In case you missed it, our American friends grew their economy at a 3.9% rate in the third quarter of the year. That came after a 4.3% jump in the previous three months. This was the best six-month spurt since way back in 2003, when Stephen Harper still liked me.
The Yanks have been churning out 200,000 jobs a month and corporate profits are just fine. The central bank has completely turned off the stimulus spending tap and none of the chaos America-haters and bullion-lickers predicted has come to pass. So, stock markets keep on hitting new highs and the greenback appreciates, since the rest of the world (including Canada) is in varying degrees of swampiness. In short, the US recovery is seriously on track.
So what?
Barring a terrorist attack, more Taylor Swift vids or a natural disaster, the Fed will starting raising interest rates in 2015. The only question is when – spring or fall. That will initiate a long process and also mark this moment as perhaps the lowest point for the cost of money in a generation. A few of them, actually.
Will Canadian rates follow?
Of course. Once the Fed goes, the bond market will pretty much guarantee that long-term, fixed mortgage rates will follow. And now we have another credible prediction that the Bank of Canada will follow suit, starting in May. That’s six months away. And if this happens, the cost of variable-rate loans, lines of credit and business borrowings will go up the same day.
But don’t blame me for this. Dis the OECD. The international agency was a thorn in the paw of CMHC this week, just one day after the feds termed the Van and 416 real estate markets “low risk.” The call is for the first rate hike this spring, and then more of them, “steadily thereafter”. The OECD is also stating the obvious – it’ll ruin the financial plans of Canadians who have gambled it all on a house.
The biggest risk the country faces, the economists say, is a “disorderly housing market correction.” BTW, these dudes also point out that the current house price-to-income ratio is at 132% of its historic long-term average. There is only one other country in the world that’s worse, but who cares about Norway?
Now, let’s talk about Adam Mayers, the poor personal finance editor of the Toronto Star.
He wrote about housing this week, urging young people to buy in a city where average prices have increased at four times the inflation rate in the past year. You’d think that would tell a financial guy something about over-valuation and hormonal urges, but apparently not.
Calgary, of course, is cooked, Adam says, especially since oil just tanked below $75 a barrel. But Toronto is the holy land. Suck it up, virgins, and buy.
“Should we be worried, too? I don’t think so. Price increases will moderate as interest rates slowly rise, but that’s no cause for panic. Home ownership is about a place to live, so the horizon should be long. While the big gains for condo investors may be over, for those who plan to live and work in Canada’s largest and most desirable city, waiting probably won’t help. If they’re forming households or just tired of paying rent, they might as well pay themselves first. That’s the prime law of personal finance.”
Wow. Somehow it makes more sense to Adam for a kid to pay interest to RBC, and carry $400,000 in debt at rates destined to rise, rather than pay less rent to Larry and owe nothing. In fact, there hasn’t been a rent-or-own scenario on this pathetic blog where the math has proven that buying beats leasing over any five-year period. And don’t tell me 26-year-olds are buying a detached property to be their Forever House. That’s simply a myth.
Pushing your finances to the wall to get a half-million-dollar condo or $800,000 slanty semi is not the only path to ‘paying yourself first.’ Remember that just $100 a week stuck into a TFSA and invested in a balanced portfolio for the same length of time as a mortgage – 25 years – will end up being worth almost four hundred thousand, and for that you assume no debt and little risk. No condo fees. No property taxes. No burst pipes. No new roofs.
Plus, Adamonics assumes what has happened will continue to take place. It’s classic. This is the sentiment that screws more people than unsupervised radio hosts. By every measure, real estate values in Toronto and Vancouver are excessive, frothy, volatile and unsupported by incomes or economic activity. So when the Fed moves, and if the OECD is correct about Canadian rates, you should expect that disorderly correction.
And so much for Mr. Mayer’s advice: “If you’re at the age and stage when it’s time to buy and you can be patient in any downturn, there’s not much to be gained from waiting.”
By the way, the Star asked readers if this is a good time to buy a Toronto house. Yes: 30.54%. No: 53.56%.
I hear there’s an opening in Sports.
171 comments ↓
It’s good to see that more than 50% of Star readers have got the message. Way to go!
Just got into ETFs in the last few months.
Thanks for the inspiration, Garth.
Now to figure out my housing.
Garth, do you think the Bank of Canada will raise interest rates before the federal election is over in 2015?
Its kind of a “chicken and egg” question.
Which will come first, the election or interest rate hikes…..
I just cant see harper raising interest rates before OR during an election.
UNLESS he expected to lose and would like to send a fiscal “fist” up the new PM’s “economic bung” as it were.
The Star says ‘buy, buy, buy!’
Reader poll on The Star says ‘Get Bent’.
Nice.
The U.S. economy is improving so why are Canada and U.S. bond yields dropping like a stone?
Isn’t the bond market and their investors supposed to increase rates when there is stronger GDP, economic growth and more employment, falling unemployment rate?
It seems we are going backwards no forward when it comes to fundamentals and market based economics.
Bonds, Benchmark Canada 5,10, 30 year 1.47%, 1.94%, 2.49% and U.S. benchmark 5, 10, 30 year 1.57%, 2.26%, 2.96%.
We are getting closer to 2012 all time historic lows in bond yields in Canada, U.S.
Also, as European bond yields keeping falling like a stone as well won’t that push down Canada and U.S. bond yields as well?
Haha his next article better be about sports!
Plus, Adamonics assumes what has happened will continue to take place.
———————–
But if things just kept rising eventually everyone but people making $500k/yr will be priced out of the market.
Assuming just a “miserly” 7% annual appreciate rate on houses and the 2014 $1 million house will be worth $2 million in 2024.
With an interest rate of say just 5% on a mortgage that’s a $12,000 monthly payment!
And 5% is conservative – it could just as easily be 8% or 10% like it was in the early 1990s.
“…..The biggest risk the country faces, the economists say, is a “disorderly housing market correction……”
=============================
Then, by extension, the biggest benefit the country faces would be an ‘orderly’ housing correction.
No rate hike in the over night rate in 2015
Prozac even said so.
He said that where? — Garth
Has that Pillsbury Doe Boy been around since 2003?
Well hi there, Blog Dawgs, and Hey, Hey!, Hey! to you, Garth!
https://www.youtube.com/watch?v=GDT7GP9l1-I
Listen, Garth, thanks for the cute little shout out in today’s message, but I’m not just unsupervised now, I am royally up the creek. I’m in a bind and hoping you can do me a solid.
I’ve had to drop my hopeless lawsuit and I’ve got to cover almost 20 grand in legal bills plus nobody with a brain is buying tickets for my comedy shows now, so I could really use some work.
So I want to do this blog once a week for some extra pocket change. I promise I’ll leave the amazons alone unless they consent. I can pick up the ball Friday with my own take on that “50 shades of taper” piece you did a while back. (You will love it – but read it in a private place with Dorothy, or at least Bandit.)
– Besides, isn’t a little BDSM what goes through your mind whenever you read stuff by aka Devil’s Advocate and Cato here ? ;)
I can do you proud, bro. Gimme a chance?
I like the U.S. law for leadership… 8 years and then punt
Scared yet?
How many more meager quarters can Europe bumble through before they have to do something radical (like Japan did this year) to avoid a lingering depression?
http://online.wsj.com/articles/eurozone-gdp-shows-meager-expansion-1415947091
3 crowdedelevatorfartz on 11.25.14 at 8:29 pm
I just cant see harper raising interest rates before OR during an election.
=========================
“OTTAWA – Prime Minister Stephen Harper denied breaking a major election pledge with his government’s surprise decision to tax income trusts….”
– Nov 6, 2006
“….This country will not go into recession next year and will lead the G7 countries.” – Prime Minister Stephen Harper, Oct 10, 2008
Just remember, anything coming out of this guy’s mouth isn’t worth the oxygen it consumed.
Come 2015, which of the following do you thing will apply?
a) a fixed (election date), or
b) a (fixed election) date.
“Home ownership is about a place to live, so the horizon should be long.”
Ah, so heuristics like ‘buy low sell high’ don’t apply to homes, then.
How convenient. If you have a long time horizon, don’t worry about the purchase price. And this from someone whose job involves writing about financial issues.
Moving from the East Coast to Calgary 18 months ago I was absolutely blown away by the opportunity the West has to offer. So many jobs and so many young people buying brand new homes in their early to mid twenties. Along with their brand new trucks and SUVs I felt like a scrub cruising around in my older car and renting a room.
I couldn’t figure out how so many of my peers were so far ahead of me in terms of what they had. I was determined to to pay off my student loans while they were trying to figure out where to vacation in the winter.
While I assumed many of them were fortunate to have help from their parents to be so far ahead, I began doing research on the CMHC, mortgage rates, houses being built seemingly overnight in suburban Calgary etc.
Then I found this blog.
As of now I have saved six figures, began investing modestly through my TFSA and am excited to travel a few times a year while having my credit card paid off in full at the end of every month.
I very much appreciate your point of view and outlook when faced with peers that view ‘owning real estate’ as the proper thing to do.
Just one question, thinking about attending night school at Haskayne to earn a part time MBA. Coming from an applied science background business has always interested me. Worthwhile investment or would my money be better spent elsewhere?
