The last tool

HIPSTER modified

It was like having a cold Slurpee dumped in your warm lap. Bob Kaycic’s analysis of the condo market a few days ago could not have been more at odds with what the realtors have been telling the delusional citizens of Toronto. The boom, the BMO economist said, is kaput.

The facts are clear enough:

  • Housing starts in our largest market are at the lowest point in four-and-a-half years.
  • New builds in Toronto are down more than 50%. Two years ago there were 40,000 fresh units. Today, 16,500.
  • Building permits in the GTA crashed 43.5% in a single month (August). They’re down 27% year/year.
  • Meanwhile cranes darken the sky as almost 60,000 new units are under construction. Just imagine what that’ll do to the 2015 market.

This development’s worth mentioning given what happened over the weekend in Washington, and the financial markets last week. Seems the entire world is cooling off in way most political leaders and central bankers never saw coming. Global finance ministers are now up against a beast none have known in their professional or adult lives. A lot of them won’t survive.

“I’m worried about growth around the world right now,” was the comment of one senior Fed official to the ministers (including Joe Owe) and bankers. In fact, they’re all worried. Things are going badly.

In Europe inflation is the lowest in five years, and barely alive. Now European Central Bank boss Mario Draghi says massive stimulus spending is “the last monetary tool left” after the bank already slashed interest rates to nothing, offered cheap loans to banks and will be buying up private-sector assets.

Powerhouse Germany is running out of gas, and may soon be in recession. Manufacturing orders, industrial output and exports have all taken the biggest hits since 2009. The economy actually shrank in Q2 and Berlin’s about to forecast growth of around 1% for the year. Pathetic. Now the Merkel government’s being called the “Tea Party of Europe” by obsessing over a balanced budget while the economy sputters. Over the weekend a former US Treasury Secretary accused Germany of leading Europe into Japanese-style deflation. Ouch.

In the US, last week’s big market volatility seems to have rattled everybody. A new Ebola case in Texas isn’t helping much, either. Crappy growth in most of the world means falling US exports and lower corporate profits. Meanwhile uncertainty drives more money into Yankee dollars, which rise in value, making American goods less competitive. A higher dollar also creams commodity prices – like oil, already suffering due to reduced demand – and that’s bad news for Calgary. Worse, the Fed is scheduled to end its stimulative bond-buying program tater this month, which will further chill markets and inflation.

Speaking of which, expect central bankers to turn from creating jobs to desperately trying to raise prices. Commodities, incomes and inflation are all under downward pressure – even in the US, which is the world’s best hope for recovery. The inflation target there (2%) has been missed for 28 consecutive months. As in Canada, real wages are flatlining or in decline, and combined with low interest rates, it’s all having a profound effect on the economy, and society. Corporations can’t raise prices or they will hurt sales and cut profits. They have an impossible time cutting wages and salaries, thanks to organized opposition and the perception of unfairness. So, they can people instead. The unemployed don’t buy stuff, so the outcome is usually downward pressure on prices.

Yes, this is deflation. It’s approaching. Suddenly everyone’s focused on it, including investors who last week scrambled to turn paper profits into real cash.

While the Dow and the S&P 500 get all the headlines, small-cap stocks have already been leveled. About 80% of all smaller US publicly-traded companies have seen declines, while volatility has jumped 46% overall. Some people believe this is a portent for larger drops in the big indices, which seems like a reasonable conclusion. The current bull market has lasted almost 40% longer than most, and there hasn’t been a 10% correction for over three years (twice the normal).

Technically, it’s time. So you should expect more declines – which will probably set the stage for subsequent gains, since a protracted bear market is unlikely. That would mean selling into the teeth of this correction is a dumb thing to do – a strategy your know-it-all genius brother-in-law will probably embrace.

Well, there ya go. This is why people with balance, diversification and liquidity in their financial lives, as opposed to those with debt and illiquidity, will come out okay. Regardless of what lies ahead. In a deflating world – even mildly so – commodity and real asset values fall (happening now), real estate disappoints (that’s coming), incomes get swampy (had a raise lately?), making debt harder to pay regardless of what the rate is.

This past week has the Fed rethinking its plans to jack rates next year. It has people who bought stocks on margin avoiding their brokers. It has whole governments questioning. And it sure isn’t the time for your daughter to close on her condo.

150 comments ↓

#1 View on 10.12.14 at 4:57 pm

Very sobering. Happy Thanksgiving Garth, we should all be thankful for our lives here in Canada.

#2 crowdedelevatorfartz on 10.12.14 at 5:08 pm

Just ran into a developer friend of mine at safeway. He’s been working on a house for the last 2.5 years in Deep Cove/Indian Arm area of North Vancouver.
House has cost almost 7 million to build and he’s almost finished
“Whats next”? I asked.
His reply?
“Nothing”

#3 johnny d on 10.12.14 at 5:10 pm

Time to raise interest rates. There will be blood. But then normalcy will set in.

#4 Smoking Man on 10.12.14 at 5:13 pm

About a year ago, I called this..

From BBG

Bank of Canada Governor Stephen Poloz said he will focus monetary policy on his own economy’s progress rather than matching any tightening by the U.S. Federal Reserve.

The global economy is gathering strength and there are signs of improvement after a period of disappointment, Poloz told reporters in Washington yesterday. Poloz said Canada’s policy rate of 1 percent is already higher than the U.S. rate that’s close to zero, and said he wasn’t alarmed about a situation in which the Fed’s key rate could exceed Canada’s.

“That wouldn’t concern me in the sense that we have an independent policy, we are aiming for our inflation rate, not somebody else’s,” Poloz said. “The real question is: At what point will we get the fulsome follow-through from proved export performance to the U.S., when will we have that and when will it then begin to feed through to capacity investment and new jobs?”

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#5 Londoner on 10.12.14 at 5:23 pm

“Seems the entire world is cooling off in way most political leaders and central bankers never saw coming”

“Yes, this is deflation. It’s approaching. Suddenly everyone’s focused on it…”

Actually, I would say that’s exactly what central bankers have been expecting and it’s exactly that which made them take the actions they did. Just imagine how much worse it would be now if they hadn’t.

Btw – Happy Thanksgiving. To celebrate here in the UK we went to the Maple Leaf pub in Covent Garden. Fyi, despite the name, it’s nothing like a Canadian bar. Cheers!

#6 Rural Rick on 10.12.14 at 5:28 pm

Just ran across this article on how the Dutch manage their pension plans. We could learn a thing or two but hey this ain’t the Netherlands. Too bad.
http://www.nytimes.com/2014/10/12/business/no-smoke-no-mirrors-the-dutch-pension-plan.html

#7 Retired Boomer - WI on 10.12.14 at 5:31 pm

Well Garth, a week or two, of weak market numbers isn’t going to get financial advisors, or central bankers to change policy abruptly.

Besides, after 6 years of ZIRP and mostly recovery, is a breather the end of the world? Would a month, or two of negative numbers, and no inflation break the bank?

Yeah, my overall numbers have shrunk some $44,000 from their high-water mark. Yeah, it looks like 5.8% thus far, but there probably some extenuating factors in there with the international stocks, and one individual stock holding that’s down less. elides whenever you have bought / sold holdings during the year you muck up the averages.

Still, not having to fret debt, nor a job, nor if I will eat tomorrow, there is yet no reason to change this broadly diversified cluster.

your results may vary…

#8 Mukadi on 10.12.14 at 5:31 pm

The EU shot itself in the foot and should not complain:

“Sanctions against Russia are de facto sanctions against European business,” said Philippe Pegorier, Chairman of the Association of European Business in Russia (AEB), which is the largest business association in that country. According to Pegorier, sanctions against Russia could cause 300,000 layoffs in Germany and at least 100,000 in France.

#9 Londoner on 10.12.14 at 5:32 pm

Virtually every economist believes the Fed will begin to tighten in 2015. Did they not call you? — Garth

No, I just don’t agree with virtually every other economist.

#10 Joseph R. on 10.12.14 at 5:34 pm

” There comes a time in your life, when you walk away from all the drama and the people who create it.

You surround yourself with people who make you laugh.

Forget the bad and focus on the good.

Love the people who treat you well, farewell to the ones who don’t.

Life is too short to be anything but happy.

Falling down is part of life, getting back up is living.”

José N. Harris

Happy Thanksgiving at all Blog Dogs!

#11 Role on 10.12.14 at 5:38 pm

Deflat. Inflat. Its all merry for teh liking of more ebola at same time.. Can’t no for maybe find sundshine in the dark of monies debt! !
I do like Gart say ‘ balance yourself with out house!!’
Thanks Gart!

#12 John in Mtl on 10.12.14 at 5:40 pm

Sheesh… a boatload of bad news!! Good thing I’ve 0 debt, a decently managed portfolio, a good job, and am a few years away from retiring from full-time work in the rat-race maze.

I’ve never had so much and been so wise. I have much to be thankful for on this Thanksgiving holiday.

Thankful for true friends, a stable country, good health, a lack of nothing and a generous man that goes by the name of Garth Turner :)

John

#13 saskatoon on 10.12.14 at 5:51 pm

Stimulus and cheap money policies haven’t worked.

Solution: MORE stimulus and cheap money policies.

#14 Victoria Real Estate Update on 10.12.14 at 6:06 pm

Canadian housing bulls think that interest rates must rise in Canada before house prices can fall. They are quite simply wrong.

House prices in Victoria are currently 10-15% lower than (2010) peak levels despite historically low (emergency) interest rates.

Some national housing bubbles completely deflated while interest rates were at historically low (emergency) levels. Example: Japan..

It can happen in Canada. It is happening in Canada. It isn’t different in Canada.

#15 Smoking Man on 10.12.14 at 6:07 pm

Don’t you buggers hate it when I’m right, wow, just looked at my trade blotter, Thank you Facebook…

Tis a glorious thanks giving..

Note my wife and I where so hammered last night, she goes did you cash in the slip, nope I said did you..

We left a 1000 bucks in a slot machine and walked away..

Hope the homeless dude sitting next to us… Used his brain..

#16 Mike T. on 10.12.14 at 6:23 pm

This guy already told you what was going to happen.

I have posted this link at least twice on Mr. Turner’s site, thank you for hosting this open forum.

You live in a world governed by multi-national elites. They believe in the rules of free will and basically force you to accept their version of the world. Please ducate yourself.

This is the former head of the ‘World’ (lol) Bank, telling you what is planned for you. What happens from here is up to you. Don’t tell anyone no one told you what to expect. I am trying, despite the resistance.

quick recap:
“James Wolfensohn, former president of The World Bank and CEO of Wolfensohn and Co., addressed Stanford Graduate School of Business students with details about his work at the World Bank during its transition years and how the equation between developed and developing countries is changing. Wolfensohn claimed that in the next 40 years, a global power shift will see today’s leading economic countries drop from having 80% of the world’s income to 35%.

to quote the persona I dislike the most on this forum, SHIFT HAPPENS

do not miss out – this is what is happening

#17 Mike T. on 10.12.14 at 6:24 pm

the link

https://www.youtube.com/watch?v=6a0zhc1y_Ns

#18 james on 10.12.14 at 6:25 pm

#13 saskatoon

“Stimulus and cheap money policies haven’t worked.

