50 shades of taper

50 modified

Warning: The following post deals with explicit fiscal and monetary policy. It does not contain flogging or whipping. Jian Ghomeshi has left the site. The safe word is ‘yellen.’

Cast your mind back to the summer of 13. Fed boss Bernanke said his central bank would start to taper back on its stimulus spending, as the US economy was gaining strength. Of course, many people went nuts. Stocks turned volatile, bond prices tanked and yields spiked. Juicy assets like preferred shares and real estate investment trust fell about 15% in value. This pathetic blog was overrun by people screaming ‘sell’, while the contras said ‘buy.’

For years Washington has been soaking up massive quantities of bonds – $85 billion a month through most of 2013, for example. Why? To inject rivers of cash into the US economy so corps will create jobs, and keep interest rates low by Hoovering up bonds.

It worked. Unemployment went from over 10% to under 6%. Families paid off $1.5 trillion in low-cost mortgages. Corporate profits plumped to pre-recession levels. The stock market gained 160%. The American economy resumed growing at 4%, and inflation stayed under 2%.

After toeing to the edge of the economic abyss in early 2009, it all came back. Now the once-massive government deficit is at an eight-year low, plus consumer confidence has shot up with more jobs, affordable houses and cheaper gas. No, it’s not all ponies and rainbows. But by every measure that counts – productivity, employment, inflation, GDP (check out today’s news) – the storm is well passed.

The metalheads and bullion-lickers refuse to believe this, and were arguing up to 2 pm Wednesday that if the Yanks actually withdrew this stimulus, stocks would tank, the US cleave and the Z-times begin. Fail. Not even close.

For all of 2014 the Fed, now run by the sweet old lady, Janet Yellen, has been ratcheting back on its stimulus (known as QE, or Quantitative Easing). That $85 billion had been tapered back to just $10 billion by this week, and is now kaput. The Fed did exactly what it said it would, and this should have surprised nobody.

It’s a remarkable achievement. We’ll all benefit from it.

In an orderly fashion for a year, the tap has been turned off. Far from starving the economy of cash, ushering in recession, killing markets or precipitating a crash in bond prices and a spike in interest rates, it’s been serene. The S&P is 14% higher than a year ago this week, and the TSX is ahead 11% – even after its blow-off two weeks ago. The US dollar has surged along with the recovery, which has knocked commodities and gasoline prices lower. Over 80% of companies currently reporting quarterly profits are ahead of expectations. Over 60% have higher sales.

So, what now?

Easy. More of the same. US interest rates will rise, but not until later in 2015 when the bankers are sure the economy can take higher mortgage costs and tighter business loans. Yellen has made it clear there’s no rush. It all depends on jobs. But, without a doubt, rates will normalize. People borrowing to buy houses in Toronto or Calgary today will not be renewing at 3% or less.

As for investors, this might be a Goldilocks moment. Not too hot – with the removal of all that stimulus money and Fed hand-holding. Not too cold – with inflation expected to come back with oil prices and sustained growth. Stocks have weathered tapering just fine. Bonds, ditto. Investors who bought the dips – like REITs last summer or the TSX weeks ago – now look smarter than Jian in a frock. With a paddle.

Well, if you’ve been quivering in cash since 2009, believed the gold nuts in 2011, or haven’t built a balanced portfolio because you thought rates would rocket and stocks waver, it’s time to reassess. The US is fine. Europe is about to do its own QE, and the results will be similar. China’s weird, but unstoppable. Corporations are fat. There’ll be no pandemic, and the ISIS numbnuts are losing.

We’re running out of things to worry about. Unless you just bought a condo.

159 comments ↓

#1 Mark on 10.29.14 at 5:54 pm

QE worked? Hardly. Unemployment is only “low” because the participation rate fell through the floor. The stock market isn’t even back to its 2007/2008 levels adjusted for inflation. Earnings haven’t fully recovered in real terms either. The economy is not meaningfully growing, and malinvestment reigns supreme in sectors such as technology, healthcare, and the government/public sector.

Even the TSX, as highly suppressed as it is, isn’t even at its 2008 highs nominally, and is still 20-30% off in real terms. QE success? Hardly. I know that people might want to buy the fantasy that QE was a success, but evidence is scant. If anything, it just served to further re-enforce the ills that have infected economies on both sides of the border — too large of, and too powerful of a financial sector. Inadequate employment opportunities, particularly for graduates. And it certainly hasn’t created much wealth for true wealth creators, that’s for sure.

Done fine for me. — Garth

#2 Funny that on 10.29.14 at 5:56 pm

That’s one big dog!

#3 Piccaso on 10.29.14 at 5:57 pm

The Fed has been holding the markets hand for the last 6 years, let’s see if the market can stand on it’s own without quivering.

#4 Londoner on 10.29.14 at 6:12 pm

Rate rises will be data dependent as Yellen and virtually all other central bankers have been saying for a while. Too early to tell if it’s going to be 2015 or later. Even the BoE, despite having the strongest growing economy in the G7, are hesitant to raise rates too early, citing global economic risks. Maybe when the Europeans finish their QE, but that’s a long ways away.

No doubt the US economy is growing and stabilizing. It’s not going to look like it did before. The markets will put in another low before going the next leg higher. But that will be enough to have the doomers running for the exits and claiming QE4 is around the corner.

#5 Happy Renting on 10.29.14 at 6:16 pm

Nice recap, Garth. And I enjoyed the optimistic tone. :)

#6 DV01 on 10.29.14 at 6:17 pm

#Timestamp

#7 David McDonald on 10.29.14 at 6:18 pm

Maybe this is naive but I was wondering about the effect of unwinding QE1/2/3. Will the Fed sell all those bonds back to the US treasury and in turn back to the banks and ultimately retail customers. Won’t this supply depress the value of bonds thereby increasing yields and hence depressing stock prices.

#8 JohnL on 10.29.14 at 6:20 pm

US government borrowing maybe down, but someone else has picked up the baton, any guess?

http://research.stlouisfed.org/fred2/series/TCMDO

I’m thinking HY, covenant light maybe?

#9 Stomper on 10.29.14 at 6:23 pm

I wish I shared your optimism – but with the US, Canada, Australia and Europe awash with Debt and no end game in sight I suspect a decade of moribund growth.

#10 Retired Boomer - WI on 10.29.14 at 6:31 pm

#1 MARK

YAWN…. By my accounting, I have NEVER had it SO good!

Let me see. 2014 vs 2007

more money? check
less DEBT? check
less worry? check
good Health? check
Better job? check (retired, dummy BEST Job EVER!)
Any Complaints? NO, not really, finally learned to do it ok.

#11 bill on 10.29.14 at 6:37 pm

Garth -that warning at the top was hilarious.
I will now go back and read the rest.

#12 Garth is my Enabler on 10.29.14 at 6:37 pm

Unemployment went from over 10% to under 6%. Corporate profits plumped to pre-recession levels.
The stock market gained 160%.
The American economy resumed growing at 4%,
and inflation stayed under 2%.

But where is my 1.7 Trillion dollars i lent you?
what are you smoking Garth?

Tomorrow is Thursday and then Friday..
i will be here like always ..
i hope my portfolio survives
i am only $25k short for you take me in !
i have been saving hard,

eventually i will have $150k and you will not tell me to close the door from outside…

#13 Honus on 10.29.14 at 6:46 pm

If the US were fine, the Feds would have raised interest rates by now. The US is not fine. China is not fine. It’s a massive debt bomb that’s about to go off. Europe is in a Depression; hence, their own version of QE. Canada is a commodity based, overleveraged economy that’s about to implode. There won’t be a pandemic, but the economic fallout of Ebola fears will be far-reaching. ISIS is growing by the day. Enjoy the dead cat bounce… We’re going down.

#14 visorman30 on 10.29.14 at 6:49 pm

You sort of touched on it very briefly at the end but I was wondering if you might expand on the situation in China. It’s a bit difficult for me to even understand it and hopefully you have more insight you can share.

#15 crowdedelevatorfartz on 10.29.14 at 6:51 pm

@#8 Homus.
My my. So cheery.
Mind if I bleed all over your carpet after slashing my wrists?

#16 crowdedelevatorfartz on 10.29.14 at 6:52 pm

So sorry #8. I meant #11 Honus. Doh! :)

#17 Exit Plan, Gold and Greenspan on 10.29.14 at 6:59 pm

# 7 David McDonald
The Fed has no exit plan (that has been made public), and the US government is in no position to purchase trillions in bonds – where is it going to get the money? US debt is also up another trillion for 2014 and is now pushing 18 (deficit numbers are down due to accounting, but total debt is still rising fast). We’re all interested to see what happens next.

Even Greenspan says that QE was the easy part – the exit is the risk. He also shockingly just called QE a failure (not surprising as the first two clearly failed). Against all the bullion haters Greenspan ‘the wiz’ is now recommending gold as he does not see how governments can deal with their debt and manage their currencies. The horror.

http://online.wsj.com/articles/former-fed-chief-greenspan-worried-about-future-of-monetary-policy-1414597627

Here’s a raving conspiracy site talking about QE4:

http://www.telegraph.co.uk/finance/economics/11165982/World-economy-so-damaged-it-may-need-permanent-QE.html

#18 totalinvestor.com on 10.29.14 at 7:00 pm

” Over 80% of companies currently reporting quarterly profits are ahead of expectations. Over 60% have higher sales.”