Still can’t figure out why Garth is against people who eat bacon. Did I miss something a while back?
Pushing your finances to the wall to get a half-million-dollar condo or $800,000 slanty semi is not the only path to ‘paying yourself first.’ Remember that just $100 a week stuck into a TFSA and invested in a balanced portfolio for the same length of time as a mortgage – 25 years – will end up being worth almost four hundred thousand, and for that you assume no debt and little risk. No condo fees. No property taxes. No burst pipes. No new roofs.
—————————————–
Come on Garth your a smart guy but you don’t understand these kids today. Firstly they don’t even want to start off with small stepping stone increments like most of us did. They want the 3000 square foot McMansion and they want it now! No small semi in Hooterville. Hell no right in the heart of the city or part of the GTA. Secondly most of these kids are maxed out! They’ve got a Beamer or some other piece of crap car plus the trips to Cabo, bling, Galaxy 25 phones all the rest of fancy crap, they don’t have two nickels to rub together little Laura hundred dollars a week to invest.
Get with the times man!
What the hey is going to happen to the Canadian dollar thru all this, Garthy, Baby?
Well, my millennial friends and I have been waiting years for this rate increase/price correction here in Vancouver, something tells me I shouldn’t hold my breath for any dramatic change.
Since when has Toronto been the most desirable city in Canada?? Yeah, yeah… I know. It’s a subjective statement but really. Traffic is horrible, the people aren’t the most friendly most of the time, the air isn’t *that* great, and the real estate outlook is… well… you know.
Stating risk to be low in that city (or Vancouver) should have the editorial staff second-guessing the guy.
Keep up the good work, G.
Regarding my previous post not Laura hundred dollars!
That was let alone a hundred dollars to invest! Jesus Garth I’m turning into Smoking Man.
I saw ben Tal today and he suggested that CDns are actually paying down their principal quite a bit. He had some stat. He also had a stat that most mortgages have an armortization period of 20yrs and not 25+ years.
This means even an interest rate increase won’t cause mass defaults.
He does think a correction will happen but not dramatic like the US.
Agree with Benny?
I was kinda expecting you to attend as it was at at Andrews. Walking distance to your office.
The threat is not mass defaults, which will not happen. It is an erosion in equity. Fear that. — Garth
Garth, you keep on touting US stocks on this blog. This is not the time to buy US stock. Best bets are now international.
http://www.gurufocus.com/global-market-valuation.php
I do not tout stocks. — Garth
“In case you missed it, our American friends grew their economy at a 3.9% rate in the third quarter of the year.”
There is something very wrong with a growth rate like that where 1 in 30 kids are homeless. The 1% vacuuming up more than every before?
http://time.com/3588844/child-homeless-study/
#3 – the central bank is independent, they don’t care if an election is on.
Garth, you mentioned before that preferred shares should have some downward pressure on their price once interest rates rise. Any thoughts on cashing them out before this happens?
They pay 5% plus a juicy tax credit. Why would you worry about a potential dip unless you need the cash? — Garth
“So, stock markets keep on hitting new highs and the greenback appreciates, since the rest of the world (including Canada) is in varying degrees of swampiness. In short, the US recovery is seriously on track.”
It’s what happens when:
Bankers spend 6 1/2 years trying to make back capital losses, funded by taxpayers everywhere.
$4 trillion of “stimulis”
Brilliant!
Good post today Garth. BTW, the amazons say hi. Haha, just kidding….no they don’t.
Come 2015, which of the following do you thing will apply?
a) a fixed (election date), or
b) a (fixed election) date.
b)
Your only choices are Dumb, Dumber and Dumberer. Until we remove the “Dictator till the next election” system we have nothing will ever every change – well until the WCW I comes (World Civil War I).
> tired of paying rent, they might as well pay themselves first.
What’s this nonsense?? you are paying the bank until the debt is fully repaid.
no wonder people love debts these days, “Get free money now, and pay yourself later!”
Fantastic post Garth. Your blog has been the only bright spot in my day today ;-)
PS – My sister is sitting on a good chuck of cash and I’m sending you her way. I’ve got a bit of catch-up to do, but when I get to the $150,000 mark, I’ll also be coming your way!
Garth, do you think FRS will abandon inflation as the target? That would make rising interest rates less of a certainty.
If I may suggest a subject for one of your future masterpieces, would you be able to talk about the reasoning/decision making process on Parliament Hill. What is in the minds of the folks there. What is the share of their mind dedicated to the constituency, the party, the reelection, etc. Obviously, this woulf reflect only the situation back then and not the current status quo.
Oops, I mean I’m sending her YOUR way….
I think I might need a shot or two of whiskey myself tonight!
Garth, it’s a bit premature to declare gold bugs to be wrong, just like it’s premature to declare you wrong on Canadian real estate.
Trends dictate that both Canadian real estate must decline in real terms, and gold increase due to a diminishing supply of physical metal.
These are irrefutable to anyone that does not hold official statistics to be gospel. Government has proven it will lie over and over on various issues, statistics are not immune from that.
The US GDP is shrinking, not growing. At about a negative 2.5% a year since 2006 (this would explain the disconnect between the complaints of the middle class and the exuberance of the elite).
http://www.shadowstats.com/alternate_data/gross-domestic-product-charts
Even if GDP DID go up, that is NOT an indication that WEALTH has increased. GDP is a barometer of spending. Spending is not necessarily good. It is what the money is spent ON that is good, and whether or not people’s standard of living is going up (such as leisure time, which is unaccounted for).
If the government spent 1 billion dollars on digging holes, and 1 billion dollars filling them back in, it would increase GDP. No one would suggest this has helped the economy or the lives of anyone, except maybe Paul Krugman because he is an idiot.
I gave up reading the Red Star a long time ago.
Shills for the RE industry – and no surprise if you pick up a print copy (especially at the weekend), crammed full of juicy RE ads. TorStar Corp’s price is 1/3 of what it was five years ago. They need that revenue badly, and will write anything to appease their masters. Susan Pigg is their chief proxy; printing TREB releases as gospel with no analysis whatsoever.
The best part – dare to bring up a counterpoint in the comments and find yourself censored within the hour. Same goes for any criticism of their beloved LPO.
No tie in between the Homes section of the newspaper and editorial staff.
wave hands in the direction of the readers…These are not the journalists you’re looking for, move along…
“So when the Fed moves, and if the OECD is correct about Canadian rates, you should expect that disorderly correction.”
So that’s kind of prediction… IF the OECD is correct.
9 Smoking Man on 11.25.14 at 8:44 pm
No rate hike in the over night rate in 2015
Prozac even said so.
He said that where? — Garth
………..
Few months ago, I don’t have the link so cavet emporium.
He said, something along the lines of, even if the out put gap tightens (meaning unemployment shrinks ) he won’t be pressured even if The USA spikes.
The guy wants a 75 cent dollar and his pals in the export game drinking champaign again….
It’s out there somewhere.
Who would be taking their “home buying cue” from the editor of the Toronto Star? Should we suppose these same people take their “investing advice” from that same source?
I’m sure the qualifications to be a “personal finance editor” at a paper such as the Toronto Star are similar to those required to peddle Real Estate, except perhaps one need not have completed middle school.
Apparently over 53.56% of the readers answering a poll about it being a ‘good time’ to buy a Toronto home disagree with the advice dispatched by Adam Mayers the “personal finance editor.” Wise readers. Good call there!
“By the way, the Star asked readers if this is a good time to buy a Toronto house. Yes: 30.54%. No: 53.56%.”
My small sample poll of “where you think average Vancouver, Calgary and Toronto single family detached prices will be 1 year from now.” has readers suggesting that in one year Toronto SFDs will be:
32% SAY 20% DOWN
19% SAY 10% DOWN
13% SAY 5% DOWN
12% SAY 15% DOWN
8% SAY NO CHANGE
8% SAY 5% UP
You can vote on all 3 hot metro markets here (as well as view the rest of the results):
http://www.chpc.biz/opinion-polling.html
http://m.thespec.com/news-story/4778041-poloz-says-employment-weakness-means-rates-can-stay-low/
There’s your link Garth…
I am familiar with those comments, but he did not commit to no rate movement in 2015. — Garth
#”Will Canadian rates follow?”… #Duh!… #Or,”OnlyInCanada?Pity…”… #Not!
http://youtu.be/prVRwXAWFeA
[NoteToGT: “This was the best six-month spurt since way back in 2003, when Stephen Harper still liked me.” – Hon.GT… Just between the two of us, AuldPol – that was a particularly disturbing word picture you just painted… On the BrighterSide, though – what a splendid opportunity to have a WellDeserved laugh at the PM’s expense – as in, “Spurt”… Figuratively speaking, natch. Ooops… MyBad. Does remind me of a recent release, though – speaking of which, are we allowed to say, “Premature” before 1800PST on the BlogoSphere? Just checkin’: http://youtu.be/vFncV2U5PHw ]
Would it make sense to buy before interest rates increased so you can lock in on a fixed low rate for 5 or more years?