Solution: MORE stimulus and cheap money policies.”

I’d say this is accurate. The entire ‘great financial crisis’ was in many ways an unwinding of irrational market behaviour fueled by cheap money (and moral hazard) in the first place.

Central bankers really don’t to anymore more sophisticated than the old coin clippers back in the Roman Empire. They just have fancy names for it (e.g., quantitative easing) and computers to spare them the burden of printing paper or clipping coins.

#19 Freedom First on 10.12.14 at 6:25 pm

Great post Garth! Nothing but the truth. Most unfortunate that the msm is always bullish world wide, until the shtf, and they have to report it, after the fact. Meanwhile the masses, as usual, get creamed. Play it again Sam, as it is the same world wide, in recent and in past history.

A feast is coming for the balanced, diversified, liquid, debt free, and cash to spare. There will be very good sales coming in ETF’s, as well as other assets that are currently being hammered. Not time to buy yet. More pain coming in all the ways Garth mentioned, and more, as the domino effect will be seen only as it happens. I just love Garth’s strategy of managing financial matters of every description, as I have always believed that the best offense is a solid defense. Garth is a good coach to have on my side. Helps to keep me living in gratitude.

#20 Nemesis on 10.12.14 at 6:32 pm

#SynchronousGlobalHardLanding? #SayItAin’tSo! #NoWorries,SaltierDogz… #AtLeastSomeone’sGotYourBack… #Cue:ScherzoForMotorcyles!

http://youtu.be/jIRxsCHViPk

#21 KommyKim on 10.12.14 at 6:34 pm

We’re all doomed.

#22 Mike T. on 10.12.14 at 6:36 pm

it gets really good at 3:48 in

#23 grampahindsight on 10.12.14 at 6:38 pm

”Corporations can’t raise prices or they will hurt sales and cut profits.” so what there doing is reducing packaging weights, like buying a pound of bacon in most places is now only 375 grams, whats that all about?

#24 SWL1976 on 10.12.14 at 6:40 pm

Well here we are close the peak of civilization, it’s been a fun ride up but now it’s time for things to unwind. Not sure how this will all play out but I’m thinking it’s going to be a long slow grind down with perhaps some big steps at times. No matter which way you slice it this Ponzi scheme is pretty much cooked, and really only has one direction to go over the long haul. But, wait? Am I a doomer or just a realist? I think the latter is true but form your own opinion please. Anyways the moral of the story is ‘expect less’

I wanted to chime in a few days back about the Putin comments, but was too late to bother; he definitely is no saint, but the west making a villain out of him is also out of line, given their track record on questionable events both at home and abroad. Putin is a traitor to the NWO hence the vilifying and China is also questionable at best. Whether the ones who wish form a one world government succeed or not, the bottom line is all of the leaders around the world are in a power struggle trying desperately to hold on to power for all its worth, while reality is slipping away. I always wonder why those in power and who crave power are older and possibly senile. How can they have the best interest of future generations in mind? Anyways I don’t want this to turn into a rant, but what happened to Sir Garth is a perfect example of how governments will extinguish rational thinking for personal gain.

What will be will be and I have chosen not to worry about what I cannot control and be sure I have all my ducks in a row for what lies ahead… Be it a long slow grind down or steep and sudden drops buckle up folks because freedom and mobility might be worth their weight in gold over the coming years and decades.

Interesting times indeed from Nano-fibers in chemtrails, to Ebola, ISIS, climate change, and the coming food shortages you can pretty much count on the next 20 years being nothing like the last…

Prepare accordingly

#25 nonplused on 10.12.14 at 6:54 pm

Throw a little Ebola and Fukashima into the mix and there could be a lot of vacant houses in a couple of years, worst case. Best case a little Ebola all by itself could empty airports, work places, public transport, schools, sports complexes and malls for an extended period, which would have an effect on housing I imagine. Yikes! Why did the world get so complicated??? When I was younger it seemed way more simple.

#26 USA citizen who left Canada on 10.12.14 at 6:54 pm

“A higher dollar also creams commodity prices – like oil, already suffering due to reduced demand – and that’s bad news for Calgary.”

There. Canada is going to enter a recession. Ontario was once the have province. Look at what outsourcing, de-industrialization, left wing politics and feminism is causing in Ontario, a slow but sure decline.

Yes, those millionaires will park their money into the villas of Toronto, but it’s only a niche market. The Torontonians who took $800,000 mortgages for their houses on their $80,000 a year job will bear the brunt of the recession.

Speaking of the long term, the student loan bubble in Canada will cause students to rethink their careers and life choices- which is good, because the feminist teachers who drug up their students with Ritalin and numbing drugs are part of the problem.

Womens Studies degrees don’t make money, it costs money. Trades degrees are big money, and if Alberta suffers a recession, Canada’s unemployment rate will skyrocket.

Some of my friends in Ontario graduated since 2010, and up to now they are either 1) unemployed, or 2) working part time jobs.

And I thought the USA job market was rough.

#27 Mike T. on 10.12.14 at 7:01 pm

this is not dumb ‘Alex Jones’ conspiracy shit.

this is what is happening, this is real, this is your reality.

Don’t miss out.

#28 Van Isle Renter on 10.12.14 at 7:02 pm

Not sure why everyone obsesses about interest rates needing to rise before the going show starts. It doesn’t take rising rates, just the sound of a phone ringing.

RIINNG

Moist Virgin: “Hello”

[email protected]: “Hi. You know all that money we lent you? We want it back now.”

MV: “But interest rates are not rising.”

[email protected]: “Doesn’t matter. We want it back now. Have a nice day!!”

MV: “[email protected]#$$#%%$$!”

And that is how it begins and why interest rates are irrelevant.

#29 I'm Still Around on 10.12.14 at 7:11 pm

Garth, its at times like these I’m especially grateful I followed your advice about the balanced and diversified financial portfolio. I’ve learned a lot from your blog since I found it last year.

Happy Thanksgiving Garth Turner and all the Blog Dogs.

#30 Roman on 10.12.14 at 7:11 pm

>> That would mean selling into the teeth of this correction is a dumb thing to do

Barely 5% of the top (large cap us), I believe technically correction haven’t even started yet – and it’s already dumb thing to sell?
Why then not selling a house should be considered dumb?

#31 Joe Average , Saggy Vancouver BC on 10.12.14 at 7:15 pm

Well, it’s a good time set a few buy limit price orders ( looking at 2013 prices) and wait and see. Like fishing, the lines are in and if there is a bite, that would be some nice return in the future. Garth, we are thankful as always for the quality education we get on this blog.
PS: did you see the Vancouver “debt” Olympic Village info ?http://www.biv.com/article/2014/10/assessed-values-olympic-village/

#32 JSS on 10.12.14 at 7:17 pm

“In a deflating world – even mildly so – commodity and real asset values fall (happening now), real estate disappoints (that’s coming), incomes get swampy (had a raise lately?)”

If this is the case, then I’d expect blue chip dividend growth stocks to become more expensive. There’s not too many other options out there for income growth in a deflationary environment. The last “raise” I got was a dividend increase from Emera (6.7%), and a few weeks ago from McDonald’s (5%). From my job…2% wage increase, after a two year wage freeze, zero bonus, and a s^&% load of people who should have retired five years ago, but are hanging in for dear life. BTW – I’m expecting another wage freeze for the next couple of years…again.

#33 Observer on 10.12.14 at 7:21 pm

Poloz abandoning rate guidance…
…we might raise them by the end of the year…
…we might not raise them by the end of the year…
…we might raise them next year…
…but then again, we might not…
…maybe we’ll just stop talking about it…

#34 Arse on 10.12.14 at 7:22 pm

Whether interest goes up or not in the foreseeable future, in the long term(after 2020), I think there is going be deflation and gradual economic decline.

#35 will on 10.12.14 at 7:27 pm

Garth,

this is a little off topic but if you will bear with me, I will link it all up to RE in saskatoon.

as you know, there is a transit lockout in saskatoon. not a strike. a lockout. drivers have been off the job for I think 3 weeks now and without a contract for over a year. at issue is their pension plan. they currently have a defined benefit plan and the city wants to morph it into defined contribution.

did the city suddenly just become mean and cheap? why? after all, saskatchewan is one of the best performing boom economies in the nation isn’t it? not to mention the center of the universe. a few years ago saskatonians were treated to visions of a colossal population expansion – possibly a doubling by 2040, with concomitant state of the art express transit system. (don’t ask me for the numbers – I promptly threw the rag that carried the heavenly vision into the rubbish). so anyway, if defined benefit was a good idea in the past, why not now when the future is even better?

I imagine that say 15, 20 years ago defined benefit was a no brainer. city economists must have understood what was about to happen in (to?) saskatoon all those years ago. you want defined benefit? no problemo. and no problemo it was. apparently the pension is currently overfunded. yay. so what’s up?

there is only one conclusion: the future for saskatoon is NOT good. the party is over. but THE CITY CAN’T SAY SO. they can’t say that it will be difficult if not impossible to fund defined benefit pensions in the future because of what they see on the economic horizon. if they did, great swathes of stonebridge, lakewood, silverwood etc. would be on fire with listings and everyone (especially the cartel) crying foul.

so what do you think? is it all circumstantial? or is this transit lockout the proverbial canary in the economic mine shaft?

-thankful for all the great bus drivers out there. hope they get a good deal.

#36 gg on 10.12.14 at 7:37 pm

“Seems the entire world is cooling off in way most political leaders and central bankers never saw coming.”

LOL. Look beyond the headlines at the underlying data and you could have easily come to the conclusion long before last week.

#37 500 Days on 10.12.14 at 7:39 pm

It is indeed becoming clearer what a game changer 2015 will be.

2016 will be the beginning of the trough, a very long one that we won’t overcome quickly as in the past.

Pity the greater fools still buying in Toronto and Vancouver. We are seeing more and more listings growing stale now, three or more months since listing, even in desirable areas under one million.

#38 Standard Deviation on 10.12.14 at 7:48 pm

Economics is a “dirty science” every economist can have a different opinion and no one can be right, yet our governments allow these pseudo scientists to dictate absolutely everything. Make the rules, uphold the rules and enforce the rules and for goodness sake punish the thieves who implode the publics pensions and destroy public trust in our institutions. We as average Canadians must follow the rules, why can’t our institutions and our politicians. Thanks for the blog Garth.