Is that because the economy is on fire or because the analysts are intentionally low-balling estimates?

http://postimg.org/image/pjj8dlsqh/

Perhaps it is simply a recovering economy, on track. Why does everyone on this blog think in extremes? — Garth

#19 Harbour on 10.29.14 at 7:04 pm

QE didn’t do jack for housing with U.S. home ownership the lowest in 20 years

But it bloated the markets !!

Maybe that’s exactly the correct level. — Garth

#20 devore on 10.29.14 at 7:07 pm

#7 David McDonald

Maybe this is naive but I was wondering about the effect of unwinding QE1/2/3. Will the Fed sell all those bonds back to the US treasury and in turn back to the banks and ultimately retail customers.

Why would the fed sell? And why would the treasury buy them? Right now, they’re essentially paying interest to themselves, as the fed credits its profits back to the treasury.

#21 Anson on 10.29.14 at 7:10 pm

Talk….Talk……Talk….
The Fed has been doing a lot of talking about raising rates for a long time
Don’t believe the hype, although unemploynent is dropping things are not as rosy as they seem
Dont believe me, then talk to anyone who has lost a job in the last 6 years and ask them if they are making anywhere near their previos wages
Like one friend said to me when looking for a job a few years ago “I did not realise it was this difficult to find a decent job”
Most people don’t and only learn this when confronted with job loss

#22 TEMPORARY® Foreign Prime Minister on 10.29.14 at 7:12 pm

Let me get this right.

America blew its brains out and self-imploded under the previous administration, was pulled out of the ditch and back on the road under the current administration.

Now Americans are pissed at the current administration, and are itching to bring back the previous administration?

#23 Nemesis on 10.29.14 at 7:15 pm

#KittiesInTheCot? #LuckyDogs!…

http://youtu.be/jnMgqceRcxQ

#24 David W on 10.29.14 at 7:17 pm

Does everyone here share Garth’s optimism or is the market due for a correction from being proped up by governments?

This seams like a last ditch push to get folks to go all in in the hopes of keeping the bull market going a little longer so the first class can get off on the life boats before the ship goes down.

Learn to read. QE has been scaled back relentlessly for 10 months, and no whack. — Garth

#25 james on 10.29.14 at 7:21 pm

one aspect of interest to me is the distribution of wealth, and its trajectory over time. Even if we accept that the USA (where I live) is on the road to recovery, a lot of those indicators (even if we assume that they are accurate, such as employment numbers) are aggregate measures that don’t allow us to tell where the wealth is going.

I personally think the USA is on the road to increasing social and civil unrest due to wealth disparities. You can even see this from a corporate perspective, where the financial industry has become incredibly dominant, cushioned by moral hazard and infusions of taxpayers’ cash.

#26 not 1st on 10.29.14 at 7:22 pm

I wouldn’t exactly call a doubling of sovereign debt a working solution. More of passing the buck and kicking the can but that appears to pass for sound economic policy these days.

So many America-haters. So far, all wrong. — Garth

#27 not 1st on 10.29.14 at 7:33 pm

Garth, you write like the fed just had a few trillion sitting around to do this bond buying. In fact its money typed up on a computer screen that goes right on to the fed balance sheet as a debt. The fed liability has increased from 1 trillion in 2007 to 5 trillion today.

At the same time, govt direct stimulus to banks and other institutions and a couple wars raised the national debt from 9 trillion to 17 trillion.

And you are actually cheering about this?

More extremism. I said it worked. — Garth

#28 Harbour on 10.29.14 at 7:33 pm

So many America-haters. So far, all wrong. — Garth
………………………………………………………………………..

I don’t hate America, actually wished I lived there.

I just think the markets have been over bought and the valuations are to high, kind of like Canadian real estate.

Unlike houses, companies make money and pay dividends. Valuations are far less emotional. — Garth

#29 takla on 10.29.14 at 7:35 pm

All these facts and figures garth,just how does one confirm the numbers ?Unemployement down,fiscal
deficet down,Reduced quantitive easeing down to zero.
I learnt something years ago concerning gov news releases…..Figures lie and liers figure.
The main underlieing problem is the cost of living has past what most middle class can afford,add in asset bubbles{stock market /housing} created by free money and the economy stalls and doesn’t recover.
As always time will tell..

#30 M on 10.29.14 at 7:40 pm

DELETED

#31 Retired Boomer - WI on 10.29.14 at 7:44 pm

#22 TEMPORARY @ foreign prime minister

Your analysis made me laugh! It is DEAD ON RIGHT, we be a strange and mutely people here. We be Americans, a mix of the descendants of rejects from all over the world here, and newly arrived rejects from them there places too.

Come join us, and be our friends. We usually don’t bite, and we are never satisfied, or satiated. That just be why we are what we are here. We be Americans here!

#32 Godth on 10.29.14 at 7:47 pm

“It’s a remarkable achievement.”

thanks for the belly laugh.

Tell us about yours. — Garth

#33 Realties.ca » 50 shades on 10.29.14 at 7:49 pm

[…] Source: http://www.greaterfool.ca/2014/10/29/50-shades/ […]

#34 M on 10.29.14 at 7:53 pm

..can’t stop myself..my dumb mouth :)
Garth, I bet 100 lousy buck of mine vs the shiny 20 bucks of yours that before long stimulus is coming back. By march 2015.
Debt must grow exponentially for the GDP to grow linearly in this brilliant system instituted after the fall of LTCM.
Yes, the interest rates will go up. Dramatically. But not because of lack of stimulus. They’ll try everything to keep yields down. King market will win at the end. Keep printing ? Stocks go up :) Stop printing ? Bond yields go up and all the beauty turns Yellen :). In the end, the market will give the final verdict-> bonds crash. But this is great news since we can make it like thieves.
Yes, gold will go up too :)
6% unemployment when the rate of labor NON-participation is 1978 high
with the printers running red hot ain’t THAT of a great achievement.

http://www.businessinsider.com/labor-force-participation-rate-september-2014-2014-10

2008 baby :) with a bigger bang.

#35 Yitzhak Rabin on 10.29.14 at 7:56 pm

The smug contained in today’s post is worse than George Clooney’s Academy Awards acceptance speech a few years back.

QE has been ended for a few hours. Give it a few months, there’s a reason QE1 and QE2 didn’t work. The economy that lives by QE, dies by QE.

The stock market sell off will quickly resume, housing will give back all of its gains, some Fed stooges will be paraded out to talk up the markets, and before you know it QE4 will be back.

Who knows what the excuse will be. Europe, Japan, inflation being “too low”, the S&P dropping, banking problems…

Without monetary heroin, the debt choked, over financialized economy will be revealed for what it is.

Wait until you see what the fallout does to the US budget deficit. Which despite the propoganda and phony accounting is still high as hell.

US Debt October 27, 2013 – $17,081,509,219,288
US Debt October 27, 2014 – $17,906,106,113,024

An $824 billion increase in 1 year, despite a clalimed deficit of $460 billion.

Source, US Treasury website:
http://treasurydirect.gov/govt/reports/pd/pd_debttothepenny.htm

#36 TEMPORARY® Foreign Prime Minister on 10.29.14 at 8:00 pm

So many America-haters. So far, all wrong. — Garth
=========================

Probably not America-haters; just posters questioning the wisdom of fighting massive debt with……….even more massive debt.

To the layman, like myself, this gives the illusion of obtaining a new credit card to make payments on the over-extended balance of the old one.

Just like perpetual motion machines and cold fusion, I’m still on the fence on this one.

#37 Anson on 10.29.14 at 8:02 pm

Don’t listen to cheap talk instead pay close attention to the 10 year US treasuries. The 10 year is painting a very different picture than what the media is forcasting, remember the bond market rules, and when you get only 2 % on a 10 year treasurie it basically is saying
“things are not well”

#38 Godth on 10.29.14 at 8:04 pm

Tell us about yours. — Garth

My proudest moments…
[IMG]http://i61.tinypic.com/10fw086.jpg[/IMG]

#39 David McDonald on 10.29.14 at 8:09 pm

First let me say I am not an American-hater and I am not an economist. I agree with Garth’s fundamental thesis that the US is improving; in fact I bet on it buying US stocks 10 days ago. However I am curious about how the Fed ultimately unwinds all this bond buying.

Devore (post 20) says the Fed doesn’t need to sell those bonds. Does this mean the Fed holds them until maturity? That is decades away and still the US treasury would have pay the face value at that time (financed by selling more bonds to the Fed?)

Post 17 says there is no plan at all and that Greenspan recommends we buy gold.

Like Garth I am optimistic in the short term but I do think the Fed has to unwind the asset purchases sometime otherwise it will have no more bullets if there is another crisis. When it does start unwinding it seems to me it will depress asset prices.

#40 M on 10.29.14 at 8:11 pm

jee… I am active tonight…

“Learn to read. QE has been scaled back relentlessly for 10 months, and no whack. — Garth”

..it’s called inertia Garth. Heavier and bigger the sludge is harder to stop it when in motion. Give it a bit of time :) You’ll be amazed. One may try a bit of inverse bonds at some point.

http://www.investopedia.com/stock-analysis/2013/the-top-5-inverse-bond-etfs-tbf-tbx-tmv-sjb-jgbs0204.aspx

making like thieves, I’m already drooling. years ago I paid my student loan shorting Nortel. Paid x student debt shorting Air Canada. I chickened out and got our at 50 cents. It stopped trading at 6. I have no clue why “recession” is a dirty word these days.

#41 Spock on 10.29.14 at 8:17 pm

The 50% of people who earn less than $30,000 in the US per year would love to hear that the economy is doing great and unemployment is going down.

