Party mode

funny dog pictures : http://www.funnydogsite.com/

The moaning and dribbling experienced here yesterday when I suggested a 24-year-old male was no kid and should be ejected from his parent’s root cellar was, ah, interesting. It’s hard to know now when adulthood starts. At thirty? When you get your first condo? Three decades before retirement? When your mom stops washing your shorts?

Those who want twentysomethings treated as dependent children invariably have economic reasons. No jobs, they say. The kid’ll be homeless. So adult children end up like giant eight-year-olds, assuming they have no mobility, freedom or personal responsibility. Hard to see how helicopter parenting does much for experience, which is the foundation of maturity.

Of greater concern, though, is what this often does to parental finances. The numbers shared here yesterday are a shocker – almost half of all Canadians spend 100% of their incomes on houses and kids, putting nothing aside for the future. And half over 50 have just a fraction (one quarter) saved of what they’ll need to retire a decade later. In other words, they ain’t going to make it. It’s a fair bet a lot of them have Millennial things in the basement, contributing nothing to the home despite expensive educations.

This underscores the fragility of household finance. With $1.75 trillion in mortgage and personal debt and the certainty of rate increases next year, plus a 3% savings rate, things aren’t going too well. No wonder wealth is drifting up to the investor class while debt drifts down to what’s left of the middle class. The TSX gained 27% in the past year and the S&P is up 21%, while inflation is 2% and houses grew an average of 5%. Real estate also has massive buying and selling costs, ongoing property tax, insurance and maintenance payments and often strata fees.

Unless there are sustained capital gains each and every year in the property market, things aren’t going to end well for a lot of people who have rolled the dice on a one-asset strategy. Almost 60% of Canadian households have mortgages. That’s 5.6 million families, while another 2.2 million have home equity lines of credit. The average mortgage rate is 3.2%, and even at that historically-low level most folks are saving nothing. Just imagine when mortgages again average 5% – which is still a relative bargain.

The Bank of Canada has crunched the numbers. They’re ugly. If five-year mortgage rates average just 4% then mortgage payments would become the most unaffordable in 16 years. If interest rates rise 2% in general (and they will, without a doubt) then 10% of households with mortgages can no longer afford them. That’s more than enough to push over the entire market.

At the heart of this threat to the middle class is the notion that houses are investments (not places to live) so if you have one you don’t need to invest in anything else. That’s how we got a 70% home ownership rate and a 3% savings rate.

This is also what screwing up the kids’ heads.

Adulthood’s now equated with real estate ownership. Parents coddle the adultettes until they land a job, tell them renting is throwing their money away, and encourage them to leap from the basement to the 23rd floor – even when that means shouldering big debt and living paycheque to paycheque. So much for moving three provinces away to land the best job and launch a career.

The condo mavens know this. Like Vancouver’s Bosa Properties. It just hatched a scheme to ensnare the young called an ‘equity plan,’ to “offer hope to Vancouverites who feel like they’ll never be able to afford their own homes.” A small (15%) amount of monthly rent goes to loyalty points which can be used later as partial downpayment for a Bosa condo. After two years, it earns a $5,700 credit towards a unit – so the buyer can start owning the same unit they’ve been living in, and pay twice the monthly load!

Well, this pathetic blog has been warning people about the one-horse portfolio for years now. Millions have ignored me. They won’t stop.

This week Reuters ran a significant story on the real estate party raging in Canada that the rest of the world is watching like a head-on collision YouTube vid. Morningstar equity analyst Dan Werner summed things up pretty well:

“If you start looking at your house as an investment class, as something else you should be investing in rather than the stock market, you run into the danger of being exposed to some of the excesses going on in the system. There is this euphoria when you are within an up-housing market. We fell into it that here. I don’t want to say Canadians are in a party mode, but they are thinking, ‘What can possibly go wrong if prices keep going up?’ It’s going to end badly.”

Of course it will end badly. Meanwhile misguided parents churn out Millennials who feel entitled to leap from their childhood homes into granite-laden, debt-drenched digs, thinking this is what adults do.

What could possibly go wrong?

218 comments ↓

#1 CPG on 09.11.14 at 5:25 pm

‘Just as a bad cold leads to pneumonia, so over-indebtedness leads to deflation,” wrote the US economist Irving Fisher in 1933.

http://www.theguardian.com/commentisfree/2014/sep/07/deflation-secular-stagnation-europe-economic-nightmare

#2 Funny that on 09.11.14 at 5:28 pm

#32 David Lee on 09.10.14 at 7:24 pm
3rd attempt @ #153 Mark (yesterday’s post):

“They talk as though a housing correction hasn’t even begun. Even though evidence of such having been in progress for more than a year now is quite abundant”.

Again: not a challenge, just looking for some help in Vancouver.

Please point (e.g. by providing links) to where you are getting your data from such that you can say that evidence is quite abundant.

Any help would be appreciated.

Thanks,
+++++++++++++++++++++++++++++++++

So there you have it folks.
Mark annoyingly replies to a dozen or more posts every single day. Even posts where he is asked to please not post his unwanted opinion. Actually he doesn’t reply to posts he voices his opinion on just about every subject matter that one can think of. He is just that smart!
But above you can see a post actually asking for Mark to reply and ……….. crickets.

So Mark please put up or shut up.
Here again is the request.—Please point (e.g. by providing links) to where you are getting your data from such that you can say that evidence is quite abundant..

#3 CPG on 09.11.14 at 5:34 pm

Garth. I think total household credit in Canada is closer to $1.75 trillion.

http://credit.bankofcanada.ca/householdcredit

#4 Retired Boomer - WI on 09.11.14 at 5:35 pm

NEWS FLASH !!!

Your kids are NOT entitled to a dam thing! They are NOT entitled to anything “FREE” from you after the age of majority. No free room, no free board, and no FREE higher education.

That said, if you wish to assist with things after the age of majority (18 here) it is your right, but NOT your responsibility.

The best balanced young people are those that learned to balance a checkbook, job, and earned their own way early.

I’m proof. Not a fan of higher education, but dam sure a fan of working smart, saving early, and not listening to well meaning, but usually mis-directed advice.

#5 Mike on 09.11.14 at 5:37 pm

My 43 year old colleague just told me a couple hours ago that:
“I will only leave my parents’ basement (where he pays $200/month) when I can afford to buy a 2BD downtown apartment in Vancouver with 20% down-payment to avoid CMHC fees”
He lives with his wife and also mentioned that their parents took out a LOC for them, secured against the house of course so that they can pay off $17000 in CC debt.
He actually thinks that they are doing great now that they don’t have CC debt, he thinks of themselves almost as being well off :) Shocking.
I guess it will take them another 20 years to scrap that down-payment together, or of course they can just ask the parents to get a bigger LOC.
Wow, just Wow.

#6 Rick Fast on 09.11.14 at 5:43 pm

Hey Garth,

How do you feel about upcoming foreclosure sales in Toronto and Vancouver? Will deals be made? How do you see it spanning out over the next few years?

Don’t fall for that. — Garth

#7 Ardy on 09.11.14 at 5:55 pm

I have found it interesting in life, that often the most successful young people I have had the pleasure to meet, received very little from their parents, beyond the necessities of life, encouragement and vocal support.

Also interesting that a past study conducted by Harvard University among their own top students, revealed the common theme that the intelligent, creative, high achievers all had parents who set normal guidelines, but beyond those they allowed their children the freedom to make their own choices.

Helicopter parenting isn’t healthy for anyone involved, and has the potential to be financially devastating for people trying to fund their own retirement, while still supporting their adult children…….and possibly still looking after elderly parents.

The greatest gift we can give our kids is independence and freedom……..not the down payment on a huge debt.

#8 Funny that on 09.11.14 at 5:56 pm

29 yr old man sues parents for financial support-
https://ca.news.yahoo.com/blogs/daily-buzz/29-year-old-man-baby-sues-parents-for-not-financially-145831060.html

#9 common sense on 09.11.14 at 5:59 pm

I sent my kid away to university in a distant city at 18. He has been on his own ever since. We paid his tuition through grad school, but he’s had to work to pay for himself……sometimes working 2 jobs plus school. We always pushed him to work harder when he called home experiencing youthful reluctance .

He’s independent now , has a small business in the entertainment industry, wouldn’t think of moving home. I’m proud of ourselves for having been tough parents. We got a stand alone winner out of it.

#10 totalinvestor.com on 09.11.14 at 6:03 pm

The stigma of living in mom’s basement or paying $1,500 per month for a mortgage that will only increase in 4 years.
Decisions, decisions.

http://postimg.org/image/7rfyikcg7/

http://postimg.org/image/nyve2bdyt/

#11 Casual Observer on 09.11.14 at 6:05 pm

…so the buyer can start owning the same unit they’ve been living in, and pay twice the monthly load!

I’ve tried to explain this to people but they just don’t get it.

They usually say, “Well at least you’ll own something at the end of paying your mortgage. When you rent, you end up owning nothing.”

I say, “I’ve run the numbers and they say I’m further ahead if I rent and invest the difference.”

To which they say, “Yeah, but you’ll have to pay rent for the rest of your life.”

I explain that you have to pay either way. Monthly costs don’t disappear just because you own your home free and clear.

They only look at the mortgage payment vs. rent and don’t realize that even if you “own” your dwelling, you still have to pay property taxes, strata fees, maintenance, etc.

#12 Mark on 09.11.14 at 6:07 pm

“So Mark please put up or shut up.”

Why don’t you? Asking the same darn question when the response was already given to you many times previously really is little more than trolling.

It is simply not my job to educate you on the differences between mean and median. Or on various statistical concepts. Canada has a significant number of institutions of higher learning for which you can go study if you are unclear of these concepts, or the effects of sampling in statistical analysis.

Of course it will end badly. Meanwhile misguided parents churn out Millennials who feel entitled to leap from their childhood homes into granite-laden, debt-drenched digs, thinking this is what adults do.

I’d personally say its a self-fulfilling prophecy. Misguided people invested heavily into housing, rather than into equity and business formation. The kids hence, can’t get jobs because industry is comatose and hasn’t hired in any significant numbers since the last millennia. Hence, they’re stuck in the basements, which further reinforces the need for boomers to hold excess real estate and to put rationalization of their lives on hold (although I’m not convinced that many would be eager sellers!).

The problem here clearly is in the $900B of CMHC subprime mortgage guarantees emitted to get the housing bubble off the ground, rather than free market allocation of capital.

And Garth is right, it won’t end well for many, but there are some excellent opportunities coming to be a beneficiary of the inevitable snap-back.

#13 dipstick running russia on 09.11.14 at 6:09 pm

You got to love capitalism!

One generation works hard and if lucky accumulates wealth.
Second generation if properly brought up maintains that wealth

Third generation spends it…

Teach your kid skills, to reposes wealth from
spoiled lazy lululemonized starbuckers of today….

On the other note got email from
Russia and VP himself:

Dear Garth, i am so sorry that your portfolio is not
what you would like to be.
You calling me names strike me into my hart,
and i decided to :

Sign off all oil fields to Imperial oil
All financial institutions to Goldman Saks
and we will as of tomorrow start using US dollar
we will never question US gold reserves.
We will give control of Yakutia and all diamond mines to
DeBeers
also Titanium mines all 18 of them you can have if you want..

Please Garth…

#14 Blacksheep on 09.11.14 at 6:09 pm

“If interest rates rise 2% in general (and they will, without a doubt) then 10% of households with mortgages can no longer afford them. That’s more than enough to push over the entire market.”-Garth
————————————–
I do, have my doubts about a 2% rate increase.
Growth is just way to weak.

I will bet you a shiny Gold Maple (I’d have to buy one) the BOC does not raise the rate by a full 2% in the next 24 months.

What say you Garth, not trying to be a dick, would just really like a free ounce of Gold : )

#15 Mark on 09.11.14 at 6:15 pm

“I guess it will take them another 20 years to scrap that down-payment together, or of course they can just ask the parents to get a bigger LOC.
Wow, just Wow.”

Your 43-year-old colleague, believe it or not, is likely in better financial shape than most. Negative equity means, in many cases, renters, newborns, and even that homeless guy begging on the street, are in fact significantly more wealthy than those living in houses which are worth less than the mortgage.

The credit card debt and asking the folks to pay it is pretty despicable though.

#16 OttawaguyRenting Worried but not too worried still a worrier but look on the brightside on 09.11.14 at 6:16 pm

How ugly will it get?

I see the house horned all around me. Couples now thinking about “investment” property down south with equity they have in their house here (5 – 7 year ownership)

So weird.

Rent and you can go anywhere. Rent and you don’t worry about the fact a piece of the chimney blew off the house today.

“how will you retire without a house”
She asked me

LOLs

Oh my goooodness.. HOW will I retire…

With Money

#17 Happy Renting on 09.11.14 at 6:19 pm

Is it that parents make the family home too comfortable, that adult kids want to stay? I was eager to fly from the nest and have my own place so I could have my own space, have friends or a date over, and do whatever I wanted.

Parents with boomerang kids, nag your children more. That sure worked on me.

#18 FormerSaskie on 09.11.14 at 6:20 pm

#5 mike

Age 43, married and living in parents basement?!? OMG. Horrible for all of them.

#19 A Yank in BC on 09.11.14 at 6:21 pm

My parents were financially upper middle-class, but never had anything more than linoleum on the floor of their kitchen, with Formica countertops and plain-faced appliances. Eating out was perhaps twice a month at most. Their happiness in life (and with each other) just didn’t depend on spending money they didn’t have on luxury items in a hopeless pursuit of the “perfect life”. How sad it is that this generation seems to think the opposite.

#20 Happy Renting on 09.11.14 at 6:22 pm

#4 Retired Boomer – WI on 09.11.14 at 5:35 pm

Careful, Kylie the Millennial is coming for you. You can’t call someone dependent and entitled when they (gasp!) pay their own cellphone bill.

#21 Casual Observer on 09.11.14 at 6:23 pm

“Just as a bad cold leads to pneumonia, so over-indebtedness leads to deflation,” wrote the US economist Irving Fisher in 1933.

This was written during a time when the US was on the gold standard. The US Gov’t could not have engaged in the same amount of money “printing” that is going on throughout the world today.

While Central Bankers have massively expanded the monetary base, it has not been inflationary (besides asset prices) because of the collapse in the velocity of money.

If velocity stays low, things will remain tilted towards deflation, but as soon as velocity picks up, inflation will be the bigger concern.

#22 Nomad on 09.11.14 at 6:26 pm

Oil might not be as high as it’s been over the last 2 years. You might have noticed oil stocks taking a hit lately. Could that impact Alberta’s economy and cool their real-estate prices?

See on BNN:
http://www.bnn.ca/Video/player.aspx?vid=438387

#23 crossbordershopper on 09.11.14 at 6:28 pm

why save anything? for what? retirement? who cares,? i do taxes for 2000 people a year, in the seniors catagory, i have millionaires(basically paid off house plus cottage) 80 year olds worried everyday about their portfolio etc. Then i have ivan, worked at the steel mill, 30 years, gets 2.5k month plus goverment cheques and saved, well zero. i asked you should be rich or atleast have a house. he said, i had a real good time in life, wine women and song and worked for it. he said i came to canada in 61 with a suitcase and i am leaving this world with the same suitecase.
ivan is funny, the old widows with money are quite borring.

#24 Doug in London on 09.11.14 at 6:29 pm

These Boomer parents should know better. Having seen real estate corrections before (I remember one in the early 1980s and another in the early 1990s) they should be advising their Millennial kids that another is long overdue whether they live with their parents or not.

#25 Londoner on 09.11.14 at 6:29 pm

Canada should introduce a program to ease affordability for lower income families like they have here in the UK:

http://www.gov.uk/affordable-home-ownership-schemes/shared-ownership-schemes

#26 dave on 09.11.14 at 6:30 pm

For some reason I found the term “adultettes” hilarious.

#27 Steve French on 09.11.14 at 6:30 pm

Smoking Man:

I’ve got $40 K sitting on the sidelines. What should I do with it?

#28 Mark on 09.11.14 at 6:36 pm

I do, have my doubts about a 2% rate increase.
Growth is just way to weak.

I will bet you a shiny Gold Maple (I’d have to buy one) the BOC does not raise the rate by a full 2% in the next 24 months.

But what about the banks simply deciding to pull away from the mortgage market (because of increasing risk)? The BoC doesn’t need to change its policy rate for mortgage rates to rise.

I agree, in principle, that policy rates are likely to remain suppressed for a long time to come. But as time goes on, mortgage rates are likely to rise as risk aversion comes back to the RE lending marketplace, and other asset classes present themselves as being hotter investment prospects than RE stuck in a secular decline.

#29 OttawaguyRenting Worried but not too worried still a worrier but look on the brightside on 09.11.14 at 6:42 pm

#11 “They only look at the mortgage payment vs. rent and don’t realize that even if you “own” your dwelling, you still have to pay property taxes, strata fees, maintenance, etc”
__________

There is a piece of the chimney in the back yard of the house today.. :D

Ain’t my problemO!!! LOLs

That has been my biggest surprise going from Ownership to Renting..
Savings on upkeep

I don’t own power tools. Home Depot? Lowes? WTF is that?
Renting includes –
Weekends not worrying about the grass
Weeknights not trying to “keep up with the Jones” by interlocking the “walk way”
Hey LOSER that interlocked 3X4 walk way..
HHAHAHAHHAHAA
I bet your wife thought it would loook awesome

What a waste you cow off to slaughter

Imagine!

Renting also means that when the time comes to move cause I need to make more $$$ somewhere else or as my boss put it
“you pick the city.. we will send you”
I am goooooone in 3 shakes

#30 young one on 09.11.14 at 6:44 pm

As a 23 year old prairie kid, where does this sense of an entitled youth come from? Myself and my friends all have well paying jobs, are currently renting apartments and job prospects look great. Is this current millennial situation you’re talking about only an Ontario/BC thing?

#31 Nattie on 09.11.14 at 6:45 pm

It’s fine if a 24-year-old lives with family…if s/he pays market room and board cost (with the exception of a disabled individual.)

I’m 26. I never had a problem finding a job – since the age of 18, I was never unemployed for longer than 3 weeks (not even in Québec during the recession and je suis anglophone.) Because I worked my bum off during university, not only did I have a full resume which helped me land my “adult” job, it also ensured I had no student loans (my dad paid my $70/month cell bill while I was in uni, other than that I was self-supporting.) I now earn the same as my parents combined income. If I visit for longer than a week, I buy a load of groceries…just like I would do if I stayed at a friends house for a week. It’s just called being a self-supporting, self-respecting, non-mooching adult.

