The unicorns

POOCH modified

“We’ve dodged a bullet.” Says Janet. “And we have you in part to thank.”

Ahh, that’s so sweet. Especially coming from a couple of 30-year-old virgins in poor Edmonton. She says they’ve been renting a one-bedder downtown for a mere $850, have a hundred grand saved and make $180,000 between them. Jealous yet? “So in Oil Country,” she says, “we’re unicorns.

“When our landlord told us they needed to move back in, I’m ashamed to say we thought about buying. For about a minute. We never thought we would be seduced by a 4BD / 2.5BA but after years of sharing a small space and wanting a baby, we were tempted. And hey, what do you know? Housing prices had come down a little.

“A quick read of crude news, a dose of reality from your blog, and a sharp reminder from my dad (a retired oil fielder) on what is coming, and we avoided a cataclysmic mistake.”

Janet says they just found a whole house to rent, for about two grand a month, “to rest in for the next year while poop hits the fan. Hopefully our jobs survive (my husband is in IT but I work in public service so my resume is ready to go). I could be vengeful and rub this in the faces of everyone who told us we’re “throwing money away” renting just to make themselves feel better, but it seems pointless. They’ll just blame the oil, like no one could have possibility seen this coming.”

Smart. The fact is, we can see a lot coming. Not only will Janet and her squeeze be able to save serious money by renting, but they might be positioned for a Big Vultch by about this time next year. On Monday oil prices fell again (by another 4.3%, to just over $55), and the ripples are showing up everywhere. Russia’s central bank bloated its key interest rate to a withering 17% (from 10.5%) to try and stem an oil-induced collapse of its currency – now at a 16-year low.

Meanwhile cheaper energy and more jobs are igniting the US economy. Industrial production soared last month by the most since 1998. Confidence among homebuilders is now at a nine-year high. “With consumer demand and business demand strengthening together, it is self-reinforcing,” Laura Rosner, a U.S. economist at BNP Paribas in New York and a former New York Fed researcher, told Bloomberg. “The gain in production sets us up for a solid pace of growth next year.”

So, count on an increase in US interest rates in 2015. Maybe sooner than expected.

And, like Janet says, the yahoos buying particle board palaces in Edmonton and Calgary maybe should have seen this coming.

OIL DEMAND

The thinking now is that oil will be $50 of thereabouts for most of next year. After that, who knows? But this is plenty long enough to destroy the Alberta government’s budget, cause a mess of layoffs, probably cancel a raft of energy projects and reshape the real estate market. Not just in the prairies. Everywhere. Energy is a big chunk of this country’s economy and an even bigger piece of our exports. Consequences will be inescapable – as we are already seeing as our currency (like the Russian ruble) takes a major dive. By the end of Monday it was in the 85-cent range, taking a hit along with commodities in general, including gold.

So, this all hurts the Canadian economy, while cheaper energy boosts the US. As I have said here before, if American interest rates start to edge higher in a few months, then our currency is due for a major dump, given the oil situation. Will the Bank of Canada have any option but to edge up money costs here as well (like the oil-producing Russians) in order to stabilize the currency? And then might we not have the perfect storm for Janet – oilageddon and fatter mortgages, just when most people are steeped in debt?

By the way, did you catch the latest numbers? StatsCan says our collective debt just set another record. We borrowed almost $25 billion in the last three months in fresh mortgages alone, and the rate of new debt surpasses growth in disposable incomes. That’s right. Every single day Canadians are borrowing against the future to finance what they can’t afford now.

That might be okay if we had steady, strong growth, lots of new jobs, inflation and good markets for the stuff we sell. But we don’t. We’re struggling. Says TD economist Leslie Preston: “The recent collapse in oil prices likely to have an adverse effect on Canada’s growth over the next year, and particularly on incomes in oil-producing regions. Now, household debt risks are heating up once again.”

Ten days before Christmas this is not what a lot of people expected. But how many are preoccupied with the holidays? How many are in denial? How many remain too house-horny to see straight? And then there are the billions who don’t read this pathetic blog and think I play guitar.

Janet feels smug now. Just wait a few months. She’ll be insufferable.

218 comments ↓

#1 ILoveCharts on 12.15.14 at 8:15 pm

Big problem. Wife desperately wants to buy. Had a life goal to buy by a certain age. That age is nearing. I can’t hold her off forever.

#2 Jonovision on 12.15.14 at 8:15 pm

This is happening fast..

#3 Blake Middleton on 12.15.14 at 8:17 pm

When is the time to start vultchin’ on XEG Garth?

#4 rk usa on 12.15.14 at 8:19 pm

re: but they might be positioned for a Big Vultch by about this time next year.

prices won’t bottom out that fast the best deals will be four years from the crest/peak

it will take two years for sellers to realize they are not getting their asking then two years of listings flooding the markets driving down prices

#5 CPG on 12.15.14 at 8:19 pm

As most of us know all too well every great party ends with an equally great hangover. Once this debt-fueled spending party that Canadian households, Governments (all levels) and businesses have been on for the last several decades finally ends the resulting hangover is going to be a doozy.

Statistics Canada updated their credit market summary data table today.

At the end of September, 2014 the total household, Government (all levels) and business debt in Canada (bottom line of the data table – total debt outstanding) was $5.67 trillion. In the first 9 months of this year the total debt outstanding in Canada increased by $162 billion. In 2013 it increased by $287 billion. In 2012 it increased by $272 billion.

http://www5.statcan.gc.ca/cansim/pick-choisir?lang=eng&p2=33&id=3780122

To put these numbers into perspective in 2014 the Federal Government is expecting to spend $250.2 billion on program expenses (Table 4.2.4 in the following link).

http://www.budget.gc.ca/2014/docs/plan/ch4-2-eng.html

#6 sideline sitter on 12.15.14 at 8:22 pm

Ohhh…. I’d LOVE to be smug. sometimes, you just gotta give in to the primal urge of saying ‘I told you so!’

#7 bdy sktrn on 12.15.14 at 8:22 pm

cash it all in and move to russia

you’ll be rich!

