Big D

BURNING

For years it’s been one of the hottest markets in the country. There was a time when a word ad would appear in the morning, “NICE house, three beds, two baths”, and by dusk there were several offers, all above asking, no conditions.

But a lot’s changed in Fort McMurray, not the least of which is the price of crude oil, now crashed through a resistance line and sitting at ninety-four bucks. And it appears more hurt’s coming – for the economy, commodity prices, oil and a northern Alberta town where people have often shelled out the better part of half a million for a mobile home.

This week the influential Geneva Report warned of a “poisonous combination” of slow growth, low inflation and massive debts around the globe with the potential for “a vicious loop, putting the world at risk.” Some believe it’s already happening. Europe’s struggling, China’s production is down, Canada is a swamp, Russian finances are in reverse and Argentina defaulted. It’s what this pathetic blog has been yammering about for the last two years. The Big D.

Yeah, deflation. It’s what you need to worry about, now that we’ve all pickled ourselves in debt.

Here is how the Geneva eggheads put it: “Indeed, the ongoing vicious circle of leverage and policy attempts to deleverage, on the one hand, and slower nominal growth on the other, set the basis for either a slow, painful process of deleveraging or for another crisis, possibly this time originating in emerging economies (with China posing the highest risk). In our view, this makes the world still vulnerable to a further round in the sequence of financial crises that have occurred over the past two decades.”

These guys understand that debt’s okay (whether it’s a national deficit, or your brother buying a condo) so long as there’s growth (giving a country more tax revenues, and your sibling a higher income). The trouble is that six years of ridiculous interest rates have encouraged elephantine debt everywhere, and yet growth is fizzling in all but a few economies (we’re not one of them). This is very bad news for the indebted.

Deflation – even the simple lack of inflation – means stuff (like real estate or a barrel of oil) stops rising in value because demand wanes. So the capital value of an asset (like a house) stagnates, and often declines. When deflation picks up a little speed, not only do asset values erode, but also incomes – creating that vicious loop economists fear (because they can’t fix it). People who have less to spend, or figure they soon will, spend less. Demand falls. Assets values plop more.

Worst, lower incomes make debt harder to pay – so it’s the people with big mortgages and the countries with fat national debts – who take it in the gut.

But I digress. We were talking about Fort Mac. Boom town. The oil and truck nuts capital of Canada, and these days a fine little microcosm of global economics. Let’s have a few words from Leonard, who has a fresh dispatch for us from the tailing ponds:

“So for all those people that think that housing is still crazy in Fort McMurray, think again. I (as a completely ignorant 1st time home buyer) bought a house up there in 2008 just as the market started to soften. My very average home cost $660K. Tack on CMHC fees and I owed the bank $684k

“Gone are the days of house values climbing daily by thousands (if not tens of thousands of dollars). My house has been a rental property for 4 yrs now, and I just listed it for $649,900. 6 years later, and a net negative value (If I’m lucky and it sells for $649k. I have my doubts). I can barely believe it myself.

“Has it been worth all the stress? NOT A CHANCE! When I originally bought the place, my magic # on the house was when it was worth $ 1 million, I’d sell it, and buy a house outright whereever I lived (currently Edmonton). It was a nice dream, but a dream was all it’s going to be. I’m just happy almost all of the money paid to my mortgage company was paid for by my tenants, because If I had been shelling out upwards of $200k in interest in the first 5 year mortgage term (remember, I obviously did a $0 down, 40 year mortgage like all the other virgins back then), i’d probably be looking to jump off the high level bridge.

“Feel free to use me as a warning sign to my fellow Canadians.”

I will. But you’re also a symbol, Lenny. How many other people have borrowed massive amounts of money to buy real estate because (a) mortgages were cheap, (b) houses always go up and (c) it’s different here? These are the folks who’ve never experienced negative growth, think deflation means iPhones will cost less (and is therefore good) and believe property values will keep bloating so long as rates stay low. They sure have a surprise coming.

Oil could drop to eighty bucks in weeks or months and Len’s house might end up selling in the fives. Wouldn’t be a big shock. Most booms turn to busts because most people think with their pants. Especially in Alberta.

But the wider risk is out there. If the Big D arrives, even modestly, assets like real estate will be hit first, and hardest – since that’s where the debt lives. In contrast, money becomes more valuable, as its purchasing power rises. This is why you want the bulk of your net worth in financial assets. It’s also why renters will win.

170 comments ↓

#1 Mr. Nihilist on 09.29.14 at 6:08 pm

Lovely photo. The economy’s pooched, and someone’s house is on fire. Might as well fiddle about on the golf course.

I guess nowhere in Canada is safe in terms of a secure job market, so might as well stay put in decadent bourgeois T-dot, with the Filipino Nannys.

#2 Harbour on 09.29.14 at 6:09 pm

Nobody buys 400K mobile homes in Fort Mac anymore. They all live in company camps, then get the hell out of there on weeks off.

#3 bdy sktrn on 09.29.14 at 6:09 pm

word is that eng firms working for ft mac producers have been cutting heads for a few months now.

oh well, the price will come back up soon enough

#4 Mr. White on 09.29.14 at 6:13 pm

I can remember oil at 9 bucks when President Reagan decided to bankrupt the Soviet Union.

I can remember my friends walking away from homes in Edmonton when that happened. I can remember mortgage rates north of 20% at about the same time.

We all need to remember that house prices, like business are cyclical. Your house depreciates over 40 or 50 years, so the only value is in the land. It only goes up in price when planners make it rare.

#5 First on 09.29.14 at 6:14 pm

FIRST!!!!!

#6 JG on 09.29.14 at 6:17 pm

As an Albertan I take offence to ” Most booms turn to busts because most people think with their pants. Especially in Alberta.”

well… I kind of take offense…some of us here know what we are doing. :)

It is amazing what crap they are selling here (in commercial property) with 4-5 % caps rates and people are buying. The hook is what they will make when the building is stabilized!!!……(if it is ever stabilized). I wonder how long this crazy easy money will keep flowing here?

#7 Randy on 09.29.14 at 6:20 pm

Why is this process happening in slow motion ?

#8 JSS on 09.29.14 at 6:23 pm

“Oil could drop to eighty bucks in weeks or months…”

What will be the impact on employment in both Calgary and Edmonton? If the price of oil does drop to somewhere in the eighty-dollar range, are we to anticipate potential layoffs in the oil sector, followed by a reduction in real estate values?

#9 ILoveCharts on 09.29.14 at 6:24 pm

On the other hand, when people in the sands are making big wads of money and their employers are directly helping them with a mortgage to retain them.. it’s not all bad.

#10 Geoff on 09.29.14 at 6:24 pm

Garth, do you think areas like Oakville, ON will take a haircut (i.e. 20%+) along with the rest of the RE market in the next couple years or are some areas “immune” due to the average income being so high?

#11 Jan on 09.29.14 at 6:28 pm

Smoking man, keep up the good work.
Like you say, the folks with most schooling are the ones who always get it last while people like me and you always make money,no matter what the thingie called economy does.
Take good care SM.

#12 Rob on 09.29.14 at 6:29 pm

Smoking man, keep up the good work.
Like you say, the folks with most schooling are the ones who always get it last while people like me and you always make money,no matter what the thingie called economy does.
Take good care SM.

#13 JustMe on 09.29.14 at 6:30 pm

The nice thing about deflation is the government hasn’t yet found a way to tax it. Your cash gets more valuable on a tax free basis. With inflation, you get taxed on interest income or capital gains, even if they are are less than the inflation rate. Give me deflation! I have cash.

#14 Van Isle Renter on 09.29.14 at 6:30 pm

Hold the phone here…. I thought that you swore that deflation was never going to happen???

#15 Montellino on 09.29.14 at 6:30 pm

Belgium experiencing inflation right now. Not fun..

#16 Montellino on 09.29.14 at 6:31 pm

.. meant Deflation.. sorry.. see how unbelievable the thought. The brain just wont process that kind of info

#17 Larry Laffer on 09.29.14 at 6:36 pm

Link to the Geneva report. Somewhat scary reading.

http://www.voxeu.org/sites/default/files/image/FromMay2014/Geneva16.pdf

#18 Catalyst on 09.29.14 at 6:36 pm

“When deflation picks up a little speed, not only do asset values erode, but also incomes – creating that vicious loop economists fear”

It’s simply not true. When we had inflation, we did not have rising incomes. Numerous studies have shown wages adjusted for inflation have declined over the last 20 years due to automation/globalization/economies of scale (bigger companies, less competitors).

The real reason we have a stagnant economy is because corporate profits are higher than ever, dividends are flowing to investors instead of the workers who made those profits. And when workers don’t have money then they don’t buy goods. Instead they focus on the essentials like housing, food, and transportation.

#19 protea on 09.29.14 at 6:39 pm

Scary business , a banks nightmare, each dollar becomes worth more in purchasing power, the cost of carrying debt increases, putting more pressure on borrowers and governments. Meantime the value of real assets drops. Lets hope it never cames to that, having nightmares already.

#20 takla on 09.29.14 at 6:51 pm

since we’ll suffer by association..putting an end to the QE free money spigot means the mother of all recessions/depression is likely around the next corner.
Along with this action comes financial market collapse,bond yield rise , consumer credit to tighten and misery for residential realestate.
Will Yellen be forced to pull her plan to eliminate QE as the greater economy slides further??Will the QE spigot be reinitiated as depression takes hold??They’ve boxed themselves into a corner and an indebted consumer cannot and willnot get us out of this one….one blogdogs opinion…

#21 TEMPORARY® Foreign Prime Minister on 09.29.14 at 6:53 pm

Given that their civic electoral loss is all but a certainty, I’m sure Toronto’s Fraud brothers will be first in line to offer Albertans a Deco Label variation on an old bumper sticker:

“Please, Lord. Let there be another oil boom and I promise not to piss it all away next time”

REALTURD®’s or Dinosaur turds. Only the latter have much value to society.