#32 Smoking Man on 09.11.14 at 6:52 pm

http://www.romspen.com/investing/fund-introduction/romspen-mortgage-investment-fund.aspx

#27 Steve French on 09.11.14 at 6:30 pmI’ve got $40 K sitting on the sidelines. What should I do with it?

Safe
Come up with an extra 110k total 150k and buy into Romspon mortgage fund, see above link. 10% a year, coupons paid monthly. Got 2 big bills in that one.

Risk.
Learn to count cards, black Jack…

Or wait for batman, then short the S&P might be awhile.

Stay away from Forex… Only Alians with Esp can win at that game….

#33 West Vanner on 09.11.14 at 6:55 pm

Totally agree Garth. 24=ADULT, so many think they are still Kids. I think in part it’s due to the time (and often parents’ money) they spend ‘educating’ themselves. My eldest who self financed her way through university ended up with 2 degrees, she now works in a research lab making diddly squat the last I heard. But then she doesn’t have to worry about money right since her BF does make money. This is not a gender slight btw, I believe in equality of the genders, so many don’t.

#34 };-) aka Devil's Advocate on 09.11.14 at 6:57 pm

You reap what you sow.

Maybe some of these parents should take a good long look in the mirror and ask themselves, who really is to blame for the state of their adult child’s finances.

There are an abundance of opportunities out there all one needs to take advantage of them is a good attitude. A parent has a whole lot to do with the general state of mind their child adopts.

Too many postpone costs. Too many are too horny for other things right now than to make sacrifices toward banking for something that will be more important to them in the future.

You can pay now or you can pay later.

Clearly those with adult children still at home have not yet done their job in raising them in the first place.

”The Bank of Canada has crunched the numbers. They’re ugly. If five-year mortgage rates average just 4% then mortgage payments would become the most unaffordable in 16 years. If interest rates rise 2% in general (and they will, without a doubt) then 10% of households with mortgages can no longer afford them. That’s more than enough to push over the entire market.” – Garth

I hope you are not gloating over the prospect because, trust me, if that plays out the way you suggest it, ultimately, will not be good for anyone you included. I agree, interest rates are, eventually, going to head North of twice what they are. Of that there is no question – it’s just a matter of time. We know it’s coming. Do you really think “they” will allow, all things being equal, the consequence of that. Not a chance.

Rising interest rates are without a doubt the Black Swan looming on the horizon. I say “Black Swan” merely because everyone seems to simply be looking past it.

Anyone, and I mean ANYONE, dealing with me who is considering a purchase of which more than 50% is going to be financed I ALWAYS tell; “Do your budget calculations based on at least a 7.0% interest rate”. If they balk I show them that rates were in excess of 20% in 1982. It happened then and it can happen again. Worst case they have some slack in their budget for a date night here and there.

But… the bottom line is THEY won’t let what would happen happen. They might not be so proactive as to prevent it but rest assured they will be attentive enough to FIX it. And like last time it will cost us all, collectively, billions.

#35 Omg on 09.11.14 at 7:09 pm

23 crossbordershopper

I bet Ivan has paid into a private pension at the steel mill for the 30 years he worked there, which likely makes up the bulk of his $2500/m. Most people now do not have that unless they work for the public sector.

I do agree with you that there are a lot of seniors out there that will leave millions to their kids. After a lifetime of scrimping and saving it hard for them to get into spending mode. I know of a couple of cases and the boomer kids are having a great time spending all their inheritance. There parents would be rolling over in their graves.

#36 };-) aka Devil's Advocate on 09.11.14 at 7:09 pm

Today’s society is hooked on a drug and that drug’s called “credit”. It’s what allows them to escape the reality of this Ponzi scheme economy. Almost makes you wonder if it actually is a conspiracy.

#37 Blacksheep on 09.11.14 at 7:10 pm

Free ounce of Gold. Any takers? See post #14.

#38 };-) aka Devil's Advocate on 09.11.14 at 7:15 pm

#23 crossbordershopper on 09.11.14 at 6:28 pm

Ivan is a DUDE who has it figured out. Good on you Ivan };-)

#39 };-) aka Devil's Advocate on 09.11.14 at 7:23 pm

#14 Blacksheep on 09.11.14 at 6:09 pm

I will bet you a shiny Gold Maple (I’d have to buy one) the BOC does not raise the rate by a full 2% in the next 24 months.

The Bank of Canada may not have anything to do with it. The BOND MARKET is the mother of everything that happens. Check it out. The stock market is but a pimple compared to the bond market mountain. That aside, you have picked a mere 24 months so your bet may well be safe. Beyond that…

#40 };-) aka Devil's Advocate on 09.11.14 at 7:26 pm

What instrument was most influential in the defeat of Napoleon at the Battle of Waterloo?

The bond market.

Check it out.

};-)

#41 };-) aka Devil's Advocate on 09.11.14 at 7:27 pm

No seriously, check out the backstory

#42 NostyVlad the Snugglebombed on 09.11.14 at 7:33 pm

#7 Ardy on 09.11.14 at 5:55 pm — “The greatest gift we can give our kids is independence and freedom……..not the down payment on a huge debt.”

Well said. Our youngest left home when he was about 19 (30 now), and when he saw the money he earned, chose to stay there (Alberta). Our eldest moved out a few months ago, and they’re both well set up.

Let kids make their own mistakes and learn from them. We did!
*
#147 Kenchie on 09.11.14 at 8:51 am — “China is a beacon of economic stability in a profligate world!”

This world is a highly-dysfunctional cornucopia of paradoxes, highs / lows, heavens / hells etc., and it is supposed to be that way. For example: Freedom = Scotland, Catalans, Texas and Alaska!

China may be down on the one hand, but Russia and China’s new SWIFT alternative is yet another step away from the PD, along with the newly-created New Development Bank; Inflation – 63.4% Which South American country has a shitload of oil? Destroy the country’s then feed off the carcass.

#163 Smoking Man on 09.11.14 at 12:11 pm — “Some very bad ass people in the world.”

Who is responsible? New unreleased stuff and Obviously.

#43 Daisy Mae on 09.11.14 at 7:45 pm

The School of Hard Knocks. Means the sometimes painful education one gets from life’s usually negative experiences — it is what’s needed and it’s what memories are made of. Coddling accomplishes nothing.

#44 Realties.ca » Party mode on 09.11.14 at 7:47 pm

[…] Source: http://www.greaterfool.ca/2014/09/11/party-mode/ […]

#45 Andrew on 09.11.14 at 7:48 pm

A new report out today from the CD Howe Institute suggests Canadians are doing better at saving for retirement than most people think:

http://www.cdhowe.org/pdf/e-brief_183.pdf

#46 George on 09.11.14 at 7:49 pm

You know Garth that you and Bank of Canada are part of the filthy , greedy system….. and this illusionary system
will fall….soon…

And your dumb, childish blog will disappear

Let me guess. 24. Live at home. Mom does your shorts. MA in Egyptology. — Garth

#47 Observer on 09.11.14 at 7:50 pm

The bankers get bailed out from the financial crisis that many of them helped create, but the kid in the basement (who’s trying to save money to overcome the bubble it created) doesn’t get any love? What gives. Time for our leaders to set a better example! Leave the poor kid alone.

#48 Victor V on 09.11.14 at 7:50 pm

Canadian dollar sinks amid ‘amazing race to the bottom’ for world currencies

http://www.theglobeandmail.com/report-on-business/top-business-stories/canadian-dollar-sinks-amid-amazing-race-to-the-bottom-for-world-currencies/article20529859/

Yesterday, for example, Capital Economics forecast that the Canadian currency will end the year at 89 cents, and next year at 86 cents.

Also yesterday, BMO forecast that the loonie, which has lost about 6 per cent over the last year, will sink to 88 cents in 2015.

Just today, chief economist Craig Wright of Royal Bank of Canada predicted an 87-cent loonie this year, with further erosion to 85 cents next year as the U.S. dollar gains and interest rates start to climb.

Of late, noted BMO’s chief economist, Douglas Porter, the Canadian dollar has weakened on a stronger U.S. currency and the decline in oil prices.

#49 crowdedelevatorfartz on 09.11.14 at 7:51 pm

Downtown Van a few weeks back.
Waitress serving us at a pub starts chatting. She’s mid 30’s , lots of ‘tats’ on the arms, loves waitressing. No plans for the future. Lives paycheque to paycheque
(bummed a smoke off my friend). Very skinny, twitchy, looks like the beginning of a crack addict… (believe me I know crack addicts) Anywho, nice girl.
Last weekend my friend is back drinking at the bar. This girl is off shift and is “Smoking Man hammered”. Gooned. Her parents are there, its her birthday.
Her parents confided to my friend that they give her everything. Car, free rent condo, pay her bills,etc. So whats this girl do with her own money?
Spends it ALL on drugs.
Parents. Killing her with kindness. Tough love needed.

#50 Nemesis on 09.11.14 at 7:51 pm

#Shocking!SimplyShocking! #OverEducated… #UnemployedMillenials… #Expecting2ndChild… #StillLivingInMum’s’Basement’Suite:

http://tinyurl.com/p8g49wc

#PaeanToIvan… #NoHelicopterParentingHere… #JustWeatherBalloons… #”HowFarCanAnAverageJoeGo?” #SpoilerAlert:TheVillainessIsA… #[Redacted]™

http://youtu.be/xsefeaASRuk

#51 Blacksheep on 09.11.14 at 7:52 pm

D.A #36,

“You have picked a mere 24 months so your bet may well be safe. Beyond that…”
————————————–
I said “I’d really like a free ounce of Gold.” not, I really want to give away an ounce of Gold.

#52 TEMPORARY Foreign Prime Minister on 09.11.14 at 7:53 pm

“…….No wonder wealth is drifting up to the investor class while debt drifts down to what’s left of the middle class……..”
=========================

Just as the Canadian government was lobbied to do.

Good thing Harper spent millions locating an old wooden bathtub at the bottom of the Arctic Ocean. That’s got to be worth something in the pockets of Canadians.

#53 Kenchie on 09.11.14 at 7:53 pm

“Adulthood’s now equated with real estate ownership. Parents coddle the adultettes until they land a job, tell them renting is throwing their money away, and encourage them to leap from the basement to the 23rd floor – even when that means shouldering big debt and living paycheque to paycheque. So much for moving three provinces away to land the best job and launch a career.”

Totally agreed, Mr. Turner.

A child of immigrants, and having the majority of my millennial friends being the same, there is definitely groupthink going on about house-ownership being the holy grail of status. I blame immigration! (joke)

I noticed early on that my white friends, who are multi-generational Canadian, almost all moved out of their parents’ houses within the first year, and up to 3 years, since graduating high school.

Meanwhile, those of us whose parents hail from the Eurasian continent had a vastly different post-high school experience.

Both parental strategies have their benefits and costs. I was definitely a late-bloomer. But now, I am kicking many of my friends’ ass, financially-speaking. So that’s why I have some sympathy for this 24 yo kid.

PS: My family is a microcosm of the cultural dichotomy: my Western European parent was happy to kick us out at age 18, but my Asian parent said no, it’s a waste of money. Funnily enough, my Euro parent blamed my Asian parent for being too soft on us!

#54 crowdedelevatorfartz on 09.11.14 at 7:54 pm

Yo ! “Not an Economist”
Did you read #31 Nattie?
Seems to have figured out how to “make it”…….
Have YOU figured it out yet?

#55 David Lee on 09.11.14 at 7:56 pm

Mark,

Judging from the comments by “Funny that” on my question (re: pointing me in the right direction for the “ample evidence” you’ve mentioned in previous posts), I gather other bloggers here may have some issues with you.

I don’t.

I’m honestly trying to get some data which I can use to justify my position on housing in Vancouver (I sold my house here in 2011 and I am waiting).

In your response to “Funny that”, you indicate that you’ve given the response to my question previously. Please let me know around which dates you provided this response and I will search through Garth’s archives to find them myself.

I’m guessing from your mention of “mean and median” in your reply to “Funny that” that you’re implying one or the other is used by the real estate boards when it suits their purposes AND that with the mean being higher than the median, the distribution is skewed by the few sales of very high priced homes (e.g. in Vancouver West) and that the weight of the distribution is a the lower end. Is that what you’re saying?

Again, any help would be appreciated.

Thanks.

#56 Tony on 09.11.14 at 7:56 pm

To rephrase it for Reuters “the people with homes will lose a lot less than the people holding stocks” Both will take a bath but the ones in stocks will be wiped out entirely.

#57 CPG on 09.11.14 at 7:58 pm

#21 Casual Observer.

Thanks for the response. There’s lot to learn about this economic stuff. That’s why I keep on checking out this pathetic blog.

Its going to be interesting to see if the zero interest rates and money printing policies implemented by the major central banks of the world in response to the global financial crisis can solve the two major problems we in Canada and the rest of the developed world have, which I heard described nicely by a financial analyst on a money show on a Vancouver, B.C. radio station back in December, 2010.

“Way more money has been borrowed than will ever get repaid”

“Way more promises have been made by governments and so on than will ever be kept”

#58 Mr. Reality on 09.11.14 at 8:01 pm

Adultettes? lol

I call them losers. These are the people that are unwilling to move to where the work is so instead they milk off ma and pa? The crazy part is their parents defend them, as if adults needs their parents defence?

Mr. R.

I swear this country has raised a generation of pansies, its pathetic.

#59 };-) aka Devil's Advocate on 09.11.14 at 8:08 pm

#35 Omg on 09.11.14 at 7:09 pm
23 crossbordershopper

I do agree with you that there are a lot of seniors out there that will leave millions to their kids. After a lifetime of scrimping and saving it hard for them to get into spending mode. I know of a couple of cases and the boomer kids are having a great time spending all their inheritance. There parents would be rolling over in their graves.

Those parents maybe should have taken a page out of Ivan’s book and lived it up a little instead of saving and waiting for a day that may never come.

};-)

#60 Setting the Record Straight on 09.11.14 at 8:08 pm

@89. Yesterday

“Mark, if you do listen to ARAmry, remember that Von Mises’ work has been criticized by a) other ASOE professors, such as F. A. Hayek, and b) Chicago School of Economics professors, such as Milton Friedman, and c) pretty much every other notable economist since the 1980s. ”

Links please

#61 };-) aka Devil's Advocate on 09.11.14 at 8:11 pm

#50 Blacksheep on 09.11.14 at 7:52 pm

Buzzingo. You slammed me };-)

#62 AfterTheHouseSold on 09.11.14 at 8:16 pm

OT
9.11
Flight 93

We visited the National Memorial Site of Flight 93 in Pennsylvania. There were 33 passengers and 7 crew members on board. This flight was delayed on the tarmac for 25 minutes before takeoff, causing it to be out of sync with the other hijacked planes. Thus, when the plane was hijacked 46 minutes into the flight, the passengers had the added burden of already knowing the fate of the other planes.

They decided to fight back. An unlikely collection of people to be fighting terrorist; among them an older couple, a pregnant woman, three students, five flight attendants. Ordinary people taking extraordinary action. They fought for 6 minutes, keeping the plane from reaching its target, the Nations Capitol.

The plane crashed and disintegrated on impact. It was a windy day, the debris field a mile and a half wide. Only 8 percent of remains were recovered. The coroner ordered the impact site to be covered over as befitting a grave. Rest in peace flight 93.

Lesser known: Seven people were working outside on a hilltop when the plane came screaming 400 feet overhead, upside down, and at 563 mph slammed into the field below.

When these people close their eyes at night, I pray that they too, rest in peace.

A single boulder acts as headstone, marking the point of impact. Stark, somber, heartbreaking.

#63 Setting the Record Straight on 09.11.14 at 8:35 pm

@140 yesterday
“Why didn’t she become at teacher? 81k a year is considered a middle class salary. Do you think teachers don’t deserve to belong to the middle class? The reason ece’s get paid so little is because they are only qualified to teach jk/sk.”

Deserve? Unions are designed to extract above market wages. They are particularly successful when negotiating with governments. (Even FDR did not believe there should be public sector unions). The question is what would teachers salaries be if set by the market.

#64 Millennial_Falcon on 09.11.14 at 8:36 pm

#2 Speak for yourself. Mark’s comments are among the best on this blog.

I am 31 and a “millennial”.

As for some of these other millennials on this blog talking about how successful they are, how much money they make, or how self sustaining they are blah blah. You guys know that we on this blog in no way represents our entire generation right?

Our generation has got to be the dumbest that has ever lived.

It is our sense of entitlement. We lack any sense of humility, and we all believe we are some star. Sort of like the grandstanding that is evident in your posts.

If TSHTF, our entire generation would curl up into a ball in the corner of the room with our thumbs in our mouths. Garth is correct.

MF

#65 Cow Man on 09.11.14 at 8:36 pm

Sir Garth wrote:
“And half over 50 have just a fraction (one quarter) saved of what they’ll need to retire a decade later. In other words, they ain’t going to make it. ”

When fewer than 50% have saved enough for retirement, all that happens in a “democracy” is that the majority will take it from the minority. That is the way this country is run now. The fable of the grasshopper and the aunts is becoming the truth. Just look at Ontario. We have the Greenbelt Act, the Niagara Escarpment Act, the Natural Heritage Initiative, and the Oak Ridges Moraine Act. All of these Provincial initiatives, just took from the existing land owners and gave to the public majority. Millions of dollars in assets just eviscerated. What makes you think that this will not happen with investments? What point is there in investing if the majority just takes it away?

#66 Granny Annie on 09.11.14 at 8:40 pm

Blog dawgs, I need your help.

Where do I get information about the selling price of a property in Brampton if it wasn’t listed on MLS and sold privately (within the the last two years).

This may have been covered previously, but any guidelines will be appreciated.

#67 Victoria Real Estate Update on 09.11.14 at 8:42 pm

Single Family Home Sales Totals
. . (January through August). . .
. . . . . Greater Victoria. . . . . . .
. . . . . . . . . . . . . . . . . . . . . .
2007…********************
2014…*****
2013…**
2012…**
2011…**
2010…*****
2009…************
2008…*********
2006…***************
—————————————————
. . . -40%. . . . . . . . . . . . . . .0%

This chart compares single family home sales totals (January through August) of recent years to that of 2007, which was, at best, an average year for Greater Victoria.