#8 bdy sktrn on 12.15.14 at 8:23 pm

think I play guitar.
—————————
bto is ruined forever

#9 Capt. Obvious on 12.15.14 at 8:24 pm

The perfect storm is brewing:
1. Still growing debt levels.
2. Declining government tax revenue due to oil price collapse, so limited ability to stimulus spend later next year if needed.
3. Layoffs brewing in a significant portion of the country.
4. US growth goosed by lower oil prices, pulling up when interest rates are likely to rise.
5. People who bought newly into the market post 2009 will have their 5 year resets coming.

2015 is going to be interesting.

#10 LuckyCountry on 12.15.14 at 8:25 pm

First!!!

Garth seems to be reading the future like an open book :)

#11 Happy Renting on 12.15.14 at 8:26 pm

Go unicorns! But no need to be smug (in public, anyway.) Just know that none of your friends sleep better at night than you do, even in the midst of an oil price/RE/job market/economic dump.

#12 Jimmy on 12.15.14 at 8:28 pm

No sign of trouble whatsoever here in YYC if you go by the traffic seen at the malls and Costco stores. Chinook Centre, Market Mall, Cross Iron Mills have zero parking even at 10 am. Crazy long lines in Costco and the carts are full.

Costco. High-ending it in YYC! — Garth

#13 totalinvestor.com on 12.15.14 at 8:28 pm

Household debt hits record as ‘biggest risk’ to Canada’s economy tops 162% of disposable income

http://business.financialpost.com/2014/12/15/canadians-household-debt-hits-record-162-of-disposable-income/

http://tinypic.com/r/25qf2ag/8

#14 I'm stupid on 12.15.14 at 8:29 pm

The return of the late 80s and early 90s. Interest rates will climb or the loonie will get crushed. I’m not suggesting 10% but 5-6% is not a stretch.

#15 Mark on 12.15.14 at 8:30 pm

Wow, a rare Albertan in IT. Don’t hear of too many of those very often.

#16 omg the original on 12.15.14 at 8:31 pm

As a long-time veteran of being a housing bear, I have seen many a false start.

Is this the big one – hard to say? Could it have contagion outside of the oil producing regions – who knows?

I have always believed that we need a meaningful uptick in interest rates to get a real correction in Canada – basically you have to change the cost of housing significantly.

Agents have convinced buyers that affordability is about what your monthly payment is – affordability is no longer a “purchase price” issue. Only with a jump in interest rates will we see a major change in how much people can afford to spend each month.

Wake me after a 2 1/2% increase in US prime.

#17 8102 on 12.15.14 at 8:31 pm

I was thinking that the Federal Government was going to try and avoid the housing bubble problem until after the next election – don’t need that when your going for re-election – but it looks like the oil price crisis will pop that bubble – and today on TV the Finance Minister said they are going to look at ways to deal with the Housing Bubble – to late OPEC has already done it for us…

#18 Roman on 12.15.14 at 8:34 pm

Performance YTD of large Canadian banks adjusted for dividends compared with SPY (with div too).

http://postimg.org/image/hvwsjos3j/

Be more diversified. — Garth

#19 omg the original on 12.15.14 at 8:36 pm

#12 Jimmy
No sign of trouble whatsoever here in YYC.
———————–
A couple of points here

1) its pretty soon to see much of an impact in YYC – people are still pretty much oblivious and oil companies will not cut warm bodies in head offices until they have to.

2) Any commodity, including housing, is priced at the margin – that is if you change the supply and demand balance by a few percentage points you can get a big swing in prices. Calgary is an affluent city with more than oil driving the economy, but if you take 20% of the buyers away the market will get sideswiped.

But who knows, maybe oil will pop back up in the next year or two.

#20 ronh on 12.15.14 at 8:37 pm

Call me stupid but isn’t this the basis of our financial system.

Every single day Canadians are borrowing against the future to finance what they can’t afford now.

Nobody saves for anything, even the small stuff.
Just finance it.

#21 Retired Boomer - WI on 12.15.14 at 8:39 pm

Rumor has it the CBC is exploring a Canadian based reality TV show called “The Biggest Loser” but, as yet not decided on whether to base in on oil futures, Real Estate, or living standards. We will see in the next few months.

#22 omg the original on 12.15.14 at 8:39 pm

#1 ILoveCharts – I can’t hold her off forever.
————–
Do you have kids? – have a couple of kids quickly – then she will be too exhausted to worry about buying a house.

#23 Habs76-79 on 12.15.14 at 8:41 pm

Idiots and fools never learn
Smart people learn from their mistakes.
The smartest people learn from other people’s mistakes.

Which group does any person reading my post here best feel they fit in?

#24 Freedom First on 12.15.14 at 8:42 pm

Janet and her squeeze are doing it right. For the highly leveraged out there welcome to the new reality in Canada. Debt never was money. Debt is always a liability. Debt has burned people more than everything else combined. Debt is a result of either “Fear”, or “Ego”. Fear of not getting what you want(also known as greed), or fear of losing what you have. Ego has many ways of coming across, but simply put, Ego is a lack of humility.

For example, look at Smoking Man. He has done extremely well financially. So maybe just aim to keep your ego smaller than his ego is, and you should do well.
Or, just do what Garth suggests day in and day out, as Garth doesn’t sound to worried about his finances. Those are 2 pretty good barometers to go by. As always, my freedom first.

#25 b riding dirty on 12.15.14 at 8:43 pm

Besides selling our homes and renting, should we also sell off our stock portfolios? If things look down hill for 2015, why not sell now, sit on cash, buy back in when the sun looks like it is coming out again.

I am confused, help on the logic of this please???

#26 Victor V on 12.15.14 at 8:44 pm

Parkdale home listed at $1.45M sells for 90% of list.

http://www.torontolife.com/informer/toronto-real-estate/2014/12/15/sale-of-the-week-39-gwynne-avenue/

#27 HD on 12.15.14 at 8:47 pm

Keep calm. Rebalance And Carry on.

