The deniers

FOR RENT modified modified

Five years ago Randy bought a brand new home. New walls. New wires. New grass. New pipes. New roof.

He was thinking like most people who shell out big bucks for fresh construction: at least there’s one thing I need not worry about. Repairs.

Flash forward to now. Here’s his note to me:

“A few weeks ago I detected a leak in my 5 year old home, water dripping from the light fixture, door frame, basically coming down whichever way it could from the attic. So much so, that it migrated all the way down to the basement (just behind my 200Amp panel, shorting out my alarm system under it), stopping off on every floor to leave its mark along the way. Now I realize that shingles are notorious for not lasting the 20, 30, 50 years that the manufacturers claim, but 5 years???”

Being a reasonable guy, Randy contacted the builder (Baywood Homes) to see if they’d be reasonable, too. After all, 30-year shingles are not supposed to roll on you after five. Here’s the response from Suzanne, the “customer care” lady:

“Homebuilders cannot be liable for repairs once the respective warranty period has expired.  After this date passes, the homeowner becomes responsible for maintaining the home and attending to necessary repairs.  Unfortunately you are well beyond your warranty deadline.  You will need to contact the roofers directly with your concern at this time.  Kind Regards, Suzanne.”

Now, Suzy did provide the name of the contractor. “As you can see it took very little for them to reference the limitations of the warranty and throw their roofing contractor under the bus,” says Randy. He did call the roofers, and is waiting for a response. “I know you probably have no shortage of interesting stories but I thought this one could serve you well in the event you wanted to do a piece on the modern day builder. We worry about how there will not be enough eligible buyers to support housing prices going forward and from what I can see that’s the least of our worries, the way new homes are constructed, the bigger problem may be, will my house still be standing when it’s time to sell.”

This is a far truer statement than most people understand or realize. Watch a new home rise, and often you’ll see an entire house sheathed in plywood, then coated with new-age stucco or (if it’s a premium job) one row of face brick. The joists are composite. OSB is everywhere. Pipes are no longer copper. Your new house may even have been built on an assembly line (Mattamy homes churned out thousands this way.)

File this one along with the Window Wall disaster creeping up on all owners of condos in those big Toronto, Calgary, Montreal and Edmonton glass towers. The experts give those curtain walls about 15 years of useless, moisture-free life, before they have to be systematically replaced. Not only does that means a massive special assessment, but often moving out for a month or two.

Randy’s right. The market may be the least of our troubles.

Speaking of which, I notice a new crop of rate deniers have joined us on this pathetic blog. It seems equally composed of realtors who need people to think house prices will endlessly rise so long as we have 3% loans, and those who have 3% loans are terrified they’ll end. So they deny it.

However, interest rates will be rising in 2015. First with the Fed in the US, then the bond market, then fixed-rate mortgages, then the Bank of Canada and variable-rate loans. The reason is simple, and that is sustained and robust American economy growth.

Every month this year 200,000 or more new jobs have been created, pushing the unemployment rate to a six-year low, from over 10% to 5.8%. Remarkable. As more people enter the labour force, it has increased the share of the population who are working to a five-year high. This is the fastest expansion since back in 1999, and comes on top of 2013, when an average of 194,000 new positions were created monthly. The US underemployment rate – those who wish they had more hours or can’t find any – has dropped to 11.5%.

The American economy grew at the rate of 3.5% in the latest quarter after 4.3% in the previous one. That’s the best six-month spurt since 2003. Meanwhile $78 oil has plunged gasoline costs and raised household cash flow, which bodes well for retail sales. Plus, as I’ve told you, a falling home ownership rate in the States has resulted in families carrying $1.5 trillion less in mortgage debt.

Meanwhile stock markets have shot up again, even though stimulus spending has come to a shuddering halt. Why? Simple – profits.

S&P 500 companies (among the nation’s largest) are posting numbers that reflect a burgeoning economy. Over 81% reporting quarterly earnings have exceeded projections, with six in ten beating sales expectations. This is the highest rate in four years and comes, as I just mentioned, after an entire year of the US central bank turning back the spending tap. Analysts are calling it the ‘plow-horse’ economy. Not flashy or shiny. Just sweaty and effective.

This is why the Fed will start, carefully but relentlessly, normalizing the cost of money in order to keep the beast plodding, instead of galloping. That rates would rise was never in doubt. You’d know that, unless you’ve been in denial. In which case, better go check your shingles.

210 comments ↓

#1 Jimmy on 11.07.14 at 7:08 pm

first for Friday!

#2 Sideline Sitter on 11.07.14 at 7:08 pm

this is a good thing — I want the US economy to grow… while people may think that it will take a Central Bank rate hike to make rates go up, maybe that little tick UP will cause panic in housing to go DOWN.

#3 Catalyst on 11.07.14 at 7:14 pm

Unemployment figures are just flat out lies. How could you have spent that much time in politics and not realized that? And a day after you post about an economy shedding jobs and sched-A banks curbing people…

#4 Musty Basement Dweller on 11.07.14 at 7:20 pm

I Love this pathetic blog. Every day. But if the blog is pathetic what does that make its enthusiasts? Sigh

#5 May Peters on 11.07.14 at 7:22 pm

Hopefully the rates will rise and people will realize that real estate is not 100% guaranteed to go up.

However as good as the job numbers seem on the surface when most of the jobs being created are minimum wage – I doubt it does much in terms of adding taxes to the economy.

US seems to be heading the right way but if the interest rates creep up, companies will no longer be able to borrow cheap and buy back their shares to manipulate the EPS.

Hoping for the best and thank you for your hard work Garth.

#6 Rural Rick on 11.07.14 at 7:22 pm

I am not sure there is anything wrong with assembly line houses. It always comes down to the skill of the workers.
Hire good tradesmen give them good quality materials and you will have a good house. This process goes way wrong in boom times because the good guys are booked and all that is left is some guys with little experience that think they know what they are doing. Buyer beware.
In my community there was one builder would buy a lot and start building on spec with his son. They would do everything themselves except the drywall and roofing. As soon as construction started on the house they would put a sign in the ground with their name on it and would have multiple offers in a week. Why you ask?
Quality, plain and simple. It will always sell.

#7 seeing it from both sides on 11.07.14 at 7:23 pm

More tailwind for Vancouver real estate.

Alibaba’s Jack Ma, China’s richest man, eyes Vancouver for new office

Read more: http://www.canada.com/business/Stephen+Harper+pitches+closer+Sino+Canadian+trade+ties/10361979/story.html#ixzz3IQanm7Xw

#8 Mark on 11.07.14 at 7:28 pm

A good rule of thumb is to assume that long-term maintenance on a house will cost at least 1% of the *current* price of the house per year.

Now, there can often be very convincing arguments that it will actually be greater than 1%. Especially for an older house for which a lot of maintenance has been deferred. But when I read on various RE forums of people claiming that they have owned a house, not put anywhere near 1% into it, and have not experienced any impairment of the asset or its quality, I pretty much know they’re full of brown smelly manure.

Additionally, condo fees do not cover the entirety of ‘maintenance’ an owner will experience. After all, condo fees just cover common elements of the building. They do not cover interior maintenance which will be required over time. New carpets. New bathroom fixtures, tiles/lino, whatever. Many amateur condo landlords and the Realtors marketing units to amateur “investors” often do not properly incorporate these long term costs into their pro forma projections onto which they commit investment dollars. And of course, there’s the well known phenomena of condo fees not even being set adequately to fund long-term maintenance of common condo elements.

#9 Obvious Truth on 11.07.14 at 7:28 pm

Houses cost money. I’ve never known this not to be tha case. They also carry enormous leveraged risk for most.

This just hasn’t been the narrative for so long tgat people forget or deny. It’s what creates the boom bust. “It’s different thus time isn’t it. ”

It’s never different.

#10 Christopher Mewhort, EA on 11.07.14 at 7:30 pm

My daughter lives in a row house in England, built about 1500. It has been well maintained. Utilities were added as they became available. There are no leaks. It is quite possible to build a house that will last a reasonable amount of time.

#11 Cici on 11.07.14 at 7:40 pm

Thank you for exposing this Garth.

I’ve been watching a bunch of crappily built (and ugly) new homes sprouting up all over my city, and shaking my head at the poor nimrods willing to fork out between $400,000 to $900,000 for them (variation between some duplexes and detached single-family homes).

The bungalows being torn down in the place of these hideous monstrosities weren’t pretty either, but were at least built to last a century.

#12 Jon on 11.07.14 at 7:41 pm

Don’t want to be under those glass sheets when they start falling.

#13 The Real Kip on 11.07.14 at 7:41 pm

“The joists are composite. OSB is everywhere. Pipes are no longer copper.”

Composite and engineered joists are preferable, stronger and creak less when properly installed. OSB or strand board is fine for home construction offering strength comparable to plywood at less price and favour recycling. Lastly, PEX tubing offers many advantages over copper and is also used in radiant floor heat, very efficient in home heating.

Many new construction techniques are far superior to old ways. Build quality may be suspect from a poor workmanship aspect. As appears to be the case here. Roof shingles should last more than 5 years.

#14 Cato the Elder on 11.07.14 at 7:42 pm

Garth, I am confused as to why you find the government’s justifications for lower interest rates to be suspect, but their published statistics to be gospel.

The statistics are lies. They’re manipulated to get the politically correct result of: everything is great!

The quality of jobs are what matters. The jobs being created are low paying service sector, part time, no benefits, contract, and pay next to nothing.

And your observations about the quality of home construction? This is the result of our monetary system. Long term capital investments are no longer made as the monetary system is eroding purchasing power by the day. 2 by 4s used to be 2 by 4 when we were on a gold/silver standard.

The fact that there are more people competing for resources in the world due to globalization IS NOT THE PROBLEM. As long as the people competing for resources contribute through labour force participation, wealth INCREASES. Economies are not a division of a limited pie – it is about GROWING the pie.

More people competing for wood around the world does not mean there is less to go around – just the opposite. More people planting trees to harvest them – that is capital formation.

But undermining a nations currency through fiat paper destroys capital formation and replaces it with debt. Debt that needs to be serviced with interest payments. The means to which they do that are SHORT TERM focused. There is no willingness to invest in the long term, build quality product, or plan for the future. It is all about sales RIGHT NOW.

Return to a gold and silver standard. We will see a dramatic increase in living standards for the average person within 10 years. The people that will suffer are the speculators, social parasites and criminals running our system today.

#15 waiting on the westcoast on 11.07.14 at 7:42 pm

And once the beast starts plodding… it takes a long time to stop. Interest rates are in for a slow and steady climb. Either the CDN dollar will fall relative to the US if we do not go with it or we will see some significant pressures on consumer debt as the rates rise.

#16 i.see.debt.people on 11.07.14 at 7:48 pm

fuuuuurrrrstt

#17 Ben Silverman on 11.07.14 at 7:50 pm

“Over 81% reporting quarterly earnings have exceeded projections, with six in ten beating sales expectations.”

Now the taps are off, what will happen? All those numbers are based on the taps being on. I hope the party continues.

What cause the sudden rise in gold today I wonder. Do you think this reversal signals a bottom in shiny metal?

#18 Smoking Man on 11.07.14 at 7:51 pm

Three weeks ago today, I asked God for a challange. Well I didn’t see it coming.

The prick takes the soul of my wonderful perfect 28 year old nephew. The day we toss flowers on his lowering casket, god takes my mom.

I pride myself on being a logical bastard, void of destructive emotion.

Last Friday one call to the funeral home, her body is picked up, everything was pre-arranged. Balls to the wall I go to the tax farm bright and early on Monday. Piece of cake I’m thinking. Come Tuesday around noon my specs fog up, not for mom, we took great care of her, she lived a long amazing life.

Talk about shear panic, I can’t let any of these buggers around me see I got some human in me.

My tears were for my brother in law, knowing he will never insult me again, for my sister in law never bragging about how cool cruse control is on the new Lexis. Seeing them in this much pain is devastating.

Last Christmas when I face booked a scathing rendition of how I felt about them excluding the phyco sister in law and her kids, I was realy venting on my own frustration, being forced to dealing with a drug addicted suicidal son on my own. I need them all to help. He’s good now rehab, thanks to Jim McKenny, and all those at new awakenings we fixed one.

My son is now an expert at fixing fellow humans, he’s in school learning.

It’s water under the bridge, I can never share that story now, I will go down as an ass hole. But my son newly awakened visits them every day, giving a hug, and comfort and love, they lost a perfect son.

On Wednesday, Mom’s funeral could easily have been a Seinfeld episode.

For mom the plan was simple: Closed casket waiting in the lobby, my pallbearers carry it to the Hurst, we walk behind it a hundred yards to the waiting hole. The preacher will to do a few words. Then I read a poem, we lower it, then back to the funeral home for light snacks and nostalgia.

Well it didn’t quite go that way.

Apparently in the Greek orthodox religion, the casket needs to be popped open, the preacher needs an a hour of singing, incence, and reading so my mom can make it to heaven. What a F-en joke, she was sweet, kind, and generous her entire long life, she could have made Jesus look selfish.

For her sake I agreed, “keep it down to five minutes”. I said to the peacher who speaks no English..

She didn’t want embombing and insisted on a closed casket, she looked great for someone who is fifty pounds, she was in the dress we got her for my son’s wedding.

Preacher said OK, five minutes.

1/2 an hour in to it, me, the funeral director, my family and my wife’s family, we are all exchanging WTF glances.

I order the funeral director to close the casket. A brawal nearly breaks out between them. The preacher almost knocks her over to stop her. She caves, five more minutes of this tourcher.

The plan goes perfect after that, back at the reception hall, all my cousins confess to being athisits, how can we not be. At the prime brain washing age, 5 to 10 years old, we had no idea what the hell the preachers were saying, talk about luck ..

For three weeks now, great topics on greater fool, I showed restraint and self control out of respect for the dead. Man did I want to post, work for free… Ahhhhh

With no bodies left to bury, I’m back, I’ll be hitting the JD hard during and after the Hodgson show down here at Seneca.
I met him at the bar tonight, super guy… So humble…

So God I ask you again, is that all you got.?

Friday night, Ground hog day again…..

#19 bobdog on 11.07.14 at 7:53 pm

Lets revisit yesterdays MSL news from the point of view of young Canadians.

“The standard of living continued to plunge across the Greater Toronto Area in October, matching similar drops in Calgary and Vancouver which should continue to inflate national housing costs due out later this month. The Toronto Real Estate Cartel said Wednesday the average house price in the region in October was $587,505, an 8.9% decrease in buying power from a year ago. While condominium inflation has slowed, low rising housing cost continue to rise with the average detached home costing $951,746 in October, an 8.7% decrease in buying power from a year ago.”