I’m thinking of buying a property in Innisfil or Alliston for about 150k to 200k, which at the top end would have a payment of 1200, which considering taxes and utilities would be 2,000. Which is roughly what renting a house nearby would be.
What about buying a foreclosure? I know you don’t see an america style crash but what exactly are people going to do when the rates increase?
Another one outed. Adam Mayers. Thank you Garth!
Adam has now joined the greater fool distinguished outed money advisers list of: MIL, [email protected], All housing salespeople, BIL, Condo Kings, Condo Queens, plus all of the other 1 asset worshipers Garth has outed on his “Top Canadian Personal Finance Blog”.
Now, I am nowhere near the smartest nor the richest blog dawg found on this site, but just the mere idea of me ever doing what Adam suggests, instead of doing what Garth suggests, $care$ the living $$$$$$hit out of me. But then, I always put my freedom first. Thanks Garth, for truthfully promoting real financial health for everyone, and not the life ruining decisions brought on by financial insanity. This is not hyperbole. This is deadly serious, and sadly, very very true.
“I do not tout stocks.” — Garth
No kidding…
http://youtu.be/uoekfgmbe-o
[NotesForSaltierCinephiles&OtherKryptophiles: Only his BeardDresser knows for sure – http://www.imdb.com/title/tt0043733/?ref_=nv_sr_1 ]
Still remember how money is created kids? What happens when people stop borrowing to buy houses?
Albright wants the D. Deflation.
“Adamonics assumes what has happened will continue to take place. It’s classic.”
Funny that was what I was thinking after I read your 2nd paragraph ending with:
“The US recovery is seriously on track.”
I don’t disagree with your general themes and advice, but no need to be complacent about what the future may hold.
Like it or not, the US is in recovery. No reason to believe it will not continue. — Garth
The economic fundamentals worldwide are the worst they have ever been in the history of the world. How can grown ups keep believing all the phony numbers published by these losers is astonishing. Never underestimate the power of media brainwashing and denial.
“This is the sentiment that screws more people than unsupervised radio hosts.”
ahahahaha…
hey Mr T, how about this idea: When the housing price corrects (looks like it could be soon) you get a spot on … say Mercer Report, and explain to a general audience why housing is too expensive, and have some fun at the same time?
They pay 5% plus a juicy tax credit. Why would you worry about a potential dip unless you need the cash? — Garth
Buy a house with 5% down plus juicy tax free gains. Why would you worry about a potential dip unless you need the cash? — anti-Garth
What a foolish comment. The house comes with 95% financing, no income and endless overhead. — Garth
#42 Smoking Man on 11.25.14 at 9:52 pm
http://m.thespec.com/news-story/4778041-poloz-says-employment-weakness-means-rates-can-stay-low/
There’s your link Garth…
I am familiar with those comments, but he did not commit to no rate movement in 2015. — Garth
….
Of course not . He didn’t actually say the words..
But he said it clearly without saying it. Know the man’s history, his alliances, his priorities.
Then tie them to his words …you hear what others miss.
example in the above link when he says I’m not happy with a low dollar.
Dose anyone in the money business belive that.
….
Anyway off the Vegas tomorrow, going to Cheetahs topless bar..it’s in my book but can’t describe it cause never been there. Almost talked my wife into going in with me.
I don’t want those dancers to think I’m a creepy old guy.
I may post some pics of this adventure.
#131 what bubble? on 11.25.14 at 2:32 pm
#122 Chickenlittle – With that article, what do you think will happen now? A housing boom come spring? Maybe that was the intention…”
“Exactly. They let that information out with one purpose – to boost the RE market which is drying out.. and then who cares about recommendation of some Organization for Economic Co-operation and Development…”
Isnt that exactly what these greedy RE people want. Who knows…it could have been purposely announced just to get the CONservatives through the next election. One last push to bump up the housing market and the “economy” before the fall election.
I GUARANTEE these S.o.B’s will manipulate thisto
For F@$*%’s sake… I just wish the economy wasnt so easily manipulated…im getting pretty ticked off.
Red herring indeed..
Sorry Garth, but isn’t it obvious that those who think the US is ‘recovering’ are victims of propaganda? Bond rates continue to plummet, which is no sign of economic growth. The US dollar rising so much is clearly a signal of deflation occurring in the US economy, which doesn’t lend itself to economic growth either. There’s been no credible indication that rates on either side of the border, especially not Canada, are anywhere near rising. And to say that Canadian prices are still going up — again, duped, when evidence is abundant that quite the opposite has been occurring.
Just one question, thinking about attending night school at Haskayne to earn a part time MBA. Coming from an applied science background business has always interested me.
MBA’s are a dime a dozen in Calgary. If you can find a job with your technologist background, which shouldn’t be too hard (most employers prefer them to engineers) you’ll probably make more than the average one.
Hey Garth,
Up in Vaughan this evening I saw fuel pump prices of 109.
“Bank of Canada will follow suit…” Nope.
One of the dubious achievements of this Conservative government has been to politicize the bureaucracy and related institutions.
Interest rates will go absolutely nowhere until 3 months before election – right now Oct 2015 so you are safe until July 2015.
Action list:
1. Sell your CAD over .89…it won’t be back over that level for minimum of 10 years.
2a. Get pre-approved before the election for as long as possible and buy your house with only a 20% correction looming
or
2b. wait for 2+ years then buy when panic hits
i Like Cato the elder
where are you getting these
figures
http://www.activistpost.com/2014/11/21-facts-that-prove-that-dependence-on.html
looks like the good old USA is not the same as once was.
companies buying back their shares, no work, more wars, and look at the out of work workers?????
USA doing well ????
54 Mark on 11.25.14 at 10:41 pm
Mark, I go Vegas 2 to 4 times a year..and have been doing so since 1990.
It’s my gage..and the three privious trips this year. It’s as busy as it was at its peek in 2007.
I don’t think it’s that much propaganda. USA is heating up.
But not to say an export centric BOC govenour is going to jump on the dollar strengthening rate spike band wagon.
Here is the link to The Star’s poll. Take a minute to vote dawgs.
http://www.thestar.com/business/personal_finance/2014/11/24/why_firsttime_home_buyers_are_still_taking_the_plunge.html
What is the Toronto Star? Never heard of it before…
In case anyone thought otherwise… TFSA contribution limit should be $5500 again for 2015.
http://www.jamiegolombek.com/articledetail.php?article_id=1347
RE #35 Cato the Elder on 11.25.14 at 9:38 pm
Garth, it’s a bit premature to declare gold bugs to be wrong
What do you think will happen to gold prices when interest rates rise? OOOps!
Great blog tonight Garth. They’re all good and informative but this one really lays bare the move by the Fed in 2015. The inevitable interest rate hike cometh.
The OECD has been terrible in their outlook/forecasts. If anybody is listening to the OECD, they’re as nutty as the gold-lickers. Most notably, the OECD outlook was completely wrong re: Eurozone. Like totally. Exact opposite.
We shouldn’t be surprised if they’re totally wrong about Canada and the BoC as well.
Oh and guess what usually happens when the consensus of Canadians (let alone readers of The Star) votes one way over another.
Right.
The consensus is usually and completely wrong.
That’s why they’re poor.
What’s wrong with Taylor Swift videos?? They are better than Millie Sirus or how ever you spell that naked kid’s name. Yuck. Wrecking Ball all right. I think I’ll turn off the internet and go eat some bacon. Hopefully Garth is right and it ends the offensive onslaught of all this yuck, while being yummy.
Here an interesting piece,
http://www.theburningplatform.com/2014/11/20/no-one-told-you-when-to-run-you-missed-the-starting-gun/
http://www.visualcapitalist.com/everything-need-know-swiss-gold-referendum/
The Swiss could be the starting gun, Germany, then Belgium, and now France wants their gold back.
gold is ready for a rebound, can’t keep her down much longer, selling one year supply in one hour, the shorts are going to get creamed….
the Ukraine gold is gone, many countries now want their gold back, gold has been in backwardation for many many months, and The central banks are buying along with the Chinese, India as always, Russia, and many many countries, Japan has tossed the old ladies under the bus, so much for their retirement funds, and yes the USA dollar is up, as in the Pink Floyd SONG only in a relative way, the USA dollar index is based on other dollars that re sinking so , what recovery
The US dollar is based on trust, but right now many are loosing the trust, it all starts with on a leader, then a follower, then three there is a movement, after that the crowds jumps on board, when 3 billion people see that the metal has no counterpart risk, and cannot be cheated, then we have a movement, so wherever you believe gold will not go up is of no consequence, it is what the crowds believes, and we in the west are a small population relative to the EAST.
Goldman , JPM , etc…and the boys have been accused of rigging the commodities markets, ya that is a good healthy markte.
This is not a gold blog. Go away. — Garth
Whazz wrong with buying houses and condos … there are 1.2 billion Chinese and they haven’t bought all of Canada yet. There are actually some scraps left the Yanks and Chinese have not taken off the grabby little hands from those sold out Canuck- land inhabitants yet.
So the future of condos and houses here are limitless, in this, my home and sold out land or anything else here. Whazz next … national parks to pay down the debt? Yanks sold most of theirs already.
