If you want to be in the top 1% of income-earners so Millennials can hate you and your divorce turns into hell on wheels, then make $217,000 a year. About two hundred and thirty thousand people qualify. So, 99% of Canadians don’t cut it.
How can this be when a majority of houses in Vancouver and 416 are now worth a million bucks? Hasn’t the real estate boom made all these people rich, too?
Well, there’s a difference between high-income and high-net worth. There are 320,000 people of wealth, defined as families with $1 million investible assets, excluding their principle residence. Houses are not counted because most of them are leveraged, they’re not really liquid, and they act as personal possessions, not investments. At least that’s the way financial guys think, which makes them different from realtors.
As you know, the gap between the rich and the rest is growing faster than yeast. The Occupy kids were exactly right when they flooded onto Wall Street. The middle classes are being hollowed out and the generation of genius kids now being farmed in the basement could be the first one in modern history to be less financially secure than their parents.
They’re pissed, as you might expect. And blame everything. Especially the 1%.
But this could be seriously misplaced anger. At least part of the reason rich people are getting moreso and the middle’s in trouble is where money is deployed. For starters, men (who are as a group wealthier) invest more, while women save more. Given the fact that interest rates have collapsed since 2008, savers have been creamed. The return on bank accounts, GICs, bonds and most fixed-income assets is pitiful. After inflation and taxes, these investors have seen negative numbers.
Also since 2008, the world’s been in an asset bubble. The collapse in interest rates has diverted a torrent of money into things which grow in value and throw off capital gains. Central banks have played their part by flooding economies with cash, trying to stimulate growth and job-creation, which has added to corporate profits, then reflected in healthy stock markets.
Of course, cheap money and an ocean of easy credit have done the same for properties. Canada’s real estate market is a prime example of what happens when you let people without savings buy houses with 3% financing. They pig out. Prices go up. They pig some more. Bigger prices.
But the difference between a guy with a seven-figure portfolio of financial assets and the person owning million-dollar beater house in East Van is debt. Almost always the house is leveraged, while the portfolio is not. Moreover, the returns on a balanced portfolio for the past six years have far eclipsed those enjoyed by a real estate investor, even in Van, 416 or Cowtown.
But there’s more. A US economics professor, in studying the same phenom there, has come to this conclusion: while middle-class people have 63% of their wealth tied up in a single asset (the house), wealthy people have 75% of theirs sunk into investment assets. So, the wealthy have harnessed diversification to actually increase returns and lower risk, while the workies have rolled the dice, gambling that a one-asset strategy will yield financial security. In doing so, they’ve amplified risk.
American families bet on a real estate boom, fuelled by easy credit and rising prices, then lost horribly. After the property market crash of 2007-9, middle-class Americans sold assets in order to pay off debt. The rich were buying. And the gap between them turned into the Grand Canyon.
Professor Ed Wolff also found the wealthy earned double the return on their stock and bond investments as the plebes did on their houses and savings accounts. “The differences reflect the greater share of high-yield investment assets like stocks in the portfolios of the rich and the greater share of housing in the portfolio of the middle class,” he says. “Middle class Americans’ reliance on home values, which still make up two?thirds of their total wealth, and their high levels of mortgage debt have been the main cause of increasing wealth inequality since 2007.”
Will the same experience be repeated here? Of course. Already is.
Real estate values have peaked while the cost of debt can’t go much lower. The easy money’s been made in this asset bubble, as new buyers will discover, unhappily. And, unlike dividend-producing stocks, houses earn nothing and yet have substantial ownership costs. If there’s no yearly capital appreciation, they drain net worth instead of building it. And just wait until mortgage rates normalize.
So, that’s one reason we have rich people. They invest more than they save. They diversify. They’re unhouse-horny. They buy stuff that pays them to own it. They take less risk. They shun debt. And they know it’s not just how much you earn, but what you do with it.
Finally, I know all you metrosexual urban latte-sippers don’t care about a provincial backwater like Saint John, New Brunswick, but add it to the list of places where the housing market is toast. Almost 10% of all homes currently listed for sale are foreclosures.
Says a prominent local realtor: “The last time I saw foreclosures in the numbers I’m seeing was in 1980. That’s when interest rates were at 18 and 21%.”
Imagine what might be coming.
216 comments ↓
217 k per household (assume 4 kids) is nothing in Toronto and Vancouver if you consider general expenses and housing.
Rich? Hardly mid/upper middle class
assume 2 kids…
Garth, you are missing one crucial point. Stats prove the rich didn’t get rich from investing. They got their wealth from businesses, real estate and inheritances. Then they invest it in equities. An important distinction.
Haven’t heard anyone getting rich from stocks from the get go. Even Buffet had multiple businesses first including a hedge fund he ran.
Corrections
The foreclosures represent about 3.7 per cent of the total residential listings, not 10 per cent. Hodges Hamm’s initial figures were incorrect.
Nov 19, 2014 3:11 PM AT
That’s from an article I just read. Who’s correct, you or him?
http://www.cbc.ca/news/canada/new-brunswick/saint-john-s-home-foreclosure-rate-worst-in-decades-experts-say-1.2839669
The media reported two numbers. Take your pick. Ugly or uglier. — Garth
Sadly, the skinny jeans are going to see the downside of leverage. It seems odd to me that companies don’t like to invest in technologies or equipment unless the ROI is relatively swift. Yet, the general population continues to add to their debt load because of paper gains. While I don’t think their will be a massive crash… There will be significant blood in the streets. Worse, there will be a few less coffee houses to visit…
Good for them (i.e. the rich), I guess. They can isolate themselves from mass unemployment, erosion of social contract, beggars, and police crackdown on beggars. For now.
At what point is everyone else so impoverished that social disorder becomes uncontrollable? I’m just one crackpot, but I figure that between the astonishing amount of cash given to cops, teachers, and other civil servants, and the tax burden on the remaining few of you employed in the private sector, something’s got to give.
They say you can pay half the working class to kill the other half. But there isn’t really a working class anymore, is there?
“If you want to be in the top 1% of income-earners so Millennials can hate you and your divorce turns into hell on wheels, then make $217,000 a year. About two hundred and thirty thousand people qualify. So, 99% of Canadians don’t cut it.”
Just out of curiosity Garth, do you know if this stat excludes estates that report >$217k income upon death because their RRSP and other deferred taxation investments immediately become fully taxable?
Live people, not dead ones. — Garth
Sorry – numbers for SJ are wrong, tho still not pretty:
“The foreclosures represent about 3.7 per cent of the total residential listings, not 10 per cent. Hodges Hamm’s initial figures were incorrect.”
http://www.cbc.ca/news/canada/new-brunswick/saint-john-s-home-foreclosure-rate-worst-in-decades-experts-say-1.2839669
Thats gotta be per person stat and not family income. Garth mentions 230 thousand of people qualify..not families
But dont worry.. T dot is different who cares about some place where they make pool tables..
“Garth, you are missing one crucial point. Stats prove the rich didn’t get rich from investing. They got their wealth from businesses, real estate and inheritances. Then they invest it in equities. An important distinction.”
Go to the Vanguard diehards forum sometime. There are plenty of people who got rich by investing regularly and often, on a schedule, with relatively modest employment incomes. In fact, the likelihood of doing so, with low-cost diversified portfolios, is far greater than being one-trick ponies of investors with enormous leverage as you imply above.
Just because the past 14 years have been mostly devoid of significant (or even long-term average) equity gains, doesn’t mean that investing in stocks isn’t a way to significant wealth over the long term. 14 years of multiple compression will eventually give way to a period of multiple expansion for patient investors.
The biggest mistake I made this year was getting HGTV for my wife…. aaarrrggghhh!
#1 Sheane Wallace on 11.19.14 at 6:14 pm
I think the $217k figure is for an individual earner. So marry another one-percenter and you’ll do just fine in T-Dot/Van.
Why vilify the rich? I mean they simply operate under the rules that they have access too.
The common joe six pack spends more time on his fantasy football picks than he does learning finance and investing. Hence why the majority are poor and wondering why.
Maybe “principal” residence, not “principle”?
Well hi there, Blog Dawgs, and Hey, Hey, Hey to you Garth!
http://www.youtube.com/watch?v=GDT7GP9l1-I
Garth wrote this today.
“For starters, men (who are as a group wealthier) invest more, while women save more. Given the fact that interest rates have collapsed since 2008, savers have been creamed.”
I did not have ANY involvement with causing financial or any other pain to those disadvantaged women, those savers.
You can’t pin ANY of that on me.
(Whew! Close call.)
Everything else I’m not talking about; go ask my lawyer.
Mark # 155,
“Hence, the bank is not creating money”
——————————————
So your going with, the Bank Of England, has got it wrong, OK.
Question: Does anyone believe, the guy whom answers everyone’s technical economic questions, whether you asked him to or not, lacks the intellect to comprehend, the simple process of ‘Money Creation’?
Question: Whom exactly….do you think you’ve been taking advice from, for the past few months ?
#6 Mr. Nihilist on 11.19.14 at 6:36 pm
“…..I figure that between the astonishing amount of cash given to cops, teachers, and other civil servants, and the tax burden on the remaining few of you employed in the private sector, something’s got to give….”
=========================
Remember the last time when cops, teachers, nurses, firefighters, etc. crashed the entire world’s financial system, wiping out trillions in middle class equity, while taking millions in executive bonuses and bank bailouts?
Me neither.
The rich. Apt title for the Post about the rich and the masses.
The same financial principles that Garth teaches us are the same for all people regardless of income. I know for a fact that there is many high income earners in financial trouble as there is also many average income earners in financial trouble. The only difference for the high income earners in financial trouble than the average earners, is that the bad numbers are higher.
That being said, many average income earners have grown a sizeable net worth over time through sound financial management principles. There is no excuses for bad financial management. No exception.
So, just an average Joe can live decently, and retire with the assets to buy a home if he doesn’t already own one, or not.
IF you salt away as much as you can TAX FREE first, then as much as you can in Tax deferred accounts -especially if your employer is matching any of it – THINK!!! this is FREE money less taxes later.
You either rent, or pay a house payment. IF you pay a house payment you also pay: Real Estate taxes, upkeep, insurance. You also get FREE market risk! This might mean an increase in value, or a decrease in value, as neighborhoods change not always for the better.
Rent and the landlord fixes the things, and might even pay some of the utilities!!
Ya takes your chances, and pays your dues!
I sure never had to worry about getting even close to HALF the income of the richest 1% even with TWO income earners! So, I’m just one of the lowly 99%ers out there in TV land. (sigh)
Somehow though through steady eddy investments in Index Funds, over 30 odd years we fit into that “high net worth” group???
How the hell did that happen?
The perfect storm for Canada is commodity demand destruction.
It is happening at an accelerating pace. Let the games begin.
Mr. R.
It couldn’t be a coincidence, could it? The day after some Jim Dandy in Liberty Village blows up his meth lab condo, that articles like this come out:
http://www.thestar.com/business/2014/11/19/condo_demand_in_toronto_remains_high_analysts_find.html
Don’t worry about the spike in condo fees you’ll pay when your neighbour takes out half of the floor with a bathtub full of chemicals. There are plenty of immigrants who want to buy your studio apartment…
@ #10 Mark
That depends on your definition of “investing”.
Buying the market and expecting long term returns below 10% on your savings from your day job won’t get you rich. It’ll allow you to retire comfortably.
If you’re gambling with high risk, sure you may get rich, but for every success story, there are too many losers.
So I personally agree with #3. Let’s not mix up correlation and causality.
Ownership and control: the myth of supremacy
Written By: Austin Mitchell and Prem Sikka
Published: November 14, 2014 Last modified: November 11, 2014
http://www.tribunemagazine.org/2014/11/ownership-and-control-the-myth-of-supremacy/
============================
Gulf-Bound Tar Sands for Export? Follow the Oiltanking Trail
http://www.desmogblog.com/2014/11/18/gulf-tar-sands-exports-oiltanking
10% of houses for sale in St Johns are foreclosures? You buried the lead!
Thanks Garth…..sigh, again.
And one of the things rich people do is remain 1) realistically optimistic, and 2) work at something.
Go here for fun nagging facts: http://rortybomb.wordpress.com/2011/10/14/who-are-the-1-and-what-do-they-do-for-a-living.
And go here and have some fun, smile, watch the embedded video on Puerto Rico , in this article !
http://www.businessweek.com/…/puerto-rico-tax-haven-for-americas-super-rich
Life’s too short to Constantly nagg about ” being unable to afford a rotting , mouldy , stick house” in Canada .
Peace out….
[…] Source: http://www.greaterfool.ca/2014/11/19/the-rich/ […]
“They take less risk. They shun debt. And they know it’s not just how much you earn, but what you do with it.”
Risk is relative when you have so much money to play with. Debt is easily avoided for the same reason. And, it is absolutely how much you earn (salary and investments) that can make one say that without hesitation. It is so much harder for the 99%.
It’s like telling a kid whose parents never graduated high school to do their work and study to avoid repeating history. Many of the 1% were born into money or took big risks to become members of the elite club.
I always look forward to the posts, but this one, not so much.
I love that within walking distance of my apartment in Saint John there is a house listed for “below 50k!”
Which is what the hipster row houses in Van should go for ;)
“Buying the market and expecting long term returns below 10% on your savings from your day job won’t get you rich. It’ll allow you to retire comfortably.”
The TSX’s current valuation is implying 12%/annum (ie: E/P + long-term nominal growth rate in corporate earnings). I think its not too hard to get relatively ‘rich’ investing in something priced to return 12%/year. You can thank the housing bubble for leaving stocks relatively under-valued.
If you know when to take more leverage, and when to take less, like Warren Buffett, you, too, can end up like him. He leveraged when it wasn’t cool to leverage, and likewise, un-leveraged himself when everyone was obsessed with leverage. WB has commented, in the past, that his actual un-levered ROI hasn’t really exceeded that of a plain old index fund.
#6 Mr. Nihilist on 11.19.14 at 6:36 pm
They say you can pay half the working class to kill the other half. But there isn’t really a working class anymore, is there?
===========================
Correct. Once you’ve killed off the Canadian private middle class, crushing the public middle class is a walk in the park.
Just ask any Sun News Network columnist, who will happily play their uneducated sunshine-girl-addicted readership like banjos, pitting the gutted private sector middle class against the surviving public-sector working class. No coincidence that the current VP of the Sun News Network is the former director of communications for the current Prime Minister’s Office.