#20 crossbordershopper on 11.07.14 at 7:54 pm

construction is the only game you can finish high school and net 100 grand cash on the side let alone the legal bills you put in.
crazy, the tax free flip for builders is a gift that has to end, especially when your contractor buddies help you out with their stuff and you return the favour for theirs.
its like free money for guys with a grade 12 education and a hammer.
we were lied to to go get an education, dont work with your hands, etc etc. these kids dont have a hammer, we have taken the hammers out of kids hands. ask a 21 year old if he owns a hammer? no one can fix anything, we have created a society of consumers.

#21 Millennial Falcon on 11.07.14 at 7:56 pm

Hopefully rate increases happen sooner than later. Still wishing a sliver of sanity will return to Vancouver.

#22 Brian Ripley on 11.07.14 at 7:56 pm

I have my compare Vancouver to Toronto housing chart updated with OCT data now:

http://www.chpc.biz/compare-toronto–vancouver.html

Vancouver prices ticked up on dropping sales.
Toronto prices zoomed to new highs on strong seasonal sales and yet average SFD prices in Vancouver are still 32% above the GTA

Too bad I don’t have a quantitative comparison on the leaky condo situation between the 2 cities, but in Vancouver, there is still a booming industry in condo “envelope repair” and if you talk to the workmen on the sites they will tell you that their work will only hold the weather back for a short while until the next round of repair is required.

#23 Al Cowlings on the LA freeway on 11.07.14 at 7:57 pm

Hey, can you Canadians help me down here?

Some Canuck who calls himself ‘Jee-on’ just jumped into my Ford Bronco and told me to drive slowly back up your way. I told him there’s no way I have enough gas to reach Toronto but he keeps threatening me with some kind of stuffed animal. He says he’s a denier and has to get back there to deal with something. My internet search turned up this Canadian weblog. He keeps buggin’ me for Robert Kardashian’s and Johnnie Cochran’s phone numbers and won’t believe me when I say they’re both dead.

Now he says he wants to me pull over so he can give me a “Timmies”. WTF is that!!?? Am I gonna be attacked?

Help me Canada!!

#24 slam on 11.07.14 at 7:57 pm

Thanks. This reminds me of all the costs that come with home ownership. How much does it cost to repair/replace a roof these days?

#25 canadianjoe on 11.07.14 at 8:02 pm

I agree with your views on most occasions, but having to move out of a condo for a month or two in order to replace windows is far fetched. Our apartment had four windows two of which were floor to ceiling and two sliding door replaced in less than one day. That included removal of the old and installation of the new, and apartment was left clean and tidy.

That is not what happens when a curtain wall is replaced. The entire floor is normally vacated. — Garth

#26 Mister Obvious on 11.07.14 at 8:04 pm

#4 Musty Basement Dweller

“But if the blog is pathetic what does that make its enthusiasts?”
———————————–

Heroes.

#27 JM on 11.07.14 at 8:09 pm

US labour force summarized beautifully:
http://www.zerohedge.com/news/2014-11-07/participation-rate-rebounds-36-year-low-only-924-million-americans-not-labor-force

#28 Jimmy on 11.07.14 at 8:18 pm

Welcome back Smoking Man!
How many types and hours are in your log book from your flying days?

#29 Piccaso on 11.07.14 at 8:24 pm

On BBB this morning

26,500 jobs added in October vs 69,300 added in September

The keywords “full time”

#30 bobbyk on 11.07.14 at 8:27 pm

#18 Smoking Man

wtf is with this dude

attention seeking fool

#31 Freedom First on 11.07.14 at 8:28 pm

Nice subject choice today Garth. As usual, nothing but the truth. Hey, I just this minute thought of something……LOC does not really mean “line of credit”, it really means “lack of cash”. Unfortunately, for the majority of people, their LOC has become a vital part of their daily living expenses. Failure to plan is always a plan for failure. I always put my freedom first. I consider it priceless.

#32 Jack Rates on 11.07.14 at 8:30 pm

Pumpem up hard and fast!
Let savers and wrinkles earn a decent return
Let capital be deployed from savings the way it should be
Let the indebted consumer and weak businesses collapse as they should
Let the next bubble form whatever it be.

#33 Smoking Man on 11.07.14 at 8:32 pm

5 Jimmy on 11.07.14 at 8:18 pm

Never loged shit, I just flew….

Quick silver Mx
Cessna, 150,172,lear jet
Wing Suit
Herowin

It’s was back in the day

#34 the Jaguar on 11.07.14 at 8:33 pm

#18 Smoking Man..

Thank you for your humanity.

#35 Smoking Man on 11.07.14 at 8:35 pm

#30 bobbyk on 11.07.14 at 8:27 pm

If it wasn’t real I’d agree with you….

#36 Ray Skunk on 11.07.14 at 8:37 pm

#10 My daughter lives in a row house in England, built about 1500. It has been well maintained. Utilities were added as they became available. There are no leaks. It is quite possible to build a house that will last a reasonable amount of time.

Your daughter’s 500 year old row house was built in a time when things were built to last, when the builders didn’t know the minimum they could get away with and before modern capitalism reared its head.

These days we have experience, new materials and methods, computer modeling and of course – a good old fashioned race-to-the-bottom in terms of expenditure.

Everything is built to the lowest possible tolerance, at the lowest possible budget. Things are designed to have a limited lifespan, to ensure replacement and repeat business (from the roofers in Garth’s entry all the way to Apple’s older-phone-crippling OS updates).

#37 Freedom First on 11.07.14 at 8:46 pm

#18 Smoking Man

Welcome back. Sincerely, Freedom First.

#38 Daisy Mae on 11.07.14 at 8:49 pm

“Meanwhile $78 oil has plunged gasoline costs and raised household cash flow, which bodes well for retail sales.”

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

Don’t we still owe $1.64 for each dollar we earn? So, these retail sales are simply more debt — people are using credit as before, irregardless of gas prices.

#39 Rod Smith on 11.07.14 at 8:56 pm

The silver comex today was halted. Silver at 15.73 per U.S. dollar per troy ounce, who can blame them.

It was 50 U.S. dollar per troy ounce just 3.5 years ago, April-2011.

#40 Daisy Mae on 11.07.14 at 9:04 pm

#6 Rural Rick: “Quality, plain and simple. It will alway sell.”

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

We homeowners used to walk around the gated community after the workers were gone for the day to check out Phase Three, specifically to check quality. And it was ‘top notch’. Sixteen years later, it still is.

#41 Cow Man on 11.07.14 at 9:05 pm

Sir Garth:

“The American economy grew at the rate of 3.5% in the latest quarter after 4.3% in the previous one.”

If it was really all puppies and sunshine south of the 49th why did the electorate pummel Obama’s team in the mid-terms?

Facts are facts. Expectations are something else. — Garth

#42 JimH on 11.07.14 at 9:10 pm

#14 Cato & etc.
“The statistics are lies… They are manipulated to get the politically correct result…”
———————————-
Utter nonsense! By your lack of reasoning, I suppose those horrific statistics that were released in 2007, 2008 were lies also… Designed for some other nefarious end?

Your constant whining theme of denial and conspiracy and general fakery is not only tiresome, it is anything but original, as there have been others parroting the same nonsense since 2009.

But what I find most disturbing is that those like you who choose to spew out this gibberish are actually listened to those all to willing to sit on their asses and whine and complain while opportunity after opportunity slips right past them! This is tragic. You have yet to provide any of your readers a single clue as to how they might better their financial position by heeding your outlandish claims. What enormous sophistry!

As for all the fakery, see Cullen Roche for a more articulate response at pragcap.com “Fake growth, fake money, fake jobs, fake financial stability, fake inflation numbers??????”

As for a retun to a gold standard, you never differentiate between single or two-tiered standards, but anyway, as Barry Eichengreen pointed out (Foreign Affairs, Jan/Feb 2012), given the inherent price volatility of gold, nobody in a serious position of authority is considering a return to the gold standard; it is pure fantasy to suggest that gold could provide a basis for international financial and commercial transactions on a twenty-first century scale.

Gold (and for that matter any one of a number of commodities; oil for example) has become much more volatile than the dollar.

Yes, the greenback will one day no longer be the world’s reserve currency. But for now, there really is no other reasonable choice.

#43 kommykim on 11.07.14 at 9:10 pm

RE #14 Cato the Elder on 11.07.14 at 7:42 pm
More people competing for wood around the world does not mean there is less to go around – just the opposite. More people planting trees to harvest them – that is capital formation.

Now I know that you are crazy.

#44 Daisy Mae on 11.07.14 at 9:13 pm

#8 Mark: “Additionally, condo fees do not cover the entirety of ‘maintenance’ an owner will experience. After all, condo fees just cover common elements of the building.”

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

Strata fees only cover the shell. And, in our particular case, those coverages are continually being cut back to keep fees low. Fair? I dunno…now it doesn’t include windows and frames, stucco damage. And so it goes….

#45 US Ymonoce on 11.07.14 at 9:15 pm

The market is going up, everything is OK.
Good earnings is spelled stock buy back.

#46 US Ymonoce on 11.07.14 at 9:22 pm

Markets have returned 20% per year. Long-term average is what? 8%. I rather cash in and not worry about averaging down to 8%.

#47 Arfmooocat on 11.07.14 at 9:24 pm

How much would the Six Million Dollar Man cost today?

Millennials are going WTF are you talking about? LOL

#48 Cow Man on 11.07.14 at 9:24 pm

#13 The Real Kip

“Many new construction techniques are far superior to old ways”

Just ask a fire fighter what they think of the new materials used in construction. Will they go inside to fight a fire in an OSB house?

#49 saskatoon on 11.07.14 at 9:24 pm

#43 Cow Man

garth, statistics are not facts.

stats are interpreted data.

#50 JuliaS on 11.07.14 at 9:31 pm

200K full jobs are becoming part time jobs in the US as companies cut hours to reduce benefits. Just as many people are leaving the job market permanently. “Not in the labor force” figure has been growing since the baby boomer retirement bomb went. People of your age, Garth, are well aware of that.

There’s been no net full-time job creation or above-inflation income growth in the US since the year 2000, but you’re free to believe whatever you want.

#51 Happy Renting on 11.07.14 at 9:34 pm

Poor Randy. Dude, let us know if anyone takes some responsibility for the shoddy construction or if you’re left holding the bag.

#52 Rural Rick on 11.07.14 at 9:38 pm

she was sweet, kind, and generous her entire long life, she could have made Jesus look selfish.
My condolences smoking man.

#53 Montellino on 11.07.14 at 9:47 pm

Welcome back Smoking Man

Bobbyk – you must be new???

——————–

Most interesting news this week – Tara Perkins quit her real estate reporter gig at the G&M… Now thats a harbinger

#54 reality check on 11.07.14 at 9:52 pm

My roof started leaking bad tooooo …..That is the beauty of renting ….. I told my landlord. Get off your lazy butt and fix it asap. Cost him bigtime …. Took my lawn chair and watched them do it. Lol

#55 Tony on 11.07.14 at 9:55 pm

Re: #3 Catalyst on 11.07.14 at 7:14 pm

True about the jobs report as the bond market sees right through it. Copper, silver and palladium have been thumped. The U.S. dollar will only weaken with each successive jobs report in America in the future. Now that QE3 is over they’ll need an excuse for QE4 starting around March of next year. I expect interest rates to plunge just like in Germany.

#56 Adrian on 11.07.14 at 10:01 pm

“Your new house may even have been built on an assembly line” — Ok, ok Garth, I get where you were going previous to this line. However I would take a dwelling with walls constructed in a dry factory, in a jig, on a table, at room temperature over a home constructed outside in the elements any day.

#57 Happy Renting on 11.07.14 at 10:01 pm

#18 Smoking Man on 11.07.14 at 7:51 pm

Hey Smokey, I’m sorry to hear of your son’s struggles, glad he is doing better.

You know, I’m sure your brother/sister in law would appreciate your true sentiments behind last year’s Facebook rant, even saying something that just discloses the source of your frustration as “a personal problem.” You’ve all been through a lot recently, improving the feelings between you and the other bereaved family members is a way to lend support at this difficult time.

Up to a point JD helps… After that point it makes things worse. Have fun but don’t get past that point!

#58 Small Business on 11.07.14 at 10:03 pm

Easy on the haterade on new home builders. The quality of a new home is dependent upon the quality of the site supervisor and trades — it is not a generational issue. You want a good house? Go knock on the doors of people who have the builders sign out front. Most reputable builders want happy homeowners as referrals are easy sales. You can get a shoddy built home in any decade —

#59 Inglorious Investor on 11.07.14 at 10:07 pm

Thoughts:

• Yes, today most houses are built like crap, like so many other things. You want to buy new, it’s the risk you take. The term “best practices” used to mean just that. Today it means minimum code––if that.

• The warranty is the warranty. If something breaks outside the warranty period, tough. It sucks, I know, but what do you expect. You made the deal, you agreed to the terms.

• The problem with the roof is not necessarily bad shingles. Have a good roofer inspect it.

• Never opt for stucco walls. Stucco (at least the way it’s done here) is garbage. It can’t stand up to anything. Plus, it’s a greater fire risk and may result in higher insurance premiums.

• There is nothing theoretically wrong with assembly line homes. In fact, in theory they should be better because they are built under controlled conditions in a factory setting and not exposed to the elements. Also, less chance of theft and fire damage. We could do a great deal more to bring house building practices into the 21st century and reduce costs.

#60 Inglorious Investor on 11.07.14 at 10:17 pm

Gary Shilling says that if the labor participation rate in the US was back at year 2000 levels when it peaked, the unemployment rate in the US today would be 13%.

He also says real wages are flat. That does not sound too bad to me, IF that is you base it on CPI. CPI is like Santa Clause, it’s true if you believe.

http://www.bloomberg.com/video/long-dollar-and-short-kiwi-loonie-aussie-gary-shilling-JMEqN0O7THmNGKoczvwKfw.html

#61 Inglorious Investor on 11.07.14 at 10:23 pm

“Every month this year 200,000 or more new jobs have been created, […]”

That’s an average, right? Isn’t break even (i.e. adjusted for growth in the labor pool) about 150,000? Well, it’s much better than losing 200,000. But here as well, Shilling says most of the new jobs are low-paying service sector jobs. He makes a good point that jobs are not the same as income. Think of all those young slaves Poloz is prepping to hit the “labour” market.

#62 RealistvsExtremist on 11.07.14 at 10:30 pm

Meanwhile $78 oil has plunged gasoline costs and raised household cash flow, which bodes well for retail sales.

+++++++++++++++++++++++++++

Yeah really? All 1.44 to 1.22 means is mom and dad don’t have to buy so much food that says “20% off” cuz its old and will soon rot. Talk to me when gas is 89 cents which it is where it should be to a country with vast resources.