2014’s SFH sales pace is 31% behind 2007’s pace (population adjusted).

Slow sales always points to a weak, unhealthy housing market. Slow sales was a common denominator among all housing markets that underwent major price corrections throughout the US and the rest of the world in recent years. The relationship between slow sales and falling prices is well-established. Victoria’s price decline (that began in 2010) will continue.

For SFHs, the downward price path has been re-established in Victoria after the usual seasonal price bump. In August, the local board’s SFH benchmark price was down 1.3% from July.

Examples of monthly price declines (by area):
Victoria: -1.1%
Oak Bay: -1.5%
Saanich East: -1.2%
Saanich West: -1.8%
North Saanich: -1.1%
Sidney: -1.9%

Victoria’s housing market is in deep trouble. House prices in other Canadian cities have increased significantly since 2010 as a result of historically low (emergency) interest rates. That prices have decreased significantly in Victoria since 2010 should be alarming to every Victoria mortgage holder.

As of June 2014, house prices in Las Vegas were 42.5% below their 2006 peak level and prices in Phoenix were 35.5% below peak. Years after hitting bottom, prices in many American cities are still well below peak levels and prices across the US in general may be starting to move lower again.

Housing bubbles always go through major, multi-year price corrections. It isn’t different in Victoria.

Victoria‘s housing market is extremely overvalued. A quick look at house prices in Las Vegas makes this clear. (min. 3 beds, 2 baths, min. 1,800 sq. ft. of primary (above ground) living space, attached double garage).

$140 K
$141 K
$142 K
$142 K
$145 K

A similar house in Victoria would cost at least $700 K.

Girls and guys, Victoria’s housing market is weak and prices have been declining in a well-established downtrend since 2010. It would be a bad idea to buy now when much lower prices are on the way. Prices in Victoria will fall much more as house prices across Canada fall. Wait for that to happen.

Until next time – Cheers!

#68 Blacksheep on 09.11.14 at 8:43 pm

Afterthehousesold #61,

Did you know any body on flight 93?

#69 Setting the Record Straight on 09.11.14 at 8:43 pm

@152 yesterday
“PS: I’m not talking about the value of “real work” having value as being wrong. There is much more to ASOE than “real value” of work. The main problem I have with ASOE, in general, is the fixation on hard currency as being superior than a market-based floating currency. How can they profess to be market-fundamentalists but be supportive of an inflexible exchange rates (fixed to gold) and despises price discovery on exchange rates? They can’t, it’s called cognitive dissonance.”

Truly a foolish comment.

#70 Helofox on 09.11.14 at 9:03 pm

“Stop cooking with cheese!”

#71 souvereigninternational on 09.11.14 at 9:03 pm

I just drove by 6 houses for lease in small dowtown TO neighbourhood. Is this a sign of market breaching the top? Can’t sell for what I want -gonna lease instead and wait?

in other news: suprisingly despite gold/silver metal spot down today, all my junior miners are up 5% on average. Is this a sign of a bottom?

#72 Ayn Rand Army on 09.11.14 at 9:05 pm

#60 Setting the Record Straight on 09.11.14 at 8:08 pm

@89. Yesterday

“Mark, if you do listen to ARAmry, remember that Von Mises’ work has been criticized by a) other ASOE professors, such as F. A. Hayek, and b) Chicago School of Economics professors, such as Milton Friedman, and c) pretty much every other notable economist since the 1980s. ”

Links please
—-
There will be no links from Kenchi because it’s not true and he’s a liar. And even if there are any arguments against Mises by modern day opposing Keynesian economist, they can all be easily destroyed if one reads and understand the work and theories layed out in his magnum opus, Human Action.

Mises was born in 1881 and died 1973, i typed that wrong yesterday.

People like Kenchi often make up slanderous remarks and dismissive unbacked statements about Mises and Ayn Rand because their economic and philosophical arguments can not be beat by arguing against them and hence is why they always attack the person and not their ideas or theories.

To say Ayn Rand was an excessive radical against government ust because she experience the rise of the red army and communism in Soviet Russia and the destruction and death of her society is a little simplistic dismissal of her vast body of work, and if one reads her work, you’ll see that her experience was a large part of the inspiration and driving force that compelled her to greatness.

#73 TO Renter on 09.11.14 at 9:06 pm

#66 Granny Annie on 09.11.14 at 8:40 pm

Where do I get information about the selling price of a property in Brampton if it wasn’t listed on MLS and sold privately (within the the last two years).
——
A lawyer can access the title records through software most seem to have, or maybe if you visit the land registry office. Have been involved in estate property transfers (wills) and that was the way all the history and information (including amount of money involved) was available.

#74 Smoking Man on 09.11.14 at 9:08 pm

#49 crowdedelevatorfartz on 09.11.14 at 7:51 pmDowntown Van a few weeks back.
Waitress serving us at a pub starts chatting. She’s mid 30’s , lots of ‘tats’ on the arms, loves waitressing. No plans for the future. Lives paycheque to paycheque
(bummed a smoke off my friend). Very skinny, twitchy, looks like the beginning of a crack addict… (believe me I know crack addicts) Anywho, nice girl.
Last weekend my friend is back drinking at the bar. This girl is off shift and is “Smoking Man hammered”. Gooned. Her parents are there, its her birthday.
Her parents confided to my friend that they give her everything. Car, free rent condo, pay her bills,etc. So whats this girl do with her own money?
Spends it ALL on drugs.
Parents. Killing her with kindness. Tough love needed.
…………

I disagree, everyone’s different, I know many young out off control young people that snapped out of and went on to run their own huge business.

Just because your programming tells you that girl needs help. Doesn’t mean it’s so.

Why do I exhibit and enjoy self destructive behaviour, taking to myself out loud on many occasions I figured it.

I’m board of a standard life, success cones easy to me. It’s not challenging at all. Perhaps I want to box myself into a tomb , only for the amazing thrill of trying to figuring out how to get out of it.

Whether I get out alive or dead is insignificant. It’s the fun of beating huge odds. It’s what being alive is all about.

It’s demented, I know.. But shit like that makes me happy.

#75 Nemesis on 09.11.14 at 9:09 pm

#SmokingMan’sInvestmentAdvice… #Or,TheProblemWithDoorNumber2… #AccordingToAlbert,Robert&Johnny:

http://youtu.be/khY_N3j07aU

[NoteToHommeDuTabagisme: Worked for me, though… Albeit, I only did it once and I was simply trying to make a point about EideticMemory { http://youtu.be/5xBWD9RWcxU }. Of course, in those days… they weren’t dealin’ from 8Decks. Just between the two of us, when it comes to PartyMode, OldSchoolVegas was – like – WayMoreFun. Just ask Bugsy: http://en.wikipedia.org/wiki/Bugsy_Siegel ]

#76 nnso on 09.11.14 at 9:13 pm

If you don’t mind kicking out your son or daughter at 18, watch this video.
Shelley Lubben: Ex-Porn Star’s testimony (The ugly truth behind the porn industry)

https://www.youtube.com/watch?v=wHo0bk3sv4I

#77 Kenchie on 09.11.14 at 9:17 pm

#25 Londoner on 09.11.14 at 6:29 pm
“Canada should introduce a program to ease affordability for lower income families like they have here in the UK:

http://www.gov.uk/affordable-home-ownership-schemes/shared-ownership-schemes

It’s an interesting proposition, and I don’t doubt that some people have used it correctly to their long-term benefit. But I don’t care for the shared ownership program, from a ideological perspective rather than the practical attributes of it.

My issue is that this there are already so many ways in which the gov’t encourages homeownership. Adding another one that directly uses public funds (particularly in a situation of fiscal deficit position at the provincial and federal levels) is not exactly responsible use of taxpayers’ dollars. And if too many people apply, then it’s the gov’t’s capital that is directly subsidizing incumbent homeowners, which is a massive problem in Central London.

PS: In 2012, the UK gov’t paid £20bn in housing benefits. A quick calculation of privately owned rental units received £70bn in rent. That means the gov’t paid roughly 28%-29% of all rent. Not very well allocation of gov’t funds…

#78 Ayn Rand Army on 09.11.14 at 9:19 pm

Regarding the kids today and my comment yesterday about the lack of jobs because of a bad economy. My point still stands and their coddled upbringings only compounds the problems.

But just look at the youth unemployment in Europe over 25% in some countries….. and when business do have to hire someone, they prefer to hire the older people who are also out of work because they do have better work ethics than the lazy kids.

There are lot of good kids out there too, of course, its just that the ratio of useless is rising while the competition for useful has never been more essential for businesses to survive in this looter economy. Taxes, inflation, payroll deducts etc.

#79 Andrew Woburn on 09.11.14 at 9:22 pm

Some blog dogs would likely contest this statement:

“We are both by design and by culture inclined to be anything but humble in our approach to investing. We usually invest on the basis that we’re certain that we’ve picked winners, we sell in the certainty that we can re-invest our capital to make more money elsewhere. We are usually wrong, often extremely wrong.”

Be Humble, Become Wealthy
http://www.psyfitec.com/2014/09/be-humble-become-wealthy.html

#80 Smoking Man on 09.11.14 at 9:24 pm

Vlad, I loved how Alex Jones handled that caller.. The caller is a prisoner to his own bias. The group he was referring to, the majority are frightened little humanoids like everyone else. It’s the buggers at the top.

I refer to my Newvo rich relative.. She got a taste of power, domination over others as she became wealthy, everyone around her lined up to lick her boots.. It’s an evolution of some kind… If fks with your brain…

I snapped out if it and took action.. Not everyone is as smart as me…

#81 eddy on 09.11.14 at 9:30 pm

@#66 Granny Annie on 09.11.14 at 8:40 pm —

any TREB member has access to the info

#82 Spectacle on 09.11.14 at 9:31 pm

Re: #37 Blacksheep on 09.11.14 at 7:10 pm.

Free ounce of Gold. Any takers? See post #14.

********************
Better yet?
A Canadian home could be yours for $100, and one persuasive essay! For $100 wow. ( and an essay)
22 March, 2014 an article by JAMES BRADSHAW AYLMER, ONT. — The Globe and Mail stated that,

Calvin and Diana Brydges own a thrift store on the main drag of Aylmer, Ont., population 7,151. They sell vinyl LPs.
Or, for $100 and a few pages of inspired writing, you can have their house.
The couple is holding an essay-writing contest, and the prize is their three-bedroom brick home on three quarters of a country acre just east of Aylmer. To win it, entrants must explain why the house would benefit them most, and send a $100 entry fee.

– Really, has it come to this?

#83 TexasTea on 09.11.14 at 9:34 pm

Quit making them feel guilty living with mom.

Rather have them paying mom rent than some house flipper. Let house flip pay his own mortgage.

#84 Andrew Woburn on 09.11.14 at 9:36 pm

“Those twenty-eight pages tell a story that has been completely removed from the 9/11 Report,” Lynch maintains. Another congressman who has read the document said that the evidence of Saudi government support for the 9/11 hijacking is “very disturbing,” and that “the real question is whether it was sanctioned at the royal-family level or beneath that, and whether these leads were followed through.” Now, in a rare example of bipartisanship, Jones and Lynch have co-sponsored a resolution requesting that the Obama Administration declassify the pages.

http://www.newyorker.com/news/daily-comment/twenty-eight-pages

#85 Red Deer Rob on 09.11.14 at 9:37 pm

@ #58 Mr. Reality

Don’t generalize all millenials that way. We’re not homogeneous.

#86 Kenchie on 09.11.14 at 9:41 pm

#42 NostyVlad the Snugglebombed on 09.11.14 at 7:33 pm

“#147 Kenchie on 09.11.14 at 8:51 am — “China is a beacon of economic stability in a profligate world!”

This world is a highly-dysfunctional cornucopia of paradoxes, highs / lows, heavens / hells etc., and it is supposed to be that way. For example: Freedom = Scotland, Catalans, Texas and Alaska!”

I was being facetious with that statement by the way. I agree with your statement that the world is highly-dysfunctional. That’s just how it is…

My point of posting that link was to show people how messed up the Chinese property market is. It’s arguably way worse (trading paper amongst investors at a faster velocity) than boom-time America!

There are, according to the article, 1,000 online peer-to-peer lending sites engaged in helping small-time investors own a slice of a much more expensive house. It makes no mention of the cash flow derived from the investment, so it could easily be empty. That’s insane!

#87 The Reel Me on 09.11.14 at 9:41 pm

@#66 Grannie Annie

You can go to the Peel land registry office at 1 Gateway Blvd in Brampton, https://www.services.gov.on.ca/locations/locationDetail.do?id=11354

Find something called a Roscoe terminal and you can search properties by address, name, parcel number etc. The report will show all title transfers, sale prices, liens/encumbrances etc.

If a staff member is too busy to assist, most of the other patrons are usually quite helpful as they’re pros.

#88 Nattie on 09.11.14 at 9:43 pm

#30 – in my anecdotal experience it particularly seems to be a Vancouver thing, but is found in Montréal, Toronto, and even Calgary. I grew up in a small town, and my 22-year-old sister is still there; she and all her friends rent (a few buy) their own places. For them, living with your parents would be bizarre and socially undesireable.

#89 Smoking Man on 09.11.14 at 9:50 pm

Think about this people, if we’re lucky like my dad, 97 years old, a GPS attached to his wrist. The bastard can still sprint… His mind is gone, off in some weird world.

He smiles a lot, but when the words come out, not even an alien that speaks a million languages and a direct connect to the UCC can make out what he says.

We got about 100 years if we’re un lucky..

Why worry, why be afraid… Enjoy life to its fullest.

Do what you love doing cause one day, you will need reading glasses, then Viagra, then a diaper the a coffin.

It’s short, make your time sweet, going to Seneca tomorrow, drinks on me….

#90 jess on 09.11.14 at 9:58 pm

JANET YELLEN :…”the problems with LIBOR have undermined the public’s trust in the financial system.”
corporate debt considered high quality liquid asset while investment grade municipal securities are not

http://www.federalreserve.gov/newsevents/speech/powell20140904a.htm
=====
Senator Richard Shelby’s: Something’s wrong with the justice department. People shouldn’t be able – whoever they are, not just financial institutions – shouldn’t be able to buy their way out for culpability, especially when it’s so strong it defies rationality. I agree with her [Warren] on that.”
====================
parallels
extend and pretend? Japan : China
http://www.businessweek.com/articles/2014-09-10/is-china-another-japan-in-the-making#r=most%20popular

Japan : USA
http://www.nakedcapitalism.com/2014/09/fed-fails-um-irony.html
NeoCon Wild Men!

#91 Ronaldo on 09.11.14 at 9:59 pm

#4 Retired Boomer – you got that right.

#92 Tanaka on 09.11.14 at 10:01 pm

The endgame of kids living together forever with their parents in an incredibly expensive environment can be seen in Japan. These people are called parasites, since they feed off their parents forever. http://en.wikipedia.org/wiki/Parasite_single

Unfortunately, this would never work in the Canadian context, as most parents would be willing to toss the kids out on the street (or into the nearest snowbank).

The real solution for yesterday’s guy is to sell everything, take small loss, and move to Ecuador. He could live like a king off the savings/pension and even find affordable private nursing for his wife, in addition to housekeeper, gardener etc. He could even apply to be an Honorary Consul given his stellar public service.
(starting to sound like the beginning of a John Le Carre novel).
As for the kid in the basement, Pops could enroll him in Mariachi lessons down there and he could busk his way towards financial independence.

#93 jess on 09.11.14 at 10:01 pm

home depot
automated call-in system known as a Voice Response Unit (VRU) to change PIN
…fraud fighter at a bank in New England that experienced more than $25,000 in PIN debit fraud at ATMs in Canada. The bank employee said thieves were able to change the PINs on the cards using the bank’s automated VRU system. ”
http://krebsonsecurity.com/
=

Tax evasion: sophisticated scam revealed by CBC hidden camera
Experts said one plan was virtually ‘untraceable’
By Timothy Sawa, CBC News Posted: Sep 30, 2013 9:35 PM ET Last Updated: Oct 01, 2013 9:15 AM ET

=

Brian De Wit, Cem Can indicted by FBI in $500M offshore tax fraud scheme
By Timothy Sawa, CBC News Posted: Sep 10, 2014 11:21 AM ET Last Updated: Sep 10, 2014 1:32 PM ET

“As alleged, the defendants concocted an intricate scheme using sham companies to make money while repeatedly evading and violating U.S. securities and tax laws. The indictment of these defendants should serve as a stern reminder that such greed-based behaviour comes at a cost,” the FBI said in a statement.
http://www.cbc.ca/news/business/brian-de-wit-cem-can-indicted-by-fbi-in-500m-offshore-tax-fraud-scheme-1.2761811

#94 Smoking Man on 09.11.14 at 10:04 pm

OK had a JD or two… Feel like writing…

You bastards want the Holly Grail of happiness.

I’m going to tell you write now.. Print it and put it on your fridge, just like Newvo put my Xmas face book post on hers.

Do not be afraid of judgment, let it all hang out. Look in the mirror and scream to your reflection, your special your the best… Piss off your teachers if they find out..

But sky will always be blue, and the sun will always shine.

Works for me..

#95 Kenchie on 09.11.14 at 10:11 pm

#60 Setting the Record Straight on 09.11.14 at 8:08 pm

“@89. Yesterday

“Mark, if you do listen to ARAmry, remember that Von Mises’ work has been criticized by a) other ASOE professors, such as F. A. Hayek, and b) Chicago School of Economics professors, such as Milton Friedman, and c) pretty much every other notable economist since the 1980s. ”

Links please”

Hayek’s Oral History:
https://archive.org/stream/nobelprizewinnin00haye#page/n117/mode/2up/search/mises

He had respect for Mises, no doubt, but had differing views on somethings and looked to improve upon his former professor’s work. Just search for “Mises” in the search field, it will bring up all the sections Hayek speaks about him. Many of the sections show his disagreement/criticism.

Friedman:

http://reason.com/archives/1995/06/01/best-of-both-worlds/4

Page 5 of 7, half way down. Talks about Rand and Mises. It’s like Friedman could be talking about ARArmy!