The debt will never be paid off. In a few months, QE4 will be announced to much fanfare citing data and need (same as was done after QE1 ended and after QE2 ended).

The stock market will need to be propped up for the mid term elections next year.

It is good to see that the US is recovering slightly but there is a huge disconnect between Wall Street and Main Street.

Corporate earnings are dismal at best – EPS has been manipulated by borrowing at low debt and buying back shares with abandon (e.g. IBM which has been doing this for some time now and also Caterpillar which will have higher earnings with lower or same revenue next year – but more buybacks).

US will lead everyone out but it will get more painful before it gets better (for the common man)

#42 Inglorious Investor on 10.29.14 at 8:17 pm

A while back I commented on how some people (e.g. Martin Armstrong) didn’t think that stocks were in a bubble because of still low retail (dumb money) participation. He said you can’t have a bubble without retail.

I suggested that maybe we’d get a big correction even without the dumb money going all in first because the dumb money could very well be out for a generation. Now, Mr. Armstrong, who sees potential for a large correction, has been calling it “the rich man’s panic.”

I’m not saying that stocks are in a bubble. In real terms the DOW is still below its year 2000 peak. And despite what’s happened this past week, I still think a 25 to 30% correction is likely in the very near future.

#43 Basil Fawlty on 10.29.14 at 8:20 pm

“Now the once-massive government deficit is at an eight-year low, plus consumer confidence has shot up with more jobs”

Check the increase in the US debt for this fiscal just ending. The debt is up over a trillion. In regards to jobs, the labour participation is the lowest in 36 years.

Why do you continally ignore this and quickly pull out the “hate” card?

Sovereign debt is the most easily handled, especially when your currency is the global definition of money. You clearly do not get that. — Garth

#44 Mr. Frugal on 10.29.14 at 8:25 pm

Garth is 100% right. It’s all about buying the dips. If you bought Potash when it dropped last year, you were up about 18% in less than 1 year plus you collected a 4% dividend. Last year they couldn’t give away Apple stock. Then it ralled more than 30% in less than 1 year. That sure beats a GIC. If you bought the airlines when investors were flipping out over ebola, you made 10%-20% in a few weeks. Right now oil is stupid cheap! Looks like a good time to buy oil stocks on the dip.

#45 David W on 10.29.14 at 8:26 pm

Re #24

Hey Garth, didn’t mean to sound pessimistic, just hard to trust the market with government and ppl in so much debt.

If you are confident it’s only up from here, I’ll take your bet and put my cash in. How confident are you?

#46 not 1st on 10.29.14 at 8:27 pm

So the S&P may be up 10% and employment may be down 4%, but every citizen in the US is 2.5 times less wealthy than they were 6 years ago because the per capita debt load has increased by that amount. ‘Improving’ is a seriously loaded description of transferring debt laden stimulus to the public’s back.

And yes, sovereign debt DOES matter. We all pay interest on it and it has to be paid back sometime, unless a default is declared or debt jubilee is agreed on.

#47 Roman on 10.29.14 at 8:29 pm

Funny how in 2009 bankers were blamed for plummeting stocks and now they’re praised for raising.

https://confoundedinterest.files.wordpress.com/2014/10/fedasseys.png

This “160% stocks up” crap will normalize exactly the same way as gold and any other bubble did.

I also mentioned how ugly softs, grain looked like around month ago and that it would be ok to start buying them.

Well, they had just had explosive month while stocks are sitting where they were.
http://finviz.com/futures_performance.ashx?v=13

Don’t buy high…

#48 Grey Swan on 10.29.14 at 8:36 pm

Yes we should thank the Fed and the wall Street banks,they are of the same private institution.
They print money add it to the deficit,Americans better
find work to pay for that!
Have the regulators returned stable banking and investing to Wall street….where`s Glass, Stegall act and separation of banks and investment houses…we should be honoured and thankful to the Fed for printing money only!!

I bet tonight’s crowd would be giddy if the US was tanking. — Garth

#49 devore on 10.29.14 at 8:37 pm

#39 David McDonald

Devore (post 20) says the Fed doesn’t need to sell those bonds. Does this mean the Fed holds them until maturity? That is decades away and still the US treasury would have pay the face value at that time (financed by selling more bonds to the Fed?)

SOMEONE has to hold them to maturity, SOMEONE collects the interest, and SOMEONE will be paid face value at maturity. What is the incentive for the fed to sell them? What difference does it make who is holding them? If they’re sold, it’s just moving money from one pocket to another, the bonds still exist.

#50 AK on 10.29.14 at 8:40 pm

“It worked. Unemployment went from over 10% to under 6%. Families paid off $1.5 trillion in low-cost mortgages. Corporate profits plumped to pre-recession levels. The stock market gained 160%. The American economy resumed growing at 4%, and inflation stayed under 2%.”
=================================

Number of billionaires doubles since crisis

#51 Timmy on 10.29.14 at 8:43 pm

That little dweeb Gomeshi is so lucky to have had a job like that with CBC. There are thousands of equally competent people that would like up to take his place. He now has the nerve to sue CBC? We would be on the hook as taxpayers. Biting the hand that fed him. Of course he knows he won’t win, he’s just trying to scare off young woman from coming forward against him. Pathetic…

#52 Inglorious Investor on 10.29.14 at 8:44 pm

A good explanation for what’s been happening in the markets and the economy is referred to as ‘financial repression.’ I’ve referred to it as a ‘slow burn’ or ‘slow motion crash’ many times on this blog.

While the specifics can be very complicated, the fundamentals are not. You see, there is no such thing as a free lunch. Someone always has to pay for the things we have, and the things we lose.

The people who are paying for the wealth that was lost since 2008, and the huge deficits that resulted are primarily the savers. The US government-banking complex has engineered this slow burn using, primarily, monetary inflation and artificially low interest rates. While this has resulted in probably hundreds of billions of dollars (or more) of losses on savers, it has been a boon to others. This is because inflation and interest rate manipulation do not create or destroy wealth; they merely transfer it.

The gov-bank complex has been stealing wealth from savers to manage deficits. It’s a massive covert tax that they hope the dumb money won’t be smart enough to know is being employed because it’s happening relatively slowly (by design) and they can fudge the numbers as we go, as reported by their media lackeys, to pretend things may not be great, but they are not as bad as some gold-licking, gun-toting doomers claim.

In reality, things are far worse than they are willing to admit under the surface. Or why would they resort to regimes like FATCA that are forcing banks all around the world to refuse American accounts so that Americans can’t take their money out of the US? But have you heard of FATCA in the news? Or why are people with an American-born parent being unfairly targeted for taxes? But have you heard of this much in the news?

However, due to the aforementioned transfer of wealth, one can pick and choose statistics to show that things are not so bad and getting better. So, you see, it all depends on your point of view and whether or not you stand aligned with the “program” or are a victim of it. Where you stand can be the result of awareness and savvy, or just plain bad circumstances.

That said, I don’t think the real losses caused by financial repression/slow burn have yet been realized. Will the next phase be an inflationary crackup that masks a huge transfer of wealth inside an economic boom? Start warming up, because the treadmill may be kicking into high gear.

#53 Ole Doberman on 10.29.14 at 8:47 pm

Is anyone else backing the truck up on gold? I think this is finally the bottom.

If oil rises, as Garth says, gold will too! $2,000 in a couple years here we come.

For what possible reason? — Garth

#54 Sovereign Debt on 10.29.14 at 8:49 pm

Sovereign debt is the most easily handled, especially when your currency is the global definition of money. You clearly do not get that. — Garth

Exactly the current leadership mentality. That is why it continues to rise, high interest rates are not possible and deflation is evil. The US government can always pay its debts; what it can’t do is guarantee the value of the currency those debts are paid in (as Greenspan has noted numerous times). For that reason many countries are now planning to move away from the dollar where possible – why should they hold or be paid in an ever decreasing currency? That effectively represents a stealth default.

Study how a mountain of post-WW2 debt was retired. — Garth

#55 devore on 10.29.14 at 8:49 pm

#39 David McDonald

(financed by selling more bonds to the Fed?)

The fed transfers excess income to the treasury, that’s how. It was all just a massive exercise in liquidity and confidence.

#56 Young & foolish on 10.29.14 at 8:50 pm

Classic capitalism has morphed into current Creditism ….
The US will never go broke.

#57 JO on 10.29.14 at 8:55 pm

QE was a scam which merely inflated asset values temporarily by flooding the banks with cheap money that the fed created and used mainly to pay inflated prices for mortgage backed bonds and treasuries. By paying inflated prices that no private buyer would pay, the fed essentially transferred cash to the banks. The first operations manager under QE 1 who oversaw the mortgage purchases for the fed wrote a remarkable op Ed in the WSJ which confirms the scam that is. It exacerbated the “inequality” and has set the stage for an even bigger collapse likely to happen between 2017-2020.

QE has benefited the same parasitic sectors and top level execs in these sectors (FIRE and government sectors with mainly banks and other lenders)

It will come back within 6 months. They will have no choice. The entire global economy has seen a major slowdown. Inflation expectations in U.S., Europe, and Japan have collapsed in the last 2 months and in the US, the 5 year 5 ye BE rated are now LOWER than when the Fed started QE1-3

I would sell off USD slowly over the next 2-3 months and deploy into blue chips and small amount into PM for what should be a multi month powerful rally after the sharp decline we are in now bottoms within 1-2 months.