Any idea who is on the Sun’s board of directors?
a) the former PM with the big chin,
b) the former PM caught with brown envelopes of cash,
c) the former PM who sold out Canada out to FTA’s,
d) all of the above.
@#13 not 1st
“The common joe six pack spends more time on his fantasy football picks than he does learning finance and investing. Hence why the majority are poor and wondering why.”
+++++++++++++++++++++++++++++++++++
Brilliant statement.
It never ceases to amaze me when my friends can prattle off the most obscure sports statistics and then blather on about their “fantasy pool” standings.
But, when you ask them about international world events which can and may have a direct impact on their job………crickets.
For any adventurous spirit unafraid to unclip themselves from the Ontario mainstream and really EMBRACE the real Canada Saint John, New Brunswick is your town.
Not for the fraidycats who have to have the politically correct landscape of the YOUR GOVERNMENT KNOWS BEST but the rest of you unplugged…get out of town. You know who you are…the real Canada.
Here in northern b.c. in fort st john and Dawson creek, homes are still rising, and this is a community of only 11-17 thousand people, lots of gas plant work, and relators say ave prices still on the rise no slow down in sight? So much for a housing crash.
A very interesting mix of dogmatic and insightful today, Garth. You’re too intelligent to miss the warning signs of very serious economic and social problems, but you’re falling for the just world fallacy just as hard now as when you were young and on top of the world (different world back then, too).
Hard work is absolutely an essential ingredient in upward economic mobility. But it’s no longer enough. One also needs luck, either through which family you’re born in or increasingly unlikely happenstance.
You might also want to consider that even textbook-ideal economic mobility (which you advocate) wouldn’t be enough to create a fair and efficient economy: mobility isn’t enough. The differences between the economic layers have to be limited as well, after all we really do need people to serve the fries and man the factories. When you were a young lad Garth, 5% of this country had a bachelor’s or higher. Now more than 55% of young adults are in the process of obtaining such a degree. We can’t all be CEOs, ya know. The worker’s gotta make liveable wages, but we’ve all convinced ourselves we can be big time, who cares about the working class. The millennial angst you’re no doubt familiar with has at its core a simple truth: the vast majority of the population MUST be working class, it’s a mathematical certainty. And the working class is paid like shit, because it’s a hobby to look down on those you think are beneath you. It’s like the guys in Vancouver who could afford to buy in a less-than-stellar neighbourhood (even at today’s prices), where their neighbours would be their socio-economic equals. But everyone seems to think they don’t belong in that class, their ass deserves to be in Kits, amirite? That’s the thing, every cashier think he’s middle class. Ask your family doctor the same question and you’ll get the same answer: middle class. Ha, what a joke.
The reason why these problems are so hard to fix are two-fold. First, smart intelligent and influential people like you Garth cling to the just-world fallacy, and refuse to connect the dots to see an imbalanced economy. They continue to blame the victim, so to speak. Secondly, the fix for this problem involves those with enormous financial assets to part with some of it (through more progresive taxation, inflation, guaranteed minimum income, etc), and they have an enormous amount of political power and are (with the very rare exception) unlikely to accept such an arrangement.
Seems to me like things will get worse before they get better, economically and socially. The housing market is a big part of why things must first get worse, but it may contain a silver lining. It could be the catalyst for political change, and this century’s “new deal”. Too many people feel rich because they bought a house a few years ago. I know multiple people who apparently can’t do math and thus think they’ve found the fountain of wealth. The amount of working stiffs I personally know who spend all their income “floating” more than one property that they don’t live in is scary. One young couple is paying 900 a month in condo fees on an “investment” shoebox condo in downtown Toronto, while taking a week to decide if a 30 dollar thermostat is worth paying for as part of renovations. No way we can avoid a serious amount of foreclosures in the coming years.
It’s been quite a while since you wrote Money Road where you foresaw the baby boomers entering their twilight years as a significant force on the housing and equity markets. At the time you couldn’t have predicted the insanity that was yet to come, with 40 year loans, near-zero rates, and a recession that just won’t end. So yea, we can only imagine what is still to follow. 800 grand is what a house on Bridle Path should cost, not the average detached shack of the average Torontonian. Pretty scary stuff, because just like Cinderella at the ball, we can’t stay in party mode forever.
Get over your house fetish, already. — Garth
@#27 PVS Inquire
“I always look forward to the posts, but this one, not so much.”
++++++++++++++++++++++++++++++++++
My family were all blue collar, parents, siblings. All blue collar. Definitely NOT rich.
But the one thing that my parents beat into my head was . Avoid debt at all costs.
I’m not rich but Im getting there and …..I have no debt.
It isnt rocket science, just disipline.
Do you NEED that? Or do you just WANT that and think you need it?
Big difference.
Sir Garth:
If you had persevered, by now you would have been named Parliamentarian of the year under a couple of categories. Garth Turner, the best MP to ever serve the Halton Riding.
http://www.macleans.ca/politics/ottawa/2014-parliamentarians-of-the-year/
My sister…
Great….so in addition to having the hot water tank replaced we have had to hire professionals to come in and suck up the water out of the berber carpet….apparently they have to peel back the carpet and suck out the water starting with the underlay and then deodorize…..$$$$$$…..seriously….we’ve only been in this friggin condo for six months and are moving soon…..unlucky or what
#28 SJ on 11.19.14 at 7:53 pm
I love that within walking distance of my apartment in Saint John there is a house listed for “below 50k!”
Which is what the hipster row houses in Van should go for ;)
————————–
I’ve been to st john, sadly :(
why don’t you move to bc? plenty of opportunity for a young whippersnapper. better snowboarding too.
Mark – posted on the last blog asking if you know about fractional reserve banking? If you do how come you think a bank has to borrow every $ it lends out?
re: #17.
I agree that it was the brokers, and lack of oversight that crashed the markets.
That has nothing to do with my point though. Take a look at Ontario, if you can stomach it. What does Wynne-sanity spend government money on, that’s not wind farms and unoccupied office buildings? Cops. Teachers. A lot of damn money from your pocket to theirs. Maybe you’re okay with that, and that’s fine.
My point is: not everyone is okay with it, and I am curious as to what the breaking point is. You don’t know, and neither do I. But we might find out someday.
WB has commented, in the past, that his actual un-levered ROI hasn’t really exceeded that of a plain old index fund.
————————-
good stuff to ponder.
,,,,,,,,
#167 Entrepreneur on 11.19.14 at 7:07 pm
I believe that our raw resources should be refined in Canada so Canadians can benefit from them. Not the big corporations.
———————-
i’m pretty sure the refineries in canada are all owned by big corps, as would any new ones.
guess where the biggest refinery in canada is?
Re: #3 not 1st on 11.19.14 at 6:30 pm
Mostly correct only the insiders got rich like Ivan Boesky. The rest were just bag holders for the ponzi pump and dump markets of today. Going back in history most people got rich by avoiding stocks.
It’s kind of sad to read this news about New Brunswick, and it wouldn’t be a lone community in the country where despair has set in among the local folk whether they be creditors trying to unload the house or the owners. But imagine how much more brutal it might be if the worm turns in the GVA, the GTA or cowtown where monstrous homes with monstrous mortages exist quite commonly. If there are bargains in New Brunswick for locals or retirees that is one thing, but trying unloading 1.5 million dollar mansions in a market that will no longer support those prices. Even those with deep pockets aren’t going to step up in a downward cycle. 1.5 million houses used to be a small market, but now it seems like the average price of a move up home. Except the buyers haven’t realized that this is real money and real responsibility. Not play money. To quote G.T…”this won’t end well…”
Percentage of renters in Germany and Switzerland historically around 60%. Homeownership in Canada 70%. Following cultural norms even if the price is not right.
Tell those mechanic newbies to come to the 604 There are 5 luxury car brands currently building massive dealerships to compliment their record sales years. I guess it’s all those hipsters buying Mercedes slks and BMW 7 series Togo along with those million dollar homes they bought with a bank loan and 50000 down working at Starbucks. Yep it’s those virgins driving the market here for sure
#29 Mark: Don’t make the mistake of counting on the market to deliver returns of plus ‘X’ percent per annum. It goes up, it goes down. Some years you get a nice fat return, other years you may see an ugly drop in the value of your portfolio. IF the market was consistent, all those ads for RRSP’s where you would magically have a million plus at age 60/65/70 would now be coming true for all those who have been putting $ into their RRSP for the last 35 or more years. Some people will have a million plus, but lots won’t & not because they didn’t put the contribution in either.
Regarding the rich, there is another advantage they have that those who are not rich don’t get. Once your holdings grow to a certain amount – $250,000 is popular – you suddenly have access to investment funds that won’t let you in the door unless you have the minimum. These funds can be more lucrative & charge far less for managing those funds than funds the less well endowed can access. Financial institutions often waive or give preferred rates & charge lower fees to their more wealthy clients. Again, these rates & fees are NOT on offer to those whose financial assets are below a certain benchmark.
@30 Temporary Foreign P.M.
Very well put. You nicely cover the right wing strategy to demonize the middle class so it will participate in its own destruction. So far it is working.
I have no time for retards who want to destroy the public sector while average CEO pay soars into the stratosphere and no big shots have ever gone to jail for the GFC.
Firefighter/teacher/nurse etc.. bashers are the biggest dopes going.
Idiots with no knowledge of history or economics.
The problem is most people don’t differentiate amongst the rich.
There is nothing wrong with rich people that got that way through hard work and providing a good/service for their fellow man. Their richness reflects the value they have created in the world, and the amount they have helped their fellow man.
If you got rich through government granted privelege, rightfully so there should be anger.
But why do people direct their anger at the rich instead of the government? The government has created this environment in which they take 50% of our money through various taxes/regulations, and big business has to hire lobbyists to ask for some of it back.
The government shouldn’t be in the business of doling out favors. That is what has led to the record inequality we have today. The inequality is a result of the fact that not everyone can be conferred government privileges equally – some are more proficient than others at ‘gaming’ the system.
The people should be asking for MORE free market derived wealthy people to come here. They provide jobs, goods, and services. They help society. We need more of them. The Steve Jobs’ of the world. And they took big risks to do that. They deserve all the rewards, because they took all the risks.
There is a story in the vancouver sun today about internet giant alibaba is considering setting up an office in Vancouver to be neighbours with hootsuite, global relay Microsoft Facebook Ea games etc. UBC building a 127 million dollar foreign student only campus . So you better listen to this blog and sell cause this is the top for sure things are really bleak right now , I heard the cod fishing fleet isn’t going out this year.
I am getting my haircut before the interview.
The cutter asked me if I was from Vancouver. We started to yak, and it turned to Real Estate. He stood back and said, “so what do you think of the Market?”.
I told him I wouldn’t touch RE with a barge pole.
He smiled and said “I read a blog by this gentleman from Ontario, named Garth Turner and he has shown me the way.” “I agree”.
I started to crack up.
Small world.
You are making a dent, Mr. Turner. This kid was 35 or so – and he was on the right path, because of YOUR hard work.
Nice.
Glad I found your blog back in March – or could be standing 100th in this line lol:
Hi Ilona,
<>
The line up has already started for Minto West Side – and good news: I’m first in line.
Ok not me personally, but I hired a friend to hold my #1 spot in line for this Saturday’s (November 22) sales event – which is a first come, first served sales event.
I don’t normally do this sort of thing.
This is only something I would do for a project that I really believed in, something I knew was a risk-free investment and something that I would recommend to even my own family (my brother is buying a unit in this project – his first condo investment.)
And yes, I am buying one in the building myself.
Many units at Minto West Side are priced up to $50k below current market values and based on today’s rental rates will produce strong positive cash flow and huge ROI.
At these prices, this one is truly a no-brainer for investment.
Etc.
“So that’s the reason we have rich people”…einstien must of come up with this one,,,,,lets see,we create a system where the rich 1% hold 90% of the countrys wealth and continuously feed them with easy credit,printed money and a goosed stock market
At the same time we squeeze the middle class with their I asset strategy{realestate}mounting consumer debt and inflateing consumer prices right into the poorer house!
No wonder the worlds economies are deflateing
We need a healthy middle class ,that’s what traditionally kept this inflation sceme going
Wealth disparity will damn us all
So, that’s one reason we have rich people. They invest more than they save. They diversify. They’re unhouse-horny. They buy stuff that pays them to own it. They take less risk. They shun debt. And they know it’s not just how much you earn, but what you do with it.
yeah this is what I try to get across to people. I’m not a 1%er but in this respect I think like a 1%er. no doubt some 1%ers are evil but probably lots are not. 1%ers probably look at st. john n.b. as a desirable place to locate. its probably a nice place. its probably really friendly too. I’ve never been there. but by the sounds of it it is affordable. especially in a 1%er way.
Oh no! I’m part of the 1% (at least this year, fortunes vary like the weather).
I’ve done ok, and as such would often get asked by my family for investment tips and get rich tricks. I would happily respond with my 3 secrets to success:
1. Get a useful education.
2. Work hard and try stuff new (it was computers for me.)
3. Spend less than you earn. Especially with bonuses don’t get use to spending it.
The people asking normally hated this advice. They wanted a stock tip. Actually they always hated it, and hated me because they felt I wasn’t giving them the stock tip and the 3 pieces of advice I did give were useless to them.
This article does a 10 year comparison between stocks and real estate (2003 – 2013) non-leveraged. Which asset class wins? Stocks by a long even after the 2008 stock market meltdown and the strongest real estate gains in the past 30 years in Canada. The numbers are even better in favour of stocks in the US.
http://www.adrianspitters.com/familywealthadvisor/invest-real-estate-invest-stock-market/
Garth,
Why the canine obsession? To be politically correct, you should balance your pic selection with a variety of household pets, such as goldfish, gerbils etc.
Anyway, back on topic, I think you should come up with some sort of District 12 Hunger Games style secret salute or handshake so that all of the like-minded followers of this blog can secretly greet each other in public, without fear of repercussions from the great unwashed hordes…..
I know a young guy who bought a nice new house in Calgary this spring, I bet his stomach might slightly sink tomorrow morning when he hears that the first round of layoffs is starting right now. He’s a go getter and will be one of the last to go, but we’re all numbers here to the corporate bean counters in the city.