Best,

HD

#28 TEMPORARY® Foreign Prime Minister on 12.15.14 at 8:53 pm

“………So, this all hurts the Canadian economy, while cheaper energy boosts the US……………”
=========================

Cheap energy might have helped this country at one time, but continuing Mulroney/Harper free trade agreements have all but gutted manufacturing in Canada, leaving this country with a one-trick economy and a one-trick pRIME mINISTER armed with a one-trick Economic (distr-)Action Plan.

So we are, now limited to pumping stuff, digging stuff, and hewing stuff from the ground, and begging on the open market for whatever the world is unwilling to pay for it.

You can ideologically blame unions and high taxes all you want (SlumNewsNutwork readers take note), the truth is no Canadian faced with above-world-market home ownership costs will ever be able to compete with outsourced and off-shored wages in countries whose citizens don’t require above-market wages to pay for million dollar bungalows. Until Canadian housing becomes more affordable, those off-shored jobs are never coming back.

And clearly, Conservative Republican Harper Reagan Hudak Poloz Right-To-Work-For Nothing ideology is not the answer either; just one more nail in a carefully orchestrated symphony of nails in the coffin of the country’s working middle class.

#29 Jimmy on 12.15.14 at 8:54 pm

Garth, got tons of everything at Costco.
You see, I’ve got an exclusive membership card! And with that card, I get access to the whole place! I can buy large quantities of anything at discount prices!
I can talk to someone and try and get you in on a card, if you’d like.

#30 nonplused on 12.15.14 at 8:56 pm

From yesterday:

#124 Stickler

A good point, no doubt. But everything is relative. I have first world problems, I admit. But if I can work a day and pay the bills and also buy a 55 inch wife dancing machine, why wouldn’t I?

#126 Daisy Mae

I agree these things are awesome, heck we all now carry everything humanity has ever known or done, plus a lot of pornography, around in our pockets. But in the old days you had one land line for the whole family, whereas now you pay for 5 cell phones so $500 a month if you have 3 kids. It’s inflation of expectations.

#130 Daisy Mae (again)

Check it out if you like. 2 incomes of $50,000 each get taxed less than one income of $100,000. And you get more RRSP room. And you get 2 CPP cheques when you retire rather than just one.

#139 kommykim

Agreed. But my wife and I have been very fortunate so its. so. hard. to. stop.

#140 DM in C

A bit. But I don’t know I seem to really enjoy watching my son and his team, way more than NHL hockey, and the other parents seem just as involved. You have to kill time somehow. All the computers and tv’s are partly planned obsolescence and partly “well, why not?”

#147 Mister Obvious

And, I assume, no kids in the house. The only reason we have 3 cars is that I needed a beater for my kids to drive or the insurance was going to be astronomical. Then they went off to university so they needed laptops. It’s easy to live cheap if you don’t have kids.

Thanks folks, I think that is the most responses I have ever generated in all my years responding to GreaterFool.ca, and I’ve been here pretty much since the beginning. I obviously hit a nerve. It is a tough question. What do we really need? What can we really afford? Like I said, my wife and I have been really fortunate and we don’t turn down work except for better work. So I find myself surrounded by gadgets and distractions and tuition fees. But the point I was trying to make is it isn’t necessary and I know that.

#31 westcanguy on 12.15.14 at 8:56 pm

“No sign of trouble whatsoever here in YYC if you go by the traffic seen at the malls and Costco stores. Chinook Centre, Market Mall, Cross Iron Mills have zero parking even at 10 am. Crazy long lines in Costco and the carts are full.

Costco. High-ending it in YYC! — Garth”
_____________________________________________

Ahh Costco… Walmart for snobs.

#32 Market Man on 12.15.14 at 9:03 pm

How many US jobs were created in the fracking industry?
If the job numbers slow so will the need for interest rate hikes

The first three months will tell us

Also finance minister looking to reduce Chmc exposure.
They are afraid!

#33 Godth on 12.15.14 at 9:03 pm

Your optimism about the good ‘ole USA is hilariously terrifying longer term. It sounds like Fannie and Freddie are trying to blow another bubble with loose lending practices.

We’re all so screwed – how long before major war breaks out? That’s the question as this is all just so much b.s.

Enjoy your bubble surfing while you can, it won’t last -not on this planet- that’s guaranteed.

http://kunstler.com/clusterfuck-nation/crash-o-matic-finance/
There’s an interesting comment from swmnguy too.

Unicorns indeed, and pixie dust.

#34 Steve-0 on 12.15.14 at 9:04 pm

Garth, I have a mostly balanced portfolio, with the exception I do not have any bonds (I do have preferred shares though). I have a hard time buying bonds with the yields so slow. Should I bite the bullet and buy them, or just tuck that money away in more preferred shares until it makes more sense to buy a bond ETF. I need about 20K in bonds to balance my portfolio.

You don’t buy bonds for the yield, nor ever own to maturity. — Garth

#35 Steve-0 on 12.15.14 at 9:10 pm

You don’t buy bonds for the yield, nor ever own to maturity. — Garth

It sounds like we need a lesson on how we should be spending the bond portion of our portfolio, because I have no idea how I am supposed to be investing in them then. It would be very timely for the new year ;)

#36 Van Isle Renter on 12.15.14 at 9:11 pm

Got a good chuckle out of the unicorn thing. I had a similar discussion with my son.

He’s working in the Alberta oil patch but would love to come back home for the winter and says he would if he could find a full time job. I told him that he might as well be looking for a unicorn if he thinks that he can get a full time job on the island, and if he thinks he can get a full time job that pays anything close to his oil patch job, then he’s looking for a unicorn that farts Skittles.

I told him to work hard and save every penny because it’ll all come to an end. He’s doing great so far and has enough put away for University next year and part of the year after that. By spring break-up he should have enough squirreled away for third year.

#37 Sheane Wallace on 12.15.14 at 9:12 pm

#14 I’m stupid on 12.15.14 at 8:29 pm
The return of the late 80s and early 90s. Interest rates will climb or the loonie will get crushed. I’m not suggesting 10% but 5-6% is not a stretch.
……………………….