#96 DreamingIntechnicolour on 09.11.14 at 10:13 pm

When there is not enough to buy a pizza after you get paid, pay your bills and put some gas in the tank – then you know the banks, finance and car companies have you by the short and curlies – and who is to blame – only a greedy, show-off like yourself. If you can’t make payments, in time, they will force the sale of your home seize what ever they need from your equity to pay out the mortgage and their court costs, they will re-possess your car / truck and they will go after you for credit card debts – and who is to blame – only a greedy, show-off like yourself.

#97 gladiator on 09.11.14 at 10:15 pm

Ok, I have 2 kids in elementary school and the situation in today’s post crossed my mind many times. What would I do as a parent?
Here’s what I came up with: Let’s say you think about a rock climber; he/she will take more risks and explore more opportunities if he/she has good security – a rope that will save the day if a climbing fiasco occurs. I apply the same principle to life: I will tell my kids to go explore the world and will be quite pushy about it, but I will let them know that at any time they fail in a new undertaking, there is always a room and a bed for them to “fall back on”, so to speak. As a parent, I do intend to push them to go for new and risky opportunities, I intend to encourage them to be bold and not fear a new journey, but again, I will be the so-called safety net for them, so that they can go the riskier way and benefit more than average from it if successful, or learn from it if not. I am an immigrant here in Canada. I started from 32k in 2004 and now make over 100k with bonus, which is not that bad. As I wrote here before, I am going to get my CFA charter soon and keep advancing in my career. The only thing I didn’t have is this “security net” of parents here that would have allowed me to go some riskier ways and maybe earn even more today. I had to feed my wife and kids and I had to go the safer way of my career advancement.
As a parent, I think that my duty is to raise my kids to be educated, street smart, independent, wise at handling money and, most importantly, is to encourage them to take risks and if they fail – to provide them the place to come back, recover, regroup and go back to do big things again. Maybe I am wrong. But this is the best I think I can do for them. Time will tell.
And certainly, if they are 24 and living in my house, they will have to pay market-level rent, which, when they buy a house/semi (no condo!) will be given 100% back to them for the downpayment. They must learn the value of money as soon as possible.
Peace.

#98 Retired Boomer - WI on 09.11.14 at 10:16 pm

Back from the Thursday night gambling rendezvous. Didn’t win, but I had my fair share of Brandy.

No, at majority you do NOT owe your kids anything, but if you can afford it, help them with their aspirations assuming you have your future retirement on track.

Help with higher education OK – IF you CAN afford it.
Rent to them below market for a time -IF you can afford it.

Do NOT let them dwell in your basement until they “find themselves” that is bullshit.

Do NOT help them buy a property, leave them a ton in your will after you croak so they can pay off the shelter they bought, or to buy their first place. You’re dead, do you give a shit?

If you created another human being, be the best parent you can be, but at the age of majority, it is time for them to fly on their own. They may well fall and break a wing, or their neck that is called ‘life.” Most will learn from their errors, and with some pain. You can’t live their life for them, take care of your own first! Be sympathetic, but not pathetic.

Not every kid is destined to be #1 but if they are productive members of society, a job well done! Good job!

End of today’s RANT

#99 TnT on 09.11.14 at 10:17 pm

Kids’ moving out before marriage is just a phenomenon that started back with the Boomer generation.

Kids of immigrants never moved out before marriage regardless of ethnicity.

First generation Italians, Greeks and Portuguese never moved out until they were hitched and scored their down payment from their wedding collections.

Chinese and Indian cultures commonly share 1 house with Parents, kids, daughter-in-laws and grand kids. The Dad, Son, Daughter-in-law and other siblings work and bring in the house hold income while the Mother watches the grand kids.
This is why these million dollar houses with lots of space are constantly being sold and afforded with the multiple family earners.

There’s a huge economic benefit of multi-generational families living in one house that affords the extra parental supervision, extra savings for food, energy, extra money for education and their kids graduate with no debt, properly raised with strong family values.

Family dynamics are changing in Canada and the old “white” Canadian way of letting your kids run wild, work and figure it out on their own will only get them so far and do not fit in this new economy. All too often these kids take the path of least resistance and fall off the economic ladder, just look at the enrollment for the Arts vs. Science degrees.

Good documentary on the subject here:
http://www.cbc.ca/doczone/episodes/generation-boomerang

#100 T.O. Bubble Boy on 09.11.14 at 10:21 pm

@ #32 Smoking Man on 09.11.14 at 6:52 pm

#27 Steve French on 09.11.14 at 6:30 pmI’ve got $40 K sitting on the sidelines. What should I do with it?

…………

Stay away from Forex… Only Alians with Esp can win at that game….
—————————————

I’ve done REALLY well over 1-2 years keeping more investments and cash in $USD.

Are you getting out of $USD entirely? I’m likely doing a bit more conversion back to $CAD (via norbert’s gambit) now that CAD is back under 90 cents, but will still have a ton of $USD investments.

#101 long dong on 09.11.14 at 10:25 pm

Garth, you sound like you’re 90 years old when you rag on 25-year-olds. It’s not like the Boomer days when you had a fat paycheque, car, kids, and a DB plan by 14. Bald by 20. All on a high school diploma. And somehow old geezers still have no cash.

I wish I could’ve filled up my camaro for 12 cents a litre. Instead, I’m paying for underfunded pensions.

Great post as usual. I look forward to the day you shut this blog down because that means the correction is well underway and sanity will return to this country.

#102 Kenchie on 09.11.14 at 10:28 pm

#69 Setting the Record Straight on 09.11.14 at 8:43 pm

@152 yesterday
“PS: I’m not talking about the value of “real work” having value as being wrong. There is much more to ASOE than “real value” of work. The main problem I have with ASOE, in general, is the fixation on hard currency as being superior than a market-based floating currency. How can they profess to be market-fundamentalists but be supportive of an inflexible exchange rates (fixed to gold) and despises price discovery on exchange rates? They can’t, it’s called cognitive dissonance.”

“Truly a foolish comment.”
—————————————————-

Please “set the record straight”, rather than say “foolish comment” without any rationale behind it to support your view.

#103 Catalyst on 09.11.14 at 10:30 pm

“So adult children end up like giant eight-year-olds, assuming they have no mobility, freedom or personal responsibility. “-Garth

Your conclusions are baseless and incorrect on this topic. The economy, from high youth unemployment, underemployment, and obscene costs (see youth car insurance, education costs, etc.) has delayed financial independence across the board. It’s a global issue and not just Canadian, if you put some thought into it instead of turning your nose up, I think you would develop a more realistic view of today’s youth.

http://www.bbc.com/news/uk-25827061

#104 Vicpaul on 09.11.14 at 10:38 pm

#63 setting the record straight

Deserve? Unions are designed to extract above market wages. They are particularly successful when negotiating with governments. (Even FDR did not believe there should be public sector unions). The question is what would teachers salaries be if set by the market.

Well, the Criminal BC guberment has offered $40 /day for children under 12 for daycare – daycare, no accountability for teaching 6 year-olds how to read, write sentences, develop socially, artistically , physically.
I had 23 six year-olds …x $40 = $ 920/ day x 22 teaching days per month = $20,240/ month x 10 months
( remember, I need my two months off, right Slue) …….
$202,400 per annum…… F¥€£ ya! Free enterprise…..show me the money!

#105 ozy - ANSWER THIS! on 09.11.14 at 10:39 pm

“The TSX gained 27% in the past year and the S&P is up 21%, while inflation is 2% …”

so, Garth, solve this mystery:

if not many Canadians save in RRSPs, invest in TSFAs (we spend it all on kids and RE, etc) who is PUMPING $$$ IN THE fricking Stock Market?

WHO???????
WHO???????
WHO???????
WHO???????

does Canada has treason laws…..just wondering

#106 Kenchie on 09.11.14 at 10:39 pm

#72 Ayn Rand Army on 09.11.14 at 9:05 pm
#60 Setting the Record Straight on 09.11.14 at 8:08 pm

@89. Yesterday

“Links please
—-
There will be no links from Kenchi[e] because it’s not true and he’s a liar.”

Please see my post early with links.

And

“People like Kenchi[e] often make up slanderous remarks and dismissive unbacked statements about Mises and Ayn Rand because their economic and philosophical arguments can not be beat by arguing against them and hence is why they always attack the person and not their ideas or theories.”

Well, well. I actually can back up my point of view with rationale. “Beat” is subjective. You’re too biased to let go of your beliefs to look at another point of view. I only came up with my point of view on ASOE after reading about it and applying other forms of economic theory to it, and integrating real-life situations to it. And that’s how I came up with the idea that it’s just simply outdated economics. It doesn’t work any more. Nor do I believe “Keynesianism” works much anymore either. The variables today are very different than they were in the 1930s. I’m not going to waste my time by listing them here though. Learning by doing is the best form, I suggest you do your own research on other economic theories to open up your mind.

I suggest you look at what I posted regarding Milton Friedman’s opinion on Ayn Rand and Von Mises. You’re exactly the type of person he is talking about.

Also, you’re talking about what’s called “ad-hominem”. Currently, you’re doing it to me with your post.

#107 nonplused on 09.11.14 at 10:43 pm

My kid sister is 32, doesn’t have a steady job, had a kid and then split with her hubby. Now she is an economic basket case almost totally dependent on her “helicopter parents”. But why not? She’s living much better in my dad’s new “rental property” than she could on her own. I’m not sure who to blame but the whole thing looks tragic to me.

On the one hand I figure if she can get dad to buy her a house, why would she say no? So I can see her point of view. If they were throwing money at my kids to go to school I’d probably let them take it too. But they don’t. My kids don’t “need” to go to school.

If they were rich, I could understand if they were saying “hey, we can’t spend all our money so here you go dear children, $100,000 each do what you will” or something. I’d use the money to pay for my kid’s education, make life easier for them as students. Some rich people do that. But instead they are helping one child and probably imperiling their finances to do so.

And then they went and bought a new motor home. Don’t get me wrong, that seems like a normal thing for retired folks to own. Why not have our old folks cruising the highways in 10 ton disco wagons with side-outs? But they had to finance that too.

So now they have a new mortgage on a house they don’t collect rent or utilities on, or at least not very much of it, and a financed disco wagon that self levels.

Oh and the icing on the cake is they just bought a new car (financed as well) but it can’t be towed behind the RV so they are planning to get something towable. Yikes! I should just move 3 provinces away as Garth suggests. And buy (or rent) a place that doesn’t have RV parking.

So Garth, you just can’t help people. I don’t know if they just can’t do math in retirement and figure they have all the money in the world (I don’t think so) or they are quite convinced the apocalypse is upon us so it doesn’t matter (yes, they might, hence my tendency to make jokes in that line) but they went from being free of debt on a fixed income to signing loans all over the place still on a fixed income in just a short period of time. And no they did not ask for my opinion. So no, I am not backstopping it if Jesus doesn’t get back in time. There will be no “reverse helicopter parenting”.

Did I mention my dad thinks a reverse mortgage will be all he needs if anything goes sideways? I don’t get it. Take a reverse mortgage on his house to make the payments on a house he bought for his daughter. Yep. I’m moving away. Don’t know where I am going yet but the jobs seem to be in the US for my line of work.

#108 Dmitri on 09.11.14 at 10:46 pm

This article is about 15 year old “kid” who is teaching Donbass militia how to fight Ukranian naziez who burnt his home town. Kids(Canadian)…. you have no chance in this life. You just can’t compete with kids with REAL life experience. And I am not talking about combat, you will run under mom’s wing way before it comes to any fight. And I am NOT talking about war, any economic hardship and you dead :-))))) No iphone I am dead, cant live without it.
Sure you will never translate it and believe all lies in MSM, good luck.
http://www.kp.ru/daily/26281.3/3158203/

#109 sara on 09.11.14 at 10:48 pm

@ #64

I could not agree more. Being financially independent and dare I say well-off is an anomaly in my social circle let alone my generation.

Too many people my age are aghast at the reality that ‘following your passion’ usually doesn’t pay the bills. Despite subscribing to buzzfeed’s 21 Affirmations of a Modern Day Hustler (as told in cat gifs natch) they wouldn’t dare get a second job. Instead the solution is more school, financed by mom and dad. So off to Northwestern they go because a masters in journalism is sure to land them a job writing features for Toronto Life

#110 Observer on 09.11.14 at 10:51 pm

OK, here’s what kills me about this subject. These same snivelling, spoiled little princes and princesses are the ones s#!^^ing all over the baby boomers for taking everything and leaving nothing for them. I’m one generation younger than the boomers, but I’m sick and tired of hearing this. Every boomer I know has spent most of the lives and earnings on ensuring their kids have the best of everything and never wanting for anything. Cars, schools, travel, homes, best clothes etc. These are the same kids now grown up complaining because they can’t maintain the life their parents gave them. After all, why should they have to work for anything, they never had to before and they got the best of everything. How dare the boomers do this to them lol.

Sick and tired of it. Get a life and get a job, even if it’s low paying. That’s what the boomers did.

#111 WhiteKat on 09.11.14 at 11:08 pm

@#89 SmokingMan,

I used to go to Seneca semi-regularly with a girlfriend from Hamilton (where I used to live) and have ‘SPA weekend’. I live in Ottawa now, and always looked forward to our annual get-together in Niagara.

She likes to gamble, and is good at it. I would watch. We got looks from guys, who I suspect thought we were a couple. It was fun. Now I cannot go anymore because my Canadian passport shows place of birth, ‘Dallas Texas’, and I am not allowed to travel to USA on my Canadian passport. USA just raised the price of citizenship renunciation from $450 to $2,350, on top of the existing requirement of 5 years tax compliance(thousands of dollars in forms and risk of penalties) and an exit tax. I left USA with my Canadian parents at age one. Sigh…SPA days were fun.

#112 Ayn Rand Army on 09.11.14 at 11:12 pm

Fritz Machlup was a student of Mises’s, one of his most faithful disciples. At one of the Mont Pelerin meetings, Fritz gave a talk in which I think he questioned the idea of a gold standard; he came out in favor of floating exchange rates. Mises was so mad he wouldn’t speak to him for three years.

This is true. Mises was betrayed by his best student who relented on the necessity of the gold standard as is required to force discipline on the supply of money and help ensure market interest rates and so many monetary issues. Money, the lifeblood of the economy, to relent on the instance of money being backed by a weight of a commodity is absolutely fundamental for money’s function as a unit of measure and account.

On this issue, Mises was right and i believe he never forgave him or bothered with him again.

The creators of the US constitution also knew this and under the section for weights and measured mention only gold and silver could be coined by gov. as money.

All our problems today stem from the break of the gold standard.

See, kenchi, you got nothing.

No major currency will ever again be commodity-backed. Thankfully. — Garth

#113 Cocoabean on 09.11.14 at 11:20 pm

“…the certainty of rate increases next year…”

Not too likely. The last – the absolute LAST – thing governments want is higher interest rates. That’s why their central banks regard interest rate manipulation as Job#1.

You think they’ll willingly deep-six their highly-leveraged friends and clients? What would higher rates do to homeowners? To the real estate and housebuilding industry? To leveraged 40-to-1 hedge funds, barely eking out any yield at all even with today’s massive government supports?

Not to mention the heavily indebted governments themselves: http://www.zerohedge.com/news/2014-09-11/why-us-interest-rates-can-never-rise-1-chilling-cbo-chart

NOT GOING TO HAPPEN ~ not until the efficacy of the central bank ‘put’ itself is questioned.

#114 the jaguar on 09.11.14 at 11:20 pm

Of course it will end badly. Meanwhile misguided parents churn out Millennials who feel entitled to leap from their childhood homes into granite-laden, debt-drenched digs, thinking this is what adults do…..

Exactly, Garth. Which is the point of my comment from the post yesterday. (which got a couple of thumbs down). This sense of entitlement is the killer, aided by parents suffering from guilt and a ‘looking like a good and responsible parent in the eyes of their family and peers” complex.
Tell me what life lessons are being taught if all young people are given are material benefits, i.e cash, stay under thieir parents roof with no plan to evolve or become independent. Experience no financial lessons because all is taken care of for you, etc. etc.
The best and brightest young people I encounter these days are the ones that show initiative, independence, have a desire to think and plan ahead, and want to do it with as little assistance as possible. The actively look for opportunites. When I meet young people with these attributes today they really stand out. They really set themselves apart from the majority. We can all use a hand up at some point in our lives, but parents who try to justify enabling their basement dwelling children by blaming the economy or “different times” don’t want to face reality. Press articles about car manufacturers concerns regarding young peoples disinterest in buying or owning vehicles is traced to their parents habit of driving them wherever they want to go. Imagine. Why would little Johnny get a driver’s license when mommie will drive him 8 blocks to his friends house? Guess why he also won’t be receptive to moving out of his parents home with the sub zero fridge, home theatre, and permissive parents that let the girlfriend sleep over every night. Be annoyed, but recognize yourself when you read this.

#115 the jaguar on 09.11.14 at 11:28 pm

#97 Gladiator….he has it right.

#116 Saskatchewan Skeptic on 09.11.14 at 11:28 pm

I apologize for this rant in advance, I’m just in a bad mood tonight….

It is definitely a misguided party here in Canada. In Regina – New homes along with homes from the 1980-90s (larger bungalows) are, in many cases over 400 grand and becoming comparable to parts of illustrious Alberta (surprise). It’s unreal. So what happens to those of us 30ish millennials who weren’t afforded the luxuries of our parent’s basement, ‘free’ tuition from them and all the free food you could dream of? Well, I came out of university with a degree, good job and a decent pension plan. Unfortunately, I don’t have the cash saved for a down payment and thus, live in a slanty, century old 1bd for $800 a month (That’s cheap in the YQR). I also had to attain that degree on my own dime and thus, life has granted me a sizable student debt and a small car payment. I do however have a brain and see through this garbage market towards whats really coming.

That said, I can’t believe the amount of fake, entitled people who scoff at renters. I talk to friends who own (parents paid their down payment of course) who wonder why I don’t jump balls in and break my mortgage-ginity. I mean why not? I have a “career” now and some of my friends make half what I do. None of these friends are willing to admit that if they tried to sell their 1bd South Regina condo they bought for $190 8 months ago, it would go for $160 tops today. Scary. My one friend even shacked up with a girl, begging her to move in with him because after all bills were paid, he was only left with $47 for food, drinking and smoking… He STILL bugs me about owning like he does. It’s so infuriating because I’ve worked so hard for everything and all that most kids do these days is snap their fingers (or cry) to make mommy and daddy shell out their fictional savings for a down payment. There are 20-30 somethings that actually treat a renter like dirt because they didn’t jump into this party. It makes me sick sometimes and I can’t wait for the day that all my debt is paid off and I pick off a foreclosure from some stuck up hipsters who got divorced when hubby’s construction job went through some tough layoffs. Oh, and that home will most certainly be worth 25-30% less, wiping out whatever plans they had to split their “nest egg”. They deserve to eat some dirt for assuming the renters live in that dirt today.
Go Riders.