#39 Daisy Mae on 10.12.14 at 7:49 pm

#24 SWL: “Whether the ones who wish form a one world government succeed or not, the bottom line is all of the leaders around the world are in a power struggle trying desperately to hold on to power for all its worth…”

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

And that is precisely why we will never have a ‘one-world-government’….

#40 David McDonald on 10.12.14 at 7:49 pm

Hi Garth,

Oil stocks and small caps have dropped 20% since summer while large caps have recently dropped around 5%. Is this the 10% drop you forecast? Do you consider stocks to be on sale already?

#41 the Jaguar on 10.12.14 at 7:50 pm

‘..most political leaders and central bankers never saw it coming’ ??
Similar to the shock and disbelief that “crept up” on people in Alberta when the light went on about the sudden surge in US oil production? Or similar to the “no brainer” described by Steve when asked about the US signing off the Keystone Pipeline?
How is it that so called smart executives and our political leaders never see these things coming?
Guess they are all too busy trying to act like hipsters on their Twitter accounts instead of doing their jobs.
My, how the mighty have fallen. And they have some ways to go….

#42 Daisy Mae on 10.12.14 at 7:52 pm

#25 NonPlused: “When I was younger it seemed way more simple.”

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

Yeah. LOL And then you matured….

#43 Anson on 10.12.14 at 7:57 pm

Last week the minutes were released from the last (FOMC) meeting which basically complained about the strong US $. The most interesting statement was “At the same time, a couple of participants pointed out that the appreciation of the dollar might also tend to slow the gradual increase in inflation toward the FOMC’s 2 percent goal.”
Like I said in previous posts “ rates will not rise any time soon“, the world economy is very weak and
teetering on deflation even at these rock bottom emergency rates. Do you really believe rates will rise given the current global events unfolding? No, neither do governments around the world and it is clear that rates too low for too long has created an economy that is dependent on low rates.

#44 Piccaso on 10.12.14 at 7:58 pm

I bought beat up BIO on Friday… of course it was NASDAQ.

#45 joblo on 10.12.14 at 8:14 pm

grampahindsight on 10.12.14 at 6:38 pm
”Corporations can’t raise prices or they will hurt sales and cut profits.” so what there doing is reducing packaging weights, like buying a pound of bacon in most places is now only 375 grams, whats that all about?

Its called shrinkflation and it don’t count in bogus stats from Gubment, just like Statscan can’t count anymore, (lots of jobs, oops nope, oops yes) yada yada.

Crony Capitalism at work

#46 Anson on 10.12.14 at 8:17 pm

In a democratic society the majority rules.
So if the majority of people can no longer obtain affordable housing, and the majority of people are living paycheck to paycheck, and the majority has inadequate if any savings for retirement.
It is obvious that deflation will help the majority (people with little or no assets). We are in precarious times the majority is now poor, indebted and stressed due to job insecurity

#47 Nemesis on 10.12.14 at 8:18 pm

#TheFortuneTellers’Goddess… #DorisAlwaysKnewTheScore… #ThanksGivingSoundTrax… #FromTheManWhoKnewTooMuch:

http://youtu.be/yVuEC3r7a-o

#48 TurnerNation on 10.12.14 at 8:20 pm

Once again, Dollarama is the solution. Not saying its stock won’t take a hit but is currently at the top of its game. (And the place at which to shop.)

#49 dave on 10.12.14 at 8:23 pm

My ICBC ins just went up 100 bucks from last year, my wage increase will be 5.5% over 5 years. I have an older car, I really don’t know how people buy a million dollar home, have 2 new cars, are able to make it.

#50 VICTORIA TEA PARTY on 10.12.14 at 8:24 pm

ST. GARTH OF INTERESTING TIMES ARE HERE…

…has spelled out, in as clear terms as can possibly be made, what I’ve been griping about on this blog for years: The Day of Financial Reckoning seems to be finally upon us. But this time it is here to stay, for a long time.

I fear that the 2008-09 debacle will seem like a tepid dress rehearsal of what I think is coming, which will be a full-on market correction (bear market) to match the moribund so-called “growth” profile of most industrial countries over the past five years.

These are scarey financial times for one and all.

From the Millennials to the old-as-Hell Boomer cohorts, and everyone in between, some air sickness bags and words of wisdom in your favourite book of homilies would be good next steps as the storm approaches.

Those who cashed in their chips, and hopes of riches, with the world’s now-proven incompetent central bankers will be chipless soon.

They listened to them and believed their pleas in the goodness of low interest rates and how those would give everyone a boost.

All they did was to saddle those who could least afford it to load up on a deadly amount of unrepayable debt. They laid down with the devil. So expect some unintended consequences, please.

Even a balanced portfolio of this and that will get whacked.

BUT, at some point after there is sufficient “Blood in the Streets” resuming purchases may be a good step.

Cashing out now may seem a good strategy for some, especially those who went all-in earlier this year or last, or not. Your soon-to-be-sacked stock broker may not wind up giving you exactly the “best” advice. Oh well.

As for those who’ve been in the markets for years, hang on especially if you know what you’ve got was bought a long time ago at much lower prices.

Of concern to all investors should be what happened to many in 2008: dividend cuts. Those happen when prices get so low, and yields so high, that the corporations cannot afford those divs and cut them in order to live another day.

Careful there.

For the recent real estate types: You’re done. No kidding; as is also the Canadian economy as it joins in a long line around the block with all the other countries at the “Great Soup Kitchen” of economic reality.

Brother, can you spare a dime?

#51 JH on 10.12.14 at 8:25 pm

Hi Garth and readers,

We’ve been longtime renters of an SFH near Vancouver, and a few months ago the owner put it up for sale (after we declined to buy it ourselves). After dozens of showings, the house sold, but failed the inspection on mold and moisture issues. Owner ignored this, and it sold again a week later, then failed the second inspection, surprise! At the time, we also looked at the issues, and emailed the owner that there WAS visible mold and moisture, and mentioned a couple of problems we could see ourselves or were identified by inspectors. Owner again ignored, continued with showings, with us awaiting a plumber to at least come and stop the obvious two water leaks. A few weeks after the two inspections, owner’s realtor came out and saw the mold and water issues. Finally after four weeks since first failed inspection, we requested that a plumber come immediately and stop the obvious leaks. Result: dishwasher can’t be used until replaced & one toilet uninstalled awaiting surrounding floor replacement. (At least these are no longer leaking). A few days ago we summarized the plumbing situation and our request for urgent mold clean up via email to owner, who is now not returning our calls. Doesn’t matter how long we may still live here, we don’t want to live with mold any longer!

Yes, we could move out, but for various reasons it’s best for us to stay here as long as possible (assuming the mold is cleaned up!)

Since then, another offer has been accepted, but this time it appears the foolish buyers have opted to not have any inspection! OMG, how can people seriously consider buying a decades-old house without any inspection?!? When you’re paying over half a million dollars for a place, what’s another $500?! We don’t know if the (optional) BC Property Condition Disclosure Statement has been done or not, but it appears that the owner and selling realtor must not be disclosing the mold/water/failed inspections to the buyers. Buyers apparently may want us to stay until their previous property sells. What do seller and realtor think is going to happen when we meet the buyers for the first time after the closing, and the first thing we ask them is when they’re going to clean up the mold? I’m really bothered by the lack of ethics on the part of seller and realtor, but I do understand there are limits to how much “the system” should protect those who are too ignorant to protect themselves.

We really can’t say anything ourselves, as it is remotely possible that in BC we could be evicted for supplying factual information to a potential buyer that caused them to cancel a deal. (and the BC RTB has no helpful guidelines on this – they are generally completely useless!)

I’m really upset by all this, and don’t like feeling that we’re about to have a front row seat at a train wreck. I’d love to hear comments from others about this situation.

Thank you, Garth, for all of the great information you unselfishly dispense here! I’m grateful to you for being a voice of reason in this country full of house-crazed people! Happy Thanksgiving to all.

#52 dave on 10.12.14 at 8:26 pm

#46
Dollarama, good for greeting cards. and candy bars.

#53 crowdedelevatorfartz on 10.12.14 at 9:00 pm

@#24 SWL1976
“NWO” ? “Nano-fibres in the chem trails”?

Egad man……you’re commenting on the wrong blogsite.

Perhaps THIS site is more to your taste.

https://www.google.ca/search?q=paranoid+conspiracy+theorist&biw=1440&bih=766&tbm=isch&tbo=u&source=univ&sa=X&ei=zCM7VJL4Der7iwK25oHAAQ&sqi=2&ved=0CFkQsAQ

Just remember, the Masons are watching…………..

#54 not 1st on 10.12.14 at 9:01 pm

Remember when the eurozone’s problems were contained to little old Greece?

Garth, if we get a 2008 repeat, I am going to start posting on your blog as much as smoking man.

#55 PJ on 10.12.14 at 9:03 pm

Boy are some people on this blog in for a big surprise. Diversify all you want, it won’t make a difference. What we are in for is very simple. Inflation of everything we need, deflation of everything we own. In other words, the worst case scenario.

#56 ceemac on 10.12.14 at 9:13 pm

This just in, chinese ramping up prices in van..all for the purposes of profit.

http://www.theglobeandmail.com/report-on-business/vancouvers-real-estate-boom-the-rising-price-of-heaven/article21071391/

#57 wallflower on 10.12.14 at 9:29 pm

#37 500 Days on 10.12.14 at 7:39 pm – despite Garth’s belief no HAM,
all HAM from here on in, according to this:
“Based in interviews with sales staff in these projects, 60% are targeting investors and 70% are targeting “immigrant” buyers,” Schliewinsky said. “Without Chinese buyers, there won’t be much local demand to support the Vancouver high-rise market. At the end of September, there were an 5,600 unsold high-rise units in new projects and another 1,460 units still to be released in projects now marketing.”
http://www.biv.com/must-read/#buildable-costs-expose-disconnect-condo-market
“Buildable” costs expose disconnect in condo market
Startling multi-family land prices are creating a “disconnect” in a high-rise condominium market

HAM will buy pre immigration; so not Canadian at time of buying (and then may acquire citizenship without residency so I would continue to consider that HAM)

I have never said foreign buyers don’t exist. But they do not set overall Van prices. Local fools, as opposed to Chinese fools, do that. — Garth

#58 Exurban on 10.12.14 at 9:34 pm

#52 and #46

The great deals at Dollarama? Wine glasses for $2, solid items made in Turkey by German companies. And if that’s too highfalutin’ for ya, paper/plastic plates, cups and cutlery so cheap that #51 JH can just leave the dishwasher on the fritz.

#59 Nemesis on 10.12.14 at 9:40 pm

#Ooops…. #RankHasItsPrivileges… #Or,”JustWhatINeeded… #MoreNightWork!?!”:

http://youtu.be/5OXyyWeG5Mg

#60 Sheane Wallace on 10.12.14 at 9:42 pm

In normal society prices of energy going down is good thing as it helps increase productivity.

In credit driven economy it is bad, so expect more QE.