DELETED
since the price of oil is a meter stick on economic growth and consumption please explain the disconnect to your rosey outlook on the U.s recouvery.We’ve debated the fact that Gov economic numbers are released without confirmation,and are often revised downward.Also Inflation frankennumbers don’t reflect the full consumer basket.Anyone that doesn’t send the butler out to do the grocery shopping will attest to that!
I just believe it comes down to the fact that the consumers are tapped out,hence deflation is creeping in.
Also read recently that there has never been a time in modern commerce with there were so many intermediatories with their fingers in everyone pie.Just look at the deductions on your next paystub.Income tax,EI,CCP,then when you cash the sucker the bank takes a fee,whats left is attacked by consumption tax HST…then if you have the ability to save enough to invest theres always a broker standing by with his hand out looking for a commission….
No wonder the 99% are broke
#35 Cato the Elder
“The US GDP is shrinking, not growing.” “Paul Krugman is an idiot.”
———————–
And you quote ShadowStats? The same totally discredited entity that has no new methodology, but just adds a simple, conjured and arbitrary constant onto the published government stats you eschew?
See this… http://azizonomics.com/2013/06/01/the-trouble-with-shadowstats/
I used to believe you were just bitter and twisted and stupid and somewhat resinous of heart.
Now, I see that you really are nuts! Crazy! Crazier than a duck in a car wash!
And somewhat pathetically funny.
Race wars ….hum..
I look at MSM and all I see GTA real estate hot.
Twitter every second post on #mh17 The Ukrainian did it using a fighter. Yet MSM nothing…
Now all over the news , pumping race wars.
It ain’t no accident. .there is an agenda at play.
Now how do I make money on this inside info…?
I’m back bastards….done morning. .
Why all the vitriol directed against Harper. He is just the right wing…….of the socialist persuasion.
Lots of you should be happy with that.
#54 Mark on 11.25.14 at 10:41 pm
“Sorry Garth, but isn’t it obvious that those who think the US is ‘recovering’ are victims of propaganda? Bond rates continue to plummet, which is no sign of economic growth.”
What’s the time frame associated with your usage of the word “plummet”?
Obviously, it matters. For example, 2 years ago (Nov 24, 2012) the US 5-year bond yield was at 0.619%. Today, it’s 1.575%. That’s an increase of 95.6 basis points. However, going back to May 31, 2006, the US 5-year bond yield was 5.102%. Please specify what time frame you are talking about? Otherwise, words like “plummet” lose their meaning.
===================================
“The US dollar rising so much is clearly a signal of deflation occurring in the US economy, which doesn’t lend itself to economic growth either.”
Well, no, deflation doesn’t work that quickly. Corporations importing goods will take the profits for a while, until they are competed away by other firms or they raise wages until the effect of an appreciating USD is no longer attributable to profits. Absent of competitive pressures within a given industry, and all along the supply chain, the stronger USD won’t do much to lower prices and wages in the short or medium-term.
==================================
“There’s been no credible indication that rates on either side of the border, especially not Canada, are anywhere near rising.”
So CPI at 2.4% isn’t somewhat concerning for you?
If it remains above 2% for a significant amount of time, do you really think large bond investors will, over the next 2 or so years, be willing to put up with negative real returns just to avoid more risk? This practice will eventually come to an end because large institutions have an obligation to provide inflation-adjusted returns to meet their needs. Key word being “obligation”.
====================================
“And to say that Canadian prices are still going up — again, duped, when evidence is abundant that quite the opposite has been occurring.”
Please specify what “prices” you are talking about. House prices, or CPI?
Lisa laflame just reported , rates are going up for this and for that..
Does this airhead even know what she’s saying .teleprompter is what I’m thinking…my wife lover her out fits.
Translation..GTA.
Prices at record high.
inventory and days on the market at record low.
Machine says .hum…let’s slow down the spring market.
RIP Mike Brown
Back in ‘your turn’ someone suggested we invest in the children. The problem is that inside every child is an adult struggling to get out
Anyone who believes anything they read in the MSM deserves everything they get.
Old Portugue se cashing out of the west end looking li ke geniuses and making out like bandits except…everything else is ridiculously overvalued.
They bought at 1-2-3x annual salary because it was simple and sensible
thing to do. Today buying that house at 22x salary is no longer simple nor sensible. Its just insane.
Keep saving and investing. You may not even need that mortgage in a couple years
I wonder if Cenovus will wait until after the holidays to hand out those layoff notices. http://calgaryherald.com/business/commercial-real-estate/cenovus-to-give-up-nearly-half-a-million-square-feet-in-the-bow-tower
#71 JimH on 11.26.14 at 12:07 am
“#35 Cato the Elder
“The US GDP is shrinking, not growing.” “Paul Krugman is an idiot.”
———————–
And you quote ShadowStats?….
I used to believe you were just bitter and twisted and stupid and somewhat resinous of heart.
Now, I see that you really are nuts! Crazy! Crazier than a duck in a car wash!
And somewhat pathetically funny.”
====================================
Lol!!! Awesome.
Shadowstats is ridiculous. Anyone with any modicum of mathematical skills can easily put it to a sniff test. Eyeballing the chart, let’s assume it’s average inflation between 1994 and 2014 is 9%. Let’s use the simple “Rule of 70”:
Doubling time = t = 70/R
R = 9%
Solve for t
t = 70/9% = 7.78 years to double.
So under Shadowstats’s inflation reading, prices would be doubling every 7 years 9 months and 10 days (roughly speaking). Sure, maybe one or two items has grown at a similar rate, but certainly not the whole basket of goods and services, particularly when US housing fell so massively after the GFC…
Using another simple formula:
FV = PV(1+r)^n
FV = future value
PV = present value
r = growth rate (Shadowstat’s 9% per annum)
n = number of periods (years)
Question: If a chocolate bar costs $0.69 on Dec 31, 1994, and inflation grows at 9% for 20 years (compounded annually), what’s the price on Dec 31, 2014?
FV = $0.69(1+0.09)^20
Well, as of the end of 2014, that same chocolate bar would cost $3.87 at that growth rate… Smells like some BS statistics…
Fun factoid of the day:
The price of a Nintendo Entertainment System (aka NES) in 1985 was US$299.00.
The price of Sony Playstation 4 (aka PS4) in 2013 was US$399.99.
Obviously, these aren’t the same machines, but just for the fun of it, let’s assume they are comparable.
Excluding states sales tax (shout out to Oregon), that’s a womping 1.04% inflation rate…
Thank you, Japan! Keep them prices low for our entertainment needs!
I was reading that story in The Star today and immediately thought “Garth is going to lose his mind”. I was glad I was right. Adam is nuts.
“Canada’s largest and most desirable city”
Of course he’s not reliable. He was half-wrong in a single sentence fragment.
(Well, a third. T.O. is undeniably a city)
Garth
Looks like servicing the real estate boom and packaging it as a tech company is where the real action is at….According to the G&M, this guy made $500/hour to do webpage optimization for clients, and has now created a company with $100 million in sales potential based on webpage management for real estate hawkers.
http://www.theglobeandmail.com/report-on-business/small-business/sb-growth/success-stories/after-difficult-childhood-35-year-old-bc-entrepreneur-builds-real-estate-empire/article21697837/
Am wondering if your blog could be repackaged as a kind of contrarian real estate tech-play…..do you aspire to make $500 per hour and aspire to be a NASDAQ web-king?
I need to find a different outlet for this stuff but so far this is the one I use.
But why are schools banning balls and ball games??? Oh sure I was a pretty good goalie not bad at defense and scored a bit at midfield, but never a solid striker. Does that mean soccer should be banned at school to protect my tender heart?
OMG Garth you understand a lot of things, not bacon of course but a lot of other things. But the pieces you aren’t putting together is the problem is the people. All of the people. The world is falling apart because the people already have. To late to change it. Until you see the movement to save Fukashima and stop the releases, well, we’ve got 10 years left no matter what you can earn someone in a managed account. 10 years folks, unless we do something to fix the mess. Enjoy your plutonium contamination. The world is already over, just give it a few years.
Markets are fooling everyone just like it did in 2007. The US is living in a phony economy and will surprise the bulls one the euphoria from the QE fades. If everything is all good, interest rates would have risen already. But its not ok, the FED is buying time. They’ve ballooned the S&P to silly highs. Many stocks are Rediculously overpriced and when this ship turns, many will lose big time. Dont be fooled about UD job creation. They are all low paying jobs. The US are making less than they did in 2007. Remember when Peter Schiff called the GFC in 06? He got ripped to pieces. 2008 he was still called crazy and stupid. When everyone is bullish after a huge run, watch out!! Ill see u at the bottom for your shares :)
#16 We used to feel the same way. When we were first out of school, paying off significant student loans we always felt we had missed something. Friends with big new houses, two SUVs in the garage, and vacations every winter right from the start. Luckily we didn’t try to follow suit.
We started doing our research and digging into the numbers, stats and research. We studied personal finance, paid of $70,000 in 2.5 years, and continued to save like we were still students.