#117 surprised on 09.11.14 at 11:28 pm

At 11 he left the house to study in one school where you have to stay for 15 days, living, studying, sleeping and working on it, after that a weekend at home visited from Friday to Sunday night, at 8pm Sunday you better be in your bedroom back on the school.

11 class sessions per day, 7.50am you already cleaned your student neigborhood, took your breakfast, had the first general meeting.

at 8am in the freaking classroom on the first session.

obligatory study from 8pm to 10pm, from monday to friday, teacher check you by your number, yes, it’s faster to ask for a number instead of your name.

at 17 he took a ship to another country to start the university, 10000 miles from the parents, he just arrived and found a job in a laundry facility where half drunk strong old russian guys pushed him to work harder and faster to getter a better pay and drink heavier at night, 12 hours of work, 30 minutes to eat and not more pauses during the day, drink water was not a pause.

Is this a good standard to compare the new kids and their education in Canada, Garth?

I wonder if the minister of education of Canada reads this blogs?

He (in the history) = me

I hear that in South Korea is more strict in their program than in this history, in some cases they stop the traffic around the school to allow the kids to concentrate in the exams.

If it was the case I’d love to be born there.

#118 High Plains Drifter on 09.11.14 at 11:29 pm

The letters column reads like from the 1800’s. This world is different and does call for different strategies. I suggest that this does look like a dead end world for the many. Juggling equity and debt is the modern tightwalk that allows luxury before turning into a curmudgeon. Somebody please write a letter trying to talk my wife out of her winter cruise to exotica.

#119 Blacksheep on 09.11.14 at 11:35 pm

“No major currency will ever again be commodity-backed. Thankfully. — Garth”
——————————————————
Agreed. Why would a sovereign, tie their hands and relinquishing control of the printing press? Sure as hell know I wouldn’t.

Would you?

#120 straight six on 09.11.14 at 11:44 pm

I was a prefect at age 14 and had hitchhiked the western states by age 17.

I say, bring back the whip.. and the running shoe!
The snot nosed little bastards..
Violence solves most everything.
History says so.

#121 Ayn Rand Army on 09.11.14 at 11:45 pm

No major currency will ever again be commodity-backed. Thankfully. — Garth

Well if ever again depends on the results of the vote in November, ever again, is not as long as one might think.

Swiss will vote on Nov. 30 for gold backed Franc
http://www.dailypaul.com/325123/swiss-will-vote-on-nov-30-for-gold-backed-franc

First country to back their currency will be the first out of the gate at improving their economy while the west follows Zimbabwean, Argentina, Japan, and USA into oblivion.

Garth, your whole blog only exists today because we are not on the gold standard. All the money driving up prices would not be possible if tied to finite commodity backing.

This bubble is a credit and debt bubble by mortgages created out of thin air back by small reserves. Canada’s banking system has no limit on leverage or reserve requirements.. All very Bad.

#122 Don Derc on 09.11.14 at 11:46 pm

Greetings from Leduc – walked the Frt Mac oil show, and called on customers in Edm who were constantly short of workers. Boss wants me to move to Edm because he thinks the oil patch is on fire and would increase business – looked at 3 bdrm townhouses that are being bidded on around 10% below asking, and lots of product to choose from. Watching the telly in the hotel room and the kick is the CBC doczone program is on condos – good show – I bet they read your blog to research it ha ha. I have been there done that in condos (it’s the CBC right?) – hey I live in Vcr. Your comments on the show…if you caught it…would be welcomed. 911 was an inside job.

#123 Kenchie on 09.12.14 at 12:01 am

#112 Ayn Rand Army on 09.11.14 at 11:12 pm

“Mises was betrayed by his best student who relented on the necessity of the gold standard as is required to force discipline on the supply of money and help ensure market interest rates and so many monetary issues…

On this issue, Mises was right and i believe he never forgave him or bothered with him again.”
————————————————
It’s just your OPINION that “Mises was right”. Clearly, this “betrayal” shows the world that his “best student” didn’t agree with him on the gold standard and preferred floating exchange rates! And, quelle surprise, I touched cognitive dissonance exhibited by LVM on inflexible exchange and price discovery of exchange rates (i.e. floating is superior and more in line with market economy fundamentals). =P

You think forcing “discipline on supply of money” and “help ensure market interest rates” actually works? Newsflash! It doesn’t! Inflation happens regardless of “sound money?. Have you ever seen the chart of inflation and deflation in the US over the course of the 19th century? It’s not pretty. Try making capital investment decisions when the economic cycle is like this: http://socialdemocracy21stcentury.blogspot.ca/2012/10/the-gold-standard-did-not-prevent-price.html

Despite your OPINION, no monetary policy (“Sound” or not) can stop human beings from irrationally bidding up the price of, say, tulips, or shares in the “Mississppi Company”, or freakin’ NORTEL Networks stock ($398bn market cap at its peak!).

So in reality, the legitimate discussion isn’t about “Sound Money”, but about availability of “Liquidity” when it’s needed most! And under a “hard currency” system, backed by Gold, Silver, Seashells, or Beaver Pelts, “liquidity” can’t be brought forward quickly enough to stop the complete crash and, potentially, depressions.

Like I said, take the lessons from LVM and apply them to real life, and you’ll quickly understand that it’s just “theory” and has been obsolete for about 70 years (at least).

You should start by watching all of the “Free to Choose”. Part 1:
https://www.youtube.com/watch?v=D3N2sNnGwa4

#124 Blacksheep on 09.12.14 at 12:15 am

Vicpaul # 104,

“$202,400 per annum…… F¥€£ ya!”
————————————–
Keep dreaming.

Those $’s are destined to buy off the parents, so the gov. can let the daycare works starve on the picket line.

http://blogs.vancouversun.com/2013/06/06/too-many-teachers-but-b-c-deans-dont-favour-ontarios-approach/

With an over supply of teachers in BC, the value for your ilk’s services is dropping by the day. If I was a teacher (ya, right), I’d be getting my ass back to work, while I still had a job.

#125 Mark on 09.12.14 at 12:33 am

“if not many Canadians save in RRSPs, invest in TSFAs (we spend it all on kids and RE, etc) who is PUMPING $$$ IN THE fricking Stock Market? “

The Canadian stock market hasn’t really gone up in over 7 years. And there has been significant buyback activity. Additionally, TSX60-index-constituent firms have retained (and re-invested) 2/3rds of their earnings. So naturally such firms, with additional retained earnings, become more valuable.

At some point, the stock market will come back into favour, but until then, it will remain exceptionally inexpensive cheap and ripe for great returns going forward. This years’ performance of 17% YTD is just a small taste of what we could look forward to for many years to come.

#126 TakingResponsibility on 09.12.14 at 1:58 am

What’s actually wrong with inter-generational living? I think it sad that birth, child-rearing, education, old-age, and even death have become Outsourced – institutionalized. Actually, most of us spend our working years in some institution or another. We are all institutionalized debt slaves.

Hard to moralize – other than simplistic moral opinions – from within our institutionalized and marketized minds.

Does the Market inform us and determine our morals and the ways in which we live? Or, do our morals inform the Markets?

This intergenerational moralizing doh– which is most definitely not moral theory nor ethical – can get out of hand – young people might even turn the tables and begin moralizing (and, yikes, legislating!) about how those old folk are not productive and decide that anyone over a certain age should be euthanized.
68? Or 70?

#127 Foreign $$ on 09.12.14 at 3:44 am

Tear down listed for $17.9 million in Vancouver.

Damn low interest rates…

Wait,…payments would be $90,000/month…

Damn CMHC…..wait

#128 Blobby on 09.12.14 at 4:35 am

My parents “encouraged” me to leave home at 16 and fend for myself – especially if i wanted to go to college. They saw it as a way to make us more grown up.. My brothers had the same treatment.

Of course, if anything serious happened i could always return home (still could if i wanted), but ego – and determination to be an adult stopped me.

Im now approaching 40 and am glad I did, i became less dependent, more self sufficient, and more GROWN UP because of it.

These kids staying at home until their 30’s, doesnt just strike me as sad (how the hell do they get laid?).. But also, I wonder what it’s doing to this new generation of mommies boys/girls – who never really learned to grow up?

How will these people ever proceed in life? They’re obviously never going to become the new bosses/etc.. Because they just have never learned to properly fend for themselves – expecting everything on a plate.

Its quite depressing.

#129 gtrz4peace on 09.12.14 at 5:02 am

Not to impersonate “Devil’s Advocate” I must be one. The specter of adult offspring living in the same home as parents, moldy basement stereotype aside, is not such a nightmare when everyone gets along well, and handles their portion of community responsibility.

My folks lived with my family when my son was very young, and both my husband and I feel we benefitted as did our son. It’s a spiritual or emotional benefit, and not necessarily a financial one. But a house filled with love can weather many problems.

Note the key phrase: As long as everyone (including beloved offspring) take on their share of community responsibility.

#130 Porsche on 09.12.14 at 6:09 am

Ottawa moved to cut employment insurance premiums for small businesses Thursday, touting it as an effort that will save employers more than $550 million over the next two years and help stimulate hiring.

Encouraging the hiring of workers, hopefully Canadian workers and not TFW’s is a good thing but it is truly sad that the Minister and his cohorts in the Conservative government would not try a really effective tool. And that is to simply stop the massive immigration that goes on decade after decade at a rate that cannot be sustained by job creation. Statistics Canada and non-government agencies have already outlined the impossibility of providing sufficient jobs in the economy under dicey world economic conditions. If you have any doubt about the fragility of the economy just try to explain why interest rates have remained near rock bottom for many years. Yet this country is hell-bent on hundreds of thousands of new immigrants seeking work, added to hundreds of thousands of previous years immigrants who are still seeking work. Add to those hundreds of thousands of foreign students who are eligible to work and are seeking employment. Then try to find room for the hundreds of thousands of real Canadian unemployed who are seeking work. We have a government bent on a policy of Multiculturalism in a rush, and more interested in developing that boondoggle then giving serious consideration to what is happening to the Canadian workplace and the downward push on wages and full-time employment.

Annual immigration us 0.7% of the population, without which we would have decline. — Garth

#131 Porsche on 09.12.14 at 6:22 am

Annual immigration us 0.7% of the population, without which we would have decline. — Garth

………………………………………………………………………

This country is getting pretty brown pretty fast

Normally I delete comments like this. However, because this is your last, it will remain as your marker. — Garth

#132 bigrider on 09.12.14 at 7:00 am

#46 George on 09.11.14 at 7:49 pm
You know Garth that you and Bank of Canada are part of the filthy , greedy system….. and this illusionary system
will fall….soon…

And your dumb, childish blog will disappear

Let me guess. 24. Live at home. Mom does your shorts. MA in Egyptology. — Garth

Boy that was funny Garth… Egyptology LOL

May I add, how many young girls do we need enrolled in the teachers program at York University , looking to major in Languages (Italian and French in that order) to teach Italian or French and graduate from their MISS to MRS. on the side…LMAO.

A gaggle of uselessness.

#133 bigrider on 09.12.14 at 7:06 am

#125 Mark on 09.12.14 at 12:33 am
“if not many Canadians save in RRSPs, invest in TSFAs (we spend it all on kids and RE, etc) who is PUMPING $$$ IN THE fricking Stock Market? “

The Canadian stock market hasn’t really gone up in over 7 years. And there has been significant buyback activity. Additionally, TSX60-index-constituent firms have retained (and re-invested) 2/3rds of their earnings. So naturally such firms, with additional retained earnings, become more valuable.

At some point, the stock market will come back into favour, but until then, it will remain exceptionally inexpensive cheap and ripe for great returns going forward. This years’ performance of 17% YTD is just a small taste of what we could look forward to for many years to come.

Mark , I have come to enjoy most of your posts and agree with your assessment of the TSX and relative value it represents.

I would add that the overwhelming distrust of the stock market and the repetitive refrain I hear from the average shmuck out there , for instance, “the market is going to take a bath” was yesterday evenings from a local ‘genius’s comment.

S&P at new highs, TSX flirting with all time highs and people still horny for bricks…

Idiots

#134 CP on 09.12.14 at 7:59 am

http://business.financialpost.com/2014/09/11/china-buyers-vancouver-housing/

#135 Nomad on 09.12.14 at 8:00 am

Stock market is likely to get very volatile next week with the fed meeting, plus oil fell 15% in 3 months. This means, get your stock shopping list ready.

With some luck, in 2015, only REITs and condo prices will go down while banks, insurers, and energy will keep going up.

Ah what am I saying… rates won’t even move by a percent by the end of 2016. Please the masses.

I would not take a bet on that if I were you. — Garth

#136 Ret on 09.12.14 at 8:11 am

#124
“With an over supply of teachers in BC, the value for your ilk’s services is dropping by the day. If I was a teacher (ya, right), I’d be getting my ass back to work, while I still had a job.”

Is there not also an oversupply of ready to start work police, fire, etc. It doesn’t seem to stop those groups from demanding even more $ than any classroom teacher could ever hope to make,

Police and firefighters are essentially only required to be high school graduates and enter their jobs with no post secondary education or the student loans that go with four years of university.

Police and fire services are where the money is at and as essential services you will never lose a dime sitting on a strike line. Thirty years and out with gold plated benefits sure beats a teacher’s 35 years and out with no benefits.

“Unfunded pension liabilities” are words that no T.O. candidate for Mayor or Councillor would ever utter. It is easier to just buy civic workers, police and fire services off with taxpayer money to keep them happy and you elected.

Hamilton, soon to be $1B in debt. Not even on the radar for the up coming civic election.

http://www.hamiltonnews.com/news/hamilton-eyes-debt-infrastructure-crises/

#137 pbrasseur on 09.12.14 at 8:11 am

@bigrider

“At some point, the stock market will come back into favour, but until then, it will remain exceptionally inexpensive cheap and ripe for great returns going forward. This years’ performance of 17% YTD is just a small taste of what we could look forward to for many years to come.”

I tend to agree, short term fluctuations aside this market has legs, despite recent gains stock ownership remains at historic lows and bonds are historically expensive. These are sure signs that risk aversion is still very very high. The fact that stocks have done well in that environment is amazing. Some people are making a lot of money, but the herd, or to be polite the middle class is not. When risk aversion recedes and it eventually will there will be some sparks.

To me the main caveat here is the Canadian economy which could be severely impacted by a real estate correction, this would further sink the CAD, hurt Canadians companies and likely the local stock market. To me the US market is by far a safer investment.

#138 crowdedelevatorfartz on 09.12.14 at 8:49 am

@#101 long dong
“I wish I could’ve filled up my camaro for 12 cents a litre. Instead, I’m paying for underfunded pensions.”
+++++++++++++++++++++++++++++++++++

Well…..there’s always Viagra and the “movie industry” to supplement your income…….

#139 rosie "moving forward" in the knowledge that, "this won't end well" on 09.12.14 at 9:07 am

This baby adult thing is just a fad. Like granite and stainless. Boomers trying to out do each other. They can be so darn cute though.

http://petapixel.com/assets/uploads/2012/08/baby2_mini1.jpg

#140 crowdedelevatorfartz on 09.12.14 at 9:09 am

Good old Ayn Rand
A sci-fi hack that couldnt even spell her first name right( or is that “write”? Smoking Man, help me here).
But even Elron Hubbard (another sci-fi hack) was smart enough to turn his novels into a “religion”.

Both “authors” used their self importance and the stupidity of the masses to create “movements” that sheeple to this day still spew as “gospel”.

Kenchie, feel sorry for the delusional, for they know not what they speak.

Back to you Ann “gold is my God” Randy.

#141 Hot Albertan Money on 09.12.14 at 9:11 am

“It’s hard to know now when adulthood starts. ”

————

That’s why these geniuses invented a new term for 20 something basement trolls…”Kidults”

#142 Inglorious Investor on 09.12.14 at 9:13 am

Recently, a number of readers of this blog have been debating the compensation of public sector workers.

There is no doubt that public sector workers offer some valuable services. People can argue over whether some of those services would better be delivered by the private sector, but that is not the point of my comment.

The main point that I’d like to make is this: In my opinion, it is immoral for public sector workers to be receiving increases in wages/salaries/pensions/benefits during a time that the private sector is experiencing high unemployment, stagnant or declining wages, meager or no pensions, and meager or no benefits.

Why do I say it’s immoral? I say so because public sector compensation is paid for with taxes. In fact, all wealth is generated by the private sector, either directly or indirectly. Even when the government builds valuable infrastructure such as roads and bridges, no matter who does the actual work (public or private workers) the necessary funds come from taxes. Even if the initial funding comes from the issuance of bonds, ultimately the debt is serviced with taxes.

Without the private sector, there would be no public sector.

Every time a private sector worker’s taxes increase in order to fund an increase in public sector pensions, every dollar taken is a dollar that the private sector worker is denied for his/her own pension. Every dollar taken to fund a pubic sector pay increase is a dollar denied to pay for the private sector worker’s own needs and the needs of his/her family. If the increases are initially funded with debt, then the burden is compounded with interest charges.

Some might argue that public sector workers also pay taxes like everybody else. This is true. However, public sector workers are, by definition, net tax beneficiaries. When taxes rise to fund increases in public sector compensation, the public sector workers gain more than what it costs them in additional taxes. It’s like paying yourself ten additional dollars and getting twenty additional dollars in actual extra pay. However, for the private sector worker the loss is compounded due to interest charges and because of the lost returns he/she could have realized by investing that money.

In my opinion, public sector workers should only get increases when the private sector is also getting increases (in aggregate of course). Again, all the money earned by the public sector comes from taxes. When private sector wealth is stagnant or declining, the public sector should not be getting increases. This approach only further weakens the private sector, causes economic imbalances, and social tensions. Taking more from those who have less is simply wrong.

On a related issue…
In Ontario, the Teachers’ union has coerced the government into handing over the bulk of increases to education funding for many, many years. This has come at the expense of the quality of education our children are receiving in grade school and high school. If one examines the tactics used today, it is painfully obvious that all manner of concessions and strategic alternations are being made to maintain teacher headcount. This comes at the expense of the tax payer, and more importantly at the expense of the children the system is supposed to serve. This is why I believe public sector unions should be illegal––they can become, and have become, far too politically powerful.