#22 waiting on 09.29.14 at 6:57 pm

Good luck Leonard, (seriously – I hope you’re able to sell) Thanks for sharing. I just looked at Fort McMurray on MLS and see that there are almost a thousand listings (492 houses for sale of which half show as being listed this month.)

#23 TurnerNation on 09.29.14 at 6:57 pm

I read his book years ago.

http://www.bnn.ca/Video/player.aspx?vid=453777

Former Wall-Street trader, Jared Dillian, says there are five challenges facing Canada’s economy. The editor of The Daily DirtNap and author of “Street Freak: Money and Madness at Lehman Brothers,” joins BNN to share his thoughts on Canada’s housing market, debt levels and the BOC.

#24 Sheane Wallace on 09.29.14 at 6:59 pm

http://www.federalreserve.gov/boardDocs/speeches/2002/20021121/default.htm

Deflation? how about more QE?

The growth of sub-prime debt post 2008 was ENCOURAGED by the governments through various guarantees – CMHC, student loans, car loans and central banks manipulation of interest rates.

majority of the new debt would have not occurred if not for these market manipulations.

central banks and governments are the problem, instead of relatively mild recession in the beginning of 2000’s now we will see our credit currencies destroyed.

Unless is by intend (outsourcing) and legal temporary workers program surely is by intend.

Harper does not think there is housing bubble. I agree, Bubble will be when houses hit 5 mil. of 5 billions whatever confetti CA dollar would become.

#25 Sheane Wallace on 09.29.14 at 7:00 pm

housing and stock market will keep going up. There is no way back.

#26 Exurban on 09.29.14 at 7:07 pm

#4 Mr. White

I can remember oil at 9 bucks when President Reagan decided to bankrupt the Soviet Union.

In January 1999 oil prices fell to $16 a barrel. I clearly remember buying gasoline in Washington State for 92 cents a gallon.

While we’re at it, not long ago many supposedly authoritative greens and sites like the Oil Drum used to bang on that fracking was an unsustainable flash in the pan that would soon peter out. Now the U.S. is the world’s #1 oil producer.

#27 nonplused on 09.29.14 at 7:08 pm

I’m not experiencing any deflation.

I just put new batteries in my UPS. They cost me more than the whole unit did 5 years ago. I could have bought a brand new unit for $20 more but the new one has less than half the total power reserve, meaning it only has 1 tiny battery. That’s how they get the cost down but in a UPS the battery is everything so what good is a UPS with a tiny little battery?

PS do they count that kind of stuff in the inflation calculations? Sure, computers and phones are getting cheaper but I need a new one every 3 years. Anything with a rechargeable battery needs new batteries every 5 years or less, even laptops if you are still using it 5 years on. I’ve got one laptop here that I’ve already replaced the batteries on and the “new” ones are now hooched so it only runs plugged in, I’m not replacing them again they are worth more than the machine is at this point.

And don’t get me started on cell phones. My dog, people 20 years ago didn’t need to spend $300/month keeping everyone in the family in cell phone service. And the cable guys are crooks too, but how do you get by without internet anymore? I can’t pay my bills or find out when my kid’s hockey times are without it anymore. Oh well at least it comes with free porn. I guess there’s some deflation there. And of course it comes with some helpful free stuff, for example instructions on how to change the batteries in your worn out UPS without electrocuting yourself or breaking it. Sneaky screw behind the sticker was giving me grief getting it open. The internet showed where the hole was and you just poke the screwdriver through the sticker.

#28 ronh on 09.29.14 at 7:10 pm

Speaking of oil. Another point of view of oil prices.
Not good at all.

http://www.zerohedge.com/news/2014-09-29/oil-head-fake-illusion-lower-oil-prices-are-positive

#29 WallOfWorry on 09.29.14 at 7:13 pm

Garth…just a few months ago you were talking up how you predicted the sustainable growth we were seeing, strong jobs, strong gdp and the poor gold bugs getting a whooping? You seem a little inconsistent now though? What gives handsome?

I referenced the US, which continues to recover. Gold, not so much. — Garth

#30 nonplused on 09.29.14 at 7:15 pm

Oh ya, and then the check engine light came on while going to get the new batteries for the UPS and the vehicle started stalling whenever it idled. That’s a bit disconcerting in traffic because the power steering and power brakes become rather heavy to operate when the engine quits. Limped in to the dealer for repair and they gave me a ride home in their shuttle. Will there be any deflation in the cost of repairs? It looked to me like it was going to cost me $150 just to find out what was wrong with it. And it’s not the battery, I just changed that one too, and there was no deflation there either.

#31 Nemesis on 09.29.14 at 7:17 pm

…”most people think with their pants.” – HonGT

#SomeTrousersAreSmarterThanOthers,Though:

http://youtu.be/_H6SG34EOqk

[NoteToSaltierDogz: SpoilerAlert – beware the diabolical machinations of chickens… They can remotely control your trousers at precisely the moment you least expect it.]

#32 Nick_L on 09.29.14 at 7:17 pm

Scott Sumner has some interesting observations on this subject : http://econlog.econlib.org/archives/2014/09/what_kind_of_gr.html
See also: http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/09/the-bank-of-canada-vs-the-bond-market.html#more

#33 Happy Renting on 09.29.14 at 7:18 pm

Once this current oil boom winds down, would be interested to see who puts up their hand when asked, “so, who didn’t piss it all away this time?”

#34 Freedom First on 09.29.14 at 7:20 pm

Lenny is a humble man to share his story with us, and I wish him the best going forward.

Garth, thank you for today’s Post. Another example of the importance of being diversified, liquid, and diversified. (Garth has laid out a comprehensive %allotment formula of a$$ets to hold within any Portfolio and how to Re-balance the mixture to keep you out of a Lenny like predicament and financially stable).

Anyone who believes in being all in in any 1 a$$et, I
urge you to change your way of handling your finances. Change, or change will be forced upon you. No exceptions. No excuses. None.

#35 ummm Hong Kong.. on 09.29.14 at 7:30 pm

Ummm….are you aware of what’s happening in Hong Kong and the 300,000 Canadian passport holders?

No deflation in YVR.

#36 CPG on 09.29.14 at 7:32 pm

Two thumbs up for Smoking Man.

#37 Smoking Man on 09.29.14 at 7:34 pm

Fort McMurray, Sudi Arabia just got a new massive rival.

Russia just found in the artic, an oil field the size of golf of Mexico…

Should translate to Lower oil prices.. Will it be reflected at pumps? … That is the question..

#38 Big Jack on 09.29.14 at 7:36 pm

Deflation? What you talkin’ bout’ Willis?
Paid rent or filled your gas tank or fridge lately?

#39 TurnerNation on 09.29.14 at 7:38 pm

Oil?

The Globe and Mail reports in its Saturday edition the relationship between U.S. real interest rates and commodity prices looks innocuous at first, but the future course of this chart could be a major determinant of Canadian investor portfolio performance in the months ahead. The Globe’s Scott Barlow writes hedge fund manager Mark Dow believes that, even though we have already experienced a painful correction in commodity prices, rising U.S. real interest rates will cause a second wave of declines. The inverse relationship — commodity prices fall as real rates rise — is clear. There are two reasons for this. One, rising real rates attract yield-hungry foreign capital into the U.S. bond market. This pushes the greenback higher, and commodity prices valued in U.S. dollars, lower. Second, higher interest rates also make safe, yield-producing assets such as U.S. Treasuries more compelling. These current trends create a host of risks for Canadian investors, even those without significant holdings in the near 40 per cent of the Toronto Stock Exchange made up of resource stocks. Rising real bond rates threaten returns in yield-bearing sectors like REITS and utilities, where many domestic portfolios are overweight.
© 2014 Canjex Publishing Ltd.

#40 mark on 09.29.14 at 7:39 pm

Ft Mac, sounds like fort st john and Dawson creek in northern b.c. These areas are in there own little world where big oil and gas companies are running full steam, I read that fort st john in b.c. is the most expensive place in the north to buy a home, with the average price is $400,000.
Garth I wonder were a person can find stats on these micro economies? Interesting to know the actual unemployment rates, housing prices, housing prices from last year to compare if the market is still heated or is it sliding price wise??
Can you help?

#41 pinstripe on 09.29.14 at 7:40 pm

ft mac is the last place in Canada to see any negative impact when the economy dips.

not too many tradespeople make less that 150 grand a year. many make more.

many tradespeople at age 55 can retire with a 7000 grand per month pension but choose to continue working.

many tradespeople fly in to work, live in camp with room and board supplied, and fly out home to any city in north America.

oil is moving by rail like never before.

the truck traffic to ft mac is mind boggling. 24/7.

there is money in that sand.

#42 not 1st on 09.29.14 at 7:42 pm

China is totally the USA in 1890. Straight up strong 30 year growth while the country was industrialized.

We know how that ended in 1929. Totally over due..and we are about to see a few billion people experience a hard recession for the first time. What you see in HK is like playschool.

#43 not 1st on 09.29.14 at 7:49 pm

Look, lets be clear and realistic. Canada needs deflation because it cannot continue on this path. Yup, it will be some pain for those who are in over their head, but we must think of the greater good. The countries economy won’t survive on its current path.

To get a taste of what our economics has wrought go and try to hire a contractor and how much we pay for labour in this country to keep pace with cost of living. Totally unsustainable.