Now in our early 30s we know that most of what you are describing is not because of parental help. It isn’t due to high salaries. It isn’t even financial savvy. At least in our experience, the vast majority of what you are seeing is a mirage. You can live an amazing life on low interest rates in today’s world. Until you can’t. This usually doesn’t come out in the wash until much later in life.
As you learn more, talk to your friends/acquaintances you will start to understand this.
By the way, it is now 55.52% NO in the Toronto Star survey.
oh maybe we are wrong on the housing thingy in Canada is the best place to be, Bar our gov.
FACT never before has so many been allowed to travel, China has just allowed more of their citizens to travel, they have offered 400 million chinese visitors visas to travel to to other places, and in another article,
Aprox 400 million middle class Chinese really want out of their country,due to pollution, corruption and now they have the means, education and money to go see whats out there. WOW 400 million, incredible, so maybe many would love to live here.
let hope at least 1% of them get to come and visit this fabulous country, and how many would want to stay.
Then we have a housing boom, HAhaha. just saying
“But don’t blame me for this. Dis the OECD.”
The OECD is a lobby group masquerading as a think tank. Ask your local rates desk whether they trade on OECD research. Don’t be surprised if they laugh you off the floor.
The BoC has no intention of raising rates in 2015 as they see inflationary pressure dropping towards the end of the 2015 and into 2016. Raising rates in the spring will just mean that they have to cut rates later if their own predictions hold true. Of course they’re not going to guarantee anything but if you read the monetary policy report you will understand what they’re talking about. There’s an outside chance that they could raise rates next year but at the moment they don’t see it. Why believe anything a purposeless group like the OECD is saying when you can read your own central bank’s views on the topic. Who do you think will make the decision anyways? Hint: it’s not the OECD.
“He wrote about housing this week, urging young people to buy in a city where average prices have increased at four times the inflation rate in the past year.
He could be right but he either hasn’t articulated his argument correctly or he doesn’t understand the reasons behind it. Core Toronto (not GTA) houses (not condos) will increasingly be affordable only to those with the resources to purchase it. This means above average income earners and high net worth households. SFH Toronto houses will not be affordable to average income earners again. I think what he means to say is, if you have the income or net worth and you have a long time horizon for investment and you’re willing to put your money into it, then there’s no reason to wait for a correction to get in on the trade.
GDP calculation in the US has been inflated since 2013.
seekingalpha.com/article/1368001-u-s-governments-new-way-of-calculating-gdp. The FT link is good.
Central bank QE is fungible; Japan has put the pedal to the metal; next will be the EU, and ultimately the IMF with SDR’s. QE has not ended.
In the US it has. But why do you care? — Garth
there was a short pause between QE1 and QE2.
there was a short pause between QE2 and QE3.
QE4 is coming.
“Federal Reserve officials meeting Tuesday and Wednesday are virtually certain to end their latest bond-buying program, but they won’t be retiring the policy for good.
Their recent comments show bond purchases are now an established part of the Fed’s policy tool kit that they could employ again in times of deep economic trouble.”
– W.S.J.
With GDP growth of almost 4% and robust job creation, there is no need for further stimulative spending, now or in the foreseeable future. — Garth
#17 Jimmy on 11.25.14 at 8:57 pm
Still can’t figure out why Garth is against people who eat bacon. Did I miss something a while back?
==========================================
yes. a whole post about sarcasm
With GDP growth of almost 4% and robust job creation, there is no need for further stimulative spending, now or in the foreseeable future. — Garth
GDP growth? Manufacturing is down, the growth is mostly due to miss-measured inflation. Most jobs are low paid temporary service jobs for baby boomers who can’t retire.
There might be no QE until the reserves leak into the real world causing the proverbial inflation Paul Krugman is looking for.
Sarcasm behaves to people who get it right at least from time to time.
As I sad DOW going up towards 20 k. Dollar somehow down lately.
@66 nonpulsed
It’s spelled “Smiley Virus”
behoves, darn spell checker.
Deficit is fake, US debt swill grows over 1 trillion per year.
Look up the definition of fungible.
I believe there is a powder for that. — Garth
DELETED
More bad signs on the horizon for the hollowing out of the middle class.
http://www.cbc.ca/news/canada/manitoba/rent-to-own-practices-in-canada-would-be-illegal-in-parts-of-u-s-1.2850023
http://www.creditdonkey.com/middle-class-afford.html
Garth, why has three month Treasuries been hitting negative interest rates if the economy is doing so well? Are bond markets no longer a leading indicator?
This supports what Garth has been saying.
“It’s surprising how much central bankers don’t know. Not because they are bad central bankers, but because there are things they just can’t know.
Bank of Canada governor Stephen Poloz says he won’t have to rein in the economy until 2016. The Organization for Economic Co-operation and Development begs to differ, saying we should expect interest rises as soon as this spring.
But there is another reason why not only Poloz, but also U.S. central banker Janet Yellen may be forced to raise rates much sooner than even they expected just a few months ago.
That is the huge lag between when central banks decide to increase rates and when those increases actually act to bring inflation under control.”
http://www.cbc.ca/news/business/danger-of-runaway-inflation-means-rates-could-rise-sooner-don-pittis-1.2849297
“Last week, Statistics Canada also had a surprise. Despite a sharp fall in the price of oil, Canadian inflation came in at a startling 2.4 per cent, well above the Bank of Canada’s target rate of two per cent. As BMO economist Doug Porter said, that made Canadian inflation the highest in the industrialized world apart from Japan.”
“According to the Bank of England, the effect of raising rates on fighting inflation is delayed much longer than you might think — not just months, but years.
“Official interest rate decisions have their fullest effect on output with a lag of around one year,” says the Bank of England research, “and their fullest effect on inflation with a lag of around two years.”
Re: #82 Kenchie
Inflation is the increase in the money supply, with the SIDE EFFECT being an increase in prices.
And your example proves the point I have made many times on this blog: government is the reason behind price increases.
Electronics and technology are some of the least regulated areas in the economy. Prices fall in that space IN SPITE OF the rampant money printing going on.
They would fall EVEN FURTHER if it wasn’t for this money printing because the components that go into it’s construction (copper, gold, plastics, etc.) would decrease in price over time as well.
Japan has VERY poor economic policies in place. They are an island that has to import virtually everything. How does having a weak currency help in that regard? A strong currency would be a better plan (it is also what the free market has been TRYING to tell the politicians there for decades, but they are adamant about fighting it). A strong currency would mean cheaper raw material imports, as well as incentivize investment into higher efficiency machinery. Their exports would decrease in price as a result, and they could gain more market share.
Japan is a UNIVERSAL example of the FAILURES of Keynesianism and how to destroy a society with interventionist political idiocy.
#52 Smoking Man on 11.25.14 at 10:35 pm
#42 Smoking Man on 11.25.14 at 9:52 pm
Anyway off the Vegas tomorrow, going to Cheetahs topless bar..it’s in my book but can’t describe it cause never been there. Almost talked my wife into going in with me.
I don’t want those dancers to think I’m a creepy old guy.
I may post some pics of this adventure.
____________________________________________
Jesus Christ Smoking Man don’t ever take your wife into a strip joint. Just let the dancers think your a creepy old guy cause you probably are in some way. Thats a good way get a quick divorce. As the saying goes what happens in Vegas stays in Vegas. I was supposed to go to a convention back on Nov 07-Nov 10 it was the 155th Attack Helicopter Company Association 2014 Reunion. I was posted to them for a short time back in 1970. Once a brother always a brother. I really am kicking myself in the ass for not going as we are all dropping like flys.
It was at some place called Tuscany Suites & Casino? Never pass up these moments Smoking Man!
Cheers.
http://www.155-th-ahc.org/
#89 timmins miner on 11.26.14 at 4:31 am
oh maybe we are wrong on the housing thingy in Canada is the best place to be, Bar our gov.
FACT never before has so many been allowed to travel, China has just allowed more of their citizens to travel, they have offered 400 million chinese visitors visas to travel to to other places, and in another article,
Aprox 400 million middle class Chinese really want out of their country,due to pollution, corruption and now they have the means, education and money to go see whats out there. WOW 400 million, incredible, so maybe many would love to live here.
let hope at least 1% of them get to come and visit this fabulous country, and how many would want to stay.
Then we have a housing boom, HAhaha. just saying
____________________________________________
Well we certainly have the room for them. But then who the hell wants to live in the neither regions of this wonderful land. Everyone or should I say most of the 35 million people here live within 100 to 200 miles of the US border. I guess we like living near them but just not with them. I wonder what the newbies think? Holy shit I better start practicing Mandarin or Cantonese.
#103 Cato the Elder on 11.26.14 at 9:29 am
Agreed a weak currency is not a positive step for any state. A strong currency puts you at the head of the dog, not the wagging ass tail.
We just came out of 30 years of a devalued dollar what did we get for it? Nothing! Now we are headed back to a crappy currency level. All the unions love the cheap dollar so they can keep their scam going. For gods sakes we just need to be competitive and hungry for business.
Initial jobless claims spike ubove 300k to 3 month highs in the U.S,,,wow the “recouvery” down south is in full swing!