The reference was to US households. — Garth

#63 juno on 11.07.14 at 10:40 pm

One thing to remember, the USA has taken its hit which wiped out alot of the middle class wealth. They were also able to wipe off debt and start from a clean slate

Here in Canucks town, instead of taking the hit back in 2008, we expanded the debt bubble. Its is very dangerous for Canada, because when the USA raise rates, the government will try to keep it low, resulting in massive hedging against the Canadian dollar.

EG borrow Canadian dollars at record low rates and buy USA and collect a Higher interest rate than the cost of borrowing here, Hey you are now making money on the money you borrow. So what? Borrow like heck while the Canuck buck drops to its knees like a crack whore.

Sound familiar, Greece VS Germany and we all know what happened there.

#64 45north on 11.07.14 at 10:43 pm

Inglorious Investor : The problem with the roof is not necessarily bad shingles. Have a good roofer inspect it.

a woman walking by my house, told me that her roof leaked even though she had it re-roofed five years ago. It had happened more than once – that is her roof leaked once it was five years old.

My theory was that the soffits were blocked and there was no air circulation in the roof space. In the summer, the shingles would dramatically heat up and they would prematurely age.

Her next step was to hire a building inspector.

#65 Ray on 11.07.14 at 10:46 pm

So happy to learn that the Condo King is bullish on the market in Edmonton http://www.edmontonjournal.com/touch/story.html?id=10363650 Is the supply of greater fools finally running out in the big smoke?

#66 prairie person on 11.07.14 at 10:54 pm

Victoria. 2 lots. sat for over a year. bought 3 months ago. one huse is nearly finished. started digging the basement for house 2 this week. on another lot that had to be blasted out of a granite outcrop a house is going up. it will be interesting to see when the sold signs go up. the economy isn’t scaring the builders/speculators. I’m surprised. I would have thougt caution would be the word. However, the lower Canadian dollar may be bringing buyers into the local market. Canadian real estate just got a lot cheaper if you’ve got US dollars.

#67 Ford Prefect on 11.07.14 at 10:55 pm

“Meanwhile $78 oil has plunged gasoline costs and raised household cash flow, which bodes well for retail sales”

EIA shows price drop of $0.27 gallon since one year ago. This translates, given US burns around 17m b/d, to around $206m per day or about $0.70 per capita per day. Doubtful that it will do a whole lot for retail sales.

We’re just teeming with US analysts tonight who can’t abide good news. Always the same story. Always wrong. — Garth

#68 Dd on 11.07.14 at 10:58 pm

Lol … Many on here have faith in the central bankers.

Bet you didnt see this clong …..

According to The Wall Street Journal, former Fed Chairman Alan Greenspan said the QE program had failed to achieve its primary goals.

Is Mr. Bubbles still foaming? — Garth

#69 marnic on 11.07.14 at 11:06 pm

It doesn’t quite fit the narrative, I know, but Canada added 43,000 jobs last month; on a proportional basis blowing the US out of the water.

Let’s hope it holds. Job creation here has fallen by half in the last year. — Garth

#70 *NAKEDAPE* on 11.07.14 at 11:07 pm

AH Man!

Don’t talk to me about shingles!!!! Major hail storms in Alberta this past summer. Serious property damage in many areas. Try finding a roofer that will even talk to you – no less give you a quote – times varying between 8 weeks to the spring of 2015. Roof the house? “Sometime next year” they say….

And the insurance companies just increased their deductibles including hail insurance across the board. My former deductible of $600 just went to $2500. I would surmise that they believe in the climate change evidence.

#71 marnic on 11.07.14 at 11:13 pm

We’re just teeming with US analysts tonight who can’t abide good news. Always the same story. Always wrong. — Garth

Simple math. Always right.

#72 Mark on 11.07.14 at 11:16 pm

“However, the lower Canadian dollar may be bringing buyers into the local market. Canadian real estate just got a lot cheaper if you’ve got US dollars.”

I wouldn’t hold my breath. The ‘cash’ buyer has been practically non-existent in the Canadian market for a long time now, and I doubt they’ll magically appear in Victoria or anywhere in Canada that is actually worth living without a major correction (ie: -50%) in prices.

People with cash generally aren’t dummies. They can do the math and see that housing is a horrible investment compared to historic norms and the alternatives.

#73 kommykim on 11.07.14 at 11:16 pm

RE: #48 Son of Ponzi on 11.07.14 at 9:18 pm
#45 kommykim on 11.07.14 at 9:10 pm
RE #14 Cato the Elder on 11.07.14 at 7:42 pm
More people competing for wood around the world does not mean there is less to go around – just the opposite. More people planting trees to harvest them – that is capital formation.
——————-
Now I know that you are crazy.
———————–
Many things are counter intuitive.

Go to your local lumber yard in Canada and try and find a decent piece of Fir for a descent price. You’ll find piles of crappy spruce & knotty pine and then a little section with very expensive Fir.
Every time I see a logging truck taking a load away for export, it is 90% filled with crappy little logs. The good stuff is nearly all gone and takes 100s of years to grow.
Not counter intuitive at all.

#74 Mark on 11.07.14 at 11:20 pm

“EG borrow Canadian dollars at record low rates and buy USA and collect a Higher interest rate than the cost of borrowing here,

Usually that sort of trade doesn’t really work out, as the low-rate currency tends to appreciate faster than the high rate currency. Countries have to raise their interest rates for a reason — capital flight, and increasing domestic inflation. Both of which are profoundly bad for the value of a currency.


Hey you are now making money on the money you borrow. So what? Borrow like heck while the Canuck buck drops to its knees like a crack whore. “

A rather impolite analogy, and there are some very strong forces in the economy brewing to push the CAD$ up dramatically. Did you see today’s action in the resource stocks? Some of mine were up 20% in one gulp. Combine such with increasing inflation in the USA, and housing-led debt deflation in Canada, and you have the recipe for a much stronger CAD$. If you got USD$ right now, sell them, this rally is probably one of the last great gifts that will exist for a long time to come.

#75 Inglorious Investor on 11.07.14 at 11:21 pm

#67 45north on 11.07.14 at 10:43 pm

I had a similar issue with my roof. Ventilation is very important. When I redid my roof a couple of years ago I had them remove the vents and whirlybirds and install a ridge vent. It’s a spine-like vent that runs along the entire ridge. Better ventilation and no moving parts. The attic was noticeably cooler on hot days after that.

#76 Snowboid on 11.07.14 at 11:26 pm

#65 RealistvsExtremist on 11.07.14 at 10:30 pm

Regular is .78 CAD a litre at our local Phoenix station today, 1.239 CAD at the station we normally deal with in Kelowna.

In AZ there is .407 cents CAD per US gallon combined tax, or 10.75 cents CAD per litre.

In Canada the total tax is .2117 cents per litre plus 5% GST – so in Kelowna about .26 per litre.

That means before tax:

Phoenix per litre CAD: .373
Kelowna per litre CAD: .979

Can you tell who is getting gouged?

#77 Mark on 11.07.14 at 11:34 pm

“That’s an average, right? Isn’t break even (i.e. adjusted for growth in the labor pool) about 150,000?”

Yeah its around that. And every month, on average, around 10-20k of those jobs, typically the highest quality ones, particularly in the technology sector, are taken by foreigners on H-1B visas.

The cheerleaders for the US economy like to point out how well the US tech sector is doing, but it really hasn’t trickled down to even most US tech professionals. Firms are still receiving 1000+ resumes for each position they hire. Net hiring of US citizens since 2000 has actually been negative.

We have the same thing going on in Canada. Youth unemployment is high because, at the margin, most net new hires to Canadian businesses have been TFW’s. The RBC fiasco with TFW’s is just the tip of the iceberg of what’s really going on out there, and firms are not making good faith efforts to find Canadians. There’s engineering firms in Canada’s major cities that are almost entirely TFW’s while huge numbers of new grads go unemployed (2/3rds apparently).

#78 Inglorious Investor on 11.07.14 at 11:52 pm

Ramblings…

US has problems, no doubt. Big problems. But many other countries are worse off. Japan is committing seppuku. Europe is eating its young. China will have to kill millions. Putin will have be brought on side.

Cheaper oil could be a boon to the US economy if growth in supply outpaces growth in demand.

Furthermore, we may have an opportunity to reduce our dependance on oil. Watch the solar market. If things fall in line there’s going to be a burst of solar activity, further reducing consumption of fossil fuels. It could happen. I will have to revisit solar and run the numbers.

In the meantime, new tech coming on stream can make America more competitive. This in combination with lower wages. Pulling back on the US dollar can also help attract more capital to the US.

The two trends that seem to be in play are lower wages, but also lower cost of living as technology makes possible a wide range of efficiencies coupled with higher productivity.

I don’t think that translates to a higher standard of living. At least not until we work through the debt burden, the boomers die off, and an entire generation are scammed out of their savings (which is occurring right now via financial repression). So it’s not all sunshine and lollipops, not by a long shot. But there is hope for the future. Faint. But hope.

No forecast can be monodiretional. Even in a collapse, we will have booms and busts. Rome peaked around late second century, but took about another two and a half centuries or more for the Western Empire to finally collapse. What I’ve learned is that the Germanic invasions were not marauding armies as much as mass migrations of Teutons looking to join the empire, not destroy it. In other words, they were like illegal immigrants looking for a better life. Sound familiar.

#79 Basil Fawlty on 11.07.14 at 11:56 pm

someone was recently quoted as saying; “There are no longer markets, only manipulations”. I’m pretty sure it was not Garth.

One thing that does not add up about the purportedly strong US economy, is why so many college graduates can’t find jobs to match their education levels?
Another thing to consider is the amount of money borrowed by corporations, at the lowest rates in histrory, to buy back their own shares. This is part of the reason for the increasing stock markets, yet it is completely ignored by most on this blog. Many who are starry eyed over an economy showing the worst labour participation rate in 35 years, along with nearly 50M on food stamps.
I don’t care how many times they tell me the US is doing well, if one scratches just below the surface they will find crap.

#80 S Arias on 11.08.14 at 12:05 am

Agree with the % job increase comments, but still the wealth gap is growing despite of many central bankers’ statements, just like the one discussed here… http://socioeconothinking.wordpress.com/2014/11/07/dont-blame-central-banks-for-wealth-gap-seriously/

#81 Inglorious Investor on 11.08.14 at 12:06 am

Steve Austin.
Astronaut.
A man barely alive.
Gentlemen, we can rebuild him.
We have the technology.
We have the capability to make the world’s first bionic man.
Steve Austin will be that man.
Better than he was better.
Better.
Stronger.
Faster.

Price: $31,400,000.00

Geezus! 31 mil?! How much for Sasquatch?

#82 SWL1976 on 11.08.14 at 12:23 am

#77 kommykim

Go to your local lumber yard in Canada and try and find a decent piece of Fir for a descent price.

———————————————–

Thanks to our drunk driving Priemier of the late 90’s and early mellenial, plenty of value added mills were closed on the coast in favour of selling some of the worlds finest timber offshore to the lowest bidder. The belligerent race to the bottom by our leaders makes me want to vomit, and they get gold plated pensions and big promotions. Gordon Campbell, high commissioner to Canada was arrestted in a foreign country complete with mug shot, and a night in the drunk tank. Hardly a surprise the system like this is bound to collapse from within with behaviour like this being rewarded like it is.

A real king or leader can walk amoungst his people without fear of attack, but only praise and respect. We have lost our way folks. I would like to see any ‘leader’ today walk amoungst their people without ‘their’ billion dollar security budget at ‘their’ G-20 summits complete with ‘free speach zones’ I’m thinking there might be a ‘punch in the face zone’ to them. Its sad we are here.

Garth you are one of the few who deserve every penny of your pension and sadly you were asked to leave

#83 Nemesis on 11.08.14 at 12:25 am

“Just sweaty and effective.” – Hon.GT

#Well,ItIsFriday… #TheConstructors… #&WorksInProgress,Or… #ExpendableGreasedTerminators?…

#Schwarzenegger,Vs.:

http://youtu.be/c7Iaz_r2t-g

#NeutronNewton-John?:

http://youtu.be/vWz9VN40nCA

[NoteToGT: Was it good for you, too?… BriefAside: SmokingManRecentlyObserved… PublicallyConsortingInStripedShirt… http://youtu.be/zXt56MB-3vc ]

#84 West Coast on 11.08.14 at 12:28 am

http://www.housing.gov.bc.ca/pub/stratapdf/Guide12.pdf
If you live in BC and are thinking of buying a condo, ask for the depreciation report. If the strata council hasn’t prepared one, move on. (Don’t rely on past strata minutes. Lot’s of information can be left out.)
The depreciation report will give you a sense of the major repairs the owners will be responsible for in the years to come. Sobering reading at best. And yes, these repairs are normally covered by ‘special levy’. Budget for repairs: $20,000 – $80,000 over the next 5 to 10 years – that’s per suite!
We have decades of information regarding poor building practices in BC. Do your research, read, talk to home owners. Look at the following site – Home Owner Protection Office:
http://www.hpo.bc.ca/
Buyer beware!

#85 dd on 11.08.14 at 12:39 am

Is Mr. Bubbles still foaming? — Garth

Ask the Boj and Japan pension about that garbage bond Stock swap. Now Swiss Bank printing Francs to buy S$P and Dow Index. What – will the fed be next? Very uncharted territory.

Keep believing in their love Garth.

#86 Ford Prefect on 11.08.14 at 12:47 am

“Meanwhile $78 oil has plunged gasoline costs and raised household cash flow, which bodes well for retail sales”

EIA shows price drop of $0.27 gallon since one year ago. This translates, given US burns around 17m b/d, to around $206m per day or about $0.70 per capita per day. Doubtful that it will do a whole lot for retail sales.

We’re just teeming with US analysts tonight who can’t abide good news. Always the same story. Always wrong. — Garth

………………………………………

I became interested in your comment above. So I looked up current US retail sales per month, around $395B. Without going through the simple math, the total savings from the drop in gas prices if it was all applied to retail sales, would be around 1.5%. Not being an expert in the movement of US retail sales figures, I do not know if this is a significant change, although it certainly seems small to me.

#87 Roofpride on 11.08.14 at 1:05 am

The new shingles are not asbestos like they used to be but just cardboard and paper soaked in tar and covered with tar layers and stone. These shingles rot in moist years and when they go they go quickly. Our roof went after 11 years (new all brick house) and we opted for quality metal shingles. I am glad we did.

#88 espressobob on 11.08.14 at 1:48 am

#49 US Ymonoce

Try doing some homework!

#89 devore on 11.08.14 at 1:50 am

#61 Small Business

Easy on the haterade on new home builders. The quality of a new home is dependent upon the quality of the site supervisor and trades — it is not a generational issue.

That quality of a new home is dependent on the quality of materials and workmanship, which is directly correlated to how much you pay for it. Guess what happens in a boom, when quality builders are booked up, and the common riffraff cannot afford to get a slice of their time.