Deflation is a far worst ailment than inflation. Wish it on nobody. — Garth

#44 not 1st on 09.29.14 at 7:51 pm

#41 pinstripe on 09.29.14 at 7:40 pm

Yup, they better get while the gettings good cause a mere 20 years solar is going to make that place crickets.

#45 Realties.ca » Big D on 09.29.14 at 7:54 pm

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#46 old gringo on 09.29.14 at 7:58 pm

Let’s not confuse “education” with “intelligence”.
Too many folks just do not understand the difference.
And by the way “Garth does rule”.

#47 takla on 09.29.14 at 8:12 pm

http://www.google.ca/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&sqi=2&ved=0CB0QFjAA&url=http%3A%2F%2Fwww.kitco.com%2Freports%2FKitcoNews20101119AS_silver.html&ei=1PMpVJvCEcWGyATO04GgAw&usg=AFQjCNFnXCoV7b7an01Naecmre7zoGJIPg
re#44 solar makes that place crickets…….Sure a little research and smarts tells us an average 4×8 solar panel uses up to 1 oz of silver,and the price of silver has been hamered and currently sits @ cost of production….Anyone see an opportunity here?
Just read yesterday As the Saudi oil fields deplete, their plans for solar are huge as their claim to huge solar exposure will start their new homegrown resource banaza.Get your silver while its cheap!

#48 OttawaMike on 09.29.14 at 8:14 pm

Question for Blogdogs:
What percentage of Canada’s GDP comes from the oil sands??

Guess and make your guess low.

Estimates are in the range of 1.8%-3%, meanwhile the lobby machine has us all believing that it is the lifeblood of Canada’s economy. Yes, as Pinstripe mentioned up above, the pay is good for a relatively small workforce but overall it is a fart in a wind storm.

#49 Italians love real estate on 09.29.14 at 8:14 pm

The GTA RE market transcends all of the analysis on provided by Garth above. It had already proven to be unaffected by GFC’s, abnormal debt to income and rent verses cost analysis’s provided by others.

The threat of deflation is just another empty threat against the relentless and unyielding rise of GTA housing prices .

#50 Dee on 09.29.14 at 8:18 pm

Debt-free with a diversified portfolio, and I live in Canada while working for an American company (US job stability + pay in USD while living in CAD). Bring it on.

#38 : my rent hasn’t gone up in 3 years, and I just took a road trip this weekend where gas was $1.22/L…road trips last summer, that was $1.50-$1.60.

#51 saskatoon on 09.29.14 at 8:20 pm

Interesting/salient quote:

“The emergence of deflation is the beginning of the process of economic healing. Deflation arrests the process of impoverishment inflicted by prior monetary inflation. Deflation of the money stock, which as a rule is followed by a general fall in prices, strengthens the producers of wealth, thereby revitalizing the economy.

Obviously, the side effects that accompany deflation are never pleasant. However, these bad side effects are not caused by deflation but rather by the previous inflation. All that deflation does is shatter the illusion of prosperity created by monetary pumping.”

One unpleasant side effect of the last bout of deflation was World War 2. — Garth

#52 Rob on 09.29.14 at 8:21 pm

Deflation is a far worst ailment than inflation. Wish it on nobody. — Garth

NOT EVEN THOSE WITH SOME HARD COIN STASHED AWAY ????

#53 Ret on 09.29.14 at 8:22 pm

So if the big “D” happens will CPP, OAS, etc. be adjusted down each year to reflect the new purchasing power? Cuts to social assistance checks? GST checks stopped?

How about those multi year collective agreements for teacher, fire, police and government workers? They need deflation protection for the taxpayer written in to all new agreements now, just in case the unthinkable happens.

In addition, all pension plans will have to cut benefits or slowly become insolvent. Maintaining the status quo will not be an option.

This could all get very ugly, really fast. It was a great ride on the way up!

#54 Property Accountant on 09.29.14 at 8:29 pm

Garth, I agree with you that “Big D” is a worry but it is not going to happen, period. Ben Bernarke, Princetown university professor and later head of FED has been nick named “helicopter Ben” because of his famous argument in his speech” “Deflation: Making Sure It Doesn’t Happen Here” (wikipedia).
Deflation, as inflation, is a monetary phenomena. To fight it you might as well drop the money from helicopters onto the ground so the lucky ones can spend it create a raise in prices. Aside from side effects these actions create (like lack of motivation to work) they will reach its goal. Another, more civilised method is to give out cheques to poor ones or engage in quantitative easing and so on. It has all been done in USA.
Canada …. is waiting for it… as is most of EU countries.

Much more interesting question is – Why is it happening?

Maybe that would be the topic for future blog post.

#55 Retired Boomer - WI on 09.29.14 at 8:32 pm

I wish no one INFLATION …maybe not even DEFLATION.

Just a little RE-AWAKENING would be nice! It is amazing how Joe Average has let himself be screwed these past years by BIG MONEY in the form of subsidies for (of all stupid things) sports teams stadiums, to prescription drug coverage for geezer’s that was never funded. Buying politicians never ends well.

Do you WANT higher taxes? Keep telling politicians “YES” for stupid crap YOU aren’t willing to PAY to get.

DEFLATION? Bring it around for a while. I didn’t much care for INFLATION back in the 70’s but I was a young married family guy then with huge debt. It might have actually helped then.

Now, no debt, money in the bank, and government dough in retirement. Let the indebted choke!! Who has money beside the extremely wealthy? 35% top rate today in the US….used to be 92%…we have room to screw ’em a bit more, and unbelievable debt!

A cut of 20% in that ‘free money’ would be a pain in the arse, but hey, been through worse. Besides, it would be a real teaching moment for the idiots who chose to be debt-chocked, who never listen to reason.

Yes, pain, but nothing never seen before. Each generation has to learn the lessons of the day. Whatever will be, will be. Bring on the balloon pin.

#56 omg on 09.29.14 at 8:34 pm

DEFLATION

Is deflation possible – yes, is the type of Great Depression deflation probable – NO.

Give it a few weeks or months and we will be talking about some other great calamity stalking the world’s economy. Whatever the MSM flavour of the day is.

In the mean time – JUST SIT BACK AND ENJOY THE SHORT-TERM NOISE. BUT REST ASSURED THAT THERE IS A 99% PROBABILITY THAT THE WORLD ECONOMY 5 YEARS FROM NOW WILL BE BIGGER THAN IT IS NOW.

But will yours? — Garth

#57 Spectacle on 09.29.14 at 8:35 pm

Thanks “G” .

To paraphrase a bit:
Deflation is a side effect of the collapsing of aggregate demand .

Which means – a drop ( collapse) in spending so severe that producers have to continually cut prices to find a buyer(s).

The ugly economic effects of deflation, are similar to those of any other decline in spending. And this result brings us:
– recession,
– rising unemployment,
– and financial stress.

When this takes place, slow or fast, it is daunting !

Anyone else feeling the pain in their life? I’m in business, creating things/selling things, and live with this reality every day.

Regards all

#58 Tony on 09.29.14 at 8:41 pm

Quote “investors” went net long oil contracts after 11 weeks of decline. Obviously a stupid bet as oil will plunge but it could bounce before the plunge back down to the 30 dollar U.S. range. Being in debt is the worst thing when deflation strikes because you can’t inflate your way out of debt. Add to that falling corporate profits worldwide and an eminent housing crash in China and things look very bleak for the total fools that bought houses in Canada in the last 17 or so years. Probably housing prices will fall back to 1990 valuations in Canada.

#59 Anson on 09.29.14 at 8:45 pm

Deflation has been around for quite some time, just look at the latest headline “workers 50 years and older make 63% more than younger workers”.
Part time, contract, temporary, casual this is the new normal, no wonder young people are not having kids, is their such thing as a secure job anymore?
Deflation is comming whether governments want it or not, the real question is…. how bad is it going to be?

#60 A Yank in BC on 09.29.14 at 8:45 pm

I suppose there could be nothing much more representative of off-kilter people have become than some guy who buys an average 3-bedroom home for 660k (gulp), who then expects it to be worth 1 Million Dollars as short while later. In what kind of universe could that happen. I have no sympathy for the guy.

#61 Tony on 09.29.14 at 8:46 pm

Re: #56 omg on 09.29.14 at 8:34 pm

Falling birth rates, people living longer and much higher taxes almost guarantees deflation will last a long time into the future.

#62 Upgrader on 09.29.14 at 8:47 pm

With deflation, what happens to the balanced portfolio you advise to us? Wouldn’t a shrinking economy also kill any investments?

Far safer than having your wealth in one asset – a house. The essence of a balanced, diversified portfolio is multiple asset classes. It is a good defence for such eventualities. — Garth

#63 Linda on 09.29.14 at 8:48 pm

An Argentinian default is hardly news. They have defaulted on external debt 7 times & internal debt 5 times in their just over 200 years of history as a nation. It is practically a hobby for the Argentinians. Not a fun hobby, mind you, but none the less not exactly unheard of. They make Alberta look like pikers in the boom/bust cycle, for sure.

This is not to say deflation is not scary as all get out, especially if one has a boatload of debt & a possibly shaky job situation. Given how the many readers of this blog appear to have a firm grasp on keeping control of their finances though hopefully not an unmitigated disaster for all. Those with cashable assets will presumably have buying opportunities galore & should be able to retire sooner than expected (if they wish to) as they snatch up tasty little bargains with potentially fat returns on investment.

#64 omg on 09.29.14 at 8:55 pm

SPEAKING OF OIL

I lived through the early 1970s OPEC driven oil crisis – MY GOD we were running out of oil, people lined up for gasoline, the federal government introduced the National Energy Program to save us all and also paid to have noxious foam insulation pumped into our houses.

That lasted until the early 1980s, when we suddenly discovered the world was awash with oil. It wasn’t until the mid 2000s that HAPPY DAYS returned to the oil patch and the supply/demand tilted towards producers.