I can only imagine the unsettling feeling of looking at a chart 2 years from now knowing you bought right at that peak right there. Yep, gulp, that one
We live we learn some more than others
Great work on educating those willing to listen and learn Garth and all you blog dogs out there, always interesting topics of conversation here
PS Garth I meant to ask what do you think of BMO’s fund that buys Canadian banks and then sells covered calls? My new (thanks to your advice) financial guy thinks this is a good way to get some beta. I’m thinking worst case is the fund gets closed out of a run if banks go up but shouldn’t actually be too risky in terms of principle. Your thoughts? Most options expire worthless but the risk seems to me the fund gets closed out of a big upward move. Anyway it’s not a large position but this is how he recommended owning Canadian banks. Part of the diversification he is subjecting me to.
My opinion? Get a new financial guy. — Garth
Well start to get “RICH” by doing rich people stuff.
1. They save & INVEST. (yeah two ways, how novel!)
2. They don’t lease their cars. They buy used cars, and
keep them until they have no value left in them.
3. They use credit wisely! Like paying off the credit cards
every month. No interest!
4. They don’t keep student loans forever! They pay them
off quickly.
5. They do NOT buy a home until finances allow for it,
regardless of their age, and finance it for 15 yrs.
6. They don’t play LOTTO for their retirement plan.
I have never been “poor” but, I have been “broke” poor is a state of mind! As Henry Ford said, “Whether you can, or can’t, you’re probably right.” It’s up to you!
#57 SWL1976 on 11.19.14 at 10:05 pm
“I know a young guy who bought a nice new house in Calgary this spring, I bet his stomach might slightly sink tomorrow morning when he hears that the first round of layoffs is starting right now. He’s a go getter and will be one of the last to go, but we’re all numbers here to the corporate bean counters in the city.”
Are you referring to the City of Calgary???
“Mark – posted on the last blog asking if you know about fractional reserve banking? If you do how come you think a bank has to borrow every $ it lends out?”
Because they do. Its as simple as that. The part of the bank that takes borrows money, is just as important to the bank as the part that lends. One cannot exist without the other. Leverage isn’t conjured out of nowhere.
Always remember, Assets = Liabilities + Shareholders’ Equity.
Hey, did they find the weapons of mass destruction?
#58 nonplu$$$$ed
In another words he thinks Canadian banks are going to be flat or go down short term
“PS Garth I meant to ask what do you think of BMO’s fund that buys Canadian banks and then sells covered calls? My new (thanks to your advice) financial guy thinks this is a good way to get some beta. “
Why would a person want to give up the excellent characteristics of Canadian banks, including the ability to defer taxable capital gains over the long term, for a call option selling strategy which ensures that you’ll be paying more taxes and more embedded brokerage commissions over the long term?
I agree with Garth, stay away from those who recommend options strategies or derivatives products. Options, over the long term, destroy value as value has to be tied up in the low-return collateral that facilitates their marking to market.
Garth et al:
It sucks to be me today.
My 10 lb poodle has a golf ball size lump in the groin area. Took her to the vet…blood work, needle biopsy done. Lab did something with the biopsy…no results, have to re-due the tests. If it is a Lymphoma…and with the loss of weight and lack of desire to eat, I am afraid it is just a matter of time.
The thought of having to put my dog down is ripping me apart right now. Never, have I ever dreamed this was going to be this hard. Within a few weeks, I will have to make a decision.
It sucks to be me today.
Mike
6 Mr. Nihilist
“…..I figure that between the astonishing amount of cash given to cops, teachers, and other civil servants, and the tax burden on the remaining few of you employed in the private sector, something’s got to give….”
————————————————————-
I know a teacher. She earns less than 30k a year.
Yeah… They literally swim in cash – obscene.
“This article does a 10 year comparison between stocks and real estate (2003 – 2013) non-leveraged. Which asset class wins? Stocks by a long even after the 2008 stock market meltdown and the strongest real estate gains in the past 30 years in Canada. The numbers are even better in favour of stocks in the US.”
Doesn’t seem like a very rigorous “study”. And it ignores the imputed return on housing, ie: being able to live in it or rent it out for revenue. Yes, over the long term, diversified business ownership beats real estate hands-down, but comparing real estate with no on-going re-investment of retained earnings, versus equities with aggressive re-investment of retained earnings isn’t exactly a fair comparison for the time period cited. RE has clearly been the outperformer, and that’s before the whole question of leverage is considered.
@ #29 Mark
Right. If we only knew how to time the market, we can all end up “relatively rich” like Buffet.
/sarcasm
Investing has been surprisingly great since October 15. Although it is true the stock market beat the 7% year to year home price increase, to be fair, when you sell your house, the gain is NOT taxed. My capital gains are taxed 25%.
So, I must raise my hat to colleagues who bought houses even only 2 years ago. Mind you, if they sell in Toronto, they can’t buy in Toronto if they want to see a gain. It’s also true that after taxes, if I sell all my stock to buy my colleagues house, I’m not really ahead.
But there is something else that unfortunately for me, is on their side: Poloz. Now we hear hints that the Bank of Canada could raise the 2% inflation target rate. Higher inflation benefits borrowers.
Re taxes on cap gains, to pay 25% you must be making north of $150,000. Homeowners pay their tax up front (land transfer), every year (property tax) and when they sell (commission). — Garth
People make less money than you realize. Median family monthly net income is about $5000
http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/famil131a-eng.htm
Basic Needs:
Shelter 1300
Transportation 900
Food 700
Utilities 300
Clothing expense 300
Education 100
Health Care 200
Personal care 100
Total: $3900
It’s not possible to max the TFSA or fund an RRSP with the few hundreds leftover. The numbers are even worse for an individual.
looks like we need to increase Moosehead production big time.. If people in NB can’t carry 200 k houses at 2.99 then what will happen in the GTA ?
The anger turns against the 1% once the masses get wiped out. It’s simply too easy to blame an innocent than own up to ones mistakes. Ironic how many people who do not add to the tax base complain about those who do. Yes some of the rich pay very low effective tax rates as a lot of their income is rental and dividends but despite this the “rich” generate by far the greatest portion of gbd tax dollars that flow in.
Always a favourite whipping boy of corrupt politicians. The rich sims do not have anywhere enough money to confiscate to help pay for unearned goodies the masses want… Sorry. Politicians love to redirect the public anger against the wrong people. No amount of tax revenue will help these out of control idiots. No matter what, we will see interest expenses overtake the entire budget all over the developed world over the next 10 years or so. It’s lights out folks. Sorry no money to pay for interest and health care and pensions etc.
No amount of tax revenue will help
These promises were made by bought and paid for politicians on the back of the greatest housing debt bubble of all time.
JO
Income of 217k gets you in the 1% club
Now if you think of trading time for wages unatanable for most.
Now if you had a lemonade stand , opened for 8 hours a day 7 days a week, you made 1 dollar a minute.
Welcome the 1 %
My point is, sell and prosper, or work and starve.
Oops,
Previous video link did not work, this one is close enough.
http://www.youtube.com/watch?v=d1LteShCj_o
The takeaway……..Puerto Rico is giving tax incentives to be a foreign TFI ( temporary Foreign Investor ) with bill2022.
What a beautiful place to launder/shelter money. Best thing Canada could do…….but won’t.
eat the rich.
Mark I don’t know any other way to say this as it’s a core concept. Fractional reserve banking. If a bank lends $100 it only needs $10 in deposits. It has “created” $90. It has as an asset a piece of paper saying the borrower owes it $100 so it’s total “assets” are now $110 but they are now leveraged. The reserve requirement sets this ratio.
http://www.investopedia.com/terms/m/multipliereffect.asp
DEFINITION OF ‘MULTIPLIER EFFECT’
The expansion of a country’s money supply that results from banks being able to lend. The size of the multiplier effect depends on the percentage of deposits that banks are required to hold as reserves. In other words, it is money used to create more money and is calculated by dividing total bank deposits by the reserve requirement.
– Always remember, Assets = Liabilities + Shareholders’ Equity.
Yes but they put the $100 loan down as an asset after pulling $90 of it out of their ass. This is what makes a bank a bank. They can create money by being leveraged.
Try setting up a business that does this and stay leveraged. See who pays you a visit from the state. I’ll visit you in jail – I promise.
Part of the problem is the higher taxation of labor relative to capital. I believe as Warren Buffet and Bill Gates have pointed this out.
Alright bastards before I get chirped on my calculation error I did it in my head. But used a 10 hour day, but typed 8 hour day, t
he math was easier. Think it comes out to 218k
Now think of making 5 bucks a minute. Your a millionaire.
But like all the schooled your programming is to serve a master. Follow the herd, seek acceptance by your peers.
That’s why you are where you are.
All the zillionares I know, prefere to play god rather than worshiper.
Just an observation..
Mark
And in fact the above is just a simplification on the reality that even reserve ratios don’t constrain loan creation:
http://www.economonitor.com/dolanecon/2013/09/23/whatever-became-of-the-money-multiplier/
Banks are ultimately bound by capital constraints. But the $ in $ out is *way* off:
Mark: Banks don’t “print” money. They have to borrow it.
I’d contend that in a world of fractional reserve banking the above is not correct.
#65 Mike
Just a suggestion – take pooch out to the country side and let dog run like hell in the ditch as you drive slowly along. let her sniff country stuff. let her roll in country stuff. let her back in truck all wet and stinking and sit in the front seat. pooch should be covered in all sorts of floral material before being allowed back in vehicle. get it?
Re: #66 BG
First off, if they’re public sector school teachers, that’s for a 9 month year (2 months off in summer + plethora of holidays). They get full benefits and a guaranteed taxpayer bailout proof pension. So 30k in that context IS STILL GOOD.
That being said, I doubt it’s that little. I know someone who’s at 80k and he’s only been doing it for 3 years. Works 9 months or less a year. 8-3 days. Full benefits. Guaranteed taxpayer stolen pension. And to top it off, he works for a private school that ‘matches’ public sector in every regard (yet his pension is OMERS, yeah I don’t get it either). So he gets 3 square meals a day FREE, and whenever they take trips (which is pretty much every March break) he gets his trip paid for by the school as a ‘chaperone’.
The GRAFT is ridiculous. Especially given how dumb these kids are when they graduate. They can’t manage money AT ALL and they certainly don’t know any practical skills like carpentry etc. I stopped learning at about grade 10 everything after that is useless unless you plan on becoming an engineer or something (why else would you need calculus?).
Almost all of world knowledge is at your fingertips. When you want to learn about something, you don’t need anyone to tell you or force you or give you homework. You can go online! Regimented schooling is irrelevant and has been for some time beyond a certain age.
I do believe the Condo Market is doomed in Vancouver. Now Buying a condo in Van is like buying a new car, It will be never worth as much as the day you bought it. However I don’t see any massive correction coming for single lot detached housing, maybe just a flatline. Location, Location, Location. Immigrants don’t want to live in the sticks away from their respective cultural enclaves. HAM is real, come to Burnaby and check out my neighborhood or go to metrotown on a sunday and describe the predominant demographic make up to me.
Holy Crikey!!
BaBOOOMMMM!!!!!!
Nonperforming loans at Chinese banks jumped by the most since 2005 in the third quarter to 766.9 billion yuan ($125.3 billion), official statistics released earlier this month showed.
The People’s Bank of China has injected 769.5 billion yuan into its banking system over the past two months to support an economy growing at the slowest pace in more than a decade.
http://bloom.bg/1yreXuG
Re: #65 Miketheengineer
Check this out before pursuing surgery if there is a low chance of success:
https://canna-pet.com/
I know someone that did it and his dog had a tumor. Vets told him to put the dog down. After a couple weeks the dog was near perfect walking again, eating, tumor had near disappeared. Amazing results given the propaganda we are constantly fed about cannabinoids being harmful and having no medicinal uses.
Good luck let us know if you try it and what happens.
“My opinion? Get a new financial guy. — Garth”
Cheese and crackers it’s hard following your advice. I just got this guy!
#65 Mike the engineer:
So, so sorry to hear that. Your comment brought tears to my eyes- I hope you have good friends/family at this time. Perhaps it won’t be lymphoma? Just cherish every moment and surround yourself with good people. Give your little doggie a kiss from me. Take care.
New Brunswick is barreling towards a Federal bailout
#60 JSS
Are you referring to the City of Calgary???
——————————————————-
No. Why you nervous? Kidding. I am referring to one of the big sites in the north
#64 Mark
I don’t think there is a tax implication at this point since they are held in RRSP’s.
I also don’t understand the capital tie up idea. The point is to be long the bank stocks, and sell calls against them. The idea being while you are long the stocks you get dividends and all that but if you sell calls you also get the premium. The downside being if the price goes through the strike price you have to sell at the strike (or “get exercised”) but you are still up from whatever the price was when the options were sold.
This isn’t a short call strategy which would require a lot of margin. They own the underlying.
In the St John, Fredericton, Moncton corridor there is maybe 4,600 listings. That is absurd for November.
If you want to be in the top 1% of income-earners so Millennials can hate you and your divorce turns into hell on wheels, then make $217,000 a year. About two hundred and thirty thousand people qualify. So, 99% of Canadians don’t cut it.
———–
Why do people leave athletes out of the 1 percent list?
http://www.capgeek.com/mapleleafs/
What’s the unemployment rate in Saint John, New Brunswick?
#41 Not an economist…”who cares about the working class.” That is the problem.
#41 bdy sktrn…”quess where the biggest refinery is in Canada?” I say somewhere in the east coast…Nova Scotia or Ontario. From those two, Ontario because that is where most votes come from when it comes to election time. Or I can just google the answer.
#65 Mikethe engineer on “golf ball size lump in the groin area…” A close friend has a dog who has these huge lumps like the size of baseball. He is thirteen years old. The vet said that they are not cancerous, just leave them alone. My own dog had a couple of lumps, tested & negative. He lived till fifteen years old.
There is hope.
We love custom homes. Please visit our updated website.
http://www.lakewoodcustomhomes.ca
Please go away. — Garth
Googled it. The biggest refinery in Canada is Irving Oil Refinery in Saint John, New Brunswick. I will check out other provinces when I have more time. Just to see where the others are and do they have an impact on the economy, environment, etc.
” If a bank lends $100 it only needs $10 in deposits. It has “created” $90.”
Not true. Assuming a regulatory capital requirement of 10% for loans written (yes, very simplistic), a bank needs $10 in shareholders equity and must borrow $90, to make $100 worth of investment.
Of course, different asset classes (investments) have different capital requirements / risk weights. For instance, subprime mortgages require significantly more capital, than GoC bonds or CMHC insured subprime mortgages.
Your reading obviously is confusing deposits with bank reserves and bank equity/capital. Which is why you’re coming to some completely erroneous conclusions as to the ability of a chartered bank to “create” money.