The currency implosion is certain. For 6 months the loonie has declined by 10 %. Just watch food prices at the stores.

some people see imaginary deflation and magic future growth (despite decline in oil price) that will somehow make debt levels manageable.

We either default and cause depression the like of which the world have never seen or inflate. The problem is that inflation is already in the cards and profitized so we might overcook it.

#38 Timmy on 12.15.14 at 9:12 pm

No, those in power seem to do everything to keep interest rates low in order to prevent a crash. They’ve been incredibly low for years and they keep coming up with excuses to keep them low, without stating they are worried about a housing crash.

#39 Dirty Debtor on 12.15.14 at 9:15 pm

@ #5 CPG

Thats right. The rest of the world called it quits at 2AM, called it a night and stumbled to bed drunk.

Canada, Australia and a few others decided to bust out the fluffy stuff. The night roared on for a while… The world even admired our ability to keep on partying.

The rest of the world got a good nights sleep and awoke at daybreak, dusted off, ready to make the most of daylight.

We are still up, incoherent and mumbling. We’re awake, but not functioning properly… We truly believe we are good to go, even as the rest of the world is looking at us funny and telling us to chill out…

But like any drunk who has made it through the night to sunrise, we think we are invincible…. this is the stuff that 2 and 3 day long hangovers are made of…

DD

#40 Dan on 12.15.14 at 9:17 pm

If the Canadian economy is going in the gutter and the housing market begins to go into decline, why would they raise interest rates? The low price of oil and commodities and the declining housing market would lower inflation and the one bright spot for the Canadian economy would be a lower CAD dollar which could help exports and offset some of the decline in the inflation rate. We aren’t Russia and we’re not going to have a currency crisis causing us to need to support the dollar by raising rates. We’re more like Norway which has lowered rates in response to the drop in oil. All this turmoil pushes rate rises further into the future. It seems like you are defying logic suggesting the BoC won’t have a choice but to raise interest rates only to support your case that it’s a bad time to buy a house.

Nobody said the economy would roll over. It is slow with vapid income growth and an indebted people. Bad news for the borrowers who over-extended. But if the US raises rates, our dollar is headed for sub-80, which is inflationary in the worst way. The BoC will be sorely tempted to act. — Garth

#41 espressobob on 12.15.14 at 9:19 pm

#21 b riding dirty

should we also sell off our stock portfolio?

……………………………………………………….

What’s wrong with selling low and buying high?

#42 DM in C on 12.15.14 at 9:23 pm

“Wow, a rare Albertan in IT. Don’t hear of too many of those very often.”

+++

One further…. I’m a female Albertan VP in IT ;-) We sell enterprise software B2B in USD around the world. Our bottom line just got wayyyy better. Bonuses and raises abound. The oil plunge doesn’t affect our business. We also do better in recessions.

#43 Republic_of_Western_Canada on 12.15.14 at 9:24 pm

#21 b riding dirty on 12.15.14 at 8:43 pm

Besides selling our homes and renting, should we also sell off our stock portfolios?

No, because the nature of stocks is to regularly pay you tax-advantaged divies over time as well as tend to increase in value based on corporate production and due diligence.

Houses OTOH cost you every month for ever, and depreciate like refrigerators. And the associated land prices have only started to drop over the edge from nosebleed levels.

The good news is that good energy stocks will continue to crater a little bit more over the next quarter, to become wonderful buying opportunities after you have sold off the chipboard doghouse.

#44 Lumberjack arch on 12.15.14 at 9:25 pm

#39 dirty debtor

Hahaha great analogy, “go home Canadian finance your drunk!”

#45 Lumberjack arch on 12.15.14 at 9:28 pm

Garth could this be it for vancouver ? Finally after all these years? I think it’s gona take more than 5 percent interest rates to stop the 604 freight train

#46 Mark on 12.15.14 at 9:28 pm

“The currency implosion is certain. For 6 months the loonie has declined by 10 %. Just watch food prices at the stores.”

The loonie may very well have declined, but purchasing power is increasing as prices are going down due to lack of demand. We see this at the pumps almost every day now, and it is increasingly showing up in the economy. The current CAD$ weakness is entirely unjustified and is the product of short-term speculation, exactly as we saw in 2008/2009 when the global economy collapsed — with the speculators proven wrong in hindsight.

If there was any question of a loss of price stability in Canada, long-term bonds would have sold off. Instead, the XSB and XBB ETFs are basically setting new all-time records almost every day now. Speculators are going to have some awfully sore nether regions for betting against the strength of Canada’s export-rich economy and domestic deflation due to the declining housing market.

#47 Naga on 12.15.14 at 9:29 pm

Because of oil price collapse:

1. Russia raises interest rates – currency declines;
2. Norway drops interest rates – currency declines.

Only but two examples but no clear path for Canada. It is clear our bank Chief is pro export and lower $.

Lower oil is here to stay for a few years, bottom not clear.

I agree that for RE to significantly correct interest rates have to rise by more that a few points.

My prediction stands not for the balance of this decade.

Garth looks like you are pursuing forecasting the future of interest rates to support your forecast of an RE correction even though you have crossed over to agreeing to almost soft landing.

Forecasting the trajectory of interest rates is akin to predicting blackswans.

Good luck, I still enjoy your posts.

Naga

#48 Vanecdotal on 12.15.14 at 9:29 pm

#39 Dirty Debtor

Best. Analogy. Ever.

Agreed, we are approaching the economic equivalent of the “waking-up-in an-alley-where’s-my-other-shoe-what-day-is-it?” stage of our 3 day debt-orgy bender… or so I’ve heard…

#49 Mark on 12.15.14 at 9:30 pm

“One further…. I’m a female Albertan VP in IT ;-) We sell enterprise software B2B in USD around the world. Our bottom line just got wayyyy better. Bonuses and raises abound. The oil plunge doesn’t affect our business. We also do better in recessions.”