#36 Ray Skunk

Your daughter’s 500 year old row house was built in a time when things were built to last, when the builders didn’t know the minimum they could get away with and before modern capitalism reared its head.

I don’t even… yes, you’re right, every house built 500 years ago is still standing and functioning. A quality built house is a quality built house, and you pay lots of money for quality, regardless of whether you’re talking today or 500 years ago. Nada to do with capitalism, but whatever makes you sleep well at night I suppose.

It is thanks to capitalism that today’s Joe Blow can afford to have a decent and comfortable house built that will last him several decades, without having to spend an arm and a leg building a mansion to last a millennium. You have options to spend as much (or as little) money for as much quality as you desire. 500 years ago in England your options were to either build a palace, or live in a shack you built yourself from whatever lumber you managed to scavenge from the area.

#90 omg the original on 11.08.14 at 2:15 am

SO I AM ASSUMING ALL THOSE THAT ARE DOUBTING THE US RECOVERY:

– did not buy US equities over the past 5 year
– have been watching as they get left behind
– and, are sitting on a pile of gold/silver bullion or equities (and maybe dehydrated food)

the lesson – NEVER BET AGAINST THE USA

we have recovered from much worse than the piddling little hick-up of the US housing bubble

the best days are yet to come

just average in and do not worry about the economic world ending – it has not in 100 years and it will not.

#91 omg the original on 11.08.14 at 2:31 am

#70 Ford Prefect – EIA shows price drop of $0.27 gallon since one year ago. This translates, given US burns around 17m b/d, to around $206m per day or about $0.70 per capita per day.
———————–

I can’t speak for the rest of the US but prices in Seattle are about $1 less than they were in springtime. So filling up a mid sized vehicle will cost $15 to $20 less.

If you are commuting and burning through two to three tanks a month, that is a meaningful savings.

If you are a two car dual commuting family that is a huge savings.

#92 Carpe Diem on 11.08.14 at 2:32 am

I remember, as child and teenager, going into construction sites of homes and mini-condo sites in Montreal. I even got caught once by some security dude. I also had a nail go through my foot. Ouch!

It was fun and the materials they used were QUALITY!

40 years later … I would never buy a new home. They are built with crappy materials. I went to a few sites ,when no one was there, with my kids and I saw homes being built with 2×4 that are not wood but pieces of wood glued together!

I showed my kids how crappy homes were built in Kanata (Ottawa).

I also have friends living in Mattamy homes 5K from where we live and they have stories about homes already having structural issues with porches falling off!!!

But a few KM away on a Ridge … there is a Ottawa-based company that is building homes. They state real wood and quality. It cost more but you know, it’s a QUALITY! That’s why execs types buy them!

Me, I rent a place built 40 years ago and has a forest around it … for far less than owing a piece of crap with homes 3 feet apart. Actually I’d buy this, but with so many repairs my landlord has to pay, renting is far better.

Now my neighbor wants to sell in a 3-4 years. I’ll see if I get a deal then!

But there is hope. There are a few compano

#93 omg the original on 11.08.14 at 2:44 am

78 Mark
Combine such with increasing inflation in the USA, and housing-led debt deflation in Canada, and you have the recipe for a much stronger CAD$. If you got USD$ right now, sell them, this rally is probably one of the last great gifts that will exist for a long time to come.
——————————

Good luck on that, the world does not work in such a fine tuned “text book” way, especially in currency.

There are so many other things that could swamp those linkages off the face of the planet.

(plus I ain’t so sure that a “housing lead debt deflation” is going to be good for the CDN$)

#94 NEVER GIVE UP on 11.08.14 at 2:58 am

Here is an eye opener.
The life expectancy of all parts of your home.

http://www.nachi.org/life-expectancy.htm

#95 Cato the Elder on 11.08.14 at 3:14 am

Re: #77 Kommykim

Actually, it is very simple. Business owners are driven to lower costs, and increase quality to attract new customers. What that means is they will plant huge swathes of forest for future harvesting – they will PLAN AHEAD. They will also invest in research for hybridizing different varieties to increase growth, decrease pests, increase resistance to droughts, etc.

That means supply increases to accommodate demand.

Here’s a simple statement that will test your critical thinking skills but is economically true:

When a hawk eats chickens, there are less of them. When humans eat chickens, there are more of them.

Why are there more? We plan ahead. Hawks do not. Hawks, if given the opportunity, would hunt them to extinction. Only where market forces are in play do extinctions not occur. Whenever market forces have NOT been in play, we have caused extinctions. This is why the price mechanism and property rights are so important.

Another often quoted thing by the economically illiterate is to ‘stop wasting food there are starving people in the world that would love it’. Well, I got news for you: if you weren’t eating that food, it would NEVER have been produced in the first place! It is not wasted. See, the farmer produced it so you would buy it. If the farmer had no reasonable expectation of earning a profit, they would not have gone through all that trouble. As long as you paid for it, you have wasted NOTHING.

Now, to answer why you are getting lower quality wares for the same prices you may have paid years ago, the answer is YOUR MONEY. See, if your money was WORTH MORE on international markets, you could afford to buy higher quality goods. We could import the best. Unfortunately, our government and central bankers are content to destroy our purchasing power, thus we get the scrappiest goods in our stores.

Decades ago, when our coinage still contained silver, things were built to last. 2 by 4s were still 2 by 4 instead of 1.5″ x 3.5″. Machinery lasted forever. Not anymore.

See, when you destroy the value of a currency, the focus becomes on the short term sale. Long term investments are punished by the erosive power of decreased purchasing power in the future.

If you have any older relatives, ask them if they have any old coins stashed away anywhere from before 1967. The quarters are are worth 2.50$ and the dollars are worth 10$ today. Imagine if you were earning your wages in silver dollars. If you earn minimum wage of 11$, you would have 110$ worth of purchasing power every hour of work.

The truth is, YOU ARE BEING ROBBED BY BANKERS. WAKE UP. Our currency is privately issued and printed and is based on NOTHING. If you had the power to do that, wouldn’t you abuse it? Now every time they print more, it dilutes the purchasing ability of existing dollars. This is nothing but LEGALIZED COUNTERFEIT.

Gold and silver money DOESN’T lose it’s purchasing power. An ounce of gold 2000 years ago took just as much human labour to extract as it does today. It is the ultimate store of human capital. And it’s no longer issued today for a reason: it can’t be printed out of thin air.

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

Re: #44 JimH

I feel for anyone that believes what their government tells them. Governments have no reason to be honest when they’ve mismanaged the economy. If they were, they would be voted out. There is also a human element involved in which people refuse to admit when they’re wrong.

Inflation is not running at 2% a year. Anyone existing in the real world knows that. Before you criticised me, did you even BOTHER to check how they calculated that 2%?

Did you know that they substitute items year to year? That means they take the price of steak a year ago, and compare it to ground beef today. This is called hedonic regression – does it seem honest to you?

Did you know that they omit NECESSARY things from their calculations like home prices? You need a home to live, or at least need to pay rent. Seems pretty important that they would include that.

Did you know that when package sizes decrease, they don’t calculate that? Bacon packages have been decreased significantly in order to mask price increases. They don’t calculate for that either.

Again, this the result of our banking system issuing too much currency. They are inflating, and counterfeiting, on a massive scale. All these statistics are an effort on the part of our government to cover it up.

Guess what? A 1967 quarter in 1967 could buy a gallon of gas. If I take a 1967 quarter to buy a gallon of gas today, I STILL CAN. How many of those quarters that they give us today with WORTHLESS metals in it would that take (answer is over 10).

You’re being screwed. Best thing would be if you could at least acknowledge it, then we could get somewhere.

#96 NEVER GIVE UP on 11.08.14 at 3:20 am

Fascinating stuff about windows.
Who knew this!?

http://www.wefixfoggywindows.com/why-windows-fail.htm

#97 VINCE TURNER on 11.08.14 at 4:16 am

STOCKS SHOT UP BECAUSE OF JAPAN’S QE. NOT BECAUSE OF CORPORATE EARNINGS.

#98 BillyBob on 11.08.14 at 4:27 am

Welcome back, SM. Sorry you had take a detour through hell to get here. But now perhaps the comments can get back to being as interesting as the column!

#99 miau on 11.08.14 at 5:17 am

Canadian housing is an overpriced joke. Wood sticks, cornflakes, glue and staples … voila, a bio-degradable “house”, for a million bucks. The wood frame “builders” groups tried to flog this stuff in Germany and got kicked out with their, as it was called, temporary housing.

In our houses in a so called “third world” country, the Philippines, I have to use a hammer drill to hang a picture….. and the canuck condo buildings only are built for a holding of 5 years max and start falling apart after less than 8 years.

#100 Rexx Rock on 11.08.14 at 5:52 am

The USA can’t service its debt with higher interest rates.End of story we all know that.They’ll keep delaying higher rates with lies and propaganda.Who believes their crap anymore.I just laugh when they keep repeating themselves every few months.Wake up people.

#101 Big Ears Teddy on 11.08.14 at 6:41 am

“#23 Al Cowlings on the LA freeway on 11.07.14 at 7:57 pm”

Just do as he says. You don’t want him doing what I heard when he turned me around. He ripped Teddy Ruxpin apart because he kept repeating what we heard. It was awful, stuffing and batteries everywhere. I kept quiet and prayed the national broadcaster would intervene. I still desperately miss Ruxpin. I’m all alone with this creep!

This is no OJ situation, women are now aware, he could turn to you for gratification. Keep your arse in the seat, he can’t axcess it there.

#102 jerry on 11.08.14 at 8:05 am

Thats why I would never want to become a house.

You suffer from window panes and roof shingles and gutter mouth.

#103 jane24 on 11.08.14 at 8:40 am

Visiting the family in TO now and hubby and I, out of interest, visited some Brampton building sites. Hubby pointed out the construction techniques and building material quality were not as good as those used in the garden shed we put up last year in our garden in England. That was a kit shed too but at least had solid pine walls. Same roof sheeting, same window framing though.

You have to wonder how these Brampton houses can be mortgaged for 30 years and what their value and condition in 2044 will be?

And yes, they are indeed pulling down solid double brick bungalows on large lots to build them. How can this be building code?

#104 polecat on 11.08.14 at 8:41 am

Go metal for the roof, 50 years worry free, did it 2 years ago, I’ll be dead before it needs to be replaced, bit more than shingles but worth it. My house built in 57, real wood throughout, douglas fir 2 by fours and tongue and groove walls and roof. They don’t make em like that anymore. New windows and heat pump, wicked.

#105 shredder on 11.08.14 at 8:45 am

Old school vs new school

Working well in automotive sector, electronics

Not so well in most homes built.
I’m building a house at the moment and was surprised no copper pipe from the city water pipe into house. Seems burried copper pipe (from China ) will start leaking in a few years. Pex is much better.
Heat kills shingles. Attic needs ventilation…best to put continious ridge vent and 100% perforated soffit instead of a couple of plastic roof vents.
By the way, I built ICF walls, Hambro steel joist system, poured concrete main and upper floors c/w in-floor heat. Will be the only house left standing when next twister comes thru. 34% cheaper to cool and 43% cheaper to heat

#106 The real Kip on 11.08.14 at 9:17 am

#51 Cow Man on 11.07.14 at 9:24 pm

#13 The Real Kip

“Many new construction techniques are far superior to old ways”

Just ask a fire fighter what they think of the new materials used in construction. Will they go inside to fight a fire in an OSB house?”

Actually, I did check with a firefighter and it seems they don’t rescue cats from trees anymore either. Don’t have a Cow, Man.

#107 domain on 11.08.14 at 9:24 am

Boy do I dislike the recent abuse of the word denier being used in the last couple of years.

Whether it is being used to demonize those who disagree with the ‘science’ behind global cooling/warming/climate-change, or any group of people who disagree with an opinion or outlook.

Garth, my complaint/rant is off-topic here as I agree with you on future rate policy, market repricing of risk, and the precarious future of RE in Canada, but I think you are little more creative, or at least have more integrity than someone who would use the label ‘denier’ in a derogatory manner (which would probably be context other than the holocaust).

Thanks, and please keep on with your genuine efforts to help those who come here looking for answers.

#108 Captain Caveman on 11.08.14 at 9:39 am

Until recently, The Wife and I owned a house. Watching our savings dwindle due to home repairs, we started considering renting as an option. People thought we were nuts, so I started running side-by-side comparisons in a spreadsheet. Repair costs were the hidden cost that nobody seemed to be considering.

https://docs.google.com/spreadsheet/ccc?key=0Ar-01GWEwOJcdC1CRjVtVGZVNlk5eGVTaDNXMlFwa2c&usp=sharing

#109 jess on 11.08.14 at 10:20 am

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’

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

======

Chase whistle-blower Alayne Fleischmann

Read more: http://www.rollingstone.com/contributor/matt-taibbi

Bank Whistleblower Alayne Fleischmann & Matt Taibbi on …
Video for Alayne Fleischmann► 9:26► 9:26
http://www.youtube.com/watch?v=KQISNV4T7QA
23 hours ago – Uploaded by democracynow
http://democracynow.org

#110 Cow Man on 11.08.14 at 10:40 am

# 82 Inglorious Investor
“At least not until we work through the debt burden, the boomers die off, and an entire generation are scammed out of their savings (which is occurring right now via financial repression). ”

Scams like Whole Life Insurance Policies that return 2.5% and cost 5% to borrow against for income stream?

#111 Snowboid on 11.08.14 at 11:06 am

#43 Cow Man on 11.07.14 at 9:05 pm…

What we see here in Phoenix is more business activity than we have seen in over four years.

Not a single vacant store in the malls, restaurants packed, new construction, store openings, freeway construction, you name it.

In the last week we’ve been contacting various contractors about getting some renos done – not a one has time until next year!

Our local neighbours and friends haven’t had it this good in a long time, but as the esteemed professor states: “Expectations are something else”

#112 Incubus on 11.08.14 at 11:09 am

“However, interest rates will be rising in 2015. First with the Fed in the US, then the bond market, then fixed-rate mortgages, then the Bank of Canada and variable-rate loans. ”

If that finally happened then Quebec will be hit very hard. The job market in Quebec is terrible.

“Quebec lost 30,000 full-time jobs last month, raising the 12-month total to 100,000 jobs terminated, according to numbers released by Statistics Canada Friday.
Elsewhere in Canada unemployment fell, with an increase of 43,000 jobs in October, and 182,000 jobs created outside of Quebec over the last 12 months.”

I have few apartments that are still empty since July, I thought the condo folie in Montreal was responsible, but the job market add pressure for the renting market.