JO

#58 The real Kip on 10.29.14 at 8:57 pm

DELETED

#59 Arfmooocat on 10.29.14 at 9:00 pm

The U.S. is 17 trillion in debt

To put this into perspective, turn dollars in to seconds.

A million seconds is 12 days
A billion seconds is 32 years
A trillion seconds is 32.000 years

Apple has $170 billion in cash. — Garth

#60 Sovereign Debt on 10.29.14 at 9:19 pm

Study how a mountain of post-WW2 debt was retired. — Garth

Oh, I did. A post war massive expansion of the economy and GDP, being the last and largest developed nation intact after the European bombings of the war powering a huge trade surplus, a MASSIVE gold hoarding specifically giving it reserve status (as per Bretton woods), recently post depression having cleaned out failed companies and speculative investments, large re-purposed military spending into civilian infrastructure…

In short, the opposite of what we have today. We could not be further from that period. All that is left is confidence. It’s no coincidence that the Fed has ramped up PR the last few years where before it was mostly silent.

All we have left is confidence.” Really? US economy is $16.8 trillion. — Garth

#61 saskatoon on 10.29.14 at 9:28 pm

“Effective demand is dead in the water” and the effort to boost it via bond buying “has not worked,” said Mr. Greenspan. Boosting asset prices, however, has been “a terrific success.”

#62 M on 10.29.14 at 9:37 pm

“I bet tonight’s crowd would be giddy if the US was tanking. — Garth”

Garth, US IS tanking. The thing is if it can come back or not. I think they have a 5 years window in which they can pull up if they take the right decisions now.
Once you hit 20 % in debt interest rate payments to gdp, your tax base gets hammered. If interest rates grow and the interest on the debt to GDP hits 50%, then aircraft carriers stop moving. And if those stop moving the show stops

Britain used to be a larger, bigger empire gone bye bye in 20 years

I’ll take that trade. — Garth

#63 Marco from van on 10.29.14 at 9:45 pm

Let’s see –
The U.S. recovery is phoney… I work in San jose in high tech making 3x what my job would make in Van and 6 x the van average family income because their economy is tanking.

The reason why I can do that is because the company I work for is expanding globally which is happening because clearly there is no business investment.

Of all that all the people we hired (including 20 new employees in Vancouver in the business unit I run) in the US, Europe and other countries are not benefiting from a non existent business investment appetite in a non growing economy…

Well, I should quit and go get an average job in Van so I need to incur debt to buy the few things I waste money on (because I can) so I can keep up with the jones’ and keep to the norm…

Yeah right!

#64 TurnerNation on 10.29.14 at 9:46 pm

There never was an Ebola, ISIS or WMD threat. Just brilliant minds who have enough money so play with control and concoct the same old story. Nothing like a hit on RCMP, soldiers to rally us around them or a flag. Trust then to Keep Us Safe while they breed the wolves.

Now this blog is scaring me. — Garth

#65 Harbour on 10.29.14 at 9:50 pm

I’ve lived 1.7 billion seconds

I think

#66 Basil fawlty on 10.29.14 at 9:53 pm

“Sovereign debt is the most easily handled, especially when your currency is the global definition of money. You clearly do not get that. — Garth”

A dollar becomes worth less with each passing year, which is a poor representation of money.

Not exactly. A US$ buys more house now than it did six years ago. — Garth

#67 [email protected] on 10.29.14 at 9:58 pm

Economics aside – this helps shed light on the dislike of the US

if you haven’t picked up a Halloween costume, here is a poor taste choice if there ever was one

http://abcnews.go.com/Lifestyle/sexy-ebola-nurse-costumes-raise-temps-ire/story?id=26484278

I don’t actually know that the company is based in the US or not – but for my argument I am assuming it is

#68 RealistvsExtremist on 10.29.14 at 9:59 pm

Fed says US not recovering. Trying to sell books maybe? And all this “MONEY” and juicy dividends from companies? Cutting. Slashing. Firing. Reducing. Its not real money making.

There has been no US recovery. Only US slashing and burning to give the appearance of making money. Unless the “FED” is lying……

http://www.wsws.org/en/articles/2014/08/14/econ-a14.html

#69 JohnL on 10.29.14 at 10:05 pm

US Mortgage deleveraging not really so much, were only back to 2006 levels.
http://research.stlouisfed.org/fred2/series/MDOAH

Unfortunately US house hold incomes back to 1995 level
http://research.stlouisfed.org/fred2/series/MEHOINUSA672N

Stocks are up as a result, in a large part, due to float shrink…….stock buy backs, to the tune of $40 billion per month. (sorry no chart for that one, at hand)

#70 Debtfree on 10.29.14 at 10:06 pm

@ 64 tn did you know that the building of the pentagon began exactly 60 years before the 911 NY attack ? And the end of the Mexican independence war ended 120 years the same day as 911 01 ? Do you think it means anything? Or that DA won’t tell us how to do due diligence on a realtor ? What can it mean. Is it impossible to do ? DA MIA . Hope he’s okay .

#71 marnic on 10.29.14 at 10:08 pm

The irony…on the same day I read this column, there’s Alan Greenspan, Alan Freakin’ Greenspan (!), the Central Banker’s Central Banker, saying QE was a galactic failure, buy gold…

You mean the guy who facilitated the dot-com and housing bubbles? — Garth

#72 Seab on 10.29.14 at 10:11 pm

Great post, but it might be time to hold off on the Gomeshi jokes. The mounting evidence is that it’s not a joke in any sense of the word.

#73 Retired Boomer - WI on 10.29.14 at 10:29 pm

Well, of the places I have been in around this world, few are better than here. Yes, we have weird politics with Ayn Rand boot lickers, the party of “NO” who, when they’re in power sun up debts even faster than our current dweeb.

At least we got the clueless out of homes they couldn’t afford. We closed up marginal shops, and business.

We could still impose tariffs and ‘inshore’ more business here, but at what cost? We could increase minimum wages, and maximum taxes on the mega earners, but at what cost? We could increase my tax rates 3% back to what I was paying in 2000. Gee, would that break me?
Would it solve a 18 T debt? We could goose gas taxes, but NO. Here, beer taxes haven’t increased since 1969. How about goosing taxes on phones? Now there’s an idea!!

Despite the squawking, it is still a great little place to raise a family. Newest history book in school, Howard Zin’s
“A People’s History of the United States.” Let the real education begin.

#74 ozy - well, someone HAS to be left holding the bag... on 10.29.14 at 10:29 pm

someone HAS to be left holding the bag…

HYPERINFLATION BABY!! 6-10% A YEAR IN ALL valuable assets: upper-class housing, luxury cars, prostitute fees ;), restaurant bills, quality food, qualify craftsmanship…. you name it. Note, this is happening ALREADY…. why do you think Roncesvalles and other hoods almost doubled in 5-6 years… hahaha

society will split like never before… gaps that will make the puppet masters tremble in their beds at night…

a decade later… the collapse…. (you can guess it or just wait and enjoy the SHOW)

good job selling a pink view Garth, now, smart guys, goooooo SELLLLLLLLLLLLLLLLLL, the pink slip is coming

#75 Spock on 10.29.14 at 10:42 pm

>>>> A dollar becomes worth less with each passing year, which is a poor representation of money.

Not exactly. A US$ buys more house now than it did six years ago. — Garth <<<<

A US$ does buy a lot less beef and diapers and lot of other items (than it did last year)

#76 Freedom First on 10.29.14 at 10:54 pm

Interesting comment section tonight concerning Garth’s Post today. Got me thinking about how Garth invests for himself and for his clients, which he has so freely laid out to us over the years for our benefit.

Yes, $$$$$hit happens. Always has, always will. This is why I like Garth’s conservative investing approach.

For myself, I always like to be diversified, liquid, balanced, and debt free. Throw in some cash, cash flow from different income streams, 0 dependents, and avoiding any social gatherings of house horny/fully leveraged people with only 1 asset and a mountain of debt, and I am good to go, as
I always put my freedom first.

Thanks Garth, for constantly reminding me to ignore the financially insane world we live in and just do what is financially best for me.

#77 Sheane Wallace on 10.29.14 at 10:56 pm

QE ballooned asset prices.

Of course fine for the old farts, including Garth,

Nest generation would envy work at Starbucks. Starbucks or Wall Mart manager would be the dream career.

In North America.
The rest of the world will do much better.

As for the metal heads we will see who will have the last laugh.

Yellen sweet old lady? I almost threw up after reading this.

#78 Mr. White on 10.29.14 at 10:59 pm

It is effectively impossible to get a reasonable business loan or line of credit in Alberta where it is booming. How about the rest of the country?

#79 Kim Chi on 10.29.14 at 11:00 pm

Yes indeed…I agree….the world is not coming to an end any time soon. Newspapers have been spewing negative commentary…a lot of it paid for. The noise became overwhelming for many and they puked up stocks at a loss…too bad for them.

As it is Oct 16 looks like the bottom was already in. The market is still off it’s highs…but has made back most of the gyration, so what, it’s like the sell off never happened. Good companies that were sold off into the bargain basket only increased their dividends and yield THX for the cheap buys.

Oh….and never buy a condo in a sewer.

http://www.vancouversun.com/news/metro/Surrey+should+beat+itself+over+livability+results/10336461/story.html

#80 BG on 10.29.14 at 11:01 pm

Off topic question:

I’m in the process of incorporating.
As I was trying to open a business account at the RB with a business Credit Card, the guy told me I would be personally responsible for this Credit Card.