Too bad, for Alberta, that so many other firms of such a nature have been driven out over the past decade of the bi-economy. Bi-economy, meaning, that real estate, and the energy sector have been the two overwhelming players in the economy. The former having a far larger impact than the latter.

At least in the 1990s there were efforts at diversification. But I’ve personally watched so many IT businesses driven out of Alberta due to the uncompetitive business environment.

#50 mishuko on 12.15.14 at 9:30 pm

So apparently having huge lines at a wholesale seller is a sign of a good economy?

Don’t get me wrong… you can buy some stuff at Costco (soaps, detergents, stuff that doesn’t expire) but stay away from that in-house TP. That stuff will give you a bleeding behind. I mean seriously… if it’s one thing you splurge on in life at least get the nice stuff to put against your sensitive spots.

#51 [email protected] on 12.15.14 at 9:30 pm

Russia raises interest rates today from 10 to 17.5 %
In Russia interest rates rise you!!!!

#52 HD on 12.15.14 at 9:30 pm

#32 Steve-0 on 12.15.14 at 9:04 pm
Garth, I have a mostly balanced portfolio, with the exception I do not have any bonds (I do have preferred shares though). I have a hard time buying bonds with the yields so slow. Should I bite the bullet and buy them, or just tuck that money away in more preferred shares until it makes more sense to buy a bond ETF. I need about 20K in bonds to balance my portfolio.

You don’t buy bonds for the yield, nor ever own to maturity. — Garth
.

—————————–

You might want to read this:

http://canadiancouchpotato.com/2010/09/05/why-every-portfolio-needs-bonds/

Best,

HD

#53 Van Isle Renter on 12.15.14 at 9:31 pm

I just love all the RE pumpers who quote the CREA’s latest missive of ever rising prices as gospel.

Same kind of people like George Costanza from Seinfeld who gave all of their money to Bernie Madoff and then believed the monthly statements that he sent out telling them that everything was just fine.

And we all know how that ended.

#54 john m on 12.15.14 at 9:34 pm

A question Garth…Is it true that CMHC in addition to the 600 billion plus guaranteed mortgages is also insuring third party insurers to the tune of 90% of their loan portfolios?….i was told this today ?

#55 doomed on 12.15.14 at 9:34 pm

Canada’s GDP is pretty constant at just over 2%.
http://www.tradingeconomics.com/canada/gdp-growth-annual

Oil sands-related investment is expected to generate $79.4 billion in federal and provincial government revenues between 2012 and 2035, on an inflation-adjusted basis.
http://www.energy.alberta.ca/oilsands/791.asp

According to the Federal Budget, our total Federal Government Revenue is about 255 billion.
http://en.wikipedia.org/wiki/2012_Canadian_federal_budget

If the oil sands slow, I think we are destined for a pretty big slide.

Not to mention:
one in 16 jobs in Alberta is directly related to energy.
About 121,500 Albertans are directly employed in Alberta’s mining and oil and gas extraction sectors.
http://www.energy.alberta.ca/oilsands/791.asp

Who is going to buy our dirty oil?

#56 Smoking Man on 12.15.14 at 9:37 pm

The way it see it their are 3 types of people who visit this pathetic blog.

Pro real estate, owners, land lords who get a kick out listing to renters rant.

Renters who patiently wait for the day when they will get revenge, it will come in the form of a arrogant smug smile, followed by teeth, sharp teeth.. The vultch.

Then there are the intellects, the zillionaire, the refind citizens of this great land, who are board… And get a kick out of my shit. It’s mostly shit, but some times spectacular..
I’m got be in the mood.

#57 Jsan on 12.15.14 at 9:38 pm

Recently moved out East due to a job transfer. I was listening to one of the local radio stations (which one?????) on the weekend. What sounded like an older female called in for some advice as to what to do with some inheritance money that just came here way. She said she was thinking of buying some real estate because in her words “real estate never goes down in value”. What surprised me was how quickly the shows host jumped in and corrected her that NO, real estate does go down and than he mentioned the BOC coming out and suggesting it is up to 30% overvalued.

Again, it really reinforced to me just how ill informed the masses are when it comes to real estate. They are for the most part extremely out of touch with reality and it also makes me realize that when the actual fear that you CAN lose money in real estate begins to pop into peoples minds, LOOK OUT!! The ONLY thing I believe that makes otherwise rational people over pay and stretch themselves so thin with real estate is their misguided belief that they will never lose money. That will change!!

#58 Liquid Independence on 12.15.14 at 9:38 pm

I bet the debt-to-income ratio will get revised down later on like they’ve done with the previous data. By the way Garth, it looks like your blog is first on the list of Top Canadian Personal Finance Websites. :) I guess that shouldn’t be a surprise, but congrats none the less.

#59 AK on 12.15.14 at 9:47 pm

“So, count on an increase in US interest rates in 2015. Maybe sooner than expected.”
==================================
U.S. rates will rise from 0.25 to 0.75 throughout 2015. Hardly an earth shattering event.

Where would we be without rationalization? — Garth

#60 Sheik Yerbouti on 12.15.14 at 9:54 pm

The comments section of this blog seems to awaken the inner schadenfreude in lots of people……reminds me of economists who are often described as being like the guys who come on a battlefield at the end of a major skirmish to bayonet the wounded….

#61 Mark on 12.15.14 at 9:55 pm

“A question Garth…Is it true that CMHC in addition to the 600 billion plus guaranteed mortgages is also insuring third party insurers to the tune of 90% of their loan portfolios?….i was told this today ?”

Yes, CMHC provides re-insurance of 90% of approximately $300B of subprime mortgages guaranteed by 3rd parties (ie: Genworth, Canada Guaranty, etc.). So the total potential liability of CMHC is in the neighbourhood of $900B.

In other words, anyone who tells you that subprime doesn’t exist in Canada is lying through their teeth. This includes CMHC.

#62 Mark on 12.15.14 at 9:56 pm

“Finally after all these years? I think it’s gona take more than 5 percent interest rates to stop the 604 freight train”

The “604 freight train” stopped last year. You didn’t get the memo?