The ONE CONSTANT throughout was the whining of LEFTIES that thought we were going to RUN OUT OF OIL.

Their MANTRA was leave it in the ground for FUTURE generations.

It has always been my view that we will NEVER run out of oil. There is an essentially INEXHAUSTIBLE supply of oil when one looks at potential demand balanced against current known reserve and potential reserves.

And that is not even considering new technologies and discoveries (20 years ago shale bed reserves were considered wildly uneconomic and intermountain reserves were pie in the sky.)

The reality is that oil will become OBSOLETE like every other major fuel source has become (like wood, peat and coal) before we ever get close to RUNNING OUT.

So leaving oil in the ground is not leaving it for future generations – its LEAVING IT IN THE GROUND FOREVER.

#65 Son of Ponzi on 09.29.14 at 8:57 pm

The positive side of deflation:
We don’t have 50 kinds of tooth brushes anymore.
The one’s surviving will last more than 10 brushings.
Build in obsolecence will be obsolete.

#66 Daisy Mae on 09.29.14 at 9:01 pm

#40 mark: “Ft Mac, sounds like fort st john and Dawson creek in northern b.c. These areas are in there own little world where big oil and gas companies are running full steam, I read that fort st john in b.c. is the most expensive place in the north to buy a home, with the average price is $400,000.

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

This CAN’T be OUR ‘Mark’? Fort MacMurray is in Alberta. Dawson Creek is in BC.

#67 omg on 09.29.14 at 9:04 pm

#56 OMG

In the mean time – JUST SIT BACK AND ENJOY THE SHORT-TERM NOISE. BUT REST ASSURED THAT THERE IS A 99% PROBABILITY THAT THE WORLD ECONOMY 5 YEARS FROM NOW WILL BE BIGGER THAN IT IS NOW.

But will yours? — Garth
————-
I will be the first to admit that NOBODY KNOWS with certainty what will happen in the future. Investing is about balance but also playing the odds.

Time and time again, cataclysmic possibilities have been touted and time and time again the world just keeps marching on in its muddled spasmodic way.

The odds are heavily in favour of the world just muddling on.

#68 Daisy Mae on 09.29.14 at 9:04 pm

Oops! Fort St.John is, indeed, in BC.

#69 Anson on 09.29.14 at 9:05 pm

EBOLA, TERRORIST ATTACK, ISIS, IRAN, IRAQ, E U SLIPPING INTO DEFLATION.
Pick your headline because any one of these or many of these are going to be what is responsible for many more years of low interest rates.
Garth still think rates are going to rise?

Most economists certainly expect the Fed to tighten in 2015. — Garth

#70 Casual Observer on 09.29.14 at 9:07 pm

“When deflation picks up a little speed, not only do asset values erode, but also incomes – creating that vicious loop economists fear”

Many economists believe that, and with severe deflation it may be true, but with mild deflation, it’s not always the case…

http://www.cato.org/sites/cato.org/files/serials/files/policy-report/1999/5/cpr-21n3.html

“Central bankers believe that deflation is always harmful, no matter its cause…

Benign deflation is something else altogether. It is a result of improvements in productivity…

Because an increase in productivity is the same thing as a decline in unit costs of production, a productivity-driven decline in the prices of finished goods and services needn’t involve any decline in producers’ earnings, profits, or payrolls…

When productivity rises, so do workers’ real wages. If the productivity gains are allowed to take the form of falling output prices, then money wage rates will remain stable or will rise modestly.”

Your link is 15 years old. — Garth

#71 economictsunami on 09.29.14 at 9:07 pm

Unfortunately the effects from low rates are subsiding and the more liquidity (Fed/ BoJ/ ECB/ PBoC and government balance sheets) we pour into the system, has ever decreasing ROI for the global economy’s growth.

The Fed reduces QE not due the “strengthening economic recovery” meme but because the multiple bubbles that have developed from the flood of liquidity have lulled and masked risk pricing.

A flurry of haphazardly negotiated international trade deals will have little lasting economic effect on the likely global outcome.

Debt afforded us a lifestyle above our rightful means.

Peak debt is near…

#72 Strathcona on 09.29.14 at 9:08 pm

#41, Pinstripe,

Ft. Mac is the FIRST place in Canada to see a decline with oil prices down. Some of the more expensive oilsands mines need $90 oil to make a profit. Many SAGD plants need 75 or 80 dollar oil.

When we last saw $50 oil in 2008, the place was at risk of being a ghost town. Had the financial crisis been long, without US government intervention, and QE, Ft. Mac would still be broke, and a place to move from! A modern Dawson City, Yukon.

#73 Casual Observer on 09.29.14 at 9:09 pm

“These guys understand that debt’s okay… so long as there’s growth…”

I couldn’t agree more. Negative growth is the job killer.

The economy can prosper under mild deflation as long as real GDP growth remains positive.

http://www.greaterfool.ca/2014/09/07/confusion/#comment-323098

#74 FLAWED on 09.29.14 at 9:26 pm

This week the influential Geneva Report warned of a “poisonous combination” of slow growth, low inflation and massive debts around the globe with the potential for “a vicious loop, putting the world at risk.”

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

The problem with any “inflation” “Deflation” argument is that they are BOTH happening together.

Take out the Inflated public sector worker salaries and pensions cuz they ALWAYS go up – you have deflation in the private sector (FACT – private sector wages have stagnated for 20 years).

ADD IN FOOD and ENERGY and GOVT TAXES and 1/2 size granola bars/cereal boxes for the same price and you have inflation. Low inflation? BULLSHIT. I hate it whenever I read it and have thoughts of people “eating tvs” and fueling their cars with “laptops” because that is how inflation is measured. Everyone knows its not measured correctly but yet we keep getting told inflation is low. Again. BULLSHIT.

BOTH inflation AND Deflation are killing the private sector.

So please Garth or anyone else – don’t bother bringing up inflation or deflation as a single entity when talking about the real world. They are both here. And they are both bad……

#75 My Life is a Pile of Shit on 09.29.14 at 9:30 pm

One unpleasant side effect of the last bout of deflation was World War 2. — Garth

The cause of WWII can be traced back to the hyperinflation of the Weimar Republic, which led to political upheaval and the rise of the Nazi party. Deflation did not cause WWII. If anything, deflation alleviated the Great Depression. It would have been worse had the unemployed been hit with higher living expenses. Politicians are petrified of deflation, because they’re not used to it. But I’ll take lower prices over higher prices any day.

I said the war was a side effect, not the result of, deflation. The rest of your comment is consistent with your name. — Garth

#76 ozy - Renters never win on 09.29.14 at 9:36 pm

hahaha, Renters never win. THIS actually sounds like soviet propaganda

the ones that bought 8y ago, already won… no worries

:)

happy renting

#77 Casual Observer on 09.29.14 at 9:37 pm

Your link is 15 years old. — Garth

Most Central Bankers adhere to economic theories that were formulated during the 1930’s. 15 years is quite recent in comparison.

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

#78 Casual Observer on 09.29.14 at 9:39 pm

Ooops. Didn’t mean for all of that to be bold.

#79 CdnFlyer on 09.29.14 at 9:47 pm

I’m starting my noval today. Writing is tuff, but it’s my paschen. Well, starting today it is. You guys are gonna love it. It’s about a drunken amish alien who drives a motorcycle around America. Pirsig’s got nothing on me. You may not like it, but it’s not your fault. It’s your programming.

#80 Anson on 09.29.14 at 9:52 pm

“Most economists certainly expect the Fed to tighten in 2015.”-Garth
Exactly….Right on brother, this is the reason I beleive rates are going nowhere soon, because I have learned that it pays to be contrarian.

#81 Second Class on 09.29.14 at 10:06 pm

Garth. Stept by step what happens to the bond and stock market in a deflationary cycle? Do stocks hold value or drop as everything else drops? Dividends? Do bond prices hold steady or go up as you are lending money so if that money has more buying power when the bond is paid back to you in 10 years do people pay more for bonds?

Obviously metal heads lose during deflation.

How much should I sell and put in cash to stay balanced?
As during deflation cash is king is it not?

#82 Smoking Man on 09.29.14 at 10:11 pm

You guys got to get twitter, follow lorrie Goldstein and Conrad black..
goldstein each other in an affection way.. Black calls Goldstein a drunk, Goldstein fires back, I’ll be sobar in the morning but you will still be a felon….

Love it… You know me I added my 2 cents. .

#83 Smoking Man on 09.29.14 at 10:15 pm

#78 CdnFlyer on 09.29.14 at 9:47 pm

You just can’t let it go can you…

Promising….

#84 45north on 09.29.14 at 10:20 pm

How many other people have borrowed massive amounts of money to buy real estate

lots

TurnerNation : from your link: Jared Dillian notes the following about Canada:
– high level of consumer debt
– high percentage of construction employment

He believes that the Bank of Canada will lower rates while the US Fed raises them! Personally I don’t. On the other hand raising interest rates in Canada would lower house prices which would impoverish the middle class. Or a big chunk of the middle class.

Italians love real estate: The GTA RE market transcends all. It has proven to be unaffected by GFC’s, abnormal debt to income and rent verses cost

The threat of deflation is just an empty threat against the relentless and unyielding rise of GTA housing prices .

GTA real estate is a fortress about to fall. You personally need to sustain your own family in the face of adversity.

Rob: Deflation is a far worst ailment than inflation. Wish it on nobody. — Garth

NOT EVEN THOSE WITH SOME HARD COIN STASHED AWAY ????

the movie “The Book Thief” shows the repression and fear under the Nazis in Germany. It amazes me that they (repression and fear) came in a modern and educated society.