Not that I want to fraud or anything, but I though the point of incorporating way that the corporation was its own legal person.

Should I accept the bank’s condition?

#81 Tony on 10.29.14 at 11:01 pm

Re: #7 David McDonald on 10.29.14 at 6:18 pm

The FED bought all those bonds because interest rates will soon turn negative in America (like in Germany) when they finally start telling the public the real truth about GDP the unemployment rate and company profits or more to the point losses.

#82 Trojan House on 10.29.14 at 11:05 pm

“Sovereign debt is the most easily handled…”

Yes, because there is no intention of ever paying it back.

#83 Retired Boomer - WI on 10.29.14 at 11:07 pm

Garth-

Me thinks the asylums have broken locks, and they are all dissing you on tonight’s blog posts. venom abounds

Explain to me, where is the misery in any type of recovery, and progress?

Would we wish 2008 back? Heck NO, glad it is in history to be dissected, and distorted as history always has been.

#84 Obvious Truth on 10.29.14 at 11:12 pm

‘The safe word is Yellen ‘. Hilarious.

Certainly has safeguarded my money.

And is it just me or does this market want to get growthy.

Didn’t need the frock and paddle visual.

Bought some fb for one account today. Want to pull the trigger on db but too chicken. Feels like all cash wants to go states side.

Wonder if the chase for performance even allows for much of a pullback. Feels like a lot of folks got stopped out.

#85 Nomad on 10.29.14 at 11:23 pm

Bought more RoyalBank today. It’s still down 5% from its peak.

Wanted to buy more Manulife and Industrielle Alliance but, those insurers are cravign for higher interest rates. Now Poloz is talking about low OIL possibly shaving off 0.5% of GPD… so banks seem a better choice, for now.

#86 cmj on 10.29.14 at 11:25 pm

Thanks, Garth, for another great post. There is never a perfect time to invest but remembering to be diverified and rebalance sure helps me to sleep at night through the ongoing global blips

#87 Fifmund Sreaud on 10.29.14 at 11:47 pm

The US is fine.
___________________

You think? Some don’t! I don’t. But I don’t count, …

Hence, let’s start with Marin Katusa and his new book, The Colder War. Mauldin is introducing it here:
http://www.mauldineconomics.com/outsidethebox

Also Putin himself disagrees. Consise. Frank. Putinism. Have a look here:
Meeting of the Valdai International Discussion Club
http://eng.kremlin.ru/news/23137

Yes. Yes. I know, Putin is biased propagandist. Self serving. Fair enough, … maybe.

Of course, there are others, too, … like this guy, John Michael Greer. See his series captioned Dark Age America here:
http://thearchdruidreport.blogspot.ca/

I must warn you, however. John is deep, dense, Asperger. Most may find him difficult to follow – primarily fused sentences – needing frequent re-reading. But try him. It’s well worth it, … if not for simple amusement.

F.S. – Calgary, Alberta.

#88 Waterloo Resident on 10.29.14 at 11:48 pm

I read that people searching for work in the U.S. are having as hard a time as any trying to find work, that’s why record number of people have just given up trying to find work. But then again, we are CANADIANS and we don’t live in the U.S. so that doesn’t bother us anyways. What does bother us is that corporations in the U.S. are doing better than ever and if you have money to invest and you invest in U.S. index ETFs, you will probably make a lot of money over the next few years.

So open up a direct trading investment account (Like one from TD Waterhouse) and invest in things like SSO, SPXL, or UPRO and watch your savings go up by double digits.

The downside of this is that there might be another ‘Flash Crash’ and you can watch your money disappear in a heartbeat, that’s possible too.

#89 Timmy on 10.30.14 at 12:24 am

#63 for a guy who can’t write, you sure are making a lot of money

#90 chapter 9 on 10.30.14 at 12:26 am

It will be interesting to see the outcome of the referendum in Switzerland Nov.30
The “gold” referendum is simple:
-prohibit the Swiss National bank from any further gold sales
-repatriate any Swiss owned gold held in foreign vaults
-gold will make up at least 20% of the Swiss National Bank assets
The folks over there are concerned that printed money unbacked by any asset is unacceptable.

#91 Fortune500 on 10.30.14 at 12:40 am

A lot of recency bias on display tonight.

#92 Tom from Mississauga on 10.30.14 at 12:51 am

Comments today are hilarious! Buy some ZSP, ZDM, ZDV maybe some ZAG or ZPR, throw in little MRG.UN or MST.UN and chill out everyone.

#93 still learning on 10.30.14 at 12:53 am

Dear Garth,
Please stop using Jian Ghomeshi as light humour. There is a high likelihood that he has indeed seriously abused women. I realize you may not think it’s a big deal, but as a woman
it gets tiresome when jokes are continually made about abuse. Best regards, still learning.

I shame him because it matters. — Garth

#94 cynically on 10.30.14 at 2:26 am

Got to hand it to you tonight, Garth. You got all the dumb Canadian “economists” barking at you to the point that it reminded me of that old economist saying that if you laid all economists out in a straight line they would point in all directions. America will survive – they have the strength and the spirit and that “sweet old lady” has more brains than all of tonight’s responders.

#95 };-) aka Devil's Advocate on 10.30.14 at 4:19 am

#70 Debtfree on 10.29.14 at 10:06 pm
@ 64 tn did you know that the building of the pentagon began exactly 60 years before the 911 NY attack ? And the end of the Mexican independence war ended 120 years the same day as 911 01 ? Do you think it means anything? Or that DA won’t tell us how to do due diligence on a realtor ? What can it mean. Is it impossible to do ? DA MIA . Hope he’s okay .

Seriously, if you don’t know how to do your own due diligence in the selection of your chosen advisors you should maybe not foray into those particular arenas to begin with.

Let me make a few suggestions:

1.) Ask friends, family or other trusted advisors who they would recommend.

2.) Get to know who you are considering doing business with. REALTORS® are “Agents” and as such they have a high obligation to put your personal interests before their own. It is a very intimate relationship. Trust your instincts. I don’t know about you but mine have almost ALWAYS proven to be right on the money and rarely have they let me down. If it doesn’t feel right don’t do it.

3.) Research the law of agency to better understand what you can expect of your chosen REALTOR®. I think you’d be surprised.

#96 Grantmi on 10.30.14 at 4:49 am

Holy Snikies Garth-O… How did your insiders miss THIS????

http://www.ctvnews.ca/politics/harper-to-announce-income-splitting-tax-break-1.2078013

#97 Angry Saver on 10.30.14 at 5:05 am

Does anyone outside the Fed want to claim that QE had a positive influence on the American economy, other than through boosting prices of stocks and homes that could only happen because people started seeing things that weren’t really there?

#98 Angry Saver on 10.30.14 at 5:10 am

Low interest rates don’t work to improve the real economy. Neither does free credit for Wall Street. So now that more people are finally figuring that one out, they’re going to let go of these manipulations that pose as policies, while supporting their member banks in making the biggest possible profits off of the impending changes.

#99 Charles Ponzi on 10.30.14 at 5:13 am

The Fed doesn’t react to – changing – circumstances, it scripts them. And it’s not about Greenspan or Yellen or Bullard or even Jamie Dimon, they’re hand-puppets; it’s about the wizards behind the curtain.

#100 Charles Ponzi on 10.30.14 at 5:16 am

The reason why the unemployment rate in America has fallen is that 90 million working age Americans are no longer counted as part of the work force. Many of those who are still employed have moved to worse-paying jobs and had their pay and benefits cut.

Unbelievable. — Garth

#101 Charles Ponzi on 10.30.14 at 5:19 am

I think the Fed is going to bring the economy down and justify that by saying that it’s the only way to burst the bubble and make it healthy again. They will raise interest rates and declare that they’ve been too low for too long. They will pump up the dollar and claim it’s been undervalued too long because of the global impact of QE’s flood of cheap credit.

#102 Millenial on 10.30.14 at 6:12 am

Study how a mountain of post-WW2 debt was retired. — Garth

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

Garth,

You equate what the US is experiencing now with the Post-WWII economic expansion?

Ok, fine, the US can print away their National Debt, but what about the STATE debts like in California and Illinois? I’m sorry but their problems are here to stay, no money printing for them, or the municipalities.

Garth, I like your optimism about the US, and no, I wouldn’t be happy if the US were tanking, but there is still plenty of “things to worry about.”

The biggest thing nobody is talking about is this worsening wealth inequality as another poster mentioned. And listen, I’m not some sappy liberal, I consider myself a libertarian. Things are totally out of whack, the bankers have won, and the laws aren’t treating everybody fairly anymore as they should. Each future recession will be longer and harder on account of it.

#103 The real Kip on 10.30.14 at 6:57 am

“No, it’s not all ponies and rainbows”

Wow, you deleted my last comment. Your comment above is the only true statement in your blog post today.

Your comment was vulgar. — Garth

#104 Jean Ghomeshi on 10.30.14 at 8:02 am

Well, hi there, Garth.

People point fingers at defrocked radio stars, and there you are in plain sight in your bed, Garth – with Bandit!

You are one sick, perverted host. I feel strangely attracted.

On another note, with your expertise in publishing Garth, I wonder if you can help me with a book project I am mulling over…..I think I will call it –

“The ISIS Guide to Dating – How to Have it All Now: 72 Obedient Virgins and Celebrity Heaven Right Here on Earth (No Bombing Required)”

by JG

I envision this as a very positive literary counterpoint for all those misguided young bombers and executioners.

Whaddya think?