As I said before and will say again, Assets = Liabilities + shareholders’ equity, and a bank liability is usually a deposit. ie: a GIC, a savings account, or the proceeds of a bond or commercial paper instrument issued by the bank to the debt markets.
“Imagine what might be coming.” – Hon.GT
#IfI’veToldThemOnce… #I’veToldThemAThousandTimes…
http://youtu.be/5485fd0CtKw
[NoteToGT: The UberRich never expect the PetGorillas to finesse the WallSafes… The worst of it is, they’re so often empty!]
Check out how many “power of sales” there are in GTA right now – 700 +.
Odd considering res mtg ‘delinquencies’ are at 0.29%.
In my experience at an FI, POA often happens we’ll before delinquency.
“I don’t think there is a tax implication at this point since they are held in RRSP’s.”
Fair enough. Most of my personal accounts are fully taxable, so I am always thinking of tax consequences.
I also don’t understand the capital tie up idea. The point is to be long the bank stocks, and sell calls against them.
The options themselves are, at various points in trading, going to have a mark to market profit or loss associated with them. If there is a mark to market loss, the broker will require the fund to post collateral in satisfaction of the mark to market loss. The requirement to post collateral places such collateral at risk with a counterparty without a meaningful return.
In a nutshell, its an attempt at financial alchemy, and the risk/return ratio of such an investment will not be fundamentally altered in a way favourable to the investor. The Sharpe Ratio will end up being poorer over the long term than would otherwise be achievable just owning the stocks without the fancy options clap-trap. A bunch of fees will be charged to boot for essentially managing a mundane portfolio of Canadian bank stocks. Much better off to go with a sort of balanced portfolio frequently described here by Garth.
“The downside being if the price goes through the strike price you have to sell at the strike (or “get exercised”) but you are still up from whatever the price was when the options were sold.”
Its a little more complicated than that as options can be prematurely exercised, particularly around dividend dates.
#48 Cato the Elder on 11.19.14 at 9:10 pm
=========================
You make some good posts but this one I disagree with.
People are correct to dislike some segments of the rich and more than public servants. Public servants may be way overpaid, but they do not control the price of essentials like perhaps Mr. Galen Weston would, (i.e. by controlling distribution).
Ofcourse not all the super rich become wealthy by just ownership and control of vital resources and price squeezes……………but some certainly do, with help of their govt. stooges.
#17 TEMPORARY® Foreign Prime Minister on 11.19.14 at 7:30 pm
#6 Mr. Nihilist on 11.19.14 at 6:36 pm
“…..I figure that between the astonishing amount of cash given to cops, teachers, and other civil servants, and the tax burden on the remaining few of you employed in the private sector, something’s got to give….”
=========================
Remember the last time when cops, teachers, nurses, firefighters, etc. crashed the entire world’s financial system, wiping out trillions in middle class equity, while taking millions in executive bonuses and bank bailouts?
Me neither.
+++++++++++++++++++++++++++++++
Rome – olden days and today
Spain – olden days and today
Greece – olden days and today
France – olden days and today
This list is close to the whole world today actually.
As usual “the less than 10% of public servants” are always cherry picked as the “majority” of Civil Servants which they are not.
But……quite correctly……its GOVERNMENT which has destroyed more people and societies than war ever has. Read some history Mr Prime Minister.
An average guy would like a $500k home, but buys a $250k home to avoid financing. That $500k home is enough for a rich guy, but the rich guy buys a million-dollar home; then puts his remaining two million dollars into stocks. The rich guy has less portion of his wealth in RE, but owns four times more RE than the average guy, and twice as much as he needs to. Is the rich guy smarter? I don’t know, but the average guy can’t follow in the footsteps of the rich guy, because the average guy’s options are more limited.
#55 The Financial Hub
That 30-year comparison of home ownership and stocks doesn’t include the cost of renting; i.e. if you choose to own stocks instead of home, you must factor in the cost of renting. It is possible to be better off owning home than stocks if you have high tax rate and high rent, and your return on investment is mediocre (less than 6%). Furthermore, investing in the stock market through thick and thin is easier said than done. A lot of folks gave up on the market at some point.
If there were more of us I would say “Eat The Rich”…..like we hollered in the 60’s. But…that’s the down side of being stoned all the time….you forget how to count.
Even if the Millenials were to ‘eat the rich’…they’d still be awful hungry…..cause there aren’t enough of us to go around. Meanwhile it’s a kick butt day in Thailand….and when you’re freezing in your Toronto hi rise and can’t afford heat because the politicians just raised taxes on power…again… you’ll hate the people who live well….and eventually want to do something about it. That’s how revolutions start. Canada is not immune.
I predicted social upheaval many years ago…this has been a slow train coming. Frankly I think the first in line to be taken down and eaten are the big public service unions and the perks offered to so few by so many.
We still have social taboo’s against consuming our parents…so pensions will be safe….unless you’re a civil servant…..all bets are off when the Millenials run for office.
#59 Retired Boomer – WI on 11.19.14 at 10:08 pm
Well start to get “RICH” by doing rich people stuff.
+++++++++++++++++++++++++++++++++
Mr Old and Retired….
I have been reading your “Old” diatribes for a while now. Guess what? Their old…..
Back in the “olden days”…..
We were not TAXED to death.
Women could stay home.
Stocks were not “volatile”.
Gas was not $6 a gallon.
Health care “was free” – list of unfree stuff is a mile long
School was free
Govt services (like national parks) were free.
The “cheaper in the olden days” goes on.
Now EVERYTHING IS EXPENSIVE AND WE ARE TAXED TO DEATH.
So……..if you want to talk about 50 years ago fine. But PLEASE stop comparing it today because it aint even close.
#47 GeorgeSoonToBeRetired on 11.19.14 at 8:59 pm
@30 Temporary Foreign P.M.
Very well put. You nicely cover the right wing strategy to demonize the middle class so it will participate in its own destruction. So far it is working.
I have no time for retards who want to destroy the public sector while average CEO pay soars into the stratosphere and no big shots have ever gone to jail for the GFC.
Firefighter/teacher/nurse etc.. bashers are the biggest dopes going.
Idiots with no knowledge of history or economics.
+++++++++++++++++++++++++++++++++
Speak for yourself?
#66 BG on 11.19.14 at 10:21 pm
6 Mr. Nihilist
“…..I figure that between the astonishing amount of cash given to cops, teachers, and other civil servants, and the tax burden on the remaining few of you employed in the private sector, something’s got to give….”
————————————————————-
I know a teacher. She earns less than 30k a year.
Yeah… They literally swim in cash – obscene.
——————————————————————
And I know at least 10 high school teachers of Math and Geography ect, that “earn” $95,000 per year (actually every 9 months).
What’s your point?
#90 Make Sense?
I’m sure they do, so the average of the top 1% probably varies from the median as well as it does for the 99%.
Remember your fractals from math. The 100% has a 1%, and that 1% has another 1% (0.01% I think), and so on. Yes Bill Gates is included in the top 1% so many of them are earning much less than the average.
Also with hockey remember the average career for an NHL player is 3 years, and most of those guys make $750,000 a year. Nice cash, but 3 x 750,000 minus taxes does not a lifetime career make. Dentists do better over the long haul.
Most of your AA or AAA players end up broke, their parents having squandered the college money on NHL dreams, then they never got drafted or played a few years in the minors, then they had nothing.
Which is why my kid plays house. I like him playing hockey, it’s just as fun, but he doesn’t need the $800 skates and $4000 a year in “training”. Plus I don’t need to drive all over the damn province for games. He played rep last year and an away game was an all day adventure. Must have spent an additional $3000 on gas. For what? So he could have a 1/10,000 chance of earning $750,000 for 3 years before he is permanently disabled due to a concussion? How about dentist school?
Oh and one more sarcastic comment about hockey or sports in general (or music) as a career plan. Lotto 649 mints a new millionaire every week in every province that has it. Hockey does not. Buy your kids lotto tickets, better odds. (And I jest, I hardly ever play the lotto because I know who the patsy is. I’ll go in on office pools to be social.)
And then when you count how much work and dedication it takes to make it into top level hockey, well, why not engineering? They make good money too and can have a day off once in a while.
Oh and so to square those comments up, a 10 year engineer will make about $140,000 a year for the rest of his life unless he moves into management (in which case it goes up) and there is very little risk of a concussion unless he plays hockey on the weekend. Dentists are probably north of $200,000/y but my number isn’t as good here.
#54 So true. I have had that same conversation a few times.
Garth, as you know all too well there are smart people and idiots. Nature left about 2/3 belonging to the later. This oscillates of course and in the decades we are living in idiots make up a huge majority, say 7/8.
In order to recede back to 2/3 a kick in the butt is de rigueur.
That’s why such things as : lost wars, depressions, personal bankruptcies, etc do indeed exist. Brings the herd to reality.
Rejoice for there is hope.
Mr Market gives (even when manipulated) what one deserves.
market manipulation example :) U think ? Gold In My Sacks and JP Morgan
http://www.cnbc.com/id/102201021
..in the end..id doesn’t matter. market round up the bets.
Check out iron ore prices.
Australia is heading into some choppy waters.
Budget deficit gonna blow out.
Mining layoffs.
Unemployment increase.
Consumer spending decrease.
Housing price pressure to follow.
No amount of rate cuts will save the good ship Aussie.
http://www.indexmundi.com/commodities/?commodity=iron-ore&months=360
Hi Garth
Hear that you Canadian guys are getting some early polar vortex. Doesn’t look good for a happy winter!
The reason that I am into owning things rather than a higher income is the UK tax system. Earn £100,000 a year and you are creamed with income tax, flip a house and for an adult couple £20,000 or $36,000 a year of gain is tax free via capital gain exemptions. Add some adult kids onto the title and you are laughing.
BBC show on the appreciation of assets due to the growth in BRIC wealth. Example given was a £150,000 investment grade loose diamond purchased 10 years ago and recently sold for £10 million at auction. You can indeed make money on things, especially if the Chinese or Russians want them, and in a tax efficient way.
The Global wealthy are not paying massive national income taxes. We are.
Income is taxed fully, wealth is not – at least not yet. They do tax total wealth each year in France so eventually we all will get that development as globally govts become desperate for money, any money to pay debts and benefits.
Saving works now as inflation is non-existent, so unlike normal times your bank balance stays even with your living costs.
Financial times are changing fast and what worked 10 years ago, doesn’t work today. Each country is different. The key is to be ahead of the intended national tax curve.
That said I have to arrange to die back in Canada due to UK inheritance tax, which has to be the unfairest one of all, where your previously taxed, assets and savings get taxed again so the govt can spend it for you rather than your kids.
#104 Fed-up
“And I know at least 10 high school teachers of Math and Geography ect, that “earn” $95,000 per year (actually every 9 months).”
this is simply untrue.
go ahead and bash public school teachers, but let’s be honest about it?
Who would have guessed?
This speaks for itself, huh Garth..
http://www.nature.com/nature/journal/vaop/ncurrent/full/nature13977.html
People hate banks. That’s news? — Garth
As you know, the gap between the rich and the rest is growing faster than yeast. The Occupy kids were exactly right when they flooded onto Wall Street.
Garth, are you sure about that? Recent numbers from Stats Can show that the 1%’s share of income has actually been dropping, and is currently at a 6-year low.
“The top 1% of Canadian earners saw their share of the country’s overall income tumble to a six-year low in 2012, the agency said in a report Tuesday.
The wealthiest Canadians, the data show, held 10.3% of total earnings, a drop from a peak of 12.1% in 2006.”
They do concede that this situation is not mirrored in the US, where the gap does indeed continue to widen, but is it possible that the popular rhetoric of the “rich getting richer” isn’t actually based in reality, at least in recent history?
Do not confuse income and assets. — Garth
Mark – ok I think I see where we diverge. You think I’m saying banks can simply create money at will irrespective of the other side. Obviously they don’t just reel off $2MM and say “hey we made $2MM profit guys!”. Clearly nobody is arguing this and it’s odd if you are assuming this line.
What banks can do is create money. Yes then then lend it out against an “asset” (usually housing). When housing is rising because banks will lend against housing because housing is rising (positive feedback loop) then banks are indeed creating money. They are lending more into the economy which is instantly available to the seller and paid back by the buyer over 25 years.
The state cannot stem this money creation.
Again I say that banks create money. This printing of money into the economy is a vital part of money creation. They are essentially doing it without any value being added as most housing stock is essentially the same as before. Only now it costs more. This is inflationary (as we have seen as the young have to work longer for the same pile of bricks).
Mark – so again I’d say this is utterly incorrect:
Mark: Banks don’t “print” money. They have to borrow it.
Fractional reserve banking means they lend first then mark the loan as an asset on the other side. Capital constraints stop this going to the moon.
Banks do not borrow money to loan
It’s all because of the meat, meat, meat… well the foreign HAM actually, according to CIBC:
https://ca.news.yahoo.com/more-condos-needed-keep-immigrant-154626882.html
Oh to be old and raised to trust authority! PO&GG.
All this misty eyed talk over ‘freedoms’ and OurWayofLife [sic]on this weblog lately.
The pyramid is compensating this guy the most over all others in Canada, he has the highest paycheque of his ilk. This CouldNeverHappenHere.
I have seen the enmity:
“Fenton ordered officers to box in protesters in front of a downtown hotel. More than 260 people were arrested and taken to a makeshift prisoner processing centre, which came under severe criticism for its deplorable conditions.”
“”Our position is that it was an egregious abuse of power under the guise of public order policing. It was excessive, without any lawful authority and did not consider what actual circumstances on the ground called for.”
Fenton also repeatedly referred to the protesters as “terrorists” over the summit weekend, Lei added.”
http://www.cp24.com/news/disciplinary-hearing-begins-for-senior-cop-accused-of-misconduct-in-g20-detentions-1.2109221
@#49 Van right?
“So you better listen to this blog and sell cause this is the top for sure things are really bleak right now , I heard the cod fishing fleet isn’t going out this year….”
+++++++++++++++++++++++++++++++++++
There’s a cod fishing “fleet”? Where? Iceland?
“Do not confuse income and assets.” – Garth
I’m not. I made sure we were talking about the same thing. The very first line of this blog post makes it clear which kind of “1%” you’re talking about:
“If you want to be in the top 1% of income-earners …then make $217,000 a year.”
You’re clearly talking about income. And so is the StatsCan report.
@Ben (#118):
Fractional reserve banking means they lend first then mark the loan as an asset on the other side. Capital constraints stop this going to the moon.