#63 everythingisterrible on 12.15.14 at 9:58 pm

#56 Smoking Man
“It’s mostly shit, but some times spectacular..
I’m got be in the mood.”
—————
more like spectacularly shitty.

#64 Uh Oh Canada on 12.15.14 at 10:03 pm

Thanks again Garth for suggesting a few years back that we invest in the US. I just noticed the exchange rate is a little above 15% now.

It looks like 2015 for us will be like 2005 in the States. The best time to scoop up deals was in 2010 for the U.S., so it looks like it might take another 5 years for the bubble to fully plop.

So is waiting until 2020 worth it? Well if you like the thought of owning without a heavy mortgage, then it’s worth the wait.

#65 Entrepreneur on 12.15.14 at 10:06 pm

Alberta oil has grown so big; the land looks like the moon. I feel for the farmer, etc., the ordinary person.
The biggest oil refinery is in New Brunswick (less people to complain about the mess).

Owners not buyers in the housing market will feel the pain (Correction at End: Market Update#112 Avoid ETF in Canada).

I would not brag about buying big time at a big box store. They are only for short term gain.
Use your money and energy buying at small bussinesses which supports your community…the whole circle.

Founding Fathers of the U.S. had a nonpartisan government (no parties) said, “As political parties had interest which were adverse to the rights of citizens and to the general welfare of the nation.” (Wikipedia)
(Love American History) Notice that present parties argue back & forth about parties.

bdt sktrn: Earth is in correction mode and does not need mankind. Our political parties forgot the ordinary person. One of the UN leaders (lost the paper) said that the leaders of countries should listen to the people and the the countries should be fined for enviromental penalties.

Garth, love your blog but you go to fast for me. I do have a life. Excuse the spelling, etc. as I am always in a rush.

#66 will on 12.15.14 at 10:10 pm

You don’t buy bonds for the yield, nor ever own to maturity. — Garth

yeah garth has obviously read ben graham’s security analysis. interest is the most highly taxed of all income from securities. what you want from bonds is capital gains. too hard for me to do on my own so i have a small allocation of my portfolio in a high yield bond fund. i don’t know if this is a good time or a bad time to get into high yield bonds, but i’m sticking with what i’ve got. i think high yield bond fund managers are looking for capital gains but obviously taking the interest in the meantime from the bonds that are paying.

#67 SWL1976 on 12.15.14 at 10:15 pm

Every single day Canadians are borrowing against the future to finance what they can’t afford now.

———————————-

Monkey see monkey do. This strategy seems to work pretty well for the Federal Reserve and Central banks.

Or does it? Time will most certainly tell.

—————————

#181 AB Boxster

Soon we’ll be telling people how foolish and greedy they are for:

1. Wanting to raise children
2. Having your children complete college without crushing debt
3. having a job that pays a living wage
4. having a pension that can be relied upon when your retire
5. Having some job security when you do a good job
6. Having a government that works for the 99% and not just the 1%
7. Having affordable housing

You know.
All of things that once characterized a thriving middle class.
All the stuff that your generation just took for granted.

——————————

I can see you can see where this is going. Recovery is not the plan of the 0.001%

The plan is simply to slowly wring every last bit of wealth out of the middle class. Slowly but surely it’s happening all the while most haven’t the slightest clue, and most are convinced that they are richer than they think.

WOW! 2015 and beyond could be a real heart breaker for many

#68 Nomad on 12.15.14 at 10:17 pm

“However, the recent decline on Canada’s equity markets is likely to cause a decline in household wealth in the fourth quarter” (CTV news)

People will open their portfolio quarter report and feel less horny about buying a bigger house. Will weight on house sales.

We wish you a Merry Christmas;
We wish you a Merry Christmas;
We wish you a Merry Christmas and a Happy New Year.
Good tidings we bring to you and your kin;
Good tidings for Christmas and a Happy New Year!

The TSX is up 3.4% YTD and 7.5% over 12 months. — Garth

#69 Grounds for Treason on 12.15.14 at 10:17 pm

I have agreed with most of your blogs regarding real estate, and financial comments for the most part for quite awhile now, but the constant glee and admiration you have for the US, who by the way almost killed the world with fraud in 08/09 but were bailed out by taxpayers, and your constant negativity and even more glee at the interest in seeing fellow CANADIANS suffer with the current oil turmoil is getting ridiculous.

TO wish AB and Sask such ill will is grounds for dismissal from CANADA. If you love the US so much and want to continually state how great the Fed is for using taxpayer money to tell bankers “hey it is ok to commit fraud and steal billions because we will bail you out and you can sail off on your yacht while we clean up the mess on the backs of the hardworking honest people of the world” then you should give up your CANADIAN Citizenship and move to the USA where they will happily have you for it.

WE ARE ALL CANADIANS…NOT BC’ans, ALBERTANS, SASK’ians, ONTARIANS, but CANADIANS. ENOUGH with this Canada bashing already!! We already know we have a bunch of financial illiterates and politicians that praise it as “growth” in this country, and that they are the cause of their own demise via too much debt, but to take pleasure in entire provinces suffering revenue shortfalls is anti-CANADIAN. Do you know that the disabled will suffer cuts first and foremost before any union or politician does with such revenue shortfalls?? and you’re happy about seeing people who can’t defend themselves suffer? WOW…..just WOW

I may not agree with BC and their tree hugging ways, or Albertans and their love of debt fuelled Audis, BMW’s, and Mercedes, or Saskatchewans love of polluting their own province with un-enforced energy reg’s, or Ontario and their debt that’s almost 50% of the federal debt, or Quebec and their never ending extortion attempts, I may also not agree with Trudeau, Harper or Elizabeth May, but we are all CANADIANS and we should NEVER be happy about entire provinces being decimated while cheering another country’s turnaround.

You and your blog will be hung for treason in the town square…live on the 100% CANADIAN CBC television network… with coverage by Peter Mansbridge at 6pm!!