#113 TimL on 11.08.14 at 11:32 am

I was talking to an electrician who figures he’ll never lack for work fixing the shoddy wiring in all the new subdivisions going up around his town

#114 Oscar Goldman on 11.08.14 at 12:29 pm

#50 Arfmooocat on 11.07.14 at 9:24 pm

How much would the Six Million Dollar Man cost today?

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

Apparently inflation exists in Hollywood as well

#115 Grantmi on 11.08.14 at 12:29 pm

#16 i.see.debt.people on 11.07.14 at 7:48 pm
fuuuuurrrrstt

Iddddddiiiiotttttttt

#116 Doug in London on 11.08.14 at 12:31 pm

For the outrageous price these new houses sell for, they should be built like the Diefenbunker, near Ottawa, which was built to withstand a direct hit with an atomic bomb.

#117 Daisy Mae on 11.08.14 at 12:44 pm

#86SLW1976: “Garth you are one of the few who deserve every penny of your pension and sadly you were asked to leave.”

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

And he donates that pension.

#118 800 RMK on 11.08.14 at 12:45 pm

I spent three years helping my dad build a house on a lake in Northern Saskarchewan. Neither of us are buidlers or trades people, but dad is just one of those old school guys who seem to be able to do everything. And well if someone tells me what to do I am pretty cabable of doing th take. We did everything but frame the house, and run heating ducts and vent stakes. I can tell you that place is air tight, has three times the nails, two times the shingle nails, insulate so well that here is saskabush equalized heating bills are only $60 a month for a 2000 square foot house with lots of Windows. And no engineered joists, my uncle a builder who framed the place says those things are garbage. We used 2 x 10 and 2 x 12 instead. In the garage we bult we used floor trusts as we put a loft on top. Those thing are pretty neat, much better then glued together fake I beams.

Given the “boom” in Saskatchewan (there is no boom here of real substance in my opinion just government cheerleading) I would not touch a newly built house by a Home builder in the last five years unless it was built by someone you personally know and whom did not use a bunch of fly by night trades and or inexperienced people.

The place I live in and rent, is a poorly built less then five year old condo/townhouse with dry wall screws popping out, an air exchange system that doesn’t work properly , a hot water and heat system that is way undersized and that they cheaped out on, you can see drywall seems everywhere, and the place has shifted so much the doors are starting to get outta square in a bad way. Thank god I don’t own this pile of crap. I am waiting for the opportune time to contract and build myself, rent till then. Wait till things get desperate for builders and they have to unload some of their lot inventory.

#119 Waldo on 11.08.14 at 1:17 pm

Nothing wrong with those housing materials. I’d much rather buy a brand new house off of a builder as opposed to a box in the sky, a home which has been neglected by the current owner for years or a resale at an outrageous price to help line the pockets of the seller and the vulture agents.
Besides today’s housing codes far exceed those or yester-years and all new homes come with a warranty. Anyone who thinks you wouldn’t encounter crappy workmanship or underlying issues from a resale is in la la land.

#120 NEVER GIVE UP on 11.08.14 at 1:24 pm

#77 kommykim on 11.07.14 at 11:16 pm
Go to your local lumber yard in Canada and try and find a decent piece of Fir for a descent price. You’ll find piles of crappy spruce & knotty pine and then a little section with very expensive Fir.
———————————————————–
Actually most countries flog their very best on the international market and keep the junk for themselves.
This is true in all exporting nations.
It is a national brand they are trying to promote. Canada does not want the reputation of the China of forest products, so we go for the high end market.
Also Forest farming is much like grain farming. We plant and harvest. They are getting better at it now by planting more diverse forests that look like real natural forests but the real money is in quality trees. Of course as they re-plant, the forest does not look exactly the same. That is the cost of 7 billion mouths to feed and house.
We need to either stop making babies or get off this planet and grow.

#121 Panhead on 11.08.14 at 1:30 pm

#99 Cato the Elder on 11.08.14 at 3:14 am
Re: #77 Kommykim

Decades ago, when our coinage still contained silver, things were built to last.

_________________________________________

Was over at my Pa’s place a while ago and noticed his WW2 medals were tarnished. His Pa’s WW1 medals are almost black but quite a bit smaller in size. Guess they were built to last. Wonder what the new ones are made of …

#122 crowdedelevatorfartz on 11.08.14 at 1:31 pm

@#12o D in L
I visited the “Diefenbunker” last time I was in Ottawa. Neat relic of the 1950’s. Its like a time warp in there. All the rooms still furnished in 1950’s styles, Massive Honeywell computors from the 70’s. Vacuum tube Radios, old style hospital beds and equipment.
Very weird and amazing all the same.

But, the whole place has a musty damp smell…..Kinda like vancouvers leaky condos.

http://www.google.ca/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=2&cad=rja&uact=8&sqi=2&ved=0CCgQFjAB&url=http%3A%2F%2Fwww.vancouversun.com%2Ftechnology%2FLeaky%2Bcondo%2Bcrisis%2Brears%2Bhead%2Bagain%2F9871711%2Fstory.html&ei=OlNeVKG2Aur1igKj8oG4DQ&usg=AFQjCNFeD196bHvoKQ8g_6HzTNRlqVuaeg&bvm=bv.79189006,d.cGE

The condos built in the 80’s became the #1 news story in the 90’s and now here we go again.

#123 OttawaMike on 11.08.14 at 1:44 pm

18 Smoking Man on 11.07.14 at 7:51 pm

Sorry for all your losses.

Glad you came back to commenting here.

Here is a good piece that says not everything happens for a reason, we only think is does because we are human:
http://www.nytimes.com/2014/10/19/opinion/sunday/does-everything-happen-for-a-reason.html?ref=opinion&_r=0

#124 Blacksheep on 11.08.14 at 2:03 pm

“Is Mr. Bubbles still foaming? — Garth’
————————————————
Greenspan’s current stance on Gold and QE, is not new.

He just dummied up for the bulk of his carrier, as required. He is now aged, cares more about legacy than towing the systemic line. In 1966 he penned an article, “Gold and Economic Freedom” at the seasoned age of 40.

It covered what was possibly, the first application of QE in the US.

“When business in the United States underwent a mild contraction in 1927, the Federal Reserve created more paper reserves in the hope of forestalling any possible bank reserve shortage. More disastrous, however, was the Federal Reserve’s attempt to assist Great Britain who had been losing gold to us because the Bank of England refused to allow interest rates to rise when market forces dictated (it was politically unpalatable). The reasoning of the authorities involved was as follows: if the Federal Reserve pumped excessive paper reserves into American banks, interest rates in the United States would fall to a level comparable with those in Great Britain; this would act to stop Britain’s gold loss and avoid the political embarrassment of having to raise interest rates.”

“The “Fed” succeeded; it stopped the gold loss, but it nearly destroyed the economies of the world, in the process. The excess credit which the Fed pumped into the economy spilled over into the stock market, triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in braking the boom. But it was too late: by 1929 the speculative imbalances had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence.”

“As a result, the American economy collapsed. Great Britain fared even worse, and rather than absorb the full consequences of her previous folly, she abandoned the gold standard completely in 1931, tearing asunder what remained of the fabric of confidence and inducing a world-wide series of bank failures. The world economies plunged into the Great Depression of the 1930’s.”

Alan Greenspan

Published in Ayn Rand’s “Objectivist” newsletter in 1966, and reprinted in her book, Capitalism: The Unknown Ideal, in 1967.

http://www.constitution.org/mon/greenspan_gold.htm

This is why, we will never see another Gold backed $. Period.

Disclaimer: (Baring an American revolution)

#125 Larry Laffer on 11.08.14 at 2:12 pm

Yes, the job market is thougher these days. Yet, my employer still is struggling to attract enough talented people in computer science and software engineering to keep up with business levels. All is not dark for everyone. Shortage of talent, who’d have thought that?

#126 US Ymonoce on 11.08.14 at 2:43 pm

To help with homework.
http://dqydj.net/sp-500-return-calculator/

#127 Blacksheep on 11.08.14 at 3:03 pm

Here Greenspan is interviewed by Gillian Tett at the Council on Foreign Relations, October / 29 / 2014.
He’s an old man, but presents, articulate and concise.

Not be discounted as a doddering old fool.

http://www.youtube.com/watch?v=Oz4-Tru_30A

Nobody suggested doddering. Just wrong. — Garth

#128 Mr.Not so Obvious on 11.08.14 at 3:43 pm

Of course, Garth fails to mention the GREAT Canadian job report.

I did within thirty minutes of it being released. — Garth

#129 Mark on 11.08.14 at 4:07 pm

” Yet, my employer still is struggling to attract enough talented people in computer science and software engineering to keep up with business levels. All is not dark for everyone. Shortage of talent, who’d have thought that?”

Either your employer is completely non-competitive, or simply isn’t looking very hard. As most tech jobs are getting hundreds of qualified applicants, and large numbers of electrical/computer engineers are unemployed or unemployed.

Mind posting the name of your employer, as I know a few fairly talented software engineering types who are looking for jobs but are having a hard time even getting interviews amidst the mountain of resumes firms are receiving.

Thanks.

#130 Cato the Elder on 11.08.14 at 4:35 pm

Re: #128 Blacksheep

Greenspan used to be a strong gold standard defender in his younger days. Tragically, he sold out – the money, fame, and power of the fed chairmanship was too much to resist.

The gold standard is designed to restrain government, and would have prevented the very excesses the federal reserve created in the 2008 financial crisis. Those excesses have only been exacerbated with the TRILLIONS printed in the past 6 years. There will be hell to pay for this, when a sovereign debt crisis impacts western markets. It is already happening in Europe, and will eventually happen here.

Government is an unproductive element of society. All government spending should not be included in the GDP. It is required to TAX (take away from) private sector growth anytime the government spends money. It does not contribute to society in any meaningful way. Bloated salaries, pensions, misallocations of resources, and international meddling is all that it leads to. Occasionally, yes, the government spends money in areas we would have in the private sector anyways, thus creating the illusion of value. The vast majority of the funds are wasted, however, as the private sector would do it better.

How people can not connect the dots astounds me. Our understanding of history is so distorted it is disturbing. Our parents/grandparents were MUCH better off when their money had gold and silver in it. All the troubles we face today are just SYMPTOMS of this VERY big problem.

#131 SWL1976 on 11.08.14 at 5:08 pm

#121 Daisy Mae

And he donates that pension.

————————————————

Very honourable

#132 Mark on 11.08.14 at 5:09 pm

“How people can not connect the dots astounds me. Our understanding of history is so distorted it is disturbing. Our parents/grandparents were MUCH better off when their money had gold and silver in it. All the troubles we face today are just SYMPTOMS of this VERY big problem.”

Gold and silver standards have caused some profound deflationary problems and liquidity traps when they were used as the sole form of ‘money’. In other words, the extremities of the metallic money ‘standards’ can be just as bad as the situations that arise when fiat money is used.

Ideally allowing all forms of money to exist, and go without manipulation, would probably be a better system than government, by fiat, enforcing a metallic system, or a fiat system.

Actually, in practice, people can live their lives on a metallic money “standard” already. Simply convert your entire fiat money salary to gold the minute you receive it, and then convert it back. Transactional costs aren’t all that high these days, especially since one is only, on a monthly basis, spending only a fraction of their monetary hoard on living.

Agree with your comments about government 100%. The waste is astounding, and not only does government usually waste, they impede progress of private business and actually create negative value.

#133 devore on 11.08.14 at 5:11 pm

#77 kommykim

Every time I see a logging truck taking a load away for export, it is 90% filled with crappy little logs. The good stuff is nearly all gone and takes 100s of years to grow.

This shows your ignorance, you clearly have an agenda and axe to grind. As usual. All the good lumber is destined for exports. End consumers can only get the B-grade equivalent, at best.

Loosely related pro tip: if you want the best cuts of meat, make friends with someone who works in The Keg kitchen (or similar steak house). Forget grocery stores, or even most butchers.

#134 jeane on 11.08.14 at 5:24 pm

#114

What is the problem with Whole Life Insurance Policies?

#135 Mr. Nihilist on 11.08.14 at 5:27 pm

Lots of fiery comments about the shoddiness of new houses. I guess the bottom line for buyers though is that they are buying land, rather than bricks and mortar. “They aren’t making new land” is what real estate people say.

I guess the ones who are truly, 100% doomed are those buying the air rights for a condominium. You don’t own the land, you just own the obligation to pay maintenance fees.

If elected to public office in Ontario, I would start hammering away at those squatters who “own” houses on the Toronto Islands. There aren’t enough of them for their votes to count, so I’m surprised that someone like Doug Ford doesn’t start promising to send in the bulldozers and clear out all those Gaia-worshipping granola junkies. Next step: of course, Rob and Doug would build that Casino and Ferris Wheel that they were so hot and bothered about.

Oh wait, I forgot: Ford Nayshun is dead and gone. Selah.

Someday, though, someone at Queen’s Park will come up with the idea of having a lower middle class building project on the islands, with a footbridge connecting them to downtown permanently. I’d vote for that.

#136 SWL1976 on 11.08.14 at 5:30 pm

#134 Cato the Elder

All the troubles we face today are just SYMPTOMS of this VERY big problem.

——————————————————-

A very big problem indeeed. I know lots of people who are aware of this problem, but we all seem trapped without a clue what to really do to effect change in a meaningful way, and that’s excluding the reality of actually having the time and energy to do so after working so hard for so little anymore.

Well at least we all have front row seats to the big show, all of this information at our finger tips.

I wish I knew some answers

#137 not 1st on 11.08.14 at 5:49 pm

Brad Lamb strutting around alberta;

http://www.calgaryherald.com/business/commercial-real-estate/Lamphier+Condo+King+bullish+Alberta/10363650/story.html?__lsa=aeec-8017

#138 justeunperdant on 11.08.14 at 6:00 pm

Canadian houses are build similar to the ones in Florida except for the added insulation and more heating capacity.

Like always Canadian lacks any imagination and are not bright enough to build houses adapted to cold climate.

Houses in Canada are not functionale and cost too much to heat. No wonder why the Canadian economy is going down.

Radiation heating provides a comfortable heat for the people inside, yet you cannot find one heater easy to install and with the right power rating.

Ceiling are too high and a lot of heat is lost because that because heat tend to rise up. Ceiling should be more like 7 feet high.

#139 Mark on 11.08.14 at 6:06 pm

“Ceiling are too high and a lot of heat is lost because that because heat tend to rise up. Ceiling should be more like 7 feet high.”

You crazy? With the modern diets, a good chunk of the population is growing to be at least 6 feet high, and 7 feet ceilings would be pretty much a non-starter. Besides, insulation, triple-pane windows, efficient heating systems, are far more of an impact than merely the height of the walls.