#143 always priceless! on 09.12.14 at 9:14 am

#46 Geoge

Let me guess. 24. Live at home. Mom does your shorts. MA in Egyptology. — Garth

WOW (Waugh Out Woud (lol in the voice of Elmer Fudd)). Thanks Garth

#144 T.O. Bubble Boy on 09.12.14 at 9:16 am

@ #134 CP on 09.12.14 at 7:59 am
http://business.financialpost.com/2014/09/11/china-buyers-vancouver-housing/
————————————-

Another HAM story with quotes from realtors… but, this one is from Reuters (vs. the Vancouver Sun or other local papers who rely on realtor ads), so it is a bit more credible.

Is there any reason why governments wouldn’t put a foreign buyer’s tax on RE purchases?

Seems like the Cities/Provinces/Feds are providing all of the services to these properties, but in many cases no income tax flows through to help pay for it?

#145 Capt. Obvious on 09.12.14 at 9:54 am

You know people, even if it takes 5 years to get to interest rates 2% higher than today’s, people will still have tons of debt that needs to be paid at that higher rate. People are not paying off 500k, 600k or more loans in 5 years. In fact due to the wonders of amortization, they’ve barely made a dent.

Personally, once I went to university I never really came home, and though my parents paid for first year of undergrad, after that we split 50/50. It’s important to have some skin in the game, so to speak. I can’t imagine living my 20s under my parents’ roof.

#146 Joe Average, Vancouver on 09.12.14 at 9:59 am

Molson Canada ( a US company) in Mississauga just laid off 80 people, all quality job. They have plans to close Molson in Vancouver that sits in one of the most expensive hoods in Canada ( Kitsilano ). Most production moving to US….cheaper wages, real estate and so on. The trend is clear for US companies in Canada….bring the jobs back to US of A.

#147 Steve French on 09.12.14 at 10:14 am

Dis one’s for da Weekend Single Malt Drinking Filosofers Mr. Smokign Man & Sir Garths-a-Lot:

….

“I have realised that the past and future are real illusions, that they exist in the present which is what there is and all there is.”

– Alan Wilson Watts

Read it & weep, bitchez.

#148 Holy Crap Wheres The Tylenol on 09.12.14 at 10:29 am

#131 Porsche on 09.12.14 at 6:22 am
Annual immigration us 0.7% of the population, without which we would have decline. — Garth
………………………………………………………………………
This country is getting pretty brown pretty fast

Normally I delete comments like this. However, because this is your last, it will remain as your marker. — Garth
_____________________________________________

Agree 100% White, black, brown, yellow, hell I don’t care if your green or purple. Immigration is what built this country, however multiculturalism is NONE of the Governments Freeking business and should never have mandated any inclusions regarding it. All it does is divide us up into segments by pushing your heritage forward first before your citizenship as a CANADIAN first, always! Hell my wife is Irish and has a Spanish heritage. I come from Scottish and English heritage, I don’t go out and force everyone to listen to the garble that goes on from where our ancestry is from. That’s for us to keep behind closed doors. We can embrace it and talk about it but I’m sure my relatives came here 150 years ago to start fresh and embrace a new life. MULITICULTURIZEM SUCKS

#149 Holy Crap Wheres The Tylenol on 09.12.14 at 10:33 am

Wow I just did a Smoking Man on my last post.

Spelled it wrong and hit enter too fast. Should have said
Multiculturalism sucks when forced down our throats by the government!

Getting angry and old!

#150 All markets are now risky on 09.12.14 at 10:41 am

Re: “‘If you start looking at your house as an investment class, as something else you should be investing in rather than the stock market, you run into the danger of being exposed to some of the excesses going on in the system.'”

Unfortunately, as a result of easy money policies worldwide, those same excesses exist in the stock market too. There’s a bubble in the real estate market, the stock market, and the bond market. In the face of financial repression, and the desperate search by investors for yield, people have taken on ever greater amounts of risk in almost all investment classes. None of these inflated markets will end well.

The S&P 500 is at 16.7 times earnings – slightly above the historic average. A correction of 12-15% seems likely if the PE ratio were to restore. Hardly the same overvaluation as real estate, it would seem. — Garth

#151 Holy Crap Wheres The Tylenol on 09.12.14 at 10:46 am

Those who want twentysomethings treated as dependent children invariably have economic reasons. No jobs, they say. The kid’ll be homeless. So adult children end up like giant eight-year-olds, assuming they have no mobility, freedom or personal responsibility. Hard to see how helicopter parenting does much for experience, which is the foundation of maturity.
____________________________________________
Seen it all, my neigbours kept their two boys in the basement for ten years after school. Firstly they did not progress any further with their education, so high school only for one and other never did graduate. That limited their options right away. Then they paid for their cars, insurance, food and free rent. All they did was to float from mediocre job to mediocre job on and off for years. I suggested once to my neighbour that the one son appears to have a talent for landscaping and he should start a small business. Hell I even offered to give him his first contract and my company’s location. Nope his father said hes not going to do that manual labor. OK that was my Que to shut up. The son did eventually get into that business with someone else and is now considering starting his own company once he saves enough cash. I quietly told him to let me know and I will give him his first contract! The other son still on and off unemployment. The parents still supply room and board plus a freaking Lexus for him to drive. Enabling to the max will kill their kids. Holy $hit don’t they get it?

#152 Shawn on 09.12.14 at 10:50 am

Ingloriously Flawed Logic

From Inglorious at 142

public sector compensation is paid for with taxes. In fact, all wealth is generated by the private sector, either directly or indirectly. Even when the government builds valuable infrastructure such as roads and bridges, no matter who does the actual work (public or private workers) the necessary funds come from taxes. Even if the initial funding comes from the issuance of bonds, ultimately the debt is serviced with taxes.

*******************************************
Can anyone see the logic flaws in this?

Does a carpenter employed by the private sector create wealth while a carpenter employed by government never creates wealth? What if the pay and benefits and productivity were the same?

#153 Jeff in Moose Jaw on 09.12.14 at 11:08 am

I enjoyed this interview from 2008 with John Bogle (Mr Vanguard).

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

#23 crossbordershopper
My father says the same thing – came to this country with a few dollars and couldn’t speak English; only difference now – decades later – he can speak English.

#154 whocares on 09.12.14 at 11:29 am

The S&P 500 is at 16.7 times earnings – slightly above the historic average. A correction of 12-15% seems likely if the PE ratio were to restore. Hardly the same overvaluation as real estate, it would seem. — Garth

Aren’t you calling for about the same 15% correction in RE?

As a prelude to a years-long decline. Equities will likely correct and recover within a few months. More importantly, financial assets are 100% liquid. Real estate turns illiquid in a downturn. Consequently, elevated risk. — Garth

#155 jess on 09.12.14 at 11:35 am

NEWARK, N.J. – A New Jersey man pleaded guilty today to orchestrating an eight-year scheme to falsify employment certifications to facilitate the illegal entry of Indian immigrants into the United States and to filing a false tax return.

U.S. Attorney Paul J. Fishman of the District of New Jersey, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Chief Richard Weber of Internal Revenue Service – Criminal Investigation (IRS-CI) and Director Bill A. Miller of the State Department’s Diplomatic Security Service (DSS) made the announcement.

Sandipkumar Patel, 41, of Edison, New Jersey, pleaded guilty before U.S. District Judge William H. Walls in Newark federal court to conspiring to defraud the United States and to filing a false federal income tax return. Sentencing is scheduled for Jan. 6, 2015.

According to court documents filed with the plea agreement, from 2001 until 2009, Patel sponsored the visa applications of Indian nationals by falsely claiming to provide employment for them in the United States. Patel falsely certified on the visa applications that he would employ the immigrants in various technical fields at several New Jersey companies, thereby facilitating their illegal entry into the United States. Over the course of the scheme, immigrants paid Patel thousands of dollars for the false certifications to fraudulently secure the visas. To disguise the scheme, Patel issued payroll checks and other payroll forms. Patel required the immigrants to return the money from the checks and also to reimburse him for his payroll tax expenses. Patel used the fraudulent pay stubs and payroll checks to support false applications to extend the visas, and Patel charged the immigrants fees for the visa extensions.

As a result of falsely carrying the immigrant employees on his payrolls, Patel overstated his payroll expenses on his federal income tax returns by more than $1.4 million over four years, under-reporting his tax obligation by over $400,000 for those years.

This case was investigated by IRS-CI and DSS.
========

http://www.irs.gov/uac/Examples-of-Mortgage-and-Real-Estate-Fraud-Investigations-Fiscal-Year-2013
to recruit individuals who would be willing to purchase condominium units. These individuals were promised a “buyers’ incentive,

=========
Developer Sentenced for Orchestrating Massive Mortgage Fraud Scheme
On December 19, 2013, in Boston, Mass., Sirewl R. Cox was sentenced to 150 months in prison and three years of supervised release. On November 15, 2013, Cox was convicted of wire fraud, bank fraud and conducting an unlawful monetary transaction. According to court documents, in 2006 and 2007, Cox identified multiple-family buildings for sale and recruited straw buyers to purchase the buildings. Cox and others then recruited straw buyers to purchase individual units in buildings that Cox controlled. The straw buyers’ financing for the purchases was obtained by submitting mortgage loan applications and other documents that falsely represented key information. Deals were closed with HUD-1 settlement statements that falsely represented that straw buyers had made down payments and paid other funds in connection with the property transactions, and falsely represented how the proceeds of the mortgage loans were disbursed.

#156 45north on 09.12.14 at 11:35 am

Porsche : This country is getting pretty brown pretty fast

Normally I delete comments like this. However, because this is your last, it will remain as your marker. — Garth

you know in a social environment this comment would be in-appropriate. People would feel uncomfortable even if nothing pejorative were meant.

I’m sure Porsche meant to say “there have been vast changes in the Canadian demographic”.

A total of 19% of the population is ‘visible minority’, which means 81% isn’t. Deal with it. — Garth

#157 jess on 09.12.14 at 11:39 am

Sandipkumar Patel, 41, of Edison, New Jersey the fraudster
http://www.nj.com/middlesex/index.ssf/2014/09/edison_man_who_ran_for_council_on_former_mayors_ticket_admits_visa_fraud_scheme.html

#158 Inglorious Investor on 09.12.14 at 11:41 am

#152 Shawn on 09.12.14 at 10:50 am

“Does a carpenter employed by the private sector create wealth while a carpenter employed by government never creates wealth? What if the pay and benefits and productivity were the same?”

Without private sector wealth funding public sector costs the public sector could produce NOTHING. Therefore, as I said, ‘all wealth is generated by the private sector, either directly or INDIRECTLY.’

Learn to read. It might help.

#159 Shawn on 09.12.14 at 11:50 am

Ignorant?

Inglorious suggests that I “Learn to read. It might help.”

*********************************
Inglorious, learn not to be ignorant (in both senses of the word).

#160 Keith on 09.12.14 at 11:52 am

Great.

Boomers take the jobs. Consume massive amounts of health care. Inflate house prices.

And then blame the kids.

Garth, I thought you were better than this.

You have no idea what the job market is like for the young. My brother graduated with a degree in aerospace engineering. Then went on to do a Master’s in Biomechanical engineering. Took him over a year to find work in Toronto in 2009. Lived at home and worked as a fedex driver to pay the bills. He really would have been homeless if my parents had insisted he support himself after school.

You want to see how really screwed over the job market is for the young? Look at the market for teachers. Boomers just won’t leave. And there are teachers in their 30s living at home, trying to survive with whatever work they can, taking all kinds of part time jobs. I saw it first hand. Ex-gf was 34 years old and living at home after 5 years teaching. And she worked well over 40 hours a week across several jobs including teaching. But could not make any sort of actual living wage. It was heartbreaking to watch her go for interview after interview and constantly struggle to find other contract work just to get by.

My fiancee is also a teacher. Left the profession after struggling to get a proper career going. Only year long contracts at private schools. No real job at a school board. Went back to school for HR. Now job hunting. Lives on her own. 31. Still supported by her parents a fair bit.

I won’t even get into the new trend of unpaid internships. This is the reality of Gen Y today. They work hard, far harder than their parents. Don’t get paid for it. Heck, I doubt most Boomers could cut it at the internships that these kids do.

Across any actual profession, from lawyers to accountants to zoo keepers, the Boomers have taken all the choice jobs and refuse to retire. Then boomers like you have the gall to insist that they get thrown out on their bums. You sould like an “Old Economy Steve” meme:

http://knowyourmeme.com/memes/old-economy-steven

The Boomers have royally screwed over Gen Y. The very least they could do is give them couch space while they hunt for work.

ps. To all those who give the standard line about moving to Alberta. Engineers are not somehow totally interchangeable. You can’t use an aerospace engineer in the oil patch that easily.

I had no idea FedEx drivers were homeless. — Garth

#161 NEVER GIVE UP on 09.12.14 at 12:07 pm

#111 WhiteKat on 09.11.14 at 11:08 pm

I am curious as to why you cannot travel to the US on your Canadian Passport.
What about all the dual Citizens in Canada?
Why is it they are able to go to the USA?

#162 45north on 09.12.14 at 12:08 pm

AfterTheHouseSold: We visited the National Memorial Site of Flight 93 in Pennsylvania.

thanks for that

Victoria Real Estate Update: your charts suck! they just do but I really appreciate your posts, they sum up a lot of observations and I do like your comparisons to US real estate. They coincide with what I’ve seen in the US. Your narrative is easily understood although wordy.

[email protected]

Andrew Woburn: Those twenty-eight pages tell a story that has been completely removed from the 9/11 Report

interesting

The Reel Me: Find something called a Roscoe terminal and you can search properties by address, name, parcel number etc.

1973 called and asked for them back
http://en.wikipedia.org/wiki/Time-sharing_system_evolution

nonplused : So now they have a new mortgage on a house they don’t collect rent or utilities on, or at least not very much of it, and a financed disco wagon that self levels.

pretty funny

WhiteKat : She likes to gamble, and is good at it. I would watch.

your song
https://www.youtube.com/watch?v=HjDpKeiYxOU

Saskatchewan Skeptic : I can’t believe the amount of fake, entitled people who scoff at renters.

don’t let the bastards get you down. One day you’ll wake up, people will respect you in a new way and you’ll say “I don’t think I want to buy after all”

surpised: At 11 he left the house to study in one school

you’re a better man than I am Gunga Din
http://en.wikipedia.org/wiki/Gunga_Din

Don Derc : 911 was an inside job.

funny what you can learn watching telly in an hotel room

#163 Keith on 09.12.14 at 12:09 pm

“I had no idea FedEx drivers were homeless. — Garth”

Fedex drivers with tens of thousands in student debts to pay back might be…..

Try not to hyperbole. Just sayin’. — Garth

#164 Setting the Record Straight on 09.12.14 at 12:20 pm

@Kenchie. 95

I owe you three responses. The last two will come tomorrow.

But prior to the issue, I thank you for the links. They are very interesting.

On Friedman criticizing Mises, in the
Reason article, I could only find personal criticisms of Mises’ intolerance.

Even if there are substantive criticisms of Mises by Friedman, I point out the following.

Friedman identifies himself as a liberal (we would say classic liberal) His self identification does wander however because later he seems himself as a libertarian.

He said he believes the Federal Reserve should be abolished, that income tax withholding should be abolished in peacetime, and that he does not favor compulsory education. If a person here suggested the same, it would generate accusationsfrom our host and others that we were wearing tin foil hats.

I ignore the dissonance between these ideas and his work on education vouchers, withholding taxes, and rules to run the Fed by.

Friedman also noted that Hayek self identified as an. ‘Old Whig’ not a libertarian. This should be kept in mind when we discuss Hayek and Mises.

#165 Longshorebore on 09.12.14 at 12:24 pm

To many kids with humanities and arts degrees, There is real work to be done out here in BC if your willing to work there is a job for you don’t need to hear anymore whiners with fluff degrees bitching they can’t get a job as a high school teacher . Strive a lil higher in uni go for engineering and sciences or pick up a hammer. Bunch of wusses

#166 Rational Optimist on 09.12.14 at 12:38 pm

136 Ret on 09.12.14 at 8:11 am

Ret, I am pretty sure I am in your ward in Hamilton. If you can register (you’ve got a couple hours yet), you’ll have my vote.

#167 Holy Crap Wheres The Tylenol on 09.12.14 at 12:43 pm

#140 crowdedelevatorfartz on 09.12.14 at 9:09 am
Good old Ayn Rand
A sci-fi hack that couldnt even spell her first name right( or is that “write”? Smoking Man, help me here).
But even Elron Hubbard (another sci-fi hack) was smart enough to turn his novels into a “religion”.
Both “authors” used their self importance and the stupidity of the masses to create “movements” that sheeple to this day still spew as “gospel”.
Kenchie, feel sorry for the delusional, for they know not what they speak.
Back to you Ann “gold is my God” Randy.
____________________________________________

Smoking Man is at the Casino in Niagara Falls already probably writing his book as we speak. I’m actually looking for ward to seeing it on the shelf one day. Holy $hit its got to be chalk full of stuff we never even could conceive!
This seams appropriate for the huddled masses who follow a religious cult leader blindly.
http://www.youtube.com/watch?v=_hBpkCQDprU

#168 Sheane Wallace on 09.12.14 at 12:46 pm

How is $1.75 trillion in mortgage and personal debt plus maybe 1 trillion in corporate debt possible when all deposits are 1.2 trillion?
Just asking. Where is the other 1.5 trillion coming from?
………………………
‘Just as a bad cold leads to pneumonia, so over-indebtedness leads to deflation,” wrote the US economist Irving Fisher in 1933.
But when the debt was piling on there was inflation, correct? Why not deflation to offset the inflation?
Trying to present inflation as reason and necessity for growth is pathetic.

#169 Panhead on 09.12.14 at 12:49 pm

Was recently at a dinner party with my wife and her co-workers along with their spouses. A mix of ages. As we were sitting at the dinner table after consuming a wonderfully prepared dinner I looked around. Everyone that was 50 or up was engaged in conversation. The younger ones were all texting. At the table. Couldn’t believe it so brought it up in the conversation. They all thought it was just normal. I thought it was rude. Must be getting old I guess.