#85 Prairieboy43 on 09.29.14 at 10:21 pm

Remember Uranium City? Could this be Fort Mac 2030?
Cold war ended. Price of Uranium dropped. Companies folded up, and left.

#86 Ripped on 09.29.14 at 10:29 pm

Funny how rates are so important… to some.

Must be some people in a lot of debt.

#87 Muk on 09.29.14 at 10:32 pm

I have a dumb question.
Economy is cyclical by nature true or false?
If so, why can a sane person borrow $700K to buy a house in a globalized economy and expect its value to always go up for 30-40 years?

I cannot forecast what’s going to happen to the global economy even 2 months from now!! How can I dare to forecast what’s going to happen in 30 years?

#88 };-) aka Devil's Advocate on 09.29.14 at 10:39 pm

#2 Harbour on 09.29.14 at 6:09 pm
Nobody buys 400K mobile homes in Fort Mac anymore. They all live in company camps, then get the hell out of there on weeks off.

That is correct… and fly direct from Fort Mac job to their spanky crib in Kelowna to spend time with the family on their time off!

Ya makes yer money where ya has ta and spends it where ya wants ta. Oil patch wives like to live in Kelowna while their hubbies earn a living in Fort Mac.

But of course it’s a myth like HAM… HMacM… ya right.
sarcasm off
DAM RIGHT!
Why else would the airlines have such a route? Maybe because there is a demand… Duh

};-)

#89 Grantmi on 09.29.14 at 10:39 pm

#5 First on 09.29.14 at 6:14 pm
FIRST!!!!!

1st Idiot!!!!

#90 };-) aka Devil's Advocate on 09.29.14 at 10:49 pm

HAM (Hot Asian Money) and MacM Fort MacMurray Money… Do you think maybe they have something in common?

Only that both realize the AWESOMENESS of British Columbia.

sarcasm on
Yup both myths. It’s sucks to be in BC. You’re all way better off in the Big Smoke.
sarcasm off

#91 Teacher's Ass-istant on 09.29.14 at 10:55 pm

It’s not exactly the topic but could be what the outcome turns out to be. Caution with this link folks, it is some footage I have uncovered of Mark or could be Smoking Fool. It’s just not completely verified but it is one of them. The source is solid though.

http://www.youtube.com/watch?v=xhNneU5shTs

#92 Teacher's Ass-istant on 09.29.14 at 10:58 pm

Sorry everyone it appears that the link posted earlier actually turns out to be Devil’s Anus. Sorry for the confusion but you can see how they could be honestly confused.

#93 Larry1 on 09.29.14 at 10:59 pm

Don’t fight the Fed

#94 NEVER GIVE UP on 09.29.14 at 11:00 pm

Shawn:
Perhaps since I do not profess to know all, there would be a better way to gauge CEO Wage Fairness.
There is a multitude of graphs out there (google CEO wages)
Most of them show a sea change in the fairness of pay starting in around 1980.
While American workers were producing more they were getting paid less. Corporate profits rose and CEO pay went through the roof from roughly 25 to 50 times worker pay to 350 to 500 times worker pay.
Perhaps it should be capped at some reasonable amount like the NHL finally capped salaries.
Maybe a formula like a percentage of corporate earnings. Maybe 0.5% or maybe 50 times worker earnings?

The fact that shares are debased even though they are voted on by the majority of shareholders is simply wrong.
All CEO pay should be paid out of company earnings and there should be none of this stock option offering.

I always thought highly of Ronald Regan and his “Trickle Down Economics”. I have since changed my mind and I feel the whole change in that era was a mistake that we are now paying for.

http://thebeatnews.org/thoughts/2011/10/20/the-core-of-the-problem/

#95 Wicked as it seems on 09.29.14 at 11:03 pm

Lets face it..the spread between those 1% billionaires and the rest of us, the money hoarders who we consider successful need to be giving the 99% more equity, deflation is hugely because of inequality, banksters, corporate ceo’s, governments corrupt, wall st hucksters are sucking us dryer than ever before….they cannot change the way the trough is aimed!

#96 bildo on 09.29.14 at 11:10 pm

Might make for a good blog in future?

http://www.thestar.com/business/real_estate/2014/09/26/the_lawyer_who_is_taking_on_torontos_condo_developers.html

#97 NostyVlad the Snugglebombed on 09.29.14 at 11:25 pm

#52 Rob on 09.29.14 at 8:21 pm — “Deflation is a far worst ailment than inflation. Wish it on nobody. — Garth”

“NOT EVEN THOSE WITH SOME HARD COIN STASHED AWAY ????”

Evidently, Rob is correct.

Moldova — Ukraine Part 2? The Invisibility Cloak is here.

#98 Nomad on 09.29.14 at 11:42 pm

“Oil could drop to eighty bucks in weeks or months”

Surprising how fast oil went down recently. The biggest mover of markets recently. That’s why it’s not a good idea to buy a house in a city that highly depends on a single commodity (Calgary). Over a 30 mortgage, there’s a good chance you’ll live through a bad period.

Companies will want to keep their bottom-line pretty and so will lay off people.

On another note, while my colleagues are still counting their property virtual capital gains, I sold Valeant for a real capital gain and moved the money into canadian tech companies.

#99 Ronaldo on 09.29.14 at 11:52 pm

#47 Takla – re: Solar power and silver. Bang on. China by itself will consume most of the world’s silver production in the years ahead. And right now, they can purchase it real cheap.

http://www.theguardian.com/environment/chinas-choice/2014/jan/30/china-record-solar-energy

#100 Basil Fawlty on 09.29.14 at 11:53 pm

Rising prices and a slowdown in the economy. Is this not stagflation?

I can’t see the Fed increasing rates, given how weak the US and most economies are at this time. US debt levels are so high that the country is effectively bankrupt. An increase in interest rates would crater the US debt bubble.

#101 I love Deflation on 09.30.14 at 12:15 am

During the GFC I loved every minute of it. It was the best time of my life. I didn’t have to complete with people who had no money . My money was worth more and I got more for my money ( how horrible). Those who had no money and debt couldn’t go out and spend money they didn’t have (oh the horror). Deflation is what the world needs. The world has to purge excess debt and if people lose their jobs and homes so be it. Financial capital has been going into assets creating a world wide housing bubble. Bring on deflation and let the good times roll.

#102 deaner on 09.30.14 at 12:17 am

Re: #59 Anson
Re: #74 FLAWED

Just to tie these two comments together…

Many public sector employers now have various forms of wage freezes, some since the GFC, and most which will last indefinitely.
Wage freezes impacts younger employees far more than older ones as the young one’s would be most likely to get raises for performance improvement. Those frozen at the top are typically older, those at the bottom are typically younger.

At the health authority I work at, there’s as much of a 30% pay premium for being old and having gotten your raise before the freeze.

#103 grasshopper on 09.30.14 at 12:19 am

I found this interesting. Property taxes.

http://www.huffingtonpost.ca/2014/09/27/property-taxes-canada_n_5890090.html

#104 Raven68 on 09.30.14 at 12:40 am

Saw this on the Vancouver Sun website today. Suggested buyer? “A young person with a practical car and some toys” or “a family”. In a 26th floor penthouse for $1 million? Sigh.

http://www.vancouversun.com/business/real-estate/Video+Take+look+inside+million+Vancouver+penthouse/10246038/story.html

#105 devore on 09.30.14 at 1:05 am

#88 };-) aka Devil’s Advocate

But of course it’s a myth like HAM… HMacM… ya right.
sarcasm off
DAM RIGHT!
Why else would the airlines have such a route? Maybe because there is a demand… Duh

Direct flights Ft Mac to Kelowna are new starting this year. Same as to Vancouver, and the flight to Van is cheaper. So maybe not as much demand as you think?

As usual, you write a lot, but say very little. Alberta oil money effect in Okanagan is well established and accepted already. Keep fishing up those red herrings and tilting at strawmen.

#106 Charles Ponzi on 09.30.14 at 4:25 am

The Big D is for Depression.

#107 Charles Ponzi on 09.30.14 at 4:26 am

Here in Australia we have falling iron ore prices–but the story is still the same.

#108 Habs76-79 on 09.30.14 at 5:04 am

Why do people think it does not matter if interest rates do not go up? If one has attained more debt than they truly can service it’s no longer an issue if interest rates stay low or go up. IE: 2014 Chevy full size pickups are being peddled here in Canada at 0% interest over 84 months. If I bought a $40-$50 thousand pickup and I found I can’t afford the payments even at 0%, I’m just as screwed as if they were 5% or 10%.

As to houses, mortgage rates can stay low but if tomorrows prospective buyers no longer have the ability to absorb ever increasing prices even at 2% or 3% interest rates means that house prices will stall and likely fall, screwing over those who bought too much house and maybe have too little ability to carry the loan.

As to deflation, whether we have any credibly measured deflation as Garth writes or not, we will have inflation on many necessities in life mostly cost of food, and general utilities. Plus ever increasing taxes and govt fees.

Add a deflationary cycle means we all will have to accept it if it happens to any credible level. Nothing we each can do to stop this deflation that Garth points out if it does take hold and for a length of time. One can wish it to not be, one can cry for their govt. or central bankers to make it not be, but if the crushing weight of debt, and global stalling out of economies carry on we each must accept the ride.

The only control we each have and our personal household units is to protect ourselves as best we can. Falling to your knees on hopes that prayer will stop a deflationary cycle will not matter.

In the cold, hard light of reality, CASH IS FREEDOM, CREDIT IS A DEBT OBLIGATION THAT MUST BE REPAID FROM TOMORROWS INCOME! An income that may not be what you hope tomorrow and the debt carried may cost you more to hold as well later on.