Banks do not borrow money to loan
How does this misconception continue to persist? Ben, quite simply, you are wrong.
Central banks (there’s only one in Canada) can create money. Retail banks (RBC, CIBC, etc.) cannot. You do not understand what “fractional reserve banking” means.
Retail banks cannot lend money they do not have in their vault. They cannot simply tap a few keys on a computer and create money out of thin air. That’s just not how it works. They must first collect deposits from other customers, or borrow money from someone else (the Central bank, other banks, investors in the form of a GIC, whatever). Banks cannot lend money they do not already have.
Fractional reserve banking just means that if you deposit $1,000 into your savings account (earning 0.1%), the bank can immediately turn around and lend it to someone else (at 2.99%), while still telling you you have $1,000 in your account.
Kevin:
You are right that only the Bank of Canada can create money. But the commercial banks are not creating money, they are creating credit. And credit is part of the usable money supply.
From the BOC Wikipedia entry:
It is important to distinguish between the right to “issue money,” which is the right of the Bank of Canada, and the ability to “create credit,” which, through legislation and regulation enacted by Parliament, is largely done by commercial banks through the issuance of loans. While all of Canada’s money is created by the government through deficit spending, if “money” is thought of as the combination of issued money and bank-created credit, then presently, the Bank of Canada “issues” less than 5% of Canada’s money, with the remainder (95%) being “created” by commercial banks through the process of fractional-reserve banking.[19]
People hate banks. That’s news? — Garth
————————————————————-
***Of course this could not possible apply to Canada. We are special here. When Benny Tal and the other bank sockpuppets tell us real estate is just fine we should trust them.
The best lines in the scientific abstract:
“This effect is specific to bank employees because control experiments with employees from other industries and with students show that they do not become more dishonest when their professional identity or bank-related items are rendered salient. Our results thus suggest that the prevailing business culture in the banking industry weakens and undermines the honesty norm”
http://www.nature.com/nature/journal/vaop/ncurrent/full/nature13977.html
“Re taxes on cap gains, to pay 25% you must be making north of $150,000. Homeowners pay their tax up front (land transfer), every year (property tax) and when they sell (commission). — Garth”
I don’t make that much and didn’t realize this.
You know, when even I, who has not seen value in buying a house, for 5 years, start questioning his own reasoning, and that maybe, just maybe, house prices will keep raging ahead at 7% a year (in Toronto)… that might be a hard indicator we’re forming a top. Like in 1999, when my coworkers at Microsoft where buying cottages thinking their internet stocks could keep going up.
#114 – Saskatoon
Teacher’s salaries are public document. Why argue about this:
http://www.wta.mb.ca/ca_9.html
In Winnipeg a teacher with two bachelor degrees is a “Class 6”. After 9 years they earn $88.5K. There is no differentiation for the grade or subject they teach.
The argument over if this is a fair salary depends on how you value education in society. While you’re at your fact checking, Google “City of Winnipeg salary disclosure” to see what Firefighter and Police Officers earn, because I’m sure that will come up next.
No teacher in Manitoba earns $30K. Teacher’s Aides make in the $25K.
A wealth tax, similar to France’s ISF (Impot de Solidarité sur la Fortune), could certainly alleviate the almost exponentially increasing economic discrepancies between the haves and have-nots, although I’m afraid IT would most likely be considered an outright heresy in the Anglo-Saxon intellectual mindset. Just sayin’ — Christian
High-income earners already hand over half their take. That’s enough. — Garth
Rich folks don’t buy cars, at least not like this.
http://www.theglobeandmail.com/report-on-business/long-term-car-loans-a-worrying-trend-for-auto-and-financing-industry/article21662398/
@Duane (#124)
I understand. But the bank cannot lend money it does not already have. The “creation” part comes from them lending money out of their vault, while still claiming it’s in their vault. But they first must have the money to lend.
You put $1,000 in the bank, and the bank turns around and lends it to me. The “money creation” part comes from the fact that I’m walking around with $1,000 cash, and you’re being told you still have $1,000 in your bank account. So economically, there’s $2,000 circulating in the system, but only $1,000 of it actually exists. Now, if I take that $1,000 that I borrowed and put it in the bank (or more realistically, buy goods and services with it, and they put it in their banks), then the cycle repeats, and the money is lent out again, while all those people still believe they have that money in their accounts. But at the root, there is only $1,000 in actual money that began the whole process. However, none of those banks can lend out money until someone else has already deposited it (or they borrow it from somewhere else).
The fact remains, banks cannot just make up money out of thin air, and lend it to people. Because the people they lend it to will take it and try to spend it somewhere. So it must exist as actual money when it leaves the bank.
Say you want to buy a house. You go to a bank and take out a $400,000 mortgage. You give that money to the builder. Then the builder tries to buy supplies and pay his trades with that money. If it was just a number made up in a computer in the bank, then at this point, the whole show breaks down.
I will buy a case of Moosehead this evening. “Union made in St. John,” the best among many crappy beer slogans.
#77 Smoking Man on 11.19.14 at 11:10 pm
Alright bastards before I get chirped on my calculation error I did it in my head. But used a 10 hour day, but typed 8 hour day, t
he math was easier. Think it comes out to 218k
Now think of making 5 bucks a minute. Your a millionaire.
But like all the schooled your programming is to serve a master. Follow the herd, seek acceptance by your peers.
That’s why you are where you are.
All the zillionares I know, prefere to play god rather than worshiper.
Just an observation..
_____________________________________________
If I recall hearing this morning we are now up to 101 Billionaires in Canada. I believe we added around 17 or so last year.
Number of Zillionaires = 0
Hows my math holding up?
The Thomsons still heading the top of the list!
You may have a bit of a way to go Smoking Man but I am sure you will get there.
#113 jane24 on 11.20.14 at 4:48 am
Isn’t that why most smart Britons leave mother England in the first place? They tax you to death and tax you when your dead. Thanks Elizabeth and gang!
http://www.youtube.com/watch?v=Oyu5sFzWLk8
103# REALISTVSEXTREMIST
Yeah baby, they ARE old! I am 63. Fossil material you see.
I am also an American, not Canadian. Some Differences ARE obvious, and some history is in order:
WE are less taxed to death than ever before here. Top tax rate today including all ancillary income taxes 39.8% It used to be as high as 92% and 70% during most of my working life.
Women “could” never stay home during my working life 1970-2011. What are you smoking?
Stocks have always been “volatile” silly boy. 73-74 lost 50% Flat high high inflation until the early 80’s. Do you remember inflation raging at 10-12% a year? I do.
Gas doubled from .35 a gallon to .70 a gallon in 1973. We had wage & price controls then You wanted gas, it came from your beer money! Today gas here is $2.89 car gets 38 mpg. Back then .70 car got 17 maybe. Wages vs prices similar ratio.
Healthcare was NEVER FREE!! Nor should it be. Here I pay (in retirement) $440 a month beginning in Jan 15, plus $68 monthly for dental, no eye coverage. I pay $1500 annual deductible first.
School was NEVER FREE. High School had fees and college was very pricey, explains why I didn’t finish college, what do they really know anyway?
If I were to get out my old tax statements from 1970’s you will find the effective TAX RATE PAID was higher in the early years, that trended down side 2002. There are better ways to shelter income.
You may feel you are getting screwed, but one must learn to shelter things from the Tax Man. Garth’s advice can really help Canadians, as well as American’s since we have rather similar laws, except no GST here.
I might live another 20 years, or 20 minutes. I get my social security check, and a small pension. I also CAN draw on a healthy portfolio made between 3o years old and retirement at 60. Why 60? Because I could!! I could afford it, only because I SAVED & INVESTED dimes and dollars every week I could.
It still works, did you ever read Mr. Money Mustache’s blog site? How about Dave Ramsey? Two different perspectives and “contemporary” for those with their vision stuck in their poop-chutes. Good Luck, but really nothing has changed, except the names to protect the innocent.
@ #106 nonplused
Watch out, you are making way too much sense here ;)
BTW, I looked up the Westborough Church documentary (I believed you recommended it?). Very insightful.
Thank you.
@ Cato the Elder
Here’s what Daniel Kahneman would probably think about you:
“He is a hedgehog. He has a theory that explains everything, and it gives him the illusion that he understands the world”
You might also want to review this:
http://en.wikipedia.org/wiki/Na%C3%AFve_realism_(psychology)
Cato, I don’t want to give the impression that I’m picking on you as the above will most likely be relevant to other regular posters as well. They probably know who they are.
Best,
HD
Re: #124 Duane
Look, in the end, all that matters is that a private bank (Bank of Canada) CREATES our money out of thin air. It is loaned, at interest, to either our own government in the form of bonds or loaned to member banks (TD, RBC, etc.).
If you think about this for a moment, you realize it is impossible to eliminate the debt. From the moment the first money was issued through this sinister scheme, it had interest attached. How do you pay back principle+interest when all you can even get out of the system is the principle? You can’t. Even if all the debt was paid off (which would mean there’s no more money!), the interest would still remain.
We are debt slaves, as is most of the world operating under this debt ponzi scheme. This is the reason we have been getting poorer and the middle class shrinking since 1970 and the end of Bretton Woods. We are being ‘captured’ by the banking cartel.
123 Kevin & 124 Duane (and a myriad of times – Mark)
Duane – you have it right. Just forgot that the bank also has to take a reserve to preserve liquidity and also forms a natural cap to the extent that this process can add credit to the system.
Like Mark has pointed out, assets = liabilities + shareholders equity. The central bank deposits $100 into RBC. RBC has a liability of $100 to the central bank and $100 available of which some must be held as a reserve to maintain liquidity. So, for example if the reserve requirement was 10%, the bank would have to keep $10 as a reserve asset and it could issue a loan to a consumer for $90. After that money gets spent on dinner and deposited into BMO (restaurants business account), BMO can then lend out $81 (90% of the deposit) and put $9 towards its reserves. As you can see the reserve requirement forces a limit on the additional credit created. But as Duane points out it does create additional credit in the system – reserves create additional credit in the system.
Remember – deposits from us to the banks are considered a liability for them. The loans they make and the reserves they keep are their assets.
Re: #123 Kevin
You’re wrong. That’s exactly how fractional reserve banking works. You think the retail banks have 500 000$ in deposits every time they give a mortgage? Give me a break. The money gets created out of thin air. The get the ‘money’ from the Bank of Canada at interest (where it is magically created) and then they loan it out. The mechanism doesn’t matter as much as the fact that it does happen. The deposit ratio etc. doesn’t matter – they have full discretion as to how much of this criminal activity they want to engage in.
Oh, and by the way, fractional reserve banking is FRAUDULENT.
No other commodity holding company is allowed to loan out more than they have on hand. A grain holder can’t loan out 90% of their grain and yet purport to their clients that they still have their grain on hand.
Yet, our entire banking system is allowed to get away with it. This shows the kind of power they have. They can fraudulently state their reserves, and if there is a ‘bank run’, which is essentially their customers catching onto this fraud, the taxpayers will bail them out!
Anyone that doesn’t think we are living under a pseudo-serfdom under the banks isn’t paying attention.
“Oh and so to square those comments up, a 10 year engineer will make about $140,000 a year for the rest of his life unless he moves into management”
Try closer to $100k/year actually. And most engineers are part of management eventually, and don’t make much over $140k even at the pinnacle of their careers. A bit more if they’re involved in deeply cyclical industries or have a very advanced qualification, but there can be a lot of unemployment/underemployment associated with such.
After all is said and done, the $100k-$120k/year that the firefighters and cops are paid, plus almost iron-clad job security, blows away engineering compensation.
#80 Cato the Elder on 11.19.14 at 11:27 pm…
While your third paragraph statements about the lack of practical knowledge given students is certainly true, your second paragraph isn’t even close.
In all my years I haven’t met a single teacher that worked 8-3 or made the salary you suggest.
Chaperones on field trips volunteered, and covered their own expenses.
One of my DILs is a teacher in a private school and they don’t come close to matching the pension, benefits or salary of the public school teachers.
Sounds like you didn’t have a great experience during your school years – neither did I – but the teachers weren’t to blame, I was!
“119 fancy_pants on 11.20.14 at 9:15 am
It’s all because of the meat, meat, meat… well the foreign HAM actually, according to CIBC:
“
“HAM” is the fantasy of foreigners, particularly Asians, bringing money to Canada, to invest in housing. No stats actually point to this happening, which would have a de-leveraging effect. What the stats do clearly point to is people, particularly in the GTA and GVR, taking out huge amounts of subprime credit to purchase housing units.
Duane – thanks – somebody with a brain. Christ it’s unbelievable. Do I really have to state that the bank aren’t actually printing Canadian notes in a digital age?
They create “money”. They tap some numbers into a keyboard, hit return, agree the loan then match the other side with the “asset” that is now said to be worth X dollars because they just loaned someone X dollars who used it to buy the asset.
Cash makes up a fraction of the total money supply. It’s called M0: http://www.investopedia.com/terms/m/m0.asp
Nobody cares about this. Forget it. M2 is what forms our world.
Here it is in a very simple format from your own bank of Canada:
http://www.bankofcanada.ca/wp-content/uploads/2010/11/canada_money_supply.pdf
Who state that they can’t directly increase the money supply as they only control bank notes which are a small portion of all available “money”.
Once someone “buys” a house by renting money from a bank that credit is credited to the seller and at this point it becomes indistinguishable from money in a fiat system.
Oh and guess what “fiat” means in Latin:
> It shall be
That I think also gives you a good clue that it’s created from nothing. There is no gold standard kids.
Re: #99 Hawk
This is a misconception. Galen Weston’s ‘control’ of distribution channels has allowed him to LOWER prices and INCREASE the quality of his product. That’s why people shop there.
His ‘control’ BENEFITS you!
Here is where the problems arise: if Galen Weston lobbied the government and had them pass laws that PROHIBITED or made it more expensive for his competitors to compete with him in this space.
This would be DETRIMENTAL to you in the form of less choice and higher prices!
Government LIMITS competition. Many wealthy people would rather spend money lobbying the government to exert FORCE against their competitors than innovate. This hurts consumers. Why do you think we only have 5 big banks and 4 big telecoms? That isn’t natural. It’s a result of ‘regulatory capture’ whereby the big players price out their competition with expensive legislation.
This is why governments should not be in the business of ‘regulating’ or ‘subsidizing’ or ‘giving tax credits’ or anything like that. Government should be IMPARTIAL and apply laws only where INVOLUNTARY non-consensual actions have taken place. No prior restraint. If fraud or theft or violence has occurred, they can police those actions.