No rate increase until currency crashes. It is that simple.
Do not sell your stocks, no matter what.

#61 battler519 on 10.12.14 at 9:44 pm

Great post.
Has anyone told Doug Ford about the real estate market hanging on by a thread?
When the Fed announces QEv5.0 to counter this slow down $ilver will look good….

#62 Roy on 10.12.14 at 9:49 pm

Six wasted years of world central bankers trying to solve a debt problem with more debt. Who would have thought that would really work. All that worked was that the very rich got richer, and assets and all the too big to fail institutions got propped up. Greed and corruption ruled. That’s it. Its all so predictable. Three years without a market correction to generate near global deflation. Someone remind me again that means the market is not rigged

Watching last week’s financial markets was like watching a wretched drug addict finally look at himself in the mirror. It was a moment of horror. Luckily for the addict the Fed said some nice things to him, which instead of knifing himself in the stomach, vomiting again or falling over made him feel better for just another second.

#63 JSS on 10.12.14 at 9:55 pm

my wife has been trying to find an IT job in Edmonton for the last four months. Not even an interview. A year ago, lots going on. Today – quiet.

Me thinks that corporations know what’s coming. Which is probably why many of tapered off hiring. Especially white collar jobs. There’s still blue collar jobs, but those could end being victims too.

#64 Retired Boomer - WI on 10.12.14 at 10:00 pm

I still fear the ‘accounting & control frauds’ that occurred
during the GFC (think mortgages) and were never prosecuted here.

The bankers, still mostly in place, have since earned their PHD’s in how to successfully run accounting & control frauds!

Will we have another GFC I would guarantee it! When, not sure. When you see poor underwriting it is a prime time as bad underwriting increases the certainty of losses, which require public ‘bailouts’ to ‘save’ the institutions.

What elected officials will have the ands to tell the needy bankers -or needy governments- to pound sand? doubtful

This could get really interesting!

#65 Cato the Elder on 10.12.14 at 10:02 pm

We don’t have to worry about a lack of inflation – it’s running at 10% a year and will increase dramatically. The bankers will see to that – after all, they stand to benefit the most from massive money printing. And of course, the average person will fall for the ridiculous ruse that prices increasing year over year is GOOD FOR US!

And Garth, I know we are at odds about gold. Unfortunately, it’s not up to Canadians or logical explanation to justify it’s role in the world – that will be determined by our new masters, the Chinese. You see, they have 1.3 billion people, all the manufacturing power, and an insatiable demand for gold:

http://www.zerohedge.com/news/2014-10-12/shanghai-exchange-chairman-admits-china-gold-demand-topped-2000-tonnes-2013

Say farewell to Canadian living standards. China has all the wealth now. We are a client state and will continue changing our laws to accommodate whatever they say. Of course, it will be incremental so as not to alarm anyone concerned with private property rights, cultural destruction through unchecked immigration or civil liberties. Those of us who were concerned for years will be proven right. Our inalienable God given rights have been so distorted by public indoctrination (schools) that people think government has something to do with granting them. Little do they know that if government gives you something, it can take it away. Our rights as human beings are the same throughout the world – they only differ from country to country by the amount the government violates them.

Unfortunately, we are approaching a critical juncture whereby our government is going to be pressured by an aging populace to fulfill it’s entitlement obligations. Because they’ve spent years frivolously spending it away, they have two options: tell the truth, or more authoritarian policies. Guess which one they will choose? The authoritarian policies will invariably hurt all of us, which include confiscation, increased taxes, more regulations, and more inflation leading to more expensive living standards.

I hope I am wrong, but these things have happened so frequently in the past so as to make my predictions pretty much a guarantee at this point. To be honest, I’m not even that comfortable posting things like this on the internet, as it clearly paints me as a dissenter of big government.

Good luck everyone. I wish our government officials were all like Garth but you can see how he was treated when he was there, trying to fight for us. Truth is treason in an empire of lies.

#66 Happy Renting on 10.12.14 at 10:06 pm

Yes, the misery is back! I think there was only one positive sentence in that whole post:

So you should expect more declines – which will probably set the stage for subsequent gains, since a protracted bear market is unlikely.

I’ve done some buying lately and would welcome some tasty gains. Part of me feels bad that those whose finances are most in need of a shot in the arm are the least likely to benefit from this. But maybe they’re looking at me, feeling bad that I obviously need an iPhone or an expensive house or fancier attire or whatever. They get to enjoy their consumption now, I’ll enjoy my portfolio gains in the future.

Which brings me to my response to #51 JH on 10.12.14 at 8:25 pm.

JH, I get what you are saying, I really do. You feel bad for the (likely virgin) buyers. They will have some pleasure now from their house purchase, and probably some pain later when they discover issues an inspection might have turned up. If they over-extended themselves financially to buy the house, maybe it will be a lot of pain.

They made their choices, you cannot save the incautious from themselves. If the mold comes as an unpleasant surprise to the new owners, rest assured they’ve learned an expensive lesson about due diligence.

#67 battler519 on 10.12.14 at 10:07 pm

Roy the next round of money printing is going to have a lot of eyes spinning like slot machine reels….

#68 not 1st on 10.12.14 at 10:12 pm

I ask everyone including Garth…what evidence is there that a real economy is working behind all the false stimulus? I mean it all looks like smoke and mirrors now.

If a couple sentences in the back of some report can spook the traders I know this thing isn’t stable.

#69 John on 10.12.14 at 10:15 pm

Cash is good… sorry Garth..

#70 Observer on 10.12.14 at 10:21 pm

@ Roy

Well said…you should start a blog of your own.

#71 wussmode on 10.12.14 at 10:27 pm

Well I’ll be damned. After months of saying don’t bet against America, you seem like you’re betting against America, Garth. Oh, and happy Thanksgiving.

Now, where did I say that? — Garth

#72 Linda on 10.12.14 at 10:29 pm

So with deflation, people stop purchasing (hoard money) as per one definition I read, because money is worth more than the goods/services on offer. With inflation, people stop purchasing (haven’t got enough money) to buy stuff. Based on what I’ve read, we are either inflationary or deflationary at various times, but apparently in trouble either way. So I have to wonder, was there ever a time when we didn’t have inflation or deflation? If not, then why are we panicking over what appears to be life as usual? I can see extremes in either direction being an issue, but if this is just ‘normal’ economic behavior then maybe we should all just keep calm & carry on.

#73 Happy Renting on 10.12.14 at 10:30 pm

#15 Smoking Man on 10.12.14 at 6:07 pm

Wow, I guess that’s the Smoking Man-brand of charity. I was boring and conventional and donated online to a food bank.

Someone less fortunate than you still had a good time due to your act of giving, so thank you, Mrs. SM, and all the booze you drank that night!

#74 John on 10.12.14 at 10:32 pm

#65

seriously quoting Zerohedge???? why not TMZ???

Geeezzz

#75 Smoking Man on 10.12.14 at 10:43 pm

#73 Happy Renting on 10.12.14 at 10:30 pmWow, I guess that’s the Smoking Man-brand of charity. I was boring and conventional and donated online to a food bank.

Someone less fortunate than you still had a good time due to your act of giving, so thank you, Mrs. SM, and all the booze you drank that night!
…..

Hey, the guy lost everything, no medical insurance, watched his wife die, he spent everything trying to save her, showed me pics. He was real, or a god damn brilliant smoking man.. I bet real

Wife went to bed, I took over machine. Break the bank, end seat by the hall.

Had 100 bucks in it, made a max bet, 2.50 hit fifty free games.. Once done, had 1154 in it.. I asked Paul to watch my machine.. And I went to bed…

Happens every time I get wrecked. So I’m only out a hundred of real money… I’m not that nice…

#76 wussmode on 10.12.14 at 10:51 pm

@ Garth

Garth, you said it here: While the Dow and the S&P 500 get all the headlines, small-cap stocks have already been leveled. About 80% of all smaller US publicly-traded companies have seen declines, while volatility has jumped 46% overall. Some people believe this is a portent for larger drops in the big indices, which seems like a reasonable conclusion.

Oh, and all that Fed talk about not raising rates next year. If the U.S. economy is growing and booming, why is the Fed continuing with QE and rethinking raising rates? I am confused, but I do appreciate your opinion.

#77 Panhead on 10.12.14 at 11:03 pm

#28 Van Isle Renter on 10.12.14 at 7:02 pm

RIINNG
Moist Virgin: “Hello”
[email protected]: “Hi. You know all that money we lent you? We want it back now.”

You shure got a way with words … thanx for explaing that to us. Priceless.

#78 stop lying on 10.12.14 at 11:07 pm

If you’re smart and work hard, and marry a spouse who does the same, deflation does not worry you. There is always money on the table for the overachievers and performers.

#79 Doug in London on 10.12.14 at 11:10 pm

It has people who bought stocks on margin avoiding their brokers.
—————————————————————
That’s odd, shouldn’t they have been buying stocks on margin when they were on sale, then selling some off (for a tidy profit) earlier this year when they went way up to pay off that margin debt?

#80 Retired Boomer - WI on 10.12.14 at 11:13 pm

#65 Cato the elder

“Truth is treason in an empire of lies.” Well stated Cato.

#81 Obvious Truth on 10.12.14 at 11:15 pm

C’mon doomers. It’s thanksgiving. Let’s be thankful. The colours, quiet and the smell in the air are intoxicating this time of year. Like the ringing of the casino to some.

Thankful for2.5% variable rate. Lower those rates or we invert. Last renewal thankful for me.

Thankful for correction. Started buying the 2000 last week. Think some of it ended up in my woodshed. Buying more every 1% down. Thankful for nose plugs.

Thankful for algo traders and margin debtors. Give us a sale.

Thankful to the young tech generation for giving an average guy an upper hand in making a living. These youngsters continue to empower people.

Thankful for predictable scaredy cat governments and central bankers. They will spend on our behalf.

Thankful that in canada we only have to fight against deflation and some people with questionable ethics.

Thankful for family and health. Would be no fun without that.

Thanks to Garth for calling it like he sees it. And responders that keep it informative and entertaining.

Listening to great music this cool clear night myself. Smell of burning wood. Fishing tomorrow as the fog lifts. Small pleasures. Awesome. Very thankful.

Remember to help those not so fortunate.

Happy Thanksgiving.

#82 Cato the Elder on 10.12.14 at 11:28 pm

Re: #76 Wussmode

Don’t be confused. What’s happening is the Federal Reserve and the government are LYING. It has been happening for years. Their statistics are manipulated to make things look rosier than they are. People like Garth are decent, hard working, and honest and unfortunately I think they give the government too much credit.