I could really use a good advance to cover some costs, so any advice on publishers would be awesome!

#105 young & foolish on 10.30.14 at 8:37 am

It’s clear after reading a lot of posts here, that many people have lost faith in America. Too bad.

#106 crowdedelevatorfartz on 10.30.14 at 8:50 am

@#67 miket

The “sexy ebola nurse costume” ad was from England. The price tag was in “pounds”

But I’ll explain it to you at your email address since you posted it for all to see.

[email protected]

#107 crowdedelevatorfartz on 10.30.14 at 8:54 am

@#96Grantmi
Income splitting means nothing to the tens of thousands of single working voters out there.
or
Increased child tax credits to childless voters.
or
Old age pension increases to young people.

#108 Londoner on 10.30.14 at 8:57 am

Well, I was wrong. It doesn’t take a market downturn to bring out the doomers… they’re already here. I guess Halloween must have come early this year.

#109 crowdedelevatorfartz on 10.30.14 at 8:58 am

@#104 Ghomeshi

Not to worry Jian. Just start the book and wait for CBC to settle for $25 million out of court.
Should take about a year or so before they realize they screwed up and…what the hell , its only taxpayers money anyway. No one but you will be terminated.

All kinkyness aside, leave Bandit out of this.

#110 Bob Slidel on 10.30.14 at 9:00 am

It seems the treatment of comments here is very selective, stuff that does not fit the moderator’s line of thought or agenda is intentionally ridiculed or deleted.

You made it through, didn’t you? — Garth

#111 economictsunami on 10.30.14 at 9:16 am

Did QE work? Let’s just say, things could have been much worse.

I have yet to see incontrovertible evidence that the US economy wouldn’t have returned these same volatile results over the past 6 years.

Put quite plainly, the Fed cannot spend and conjure consumer demand in the real economy. Period. (Ask the BoJ how that has worked in the past.)

Did the original QE unfreeze credit markets, which became frozen through the Fed and Treasury’s own actions. (Yes but what caused markets to freeze up in the first place?)

They needed a catalyst, after-all, to secure bailout money from Congress and letting Lehman’s go, was their Modus operandi.
(Are you telling me Bernanke and his banker buddies were unaware of the repercussions/ financial consequences from a Lehman’s failure???)

In 2008 the Fed’s balance sheet stood @ $900B. At present the figure is somewhere just south of $5T.

(Is this the best the US economy can produce with such a tidal wave of liquidity unleashed by the Fed?)

It’s not as though the Fed has exited financial market hand holding. As bonds mature, they will continue to roll them over.

Both ZIRP and cryptic forward guidance also remain; attempting to provide investors with the belief that there is enough room in the lifeboat for everyone. (As always though, bankers and politicians first!!!)

If this is true, while they’re selling, who will be The Greater Fools buying on the other side of the bet?

The real question appears to be:

Can the US carry the weigh from the rest of the world’s economy, as everyone else appears to be slowing?…

#112 Ray Skunk on 10.30.14 at 9:25 am

#95 DA

REALTORS® are “Agents” and as such they have a high obligation to put your personal interests before their own.

Heh heh, nice one. “High”, but not “absolute”, right?

#113 Rational Optimist on 10.30.14 at 9:26 am

79 Kim Chi on 10.29.14 at 11:00 pm

Eesh…that story featured someone being robbed by a group with machetes and bear spray…

#114 Funny that on 10.30.14 at 9:44 am

Not exactly. A US$ buys more house now than it did six years ago. — Garth

No doubt, but a US$ doesn’t rent as much house as it did six years ago.

#115 45north on 10.30.14 at 9:45 am

First security alert issued during Ottawa attack was English-only

http://ottawacitizen.com/news/politics/first-security-alert-issued-during-ottawa-attack-was-english-only

a week after the attack in Ottawa, Graham Fraser criticizes Public Safety officials. Easy for him to say. Reminds me of Homer Simpson “son I know it’s easy to criticize so I do”.

Graham Fraser doesn’t appreciate what it is to panic. The Public Safety officials didn’t know what was going on, they didn’t know that there was only one attacker. They did well to get out a coherent message in one official language. I mean mostly coherent.

He needs to appreciate that the Federal Civil Service is mostly English speaking and will remain so. Frankly his criticism is most likely to result in slower and incoherent alerts.

#116 rosie "moving forward" in the knowledge that, "this won't end well" on 10.30.14 at 9:59 am

Doomers gotta doom.

http://www.marketwatch.com/story/four-reasons-the-market-will-rally-for-the-rest-of-2014-2014-10-28?page=1

#117 Dupcheck on 10.30.14 at 10:05 am

Good analysis on today’s post.

#118 xdisciple on 10.30.14 at 10:20 am

Did you know that Janet Yellen is played by the same actor that played Martha Stewart? That voice!

Just wondering. Is there life on your planet? — Garth

#119 45north on 10.30.14 at 10:37 am

Ghomeshi : as a CBC star, he is the definition of a public figure. As such he is open to scrutiny and comment.

I do believe Lucy DeCoutere in her statement that Ghomeshi choked and slapped her and I think that she is right to go public at this point because he went public first.

http://www.ottawasun.com/2014/10/29/trailer-park-boys-actor-lucy-decoutere-alleges-ghomeshi-choked-her

#120 not 1st on 10.30.14 at 10:38 am

Garth, the issue here isn’t whether the US is doing better or not. In fact it very well could be. Who knows.

The issue is classifying debt as you do. Home and condo and car debt is bad, but sovereign debt to ignite failed economic policies or bail out bad actors is wondrous.

People who go into debt for consumer purchases make those decisions for themselves and really do not affect anyone else. Wanna go hog wild on a big house…well whatever, doesn’t affect me.

But sovereign debt is applied without regard to every person young and old and the decisions are made by a handful of people. Little babies get debt applied to their name as soon as they enter the world.

Yes little babies and kids have bailed out JP Morgan, and they aren’t even allowed to vote. Yet the wrinkly fossils who can barely get out of bed somehow get to that polling station without fail.

#121 economictsunami on 10.30.14 at 10:45 am

Cheer leaders gotta cheer I guess.

Even in the face of mounting evidence to the contrary…

Yes, GDP Is Up. But the Recovery Hasn’t Broken Through.

http://blogs.wsj.com/washwire/2014/10/30/yes-gdp-is-up-but-the-recovery-hasnt-broken-through/

#122 rosie "moving forward" in the knowledge that, "this won't end well" on 10.30.14 at 11:19 am

Be of good cheer, all is in hand.

http://www.ft.com/fastft/228692/post-228692

#123 Doug in London on 10.30.14 at 11:40 am

Wow, last year when the announcement mas made that tapering would start, REITs and preferred shares went on a colossal Black Friday, Boxing Day, clear out the inventory NOW big time blowoff sale. Now that tapering is well under way and will finish soon REITs are back up again. In fact XRE and CAR.UN are only slightly below their recent 52 week highs. It seems all this worry about tapering was a tempest in a teapot, or a big non event like all the chaos that was supposed to happen when the date rolled over to Y2K. Now the only assets that are on sale these days are those in oil and gas, like XEG and HNY. Hmmm, it may be a good time to sell some of those REITs, take some profits, and buy more XEG and HNY. I’ll let you all in on a hot tip. URA, Global X Uranium ETF listed on the NYSE, is also on sale these days.

@Timmy, post #51:
That little dweeb Gomeshi’s career with the CBC is probably finished and no chance of being reinstated, and he’ll probably not get anything near 55 million (if anything at all) with the lawsuit. Why do so? He’s got nothing to lose trying, kind of like pulling the handle for a reserve parachute at 100 feet above the ground. Keep in mind a reserve normally takes 200 to 300 feet to open fully.

#124 batt519 on 10.30.14 at 11:41 am

Rolling out the red carpet and the trumpets already eh? It’s only been 24hrs. We will see.
Safe in a suicide portfolio and extra safe in $ilver.

#125 Holy Crap Wheres The Tylenol on 10.30.14 at 11:47 am

#22 TEMPORARY® Foreign Prime Minister on 10.29.14 at 7:12 pm
Let me get this right.
America blew its brains out and self-imploded under the previous administration, was pulled out of the ditch and back on the road under the current administration.
Now Americans are pissed at the current administration, and are itching to bring back the previous administration?
____________________________________________
I’ll tip my hat to the new constitution
Take a bow for the new revolution
Smile and grin at the change all around
Pick up my guitar and play
Just like yesterday
Then I’ll get on my knees and pray
We don’t get fooled again
Meet the new boss, same as the old boss………….

The Who knew it all along.

#126 jose on 10.30.14 at 11:49 am

Americans learned the lesson the hard way. Just like all humans, so i guess that the crisis has to hit Canada before we start de-leveraging. I agree with Garth, the Japanese syndrome was not repeated in the USA

#127 Debtfree on 10.30.14 at 11:50 am

So DA it’s all about feelings and other peoples feelings . That may well work for the house horny but that’s not good enough .
#1 is rediculas . Ask family and or friends .
My mother inlaw and sister inlaw both got screwed by their realtor back in 08 when they bought condos in west kelowna. His advise has screwed them for life . At the time he said the numbers look great and you’ll have no problem renting them out till you are ready to move there . All lies . They sat empty for two years and almost bankrupted them . They got sucked in by jimmies zero down forty year ams . Don’t think I’ll ask them . I do hope I get to meet their realtor one day . I would like to share some of my feelings with him . I see he is still in business .
#2 get to know your realtor ? How would one do that ? Feelings again . I’m old enough to have learnt to leave feelings out of business.
#3 law of agency . I will have a look at that but I doubt very much I will be surprised . Maybe it’s not to late too take my inlaws agent to task .