Big interventionist government is the problem. Limited government is the solution.
To #30 (TEMPORARY® Foreign Prime Minister), #47(GeorgeSoonToBeRetired – how old are you if not a secret), #99 (HAWK) and #114 (saskatoon)
Cry me a river about the poor “public servants”:
“The new upper class” – http://www.macleans.ca/economy/business/the-new-upper-class/
“The sick days scam” – http://www.macleans.ca/politics/the-sick-day-scam/
“Public Service Retirements: Trends in the New Millennium” – http://www.statcan.gc.ca/pub/11-621-m/11-621-m2008068-eng.htm
“Teachers’ Pension Plan CEO offers ‘dose of reality” – http://business.financialpost.com/2012/05/07/teachers-pension-plan-ceo-offers-dose-of-reality/
But self entitled behavior is typical of our public service workers and so this isn’t at all surprising. They were sheltered from competition because they worked for the public service. They were sheltered from the realities of the economy and of the changing world because they were able to shift those risks to the taxpayers. They were sheltered from the realities of job performance because they gained tenure. All of these things have nothing to do with any success on their part – it is a wholesale transfer of wealth from the productive economy to the entitlement economy. We have created a world in which working for the public service and removing one’s self from the productive economy is one of the most lucrative decisions one might make. This isn’t sustainable and unfortunately it will be our kids and grandkids that will be left with the bill.
=================================
And now some CRA numbers from the latest available 2011 tax year (Garth is using 2012 tax year but they are not public yet…):
Total numbers of tax returns filled – 26,333,940
Total numbers of taxable tax returns – 17,429,010
TR with income of more than $250k – 212,010 and 440 non-taxable
TR with income of $150k-$250k – 413,720 and 1,180 non-taxable
TR with income of $100k-$150k – 1,105,540 and 2,430 non-taxable
TR with income above 50k – 7,369,160
The last number is telling a lot because as of Dec.2011 according to CANSIM table 282-0011 they were also 3,579,500 public servants and they are almost all in the 50k+ income category.
#66
I know a teacher, makes $30k a year.
Well, I was teacher with th Toronto Catholic Board from 1990-2012. A supply teacher, the one who was there to make sure your kids were safe when their regular teacher was sick, attending her own sick children or parents, having a dr.’s appointment. The one your kids went “Yesssss” when they spied me in the morning.
My monthly pension is now $335.00 a month with CPP!!!! This is the reality facing most supply teachers who want to work more days or full time. 80% of new graduates of teacher’s college are not employed full time one year after graduation. Most school boards are not accepting new applications for the supply teaching list! If you are willing to relocate (not tied down with a house!!!!!) you stand a better chance of finding full time employment.
The positive: boards have a huge pool of excellent candidates to choose from – ie choose the best teachers for your kids. Are they doing this – I only no, they look for young out of school graduates that can be molded and will not rock the boat.
And just fyi, my pension is just play money for us now, and we (fortunately) are not eating cat food. But for many of these teachers and graduates, this will be the reality.
Duane – thanks. Do I really have to state that the bank aren’t actually printing Canadian notes in a digital age?
They create “money”. They tap some numbers into a keyboard, hit return, agree the loan then match the other side with the “asset” that is now said to be worth X dollars because they just loaned someone X dollars who used it to buy the asset. It’s a self-fulfilling prophecy.
Cash makes up a fraction of the total money supply. It’s called M0: http://www.investopedia.com/terms/m/m0.asp
Nobody cares about this. Forget it. M2 is what forms our world.
Here it is in a very simple format from your own bank of Canada:
http://www.bankofcanada.ca/wp-content/uploads/2010/11/canada_money_supply.pdf
Who state that they can’t directly increase the money supply as they only control bank notes which are a small portion of all available “money”.
Once someone “buys” a house by renting money from a bank that credit is credited to the seller and at this point it becomes indistinguishable from money in a fiat system.
Oh and guess what “fiat” means in Latin:
> It shall be
That I think also gives you a good clue that it’s created from nothing. There is no gold standard kids.
ps Garth this comment was deleted – sure hope that was a slip of the mouse as I don’t think there is anything too contentious in here plus it’s critical to understanding modern fiat money post gold-standard.
Defenders of the public service like to complain about the vilification of teachers, cops, and firefighters.
One could argue that cops and firefighters deserve to retire at 55 with full pensions.
But for every teacher, cop, and firefighter, there are half a dozen office drones doing nothing but watching the clock and counting down the days till retirement.
Quoting CMHC:
“Despite moderation in the pace of Canadian
house price growth, the Canadian price level
continued to significantly exceed the level of
U.S. house prices in 2013, even when differences
in exchange rates and inflation between the two
countries are taken into account. This Canadian
“premium” could be a cause for concern, because
it may indicate that house prices in Canada are
overvalued. CMHC is analyzing these differences,
in order to understand the reasons for the price
differential, be they structural, temporary or
reflective of relative overvaluation in Canada”
I wonder if they are going to figure out the reasons for the price differential?
Suggesting Dollarama kaputs when it hits 55-56 level. Fully valued. Post stock split.
@Sheane Wallace, first post:
Really? I know a guy living in Toronto (yes, Toronto, near Yonge and St. Clair) who for the last 22 years made only about 30 grand salary per year but still managed to accumulate a net worth of 1 million. I’m an idiot who failed a college financial course but could EASILY accumulate 1 million net worth if I made 217 grand per year. It’s not just what you make, but how much you save and invest, and where you invest. Have a look at http://www.mrmoneymustache.com or http://www.stopworking.ca if you don’t believe me.
@crowdedelevatorfartz, post #31 and not 1st, post #13:
You’re quite right, I couldn’t have worded it better. Because I have no interest in sports or celebrity “culture” (I really don’t care what Justin Bieber, aka the Biebs, is doing these days) I have been many times called names like nerd or geek. I am far more interested in world events, investing, and related topics. While not in that top 1% of net worth I’ve done not bad by saving some of what I make and taking advantage of the investment buying opportunities we’ve had, especially in the last 6 years. Yes, I’m a nerd/geek and am proud of it!
RE:#70 ( . ) ( . ) on 11.19.14 at 10:35 pm
People make less money than you realize. Median family monthly net income is about $5000
It’s not possible to max the TFSA or fund an RRSP with the few hundreds leftover. The numbers are even worse for an individual.
My household of two nets around 4K per month, my TFSA is full, and my investable income is overflowing into my taxable account. Maybe people should stop being financial boobs and simply spend less.
“Check out iron ore prices.
Australia is heading into some choppy waters.”
Indicative of slowing growth in China.
Post 2008 GFC, the Chinese government invested heavily into infrastructure, often with very questionable ROI prospects. This allowed china GDP growth even though external demand (Europe/US) was significantly lower.
Further infrastructure expansion is not sustainable. Consumer based economy is not going to happen anytime soon, as the “middle class” is particularly small relative to population and caught in their own housing bubble, which just started to pop
Overall iron ore and especially its producers (which happened to increase the capacity, expecting even higher growth) are basically toast.
#114 saskatoon on 11.20.14 at 8:20 am
#104 Fed-up
“And I know at least 10 high school teachers of Math and Geography ect, that “earn” $95,000 per year (actually every 9 months).”
this is simply untrue.
go ahead and bash public school teachers, but let’s be honest about it?
———————————————————————
3 of my very good high school friends teach at the same school that we all attended back in the day.
$94,700 per year (9 months) pal…no lies. Just teachers with tenure. Not heads of dept’s, not PHD’s, not principals.
Oh and they can teach a month at summer school and earn another 7k + if they choose to.
Sorry if this shocks you, but it is what it is.
@Cato the Elder:
You think the retail banks have 500 000$ in deposits every time they give a mortgage?
Yes, absolutely.
They either have it as deposits, or they borrow it from other banks, or they borrow it from investors in the form of bonds or GICs. That’s simply a fact. You are misinformed.
#141 Mark
“HAM” is the fantasy of foreigners, particularly Asians, bringing money to Canada, to invest in housing. No stats actually point to this happening, which would have a de-leveraging effect. What the stats do clearly point to is people, particularly in the GTA and GVR, taking out huge amounts of subprime credit to purchase housing units.
*************
There’s no stats on “HAM” therefore no one knows the impact on the RE values for GTA or GVR.
/B Tal notes that even Canada’s official census data tends to underestimate the actual number of new people coming to Canada. /B The 2011 census said the number of non-permanent residents in that year was close to 400,000, but that is more than 200,000 below the figures reported by Citizenship and Immigration Canada.
“That’s a huge gap,” Tal says.
http://www.cbc.ca/news/business/more-condos-needed-to-keep-up-with-immigrant-demand-cibc-says-1.2840234
“You think the retail banks have 500 000$ in deposits every time they give a mortgage?”
Yes. They do. That’s why assets = liabilities + shareholders’ equity. It ain’t called a balance sheet for fun — it must balance!
Only the central bank can create money backed by nothing, in the course of executing monetary policy. Trading newly printed cash for collateral, or collateral for cash from the market, when they want to either expand, or contract the money supply accordingly.
A bank that tries to lend out $500k and doesn’t have the deposits and/or shareholders equity, simply wouldn’t be able to disburse the funds. Its as simple as that.
@ #66 BG on 11.19.14 at 10:21 pm
6 Mr. Nihilist
“…..I figure that between the astonishing amount of cash given to cops, teachers, and other civil servants, and the tax burden on the remaining few of you employed in the private sector, something’s got to give….”
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I know a teacher. She earns less than 30k a year.
Yeah… They literally swim in cash – obscene.
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You obviously are not referring to teachers paid by a provincial government. Perhaps you are referring to a piano teacher working privately?
@ #123 Kevin on 11.20.14 at 9:57 am
Retail banks cannot lend money they do not have in their vault. They cannot simply tap a few keys on a computer and create money out of thin air. That’s just not how it works. They must first collect deposits from other customers, or borrow money from someone else (the Central bank, other banks, investors in the form of a GIC, whatever). Banks cannot lend money they do not already have.
——————–
Wrong. Try again.
Here is another point of view about banks.
http://www.e-booksdirectory.com/details.php?ebook=2143
To Kevin, Mark and all other “banksters” know it all:
Brief summary of banking in Canada:
http://prudentpress.com/finance/over-leveraged-position-canadian-banks/
Why Do People Believe in Conspiracy Theories?
“Do people really believe such conspiracy theories? They do, and in disturbingly high numbers, according to recent empirical research collected by University of Miami political scientists Joseph E. Uscinski and Joseph M. Parent and presented in their 2014 book American Conspiracy Theories (Oxford University Press). About a third of Americans, for example, believe the “birther” conspiracy theory that Obama is a foreigner. About as many believe that 9/11 was an “inside job” by the Bush administration.”
http://www.scientificamerican.com/article/why-do-people-believe-in-conspiracy-theories/
Best,
HD
Today’s posts have been quite inspiring to me. While there seem to be relatively few of those $217,000 a year earners here, I gather that most who earn somewhere between $4-5,000 net a month seem to be doing quite nicely. That is much more like the typical American – Canadian after tax earnings I am used to seeing.
At even $5,000 grand net a month your average family is not ‘swimming’ in excess cash, but should be able to fund their life, and stuff something into TFSA or RRSP’s for retirement. If your household is earning more, it should be the easier. Those earning less will likely be able to save a bit less but, there is not excuse for not saving anything!
While honestly nobody I know is living comfortably on minimum wages, or “just” their old age pensions, there are many that ARE surviving on those tiny sums. There is a difference between survival, and thriving.
The Smoking Man is absolutely right on being the “owner” of the lemonade stand, not the worker-server. One needs to start somewhere however, and if you must start somewhere, start with a plan for tomorrow. There still is no “Free Lunch” that I have ever seen work!
You still do own your future, and no one is making your choices, but you!
158 Stickler on 11.20.14 at 2:03 pm
“You obviously are not referring to teachers paid by a provincial government. Perhaps you are referring to a piano teacher working privately?”
Piano teachers used to be making a killing of sweet cash income, until the devious feds introduced their Children’s fitness and arts tax credit. Now, all parents demand receipts from their piano teachers, and CRA takes their cut.
In seriousness, I find it astounding that anyone would think we’d believe that their friend the teacher would (honestly and accurately) tell them his income. I know teachers, but do not know how much they make, since they don’t tell me. I think they do all right. It doesn’t bother me that they do.
Re: #155 Kevin
No, you’re wrong. That 500 000$ is created out of NOTHING. The borrower takes on debt. The creditor gets a claim to the principal + interest.
We are not living in a 100% reserve system like you think. Your example would work if that were the case. It existed like that, or closely to that, under the gold standard (can’t loan out more gold than you have in the vault). Depositors money is loaned out at interest. But that’s not how it works today.
I’m sorry that you are unwilling to open your eyes to the truth. Even a preliminary investigation into this matter will prove that I am right. Even the banks themselves admit they have a fractional reserve system!
The biggest conspiracies don’t need to be hidden – they’re so sinister that the average person doesn’t believe it’s possible. But it is.
Simple explanation of fractional reserve banking (note: 1000$ ‘creates’ 10000$ in loans. This is fraudulent):
http://youtu.be/qIxhsF6JLEA?t=54s
How money is created to begin with:
https://www.youtube.com/watch?v=p3_Q1SiRN-A
These are both US videos, but the process is nearly the same in Canada. I’m sorry if this is painful to discover if you haven’t realized it now. I must admit, this was the single most devastating thing I learned about in my life. To learn that we are not free, and are really all under control by a private organization. But after I got over that, I realized that I would rather know than continue going through life in blissful ignorance.
#151Doug in London on 11.20.14 at 1:01 pm
@Sheane Wallace, first post:
Really? I know a guy living in Toronto (yes, Toronto, near Yonge and St. Clair) who for the last 22 years made only about 30 grand salary per year but still managed to accumulate a net worth of 1 million. I’m an idiot who failed a college financial course but could EASILY accumulate 1 million net worth if I made 217 grand per year
And how exactly did that guy that made 30 g per year manage to save 1 million? By investing? Or by buying a house? I guess he is smart to invest but not smart to find higher paying job?
To support family of 4 you are looking at at least 5 g clear per month, maybe more. Minimum.
Having no family and kids to support is another story.
I could be living in Panama , working remotely and saving more then here.
#154 Fed-up
the salary you cite is per annum–not “every 9 months”.
hyperbole doesn’t beget truth.