Here are the real statistics:

http://www.shadowstats.com/alternate_data/inflation-charts

Inflation running at 10% and unemployment 25%. Want to know why these are REAL numbers? They use the SAME EXACT calculations the government USED to make decades ago! They change their criteria and metrics each year to make things look better. A couple examples:

1. To lower the inflation rate, they substitute things like ground beef for steak. So they compare the price of steak in 1980 to the price of ground beef in 2014. Ground beef is obviously a cheaper and inferior product, and when they do this, the price difference appear less. However, your standard of living has obviously DECLINED if you had to downgrade from steak in 1980 to ground beef in 2014.

2. Unemployment stats are lessened by not including those that have ‘stopped looking for work’. What the HELL? So if you stopped looking for work, but you still don’t have a job, you’re NOT counted as unemployed?

Don’t believe government statistics – something a relative of mine who grew up under the iron curtain told me. Use your EYEBALLS. Are prices increasing at 2% a year at the grocery store/gas station/housing/heating bills? Have you noticed PACKAGE SIZES getting smaller?

You’re getting screwed. The government wants you to use the rational part of your brain that takes in the numbers they’re feeding you to confuse your common sense. Think a change in government will change the issue? They’re ALL BIG GOVERNMENT PARTIES! They’ve ALL DONE IT!

#83 Nemesis on 10.12.14 at 11:30 pm

#HappyThanksGivingAll…

#IfYourTurkey’sFinallyInTheStraw…

http://youtu.be/VsnZxfkkoKQ

#PerhapsYouShould… #SlipIntoSomethingMoreComfortable?

http://youtu.be/pK6D5Y-AqqE

#84 Cato the Elder on 10.12.14 at 11:32 pm

Re: #74 John

What’s wrong with Zerohedge? Can’t remember the last time I was there and they didn’t predict something correctly.

Besides, you can find the information in that article elsewhere. It just so happened to be the site I saw it on at the time.

#85 Cato the Elder on 10.12.14 at 11:37 pm

Back on the government statistic thing, he said the government always said they had great harvests. But then they’d spent 2 hours in bread lines. Any excuses were often attributed to things outside their control like the weather (notice any parallels to what our media is feeding us constantly about global warming?).

We are slowly heading in this direction. It’s so incremental that it’s difficult to tell day to day. But you have to have a long term time horizon and see what’s been developing for a few decades now. The trend is in that direction and that’s why things are so scary.

Even in my short lifetime I’ve witnessed it. Look at chocolate bars. They used to be a dollar only a few years ago, now they’re 1.50-2.00! It’s INSANE.

#86 45north on 10.12.14 at 11:50 pm


New builds in Toronto are down more than 50%. Two years ago there were 40,000 fresh units. Today, 16,500.

Building permits in the GTA crashed 43.5% in a single month (August).

Meanwhile cranes darken the sky as almost 60,000 new units are under construction.

talking about condo construction, I just found the article by David Fleming that describes condominium financing. Basically he’s saying the condos have already been sold. Sold to who? I’d say the middle class. if the value of the condos drops it will go a long way towards crushing the middle class and Garth is not kidding with his last comment:

And it sure isn’t the time for your daughter to close on her condo.

http://www.torontorealtyblog.com/archives/condominium-financing/9775

#87 Joe2.0 on 10.12.14 at 11:52 pm

It’s time to recall the stimulus cash.
Gotta balance the books.
What goes up must come down.
Hang on.

#88 45north on 10.13.14 at 12:01 am

JH : Since then, another offer has been accepted, but this time it appears the foolish buyers have opted to not have any inspection! OMG, how can people seriously consider buying a decades-old house without any inspection?

as you say “oh my God”

#89 prairie person on 10.13.14 at 1:15 am

Tonight over turkey heard from someone in the mortgage business describe how he’s recently bought another house and a cottage. He doesn’t think house prices are going down. He’s been making money hand over fist, triple what I made, and I made good money. He’s been buying distressed rental properties, rent guaranteed for people on welfare. All on auto pilot. He’s now been expanding his empire. He’s buying better class places. Prices are going to go down? You’ve got to be kidding. He’s building a real estate empire. He’s got it all covered, he says. I kept thinking, Garth, knock on the front door, please knock on the front door, come in and have some turkey, potatoes, gravey, dressing, cranberry sauce, some pumpkin pie, coffee. Talk to this guy. He’s around 55. If he loses it all now, life will be hard. Ive been around long enough to be through a couple of real estate collapses. They can be a slow collapse like a balloon deflating but in one prices collapsed over a period of two weeks. Everything was for sale, lots of excitement, there were buyers everywhere, mostly from Alberta, and then there were none. And I mean none. My credit union put up room dividers with photos of repossessions. You could have any one you wanted for fifty percent of the mortgage owing. The collection agency would get the other fifty percent off the mortgage holder. It was brutal. You think you know what stress is? Try sleeping when you know you are going to lose your house, have your car repossessed. I was lucky, I bought what i could afford so I just kept paying the mortgage. The hot shot flippers with five houses tanking were suicidal.

#90 Chucky McLucky on 10.13.14 at 1:16 am

Some interesting charts showing most sectors deeply oversold. So …is it time to buy? Don’t look for the answers in the newspaper. The next leg of the sell off will be light volume small time retail investors puking out cathartic panic. The opposite side of the trade are institutions and smart money buying across the bottom of the trough.

Look at the fundamental values of companies, things are not bad at all…far from it. Pick the ones that have been ‘thrown out with the bathwater’. I’m liking materials paying dividends for the long term…..utilities for the short term cash flow.

http://timingthemarkets.com/

#91 Basil Fawlty on 10.13.14 at 2:09 am

ZIRP and QE to infinity has been the opinion of many non-consenus economists for a few years. It’s now becoming clear to the Fed and the consenus economists that they have no choice. They must have been looking at the wrong data, or maybe they just ignored the asset bubbles created by their flaky policies.

#92 devore on 10.13.14 at 2:09 am

#57 Leo Kolivakis

Welcome to the blog! Took you long enough.

#93 Bucklo on 10.13.14 at 5:27 am

Garth

What is the best way to profit from the deflationary environment….inverse etf’s? How about declining real estate….any inverse ETFs for that, or any other suggestions???? We may as well try and make some profit from all this misery and handwringing don’t you think?

#94 JamesKitchener on 10.13.14 at 5:57 am

Not sure I am allowed to quote a book I am reading, the next economic disaster by Rochard Vague. There s allot of talk about private debt levels and this book copares private debt to GDP. So if private debt exceeds 150% and in the last five years increases at a rate more than 18% per year the economy will have a recession. The theory has pridicted all of the last recessions including the Great Depression and 2008 Anyway it’s good reading
And you can get the statistics for Canada believe it or not from the U.S. Federal reserve web site.

#95 JamesKitchener on 10.13.14 at 6:10 am

Comment on selling stocks. Yes I am knashing my teeth lost from a 12% gain this year down to 7%. I own all dividend paying stocks over 5% yield, my belief is is you hold a five year GIC till maturity why not hold solid dividend paying companies for five years.
But I am nervous, because I lived through the 80s when people really could not find work, unemployment sored and people gave their houses away for a dollar (you had to assume the mortgage) because rates were 18% and the economy went four paws up. I remember telling my father to buy Scotia bank (where he did his banking) it was $10 a share paying $1 dividend. I wonder now if I could stomach a drop to those levels and wait till it comes back to today’s prices.

#96 };-) aka Devil's Advocate on 10.13.14 at 8:53 am

While your glass may be half empty, my glass is half full with an abundance of opportunity to fill it and many more if I so choose.

#97 Not an economist on 10.13.14 at 9:14 am

“[Corporations] have an impossible time cutting wages and salaries, thanks to organized opposition and the perception of unfairness. So, they can people instead. The unemployed don’t buy stuff, so the outcome is usually downward pressure on prices.”

After reading your blog (and books) for years I’m fairly convinced you’re a very good person Garth, but you’re stuck in a rigid ideology that acts as a lens which filters EVERYTHING before you get to consider it. It’s not the first time you’ve said something that I would have expected your old political frienemies to say. And you seem to say it with such conviction, blaming the middle class not being willing to work for less as the source of unemployment and underemployment.

In a time when income and wealth inequality have finally reached Canada in a big way, and is accelerating at a frightening pace, you’re so quick to blame unions and public opinion for corporations not being able to lower salaries and therefore “being forced” to lay people off. Let me use a little satire and illustrate how this argument sounds:

“waaah, we can’t pay our people in Canada like we do our suppliers in India (we want to have third world wage employees, but rich first world customers), waaah, so we’re gonna pout and cry about how we’ll lay people off, even though we’ve already laid off every non-essential employee years ago. waaaah, the lowest aggregate corporate tax environment anywhere on this continent is not enough, we’re not creating jobs because the lowest tax rates ever are too high and because minimum wage exists, waaah. please give more tax breaks to rich people disproportionately, get rid of minimum wage, ban unions, and eliminate payroll taxes and public retirement savings because clearly that’s what’s keeping $600+ trillion in corporate domestic chequing accounts not doing anything for anyone. waaaah!”

This argument that we should pay our people like shit so that we have…. what? room to go up? is a circular argument maybe? Hey, let’s impoverish our working people like the third world and then we can have their economic growth! If you let us pay you at Indian, Chinese or Philipino wages, we can skip outsourcing and then think of all the jobs we can create. What do you mean you can’t afford to buy stuff at first world prices with your third world wages? Oh my god, why don’t we bring back paying people in scrip, or better yet how about just working for employer-provided room and board, think about the economic growth!

Garth you’re right about one thing. Unemployed people don’t have any disposable income. And neither do people who have been moved from full to part time, or people that have taken a pay cut, of which there are very many and which are hidden in the job statistics. A person making 50k who is now getting 40k could very well find their entire disposable income cut. Which is almost as bad as unemployment from the economic growth point of view. If someone is not coming into your shop for an oil change because the family took an income hit and needs all their money for mortgages and credit cards is no different than if they can’t come in because they’re completely unemployed and about to live on the street. I mean obviously the first scenario is better than the latter, but for the garage guy? Not a lick of difference. Your customer doesn’t have the money to spend on an oil change or a tire replacement, you don’t have money to grow your business either. That’s how this works. Lower taxes won’t help, and paying your helpers 5 bucks an hour, if that was allowed, won’t help either. A mildly inflationary environment where everything goes up in price at a moderate and controlled pace is what keeps the economy working for everyone. That’s what we used to have, barring the occasional hiccup, which could be smoothed over by an active government at a time when Keynes was not considered some sort of villain.

But it’s not caused by “lack of liquidity”, “high taxes”, or any kind of evil government oppression of “job creators”. You know who the real job creators in this country are and have always been? The middle class with disposable incomes, that’s who. The guys and gals that have a pot to piss in, a few bucks to their name, and don’t already own several private jets and thus have no need for lots of spending anymore. You know, the kind of people that used to shop at Sears. The kind of people that used to hire your electrician neighbour without balking at the hourly rate because their own pay was equally good. The kind of people that used to go to Home Depot and not necessarily buy toxic Chinese drywall because it’s a few cents cheaper. The kind of people that worried about what’s behind the walls in the home, and not just the granite countertops and stainless. The kind of people with real, moderate, middle class “wealth”. The kind of wealth that gets saved and spent in equal amounts, leading to a balanced and efficient economy. Not a large divide between the blog readers that save 90% of their crazy high incomes and the average person that spends 120% of their 40k salary.