#128 Holy Crap Wheres The Tylenol on 10.30.14 at 11:51 am

#115 45north on 10.30.14 at 9:45 am
First security alert issued during Ottawa attack was English-only
http://ottawacitizen.com/news/politics/first-security-alert-issued-during-ottawa-attack-was-english-only
a week after the attack in Ottawa, Graham Fraser criticizes Public Safety officials. Easy for him to say. Reminds me of Homer Simpson “son I know it’s easy to criticize so I do”.
Graham Fraser doesn’t appreciate what it is to panic. The Public Safety officials didn’t know what was going on, they didn’t know that there was only one attacker. They did well to get out a coherent message in one official language. I mean mostly coherent.
He needs to appreciate that the Federal Civil Service is mostly English speaking and will remain so. Frankly his criticism is most likely to result in slower and incoherent alerts.
____________________________________________

This is what it has come to, who the hell rang the bell on this one. Oh I know its the Quebec Language Nazis!
Qui donne une merde !

#129 Rational Optimist on 10.30.14 at 11:52 am

#96 Grantmi

I’m not enthused that the feds are actually going through with this income splitting scheme, though for a different reason than most. I am one of the “taxpayers” (I prefer “citizen”) whom this would benefit, but I feel that there are already plenty of tools that families with disparate incomes can use to split some of their income should they so choose. Why should anyone get the benefit without putting in a bit of effort?

#130 Holy Crap Wheres The Tylenol on 10.30.14 at 12:03 pm

#119 45north on 10.30.14 at 10:37 am

Ghomeshi : as a CBC star, he is the definition of a public figure. As such he is open to scrutiny and comment.

I do believe Lucy DeCoutere in her statement that Ghomeshi choked and slapped her and I think that she is right to go public at this point because he went public first.

http://www.ottawasun.com/2014/10/29/trailer-park-boys-actor-lucy-decoutere-alleges-ghomeshi-choked-her
____________________________________________

Heres the good news!!! I never even heard of this guy until all of this crap hit the fan. I never heard of his show “Q”, him, and I usually try to stay away from anything to do with the CBC. But good news CBC, you’ve got my attention for a short while until you go back to your boring Canadian content crap, oh there it goes, Dam Ive just lost my attention!

#131 Holy Crap Wheres The Tylenol on 10.30.14 at 12:06 pm

Garth I have to ask, your feet, your wife’s feet but definitely not Bandit. Are you cheating on him?

#132 Millenial Maestro on 10.30.14 at 12:50 pm

Garth, I’ve been reading this pathetic blog for a few months now. I’m with you on Canadian RE, but it baffles me that you don’t understand/admit that the only thing levitating the stock “markets” in the US & Canada is the exact same thing as RE: super cheap money.

Bulls make money, bears make money, pigs get slaughtered. We’ve had a bull market for 5+ years. Those who understand what moves it don’t “diversify and re-balance”. Had been buying HSU (2x S&P bull ETF) hand over fist (income, accumulated OSAP loans as I paid for school through scholarships & grants) since I finished my undergrad in April 2009 till Sept. last year, maxing out my TFSA every year of course. Just sold it all over the last four days, last trade as of 15 mins ago, and will have quintupled my money after I pay the taxman and the balance owing on my OSAP. 100% cash for now and extremely excited about finding the next opportunity, which I know won’t be anywhere as easy to find as it was over 5 years ago.

HOWEVER, those times are over. Sure, the “market” can go up some more, anything is possible. It can only go up until the FED raises interest rates though. If we see 2014.50 on the S&P get rejected again, do yourselves a favour and buy the shit out of HVU (2x VIX bull ETF).

I won’t bore you with all of my reasons, since other followers of this pathetic blog have bombarded you with plenty, some of which I agree with. I’ll just add two things that no one has mentioned: 1) Super low rates are still keeping the music going, although it is slowing down considerably, which means that you’ll see what a real correction looks like as soon as the Fed raises rates and 2) Now that the printing has been halted the Fed WILL BE FORCED to raise rates in order to maintain reserve balances, not because the “economy” is improving. After the “market” makes this 10% correction look like a joke, that is when QE4 starts, in addition to rates dropping immediately again.

One last point point for all your gold and silver bug readers: Play with the casino’s money! Don’t get slaughtered short term by buying physical. Buy 2x bear silver and gold ETFs, and with your profits go ahead and buy the physical.

I was deep in the market when you were cruising the birth canal. Glad you know everything. — Garth

#133 devore on 10.30.14 at 1:19 pm

#130 Holy Crap Wheres The Tylenol

Trailer Park Boys is some great Canadian content anyone can get behind.

#134 straight six on 10.30.14 at 1:26 pm

re #65
my apt is (+-) 97,798,980 sq mm..
depending on the outside temperature.

#135 Blacksheep on 10.30.14 at 1:42 pm

Holy Crap # 125,

I know, best Who song ever, goes to show this shits bin going on, a long, long time.

#136 Joe2.0 on 10.30.14 at 1:45 pm

Total Market Cap to GDP Ratio is exceeding sell alert levels.
This market gauge is what is know as the Buffett indicator.
Has a good track record.

#137 bdy sktrn on 10.30.14 at 1:48 pm

#93 still learning on 10.30.14 at 12:53 am
Dear Garth,
Please stop using Jian Ghomeshi as light humour. There is a high likelihood that he has indeed seriously abused women.
I shame him because it matters. — Garth

———————–
would coustumes of bigears teddy and jian for halloween be going too far??? it would be pretty damn funny in a way.

it sounds quite bad, but no serious physical injuries reported so far. thankfully.

my daughter and all of her friends will start dating in a year or so and i have used this story , and will again, to explain to her boys hitting girls in any way is 100% wrong, and when it happens it MUST be called out. these women feared his power and status. RIGHT ON LUCY – good for you for! Her courage to tell her story will bring out the names and faces of other less powerful members of his dating club.
ridiculing him as a way of making young women not fear reporting abuse seems ok to me.

more on topic; dow snapping again – once again garth predicts the stock market with uncanny accuracy.
hey garth , maybe you should be writing some kind of stock market blog, with real estate as a sub topic. You could be a star on CNBC or something…

no doom yet. world awash in cheap oil, Iran, Nigeria, Venezuela, Russia, and Saudi Arabia oil profits getting hit. how much better can it get?

#138 Nemesis on 10.30.14 at 1:51 pm

#HolyHalloween!,BatMan… #Or,ExpurgatoryThursday… #Premature’OjackoLantern…#PanPacificPotPourri’oPanic?…

[TheTyee] – ‘Party of One’: An Indictment of Stephen Harper: Seeking a documented record of eight years of deliberate misrule? This is your book.

http://www.thetyee.ca/Culture/2014/10/30/Party-of-One/

[SCMP] – More than 100 corruption suspects seized abroad in China’s ‘Fox Hunt’ campaign: The number of suspects held – 104 – already exceeds the total for last year

…“We hope the international community will cooperate and support us, especially with chasing suspects and illicit money,” said Wang. “Don’t turn your country a secret haven for criminals.”

Wang Fan, vice-president of the China Foreign Affairs University told the Beijing Youth Daily that Apec members such as Australia, Canada, and the US are popular destinations for corrupt officials. But he said he was confident that using Apec to help track them down will be effective.”….

http://www.scmp.com/news/china/article/1628207/more-100-corruption-suspects-seized-abroad-fox-hunt-campaign

[NewStatesman] – Letter from Beijing: Inside the private schools educating China’s elite: In recent years the number of private schools catering to Chinese nationals has grown rapidly. A Chinese-owned chain offering a Canadian curriculum dominates, with more than 30 schools across the country.

http://www.newstatesman.com/lifestyle/2014/10/letter-beijing-inside-private-schools-educating-china-s-elite

[CBC] – India workers offered B.C. ‘s LNG jobs by Christy Clark, says NDP: Times of India reports comments were made during Clark’s recent trade visit to New Delhi…

…”The premier reportedly told the gathering of potential domestic investors in New Delhi two weeks ago that B.C. can help India with its skilled worker shortage.

“If we can help train 3,000 and 300 of them help us build an LNG industry, it’s good for you and good for us,” Clark is quoted as saying.

The NDP’s Harry Bains does not see that offer as particularly helpful to the 124,000 British Columbians who are currently unemployed.”…

http://www.cbc.ca/news/canada/british-columbia/india-workers-offered-b-c-s-lng-jobs-by-christy-clark-says-ndp-1.2817279

#AndNowForSomethingReallyScary!… #PremierClarkNeverCouldPassTheTuringTest… #NowObsoletedByBetterBot…

[Pando] – Freaked out by artificial intelligence? Don’t watch the trailer to “Ex Machina”!

…”These fears aren’t limited to wearers of tin foil hats, either. Elon Musk, one of the smartest guys on the planet, recently likened artificial intelligence to “summoning the demon.”

“In all those stories where there’s the guy with the pentagram and the holy water, it’s like – yeah, he’s sure he can control the demon. Doesn’t work out.”

http://pando.com/2014/10/30/freaked-out-by-artificial-intelligence-dont-watch-the-trailer-to-ex-machina/

http://youtu.be/EoQuVnKhxaM

[NoteToBoomingRetireeOfWI: You had me at, “Zinn”]

#139 saskatoon on 10.30.14 at 1:52 pm

#96 Grantmi

two and a half things of interest:

1. capped at $2000 rebate max.