“The income tax is considerably different than the taxation of wealth (and power).
The income tax doesn’t address control of wealth.
The income tax effectively keeps the poor in their place.
The income tax favors those that are already rich because it makes it harder for the ‘down-trodden’ to catch up with them.
Since wealth is always relative, their position of power in society is enhanced by making it difficult for ‘Johnny-come-latelies’ to improve their economic status.
Pious efforts to close ‘tax loopholes’ distract the masses from the real goals of wealthy ‘rentier class’ – the retention of the relative advantage of established wealth and the non-taxation of the ‘fringe benefits’ of economic and political power.
In order for the income tax to be truly ‘progressive’, the tables would have to be scaled to count total wealth and power — but this would be too complicated and is extremely unlikely to happen.”
— excerpts from Paul Johnson’s History of the American People (1999, Harper Perennial Edition)
How are all people made better when the successful are penalized for being so? — Garth
#154 Fed-up
additionally, a teacher can “choose” to teach summer school, and be denied; it is not simply a matter of “choice”…if “they want to”.
sure, let’s question/bash public education, but let’s be honest about it.
“I wonder if they are going to figure out the reasons for the price differential?”
Probably not. After all, they wouldn’t want to discover that the CMHC, and its own subprime mortgage insurance products, are responsible for the bubble. That would be too much of a revelation for the CMHC to handle, that they’ve spectacularly failed at their mandate and set the Government of Canada up for a financial calamity that is likely to require severe austerity in the public service and probably economic reform to fix.
I’ve written on a few occasions, the CMHC appears to be $160B under-capitalized relative to comparable entities operating in the private sector, assuming that their portfolio of guarantees should only be leveraged 5X instead of approximately 45X. $160B is a good starting point for the level of financial resources the CMHC is likely to require as a bailout.
#130 Kevin on 11.20.14 at 10:37 am wrote:
The fact remains, banks cannot just make up money out of thin air, and lend it to people. Because the people they lend it to will take it and try to spend it somewhere. So it must exist as actual money when it leaves the bank.
No one is disputing that it must exist as actual money when it leaves the bank, Kevin. But the banks have ways of ensuring that as little money as possible actually leaves the banking system even when you pay for things. And if it doesn’t leave the system, it doesn’t have to be actual money. Virtual money will do the trick instead. In the old days the virtual money was a cheque. Nowadays it’s an Electronic Funds Transfer transaction. That way the banks only need to increase and decrease account values. They don’t need to find actual money.
Say you want to buy a house. You go to a bank and take out a $400,000 mortgage. You give that money to the builder. Then the builder tries to buy supplies and pay his trades with that money. If it was just a number made up in a computer in the bank, then at this point, the whole show breaks down.
Nope, it doesn’t because the bank does its best to ensure that you and the builder pay for it all with EFT or credit cards. So no actual money changes hands. In your example, do you expect the customer to go down to the bank and get 4,000 hundred dollar notes from the bank then hand them over to the builder, so he can hand some of them over to his suppliers and trades? No of course not. The customer would use a bankers draft to tell his bank to decrease his account and increase the builders account. The builder in his turn would use cheques or EFT to tell the bank to decrease his account and increase the accounts of his suppliers and trades. I’d be surprised if more than $10,000 of the original $400,000 actually existed as real folding money at any time.
“The 2011 census said the number of non-permanent residents in that year was close to 400,000, but that is more than 200,000 below the figures reported by Citizenship and Immigration Canada.”
So what does that mean?
They either going to become permanent residents down the road taking out of about 250,000 quota approved per year. Or they will have to leave Canada (TFW/student visas are limited in time).
Either way it will slow the growth in demand for condos in the future, while the construction industry clearly doesn’t expect that decline.
#66 miketheengineer
Hey guy, good luck with the dog. i wish the best outcome.
We never know what the Vet’s news might be, but whatever it is, enjoy the pooch even more.
It is when we realize that actually, all of our time is very limited, that is when we begin to savor what is left.
I hope for the best!!
@Cato the Elder:
– You think the retail banks have 500 000$ in deposits every time they give a mortgage?
Kevin:
Yes, absolutely.
They either have it as deposits, or they borrow it from other banks, or they borrow it from investors in the form of bonds or GICs. That’s simply a fact. You are misinformed.
Wow it’s scary how many people on here opining about stocks, fair value and whatever have no idea how modern money works!
Imagine this like in The Shining but instead of “here’s Johnny”:
Surprise!!!
#172Mark
I think you might be right for CMHC, but there are other government ‘guarantees’ on private insurers as well, like Genworth.
We might be looking at 250 B + .
To be fair these money should be taken from all folks that bought mortgage insurance as it is clear that the premiums does not satisfy the risk.
Let’s reassess that risk and ask for additional premiums to be paid by mortgage holders!
CMHC does not even know that they are solely responsible for blowing the huge real estate bubble.
Similar with bank of Canada, they do not seem to know what is the cost of suppressing the market rates. Just watch out when this one blows up.
Leaving incompetents in charge of manipulating markets is dangerous.
Derek – you are right. But don’t get bogged down on M0/M2. Physical cash is not an issue.
Kevin – just go and read. There are endless online resources on this. You’ll soon see you are frankly living in a world constructed for you by the banks and politicians which is little more than a toy version.
If you don’t believe me ask the guy who made cars:
It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.
Henry Ford
You may feel you are getting screwed, but one must learn to shelter things from the Tax Man. Garth’s advice can really help Canadians, as well as American’s since we have rather similar laws, except no GST here.
+++++++++++++++++++++++++++++++
Great points old man and I respect your reply. However, we are Cdn and ARE taxed to death. There is NO SAVINGS to put dimes and quarters into a “healthy diversified” portfolio amongst the majority of private sector workers in Canada.
And its a self fulfilling prophecy. The more they raise taxes to pay Public Servants – the more services are cut (lots of examples in paper and radio today of cuts cuts cuts cuts cuts) but keep paying public servants who go on strike raises.
I would be curious to know how many of 1% 200K odd salaries are Public Servants. Here in BC ICBC, BC Hydro and other “govt” offices have plenty of 200K jobs at the same time as they keep jacking up rates year after year (as I said – no money to invest).
As I mentioned to the PM earlier……Govt has killed more people and society than war ever has.
Cheers
#173Derek R
So they loan money that they don’t have.
Forcing inflation and need for ever increasing money supply as there is no other way for the debts to be paid.
Any increase in interest rates is possible only with increase in the money velocity. That’s it folks. Otherwise the system brakes.
We know what that means. Inflation, higher than the interest rates (due to governments debt), negative interest rates for a very long time. Burning the savings.
Until new equilibrium is reached. New reality that will be totally different from what we see now. The destination is clear. Enjoy the journey.
In a way this seems like a huge theft and fraud, expropriation and nationalization of people’s assets with no fair compensation.
But hey, what is fair these days! Congratulation to the savers for paying the bill, picking that tab, sacrificing their work for the well being of the debtors.
You are the chosen guys, you the men, Think what you can do for your country, not what your country can do for you. (JFC)
#178 ben
It is a game for the people with the right roles, for the rest of us is….
It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.
Henry Ford
+++++++++++++++++++++++++++++
Call me a kook or conspiracy theorist (invented by media btw) I don’t care. I study history and facts. That quote from Mr Ford is 100 years old. I do believe WW III is coming. Only it will be a global “CIVIL WAR” because of corrupt govt and I don’t mean “the elected bunch”. Govt employees are as much to blame as the phoney elected bunch. Again…kook if you want – I just study facts and make deductions from such. And lastly….this does not mean VIOLENCE. If enough people went to the street and said ENOUGH change would happen. It hasn’t happened here yet.
@ #165 Rational Optimist on 11.20.14 at 2:34 pm
In seriousness, I find it astounding that anyone would think we’d believe that their friend the teacher would (honestly and accurately) tell them his income. I know teachers, but do not know how much they make, since they don’t tell me. I think they do all right. It doesn’t bother me that they do.
————————–
It is very easy to find out what teachers in the public school system make.
Suppressing market interest rates is stealing. period.
#178 ben on 11.20.14 at 3:44 pm wrote:
Derek – you are right. But don’t get bogged down on M0/M2. Physical cash is not an issue.
Cheers, Ben. Only reason I am hammering it, is that this is where Mark and Kevin seem to have lost their way. I realise that the central bank will pony up any amount of physical cash required in order to avoid a breakdown of the system.
How are all people made better when the successful are penalized for being so? — Garth
++++++++++++++++++++++++++++++
Not sure if I would classify successful as some kid who got told by some Wallstreet banker – “hey kid – we can make you a billionaire by having dopey people post themselves on a website you own”
And there are lots of examples of this.
There are also PLENTY of other examples where people try to make a go of small businesses and are squashed by the enormity of ridiculous Govt red tape – dictated to Govt by large corporations – who can absorb the red tape. This is a perfect example of fascism by the way. And happens all the time. It just happened yesterday with BC liquor laws – hell bent on squashing small private business while keeping Govt and a “couple” of large corporate interests rich. Fascism.
So all I am saying is “successful” is very subjective.
So is ‘fascism.’ — Garth
“I think you might be right for CMHC, but there are other government ‘guarantees’ on private insurers as well, like Genworth.
We might be looking at 250 B + .”
I was including the re-insured amounts in such calculation of how much capital the CMHC would require to support a $900B ($600B + $300B reinsurance) portfolio of subprime mortgage guarantees. $180B is 1/5th of $900B, and CMHC currently has approximately $20B available.
To be fair these money should be taken from all folks that bought mortgage insurance as it is clear that the premiums does not satisfy the risk.
A good chunk of those ‘folks’ will be insolvent and/or in negative equity as the decline accelerates. The recent immigrants may very well have packed up and gone back home instead of facing the consequences of a Canadian bankruptcy. Good luck getting money from them.
CMHC does not even know that they are solely responsible for blowing the huge real estate bubble.
Even worse is CMHC’s outright and dishonest denials that they’re even in the subprime mortgage insurance business, as seen on their website. Their denials of being in the subprime business remind me of a certain Iraqi “Minister of Information”…..
#72 Smoking Man on 11.19.14 at 10:39 pm
Income of 217k gets you in the 1% club
Now if you think of trading time for wages unatanable for most.
Now if you had a lemonade stand , opened for 8 hours a day 7 days a week, you made 1 dollar a minute.
Welcome the 1 %
My point is, sell and prosper, or work and starve.
_____________________________________________
I would have to agree somewhat with you Smoking Man on the selling and prospering aspect of your notes here above.
The funny thing is I am a company owner, my background is electronics engineering via a degree and disciplined training via the USAF back in the late sixties. After leaving the air-force I was immediately swooped up by a rather large military manufacturer to work in design of well lets just say some extraterrestrial machines. My employer Lockheed Propulsion Company was innovative and cutting edge at the time. However over many years I felt as a young Engineer I could do things better and quicker than my bosses. We didn’t always see eye to eye however they patted me on the back and said good luck Charlie! Off I went to start my own company. I became very successful but my corporation plateaued in sales as I was the main sales engineer. At that point I recognized that design, management and accounting were my gifts while sales was definitely not my forte! I hired a bright young engineer who was sales oriented and he helped my corporation go from small to medium and medium to a larger business. Anyway my engineer has no inclinations to own his own company and is quite contented doing his job. I as well am quite pleased to let someone superior than me sell my product. The point is not everyone is cut out for owning a company or visa versa. The other issue is that my sales person makes more money than I do on an annual basis. He is commissioned and that’s the way it should be. His sales generates great income for my company while it makes him quite well off.
What Is Rent-Seeking Behavior?
http://www.forbes.com/sites/davidmarotta/2013/02/24/what-is-rent-seeking-behavior/
Are you confused yet? I am.
CMCH says no bubble & high valuations in limited markets.
Now CMCH is concerend about a ‘premium’ of house price in Canada (relative to the US)
http://blogs.wsj.com/canadarealtime/2014/11/20/cmhc-probes-house-price-premium-in-canada/
http://blogs.wsj.com/canadarealtime/2014/11/20/cmhc-probes-house-price-premium-in-canada/
POP!
http://www.businessweek.com/news/2014-11-20/housing-agency-calls-canada-u-dot-s-dot-price-gap-concerning
is this a joke of some sort.. did these guys just land from the moon???!
Garth you should charge a hefty subscription to your blog for CMHC staff seeing how you are singlehandedly doing their job for them
cheers
178 ben on 11.20.14 at 3:44 pm
“If you don’t believe me ask the guy who made cars:”
We’re supposed to be swayed by a quote by a dim-witted bigot? Do you know why he even knew the phrase “monetary system”: who do you think he thought “controlled” the banks?
@Sheane Wallace, post #168:
He made a million by 1)saving some of what he earned, and 2)investing in companies that pay good dividends and 3)reinvesting those dividends. Why didn’t he find a higher paying job? Simple, he found a job where he could walk to work and save a bundle by not owning a car. Also, he liked the job. It was a lot less stressful than higher paying jobs so why give it up? He figured, quite rightly, it’s the net amount of what you save and how you invest it that determines how much wealth you accumulate. Last but certainly not least, he bought stocks when they were on sale. Is that so hard to understand?
derek ben ……its called fractional reserve lending, yes banks are legally allowed to lend money they dont have. ….correct me if im wrong but in canada i recall reading the banks only need 7 percent of their balance sheet in the “vault”. when you deposit 100 dollars the banks can lend this out highly leveraged. this is how we have liquidity.
Re #169 saskatoon
“the salary you cite is per annum–not “every 9 months”.
hyperbole doesn’t beget truth.”
====================================
The truth is that the salary is spread out over the calendar 12 months but it is for less than 9 months of actually “working / teaching”
Lets summarize quickly:
Toronto District School board calendar is here: http://www.tdsb.on.ca/aboutus/calendar.aspx
and your own Saskatoon scool board is here: http://www.spsd.sk.ca/Schools/calendar/Pages/default.aspx
Twenty sick days per year equals one month
Two weeks at Christmas
Two and half months for summer
Thanksgiving,Good Friday, Easter Monday,Family Day, Victoria Day equals a week.
Winter break is another week
Totaling 20 weeks off.
52 weeks minus 18 equals 34 work weeks (two weeks from these 34 are PD days!?!)
Lets expand this one (calculations for Ontario);
Classes start at 9:00AM and end at 3:30PM.
That’s 6.5 hours minus lunch and recess (1.5 hours) multiply by a 5 day week – totals 25 hours a week in class, multiply by the 34 weeks per school year.