If you have a shred of intellectual honesty Garth, you will ponder on the phrase “one person’s spending is another person’s income”. You might end up coming to the conclusion that you can’t be prosperous over the long term if your neighbours are paupers. Maybe the middle class and unions being unwilling to work one year for less than the year before isn’t what’s causing deflation. Maybe it’s not what’s causing the steady and unyielding hemorrage of *good* full time jobs, or a word that’s rarely used anymore in our country, “careers”.

It’s unchecked greed and many years of “the united right”. It’s years of pandering to a handful of entities with unreal amounts of unused capital, to the detriment of everyone else. It’s the mantra of “me me me”, an endless refrain of “f you I got mine”. It’s the legitimization of thinking that it’s ok to reduce the size of the pie, as long as you personally take home a bigger portion. It’s years of continuing union extinction and commoditization of our neighbours’ human labour (you need to “market” yourself if you want to find a job), under the dogma that it’s “inevitable”, brought about by globalisation, and “impossible to have any other way”. This ridiculous belief that it’s impossible to structure our economy around anything other than competing on cost with large populations of impoverished nations that are many timezones away. Impossible to have an economy like we did a couple of decades ago, because apparently something fundamental changed and is stuck in this way, although nobody can point out exactly what supposedly changed except to mutter something about “globalization”, as if the other continents were undiscovered lands inhabited by barbarians until recently.

Impossible is nothing.

And yea, the condo market has already taken a dump, when credit runs out and can’t make up for lack of disposable income anymore. When the developers are cutting back new projects that fast, it means we’re past the point of the shoe shine boy giving stock tips. Now we wait for the economists to come to their conclusion many months later when the everyday effects can be seen by any idiot who’s not an economist.

Corporations are accountable to shareholders, who expect a return on their investment. They are not designed to provide employment. If you want societal change, run for political office. Otherwise your voluminous words are wasted. — Garth

#98 NotAGreaterFool on 10.13.14 at 9:16 am

Garth a month back or so, you indicated irrespective of the routine Spring-to-Summer price drop off in Toronto home prices , this year was indeed saw a melt. What evidence of this so you see in the Autumn market? Has the trend continued?

#99 Not an economist on 10.13.14 at 9:21 am

600 billion not trillion.

#100 Daisy Mae on 10.13.14 at 9:42 am

#41 The Jaguar: “How is it that so called smart executives and our political leaders never see these things coming? Guess they are all too busy trying to act like hipsters on their Twitter accounts instead of doing their jobs.”

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

These so-called ‘political leaders’ can’t think for themselves. They simply follow along…all making the same disastrous mistakes. It’s easier that way…

#101 randman on 10.13.14 at 9:47 am

“An imbalance between rich and poor is the oldest and most fatal ailment of all republics.”
― Plutarch

#102 Daisy Mae on 10.13.14 at 10:05 am

#49 dave: “My ICBC ins just went up 100 bucks from last year….I have an older car…”

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

You drop the collision/comprehensive as the car ages, right?

#103 Daisy Mae on 10.13.14 at 10:11 am

#50 VICTORIA TEA PARTY: “These are scary financial times for one and all….”

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

What is truly scary is when friends switch to mutual funds, GICs, money markets….freeing up money to renovate, travel…

#104 crowdedelevatorfartz on 10.13.14 at 10:15 am

@#98 Not an economist
I see you’re also not an English Lit major….

@#100 Not an economist
Very eloquent and to the point

#105 Not an economist on 10.13.14 at 10:22 am

“Corporations are accountable to shareholders, who expect a return on their investment. They are not designed to provide employment. If you want societal change, run for political office. Otherwise your voluminous words are wasted. — Garth”

Absolutely agreed. I’m not blaming corporations for functioning exactly the way they were designed. The problem that is becoming visible now is that there are too many investment dollars seeking gains from too few spending dollars. It’s the government’s job to arbitrate the environment so the game can be played in a fair way and get the best out of everyone. Don’t mistake this as me being anti-free-trade, because I really do believe that free trade within realistic limits has a synergistic effect and leaves everyone better off. But free trade has to happen between nations that agree on a few basic things, so you don’t get companies manufacturing in China with no environmental protections competing unfairly with manufacturing in Canada where you can’t dump mercury down the river. Third world nations can be brought into the fold, assuming they agree to conform to certain standards, slowly and in a controlled manner, but if you skip the societal change part, open the floodgates all at once in a free for all, with no regulation or oversight, you end up with low price low quality products and employment problems. And a trade imbalance to boot.

As for running for office, do you really mean that or are you yanking my chain? Because people in real life have told me that before, and I seriously thought about it. I joined (but never worked for) one of the major political parties (won’t say which), and I’ve become a bit disillusioned. Everyone is concerned about getting a nomination in a safe riding to get that sweet MP salary and pension (completely disconnected from the economy at large), and maybe a good consulting job afterwards (which honestly I see as morally no different than getting a sack of cash in a hotel room, it’s all selling influence no matter how you slice it). Jackpot is if you get to be a Senator and act self-important for a handful of days every year in return for a prince’s ransom in pay. And the worst part is that so many people have empty heads, they get appointments to be minister of this or chairperson of that, and they have no idea what they’re doing any more than a random high school dropout would. And worse, once someone gets elected, they don’t even answer emails anymore, at least that’s been my experience. I see a lot of selfishness in our politics in general, and I’m not sure I can find my place in it so I can have my say in the national discussion. If there even is a national discussion anymore, and not just controlled messages from all sides, and fingers in everyone’s ears. Has it always been this way? I’m a bit young so I have no personal experience. I also read about what happened to you when you tried, and it’s heartbreaking to see your efforts to communicate consistently and honestly with your constituents be rewarded so poorly. If you have any advice, I’ll take it. But for now I’ll probably stick to typing occasionally voluminous crap on the internet for people that want to read it. Thank you for hosting it, and even better, reading it.

#106 Daisy Mae on 10.13.14 at 10:34 am

#55 PJ: “What we are in for is very simple. Inflation of everything we need, deflation of everything we own….”

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

We’ll be cutting back..and back some more. Buying groceries, as an example, from the four food groups outlined in the Canadian Food Guide to maintain optimum health.

“Brother, can you spare a dime….”

#107 45north on 10.13.14 at 10:43 am

prairie person: Tonight over turkey heard from someone in the mortgage business describe how he’s recently bought another house and a cottage.

40 years I knew a guy – Tony – he rented a house to a group home. Rent was guaranteed. Two weeks ago we had some sandwitches left over from a social function. I dropped them off at the group home. I asked the girl in charge “is Tony still the landlord?”. “he is” she replied.

If he loses it all now, life will be hard.

yeah it will

Daisy Mae: These so-called ‘political leaders’ can’t think for themselves. They simply follow along…all making the same disastrous mistakes. It’s easier that way.

well I agree that it’s easier. It’s not because they cannot think for themselves, it’s because they do think for themselves. I mean there are many who see problems with the current thinking but going against the trend is contrary to their own self interest.

#108 maxx on 10.13.14 at 10:49 am

The time to power up personal savings rates is long past due. For many, it’s a complete fail as there are so few years left until retirement and the ability to save was never learned. Saving whilst maintaining quality of life is an acquired skill which takes time to master and perfect.

The personal finance dashboard of legions has been flashing red for years, but the siren song of FIRE and MSM hijacked far too much attention away from the perils of debt.

“Real estate can only go up.” Possibly, if the mean hadn’t been mucked with by influential cb’s and economists who think with their gonads and believe that they can create a global, macroeconomic OZ by playing with interest rates in order to get viable taxpaying units to gorge on debt.

Reduce, reuse, recycle, repair and refuse to buy retail whenever possible. It works. Very easy when you’re young, robust and relatively less materialistic, but far more difficult, if not impossible to do when you’re old, frail and need lots of cash for non-negotiable geriatric necessities.

Old age is challenging enough, but old and poor- is a piteous combination.

Especially when the young (with good reason) can’t stand wrinklies.

#109 crowdedelevatorfartz on 10.13.14 at 10:51 am

@#35 will
Apparently you’ve never heard of Detroit

http://www.google.ca/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=1&cad=rja&uact=8&ved=0CCsQFjAA&url=http%3A%2F%2Fwww.cbc.ca%2Fnews%2Fworld%2Fdetroit-bankruptcy-retirees-vote-in-favour-of-pension-cuts-1.2714053&ei=TN87VMbVA4XvoATwmIKQDA&usg=AFQjCNGCPCVa676rHPKIakyBLPOP8axMAQ&bvm=bv.77161500,d.cGU

Or Stockton California….

http://www.google.ca/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=1&cad=rja&uact=8&sqi=2&ved=0CB8QqQIwAA&url=http%3A%2F%2Fonline.wsj.com%2Farticles%2Fa-calpers-comeuppance-1412636241&ei=gN87VIqiEMmoogSliYHADw&usg=AFQjCNGOn4W8TkjK5eTShJAImnM4JZu0hw&bvm=bv.77161500,d.cGU

Or Montreal , Quebec

http://www.google.ca/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=3&cad=rja&uact=8&ved=0CCkQFjAC&url=http%3A%2F%2Fwww.truenorthtimes.ca%2F2014%2F08%2F21%2Fmontreal-firemen-trash-city-hall-bill-3-pensions%2F&ei=wt87VP_qL4HtoATUxIGwBw&usg=AFQjCNGaGBFMJzbHtyySKigj6xqiEzodwQ&bvm=bv.77161500,d.cGU

Coming to a city, province , federal empolyee pension near you if the status quo doesnt change.

The solution?
Larger pension contributions.
Compulsary retirement contributions as opposed to “voluntary” (RRSP, TFSA,etc) contributions.
Older retirement ages( retirement at 55 is bankrupting pensions).

Interesting article about the Ontario Teachers pension plan. They were way ahead of the actuarial curve….

http://www.google.ca/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=3&cad=rja&uact=8&sqi=2&ved=0CCgQFjAC&url=http%3A%2F%2Fthewalrus.ca%2Fpension-envy%2F&ei=1eU7VNXGI5CrogTb84LoBw&usg=AFQjCNH0ip11zcNxCroRc6nNodIJWLDBOQ&bvm=bv.77161500,d.cGU

#110 takla on 10.13.14 at 10:52 am

https://www.youtube.com/watch?v=iFDe5kUUyT0
An eye opener for those in the dark..