#170 Sheane Wallace on 09.12.14 at 12:55 pm

#160Keith

You have seen nothing yet.
Kids out of top universities 10 years from now might have 20/80 chance of prosperous career at Starbucks or Wallmart if they get lucky and that old timer barista or greeter dies. Cancer rates are up so there is hope.
Finding a job would be equivalent to winning from the lottery.
Mortgage debt, education debt, car loans debt, you name it. there is debt everywhere and we can not afford to shrink it as it will reduce growth. Debt as driver of growth instead of investment and productivity. Wow. It looks like terminal cancer in its last stages.

#171 All markets are now risky on 09.12.14 at 12:57 pm

“The S&P 500 is at 16.7 times earnings – slightly above the historic average. A correction of 12-15% seems likely if the PE ratio were to restore. Hardly the same overvaluation as real estate, it would seem. — Garth”

Fueled by years of QE, the lowest interest rates in history (emergency interest rate conditions, severely negative real rates), nosebleed levels of margin debt, an extremely optimistic bull-to-bear ratio. I could go on. Nevertheless, this is a setup for more than a simple correction, a perfect recipe for a cascade much lower. Bottom line: current scenario is high risk, low reward.

#172 Nemesis on 09.12.14 at 1:03 pm

#Quote’OTheDay… #HowMeenaIsThat? #WhatAPartyPooper!

“If you can afford to come and buy a million-dollar home, and leave it empty for eight or 10 months at a time, then hey, you can afford to pay more, a surcharge, or a surtax.” – Meena Wong

[SCMP] – Vancouver mayoral candidate Meena Wong proposes tax on vacant homes: Owners who leave their expensive homes empty most of the year should be willing to pay surcharge, Wong says

http://www.scmp.com/news/world/article/1590864/vancouver-mayoral-candidate-meena-wong-proposes-tax-vacant-million-dollar

#173 Mister Obvious on 09.12.14 at 1:03 pm

#128 Blobby

“My parents “encouraged” me to leave home at 16 and fend for myself.”
——————————

Similar story here. At the age of 19, my father’s message to me was this approximately this:

“Either prove you are on a path to independence through education which I will finance provided a reasonable job prospect exists… or… hit the road and make your own way, son.”

Perhaps foolishly, I chose to hit the road. But understand me. Dad wasn’t “my buddy”, he was my father. Big difference. The prospect of living under the old man’s roof any longer was unbearable to me. Not that he was evil (he was a fine man and a war hero as far as I’m concerned) but it was like living with the day-shift foreman down on the shop floor.

I did low-paying grunt work for the next decade or so then paid my own way through school. During that time I shared rent in low end accommodation with as many as three other fellows on their own quest for would have chosen to hang with in any other independence. I can’t say they were always people I circumstance.

I guess was the kind of guy who prefers it the hard way although I have corrected that foolish attitude in my old age.

The one thing I have the most difficulty conveying to young people today is how fierce the drive for independence was among my generation.

Even if it were possible, sitting in one’s parent’s basement waiting for life to somehow begin was seen as a the seventh level of hell by all my contemporaries.

#174 Mister Obvious on 09.12.14 at 1:07 pm

Correction of butchered paragraph in previous post:

I did low-paying grunt work for the next decade or so then paid my own way through school. During that time I shared rent in low end accommodation with as many as three other fellows on their own quest for independence. I can’t say they were always people I would have chosen to hang with in any other circumstance.

#175 Mixed Bag on 09.12.14 at 1:15 pm

For Ayn Rand Army and others interested:

Ayn Rand’s life, summarized in a web comic:

http://activatecomix.com/162-1-1.comic

I don’t know enough to pick sides, posting for your enjoyment.

#176 CalgaryRocks on 09.12.14 at 1:16 pm

#126 TakingResponsibility on 09.12.14 at 1:58 am
What’s actually wrong with inter-generational living? I think it sad that birth, child-rearing, education, old-age, and even death have become Outsourced – institutionalized. Actually, most of us spend our working years in some institution or another. We are all institutionalized debt slaves.

Divide and conquer. Each generation has to start from scratch. Makes for a docile and scared worker. Good for the bottom line.

Some cultures are different but in mine at least, people get jealous and will try to cut you down if they see you rise above them. Help you? Please. The worse boss I’ve ever had was the same nationality I am. She did everything to keep me down. That’s OK. I returned the favor.

Now, there is another side of the coin. Sometimes kids are just lazy and entitled. I worked for a startup. Was employee #3, yey! The CEO’s son was a college flunkie and a pot head.

But daddy kept saying that little Johnny (25ish) flunked out of college because he was too smart and was getting bored. You see, little Johnny wanted to study Computer Science but just couldn’t handle the slow pace of a college education. In fact, couldn’t even register for class in time. LOL.

So, given that college was out of the question (too smart) , his love of Computer Science and the fact that his dad owned a freaking startup in Silicon Valley, you would assume that little Johnny would spend all of his days working with his dad, learning from ‘stupid’ people like me with 20 years of experience and 2 college degrees (that’s how stupid I am).

Oh please. Not once, did he show up in the office the whole time I was there.

He still lives with mommy and daddy. They just got the daughter (23) to move out. She’s a waitress in San Jose.

#177 Sheane Wallace on 09.12.14 at 1:20 pm

#171 All markets are now risky

Not if you look at long term.

You are missing one very important point – velocity of money, it is at historical low. Once it picks up (and pick up it will) we will see some inflation (it could be significant) but also even higher growth in the corporate earnings.
Most of the quality internationals that pay dividends are very well positioned on the world markets, so expect continues strength and growing earnings (the rest of the world actually grows).

Holding money in cash or bonds except for emergency cash or short term TIPS when inflation picks up is stupid.

So thank you very much I will keep my stocks. Even if the market corrects 30 % (chance of 20-25 %) a well diversified dividend based portfolio would shrink only by 10-12 %. The cost of selling now and then buying again at the eventual bottom (presumably you get it exactly right) is not justified by the risk.

#178 Nature vs. Nurture on 09.12.14 at 1:24 pm

OMG…you fools are showing your age…if you are 50 or over…you have benefited from a different experience than the succeeding generations.

You were raised by parents that experienced the great depression, a world war and a 1950’s conflict(that still simmers today and constantly threatens to explode).

You always knew where you stood in relation to the larger world, because competition in it’s most basic form existed. To wit, “Sports Day”, “British Bulldog”, “Dodge Ball” and other vicious games that we children just made up on the play field, with rules that we defined and actions that were allowed or not.

At my elementary school a game was devised and played on the field(farthest away from the prying eyes of adults) called “Creamo”, anyone student could play, all were welcome, the only stipulation was you had to waive your right of complaint when something happened to you.

“Creamo” was a hodgepodge of rugby, football, soccer, dodge ball, running, kicking, throwing the ball through the goal posts. Goals were important but if someone really got “creamed”, well that was excellent too. The scrum was where the vicious action occurred and each and every person had to decide if they belonged in the scrum.

Every person that went on the field acknowledged the inherent risk of getting “Creamed” and would deny all knowledge that such an activity actually existed.

It wasn’t exactly “The Lord of the Flies”, but it was good training. Given the choice of “Hopscotch” or nearly killing each other, we chose to play the maiming game.

Why? Because children are just little animals and the “basic instinct” is inclined towards wildness and animal behavior. Society’s mandate is and has been to integrate this energy into more productive activities. To make productive citizens out of the “barbarians”.

It is through our “barbarian” behavior that we, in time, begin to understand and exercise control of our inate drives. This used to be accomplished by a maiming injury acquired during play or by corporal punishment doled out by adults for partaking in maiming play.

The net result was the experience of temporary pain, which conditioned us for future endeavours, some of which would also leave physical, emotional and psychic marks.

That’s Nature.

In life, all good things must come to an end, and eventually the “adults” found out just what the hell was happening out there and stopped our fun.

That’s Nurture.

Succeeding generations have been “nurtured”, they will never know the joy of “creaming” a smaller guy on the field(because that’s always the rule, if you want to succeed, never try to “cream someone outside of your weight class).

In removing the painful experiences of childhood, we have created a class of individual that is currently incapable of exercising their own “basic instincts”.

These individuals are not to be blamed for something that they were not allowed to experience.

You better hope that they don’t figure out just how rigged the game is.

Bad behavior at 8 or 9 is one thing…bad behavior in your twenties is called…A Revolution.

#179 gladiator on 09.12.14 at 1:25 pm

@171 All markets:

That’s why I converted all my defined contribution pension holdings into money markets recently. It’s not much – under 100k – but there is too much risk for the (potential) reward left in the market.
I may be gambling, but since I do it to protect my assets and not to speculate, I agree to pay the price of forgone higher returns for the security that I got.

#180 Sheane Wallace on 09.12.14 at 1:26 pm

Lets not forget also that the historical P/E are from time when alternative investments (government bonds) actually paid positive interest that was much higher than the zero or even negative interest rates policies these days.
In absence of incentive to invest in bonds the stock markets will keep going higher and higher. Dow 20 k is certainty, I am thinking more of Dow 30 k in the next 3-7 years.
Plan accordingly.

#181 WhiteKat on 09.12.14 at 1:28 pm

@#161 NeverGiveUp

By US law, Canadians born in the USA, who have not formally renounced US citizenship, are required to travel to USA on an American passport despite holding a Canadian passport.

Until recently, US border guards rarely enforced this law, but this is starting to change with USA’s recent attempts through FATCA to enforce citizenship based taxation on non-US residents. Please warn any Canadian friends who were born in USA, travelling on a Canadian passport, that they may be queried at the border as to whether or not they are tax compliant with the IRS.

USA requires annual tax reports and ‘Foreign Bank Account Reports’ from those it considers to be ‘US persons’ (birth in USA, one or more American parents, snowbirds who overstay, green card holders) even if they do not live in the USA and do not earn any US sourced income.

#182 Drug Ford (aka Al Haig) on 09.12.14 at 1:32 pm

Okay everybody,

Settle down, I am in charge here.

More to follow, Ford Nation!!

(Garth, your regular deliveries will continue so don’t worry. There will be a slight price premium)

#183 Sheane Wallace on 09.12.14 at 1:34 pm

bonds are actually called ‘return free risk’.

Only government debt. — Garth

#184 Mark on 09.12.14 at 1:37 pm

“ps. To all those who give the standard line about moving to Alberta. Engineers are not somehow totally interchangeable. You can’t use an aerospace engineer in the oil patch that easily.”

Indeed, and great point. There’s huge unemployment/underemployment in Canada’s tech sector left by the departure of Nortel. A large number of engineers with skills more specific to the telecom sector are still running around Canada, unemployed or underemployed, glutting up the resume submissions. Even relatively basic minimally advertised positions in the telecom engineering sector are receiving in excess of 50 resumes from highly qualified and often extremely talented individuals.

Its good that government didn’t bail that bloated (and somewhat fraudulently managed) Nortel pig out in the early 2000s, but inflating almost a trillion dollars worth of CMHC subprime insured mortgage debt into the housing market wasn’t really a good answer either.

#185 Pre-Retiree on 09.12.14 at 1:38 pm

RE #131: Comment from Porsche in response to Garth:

Annual immigration us 0.7% of the population, without which we would have decline. — Garth

………………………………………………………………………

This country is getting pretty brown pretty fast

_______________________

That was a terrible comment from Porsche that should have been deleted but I guess Garth left it there for him/her to hang him/herself. I am ashamed to be Canadian and white when I see/hear/read things like that. I work everyday with so-called brown people who, in addition, to be hard working, smart, humorous, attractive people, contribute so much to this society. What does the skin color have to do with anything?? I can see this idiotic way of thinking is diminishing in the new generations, and that is a good thing. My children seem to be virtually color-blind. Nothing to do with this blog except for the fact that people who have not done too well in life (even if they drive imaginary Porsche) like to blame other people for their misfortunes. Like coddled children/adultettes (now we are back on the topic of the blog). Blame the renters, the owners, the public sector workers with fat pensions, the CHMC, Mark, whoever you want but it will not change the fact that you are the one who made the decisions that brought you where you are now. I try to remain a silent observer and learn something, but that was really too much to let it go unnoticed.

#186 devore on 09.12.14 at 1:42 pm

#21 Casual Observer

This was written during a time when the US was on the gold standard. The US Gov’t could not have engaged in the same amount of money “printing” that is going on throughout the world today.

Of course they could, and they did. The increase in monetary base during that time was absolutely unprecedented in US history. And what do you think caused the credit bubble of the 20s anyways? Newly found gold deposits?

#187 Shawn on 09.12.14 at 1:43 pm

FedEx Drivers

I had no idea FedEx drivers were homeless. — Garth

******************************************
Good point. Actually FedEx drivers are usually independent contractors who own their own trucks. Some do hire employees do drive as some own multiple trucks and routes.

I have heard also that a UPS driver can be a great gig.

The harder and faster they work the more they get paid… They are not stuck in an office. They are free of bosses most of the day.

Under employed teachers and Egyptologists might want to check it out.

Definitely an honest way to earn a living. Not much chance to slack off without getting noticed.

#188 bdy sktrn on 09.12.14 at 1:43 pm

doug ford to replace rob on TO mayor ballot.

if the ford bros can’t crash 416 than nothing can!

#189 devore on 09.12.14 at 1:47 pm

#24 Doug in London

These Boomer parents should know better. Having seen real estate corrections before (I remember one in the early 1980s and another in the early 1990s) they should be advising their Millennial kids that another is long overdue whether they live with their parents or not.

We had one in 2008, before it was arrested by 0% interest rates and opening of mortgage floodgates. This is the problem; people have the attention span of a squirrel.

#190 JSS on 09.12.14 at 1:49 pm

#160 Keith on 09.12.14 at 11:52 am

“Engineers are not somehow totally interchangeable. You can’t use an aerospace engineer in the oil patch that easily.”

Complete BS from #160 Keith.

Engineers ARE interchangeable based on their process-thinking education. It’s not the engineering degree specialization, it’s the competencies that have been learned after graduation.

#191 miketheengineer on 09.12.14 at 1:50 pm

#160 Keith:

You are 100% correct.

You said, “Engineers are not somehow totally interchangeable”

In 2009, when the auto industry collapsed in Ontario, I thought about going out west to Alberta. I had no contacts out there, no connection, no family. So I applied to whatever I could find on the net that was advertising. I had a Chemical Engineering Degree and a second one in Science (Chemistry), and 15 years experience in Auto Manufacturing. I could not get any responses to my applications, none. In the year that I was out of work, I sent out around 2000 applications (or more I lost count).

You see in Alberta, they have programs, like “Petroleum Engineer” etc, and when they advertise for a position…they are very specific and want the 10 out 10 candidate…or the guy with the experience with “rotating ” equipment, and they want like 10 years experience as a Class 4 Operating Engineer (or starting up process units). So they end up taking on the guy from the Arabic countries that come here is newcomers who have this experience working in Saudi Arabia or elsewhere, that has this 10 years experience.

It appears to me that manufacturing experience means nothing to the oil and gas industry.

You see I was labelled the “auto guy” and they were looking for the “oil guy”. I would have had better luck if I was welder or heavy truck driver.

So I stayed in Ontario….Woo Hoo for me!

p.s. I am gainfully employed now in manufacturing in Ontario, with a wonderful boss, and decent co-workers, with a job that actually has benefits. I thank GOD, every day that I walk into this building for my job.

#192 Arfmooocat on 09.12.14 at 2:00 pm

DELETED

#193 jess on 09.12.14 at 2:01 pm

perhaps on is housing a “Renegade” in their basement!

http://www.youtube.com/watch?v=0NRYLzWovtk

#194 gut check on 09.12.14 at 2:11 pm

“Every boomer I know has spent most of the lives and earnings on ensuring their kids have the best of everything and never wanting for anything. ”

This is funny because I was about to write in to state that I, as the child of Boomers, probably have gone a little too far in giving time and money to my own offspring because I had so little of both from Mom and Dad and Step Dad. I did have a pretty good time of it until I was 9 at which point all hell broke loose with all the grown ups deciding that the family thing was a drag. I had to grow up & fend for myself and my brother. We still had a roof over our heads and food but not much else. (Mom, are you reading this? I hope not. … On second thought you’d never recognize yourself anyway)

Having parental units kind of abandon the family at such a young age scarred me. (Can ya tell?) – as a result I do work very hard and am careful with money. But also as a result I hate to see my own kid left to dangle – if my young adult needs something I do what I can to help.

Finally there is the very real, very relevant point that the economy is in the sh*tter. Housing and food cost a tremendous chunk of a person’s income if he or she is making starter wages. Add in transportation and perhaps a student loan payment and there’s really no hope except to get used to doing the same thing every day until you die.

I don’t have to let my kid do that and so I won’t. Been there. Struggled out of it (sorta) and am not enough of a queen bitch to watch someone I love hurt that way.

#195 Smoking Man on 09.12.14 at 2:26 pm

Feeling like my dog just died,

Stay strong Mr Ford…

#196 A Yank in BC on 09.12.14 at 2:54 pm

#171 All markets are now risky

Trying to time the market.. are we?

History has shown.. a fool’s errand.

#197 Mark on 09.12.14 at 3:10 pm

“Complete BS from #160 Keith.

Engineers ARE interchangeable based on their process-thinking education. It’s not the engineering degree specialization, it’s the competencies that have been learned after graduation.”

Sure, we know that, as engineers. Too bad HR personnel, who are in the position of screening the resumes and act as ‘hiring managers’ don’t. This is why so many jobs apparently go unfilled, while people who could fill them complain that they don’t receive legitimate consideration.

Actually asking the on-the-ground engineers what skills and what qualifications are needed to really do a job seems to be an after-thought these days. I remember during the dot-com boom, lots of Mechanical, and even Civil Engineers easily found work in the software/computing field, but these days, it seems employers are notoriously inflexible and not really motivated to fill empty positions. Instead, holding out for TFW’s or for a ‘perfect’ yet desperate (for a low salary) candidate to come along.

#198 Keith on 09.12.14 at 3:12 pm

@JSS

I share the same undergrad as my brother. Explain to me what work someone with in-depth education and internships in aerospace structures and modelling of heart valves would do out in Alberta.

Sure, you can apply your skills to solving most engineering problems. But whether an a petroleum equipment manufacturing company will actually recognize the usefulness of your skills is an altogether different matter.

See post 191 by the miketheengineer. Stories like that abound among engineers. And his education is much closer to what is required in the O&G sector than my brother was.