The grand total is 850 hours per year teaching in class. If a teacher is at the $95,000 salary level, that works out to $111 per hour!
The taxpayer’s also pay $10,520 to their indexed pension plan, plus an additional $4,000 to cover the employer’s contributions for CPP/EI/WSIB.
So now the teacher is costing $110,000, before dental expenses, contact lenses, laser eye surgery, prescription drugs, wellness counseling, sick days, personal days, stress leaves, and myriad other perks!
And for God’s sake a teacher ought know to use a capital “S’ in Saskatoon!
“It means you can’t rely on the stats. No one ever cares to cross reference the numbers.”
Why did you expect anything different after H was done with Statistics Canada? Just look at the (admitted) errors and the yo yo numbers in the employment data
But who cares, just diversify and re-balance every so often
Immigrants temporal or permanent are not going to save us from our housing bubble, best case they are going to help us clean up the mess, after it pops
Rational optimist – I’ve been talking about how the modern banking system works. If you think you can refute that because you don’t like Ford then you are daft. I’ve given plenty of other links and information – why not refute that?
RealistvsExtremist – it’s policing by consent. Every day the establishment can’t believe that people don’t step across that line together. When they do that’s instant game over.
‘You think the retail banks have 500 000$ in deposits every time they give a mortgage? Give me a break. The money gets created out of thin air.’
No Cato you are wrong.
Look I am not in the business of defending the backward world we live in but banks do not create money out of thin air, stop watching Zeitgeist youtube movies.
You want a 400K mortgage? The bank does not have the money in the vault. Instead they create an obligation and sell your mortgage to someone else. That someone else would not buy your mortgage unless there was a benefit. The benefit is a splitting of the interest charged on your 400K. The investor gets some, the bank gets some, you get a house, everybody wins.
The investor must have confidence that the bank will collect the interest on you loan, else they would not buy it.
Again, BANKS DO NOT CREATE MONEY OUT OF THIN AIR.
repeat this until it sinks in.
Now, central banks….different story.
Application of interest when the principle is the only part of the debt created….ok, that’s something too.
Regular banks don’t create money.
RE: Commercial Money Creation.
Let’s be clear, this is not conspiracy theory or speculation. It’s documented provable facts, based on Government linked websites. You have to ask yourself, why something this basic, is so difficult to understand?
It seems to have gone beyond a lack of understanding, to blatant resistance. We all know Garth’s blog attracts substantial readership and consequently, undeniable influence.
Whom, do you believe your debating with. An anonymous, salesmen, business owner or office nerd ?
Or maybe someone entirely different….
Ben supplies us this relevant quote from 100 years ago:
“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”
Henry Ford
What an interesting, useless, debate you are engaged in. You worry about the creation of capital. You should worry about having more of it. — Garth
Obama speech tonight. More legal workers, less wage, more profits.
Stock markets will roar tomorrow.
#30 Temporary Foreign P.M.
&
#47 GeorgeSoontoBeRetired
Awesome ;-) Glad to see some people’s brains are still functioning
#163 HD
Even though we have access to vast amounts of information, we now have access to fewer sources of it that we TRUST and that can make sense of it for us. Thus, there are many events happening around the world that we are aware of, but with no way to account for them. The unexplainable becomes the magical. Occam’s Razor comes into effect, and the simplest and most obvious explanation we can come up with is adopted: some mysterious, shadowy entity did it.
#165 Rational Optimist
In all seriousness, you don’t have to ask, these are public employees, you can just look it up.
Google “-province/city- teacher salary schedule/grid”, and see for yourself. It’s defined in their collective agreements.
Mike T – that’s called bundling mortgages. They can keep them on their book also. Bundling and reselling bad mortgages was sub-prime.
They don’t have to do this. You are incorrect.
What an interesting, useless, debate you are engaged in. You worry about the creation of capital. You should worry about having more of it. — Garth
Garth, no disrespect but if people worried about the abstract side of money creation or say the theoretical consequences of underwriting mortgage debt to pick an example out the air, we wouldn’t be in this mess.
If you don’t care how money is created when it’s supposed to be fungible with work (but clearly isn’t as labour has been devalued) then you’ll be the greater fool.
This stuff is important and you can see from this discussion how utterly ignorant people are of the process. And that’s just how the establishment like them to be.
“Don’t worry about how it works, get back to work!”. Great.
#148 Iconoclast on 11.20.14 at 12:39 pm…
“…for every teacher, cop, and firefighter, there are half a dozen office drones doing nothing…”
When I retired in 2006 the ratio was about 1 drone for every 10 front-line workers.
I realize that was 8 years ago, but surely it hasn’t changed that much?
For example, your formula would mean the number of office drones at the Kelowna RCMP detachment would number about 1,380 to provide support services to the 230 odd members!
How ridiculous a claim!
#135 HD
It doesn’t happen often.
I may have recommended looking at the Westborough church at some point but I don’t think it was recent. For me, the frightening point of the whole thing is that the WB members don’t really hold beliefs that are all that much different than the whole of the evangelical movement, they are just more passionate. Scary.
#139 Mark
Well I get the APEGA salary surveys. Granted its self reporting so they may exaggerate. I also was at one time part of the compensation team and our 10 year engineers were in the $140 range. Now when I say 10 year engineer I mean someone fully trained with good reviews and 10 years experience.
That firefighters get a good deal I will not argue with. But they have to do a lot of training too, just not until after they start work.
Garth on #170
How are all people made better when the successful are penalized for being so? — Garth
Exactly. There is a whole science (although not a very successful one) around motivation. You can’t get someone out of bed in the morning if he’d be better off in bed. Doctors and dentists make more than most people because most people either can’t or just won’t do all those years of training and then have to stick their fingers in peoples orifices all day. They need higher motivation, and those who would take it away risk having to drill their own cavities.
For Saskatoon and those who feel that my buddies of more than 25 years wouldn’t tell me what they truly earn:
http://www.payscale.com/research/CA/Job=High_School_Teacher/Salary/004c9fd6/Toronto-ON
Top rate with tenure and small bonus over 94K for about 8 months of actual “work”. Read it and weep and stop splitting hairs.
It always amazes me that those who come and rush to the defense of the public sector and it’s bloated and unsustainable salaries are usually employed by it…or maybe it’s just me.
“It always amazes me that those who come and rush to the defense of the public sector and it’s bloated and unsustainable salaries are usually employed by it…or maybe it’s just me.”
Having gone to school vs. actually working in the system is a whole different ballgame. Yes, we defend the system as you would too if you were in it. In addition to protecting good paying and valuable jobs that bring dividends to a nation that cannot be numbered, teaching is a vocation for many and we earn a healthy wage for the countless hours of dedication.
Speak the truth and don’t be afraid to. Canada was built and is what it is because of public and private sector workers and volunteers who never punch a clock because the job is never done.
Amen.
#208 PVS Inquire on 11.20.14 at 11:10 pm
————————————————————————-
This my last email on the topic as statements such as “countless hours” is giving me acid reflux.
The truth??? I’ve never heard a teacher speak a word of it when it comes to this debate.
The truth is that the private sector has dwindled dramatically in this country (and continues to shrink) to a dangerously insufficient level and it’s obvious that we cannot afford what we pay teachers, cops, fire fighters etc, the salaries and pensions that they are blessed with or we wouldn’t be over $1 trillion in debt when you combine federal, provincial and municipal shortfalls.
As a teacher, you should be able to do the math, no? Or do you not care where the money comes from, just as long as you get yours?
Oh and P.S. fund your own pensions like the rest of the private sector schmucks who apparently don’t work anywhere near the “countless hours” you claim that you do.
Amen, I’m out.
#205 Snowboid on 11.20.14 at 8:18 pm
#148 Iconoclast on 11.20.14 at 12:39 pm…
“…for every teacher, cop, and firefighter, there are half a dozen office drones doing nothing…”
When I retired in 2006 the ratio was about 1 drone for every 10 front-line workers.
I realize that was 8 years ago, but surely it hasn’t changed that much?
For example, your formula would mean the number of office drones at the Kelowna RCMP detachment would number about 1,380 to provide support services to the 230 odd members!
How ridiculous a claim!
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Really? Kinda like how “ridiculous” it is to think that teachers, cops and nurses make up the entire public sector. Sorry to burst your “retired snowboid pension on the backs of Walmart greeter wages” bubble…..but less than 10% of PUBLIC SECTOR workers are the often cherry picked nurses, cops and teachers. 90% are office drones who mindlessly create un-necessary paper work that the private sector has to continually pay for.
Civil WW III coming up soon……
# 207. Fed-up
….) your vitriol is understandable……laughable and misplaced, but understandable.
You didn’t have the motivation or wherewithal to select a profession or occupation you were really drawn to as a young adult. You may not have had the opportunity or intellectual acuity to parlay dedication and compassion into a lifetime of focused service to others (teachers, doctors, nurses, firefighters and police).
I know how you feel. I could have played in the NHL.
Two teammates went – scored 12 goals a year and they paid ’em hundreds of thousands…..
Listen Fed, you couldn’t do what I do…..you don’t have the skill set, demeanour, et al. Go ahead and whine, won’t change a life fact – there are those that DO and those who criticize them.
Move to BC where Free enterprise reigns supreme – where the ruling party has fed at the trough for thirteen years, pisses away tens of millions in legal fees battling to save face for their buffoonery, cuts corporate tax in half and suffers the greatest child poverty in the nation. They’ve had thirteen years and here we are. These people vote their own raises….geez, after I retire with the DB plan I should run for office…I could make a real difference!
Now that I have bought a house which has not been built yet hence I have started to think differently than Garth, indicators are there for 2015 to be bad year for markets and there is an expectation that interest rates might rise in that year. However the next crash would not be a small crash, it would be a disaster something that would be significant for 21st century and which will pass along generations as tips but I don’t think that “next” crash would be within 5 years, reason being such bloodbath would be bad for government crooks and for the 1% that need these very masses to keep their wealth booming. Times will be bad but hopefuly not in short term.
There is zero reason for any significant ‘crash.’ — Garth
This is interesting Canadians getting comfortable with variable rate mortgages 2014 “Quote from Ratehub CEO”.
This time each year, the Canadian Association of Accredited Mortgage Professionals (CAAMP) releases their Annual State of the Residential Mortgage Market in Canada. Data in the report comes from various sources, including an online survey of more than 2,000 Canadians. Some of the statistics weren’t news to us – namely just how low mortgage rates are now compared to last year – but there’s one, in particular, we thought might be news to you.
Twenty per cent (20%) of new homeowners chose to get a variable rate mortgage in 2014; that’s up 11% from the 9% we saw in 2013. Correspondingly, the popularity of new fixed rate mortgages went down 6%, from 82% in 2013 to 76% in 2014. Why are more Canadians getting comfortable with variable rate mortgages? Perhaps after watching Prime rate sit at 3.00% for 4+ years, buyers are seeing there may not be as much “risk” to the variable rate as they once thought. Or it’s that 5-year variable rates can be found for as low as 2.10% (Prime – 0.90%).
http://www.ratehub.ca/mortgage-blog/2014/11/canadians-get-comfortable-with-variable-rate-mortgages-in-2014/
#211 Vicpaul on 11.21.14 at 2:34 am
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Ahhhh yes resort to the infantile “too bad so sad you didn’t get in on this” tactic that you twats always resort to when you don’t have any logical retorts…sigh.
I have nothing to be jealous about. I have a masters in astrophysics at the University of Toronto, run my own businesses and I earn more than 4 times what you claim that “I couldn’t do what you do…..and don’t have the skill set, demeanour, et al.”
My demeanor and skill sets are just fine, thanks. I just don’t want to be taxed to death for what your arrogant rear end (and the countless others like you) clearly doesn’t deserve. Go ahead and pick us dry and be a smart ass about it, it endears you to us even more.
Now run along child, don’t you have a sick day to take so you can work on your demeanor and skill sets?
“Oh and P.S. fund your own pensions like the rest of the private sector schmucks who apparently don’t work anywhere near the “countless hours” you claim that you do.”
Teachers fund their own pensions. Also, please read the last sentence of my post. An honest dollar is made by any person who puts time and dedication into a job.
Would you recommend that teachers punch clocks at home, on the field, or a school trip, and wherever they spend “countless hours” working in and out of the classroom? Just maybe they should punch in and out every time they write tests or mark assignments or plan courses in August. Or, feed the kids before school and tutor them after? Better yet, they can document every minute “on the job”. Best of all, a return to hourly, not salary pay could be implemented. As a result, some teachers would only earn 60-70K, but many would earn 100K+. Hmm… Sign me up!
Hi Garth
Here’s example of Son of Ponzi race baiting on other sites. Please ban this Nazi in sheeps clothing…
” HAM does not take Skytrain.
Must drive around in endless circles until a spot closest to the entrace of the mall is found”
#212 PVS Inquire on 11.21.14 at 2:21 pm
Teachers fund their own pensions.
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That’s bull and you know it.
And in case you don’t know, they fund less than 50% and closer to 37%. The rest is funded by the poor souls who are being taxed to death as it is. Public sector pensions in Canada are underfunded by nearly $200 billion dollars and counting even taking into account the extra billions the governments add to each year keep it all afloat. The Ontario Teacher’s Pension fund was underfunded by nearly $10 billion in 2012 alone, but nice try.
Please explain to me once again on how teachers or any other public sector worker is fully funding his or her pension?
Not even close.
“Oh and P.S. fund your own pensions like the rest of the private sector”
“Teachers fund their own pensions”
“Please explain to me once again on how teachers or any other public sector worker is fully funding his or her pension?”
I answered your first question. I don’t need to answer your second one as it is a invalid point and one I never claimed to make. I am far from perfect, but I contribute to the greater good in numerous ways. Please refrain from drawing conclusions. Like you and I, the pension fund or any man made system is not perfect. Does the fund require changes to maintain its goals for employees, the government, and the taxpayer? Yes. Should it be eliminated? Absolutely not.
A reminder of what happens when the government and general public minimizes the contributions of the public sector can be seen in the US. Maybe our students would do better with teachers who earned half of what they did and had to rent their house while in retirement.
All workers deserve respect and should strive for a healthy living. And most teachers deserve each and every dollar paid.
“Listen Fed, you couldn’t do what I do…..you don’t have the skill set, demeanour, et al.”
“And most teachers deserve each and every dollar paid.”
Key word: most.
Comment: not appropriate.
Signed: fellow educator.