#109 Honey Dripper on 09.30.14 at 6:41 am

So when they told me I shouldn’t be in long bonds it was the right trade. Financial assets and diversify always!

#110 SOS on 09.30.14 at 6:59 am

What about the soldier Dodsworth who lost $88,000 in 2007 due to a depressed housing market? Should the taxpayers pay for his loss (we already paid $15,000) or should he have rented, knowing that he may have to move due to his career? I think if he wins his lawsuit then it should also be decided that people in his situation would pay the taxpayers any profit they make in the housing market when reposted, though that could take away any incentive to sell high.

#111 SOS on 09.30.14 at 7:01 am

Oh I may have gotten names and dates mixed up but it’s an issue.

#112 };-) aka Devil's Advocate on 09.30.14 at 8:29 am

#92 Teacher’s Ass-istant on 09.29.14 at 10:58 pm

LOL, Love it!!!

#113 Londoner on 09.30.14 at 8:36 am

“Yeah, deflation. It’s what you need to worry about, now that we’ve all pickled ourselves in debt.

No true. You can still have economic growth during a period of deflation. Anyways, if you see the kind of deflation you’re talking about, the kind where real wages and employment are falling along with asset prices, then you can kiss a lot of things good-bye along with the your predictions for any interest rate hikes.

Of course you’re not likely to see extreme deflation just as you’re not likely to see runaway inflation. Central bank intervention makes either scenario very difficult. What you are likely to see, however, is subdued growth and low inflation over an extended period of time. Wages will grow slowly to make debt repayment manageable in a rising interest rate environment.

Nowhere have I forecast serious deflation or hyperinflation. That’s crayon economics. The warning is simply that debt and the asset it’s most often associated with – real estate – are about to become more burdensome. It will surprise many. — Garth

#114 Londoner on 09.30.14 at 8:37 am

^ meant to say “not true”… haha

#115 };-) aka Devil's Advocate on 09.30.14 at 8:41 am

But seriously, the only problem with Kelowna is that practically everybody wants to be here.

It is intellectually dishonest to speak of environmentalism without discussing population control.

Ya I know; there I go “Trolling” again. But seriously both statements bear a lot of truth.

#116 TorontoBull on 09.30.14 at 8:43 am

Deflation means low interest rate environment. So after yesterday’s SM bashing I will say that he has been right on Toronto housing market, interest rates, and his great call of last year re samsung vs apple!
SM, shine on you crazy diamond.

#117 CdnFlyer on 09.30.14 at 8:55 am

Woke up with a killer hangover. Ever try writing a book with a hangover? Not going well. I think a thousand monkeys could write a better book than me. how did Hemingway do it? I’m better than Hemingway, but how did that old basterd write with a throbing head?

#118 liquidincalgary on 09.30.14 at 9:02 am

several weeks ago i mentioned the ‘d’ word and was promptly slammed for it…now look

#119 Italians love real estate on 09.30.14 at 9:04 am

#90 };-) aka Devil’s Advocate on 09.29.14 at 10:49 pm
HAM (Hot Asian Money) and MacM Fort MacMurray Money… Do you think maybe they have something in common?

Only that both realize the AWESOMENESS of British Columbia.

sarcasm on
Yup both myths. It’s sucks to be in BC. You’re all way better off in the Big Smoke.
sarcasm off
—————–

Just like you are better off in Utah over New York I suppose ?

Sarcasm on

#120 };-) aka Devil's Advocate on 09.30.14 at 9:15 am

#119 Italians love real estate on 09.30.14 at 9:04 am

Just like you are better off in Utah over New York I suppose ?

I think so.

#121 Shawn on 09.30.14 at 9:19 am

Excessive World Debt? Record world debt to GDP

It’s always useful to consider the other side of the story.

If someone or some country is in debt it means someone had surplus to lend.

Surely surplus is not a bad thing?

If someone borrows to buy a new house someone else paid for the materials and labour and land and land development to create the house. They must of had surplus to do so.

If many people have surplus there are perhaps three choices:

1. They can invest the surplus. For example build rental houses and collect rent.

2. They can lend the surplus.

3. Society can tax the surplus away.

4 Other options?

We have to think which is better for society and what the consequences of each are.

Right now we have record lending. To me this implies record savings and surplus and I believe explains (to some degree) low interest rates.

Pointing simply at record debt to GDP and saying the sky is falling (as the Geneva report apparently does) is fairly shallow analysis in my opinion.

#122 Shawn on 09.30.14 at 9:22 am

Population Control

Devils Advocate

It is intellectually dishonest to speak of environmentalism without discussing population control.

************************************
Probably true. In Guns Germs and Steel by Jarod Diamond he described ancient population control on certain islands. It involved removing two certain vital parts from some of the boys. I found it very disturbing indeed. But it had to be done. Sorry to mention it.

#123 Smoking Man on 09.30.14 at 9:28 am

#117 CdnFlyer on 09.30.14 at 8:55 amWoke up with a killer hangover. Ever try writing a book with a hangover? Not going well. I think a thousand monkeys could write a better book than me. how did Hemingway do it? I’m better than Hemingway, but how did that old basterd write with a throbing head?
………..
I’ll take the bait….

Look at yesterday flyby, all of Smoking Man endorsements
.
Seams you lost all your wing men.

I won you lost… Na na na Bo Bo…

#124 Tiger on 09.30.14 at 9:32 am

Smoking man has been educated!

#125 CdnFlyer on 09.30.14 at 9:33 am

Short Facebook. Instagram is the way of the future.

#126 Toronto_CA on 09.30.14 at 9:52 am

Canada didn’t grow in July, while the US is growing 4%+ after the shitty winter. First month in 2014 with no growth. What is going to happen when housing cools off everywhere?

http://www.cbc.ca/news/business/canadian-gdp-unchanged-in-july-1.2782283

#127 Kenchie on 09.30.14 at 9:53 am

“We cannot generalize that advisers are helpful, although we can say some of them are.”

http://www.theglobeandmail.com/globe-investor/personal-finance/retirement-rrsps/not-all-advisers-have-their-clients-best-interests-at-heart/article20847037/#dashboard/follows/

Rule: never take advice from a financial salesguy. — Garth

#128 Godth on 09.30.14 at 9:54 am

Limits to Growth was right. New research shows we’re nearing collapse
http://www.theguardian.com/commentisfree/2014/sep/02/limits-to-growth-was-right-new-research-shows-were-nearing-collapse

#129 Funny that on 09.30.14 at 10:07 am

#117 CdnFlyer on 09.30.14 at 8:55 am
Woke up with a killer hangover. Ever try writing a book with a hangover? Not going well. I think a thousand monkeys could write a better book than me. how did Hemingway do it? I’m better than Hemingway, but how did that old basterd write with a throbing head?
—————————————————-
very authentic

#130 joblo on 09.30.14 at 10:09 am

“But I digress. We were talking about Fort Mac. Boom town. The oil and truck nuts capital of Canada, and these days a fine little microcosm of global economics.”

Microcosm indeed, the BIG game is being played in Russia.
Does Exxon have to abide by sanctions?
Putin winning, Petro $ losing value.
Geopolitical map shifting.
Now that is something to watch.

#131 };-) aka Devil's Advocate on 09.30.14 at 10:17 am

Arithmetic, Population and Energy
Dr. Albert A Bartlett
Professor Emeritus
Department of Physics
University of Colorado

#132 not 1st on 09.30.14 at 10:24 am

Garth, you are pining for economics from the 70s. We now have an iphone economy where it obsoletes itself every 18 months and produces more and more goods cheaper for more people. That is deflationary by definition. How is that not a good thing? We need to give up on this idea of scarcity and supply/demand. Thats old school thinking.

#133 miketheengineer on 09.30.14 at 10:33 am

Garth et al:

More on the US Steel plan to “STEAL” from 90 year old Grandma’s their pension money…and the greatest Fraud ever to be launched. (so you think your pension will be there…Ha Ha Ha..keep laughing!)

See below:

Union leader Rolf Gerstenberger wouldn’t comment about the special payments beyond acknowledging “it’s one of the key things” in a CCAA process. In a recent bulletin to members, he dismissed that process as a “fraud.”

“The company is not selling the assets that can be sold to satisfy creditors, suppliers and its employee obligations. Rather, the parent company is trying to pull a fast one by ‘deconsolidating’ from September 16 onwards and going into CCAA bankruptcy protection under the parent company’s control,” he wrote. “In this way it hopes to take for itself whatever assets it can and leave Canadian creditors, suppliers and employees twisting in the wind without any claim on those or other U.S. Steel assets.”

Here is the link:

http://www.thespec.com/news-story/4887000-u-s-steel-seeks-incentive-payouts-to-retain-key-employees-/

#134 april on 09.30.14 at 11:18 am

#132 – You don’t understand deflation. It’s not good. Do you really think Garth would print something like that if he didn’t know what he was talking about?? Get educated>

#135 Daisy Mae on 09.30.14 at 11:22 am

#9 ILoveCharts: “On the other hand, when people in the sands are making big wads of money and their employers are directly helping them with a mortgage to retain them.. it’s not all bad.”

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

There’s a risk workers will become become ‘lifers’ — so deeply in debt with houses and toys they can’t afford to leave.

#136 Son of Ponzi on 09.30.14 at 11:26 am

#117 CdnFlyer on 09.30.14 at 8:55 am
Woke up with a killer hangover. Ever try writing a book with a hangover? Not going well. I think a thousand monkeys could write a better book than me. how did Hemingway do it? I’m better than Hemingway, but how did that old basterd write with a throbing head?
—————-
A parody of a parody. Could be a first.
Keep it up Flyer Boy.