#140 cynically on 11.08.14 at 6:15 pm

To all the anti-USAers on this blog: Canada’s positive October job figures were quite a surprise in light of the negative numbers expected. Do you believe them and why when you continually deny the US figures so wholeheartedly and spitefully. Are our collectors more honest or better equipped than our neighbour’s. I doubt that very much just as I doubt the Canadian figure but I don’t hear any negatives from you.

#141 Blacksheep on 11.08.14 at 6:37 pm

Cato,

“The gold standard is designed to restrain government”

“How people can not connect the dots astounds me”
———————————————-
Of course, a Gold standard would constrain a sovereigns actions and that is exactly why it will NEVER HAPPEN, short of a complete collapse / revolution.

I’m not disagreeing with much of your post. In fact, as a reformed Gold bug, (MMT) your preaching to the quire. But, you may as well be complaining, “life is not fair”.

What should happen and what will happen, are two, entirely different things.

Greenspan’s recent comments carry significant weight because while Cato,

“The gold standard is designed to restrain government”

“How people can not connect the dots astounds me”
———————————————-
Of course, a Gold standard would constrain a sovereigns actions and that is exactly why it will NEVER HAPPEN, short of a complete collapse / revolution.

I’m not disagreeing with much of your post. In fact, as a reformed Gold bug, your preaching to the quire. But, you may as well be complaining, “life is not fair”.

What should happen and what will happen, are two, entirely different things.

Greenspan’s recent comments carry significant weight because while getting old, he is still quite sharp. I do believe him to be correct in his assessments, due to the fact they mirror his opinions of the past.

Ignore at your own peril.

#142 Dominoes Lining Up on 11.08.14 at 6:40 pm

#128 & 131 Blacksheep

Don’t give credit where it is not due.

Greenspan was wilfully ignorant of the connections between bad monetary policies (like his) and their impacts on the housing market.

Why do I say so?

His own 1977 PhD thesis, tucked away after his 1987 appointment, reveals that he was aware of the danger of housing bubbles, saying that……

“There is no perpetual motion machine which generates an ever-rising path for the prices of homes.”

His hidden thesis also noted, it is reported, that…

“… homeowners were refinancing for larger amounts than their original mortgage, in essence monetizing increases in their home’s market value and spending the excess cash on goods and services or putting it into savings.”

So these dangers of house horniness were already very much on Greenspan’s mind, in the 1970s and earlier.

As these reviewers state in 2008,

“…the thesis shows that the former Fed boss was focused on housing very early in his career. Thus, it casts doubt on his recent assertions about being surprised by the Mesozoic-era-size impact of this decade’s housing mania.”

http://www.webcitation.org/6DKm7EZfn

Greenspan was no hero or savant.

When his country needed him the most, he lacked even the courage of his own, documented, lifelong convictions, and chose to look away.

Just another high ranking civil servant grown too comfortable at the trough?

I place zero value or credibility in any of his pronouncements, now or before.

No backbone when it counts, no intellectual rigour with that guy.

jmho

#143 justeunperdant on 11.08.14 at 6:48 pm

Let’s talk about plastic plumbing.

The new PEX pipping is attack by light.

http://www.youtube.com/watch?v=V4pII1llVcU

OR polybutylene piping that is now illegal. 10 years from now big repair will be needed for the houses build now.

http://www.youtube.com/watch?v=EEQOptT8L6k

I paid extra money to have copper install into my house.

Canadian are just good enough to copy what is done in USA. Not bright enough to invent anyting.

#144 jess on 11.08.14 at 6:53 pm

flow patterns for chart lovers
***Look out for IFLs (interest free loans) and IBLs (interest bearing loans)
http://www.theguardian.com/business/gallery/2014/nov/07/12-luxleaks-diagrams-that-will-make-your-head-spin

efficiency eh?
video: The $870m loan company above a stamp shop

G20 experts to act on corporations’ internal loans that help cut tax
Move against intra-group financing could destroy whole area of financial services in Switzerland and Luxembourg
http://www.theguardian.com/business/2014/nov/07/g20-tax-experts-shakeup-corporations-internal-loans

#145 Mark on 11.08.14 at 6:57 pm

” Canada’s positive October job figures were quite a surprise in light of the negative numbers expected. Do you believe them “

I don’t have any reason to disbelieve them, but mere “jobs” isn’t exactly a very reliable method of measuring much of anything. Quality and average compensation are far more important. Its not particularly helpful to the economy if most of the jobs created are in low-wage retail or low-end manufacturing. The jobs crisis in the Canadian economy has really been on the higher end for quite a while now, ie: jobs that actually pay the $80-$120k/year required for average home ownership at contemporary prices. The sort of jobs that people actually expect to get when they spend a lot of time in university.

#146 Cataloonie on 11.08.14 at 6:59 pm

Hola from Barthelona,

We the united liberation front of Catalunya will be voting yes in tomorrow’s referendum. Yes, Madrid has told us no and if we vote Si, we will have our churros in a vice.
Vote Si for a free Catalunya!!!

#147 Godth on 11.08.14 at 7:26 pm

#140 SWL1976

I think you know some solutions. The first is to recognize it’s a real predicament, not a problem that has easy answers. The second is to adjust your mentality and expectations accordingly. The third is to learn to accept that the society around you is in denial and it’s a waste of time and energy trying to inform anyone with words but actions and relationships count. The fourth is to recognize that the future is going to be much more local and far less abstract, it will be a salvage operation. The parasites among us are going to meet Darwin, those that have real skills will be more valued.

Have you noticed the (Saturday) Farmers Market is thriving? Hint, hint.

Don’t get me wrong, it won’t be all of a sudden (the collapse began a while ago), nor will it be pleasant. Such is life. The sun will still rise in the east and set in the west, nothing really new at all.

#148 Cato the Elder on 11.08.14 at 7:31 pm

This just in from the propaganda department: another ‘Polar Vortex’ is set to hit North America!

While never having hurt the economy before last year, this will be a recurring theme from now on as politicians struggle to explain why the economy is being destroyed. Just like in the Soviet Union, every problem we face today is outside of our politicians control – whether it be pig diarrhea disease, ISIS, polar vortexes, or droughts.

Of course if you want a real explanation for these things, you need only look at your politicians. Everytime they meddle in the marketplace, there ARE CONSEQUENCES. If you subsidize water prices and make it free, there will be shortages (drought). If you remove the leadership of a foreign country and bomb them for 10 years, there will be radicals that spring up (ISIS).

The stupidity never ends, because politicians capacity for it is endless.

Demand gold and silver money. Restrain them. Put a limit on them by constraining them with a limited currency!

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

Re: #140 SWL1976

Solution is simple: gold and silver money. Every problem we face as a society will be rectified with that.

It forces politicians to be honest. They can’t spend more than they take in. They can’t steal by the clandestine means of destroying your purchasing power. Pensions can become stabilized again as the money they store away isn’t eroded. Wars become non-existent as people generally don’t want to pay a ‘war tax’. The average person will no longer have to throw their money into the ‘markets’, which they have no business doing, in order to preserve their purchasing power.

***********

Re: #144 Cynically

Where are your critical thinking skills? Powers of deduction? Perhaps they were never developed due to an educational system that promotes regurgitation instead of ’cause and effect’ problem solving. Or from staring at Miley Cyrus’ twerking, which is much more important than how we’re being screwed by our leaders.

Have you ever looked into how they tabulate the unemployment numbers? Why would ANYONE throw up a figure and use it to justify their opinions without knowing full well how it was made?

They omit people that have discontinued looking for a job. Read that again. They also count part time jobs and seasonal jobs.

And to top it all off, they count GOVERNMENT jobs! Bear in mind, those are jobs that the private sector has to pay for, so they shouldn’t be included! Before you argue with me on that point, think about this: if I work all day growing food in my farm, and you come along with a gun and force me to pay ‘taxes’ to you, which you then use to live off of, are you employed? The answer is no.

None of these, of course, gives you a real indication as to what the real unemployment rate is (it’s closer to 20%).

#149 miketheengineer on 11.08.14 at 7:32 pm

Roofs:

Every home in my subdivision, had to have their roofs replaced at between 12 and 14 years…or about 1/2 way through the 25 year warranty. (~200 semis or more).

In the past, I think they actually lasted longer, since I don’t remember anyone saying “my roof went before its time) growing up.

Also, the sun’s output (energy, wavelengths, etc) has changed recently. (google it for your self). Which could account for the roofing materials going earlier. (ie roasted from UV light)

When I went to replace my roof, I called my insurance agent to see what others are doing. So I had installed shingles with a 50 year warranty, that way I get another 20 years (or more) before they will need to be done. All the roofers selling standard shingles were about 20 to 25% less in cost. The materials were fibreglass, not the paper and tar type. The roofer (one of the bigger and better ones in my city) said that he felt sorry for the guy who would have to do my roof in the future, since the shingles will be difficult to remove.

Beware the roofers who want cash. Once they are gone from your street, good luck getting them come back an fix any issue, and most say they offer warranty, but there really isn’t any warranty. I wanted a real company to do the roof…..and a real warranty that is transferable when I sell it later (this is a selling feature). Also, the cash guys “may or may not” have accident insurance or WSIB. So the poor new comer to Canada that is doing that job (or illegal) can or may fall off the roof, and then go after you for damages. Call your insurance agent and ask them what can happen if these guys get injured on your property….not good for you, especially for roofers, cause when they fall, they usually get hurt really badly. Once again Buyer Beware. Is it really worth that 800 dollar savings, when the guys could go after you if an accident happens on your property.

Just my thought process.

This process, pissed off the neighbour, who claimed he could get the work done cheaper by the “cash only” people. Truth is, 1/2 a semi being roofed costs about 300 to 400 more than doing both (all my quotes had a premium for doing 1/2 the roof). 2 years later and his side is still not done, and is peeling now badly on one side. One good wind storm and those loose shingles will be blown right off the bare wood. I don’t think he will fix it until it rains in his bedroom, one cold March morning. Sometimes, living in a semi, totally sucks.

#150 Blacksheep on 11.08.14 at 7:37 pm

Cato,

“The gold standard is designed to restrain government”

“How people can not connect the dots astounds me”
———————————————-
Of course, a Gold standard would constrain a sovereigns actions and that is exactly why it will NEVER HAPPEN, short of a complete collapse / revolution.

I’m not disagreeing with much of your post. In fact, as a reformed Gold bug, your preaching to the quire. But, you may as well be complaining, “life is not fair”.

What should happen and what will happen, are two, entirely different things.

Greenspan’s recent comments carry significant weight because while getting old, he it still quite sharp. I do believe him to be correct in his assessments, due to the fact they mirror his opinions of the past.

Ignore at your own peril.

#151 Cato the Elder on 11.08.14 at 7:42 pm

Re: #124 NEVER GIVE UP

Bear in mind also, that exports are not the goal of a nation. IMPORTS are the goal of a nation, and exports are the MEANS to which you get them.

If our country was SO productive domestically, and had a STRONG dollar that had a lot of purchasing power, we could import higher quality goods.

I will never understand this fascination our ‘leaders’ have with a weak dollar. When is weakness good? Why would you want your citizens to pay MORE for the goods they buy?

We have truly become zombified. There is no other way to justify it. It is not based in fact or objective reason, but merely from a lifetime of propaganda.

The reason our dollar loses value is because EVERY COUNTRY in the world is printing money in tandem. If we stopped, it would quickly become apparent to the world what the problem is. Everyone the world over would direct their anger at their central bankers as they realized they had been plundered from for centuries.

Switzerland is having a referendum on November 30 to see if they want to back their money with 20% gold reserves again. Predictably, the government and central bank are opposed to this because it would limit their spendthrift ways. But the Swiss people want gold again. They have been impacted by humungous inflation rates as the central bank has embarked on the idiotic path of printing in unison with the Euro.

I hope they vote yes. I hope they destroy that monster. I hope it sends a signal to the world that at least some of us aren’t going to take it anymore.

#152 miketheengineer on 11.08.14 at 7:44 pm

Smoking Man:

It really sucks when you loose relatives, and it sucks even more if you really like them, like you have expressed. It has been 1.5 years since my father passed and I still break out in tears (often when sitting on HWY 401 gridlock). God I miss that guy.

It is too bad the funeral didn’t go exactly as you would have liked.

I had to bite my tongue on several issues when my father passed.

See my dad was the “life of the party”. He was always the last to leave, and often had to be “carried” to the car he was sooo drunk. I have met few people who didn’t instantly like my dad.

When he passed, it would have been fitting to have a “wake” at my mom’s house, where everyone could come and have a glass of wine, get loaded and laugh and cry and get it all out. Mom would have no go at this idea, instead we had sandwhiches in the Church’s hall with coffee. I had always felt my dad got ripped at not having a “real” wake, where you left, only if you were to drunk to do anything else, with music and laughing.

Good luck Smoking Man…the next few months are going to be a trying time. (the booze will make it much worse, so don’t do it).

#153 Entrepreneur on 11.08.14 at 7:52 pm

Our roof needs replacing only after about 10 years. Next time metal roofing, shingles are out.

Cato the Elder…”more people may be planting trees to harvest them” but when we as a mass or large group take large amounts down then replant (only in some countries) it is hard on the ecosystem, the whole. The earth had a balanced atmosphere and was sustained with that balance but when mankind decided to mass destruct then an unbalancing act follows, as we have now.

#134 Cato the Elder…”The gold standard is designed to restrain government” and said something about they should not be part of the GDP. I believe that the government should not have too much power and control. The middle class, the small business people should be the chart, the propeller.

#128 Blacksheep…on gold, money, the depression. Printing money is too easy. Maybe it is time to implement a new, improved method of currency.

Glad you made it back here, Smoking Man. Lost a brother when he was 28, it still hurts after over 40 years. Time for a drink.

#154 economictsunami on 11.08.14 at 8:00 pm

Drill baby drill and every producer a king.

Desperately defending market share.

California Oil-by-Rail Drops as Canada Faces Competition:

“California, the nation’s largest gasoline market, received the least amount of oil by rail in 17 months as cheaper in-state supplies and imports eliminated the need for Canadian supplies.

The most populous U.S. state took 11,612 barrels a day by rail in September, a 7.5 percent drop from a month earlier and down from a peak of 38,086 barrels a day in December, California Energy Commission data show. Shipments from Canada, which made up 76 percent of California’s oil-by-rail receipts last November, tumbled to zero, the agency said on its website.”

http://www.bloomberg.com/news/2014-11-07/california-oil-by-rail-volumes-drop-as-canada-faces-competition.html?hootPostID=0acc2f4710d38b46e037b8ec32ed07cd

Keystone is soo yesterday…

#155 gmc on 11.08.14 at 8:25 pm

what growth check this out:
out of work people don’t qualify
what is the true numbers ????

http://www.mybudget360.com/not-in-labor-force-oxymoron-not-in-labor-force-numbers/

#156 jess on 11.08.14 at 8:27 pm

http://www.washingtonpost.com/blogs/govbeat/wp/2014/10/10/there-are-only-five-states-where-unemployment-is-lower-than-it-was-when-the-recession-started/

http://www.marketwatch.com/story/labor-force-participation-hits-a-new-36-year-low-2014-10-03
\
http://www.latimes.com/business/la-fi-longterm-jobless-20140910-story.html#page=1

9.7 million American households still have “underwater” mortgages according to data released today from Zillow.