More Ron Paul, gold-licking whackonomics. Pablum for the gullible. — Garth

#111 Daisy Mae on 10.13.14 at 10:56 am

#67 HAPPY RENTING: “They made their choices, you cannot save the incautious from themselves. If the mold comes as an unpleasant surprise to the new owners, rest assured they’ve learned an expensive lesson about due diligence.”

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

HAPPY RENTING is right, #51 JH. You can’t save the world. This will be a hard lesson well learned for these new homeowners.

#112 Daisy Mae on 10.13.14 at 11:17 am

#108 45North: “well I agree that it’s easier. It’s not because they cannot think for themselves, it’s because they do think for themselves. I mean there are many who see problems with the current thinking but going against the trend is contrary to their own self interest.”

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

Hmmm, right. I know what you’re saying. That’s why Garth got the boot –thinking of Canadians rather than himself.

#113 NoName on 10.13.14 at 11:21 am

i believe that people are now talking about package size and shrinkflation. its on going thing since forever…
We eat nutalle with spoon in our house, why, making sure that pancreas is in good shape. Back when we first moved to the house (2005) nutalle changed packaging from glass containers to plastic ones, outer size looked a same but plastic jar had a huge dimple at the bottom of container what made to difficult to scrape bottom with spoon. Shortly after ive noticed oj went down from 5l to 3.75, cheese blocks from 500g to 460/420g and cereal boxed went thinner…
didn’t think much of it until 2006 when i sow some morning shows on tv they talked exactly about those 3 thing, and now in 2104 everyone talks about shrinklation. Maybe in 2020 all this what is going on now will be crystal clear…

#114 FormerSaskie on 10.13.14 at 11:21 am

#37 500 Days

your name should count down the 500 days so we know when we are there :)

#115 takla on 10.13.14 at 11:24 am

re Garth…more ron paul.
Maybe you call explain the creation of money in our system better .Without continuous debt creation the system fails,this is the root problem that we face today…less money borrowed into creation equals deflation…Right??id love to see your next monologue on this defineing issue

#116 Cici on 10.13.14 at 11:36 am

I’m out of the loop…Garth posted on a Saturday!

The Best Thanksgiving Ever!! ;-)

#117 saskatoon on 10.13.14 at 11:51 am

#111 takla

“pablum” is not an argument.

#118 OttawaMike on 10.13.14 at 12:02 pm

110 crowdedelevatorfartz on 10.13.14 at 10:51 am

Good link, elevator, I usually read the Walrus but missed that one.

http://thewalrus.ca/pension-envy/

As an OMERS member , I speculate that we will see our indexing reduced or eliminated in the next 5-10 yrs. I am looking at a redemption valuation for mine as a comparison.

#119 OkInvestor on 10.13.14 at 12:02 pm

Here is Canada’s last tool’s confession:

“Bankers caused crash and got away with it, says Carney: Bank of England chief says bosses should have paid a higher price

Governor Mark Carney launches stinging attack on irresponsible bankers
Claims those responsible for 2008 financial crisis got away without sanction
Mr Carney: ‘They are still on the best golf courses. That has got to change’
By Mail Foreign Service”

http://www.dailymail.co.uk/news/article-2790469/bankers-caused-crash-got-away-says-carney-bank-england-chief-says-bosses-paid-higher-price.html

#120 Max Jones on 10.13.14 at 12:07 pm

Seems the Financial Post is catching on to the true nature of the condo boom. Rule of thumb: sell before the 5 year warranty runs out.

http://business.financialpost.com/2014/10/13/toronto-housing-condo-market/

#121 Axxman on 10.13.14 at 12:08 pm

View from Washington this weekend: the mood is dim. Most described the current environment as dim, Europe is on everyone’s mind, and there was nobody willing to say that growth rates of the past will come back. One interesting observation was the role of income polarization on the housing market – the 1%ers are bidding up home values but only in very localized regions and the 99%ers are living in areas which have flatlined. The end result is a stalled economy because of the 1%ers saving rate. Lots of different opinions on where this will lead, but none of them are good. Also, at least one official is willing to admit that the run up in the housing market was absolutely intentional but now nobody know where to go from here.

#122 takla on 10.13.14 at 12:32 pm

re#118..pablum is NOT an argument…agreed {garth chose NOT to answer the question}Saskatoon{by the way beautiful city,was therefrom ’78-82′}…Loan growth has been in decline and this decline will accelerate as the realestate bubble pops huge,without new money loaned into the system with accured interest we get what we’re getting deflation.Free yourself of debt now..
The rainy day has arrived…hope you put money away!

#123 Westcdn on 10.13.14 at 12:57 pm

I was doing some historical research with the view of learning from the past to gauge the future. I thought I would take a look at FDR’s March 1933 Bank Holiday and the April 1933 related US gold confiscation. I suggest reading the Telegraph’s confiscation article first as the Newyorkfed one is long and tedious.

http://www.telegraph.co.uk/finance/personalfinance/investing/gold/9968494/Roosevelts-gold-confiscation-could-it-happen-again.html
http://www.newyorkfed.org/research/epr/09v15n1/0907silb.pdf

FDR fundamentally changed the US banking system and hastened the end of the gold standard. In my opinion, very good decisions were made. By devaluing the US$ against gold and restoring confidence in the banking system, a “version of QE where deflation is fought by raising asset prices” was invoked by FDR. Was this the basic rational of the Bernake put? Those decisions started an economic recovery, from what I can tell, was aborted by higher taxation policies enacted in 1937.

Today we have a powerful US Fed backed by the power of the state, deposit insurance and lots of Keynesian economists. The world has changed mightily since 1933. Deposits and gold are small potatoes to banks today. The danger to our banking system is not a depositor run on the banks but the failure of collateral (debt instrument value) used by the banking system.

The shadow banking system is poorly understood by me but it appears to provide plenty of cheap debt that is not explicitly backed by government. This is where I am watching for a black swan even though it won’t do me any good if I am right. It would be interesting which debts are extinguished in possible “confiscations” of debt. I read somewhere that Julius Caesar enforced a form of debt jubilee to solve a Roman republic debt crisis. Apparently, many wealthy senators were unhappy even though his plan worked.

I don’t see any warning we are near a debt crisis, so I will stay calm and carry on. The central bankers still want inflation greater than economic growth.
My musings today …

#124 Basil Fawlty on 10.13.14 at 1:01 pm

“More Ron Paul, gold-licking whackonomics. Pablum for the gullible. — Garth”

It would be interesting to understand what exactly you disagree with in Mike Maloneys presentation. Is he not telling the truth, or just grossly uneducated? Where do his arguments fall down?
In addition, where the heck does someone study “gold-licking whackanomics”, Ron Pauls basement?

#125 Snowboid on 10.13.14 at 1:04 pm

#119 OttawaMike on 10.13.14 at 12:02 pm…

The BC Pension plans are in a good position too, with overall fees for investment management and pension administration at 1/4 of one percent.

Part of the reason was moving the pension plans to a joint management system in 2001 – at arms length from government. In the past, some politicians (Socreds) had ‘borrowed’ from the fund!

That’s not to say that the plan will see some changes in the coming years. Already many of the benefits are gone, and indexing may also disappear as it isn’t guaranteed.

All the more reason to follow the advice of our esteemed host!

#126 crowdedelevatorfartz on 10.13.14 at 1:14 pm

@#120 okInvestor
Wow!
That single celled invertebrate Mark Carney actually grew a spine and critisized “bankers’. Hell hath frozen over.
Of course this is 6 years after the fact and an ocean away from the private Dinner Clubs where he may actually “rub elbows” with those self same “bankers”
What next in this upsidedown world?
Stephen Harper critisizing the Tar Sands?
The horror, the horror…………..

#127 Happy Renting on 10.13.14 at 1:19 pm

#117 Cici on 10.13.14 at 11:36 am
I’m out of the loop…Garth posted on a Saturday!

Out of the loop, yes. Today is Monday, yesterday’s post is dated Sunday. Had wine with Thanksgiving dinner (or, rather, Thanksgiving dinner with your wine? :)

#128 eyes wide open on 10.13.14 at 1:34 pm

Thanks “Roy, Not an Economist, and Cato the Elder”. SPOT ON!!!!!

Not an Economist: Run for office. I would vote for you and spread the word to as many as possible in the quest for your success.

Garth, someone needs to expose the propping of house prices by money earned outside of Canada. I say let the housing market crash and burn, particularly where I live as it is clear only a handful of people who earn their money in Canada could ever afford to buy here. Canada is selling out.

Do you believe this actually may be why Poloz and company feel they only need to create policy to stem Canadians from buying yet allow foreign investors and money from out of country load up on real estate. Very Interesting! But how do we reverse this tidal wave of demand now that it has started so we may all have a quality, private space not dictated by landlord inspections and subject to revoked tenancy!

I see directly a massive influx of new immigrants who use our social provisions, and every possible tax break to the max. My daughter’s has picked up a new term at high school, “Stupid Caucasians”.

Why does the government not set up a stratified system for benefits which are based on the number of years you have paid in to support communal benefits such as health care and spaces in long term care facilities? I am not sure why newcomers who have paid in for only a few years should be able to receive service and coveted spaces over those that have paid in for 50 years plus, but that is exactly what is happening. We all go on the same waiting list no matter how long you have paid in to the system.

Does anyone really believe people who purchase homes and conduct their business out of country are actually supporting the Canadian economy. Not much! They are particularly frugal within their new country. Some throw out an inconsequential benefactor nougat or two for a community cause while purchasing multimillion dollar homes on coveted, limited land which they arrogantly state as reasonable value!

My eyes are wide open and I hope yours are too!

They are. I see hatred – for those you think are undeserving of our generosity, or undeserving of their wealth. — Garth

#129 Joe2.0 on 10.13.14 at 1:44 pm

Happy Thanksgiving Garth.
And to the blog dogs.
Thanks for you insights and antidotes.
It appears as if we are heading into even more interesting times to come.
Unstable markets, new alliances, plagues, volcanos, earth quakes, Isis, wars and rumours of wars.
It’s going to be an interesting year+.
Many of us N Americans especially Canadians have never been through really tough financial times, excluding vets, illness.
I’ve seen it in Africa, Cuba, Phillipines, China, Middle East Russia…
We are due.
Not fear mongering recommending preparedness, prioritize.

#130 saskatoon on 10.13.14 at 2:13 pm

as far as i know, most major canadian pension plans are very much tied to current (rising?) real estate values.

i.e., watch out: if home prices begin to slide, many pension plan “sustainability” models may not look so hot.

#131 Blacksheep on 10.13.14 at 2:57 pm

Why is there still, civilian flights leaving West Africa?

#132 bigrider on 10.13.14 at 4:14 pm

Oh well, bye bye balanced portfolio returns for the year.

Funny how it takes all year to make what it takes 10 to 15 trading days lose. Been like that since that start of the secular bear market for stocks some 14 years ago.
You can lose a lot more money and a lot faster than you can make.