Guess they will blame this on the weather…..again
#39 Smoking Man on 11.25.14 at 9:43 pm
9 Smoking Man on 11.25.14 at 8:44 pm
No rate hike in the over night rate in 2015
Prozac even said so.
He said that where? — Garth
………..
Few months ago, I don’t have the link so cavet emporium.
____________________________________________
Smoking Man I surmise you were too young to take latin. Your close with cavet but emporium is the greek latin word for is a store which sells a wide variety of goods as well as a marketplace or trading center in ancient cities. What you meant was caveat emptor!
“Merda taurorum animas conturbit”
Gotta love market economics. This is a fine example of it at work in Alberta!
“Cowboy shortage and higher beef prices caused by Canada’s oil boom”
http://marketbusinessnews.com/cowboy-shortage-higher-beef-prices-caused-canadas-oil-boom/39392
#76 JSS on 11.26.14 at 12:30 am
RIP Mike Brown
…………………………..
He was a gangster thug. Period.
He had committed robbery minutes before.
He then had to show how tough he was by beating on a cop who wass 100lbs smaller and trying to take his gun byforce
I,m sure he just wanted to clean it out for the officer, and then hand it back.
He can rot in hell Imo.
Don’t care if he was purple with yellow spots, he was a cancer on society who. Tried to take a gun from a much smaller cop. Bang bang, bye.
#112 Bdy sktrn
“He can rot in hell Imo.”
Nobody cares about your opinion.
With GDP growth of almost 4% and robust job creation, there is no need for further stimulative spending, now or in the foreseeable future. — Garth
if QE worked…then QE1 would have worked.
your prognostications are correct, however they will eventually require QE4.
There are thousands of other outlets where I can get in on the Mike Brown discussion. Can we keep it out of here? Please Garth…
Re: #112 Bdy
Cop is 210lbs 6’2″ he’s hardly small.
I saw the so called ‘injuries’ – didn’t look like anything a 300lb raging person would induce. According to the officer Darren Wilson, he felt another blow ‘could kill him’ – do these pictures make you feel the same way?:
http://fair.org/blog/2014/11/25/abc-and-darren-wilsons-serious-injury/
I don’t believe the prosecutor in this case was right for the job. He is a FORMER COP. He has NEVER presided over a case where the officer he was prosecuting was indicted. There is clearly a bias from the very beginning.
An indictment IS NOT A CONVICTION – it is merely the grand jury deciding on whether or not it should go to trial. Yet when you see the statements the prosecutor was making to the grand jury, he was constantly alluding to the ‘beyond all reasonable doubt’ that a conviction would rest on, NOT AN INDICTMENT. There doesn’t need to be ‘reasonable doubt’ in order for the grand jury to decide it should go to trial – yet they were being coached to believe it was necessary.
I’m not justifying hitting cops. This whole situation could have been avoided if Mike Brown had been polite and complied. But based on the PREPONDERANCE of evidence, it looks an awful lot like the cop Darren Wilson was being overly hostile. He did NOT engage appropriately.
The thing I find most funny about this is the statement that Mike ‘charged’ at him. How ridiculous does that sound? You’re being shot at multiple times and you decide to charge at someone from 30 feet away? He was shot in the top of his head. Most likely what happened was he was hit with several bullets in the front, and started to stumble forwards and while he was collapsing Darren shot him again in the top of his head. This stumbling forward could be construed as him gearing up to ‘charge’.
Look how belligerent this ‘hero’ cop Darren Wilson is being in this other incident:
https://www.youtube.com/watch?v=nBS_is2DQiU
Quote “I’m going to lock your a$$ up” for recording him with a camera! Constitutionally allowed free speech to record cops – but this macho man doesn’t like it! And to top it all off, the guy recording is on his OWN PROPERTY.
This entire thing strikes me as many similar cases do – a cop that wants compliance because he feels empowered by his position. Protocol is often disregarded, and the fact that no crime has been committed doesn’t matter – they want you to obey them OR ELSE.
California Housing Market Cracks in Two, Top End Goes Crazy
http://investmentwatchblog.com/california-housing-market-cracks-in-two-top-end-goes-crazy/
Or yours.
In fact, beating cops and stealing their firearms is alot of fun. You should give it a try.
Re: #102 Dominoes
Our politicians don’t want to do the right thing. The right thing would be rate increases. But that would induce a recession because it would wipe out a lot of the speculative gambling that’s happened with artificially low rates. That would make them look bad.
Not only that, but their backers (the banks) don’t want rate increases either. They will get what they want. Price increases on the middle class will continue to be downplayed so they can keep plundering the system just a little bit longer.
If rate increases DO come, it won’t be a voluntary decision for the betterment of our country. It will come because it is FORCED upon them by an economic calamity.
We no longer have politicians that actually care about the middle class. At least not the ones with decision making power. Sure, there are some who care, but they don’t get much say.
That’s the problem with centralizing authority like we have today. It draws in sociopaths. The type of people who crave power over others. Most people are normal and just want to live happy lives – but not those that get attracted to government.
People buy in Calgary for several reasons: Not enough rentals. Same amount as a mortgage. No rental controls.
You are lucky if you can find a property to rent. Lucky if you get a good landlord. Lucky if you find a place that accepts pets. The rental market in Calgary is a disaster. What 1% vacancy rate? Many of the things on this blog would apply if Calgary were not cutthroat.
Dont come to Calgary unless you have housing secured. You may end up living at a shelter while working.
“Mortgage owners screwing other mortgage owners…with worthless advice.”
On the plus side if you decide to acquire a mortgage: Gridlock traffic. A city hall that decides to shaft with high taxes. Your neighbour close enough to pass the Grey Poupon(think All in the Family in Brooklyn). A house priced at least double its true value(thank you market value and bs comps).
Calgary=well paid jobs and housing craziness.
Garth – I thought you’d be interested in the ‘truth’ by the TREB. If so, watch CP24 tonight at 8PM EST and see TREB President Paul Etherington discuss homeownership facts from fiction.
Blog Dawgs – Open fire & queue up your questions ;)
Oil price weakening further. A red flag? Or just advance notice of Saudi,s/opec report tomorrow?
Could have a 60’s handle by the end of the week.
Re: #81 Kenchie
Your simple calculations don’t take into account shrinking package sizes, among other things.
http://www.dailymail.co.uk/news/article-2524032/Mars-Snickers-chocolate-bars-shrink-size-price-stays-same.html
In 2008 Mars Bar size 62.5g
In 2013 Mars Bar size 51g
This simple example also does not calculate the QUALITY changes in the ingredients. There could be a reduction there as well.
In this example, 500g down to 375g (a 25% decrease):
http://www.huffingtonpost.ca/2014/05/05/pork-prices-canada_n_5270838.html
Shrinking package sizes is the exact same thing as a price increase. Your money is buying LESS.
This is not the fault of businesses. Businesses are doing their best to keep up with price increases. But they are being squeezed, like the rest of us are, but our rapidly declining dollar. The fault lies at the feet of our central bank and government, like it usually does.
**********
Re: #71 JimH
Don’t believe me, or that site. I don’t expect anyone to believe any one source. That’s what develops critical thinking skills – independent investigation. Compare against various sources. All I know is, I don’t trust government statistics because governments lie all the time about everything else.
https://www.youtube.com/watch?v=u8lMZctA9Wc
Will house price to income ratio return to 2.2 as it had been for over 50 years before 2002? The return to normalcy will concern homeowners who thinks the house they live in is an investment.
Mr. Mayer’s advice is shortsighted and is removed from fundamentals that have priced shelter for as long as people lived in houses.
If you have any doubt that Canadian interest follow lock-step with US interest rates just have a look at the chart on this page – http://tinyurl.com/ygelnbu
Or search on Google images for: us vs canadian 5 year bond yields
#109 Holy Crap Wheres The Tylenol on 11.26.14 at 10:14 am
I had it right the first time. I realized that my god, I forgot to put in a period at the end of the sentence.
I have this key typing app. It remembers words you use. So when you put in a period after you’ve typed something.
Boom it swaps out words with ones it likes.
Not sure which statement is more hilarious. Encouraging young people to buy a half million dollar house they can’t afford at the peak of a bubble or saying that Toronto is the most desireable city in Canada.
jian charged. 4 counts.
the women he beat on must be feeling much relief.
#110
This Cowboy article is misleading on cattle prices. The overwhelming reason for high cattle prices is the brutal drought currently being experienced in the USA. Farmers have been slaughtering their cattle over the past 3+ yrs because of drastic feed shortages
118 Bdy sktrn on 11.26.14 at 11:25 am
My opinion is that I don’t know, but it’s sad whenever someone dies, and not something to be talking about here. Re-read your post at #112 and ask why anyone else would have wanted to read such garbage?
Adam says, “Home ownership is about a place to live, so the horizon should be long.” I agree with this: it’s a cliché, but it is time in the market, not timing the market.
That’s why this point is important: “And don’t tell me 26-year-olds are buying a detached property to be their Forever House. That’s simply a myth.” Someone in his or her twenties are hopefully going to be experiencing many positive developments in the short term: getting married if not already; having kids if they are married; getting job promotions that might take them to different cities. Most Canadians don’t stay long-term in their homes, and less so young people. So buying something that costs so much to dispose of is pretty senseless, unless it’s particularly cheap.