=======
http://www.bettermarkets.com/blogs/whats-wrong-jp-morgan-chase-wall-streets-big-bank-earnings-lots#.VF6xtGdeWxc

From the Better markets blog:
…”one-third of all homeowners are “effectively” underwater because they have so little equity that selling their home without a loss after costs would be difficult. In addition, real median net worth has collapsed from a high in 2007 to levels not seen in roughly 25 years (1989). Lastly, US workers’ paychecks have stagnated. Thus, to the extent that the financial crash didn’t wipe out, directly and immediately, whatever savings people had, there’s little if anything left for US families to save or spend after paying the bills. “

#157 A Yank in BC on 11.08.14 at 8:57 pm

#141 not 1st

B. Lamb in Edmonton. What a piece of work this guy is. Didn’t hesitate for a second to shamelessly try to talk-up the price of oil to settle some local nerves (not working).. and then as a measure of goodwill explained to the people of Edmonton about how half of China will soon be at the gates of town with cash in hand to buy condo’s built on their frozen tundra.

You just can’t make this stuff up.

#158 Mark on 11.08.14 at 9:15 pm

“…”one-third of all homeowners are “effectively” underwater because they have so little equity that selling their home without a loss after costs would be difficult. ”

Another shift in the United States that has been significant over the past few years has been going from the 30-year fixed rate mortgage, which remains locked in, and for which the rate can never go up during the life of the loan. And more towards adjustable rate financing.

So the new homebuyers over the past 4-5 years, sure, they got their houses cheaper than their counterparts earlier, but they’re now saddled with the adjustable rate loan which will end up sucking a lot of equity away from them as the rates rise.

Canada, as we know, is basically entirely ARM loans, with adjustment periods ranging from overnight (ie: 40% of the Canadian mortgage market) to typically 5 years. Meaning that even if current prices remain intact, the cost of debt service is certain to start increasing significantly at some point in the cycle before the loan is extinguished. Additionally, the possibility of a ‘double whammy’ cannot be at all discounted — equity falling, and the cost of debt service rising.

The so-called 1%, which derives most of its wealth from business ownership, is barely even recovered from the 2008/2008 downturn adjusted for inflation. But being ‘barely recovered’ is quite a bit different than, as you point, out, the middle class that has been decimated and is back to 1989 levels in real terms.

Just a sign of things to come in Canada though. Firms that cater to the true upper class may very well do okay, but I wouldn’t want to be in the business of catering to middle class ‘luxury’ because that’s the segment that’s going to be hit the hardest as Canada starts to see significant wealth concentration amongst Canada’s so-called “1%”.

#159 Daisy Mae on 11.08.14 at 9:20 pm

#153 miketheengineer : “Roofs: Every home in my subdivision, had to have their roofs replaced at between 12 and 14 years…or about 1/2 way through the 25 year warranty….”

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

The 25-year warranty must be honored, irregardless. Or, doesn’t THAT matter, anymore?

#160 Piccaso on 11.08.14 at 9:37 pm

I’ve been reading the doom and gloom for 11 years since I got divorced and sold and never bought again.

I’ve watched a $$$ quarter million dollars go bye bye

If you had invested the capital, as I have suggested, the returns would gave been greater. Did you? — Garth

#161 Cato the Elder on 11.08.14 at 9:46 pm

Re: #154 Blacksheep

I agree with you – a gold standard won’t happen again – BY CHOICE.

I do believe, however, that we will be forced into it by our new masters the Chinese.

China’s population of 1.3 billion can not be ignored when they make demands. Couple that with India’s 1.1 billion, who also covet gold, and you have a problem.

China, India, and many other countries are sick and tired of sending their hard earned goods to the west for pieces of paper. They are buying up gold in droves.

It won’t be a choice our politicians make, it will be a demand placed upon them. Whether by revolution or economics. Unfortunately, by that time, it will be too late. Our middle class will be gone, and we will be the nouveau third world.

You’re right about it being ‘unfair’. I find it tragic that we had a 200 year headstart on everyone, and threw it all away on socialism. What a shame.

#162 Piccaso on 11.08.14 at 10:10 pm

If you had invested the capital, as I have suggested, the returns would gave been greater. Did you? — Garth

………………………………………………………………………

Sorry I didn’t have an extra $300K eleven years ago to throw into the market

No comparison for your middle class slug throwing down $10K or $15K and buying a $300K house because he wanted a place to live. None what so ever.

#163 45north on 11.08.14 at 10:26 pm

justeunperdant : French for loser? Canadian houses are build similar to the ones in Florida except for the added insulation and more heating capacity.

Canadian houses are built on foundations to resist frost heave. Florida houses are built on concrete slabs. Where I was in Sun City Center, ceramic floors were common and there were no cracks. Tile roofs were the standard as opposed to asphalt singles in Canada. I suppose to resist hurricanes. Walls were poured concrete as opposed to wood framing in Canada. I suppose to resist flooding and insect invasion. Car ports were the standard as opposed to infrequent in Canada. To protect the cars from the sun.

comments?

#164 Bottoms_Up on 11.08.14 at 10:41 pm

5 yr old house with rotten roof…that’s just not right. Serious flaw in workmanship methinks.

#165 economictsunami on 11.08.14 at 10:48 pm

Things go better with Koch?…

The biggest foreign lease holder in Canada’s oil sands isn’t Exxon Mobil or Chevron. It’s the Koch brothers.

“The Koch Industries subsidiary holds leases on 1.1 million acres — an area nearly the size of Delaware — in the oil sands region of Alberta, Canada, according to an activist group that studied Alberta provincial records.

Suzanne Bayley, a biological sciences professor at the University of Alberta who studies the oil sands, said she was surprised to learn of the Kochs’ holdings, calling them “significant” given the fact that the total leased area in the region amounted to 35 million acres.”

http://www.washingtonpost.com/blogs/wonkblog/wp/2014/03/20/the-biggest-land-owner-in-canadas-oil-sands-isnt-exxon-mobil-or-conoco-phillips-its-the-koch-brothers/

#166 Arfmooocat on 11.08.14 at 11:00 pm

#166

Your average middle class slug that did try the markets bought some stupid mining stock and lost it all anyways.

#167 Bottoms_Up on 11.08.14 at 11:01 pm

#127 OttawaMike on 11.08.14 at 1:44 pm
—————————————————
Yes humans have evolved to recognize coincidences. We have a tendency to believe coincidences mean something, but for all the times that coincidences don’t happen, we don’t read into that thinking this indicates a lack of divine intervention.

Humans recognize coincidences; coincidences happen…end of story.

#168 Mark on 11.08.14 at 11:03 pm

“The Koch Industries subsidiary holds leases on 1.1 million acres — an area nearly the size of Delaware — in the oil sands region of Alberta, Canada, according to an activist group that studied Alberta provincial records.”

Your point? Flint Hills is one of the single largest and most enthusiastic customers of Canada’s oilsands output. Minnesota has amongst the US’s lowest pump petrol prices because the Koch-owned refineries were some of the most aggressive in using Canadian feedstocks to lower their costs.

Other states that don’t buy Canadian, or worse, oppose the pipelines, are only driving up their own costs.

US oil production will never grow enough to offset imports. The dream of “US energy independence” will only come about through a crash in the US economy’s use of oil, not because of rising domestic production. Canadian oil is an important part of the supply mix, and the Keystone XL pipeline is just one way to deliver product to market.

#169 EastVan on 11.08.14 at 11:05 pm

One of the main reasons I am staying well clear of the housing in Vancouver is the quality. My shed in the UK was better built than most of the properties that are going up. Not only is the quality poor but there is no thought around integrating alternative energy sources into the housing. Alberta of all places is leading the way in Canada, Drake Landing Solar Community (http://www.dlsc.ca/index.htm) just set a new world record, 97% of space heating needs covered with solar thermal technology. Fair enough it had government subsidies, but most of it was for 1 time R&D. Now start building these in Vancouver and I might pull some money out of my portfolio.

#170 Bottoms_Up on 11.08.14 at 11:15 pm

#112 Captain Caveman on 11.08.14 at 9:39 am
———————————————————-
You definitely have to factor in minimum 1% (and up to 2%) the value of your house for repairs/maintenance.

That covers things such as windows ($10,000) roof ($5000-8000), furnace ($3000-6000), central air ($2000-4000), appliances ($1000 a pop), not even getting into flooring, or landscaping or redoing a driveway etc.

It’s a wonder anyone ever buys a house.

#171 Snowboid on 11.08.14 at 11:20 pm

#167 45north on 11.08.14 at 10:26 pm…

Most houses in the Phoenix area are on slabs, tile floors are pretty well standard, but older homes still have carpet.

Tile roofing is prevalent, and although they last upwards of 50 years, the underlay may need to be replaced every 25-30 years.

Wood frame construction is pretty standard, although some older (1960s) homes from the original Del Webb Sun City have concrete block walls.

Garages are the norm here, and are usually large enough for two cars, a golf cart, and have cabinets along one wall.

The building standards and preferences here are based more on comfort for the hot summers.

Added insulation, more cooling capacity, and double/triple glazed windows are common energy saving upgrades here.

#172 Bottoms_Up on 11.08.14 at 11:22 pm

#104 Rexx Rock on 11.08.14 at 5:52 am
————————————————-
You’re smoking the good stuff right?

If you earned $100,000 per year, and had debt of $100,000, would you be able to service your debt?

At current rates that might be $500 per month.

You just essentially called that unsustainable. LMFAO.

#173 Bottoms_Up on 11.08.14 at 11:33 pm

#96 Carpe Diem on 11.08.14 at 2:32 am
————————————————–
Here is the good builder in Ottawa you speak of, they are known as the ‘best’ mainstream builder in the area as my impression is they do not cut corners.

http://www.holitzner.com/

#174 Bottoms_Up on 11.08.14 at 11:41 pm

#73 *NAKEDAPE* on 11.07.14 at 11:07 pm
——————————————————-
It’s not that they believe in climate change, it’s that they need to recoup the cost of replacing all those roofs. It will be interesting to see how long the premium stays high.

#175 Herb on 11.08.14 at 11:50 pm

#163 Daisy May,

with everything else being done to separate the consumer from his money, why should a 25-year roof warranty be written in his favour?

If you look at most roof warranties, you will find that they cover only material. In other words, the shingles are warrantied by the manufacturer to last the number of years specified by the manufacturer. If they don’t, you will get new shingles up to the prorated value of the failed shingles, but the cost of the labour of taking off the old and installing the new shingles will not be covered. And since the cost of roofing materials is low compared to the labour charged, roofers will be happy to charge you for applying shingles to your roof all over again.

Even if you happen to have a warranty covering material and labour, be prepared for a long dogfight over responsibilities and exclusions in the fine print. And don’t be surprised if the pickup truck roofer who shingled your roof can’t be found when you need him for warranty purposes.

#176 Entrepreneur on 11.09.14 at 12:06 am

Us, Canadians use to build/make with pride/quality but that all changed with the trade/cheaper products. So much for the middle class. We cannot compete with China/India. We cannot compete with the unions/public sectors. Our society want to live/survive but only on cheap products. So, so much for us, we are history.

#177 Godth on 11.09.14 at 12:45 am

#173 EastVan

So buy/build a log house and call it done. BC is (from what I understand) the only province that requires 2×6 framing as a minimum requirement (code). That’s 50% better insulation than 2×4 construction. The rest of Canada has some catching up to do in this most basic standard, never mind the space age.

#178 justeunperdant on 11.09.14 at 1:04 am

45north. Here is so more information about concrete slap.

It seems that Canada has even cheaper building then Florida. Like always in Canada, go for the the lowest quality at the bigger price possible.

This has been taken from a the following document:

Wall mass from masonry walls keeps buildings warmer
in winter, and cooler in summer because
they are passive solar collectors even when not
designed as such. Furthermore, because masonry
mass can reduce and shift energy flow peaks, the
size and capital costs of heating and air conditioning
(HVAC) systems may be reduced.

http://ccmpa.ca/wp-content/uploads/2012/02/6-ThermProp.pdf
Page 2.

DESIGN, THERMAL PERFORMANCE AND MODELING OF A VENTILATED CONCRETE SLAB COUPLED WITH BIPV/T SYSTEM

http://sbrn.solarbuildings.ca/c/sbn/file_db/Doc_File_e/Design,%20thermal%20performance%20and%20modeling%20of%20a%20ventilated%20concrete.pdf

This paper is from University of Concordia.

Like always in Canada, too lazy too innovate and try news things. We must stick to old stuff no matter what.

#179 straight six on 11.09.14 at 2:54 am

to hell with carrying expensive house insurance, IF you’re mortgage free you don’t have to!
chances are you’re not covered anyway.

no forms to fill out,
you only have to answer one question, that being..

Do ya feel lucky, well do ya.. punk?

#180 Charles Ponzi on 11.09.14 at 5:57 am

More green shoots in America that will surely wither and die. Nothing but empty promises.

#181 Steve French on 11.09.14 at 6:33 am

Welcome back smokey,

https://www.youtube.com/watch?v=Mmm3KTa601s

#182 maxx on 11.09.14 at 8:59 am

Rate deniers either have copious amounts of debt or have livelihoods dependent upon foisting it onto consumers.

Viewed 2 waterfront properties today:

The first owner was livid that his hadn’t sold all year. When asked for the price, he coughed up an amount that was a multiple of evaluation. I told him it would never, ever sell at that level. He barked back: “tell me about it, my house in town hasn’t sold in 5 years.” Delusion and incredulity still persist. Sad.

The second owner also hadn’t sold all year. His price was far more reasonable. He said that he’d spoken to many agents who told him that almost nothing is moving. He also said that many realtards are now taking on part-time work in order to be able to survive. Things really are that bad and are getting worse.

No matter how low rates go, prices, overwhelmingly will not increase. There are far fewer solid, reliable borrowers out there with either unassailable jobs or actual assets to back up loans/mortgages and most replacement jobs are subsistence.

Banks are well aware of this and lending standards are necessarily improving. Rates should (and will) go up so that those with actual assets can get out and spend again. Until then, they, being the determined and creative souls that they are, will continue to adapt in order to preserve hard-earned money.

No amount of playing nicey-nicey with foreign powers will improve the lot of this country’s exports. None. Are we now looking to practically give away our natural resources because premium, forward-thinking markets don’t want dirty oil? Hmmm….