2. poor people can have stay-at-home moms too–so, just doesn’t necessarily benefit “rich”.

2.5. two income families are a CHOICE–to say otherwise is incredibly disrespectful

#140 bdy sktrn on 10.30.14 at 2:10 pm

tooner,

1. capped at $2000 rebate max.

are you sure , or is this a typical amount?

#141 robert james on 10.30.14 at 2:20 pm

The goldbugs are getting their arses handed to them today..Even Big Ears Teddy has his back turned..

#142 };-) aka Devil's Advocate on 10.30.14 at 2:20 pm

#112 Ray Skunk on 10.30.14 at 9:25 am
#95 DA
REALTORS® are “Agents” and as such they have a high obligation to put your personal interests before their own.
Heh heh, nice one. “High”, but not “absolute”, right?

Of course not absolute. Were your interests to put their life and limb at risk or illegal in any way obviously an agent could not be expected to put those interests first. But under the law of agency the obligations are pretty strong and contravening them would expose the agent to potentially significant liabilities.

#127 Debtfree on 10.30.14 at 11:50 am

Really, at the end of the day, you gotta trust your gut instinct on much of life’s challenges.

You seem very bitter. Lighten up. And if your parents really did get screwed by a REALTOR®, seriously, by all means please do take that REALTOR® to task. The Real Estate Industry suffers by a bad rep already we don’t need more. We want to get rid of those bad apples and your help in doing so would be greatly appreciated. But we can’t do anything about those offences that go unreported.

#143 bdy sktrn on 10.30.14 at 2:23 pm

ok , it is a cap of around 2k.
50k off a well pain spouse to a zero income one would be worth much more

#144 espressobob on 10.30.14 at 2:26 pm

#124 batt519

Safe in a suicide portfolio and extra safe in $ilver.
……………………………………………………………………

Eric Sprott is smiling!

#145 Mike Bby on 10.30.14 at 2:26 pm

Lots of good nuggets in this article today:

http://www.vancouversun.com/opinion/columnists/Barbara+Yaffe+City+Vancouver+likes+your+home+worth/10335962/story.html

Seniors, developers, city zoning, declining property values, taxes, slimey RE agents…

#146 Daisy Mae on 10.30.14 at 2:28 pm

#95 DA

“REALTORS® are “Agents” and as such they have a high obligation to put your personal interests before their own.”

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

Except, they don’t….

#147 bdy sktrn on 10.30.14 at 2:42 pm

Barbara Yaffe: City of Vancouver likes your home, so now it’s worth $500,000 less

Unintended consequences: Older, well-kept character homes take a value hit from city of Vancouver’s anti-demolition policy

ouch.

#148 bdy sktrn on 10.30.14 at 2:43 pm

http://www.vancouversun.com/opinion/columnists/Barbara+Yaffe+City+Vancouver+likes+your+home+worth/10335962/story.html

#149 not 1st on 10.30.14 at 2:59 pm

This ghomenshi guy is obviously a violent creep or perv or both.

I mean punching someone in the head and choking them an hour after you met them is is not ‘rough play’, its assault and abuse and its illegal.

Obviously this guy gets off on violence against women. A stay in the general prison population might be the cure he needs.

#150 John in Mtl on 10.30.14 at 3:49 pm

#99 Charles Ponzi on 10.30.14 at 5:13 am

The Fed doesn’t react to – changing – circumstances, it scripts them. And it’s not about Greenspan or Yellen or Bullard or even Jamie Dimon, they’re hand-puppets; it’s about the wizards behind the curtain.

#101 Charles Ponzi on 10.30.14 at 5:19 am

I think the Fed is going to bring the economy down and justify that by saying that it’s the only way to burst the bubble and make it healthy again. They will raise interest rates and declare that they’ve been too low for too long. They will pump up the dollar and claim it’s been undervalued too long because of the global impact of QE’s flood of cheap credit.

Have the decency to cite your sources, unless you wrote that yourself over at http://www.theautomaticearth.com/everything-the-fed-does-is-scripted/

#151 Kenchie on 10.30.14 at 3:52 pm

“Economics progresses one funeral at a time”

http://www.bloombergview.com/articles/2014-10-30/economics-progresses-one-funeral-at-a-time

#152 Bottoms_Up on 10.30.14 at 3:56 pm

#59 Arfmooocat on 10.29.14 at 9:00 pm
————————————————
Point being? The US GDP is over $17 trillion THIS year alone:

http://www.statista.com/statistics/263591/gross-domestic-product-gdp-of-the-united-states/

#153 Bottoms_Up on 10.30.14 at 3:58 pm

#149 not 1st on 10.30.14 at 2:59 pm
———————————————–
Yes I hope this creep burns in hell. One woman comes forward, ok, let’s see both sides of the story. Now 8 women have come forward….this crazy’s in for some real trouble.

#154 Smantha Fox on 10.30.14 at 4:24 pm

#141 robert james

?tiem to buy?

#155 };-) aka Devil's Advocate on 10.30.14 at 5:07 pm

#146 Daisy Mae on 10.30.14 at 2:28 pm
#95 DA

“REALTORS® are “Agents” and as such they have a high obligation to put your personal interests before their own.”

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

Except, they don’t….

In the eyes of the Law YES they do. If you feel you have been wronged by an agent then you ought to escalate the matter instead of bemoaning it. If you don’t then shut up and lick your wounds for having made a stupid decision in who you chose to do business with and being too lazy to formally pursue it. We cannot remedy wrongs we know nothing of.

Or is it possible you don’t really have a claim, know you don’t but just want to bitch and complain about your own stupid decision which some agent, in retrospect, didn’t try hard enough to dissuade you from making? I hate mobile homes, that doesn’t mean no one should live in them. It’s not my home I help someone buy or sell its theirs and the choice, ultimately, is theirs. You can lead a horse to water but you can’t make it drink.

#156 bdy sktrn on 10.30.14 at 6:04 pm

#9 victim comes out

Author says she was assaulted by Ghomeshi in 2002
Posted by Staff / OCTOBER 30, 2014

more names to come….

#157 bdy sktrn on 10.30.14 at 6:20 pm

and here’s #10 now, no name.

insiders knew for many years there was bad things giong on with him

Jane Doe
With as many as 8 women coming out and telling their stories of how they were physically abused by Jian Ghomeshi, I wanted to come forward with my own information on how I first came to know and ultimately what I thought was “bond” with Mr. Ghomeshi. I don’t work in the media, but all I can and will say is that I was inside the studio where he did his radio show as I was visiting Toronto from British Columbia. We struck up a conversation and got along really well, which was difficult for me because anyone who knows me knows I am incredibly shy. He followed me on Twitter briefly so we could exchange DMs where we later exchanged numbers. He would always insist that I go to his place, but being the shy person I was it took me a good three months of us talking, just by phone or by text as I wasn’t a Toronto native anyway, until I felt fully comfortable in meeting up with him outside of his place of work the second time I travelled to Ontario. At first things were normal – we conversed like normal human beings. But without getting all TMI, I’ll just say that one thing led to another. I was completely taken aback by Jian’s aggressive stance in the bedroom, and he was violent with me on several occasions when we were intimate. I know a lot of couples engage in that kind of behaviour, consensually, however that kind of intimacy really wasn’t my cup of tea, and there were times when he would accuse me of being too “vanilla” and even verbally abuse me, never mind the fact that I took his physical abuse. Ultimately I decided I wanted nothing to do with that kind of relationship, which he surprisingly respected, and all I have to say at this point is that my heart goes out to any woman who has ever been attacked not only by Jian, but by anyone. As women it is important that we stick together. I should add that I hold no ill will towards Jian. Whenever we weren’t intimate, he was nothing but respectful towards me. That being said, physically attacking a woman in any way, shape or form, even if it’s just by smacking them across the face, is unwarranted. I hope that you get the help that you need, Jian. You have an incredible soul when it comes down to the core of things but your soul is hurting.

http://www.huffingtonpost.ca/reva-seth/reva-seth-jian-ghomeshi_b_6077296.html

#158 jess on 10.30.14 at 7:37 pm

138 Nemesis

“chains” and the failures

http://www.sourcewatch.org/index.php/K12_Inc.

Charter Schools Gone Wild: Study Finds Widespread Fraud, Mismanagement and Waste
May 5, 2014
by Joshua Holland

A charter school mogul was charged today in a multimillion dollar fraud case by the U.S. Attorney’s office.
http://dianeravitch.net/2012/07/24/astonishing-news-from-philadelphia/

#159 Snowboid on 10.30.14 at 8:07 pm

#146 Daisy Mae on 10.30.14 at 2:28 pm…

How true, I have personal experience from many years back where my parents were royally shafted by a real estate agent who happened to be a close friend of theirs.

Not just the agent, but the agency and OMREB – they all lied through their teeth (I personally witnessed this) to protect about $ 25K they were going to lose, and meeting minutes went missing that would have exposed their lies – basically they were in league with the devil.

My folks took them to court, after $ 60K in legal fees and three years they lost. Plus they lost about $ 150K on their home sale.

I do feel that as a buyer (or seller) they offer services which we appreciate, and we have a good agent now, but I am always cautious when they start the ‘pitch’ – and don’t necessarily believe everything they say.

Obvious I am bitter about what happened with my folks, maybe this is why I pursue the false ‘god’ of Okanagan real estate with a vengeance – for his blatant and repetitive BS.