Mayer suggests buying and holding RE in a large urban center for a long time makes good financial sense for the majority. He knows people have a hard time saving money, and that most people will be living and working in large cities for a long time to come. So, shelter will cost money and at minimum shadow inflation (which is well above stated figures).
Garth points out young people don’t buy and hold beyond 5 years. Also true. And why would young people want to tie themselves to a huge mortgage anyway? Especially if they are buying expensive and plan to sell soon. Risky.
Adam Mayers must have personal stakes in the Toronto housing market (does he own rental properties?) to give advice like that. Even an idiot like me, who failed a college financial course, could tell you housing in the GTA is overpriced. I would think that even if I never read or even knew of this blog. I’m old enough to remember what happened to housing in the early 1990s and understand it could happen again.
You’d be better off putting your money into oil companies or XEG. Oh sure, it could go down more in the short run but it’s a better long term bet than overpriced GTA housing. I worry about the future of oil every time I drive my petrol fueled car, and am now even more worried when I find out my neighbour is flying to Bangkok next week in a plane that runs on jet fuel. Oh dear, I just remembered last month travelling the back roads of Middlesex and Huron Counties, where I saw a lot of farm machinery that runs on diesel fuel. Help, get me out of oil companies NOW!!!!!!!
#109 Holy Crap Wheres The Tylenol on 11.26.14 at 10:14 am wrote:
“Merda taurorum animas conturbit”
LOL. Istud bonum est!
Garth,
This is hilarious. Please allow to be posted:
“Islamic State catches the Gold Bug” – Ian McGugan, G&M
“Gold bugs have some new and rather scary company: the Islamic State.
The al-Qaeda spinoff is buying gold, as well as silver and copper, as it prepares to mint its own currency. In towns across northern and western Iraq, foreign jihadists are stockpiling the metals, according to the McClatchy news service.
The purchases follow a Nov. 11 announcement that the insurgency wants to bring back the metal dinars of the Umayyad Caliphate, which ruled an empire stretching from present day Iran to Spain more than 1,200 years ago.
The Islamic State “are gold bugs,” writes Craig Pirrong, a professor of finance at the University of Houston. “They really believe the gold bug stuff.”
To be sure, purchases by the Islamic State are only a minor factor behind the recent uptick in the price of gold after two years of free fall. But they speak to the continuing ability of a really bad idea like the gold standard to attract followers despite all its shortcomings.
Economists are nearly universally agreed that a return to backing paper currency with precious metals is a bad idea. Among other problems, it’s difficult to see how a paper currency can bolster its value by relying on a commodity with no practical uses.
Tying a currency to gold doesn’t lead to stability. Just the opposite. It ensures that gold will flow out of an economy when it is at its weakest, depressing prices and growth even further. It also guarantees that gold will flow into an economy when it is already running red hot, boosting prices even higher. The gold standard’s tendency to amplify existing trends was one of the causes of the Great Depression.
But that news does not appear to have penetrated Iraq – or Switzerland, where citizens will vote next week on a proposal that would require the country’s central bank to keep a fifth of its assets in gold. While the idea has been denounced by Swiss policy makers, it is being touted by the far-right Swiss People’s Party as a way to avoid having the franc tied to the fate of the lacklustre euro.
Why does the gold standard still pack such appeal? Maybe it’s because it offers the illusion of solidity in a world where people fear governments are playing fast and loose with the monetary system.
But anyone counting on the combined forces of extremism and populism to renew interest in the yellow metal should think again. Gold is most attractive when inflation is running high and people doubt the ability of paper currencies to retain their value. That is precisely the opposite of today’s environment, where inflation is low and Europe is flirting with outright deflation.
Gold, which pays no interest or dividend, shines brightest when real interest rates are paltry and investors therefore don’t have to pass up yields on other securities to hold the metal. Among the causes for gold’s recent strength has been China’s decision last week to lower its key interest rates and more stimulus from the European Central Bank and the Bank of Japan.
However, with most forecasters predicting a rise in North American interest rates over the next couple of years, the outlook for precious metals is mixed at best. The recent rise of the U.S. dollar shows that many investors are choosing to seek refuge in the greenback rather than the gold vault.
That leaves gold to appeal to a tiny, fanatical band of extremists who yearn for simpler times – folks like the Islamic State. They are reportedly not just stockpiling gold but silver, but also burning insulation off power cables so they can refashion the copper wires into coins.
As Prof. Pirrong notes, this suggests that the movement will wind up with “metallic coins but no electricity. Which may be okay with them, given how much they want to live a 7th-century lifestyle.” It’s a mystery, though, why others want to join them in their affection for a monetary anachronism.”
Showerthoughts…
As it occurred to anyone that year after year there are reports, such as http://mobile.reuters.com/article/idUSL2N0TG15120141126?irpc=932, that claims overvaluation of 20%. The same magical number repeated over and over again, yet places like Toronto and Vancouver sees north of 10% gain year after year.
That’s why this point is important: “And don’t tell me 26-year-olds are buying a detached property to be their Forever House. That’s simply a myth.”
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maybe the folks round here lack sufficient motivation in life , but EVERYONE in my hood in e van does exactly that.
detached properties are not exactly cheap, you know, and unless you are VERY lucky, you dont have the extra mil to move over to the west side. in 20 years ive seen 150+ families move in and only 2 moved out. one won a 3mil lawsuit. the other had the cash on hand. if there is a big crash some migration will happen, but the ‘best’ areas are rising at a faster rate making the move up gap ever wider. we are happy here.
Here’s what you can get in Boston and California for $1M
http://video.cnbc.com/gallery/?video=3000334241
He wrote about housing this week, urging young people to buy in a city where average prices have increased at four times the inflation rate in the past year. You’d think that would tell a financial guy something about over-valuation and hormonal urges, but apparently not.
Young and Dumb are the 2 needed qualities for purchasing a house in Toronto.
If they live in it until they become Old and Smart it will have served them well.
“cavet emporium”…
lol !!!
If money were not so cheap, property might be much less expensive! We keep forgetting the cost of credit affects how we spend our cash, the amount of debt we retain, and if and how much we invest in our economies.
Explain then with money “cheap” why businesses have failed to ‘invest more’ at this time? Maybe they are getting a better deal in another country? …or several other countries??
Has anyone ever graphed a US versus Canada national interest rate comparison – just to demonstrate who makes the “calls” historically and who “follows”?- I know they look almost identical – but google doesn’t show any results on this…
$400,000 in 25 years will have the purchasing power of $144,000 today (2% per year inflation).
That $400,000 house today would be worth $656,000 in 25 years.
#4 sideline sitter on 11.25.14 at 8:35 pm
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You also have to keep in mind it’s just a poll. People with strong negative feelings towards buying may be more likely to vote….or even read the poll question.
#16 Shawn on 11.25.14 at 8:57 pm
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If you have grandiose ideas of running a company (ie, CEO), then getting an MBA would be worth it…you could run a geological exploration firm or take over a tech company.
Mr. Williams shares the following with us.
– Gross Domestic Product Upside Revision Was Nonsense
– Initial Gross Domestic Income Reporting Suggested Major Revision Shenanigans that Boosted Headline GDP
– Underlying Reality Remains Down-Trending Stagnation in Broad Economic Activity
“No. 677: Third-Quarter 2014 GDP, First Revision”
Web-page: http://www.shadowstats.com
Re: #134 Kenchie
“First they ignore you. Then they ridicule you. And then they attack you and want to burn you. And then they build monuments to you. And that, is what is going to happen to…” (hopefully no ISIS as ISIS will be forgotten by that time)
#31 hohoho on 11.25.14 at 9:27 pm
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Depends on your specific situation/age/lifestyle and outlook.
If you’re staring 25 yrs of paying rent in the face, a good argument can be put forward that buying is the better option (again, depending on your situation).
If you’re young and blowing your budget, you might just well be stuck in that house for life. Swaping mobility for a McMansion.
If you’re older/raising a family, sticking it out in one spot may be preferable.
I bought into the market fairly recently. My mortgage payment and property tax equals what I would be paying in rent. So I am on the hook for maintenance and all that entails. But to me I am in a situation where doing this made sense. And will make sense 10 and 20 yrs from now.
#134 Kenchie on 11.26.14 at 12:59 pm
Garth,
This is hilarious. Please allow to be posted:
“Islamic State catches the Gold Bug” – Ian McGugan, G&M
“Gold bugs have some new and rather scary company: the Islamic State.
The al-Qaeda spinoff is buying gold, as well as silver and copper, as it prepares to mint its own currency. In towns across northern and western Iraq, foreign jihadists are stockpiling the metals, according to the McClatchy news service.
___________________________________________
Let them buy gold, silver and what ever they want. In the end they are stuck with desert sand composed almost exclusively of rounded quartz grains. I wonder what they will do with all of that gold, silver and whatever when they are thirsty for a drink?
Me I’m buying stocks and bonds, mostly in the arms industry of late.
#127 bdy sktrn on 11.26.14 at 12:13 pm
jian charged. 4 counts.
the women he beat on must be feeling much relief.