Healing (fiscal ignition) always comes from within, not from dependence on external powers that have their own well-defined and quite understandably, deeply ingrained interests.

For instance, the U.S.

#183 maxx on 11.09.14 at 9:03 am

Sorry dawgs, last sentence in post ambiguous-

“For instance, the U.S.”- as an example of fiscal improvement.

#184 Mike in Toronto on 11.09.14 at 9:33 am

166 Piccaso

“No comparison for your middle class slug throwing down $10K or $15K and buying a $300K house because he wanted a place to live. None what so ever.”

Bang on IMHO.

I bought a place with $55k down about 11 years ago, sold it 8 years ago and cashed a cheque for $140k. Didn’t buy again because I wanted to do stuff. When it was time for me to buy again…. forget it.

The leverage and tax advantage of primary home ownership is amazing. 6% returns on my paltry savings is nothing compared to 10% tax free appreciation on a $1M home.

I can’t even max out my RRSP for fear of wanting to buy a home again some day.

#185 economictsunami on 11.09.14 at 10:46 am

“… Keystone XL pipeline is just one way to deliver product to market.”

What market?

Keystone may be wanted by Canadian producers but it appears as though their product is needed less by the American market.

Currently producers are locked into a fight for market share, just as capacity is increasing, reserves are plentiful, refinery capacity is limited and demand is tepid best…

#186 crowdedelevatorfartz on 11.09.14 at 10:51 am

@#156 miketheengineer

Have that wake. It’s never too late. Set it up for his birthday or some such other significant event. Invite friends and relatives that liked him. Let the booze and stories flow. Im sure everyone will enjoy the gathering.

#187 Mosshater on 11.09.14 at 10:56 am

Asphalt shingle roofs have to be treated for moss growth on the north side of the building….it should be done every other year….like cleaning the gutters.

#188 gmc on 11.09.14 at 11:00 am

famous Jim Rogers quote

Diversification is something that stock brokers came up with to protect themselves, so they would not get sued

You mean the guy who told you to buy gold, which has shed 37% in three years? Or who pushed silver in 2013, sucking the innocent into big losses? Anyone suing him.? — Garth

#189 Nemesis on 11.09.14 at 11:33 am

#”TakeUsToYourLeader,”… #”WeWantYourCherries!”…

[G&M] – In China trade talks, Alibaba tells Harper: ‘We want your cherries’

…”Over the weekend, his cherries prominently displayed and ripe for the plucking, PM Harper will formally meet Chinese President Xi Jinping for the first time, and help ‘connect’ a coterie of Canadian business leaders with their Chinese counterparts.”…

http://www.theglobeandmail.com/news/politics/in-canada-china-talks-alibaba-tells-harper-we-want-your-cherries/article21512009/?page=all

#”NoCherriesForYou!”,Or… #TalesFromTheRainForestBordello…

[CBC] – UBC’s Vantage College: Canadians need not apply: Pricey new college currently under construction is for ‘international’ students only

…”The University of British Columbia is building an exclusive new college at a cost of more than $127 million, but Canadian students need not apply. The college will house only high-paying international students, most of them from China…

…The website for the college, which targets wealthy overseas Asian students, promises “round the clock support,” a “custom curriculum,” and lower class sizes…

…Students will pay more than $50,000 a year for the privilege which includes tuition, accommodation and health care.”…

http://www.cbc.ca/news/canada/british-columbia/ubc-s-vantage-college-canadians-need-not-apply-1.2826142

[NoteToGT: I may have taken some editorial liberties with the G&M quote…]

#190 Ronaldo on 11.09.14 at 11:37 am

#142 justeunperdant on 11.08.14 at 6:00 pm

”Ceiling are too high and a lot of heat is lost because that because heat tend to rise up. Ceiling should be more like 7 feet high.”

You must be 5 feet tall.

#191 Ronaldo on 11.09.14 at 11:55 am

#139 Mr. Nihilist on 11.08.14 at 5:27 pm

”I guess the ones who are truly, 100% doomed are those buying the air rights for a condominium. You don’t own the land, you just own the obligation to pay maintenance fees.”

Isn’t that the truth. My first purchase was a condo in 1969 and I owned another to reno and sell but I would never consider getting into one of these things again for personal use. The problems of dealing with the lame duck condo boards and self appointed condo cops was enough for me. People who buy condos are the beneficiaries of the problems created by the developers who are off the hook once the places are sold out. These things came into being back in the late 60’s when governments imposed rent controls so developers decided no more building of rental apartments. Turn them into condos and pass on all the problems associated with these to the poor suckers who buy them. Let the government supply the rental units to people unable to buy houses. And so we ended up with BCHDC and subsidized rents. Heck of a deal.

#192 Ronaldo on 11.09.14 at 12:00 pm

#137 Devore –

”This shows your ignorance, you clearly have an agenda and axe to grind. As usual. All the good lumber is destined for exports. End consumers can only get the B-grade equivalent, at best.”

Agree totally. When I built one of my first homes back in 1979 I purchased the lumber directly from the mill and it was the stuff that was sitting on the loading ramp next to the box cars being loaded for the U.S.

#193 waiting on the westcoast on 11.09.14 at 12:07 pm

#188 Mike in Toronto

Congrats on making some cash on your home purchase. I don’t think others or myself are advocating that you should never buy a home. Only that you should look at it as it is. A heavily leveraged investment that you live in. And given today’s valuations, that is a lot of downside risk given the multiple over rent and interest rate normalization likelihood.

So… When looking at the fundamentals of home ownership costs, it is not a good time to buy a house. Probably when you originally bought it was a good time. But you can rent for now and build up more dollars and invest in other asset classes while waiting for a more reasonable home price or move to a market where real estate valuations make sense (like many markets now in the US).

#194 the jaguar on 11.09.14 at 12:19 pm

#186 Maxx. What ‘waterfront’ area do you refer to? Thanks. Agree with your comments wholeheartedly.

#195 Nemesis on 11.09.14 at 12:24 pm

#Justeunperdant’sOffices…

http://youtu.be/T2Y7oo3iB40

#196 Snowboid on 11.09.14 at 12:27 pm

#193 Nemesis on 11.09.14 at 11:33 am…

“…We want your cherries…”

That’s funny, I recall we started pushing BC cherries and apples back on a trade mission to Hong Kong in 1974.

The cherries were flown over and were a smash hit with the Hong Kong wealthy. They wouldn’t take any yellow apples (eg. Golden Delicious) but only wanted red ones.

Now 40 years later it’s China itself that has the wealth to support purchasing our cherries, who would have thought?

#197 Daisy Mae on 11.09.14 at 12:42 pm

#154 Blacksheep: “Greenspan’s recent comments carry significant weight because while getting old, he it still quite sharp. I do believe him to be correct in his assessments, due to the fact they mirror his opinions of the past.”

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

Perhaps it just means Greenspan has a closed mind and isn’t open to new concepts.

#198 Casual Observer on 11.09.14 at 12:50 pm

Usually that sort of trade doesn’t really work out, as the low-rate currency tends to appreciate faster than the high rate currency.

That might be true some of the time, but it’s usually the higher yielding currency that appreciates at the expense of the lower rate one. In fact, there’s an ETF that’s designed to profit from this trend – “DBV”.

https://etfus.deutscheawm.com/powershares-db-g10-currency-harvest-fund/prospectus?tab=fund_card

From the fund fact sheet…

“The Index… is designed to exploit the trend that currencies associated with relatively high interest rates, on average, tend to rise in value relative to currencies associated with relatively low interest rates.”

The only currency the ETF won’t take a position in is the USD, since it’s priced in USD.

“…the Fund will not establish a long or short futures position in USD because USD is the Fund’s home currency and, consequently, the Fund cannot enjoy profit or suffer loss from long or short futures positions in USD.”

This explains why the ETF hasn’t shot up in price recently as the USD has become a relatively higher yielding currency, and has strengthened at the expense of the Yen and the Euro.

#199 RayofLight on 11.09.14 at 1:23 pm

Does any one have information about quality differences between on site home construction compared to factory construction. My guess would be factory would be much better. A controlled environment with better quality feedback. You’re not dependent on some half hung- over roof nailer trying to hit the studs better than a third of the time.

#200 Basil Fawlty on 11.09.14 at 1:57 pm

‘You mean the guy who told you to buy gold, which has shed 37% in three years? Or who pushed silver in 2013, sucking the innocent into big losses? Anyone suing him.? — Garth”

Again you are cherry picking, by using a short term run up in precious metal prices to calculate your statistics. You continually ignore the massive increase in gold prices from 2001 to today.
Rogers usually says he owns gold and I have never heard him say put all your money into it, or any other investment. He likes Agricultural, as well, should he be sued for decreases in Ag prices?

Since when is three full years ‘short-term’? Most people like to see their wealth increasing annually, not by the quarter-century. — Garth

#201 Cow Man on 11.09.14 at 2:02 pm

#203 Rayoflight

Quality Homes in Mount Forest Ontario, make what appear to be excellent individual to order prefab homes. These are moved to private lots, mostly in rural areas. Totally different than the Mattamy assembly line homes built in Milton. I am not promoting, just answering your inquiry. http://www.qualityhomes.ca

Looks like an ad to me. — Garth

#202 Keith in Calgary on 11.09.14 at 2:28 pm

“Does any one have information about quality differences between on site home construction compared to factory construction. My guess would be factory would be much better. A controlled environment with better quality feedback. You’re not dependent on some half hung- over roof nailer trying to hit the studs better than a third of the time.”

While this is a valid point, you’re still buying a POS cardboard box regardless of the quality control.

#203 Retired Boomer - WI on 11.09.14 at 2:36 pm

#18 Smoking Man

Amazing thing, the human heart. It can run on for years, be broken in a second, and hurt like hell.

As perennial as the grass it is, and forgiving, too. Self healing despite the odds of the hurts flung toward it.

Amazing machine that human heart, it will take you places you never thought of going.

#204 bill on 11.09.14 at 3:18 pm

#196 Ronaldo on 11.09.14 at 12:00 pm
#137 devore on 11.08.14 at 5:11 pm

#77 kommykim

” Every time I see a logging truck taking a load away for export, it is 90% filled with crappy little logs. The good stuff is nearly all gone and takes 100s of years to grow.”

I worked in the Logging/Sawmill business for 21 years [’76 to ’97]
in a sawmill that traditionally got its logs from the Nimpkish Valley and the Harrison valley.
it took 10 sawmills [who had access to this wood] situated along the north arm of the Fraser river [from eburne sawmill in vancouver to the canfor panel and fibre mill in new west.].
in the period between say 1930 or so to 1997- to get halfway up the nimpkish valley or tree farm license 37 [a holding slightly larger than the entire Fraser valley] .being good ‘farmers’ we replanted everything and then some.
by 1990 we were cutting the wood that had been replanted way back in the day. this was cheaper to cut than the old growth as it was the right size[ 3 to 5 feet in diameter] to process quickly.and it was very close to the coast.we didnt have to load it on to a truck -unload it at the lake.Take it across the lake. Reload it on the train and take it down to the coast for further processing.
the 2nd and 3rd growth we harvested on the coast was decent enough wood by the way.not quite as tight a grain as the old growth but good wood none the less.
between the environmentalists in Europe and elsewhere, nafta,and a lack of will on the parts of the powers that be,all these mills were closed.
canfor cut a deal with the ndp government at the time and retained the tree farm 37 rights [giving up the vast old growth area that we never got to ]by making that some sort of ecological preserve.
Currently Canfor cuts the trees and puts the raw logs on to a freighter and they sail away to other shrewder folk.
the lost jobs would have indirectly paid for many of our current financial shortfalls in health and schooling with ease.
to those who say that we abused the resource is laughable. we were great custodians and the province is the loser for it.
if you want decent wood these days you will have to bid on it against the Japanese ,the Germans and the Italians [who traditionally bought all our good stuff and paid top dollar for it by the way..] who know a good deal when they see it. ie cheap wood and it puts their lads to work processing it.
-by the way a typical German order cut to the size they wanted [they used this wood to go around a window opening in a brick house hence we cut this beautiful zit free wood to emulate the size of a brick] would cost them around 17,000 $can for a for a load length between 12 and 16 feet.
speaking of…sorry for the length there Garth!

#205 retiredbomleter on 11.09.14 at 4:26 pm

montreal west island one neighbor sold nice old place with old style bathrooms and kitchen $70K below asking the other one for sale is getting low ball offers and the agent is berating the widow telling her to take the low offers so she takes it off the market because he does not send her clients even to see it and stopped calling.
yep they asked her to disclose all problems with the old building now it will be a problem selling and the make matter worse the son is taking real estate to flog houses!
real estate and mutual fund salesman belong on the rung of used car floggers. I saw everyone at an investors group presentation sign the waiver declaration and go inside like sheep without reading it. I tried to talk to people but no one would answer so I walked and glad I did just before I retired. Now making more than when I was working with my a few etf’s and mostly well diversified stock portfolio. We need more guys like Garth so the masses don’t get fleeced and at least get some cent$ talked into them. But I fear it is too late for Canada and we are going down the tubes so I got companies with USA and international income.

#206 espressobob on 11.09.14 at 4:50 pm

#204 Basil Fawlty

In case you didn’t notice, index investors are kicking the crap out of speculators hands down. But then we own those sectors anyways!

#207 Ad on 11.09.14 at 5:50 pm

So, Garth, basically if you were buying a house right now (yeah, I know it sounds like a joke) you will lock your mortgage rate, right?

Let’ say you have 2.3 variable or 2.89 fixed. (both 5yr)

What do you think?

I’d lock. — Gsrth

#208 espressobob on 11.09.14 at 6:52 pm

#192 gmc

Like Jim Rogers there is another benevolent fund manager who really cares about their unitholders!

http://www.theglobeandmail.com/globe-investor/inside-the-market/eric-sprott-sells-big-chunk-of-silver-trust-units/article11157109/

#209 davikk on 11.10.14 at 7:37 am

U.S. Economy Sinking FAST! Financial Crisis of 2008 Was Just the Beginning!

http://investmentwatchblog.com/u-s-economy-sinking-fast-financial-crisis-of-2008-was-just-the-beginning/

Don’t walk into this blog with that site’s crap on yer boots. — Garth

#210 Crisp on 11.10.14 at 6:25 pm

They are definitely not building houses like they use to, have to also wonder how new houses pass so called inspection these days. Our 7 year old house didn’t hold up through the harsh winter last year. Best of all frozen pipes (PEX = shouldn’t freeze) – pulled back drywall to discover pipes held with painters blue masking tape, no insulation in the walls near the pipes, and pipes running on the outside wall! Isn’t that against code? Oh wait, I forgot regulation and enforcement in the industry is non-existent…! Really feel for the poor souls taking enormous debt for these new builds at today’s prices.