#137 Kenchie on 09.30.14 at 11:35 am

Everyone should read this:

http://www.bloombergview.com/articles/2014-09-30/carbon-taxes-don-t-kill-jobs

#138 Ronaldo on 09.30.14 at 11:44 am

#105 Devore –

”As usual, you write a lot, but say very little. Alberta oil money effect in Okanagan is well established and accepted already. Keep fishing up those red herrings and tilting at strawmen.”

Absolutely. Alberta money in the Okanagan has been around for as long as I can remember and going back to the early 70’s. Developers specifically targeted the “Tar Sands” because of the big money. I know of several developments that sold out to Albertans that were purchased on credit and which were walked away from when the oil prices crashed. Many properties still sitting vacant since. I could name a few. Several developments went bankrupt several times over. It’ll happen again. We’re working on the third generation Albertans now. They never seems to learn. In the development I live in, many bought by Albertans some of whom only come a couple times a years. Rest of the time they sit empty with yards untended. Many up for resale and prices lower than what they paid. Nothing new here. Just a different crop of fools. A place purchased by a young couple in their 30’s with a newborn next to mine a couple years ago has only seen the new owners a couple times since. The husbands grandfather was there fixing up the fence one day and I was talking to him. He said, “I don’t know why they bought this place, they’ll never use it and besides his wife’s mother has a place up at Silver Star which they barely use, makes no sense”. I agreed.

#139 not 1st on 09.30.14 at 11:59 am

#134 april on 09.30.14 at 11:18 am

You need the education because deflation is the preferred choice over a huge bubble popping and thats what we are heading for. The last time the economy was allowed to purge its excesses was back in 1989.

The last 3 times it has stumbled it has been puffed up with artificial everything and now its this giant gasbag that is way out of step with reality. Thats why houses in Saskatoon are $500k instead of $125k.

Deflation is slow and orderly, bubbles are not. Your choice.

#140 Bottoms_Up on 09.30.14 at 12:01 pm

#133 miketheengineer on 09.30.14 at 10:33 am
————————————————-
And you know what’s nuts? They only purchased the money-losing Hamilton steel operation to prevent it from (possibly) falling into the hands of their Russian competition. The place was bankrupt years ago; it’s sad these corporations are playing with the financial lives of thousands of people.

#141 Bottoms_Up on 09.30.14 at 12:03 pm

#132 not 1st on 09.30.14 at 10:24 am
————————————
That is a short-sighted view.

Deflation means people withhold buying because it’s cheaper next month, next year. Sales plummet; layoffs ensue. Prices decline, yet there are no jobs left so now people can’t buy stuff (let alone pay down debt).

That is a serious problem.

#142 Bottoms_Up on 09.30.14 at 12:07 pm

#122 Shawn on 09.30.14 at 9:22 am
—————————————
And by population control we’re talking about India, China and other south Asian countries, where there are very high populations (ie, millions) of people entering a middle-class lifestyle?

#143 Bottoms_Up on 09.30.14 at 12:10 pm

#121 Shawn on 09.30.14 at 9:19 am
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So who are the top 3 or 5 wealthiest countries that are doing all this lending?

#144 Smoking Man on 09.30.14 at 12:50 pm

#137 Kenchie on 09.30.14 at 11:35 amEveryone should read this:

http://www.bloombergview.com/articles/2014-09-30/carbon-taxes-don-t-kill-jobs
……….

Niavaty at its finest…. Anytime you increase the cost of running a business you lose jobs period.

In the passed when economy was to hot, BOC raised rates which caused layoffs.. To weak they drop the rate, making the cost of business cheaper resulting in hiring..

What you newly schooled don’t understand all this save the planet, tree hugging religion is a distraction from the real problem..

In the sixties a man could work a simple job, stay at home wife would rase 4 kids, have a cottage and a nice car.

The machine has you fooled thinking, 300 sqft condo is cool, I don’t need a car, that’s bad I’ll get a bycle.

Truth today the young couple can not afford kids, a car forget a house.

It’s no accident, it was planned.

But let’s go get big bad oil…idiots…

#145 not 1st on 09.30.14 at 12:58 pm

#141 Bottoms_Up on 09.30.14 at 12:03 pm

That is a short-sighted view.
——

Not at all, it is a byproduct of modern economic theory and policy and it happens one way or another no matter what you wish. We can either pop this thing hard and have big pain, or we can slowly deflate it and ride it down in a manageable way.

Either way its going to happen. Even if govts try to avoid it and go back to QE and stimulus, then sovereign debt spins out of control. Garth is wrong about sovereign debt – it does matter a lot.

#146 High Plains Drifter on 09.30.14 at 1:18 pm

Alberta separates the winners from losers more than anywhere else in this country. Your man bought in Ft. Mac at exactly the wrong time. Many got caught buying into the LloydMinster heavy oil boom. Big oil plays the real-estate game in these company towns so the nerves of a poker player are required. He is leaving Ft. Mac Just when things are getting interesting. Say ,did you hear, free Tesla energy is just around the corner?

#147 Kenchie on 09.30.14 at 1:24 pm

bwahaha. Headline is awesome.

http://www.theonion.com/articles/woman-worried-student-loans-could-prevent-her-from,37002/?utm_source=Facebook&utm_medium=SocialMarketing&utm_campaign=LinkPreview:1:Default

#148 Westcdn on 09.30.14 at 1:41 pm

Nothing personal response: re #48 comment
I don’t how the tiny GNP % contribution of the oil sands was calculated but it is in my opinion, misleading. I am confident saying without oil sands exports, Canada’s standard of living would take a big hit. Take a look at these numbers (you can scroll down within tabs):
http://www.worldsrichestcountries.com/top-canada-exports.html
There are a lot of moving parts in our economy when it comes to measuring GNP which I think is distorted by overvalued real estate and the nominal value of our currency. Flip between our top exports and top import tabs and you can see we do a lot of horse trading. Given “Oil” is a resource and a positive net addition (despite offshore purchases for eastern refineries) to our National income but “Fertilizers” and “Vehicles” are a net negative and indicate we sell primary goods for finished goods.
I don’t see real estate or electric power exports as a top 10 item that earns income for Canada. If the price of crude oil falls or the oil sands reduces production, I may try growing cash crops in my backyard. Without oil exports, real estate and the general Cdn economy would experience a painful GNP contraction regardless of what interest rates and debts would do.

#149 Kira on 09.30.14 at 1:55 pm

Garth, consider writing a post on assets/sectors that do well in deflationary environments. We would find that helpful.

#150 Shawn on 09.30.14 at 2:06 pm

Who is doing the lending?

Bottoms up asked me:

So who are the top 3 or 5 wealthiest countries that are doing all this lending?

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It’s rare for countries to be net lenders. Almost all countries lend some money by buying bonds of other countries. But almost all countries (the governments)are net borrowers.

Most borrowed money comes from individuals, corporations and pension funds.

Everyone with money in the bank is a lender. Everyone with RRSPs that include bonds and fixed income is a lender. Pension plans are usually effectively lending 40% of their money. Insurance companies buy bonds which means they are lenders.

I know someone will argue that most of the borrowed money is printed (some truth to that) or comes from fractional reserve banking (no truth there as fractional also creates savings). The reality is that with small exceptions, every dollar of debt is matched by a dollar of savings. Money borrowed is money lent.

If someone is lending, someone has savings and surplus. That is a good thing. Unless we prevent people from having surplus we will always have those with surplus lending it out. Debt will be with us always . And it is a very good thing.

To lend is to share (with expectation of repayment later).

No one forces anyone to borrow money.

#151 prairie person on 09.30.14 at 2:19 pm

Does anyone have any information on ACM or on commercial mortgage funds? I vaguely remember Garth mentioning commercial mortgage funds or ETFs as being safer than other types of mortgage funds or REITS but I could have it wrong. It was a while ago.

#152 Victor V on 09.30.14 at 2:30 pm

https://www.facebook.com/torontolife/posts/10152290509145213

How ridiculously competitive has Toronto’s real estate market become? How rich do you have to be own a home in this town? Which neighbourhoods have the most cutthroat bidding wars? This month’s cover story has all the anxiety-inducing answers.

#153 Smoking Man on 09.30.14 at 2:45 pm

http://www.romspen.com

Approx 8 to 10% a year, min 150k

#151 prairie person on 09.30.14 at 2:19 pmDoes anyone have any information on ACM or on commercial mortgage funds? I vaguely remember Garth mentioning commercial mortgage funds or ETFs as being safer than other types of mortgage funds or REITS but I could have it wrong. It was a while ago.

#154 Sheane Wallace on 09.30.14 at 2:51 pm

#150 Shawn
The reality is that with small exceptions, every dollar of debt is matched by a dollar of savings. Money borrowed is money lent.
………………………..
really?

M2 in Ca is 1.2 trillions

Canadian government debt, commonly called the “public debt” or the “national debt”, is the amount of money owed by the Government of Canada to holders of Canadian Treasury security.
In 2013, this number stood at CAD$1.2 trillion

Household debt is 1.7 trillions.

Corporate debt is around 1 trillion.

You do the math. Debt of excess of 4 trillions, all the money 1.2 trillions.

#155 FLAWED on 09.30.14 at 3:02 pm

Just to tie these two comments together…

Many public sector employers now have various forms of wage freezes, some since the GFC, and most which will last indefinitely.
Wage freezes impacts younger employees far more than older ones as the young one’s would be most likely to get raises for performance improvement. Those frozen at the top are typically older, those at the bottom are typically younger.

At the health authority I work at, there’s as much of a 30% pay premium for being old and having gotten your raise before the freeze.