#70 Musty Basement Dweller on 12.15.14 at 10:18 pm

I wonder if this oil hit to the Canadian economy would cause any related ripple effects that might change CMHC policy of backing risk loans which probably are getting riskier now?

#71 Willy H on 12.15.14 at 10:36 pm

To be fair, I know of very few analysts that predicted oil nearing $50 bucks a barrel in 2014. That said, it won’t last long.* Even with China and Europe slowing (if not stalled) the demand for oil continues it’s relentless rise as we draw down on the world’s known reserves. It’s a finite resource after all and no matter what you think of the tar sands and global warming, the mid-term and the long-game is in Alberta’s favour. What concern’s me most is the fact that Canada’s largest housing bubble (Southern Ontario’s souless GTA) will somehow escape this reverse energy-shock unscathed, leaving another generation pickled in mortgage debt.

*OPEC may appear to be on a another planet these days but they will come to miss their $70 margin per barrel in short order. Giving away a finite resource to gain market share is going to look awfully foolish in the new year.

#72 Lumberjack arch? on 12.15.14 at 10:37 pm

#62 mark

Last year? No I didn’t get the memo but I did get an assessment that went up substantially , if you could forward me the article or data that would be awesome !

#73 SWL1976 on 12.15.14 at 10:38 pm

#40 Dan – We’re more like Norway

——————————–

Just without the 1.2 trillion stashed away for times like these

#39 Dirty Debtor – That was awesome, great analogy!

#74 VICTORIA TEA PARTY on 12.15.14 at 10:42 pm

NECESSITY IS THE MOTHER OF INVENTION…

…as the saying apparently goes.

Earlier I was grinding on about the useful idiots of Canada’s environmental movement, handmaidens of their US-based monied classes.

I wondered who’s rights were more important, the protestors or ours.

It seems to me that the greater majority of Canadians are more concerned about familial survival than what some stuffed American shirt thinks about how Canada is “handling” her resources. That’s too bad for it creates imbalances in the national discourse.

ALL RIGHTS IMPORTANT

I believe that all of our rights, regarding Canadian resource exploitation, cannot be taken from any one group by another. We’re all in this together, regardless; as we feel the pinch of lower resource prices and wonder to where it will all lead.

DO IT AT HOME

With our unstable oil and natural gas pricing cohort, a suggestion that goes in a direction away from a typically traditional export energy trade philosophy to a safer doing-it-at-home idea (but we’dl still need the exports because of the money).

I’ve opined before on the issue of a national energy distribution project wherein every Canadian home, business, school, hospital and so on has constant access to “reasonably-priced” natural gas.

Costs would have to be negotiated between the producers, the West and Newfoundland/Labrador, and the Rest of Canada.

If the resource price was somewhere north of the basic cost of finding, producing and distributing same, and locking in that price for negotiated periods of time, then Canada would have a leg up on dealing with trading partners no matter what any economic “situation” anywhere (something like Norway?).

That of course, provides that such a scheme would not violate our various external trade agreements.

Reasonably priced resources managed in a reasonable way for access to all Canadians seems a sensible base economic foundation for our economy to prosper over the very long term by benefiting the maximum number of people for the long haul.

I haven’t heard much if any of this from our glorious leaders.

What do you think?

RUSSIA JUST KEEPS ON BEING A SURVIVOR (REMEMBER WW2)

Russia, meantime, is busy defending its energy pricing structure using their currency’s “local” value to determine the true values, costs and benefits of their resources.

This is actually an effort off-set the rapaciousness of the dominant, out of control, US dollar as it diminishes commodity prices everywhere in its trading relations with the rest of the world.

Zero Hedge has this:

http://www.zerohedge.com/news/2014-12-15/what-america-does-not-understand-about-russia-oil

Also, one should not forget the trump card that Russia holds in its ever-expanding trade relations with China. Both countries seem headed for less “happy” economic times, along with every other country, but relative to the overall scene, it probably could be a lot worse for both.

Different times indeed.

#75 gladiator on 12.15.14 at 10:46 pm

Soon we will be buying a gently used car for just under 20k with the money we saved.
Does that make us unicorns too?

#76 B.O.B. on 12.15.14 at 10:47 pm

What foreign investor lends to a country whos bonds pay out less than its currency is depressiating?

#77 Smoking Man on 12.15.14 at 10:59 pm

#63 everythingisterrible on 12.15.14 at 9:58 pm
#56 Smoking Man
“It’s mostly shit, but some times spectacular..
I’m got be in the mood.”
—————
more like spectacularly shitty.
………

Yes it know I’m the village idiot… Can’t write but I’m second only to yoda when it comes to code smithing.

For those of you new here, in the last 2 or 3 years you don’t know what that is.

Guess who called my sales manager for keysme today. Warner brothers. Little encryption software that CSIS suggested it would be a good idea took it down off the Web site. And suggested that I’m should quietly market it to fortune 500 companies.

It’s a wee perfect encryption system that basically guarantees, if your email is hacked.. It’s no big deal.. They can’t read it.. And if by some miracle they figured out the algo… Plassable deniability..

Jack tried to sell it two Sony six months ago… They want a meeting too..

It’s sick how much this little drunkin invention has yielded..

I’ll do it for you…. Smoking Man youre such a loser….ha

I give my great ideas away for free, no one acts on them.. Copy me with a better mouse trap…

The Schooled..

#78 Snowboid on 12.15.14 at 11:01 pm

#12 Jimmy on 12.15.14 at 8:28 pm…

Crazy long lines and full carts – hasn’t that been a Costco tradition for a few years now?

In the meantime, regular gas is down to .60 CAD a litre here in Phoenix.