_____________________________________________
Another reason not to fund the CBC, they must take some accountability in this terrible act. They knew his actions were dangerous to others. He apparently had to cough up $18K to pay for his phoney baloney law suit against the CBC. Now charged with four counts. Disgusting on all accounts for him and CBC.
“and for that you assume no debt and little risk.”
Ummm you do know that the g20 last week ratified that bank deposits are no longer cash, they are property of the bank and in the event of a bankruptcy that they first fall under a much lower priority, right?
Just another completely unnecessary global implementation because you know the financial future of the USA, you know the mist indebted nation in history is on such a financial role you gotta wear shades…
@Kenchie
maybe reason because that chocolate bar don’t cost 4$ is because is made in china, does foxcon rings a bell every tome when come to electronic assembly?
and you are missing picture why isis wants gold and their own currency, it is for same reason why americans want us$ to reserve currency, so they can control trade of goods.
#129 Rational Optimist on 11.26.14 at 12:25 pm
+++++++++++++++++++++++++++++++
Actually the facts in the case have been released and support the police officers actions. He was initially cussed at, then beaten inside his vehicle (hit at least 10 times with at least 2 solid blows) , gun was grabbed and turned in on him, then he was charged at. All the while he warned the guy to get on the ground. The guy had ample opportunity to not put himself in that situation, but decided to beat an officer and make him fear for his life (twice).
#119 Cato the Elder
That’s the problem with centralizing authority like we have today. It draws in sociopaths. The type of people who crave power over others.
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I believe this to be the root of all evil and it is rampant in society today, right down from the top to the crappy incompetent boss we have all had to the school yard bully.
From my observations these types of people end up in positions of power for the simple reason, they crave power, and the less intelligent they are the more dangerous they become. A rational intelligent person will listen to others and use critical thinking skills to identify the best possible solution to the problem at hand and make a sound decision for everyone involved even if it causes some short term pain for some. We have drifted very far from any rational thinking in government, greed, corruption, and back room deals have been the norm for my entire life and this is not news to anyone
Its funny how becoming leader is just a popularity contest and failed promises to selected voters with a short term memory. How about political parties with their smear campaign about the others? This is a pathetic form of leadership, yet we seem to tolerate it. Our whole system of government is not vastly different from how elementary school kids would conduct business
Maybe things will be different in 2015?
I think not, we have been duped folks
Barring a revolution they are going to run this ship aground
#152 SWL1976 on 11.26.14 at 4:45 pm
#119 Cato the Elder
That’s the problem with centralizing authority like we have today. It draws in sociopaths. The type of people who crave power over others.
————————————————————–
I believe this to be the root of all evil and it is rampant in society today, right down from the top to the crappy incompetent boss we have all had to the school yard bully.
++++++++++++++++++++++++
Why do you think World Civil War I is working it’s way around the globe? Nothing will change until govt is completely changed and overhauled to where it is impossible for corruption and centralized power to exist.
This is another reason why we’ll likely have an election In Feb/March next year.
Mr H will be wanting to make sure, that if he does lose his job, that the new guy will get the full blame when rates start to normalize and market turns south.
Then he can come back in 4 years and say “under me – everything was great, you elected this guy, and look what happened1”
#151 DUI on Money Road on 11.26.14 at 4:43 pm
#129 Rational Optimist on 11.26.14 at 12:25 pm
+++++++++++++++++++++++++++++++
Actually the facts in the case have been released and support the police officers actions. He was initially cussed at, then beaten inside his vehicle (hit at least 10 times with at least 2 solid blows) , gun was grabbed and turned in on him, then he was charged at. All the while he warned the guy to get on the ground. The guy had ample opportunity to not put himself in that situation, but decided to beat an officer and make him fear for his life (twice).
.
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So I guess those 2 very experienced lawyers don’t know what they are talking about….
http://thinkprogress.org/justice/2014/11/24/3596621/in-powerful-video-legal-experts-explain-why-the-grand-jury-in-ferguson-was-set-up-for-failure/
Best,
HD
Ummm you do know that the g20 last week ratified that bank deposits are no longer cash, they are property of the bank and in the event of a bankruptcy that they first fall under a much lower priority, right?
—–
really?
Never ceases to amaze what crap people will believe. “But I read it on the Internet…” — Garth
I found this book of interest in describing how house prices became disconnected from fundamentals. ie income.
Rethinking Housing Bubbles: The Role of Household and Bank Balance Sheets in Modeling Economic Cycles.
Policy makers used low interest debt to keep the real estate market alive after wages stagnated but the effect was disastrous with housing price increases far outstripping income gains.
Canada is repeating this but we expect none of the dire consequences.
#119 Cato the Elder
#152 SWL1976
two things:
i.) there are two ways a sociopath can come into existence: nature or nurture. not surprisingly, alpha sociopaths are “engineering” increased numbers of themselves.
there are MANY more sociopathic personalities out there today.
ii.) smart sociopaths are FAR more dangerous.
Re: #153 Realist
I think something is brewing. Many countries are already in civil strife like Greece. The bankers have completely destroyed that country. Imposing ‘austerity’ on the middle class, while using those diverted funds to continue filling the pockets of the bankers. Many countries in Europe aren’t even democracies anymore – they are ruled by the European Union bureaucrats WHICH ARE NOT ELECTED! In Italy, they pretty much overthrew the government when they flew in new ‘leadership’ because they didn’t like how Italy was starting to suggest a referendum.
The unfortunate thing is, I don’t think the ‘good’ team will win this time. This isn’t 1776. Power is too concentrated. Ultimately, they have the nuclear weapons too – which means if they really started to lose that would be a last resort.
The American revolution was a bit of a historical anomaly. One of the only times in world history where a revolution from one monarchy was not replaced with a new one. Even King George was astounded when he learned that Washington didn’t plan on becoming King, but would instead form a republic. King George could not imagine relinquishing all that power and wealth his birthright had bestowed upon him and did not earn.
We owe everything to those brave men and women. People don’t realize the profound effect the US founders’ had on the world and freedom. While the US hardly resembles her earlier self (it’s been taken over by fascist/socialist types), for 150 years it was a beacon of hope for the world. Many countries fought to overthrow their own governments and established a Bill of Rights similar to that of the US.
Mr. Turner,
The US has a Current Account of $ 400 billion. That means that the US is living “boyond its means” to the tune of $ 400 billion. And that’s PRECISELY the reason why the US will be FORCED to raise short term interest rates. Foreigners will, sooner or later, pull away their money out of the US. Pushing US interest rates (MUCH) higher. And to protect/defend the USD the FED will be forced to raise interest rates.
The US deficit is $122 billion, not $400 billion, the lowest in eight years. Yes, rates will rise, but not because of debt. Meanwhile the US dollar continues to strengthen because it reflects the American renaissance. — Garth
#159 – The Founding Fathers bravery is unprecedented. They were battle worn. Even John Adams got caught on the high seas manning a cannon to fight off a British war ship. I always smile when I think of Adams and Jefferson’s will, both surviving until the 50th anniversary of Independence day. They both died on July 4th 1826. David McCullough is a must read, but the HBO John Adams is pretty good as well.
Maybe we are getting close to a new revolution?
“Will house price to income ratio return to 2.2 as it had been for over 50 years before 2002? The return to normalcy will concern homeowners who thinks the house they live in is an investment”
Not only will that ratio eventually return, but there will be overshoot to the downside. For a considerable period of time. The process of mean reversion, which implies that for time spent above the mean, there will be an equal but opposite reaction below the mean.
If the U.S. economy is improving so much why is the 30 year bond under 3.0% at 2.94%. Wouldn’t this current trend be the exact opposite if things were as bullish as you are making them out to be?
@ #141 Bottoms_up
You’ve missed the plot. You can’t do the inflation downgrade on the investments but not the house. After doing it on the house the point should be clear – a relatively piddly sum of monthly savings would be worth 60% of the house, without the massive expenditures on interest, property taxes, strata fees and general upkeep.
#155 HD
Yes, “legal experts” know more and have more information about the facts at hand than the grand jury, who have access to all the evidence and witnesses. No one opining about this case knows what they are talking about, furthermore, none of it concerns them.
Just one question, thinking about attending night school at Haskayne to earn a part time MBA. Coming from an applied science background business has always interested me. Worthwhile investment or would my money be better spent elsewhere?
I did just that. If you want an honest assessment let know.
Oops, supposed to say let me know…
#161 Nuke
Maybe we are getting close to a new revolution?
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Well something has to give, cause our current path is just not working. Middle class? Anyone? If there is a new revolution a violent one is out of the question. We all lose. So how do you have a non violent revolution?
Beats me, but I think the best way is for people to stop supporting a broken system. Now that poses a bigger question. How do we do that on a large enough scale to make a difference?
Beats me, but I’m open to ideas.
I guess for now we’ll have to ride this one out and see where the dust settles
@Bdy sktrn
you’re and idiot…..Period!
“live and work in Canada’s largest and most desirable city”
Wait, what?! Most desirable city? I live and work here and there isn’t that much desirable about it when compared to other large cities in other countries. I guess that is a matter of opinion…