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

I see…..

http://globalnews.ca/news/1349113/delta-firefighters-sign-a-new-contract-that-includes-a-20-per-cent-wage-increase-over-eight-years/

Given existing inflation, they just settled for a freeze. — Garth

#156 saskatoon on 09.30.14 at 3:02 pm

#122 Shawn

Indeed, the founder of the World Wildlife Fund (WWF) was also the head of the British Eugenics Society: Julian Huxley, brother of Aldous.

#157 Snowboid on 09.30.14 at 3:04 pm

#105 devore on 09.30.14 at 1:05 am…

While there are a couple of well-off ‘oil’ folks in our complex ($ 200,000 cars in the garage), there are many Alberta plates on beat-up old pickups that haven’t moved in a couple of years.

Maybe because 1/3 of the buildings’ condos are rentals, heavily subsidized by the wannabe RE investors!

There are units in the building that have been on the market for over two years – although you wouldn’t know it as they keep ‘re-listing’ to cover their tracks.

You can usually spot these folks, as they are always in a foul mood – I guess losing up to 30% of your ‘investment’ since 2008 will do that to you.

The renters here are the happy ones, always a friendly greeting when we meet.

#158 Dogman01 on 09.30.14 at 3:14 pm

144 Smoking Man on 09.30.14 at 12:50 pm

I saved an old quote from you several years ago:

1960 Dad worked, Mom stayed home, 5 Kids, no debt.
1970 Dad worked, Mom worked part time, 4 Kids, no debt.
1980 Dad worked, Mom worked full time , 3 Kids, a little debt.
1990 Dad worked, Mom worked full time , 2 Kids, more debt.
2000 Dad works 2 jobs, Mom worked full time , 1 Kid, tons of debt.
2010 Dad works 2 jobs, Mom works 2 jobs, No Kids, absolutely broke and in debt.
Today why is it that with our great educational system, and with all the kids with degrees why can’t they see they have been shafted? – Smoking Man

#159 FLAWED on 09.30.14 at 3:20 pm

I see…..

http://globalnews.ca/news/1349113/delta-firefighters-sign-a-new-contract-that-includes-a-20-per-cent-wage-increase-over-eight-years/

Given existing inflation, they just settled for a freeze. — Garth

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

The low inflation that does not exist? Apparently that means over 8 years inflation is 20%. Which of course is NOT something the private sector can handle. But of course the Public Sector does not care about the private sector.

#160 Shawn on 09.30.14 at 3:41 pm

Sheane doubts me, I am schocked

Sheane said:

You do the math. Debt of excess of 4 trillions, all the money 1.2 trillions.

*****************************************
Thanks for the response. Good observation, but I can explain.

Money in savings accounts is counted as money or part of M2

If instead I buy a treasury bond and put that in an investment account, I have loaned the government money. But this is not part of M2. Not counted as money.

I still consider the bond to be part of my savings.

All debt is owed to someone and that party count treat that receivable (bond, savings account or IOU) as his savings.

A world awash in debt is most certainly a world awash in savings. And when interest rates are at record lows it indicates savings are in abundance such that lenders need only pay low interest to borrow.

#161 screwed on 09.30.14 at 3:48 pm

#24 Sheane Wallace

I share your sentiment. The debt binge was encouraged for at least 5 years if not more. The foodgates were opened and governments printed to cover all their expenses.

Now they’re trying to roll back the times when their banks are saturated with paper and everyone is in shackles to the banks. Good luck with that plan, Fed shysters.

The wave of defaults will be epic. Good collateral is already hard to find and the size of the next margin calls will make 2008 look like a picnic.

They will print and inflate because that is all they can continue to do! There is NO “recovery” to speak of except in the lifestyles and on the balance sheets of the top 1%. They never suffered to begin with.

Bentley is showing top sales while Volkswagen sales are declining. It couldn’t be anymore graphic than that. The elite will drive in style and the peasants will walk again.

Let’s see about that.

By the way, the dude on the golf course is Obama. The house burning behind him is the American economy. Dude has no idea or pretends not to know. Spends all his time golfing. Best President ever!

#162 Mike in Toronto on 09.30.14 at 3:50 pm

135 Daisy Mae

“There’s a risk workers will become become ‘lifers’ — so deeply in debt with houses and toys they can’t afford to leave.”

Sounds like Hamilton.

30 years on and its only hope for rescue is proximity to the GTA.

What’s Calgary next to?

#163 Doug in London on 09.30.14 at 3:52 pm

@omg, post #64:
You’re right that the world will never run out of oil, but it will eventually run out of cheap oil. That’s why fracking, development of the Alberta Oil Sands, and farther offshore oil rigs are present today. As the easier to produce oil is used up, where it just oozes out of the ground, producers go for the harder to get oil. After all, the higher price makes it economical, where it wasn’t economical when the price of crude dropped to $11 per barrel in 1998. Thus in the longer term the price of crude will rise and ultimately that will make it obsolete. Either it will be replaced by alternatives like electric transportation or biofuels, or people will simply use less, or a combination of both.

In summary, it’s anybody’s guess where the price of crude will go, it could drop more from its present price in the low nineties per barrel, but the longer term trend is higher. That’s driven by increasing demand from emerging markets countries as well as depletion of oil that’s easy to extract. I won’t even try to predict how housing prices in Fort Mac will go in the future, but the city itself will be around for many years to come. I’ll sign off now and put in a lowball purchase offer for XEG.

#164 Blacksheep on 09.30.14 at 4:18 pm

Shawn # 150,

“Most borrowed money comes from individuals, corporations”

“Everyone with money in the bank is a lender.”
————————————————–
Shawn. Please stop lying. Here is the BOE link, I’ve supplied to you for the forth time?

http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q1prereleasemoneycreation.pdf

“Money in the modern economy: an introduction’, broad money is a measure of the total amount of money held by households and companies in the economy. Broad money is made up of bank deposits — which are essentially IOUs from commercial banks to households and companies — and currency — mostly IOUs from the central bank.(4)(5)”

“Of the two types of broad money, bank deposits make up the vast majority — 97% of the amount currently in circulation.(6)And in the modern economy, those bank deposits are mostly created by commercial banks themselves”

“Money creation in practice differs from some popular misconceptions — banks do not act simply as intermediaries, lending out deposits that savers place with them, and nor do they ‘multiply up’ central bank money to create new loans and deposits.

Your: For every seller, there is a buyer, stock market analogy does not apply to bank lending. Why the repeated deception? At this late date, a claim of ignorance, would be laughable.

Your obviously, paid to do it, what a shitty way to make a buck.

#165 not 1st on 09.30.14 at 4:33 pm

Our entire economy is based on inflation, not organic demand growth.

Ask your parents and grandparents about their first purchases. They will tell you they paid cash for cars and homes. Mortgages and car loans were unheard of. Nobody had a credit card and if you had a HELOC, you were a loser.

Now days people go into debt for items that are obsolete in a year like all the iphone 6 weirdos.

#166 Shawn on 09.30.14 at 4:41 pm

Blacksheep doubts me as well!!

Shawn. Please stop lying. Here is the BOE link, I’ve supplied to you for the forth time?

http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q1prereleasemoneycreation.pdf

“Money in the modern economy: an introduction…

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

Blacksheep, you see, the thing is, I took the ADVANCED course not just the introduction that you refer to.

Fractional reserve creates money because loans flow back to the banks as deposits. When it comes back and is loaned out again it still belongs to the depositor not the bank.

Every debt is owed to some one. One man’s debt is another man’s savings.

I have been reading bank balance sheets every quarter for 15 years and have advanced finance education, you?

I make money on bank shares, you?

#167 Shawn on 09.30.14 at 4:42 pm

those bank deposits are mostly created by commercial banks themselves”

Created by the banks yes, owned by the banks no. Owned by individuals and corporations and institutions.

A little knowledge is a dangerous thing.

#168 Smoking Man on 09.30.14 at 4:50 pm

#158 Dogman01 on 09.30.14 at 3:14 pmI saved an old quote from you several years ago:

1960 Dad worked, Mom stayed home, 5 Kids, no debt.
1970 Dad worked, Mom worked part time, 4 Kids, no debt.
1980 Dad worked, Mom worked full time , 3 Kids, a little debt.
1990 Dad worked, Mom worked full time , 2 Kids, more debt.
2000 Dad works 2 jobs, Mom worked full time , 1 Kid, tons of debt.
2010 Dad works 2 jobs, Mom works 2 jobs, No Kids, absolutely broke and in debt.
Today why is it that with our great educational system, and with all the kids with degrees why can’t they see they have been shafted? – Smoking Man
….

Ha nice….

But you see it the environment, climate change.. Silly.

The only climate that’s changed from a man in the 60 to a millennial is the amount of extra air between the young ones ears…

You see the buggers attack me.. The sky is just as blue and clean now as it was when I discovered Pink Floyd in thes 70s

But there teachers and AL Gore told them other wise..

#169 JOHN on 09.30.14 at 4:56 pm

Same house 60 Brock AV – toronto
LISTED TWICE

http://www.realtor.ca/propertyDetails.aspx?PropertyId=14866650
Listing ID: W3012697
http://www.realtor.ca/propertyDetails.aspx?PropertyId=14868760
Listing ID: W3013451

#170 Shawn on 09.30.14 at 5:47 pm

I’m Paid to Deceive this Blog?

Blacksheep said:

Why the repeated deception? At this late date, a claim of ignorance, would be laughable.

Your obviously, paid to do it, what a shitty way to make a buck.

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

LoL, do you really think anyone is paying anyone to post things on this blog where anonymous people argue with each other. I know it gets a ton of traffic but I don’t think the comments here are taken as authoritative. I post the truth as I see it.

But really all of us regular posters are a bunch of misfits as proven by spending our time here tilting at the windmills of the unconvincable.

Paid to post here. that is rich.