Lets just hope that the current ominous decline does not accelerate into a full blown crash. Getting really ugly

You don’t lose if (a) you had rebalanced as I suggested and (b) you don’t sell into a falling market. — Garth

#133 Cato the Elder on 10.13.14 at 4:28 pm

Re: #129 eyes wide open

Thank you for the endorsement. I don’t see anything wrong with what you’re suggesting – that people actually PAY INTO our social programs before receiving benefits.

My ex girlfriend’s family were immigrants. They came here 30 years ago. Back then, they had to prove employment, and have a reserve of cash. They didn’t qualify for benefits upon arrival. Her mother is a dental hygienist and she said NEW IMMIGRANTS that haven’t paid a penny into the system get FREE DENTAL CARE. Citizens that have been here for GENERATIONS don’t get free dental care – what the hell is going on folks?

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

Re: #132 Blacksheep

This ties into the concerns above. It’s all got to do with POLITICAL CORRECTNESS. They are making decisions based on the emotional whims of the masses instead of logical, long-term constructive ones. It’s been happening for decades – ever since 51% of the population realized they could vote themselves the wealth of the remaining 49%. It’s democracy folks – and it is massively flawed.

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

Regarding your suggestion of running for office, here are my solutions:

1. Balance the budget
2. Immediately decentralize interest rate policy. Let different areas of the country set different interest rates according to the demands of the credit markets in those regions.
3. Allow competing currencies – anything people want to trade in is allowed
4. Immediately disengage ALL FOREIGN INTERVENTION abroad. Bring our troops home. That includes an elimination of all ‘foreign aide’. That money should be spent HERE.
5. Institute a national ‘neutrality’ policy in world affairs. Focus 100% of our efforts on our own problems. No more angering potential trade partners abroad (thus hurting business owners) with stupid condescending statements expressing our disappointment in their behaviours
6. Implement a reduction in voting power for government employees, or a ban all together. Those benefiting from government power shouldn’t be allowed to vote themselves more. When they leave government employment, their suffrage will be restored.
7. Eliminate the entire Canadian tax code. Implement a simple flat tax. No more complicated exemptions, loopholes for big business, or the massive money drain the system places on the productive economy.
8. Reduce income and property taxes dramatically, with a year over year plan to reduce them until they approach 0.
9. Reduce property taxes until they reach 0%. Property should not be something you are ‘renting’ from government that can be confiscating anytime you fail to pay your taxes. It is the central tenet of a free society (ex: how do you print flyers promoting political beliefs if you can’t own the printing press?)
10. MASSIVELY REDUCE SPENDING. Every business the government is involved in should be phased out (garbage collection, electricity production, first class mail, etc.)
11. Make competition LEGAL in the industries we deem to be ‘essentials’ like healthcare. Let people opt out if they want. For those of you who think this is a bad idea, Switzerland does it (they are much richer than us). Also, we already have a 2 tier healthcare system, people just go down to the US to spend their money! Keep it here!
12. Massive layoffs for government officials (all the useless hacks that make our lives difficult through regulations)
13. Strengthen the military. We won’t be a client state of anyone. We will ensure no country the world over wants to touch us. Maintenance of neutrality will ensure we don’t get bogged down looking for monsters to destroy
14. ‘Guilty until proven innocent’ will no longer be policy at the Canada Revenue Agency. Normal crime procedures will be followed
15. Destroy all monitoring of Canadian citizens without a proper warrant issued by an impartial judge
16. No more violating contractual obligations – no forcing companies to accommodate the complaints of citizens that feel ‘wronged’ by contracts they signed. Contracts are INVIOLABLE. The moment a country begins rewriting them, everything is on the table and you are forced to build society on shifting sand.
17. Amend the constitution allowing a provision for self defense against an unwarranted aggressor. No more getting prosecuted for defending the lives of you or your family against criminals. Sorry, but police are only called AFTER A CRIME HAS TAKEN PLACE. By the time they arrive, it is often too late. This is ridiculous. No one should ever have to hesitate to defend themselves against a violent individual.
18. No more cronyism. All contracts for NECESSARY (this would be very limited) government programs will be OPEN TO THE PUBLIC FOR BIDDING. No closed door contracts or secret deals.
19. Massive cuts to the salaries of government employees, especially elected members. Their jobs would essentially become ‘part-time’ after the economy becomes rebalanced. The private sector will fill the vacuum. Elected members will meet very infrequently and ONLY to discuss matters that pertain to public matters (the enhancement of individual liberty). Part-time also gives them much less of an opportunity to screw things up.
20. On taxes again, no capital gains taxes. We want people to invest without fear. Those that make large profits have BENEFITED our country through job creation and wealth creation. The larger the profits the better.
21. Restrict immigration to those that bring this country what we want – skills. Make speaking English and French a higher priority. Make the offers conditional on integrating into our societies – if violated, we can kick them out. They can’t qualify for social benefits until they’ve paid into it by a certain amount after a certain number of years. This isn’t ‘xenophobic’ – this is protectionist. I want to PROTECT our culture and society. WE GET TO SAY WHO COMES INTO OUR HOUSE.
21. We should be a place the rich the world over see as somewhere they can store their assets without fear. Imagine the wealth that would flow into this country – it would be unprecedented. While countries the world over are scheming up ways to keep plundering the wealth of their citizens in ever imaginative ways, they would all flock here.

#134 Tony on 10.13.14 at 4:29 pm

In America the FED bought stocks during lunch. No signs of a meltdown yet.

#135 Jan on 10.13.14 at 4:41 pm

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#136 Cato the Elder on 10.13.14 at 4:48 pm

I should clarify – those objectives are at the federal level. If provinces are dumb enough to want to implement poor policies, they can do so. But at least the whole country won’t be blanketed in stupidity. When the federal government does something, it become incredibly difficult to see if something different would work differently. If we decentralize the processes, then provinces can compare amongst each other what works best. Also, local governments are more accountable to their people because they are situation closer and live amongst their voters.

#137 Michal Padolki on 10.13.14 at 5:07 pm

They are. I see hatred – for those you think are undeserving of our generosity, or undeserving of their wealth. — Garth

Me – So, I the basement-renter should show generosity to those who buy multi-million dollar homes and keep me poor and unable to ever purchase a home in own country?
Sir, did you ever fall on your head when you were a child…..sorry, I just couldn’t help myself to ask.

Nobody else is responsible for your inability to buy something you can’t afford. — Garth

#138 Michal Padolki on 10.13.14 at 5:22 pm

#131 saskatoon on 10.13.14 at 2:13 pm
as far as i know, most major canadian pension plans are very much tied to current (rising?) real estate values.

i.e., watch out: if home prices begin to slide, many pension plan “sustainability” models may not look so hot.

Me – interesting.
Do you have any links….thanks

#139 HAM - TO DEATH DO US PART on 10.13.14 at 5:40 pm

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#140 HAM - TO DEATH DO US PART on 10.13.14 at 5:48 pm

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#141 OttawaGUYrenting on 10.13.14 at 5:59 pm

Shrinklage –
Less larger families
Easier shipping of MORE product (fuel expensive)
All leads to product packaging becoming smaller

I see it in my line of work for sure.

The Lad who is bananas about inflation calculations being skewed… %100 right

Houses in Ottawa continue to sit on the market…

#142 500 Days - and counting on 10.13.14 at 6:05 pm

FormerSaskie on 10.13.14 at 11:21 am

#37 500 Days

your name should count down the 500 days so we know when we are there :)

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Thanks for the thought and reminder, FormerSaskie. I had been thinking the same thing when the idea occurred to me in September, and will change the number from time to time for emphasis.

I claim no special powers, and am not a gold pumper. I do think that in 2015 real estate will slowly derail across the country, including TOR and VAN. Based on what I remember of the slump from the early 1990s, plus the greater velocity of information today, I think it will take about a year for the house horny to sober up. By early 2016 and what ‘should’ be the start of the spring market, that will be evident. There will be a lot of added sadness too, I fear, from other economic effects such as deflation and global cooling off that Garth notes here, as well as personal stories of friends and relatives in dire straits. Not every week will be as dramatic as Garth shows this past one has been, but the trend is now becoming much clearer, in real time.

By 2016, the onus will finally be on sellers to justify why a house (or heaven help them, a condo) could possibly be worth more than about 3 X income. The reversion to the mean will be in sight.

Could it happen sooner? Many more weeks of news like this last one, and all bets are off.

BTW, we’re down to around 475 days now by the end of this week, as I see things, FWIW.

#143 Michal Padolki on 10.13.14 at 6:32 pm

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#144 Michal Padolki on 10.13.14 at 6:52 pm

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#145 SWL1976 on 10.13.14 at 7:26 pm

Cato the Elder

Many good points today and my favorite being the following…

Truth is treason in an empire of lies

5. Institute a national ‘neutrality’ policy in world affairs. Focus 100% of our efforts on our own problems. No more angering potential trade partners abroad (thus hurting business owners) with stupid condescending statements expressing our disappointment in their behaviours

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Yes our government and democracy is broken…

Majority rules doesn’t work in mental institutions

You can’t fix stupid but it can easily be maintained

#146 AndyJH on 10.13.14 at 9:34 pm

Never have so many been so DELETED by so few.

The Thanksgiving Day Massacre.

PS: Had a wonderful ham dinner tonight.

#147 Tamsen on 10.14.14 at 1:33 am

Eyes Wide Open is 100% right about HAM and other rich foreigners buying up property in Canada, especially West Vancouver. Locals can’t buy a house for under 2 million which is now the average price in West Van. Talk to any realtor in West Van and they all say the same thing. It’s not the locals that are buying the “average” 2 million dollar home. You have to come to West Vancouver to see for yourself …

#148 Van Isle Renter on 10.14.14 at 8:43 am

“We are also told of general catastrophes and a succession of deluges, of the alternation of periods of repose and disorder, of the refrigeration of the globe, and of the sudden annihilation of whole races of animals and plants, and other hypotheses, in which we see the ancient spirit of speculation revived, and a desire manifested to cut, rather than patiently to untie, the Gordian knot.” – Charles Lyell

I received via email this text excerpted from the classical text Principles of Geology, by Charles Lyell (1st ed.. Vol. Ill, pp. 1-5, London, 1833). Charles Lyell is generally regarded as the father of modern geology.

http://judithcurry.com/2014/10/14/words-of-wisdom-from-charles-lyell/#more-17047
+++++++++++++++++++++++++++++++++++

Doomers and End-of-Timers have been around forever. I’m just surprised to see so many on this blog.

#149 Terry on 10.14.14 at 9:42 am

You know my brother in law? lol

#150 ozy - stocks must be sucking bad on 10.14.14 at 6:59 pm

if bonds spiked that this in last 2 weeks

http://quote.morningstar.ca/quicktakes/fund/f_ca.aspx?t=F0CAN05M27

HOOREY