@Miketheengineer

Non-engineers simply don’t get it. The number of qualified engineers out there and the number of qualified foreign trained engineers coming here. Very difficult for a young engineer to start out. And this is after hearing all the lectures about how an Arts and Science degree is useless and how engineering leads to good jobs. Most BBA/BComm grads I know are better off than most engineers I know. Far less workload, in university, and at work.

Moreover, if you did get a job, they’ll just use your supposed lack of experience to dramatically underpay you. Starting salary for aerospace engineers at Bombardier is around 50K. Most business majors who get a decent bank job downtown make more. Hot realtor babes can pull in six figures.

Canada hates engineers and technical talent.

#199 Holy Crap Wheres The Tylenol on 09.12.14 at 3:26 pm

#195 Smoking Man on 09.12.14 at 2:26 pm
Feeling like my dog just died,
Stay strong Mr Ford…
______________________________________

OK Smoky heres the scoop, Rob out as Mayor, Doug in as Mayor, Rob going for council, Michael Ford — or “Mikey,” as his uncles Rob and Doug call him is on his way to becoming a Toronto city councilor as well.
So there go have a beer and chill. There’s a whole lot of Fords parked in the driveway.

#200 CPG on 09.12.14 at 3:49 pm

# 186 Devore.

Good post.

#201 cash-hater on 09.12.14 at 4:03 pm

#53 said….
PS: My family is a microcosm of the cultural dichotomy: my Western European parent was happy to kick us out at age 18, but my Asian parent said no, it’s a waste of money. Funnily enough, my Euro parent blamed my Asian parent for being too soft on us!

WHICH IS WHY IT IS DIFFERENT HERE AS MUCH AS I HATE TO ADMIT IT.

#202 TheManwhoStaresatSheeple on 09.12.14 at 4:06 pm

Just one link:

http://www.showrealhist.com/yTRIAL.html

#203 Exurban on 09.12.14 at 4:14 pm

Canada hates engineers and technical talent.

It certainly looks that way. I’m an IT worker who was fortunate to get into a public sector position relatively late in life. The working conditions of IT people in corporations have been steadily degraded by outsourcing, immigration, and the TFW program.

Annual immigration us 0.7% of the population, without which we would have decline. — Garth

This is not accurate. We have a population of probably not more than 35 million (we can only estimate– I have learned as a public sector worker that there are no truly reliable figures on stuff like this). Every year more than half a million newcomers enter Canada. You have the 265,000 “regular” immigrants, you have approximately 200,000 “Temporary” Foreign Workers, you have about 100,000 “international students”, and there surely must be some illegals. BTW the immigration and student figures are readily searchable on federal government websites, and TFW figures have been reported many times by news media. Commenters on this site have linked all this stuff before.

(There are also millions — yes, millions — of people who have Canadian citizenship and passports living outside the country in places like Lebanon and Hong Kong. ) So while the exact figure cannot be determined from the low-quality data available, it’s clearly more than 0.7% a year.

The notion that without this influx “we’d have decline” is also mistaken. Heavy immigration more likely depresses family formation in the host population.

What a dandy collection of anonymous paranoid xenophobes we have on this site. — Garth

#204 Macrath on 09.12.14 at 4:22 pm

@Miketheengineer
I had a Chemical Engineering Degree and a second one in Science (Chemistry), and 15 years experience in Auto Manufacturing
—————————————————————-

What about the lithium ion battery revolution and companies like Tesla, electric bikes ,scooters, solar ,wind etc…. One would think there is plenty of opportunity and demand for engineering expertise ?
Perhaps not in sticks and stones Canada but elsewhere.

#205 Herf on 09.12.14 at 4:56 pm

#26 “For some reason I found the term “adultettes” hilarious.”

And re: Garth’s rebuke @ #46:

The term “adultettes” seems too respectful. How about “adultescents” or perhaps “adultweenies”?

Then top it off with Yul Brynner’s comments in the following clip. Garth can be Yul (up until the gun fight):

http://www.youtube.com/watch?v=8RwNqorvjtg

#206 aaron on 09.12.14 at 5:06 pm

As a prelude to a years-long decline. Equities will likely correct and recover within a few months. More importantly, financial assets are 100% liquid. Real estate turns illiquid in a downturn. Consequently, elevated risk. — Garth

Nobody sells house within months of purchase. Risk is mitigated and smoothed over long period of time. IE years.

Btw you only loose money when down if you sell like any financial assets. Even if prices stagnates you still win. House is a utility. How about that?

Irrelevant when 92% leverage is used to buy houses – as CMHC numbers published here show. (Nobody gets 92% margin to buy equities.) When house prices fall, you can be assured of a flood of emotional sellers – people who bought for capital gains, not losses. — Garth

#207 Just my 2 cents on 09.12.14 at 5:31 pm

I think Garth is absolutely right, 24 is an adult and should behave accordingly. I see so many kids that age who have an expectation of adult rewards (I’m an adult, I can do what I want) but who assume as few responsibilities as possible. Parents who encourage this are doing their kid a great disservice. We got flak from well-meaning friends and relatives who thought it was unfair to make a 10 year old make his bed before leaving for school and make his own lunch the night before. We thought it taught time management and planning. They thought it was mean that we said if he wanted extra ‘stuff and things’ that he pick up a paper route. We thought he should learn that ‘stuff’ was not free and you had to be willing to work for it. There was an expectation that he help out with whatever needed doing in the house, because he was part of a family unit and that everyone should do their part. He had an allowance and was taught about credit, savings, debt etc but his allowance was never tied to what he did in the house, nor would we ever dream of paying him to attain good marks in school. When he graduated high school, he decided not to go to college right away, so we said sure, you can be home, but you must carry the equivalent of a full time job and you must pay rent, your own car insurance, buy your own clothes, etc. I overheard a conversation where a friend asked him where his parents got off making him pay when he was just living at home and my son laughed and said they don’t want me to be useless and not know how to take care of myself. He got it! We also figured doing menial labour in our small town would have him in college in less than a year and we were right. While he thinks it’s good to do what you must to pay your bills, he also didn’t want a lifetime of it when there was an alternative.

Fast forward to now, he is 22 and has been married for a year. He finished his 3rd year of college last year, dropped out for a year and they saved money for his grad year, which he started this month. In his year off, he worked 2 part-time jobs for minimum wage and he found there were lots of jobs that would ‘put food on the table’ but they weren’t fun or glamorous. He worked in a feed store primarily and he said a lot of people his age won’t take any old job to start out, and then they say there are no jobs. In that one year off school, they saved enough to pay his tuition for the full year, they have money set aside for savings and they’ve donated to charity. They live in a basement suite close to the school and while they are very frugal, their life is very full with friends, dinners, pot lucks, bike rides, other sports, art and music and they don’t seem to be deprived at all. They don’t have cable, share one old flip phone and he bikes to school. When they got engaged, they sent me an Excel spreadsheet and asked if I could look over their budget for when they were married and see if it looked reasonable – you can only imagine how happy it made me that they were thinking of things like that.
We always helped him when we could, but often our help came in the form of time spent talking and assuring him he had the ability to sort out his problem and kicking around ideas until he had come up with a resolution. I think they have a great foundation for their marriage and future and that we would have robbed him greatly if we had simply handed him everything and given him the message that he was NOT capable and could not figure anything out unless it was provided by us.

#208 Nemesis on 09.12.14 at 5:34 pm

#IsItJustMe?… #OrIsThatLeaderIllustration… #LookingMoreDoggoneFlummoxed… #WithEachCTLF5?

[NoteToGT: Just between the two of us, I thought the ‘TeaserTrailer’ was outrageously GoodSport. NoteToWhiteKat: TrueEnough. Even those without formal ties to UncleSam are occasionally obliged to navigate his bureaucratic maze… something to do with W8-BEN’s.]

#209 ponerlology on 09.12.14 at 5:40 pm

The stock market doomers and conspiracy nuts make me laugh.
Why does the stock market go up even if 50% of people don’t save? Because the vast majority of stocks are held by the top 5% and corporations.. This makes sense since logically they have that much more money to save. Nothing evil or sinister about that. If there is a wideningn wage gap between the top and middle it follows that those top 5% stock purchases would drive shares up. But it also means someone poorer can get their piece buy owning the shares too even if their demographics purchases are less substantial or influential on stock price… As for the stock market crashing.. Meh. I am a long ways from retirement and the stocks aren’t a leveraged investment for me so no one is gonna force me to liquidate them.. Unlike a mortgaged house or the small amount of stocks I buy on margin.. for entertainment purposes.

#210 Herf on 09.12.14 at 5:58 pm

#198 Keith

“Explain to me what work someone with in-depth education and internships in aerospace structures and modelling of heart valves would do out in Alberta.”

Keith,

You (or your bro’) might check out becoming a DAR or finding work as an aircraft structures engineer within a company that has received Transport Canada delegation as a DAO. See pertinent links on Transport Canada’s Delegations Information System web site, below:

http://wwwapps.tc.gc.ca/saf-sec-sur/2/CAS-SAC/h.aspx?lang=eng

Or, check out working for an aircraft structural repair and/or modification shop (aka an Approved Aircraft Maintenance Organization (AMO). Aircraft modifications is a major part of the Canadian aviation industry. A few of the major players in BC Kelowna Flightcraft, Cascade Aerospace and CHC Helicopters. I’m not sure who the main players in Alberta are – maybe Kenn Borek Air. In Ontario, there is Field Aviation, Voyageur Airways and Deca Aviation. I believe the Midland, ON based company, Avionics Design Services was/still is looking for a structures engineer for its office out at YVR (Vancouver/Richmond airport). See link here:

http://www.avionicsdesign.ca/

These companies and/or individuals are given a Delegation of Authority by Transport Canada to “make findings of compliance” to the pertinent airworthiness requirements, for aircraft modifications. Specialized work/knowledge that the not taught in engineering schools (see exceptions below), meaning there aren’t a lot of competent engineers working in it (compared to other engineering disciplines). Hence, it seems jobs in the field are somewhat “age-proof” (at least, if you’re able to work for the smaller companies/mod shops). You don’t get the knowledge and experience from “engineering school” (except perhaps if you graduated from one with an aeronautical engineering discipline like U of T, Carleton U. or Ryerson U. and/or had specialization within a Mech Eng. program. On top of those places, Boeing offers its own structures engineering courses (at your or your employer’s expense, of course).

See the TCCA link above and/or contact your local TCCA Aircraft Certification Office (Toronto, Montreal, Edmonton, Calgary, Vancouver and Moncton) for more information. You would have to take TCCA’s Aircraft Certification Specialty Course (paid for by yourself or by your employer) in order to (eventually) get delegation as a DAR or as an Authorized Person within a DAO. Also, TCCA itself was recently hiring Aircraft Certification Engineers with specialization in (among other areas), aircraft structures. The thing about working for them is, you will be removed from being a hands-on “engineer” and would be a paper-shuffling bureaucrat (although a well-paid one with benefits/pension). Still, the work can be interesting if you can tolerate the politics and bureaucracy.

Best of success (since I don’t believe in luck).

Herf

#211 Confucius on 09.12.14 at 6:12 pm

#74 Smoking Man on 09.11.14 at 9:08 pm
“It’s what being alive is all about. ”

You think that being alive is about feeding your ego. It’s actually about putting your ego aside, and learning to love the people around you. Stop trying to pursue your own selfish desires. This will be your greatest challenge.

#212 Entrepreneur on 09.12.14 at 9:37 pm

We should (shall) not judge and brag. It is different now; it is not the 50’s, 60’s.

#142 Inglorious Investor you are right on the spot. The public sector worker should not get more pay/benefits than the private sector. The private sector create wealth/money through goods and services which pay taxes; whereas, the government wealth is obtained by taxes.

#213 Keith on 09.12.14 at 10:17 pm

@Herf

Do you really believe that neither my brother or I know how the aerospace industry works or that we need advice internet randoms?

I’m in the RCAF. He did find work in his field at a well known aircraft engine maker in Toronto.

The point of my narrative was to illustrate the very real challenges that young people experience today. The old line that “They should be independent.” And some internet links are hardly relevant. The tone of Boomers like Garth and yourself comes off as, “Let them eat cake.”

I hope Gen Y remembers this when the Boomers start agitating politically for higher state pensions. No issues taking care of my parents. Other boomers? Couldn’t give s fig.

#214 Rabi Dmangycur#35 on 09.12.14 at 11:44 pm

#35 Happy Renting re Ayn Rand cartoon link:

Thanx for the post. I am a big Ayn Rand fan and have all her books and plays and have read all her newsletters. She must have been extremely intelligent but not that smart (the two are not mutually inclusive).

I love this blog site and have read all the archives up to Nov 2012 (so far).

I appreciate the task GT has undertaken armed only with a whip and a chair. I understand the fact that very few seem to understand the fundamentals Garth is sharing with readers, but many are quick to argue with the conclusions.

It appears Alan Greenspan fell into the same trap that ensnared Ayn in the end: an over reliance on intelligence and an under reliance on smarts.

A common trap of highly intelligent people.

#215 Flawed on 09.13.14 at 12:31 am

Can anyone see the logic flaws in this?

Does a carpenter employed by the private sector create wealth while a carpenter employed by government never creates wealth? What if the pay and benefits and productivity were the same?

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

NO……the govt does not create wealth. Ever. They build crap they don’t need most of the time. The private sector carpenter creates wealth by being employed and whose paycheck goes into the economy and whose TAXES PAY govt workers. Govt workers are paid with taxes so all they are doing is recycling money created by the private sector.

And in today’s economy……the private sector is more pissed off than they have ever been as the cost of living keeps going up despite the lies by the govt, meanwhile the govt workers keep getting bigger and bigger paychecks and pensions that go with them.

I thought you were smarter than this Shawn……and beware, class warfare is soon to come.

#216 Herf on 09.13.14 at 12:45 am

#213 Keith (assuming you come back to this particular post)

I didn’t intend or think my “tone” came across as “Let them eat cake”. Was not my intention. Was only trying to offer some help/food for thought from my scope of knowledge/experience, for what it is/isn’t worth, since I’m in a similar situation as yours: engineer (electrical/electronics), specialized (aerospace/aviation), middle-aged, technically obsolete.

Tried to move away from aviation back in ’07 by moving to Alberta when the demand for engineers and labour in general was virtually being hyped as “they’ll hire anyone with a pulse. Turned out not to be so (naturally). Turned out that despite the whining in Alberta that companies can’t find enough qualified people, they still cherry-pick who they’ll hire or even interview. Job prospects for electrical engineers in Alberta were/are great – if you have background and “Canadian” experience in electrical power generation, distribution and substation design, or instrumentation and controls (I&C) systems. Seems to be a similar situation in Ontario today, except instead of instrumentation and control jobs, seems to be more focus on “automation” and robotics programming jobs for EE’s. (With the loss of manufacturing jobs in Ontario in recent years, darned if I know what they expect to “automate”).

I thought with my background in FMEA/systems safety analysis I could “transfer” over to the I&C field, what with that field’s need for process control hazard (HAZOP) analysis, safety risk management, safety integrity level analysis, etc. Had one interview with an I&C consulting engineering company that said they farmed that safety analysis stuff out to another party, and as far as the I&C techie stuff they did, well, they “didn’t see a fit” within their organization for me and couldn’t justify taking on someone from outside their industry because of the implications to how much they would have to bill their customer (i.e. higher bill because of my learning curve). Had one agency tell me the engineering companies prefer to hire the young engineering grads fresh out of school because they can pay them peanuts and “train” (i.e. beat them into shape), rather than hire us older dudes who have some proven ability to “think”. Calgary Herald ran an article at the time profiling how oil patch companies were screaming they didn’t have enough people, yet were picky about who they hired because after working so hard to earn their good reputation, they were wary about damaging that reputation by hiring just anyone. Blah, blah, blah.

I came to the realization that the dark secret not told to undergrad students at engineering school is that once you get your first professional engineering job, you’ll likely be pigeon-holed in that particular type of work or industry. The problem seems especially acute for electrical/electronics engineers since the field is so diverse and changes so rapidly, particularly in anything to do with electronics and software.

And that’s another kicker: the electronics industry in Canada that existed 20 to 30 years ago, no longer exists. What once seemed like the bright shining star in Canada’s economic horizon, has essentially vaporized (think Mitel, Nortel, Jerrold, many others I’ve long since forgotten about). In BC, electronics companies that existed in the 80’s and 90’s are gone with just a remnant of one or two that somehow reincarnated themselves.

Then, to complicate matters, the electronics industry has shifted more toward software engineering and digital complex programmable logic devices (CPLDs) and gate arrays (FPGAs) over the past 20 years. One needs to learn/use software tools (VHDL, Verilog) to design the hardware logic used to program the chips.

During the same time frame, along has come the growth of the internet and IT, cell phones, wi-fi, CDMA (already obsolete), CDMA-II, HSPA, LTE, and Whoa Is Me. In the past, one specialized in either hardware or software. Today, seems companies want a person who can “do it all” – hardware, software, IT/internet (and radio frequency (RF) circuit design, which is a specialty all its own). All the while, you’re supposed to keep up with this stuff. What the frig kind of life is that, trying to chase after and keep up with this stuff, particularly if you’re a family person? I’ve come to the conclusion that the career counselors and/or HR people who concocted the idea of “transferable skills” don’t know their heads from their butts when they try to apply their transferable skills schlock to engineers and most anyone else who works in a specialized profession.

On top of the above, if you happen to be a software engineer or work in IT, your knowledge half-life is now down to only about 18 months to two years (according to IEEE and one or two other articles I’ve read). By age 35, you’re too old to work as a software or IT engineer, at least, in the U.S. This is another dark secret that probably isn’t being explained to the young engineering undergrads.

I concur with one of the other previous comments: that depending on one’s area of specialty, Canada isn’t a very good place to have an engineering career. But with the off-shoring of industry and jobs in the U.S. over the past 20+ years, according to blog comments I’ve read, it sounds like the situation in the U.S. isn’t all that great either (again, depending on area of specialty).

#217 Flawed on 09.13.14 at 12:48 am

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#218 liquidincalgary on 09.14.14 at 6:52 am

#21 Casual Observer says:

because of the collapse in the velocity of money

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

collapse? with housing now employing more than O&G, how has velocity collapsed? houses changing hands so frequently, are these not the definition of ‘velocity of money’ ?

check your definition, then re-read your comment and my response to it…please