#79 Willy H on 12.15.14 at 11:06 pm

The Alberta housing market will take a temporary hit with oil at $50 bucks a barrel but the reverse may be the case for GVA and GTA. One of the causes of the 2008 melt-down was the rise in oil prices in concert with Wall Streets fraudulent paper building a house of cards that backed major banks around the world. Our current situation is the exact opposite. A drop in oil prices will act as a temporary stimulus that will drive up US production in demand which tends to be very good for the GVA and especially the GTA. However we must keep in mind that Ontario’s manufacturing base has been dying the death of a thousand cuts and it may not be able provide central Canada with enough economic activity to offset the negative impacts of lower oil prices, a weakening CAD$ and increased cost for imports (in particular food!). The analyst’s have their work cut out for them. It could go either way in cental Canada.

#80 Mark on 12.15.14 at 11:08 pm

U.S. rates will rise from 0.25 to 0.75 throughout 2015. Hardly an earth shattering event.

Bettere ask the bond market what they think of the probability of this happening. Yields are crashing. Bond prices are at near all time highs. Nobody in the market is taking the prospect of rates rising seriously. With oil crashing, inflation is as good as dead on both sides of the border. With the strong USD$, the next shoe to drop is US corporate earnings.

#81 winter peg on 12.15.14 at 11:08 pm

Rk USA”re: but they might be positioned for a Big Vultch by about this time next year.

prices won’t bottom out that fast the best deals will be four years from the crest/peak

it will take two years for sellers to realize they are not getting their asking then two years of listings flooding the markets driving down prices”

So…When CAN we think about vulching.?

Moreover, is the sell- now-&- rent strategy applicable in the smaller centres like Winnipeg , Saskatoon etc?

Do I still have time to “cash in?”

Would like to hear about the prospects in smaller centres. Anyone?

#82 Mark on 12.15.14 at 11:17 pm

“What foreign investor lends to a country whos bonds pay out less than its currency is depressiating?”

One that sees deflation in the domestic economy of said country, under a belief that currency appreciation will make up for the interest lost.

In reality, it makes no difference if you buy a 1-year bond at 10%, and the currency depreciates by 8%, or buy a 1-year bond at 2%, and the currency does not depreciate at all. The total return of both investments is 2%. The bond market is solidly predicting a very strong rebound in the Canadian dollar, which is completely rational given the stability of prices in Canada, the robust nature of our export capacity, a long-term record of accumulating offshore assets and trade surpluses, and the high degree of deflation embedded into the pipeline in Canada as house prices continue to fall, sapping consumer spending on discretionary imports.

Bet against the CAD$ at your own peril.

#83 Sheik Yerbouti on 12.15.14 at 11:17 pm

#69 Grounds for Treason on 12.15.14 at 10:17 pm

Try adjusting the meds dosage b4 posting…..that was painful to read, must have been even moreso to write…

#84 DM in C on 12.15.14 at 11:21 pm

#69 Grounds…..

Miss your meds tonight? Are you kidding? SCHADENFREUDE is what this blog is all about!

Well, that and Harleys, moist virgins, bloated boomers and diversified investing.

#85 TheRealTruth on 12.15.14 at 11:22 pm

Garth,

How you like my forecasting now for the last 4 years. Go through the archives.

Mid 7 figures.

Can still hit 8 Figures with poloz et al’s attack on the C$

#86 Mark on 12.15.14 at 11:22 pm

“I wonder if this oil hit to the Canadian economy would cause any related ripple effects that might change CMHC policy of backing risk loans which probably are getting riskier now?”

The politicians have made it very clear, there will be no extension to the CMHC’s $600B statutory authority to provide subprime mortgage loan insurance in Canada. Hence, as demand on CMHC subprime mortgage insurance continues, standards will be tightened by the CMHC such that they can continue to fulfill their mandate.

A significant number of CMHC subprime mortgage insurance customers were making prepayments. The pace of those prepayments is likely to slow, thus placing increased pressure on the $600B limit, and forcing the CMHC to tighten further. Additionally, as defaults start to increase, there may be political pressure to further reign in the CMHC, by reducing its statutory authority. In any event, failing to raise the $600B limit of authority in an environment of 2% inflation, is, in effect, a reduction in the real value of the subprime loan guarantees provided by the CMHC.

#87 prairieboy43 on 12.15.14 at 11:27 pm

Speaking of Unicorns !!!!

http://youtu.be/lc3LUCu8-IU

#88 a prairie dog on 12.15.14 at 11:29 pm

Banking Packages

Everything You Need to Get Settled Quickly and Easily
We know how important it is to have easy access to money, especially in the early days of settling in. With an RBC bank account, you’ll have lots of options available to you. We also have credit solutions to help you get your first credit card, car, and home faster and easier with no Canadian credit history required.

We also know that you may not be familiar with banking fees, which exist in Canada. So, to help you save money and get ahead, we’ve eliminated the fees on many services included in your banking package.

– – –

That’s from RBC’s website.

So who do you think is backstopping this free-money-no-credit-giveaway to “newcomers”?

You can bet your ass it’s not the Bank.

It’s your tax dollars.

Welcome to Canada. How much money would you like?

What free money? What tax dollars? The only injustice here is your bigotry. — Garth

#89 Freedom First on 12.15.14 at 11:34 pm

#69 Grounds for Treason

So, just to clarify, it’s different here in Canada, but we are all Canadians?

#90 Saskatchewan Roller on 12.15.14 at 11:36 pm

#69 Grounds for Treason
Couldn’t agree with you more. I didn’t realize the Canadian dream was to bash the citizens who make this the most desirable countries in the world to live in. I do see the premise of this blog WAS to educate those from making poor financial decisions. Although now it’s a whipping session on the provinces that provide transfer payments to the not so prosperous regions of Canada. Some jurisdictions in this world would be so happy to have that kind of cooperation in their regions. We help the poor, enable our children with education, and allow the masses to enjoy freedom to be within our boarders. It would be encouraging to see some of the regular “know it all” crowd to offer up some credible solutions for a generation of people who just want what their forefathers fough wars over. Stable food, water, shelter, jobs, freedom!!!! This blog is somewhat insightful but mostly just a way for cowards to say “hopefully” that they told us so!! Good luck, the average Canadian is too resilient to let scare tactic achieve their dreams. Failure is not in our creed.

#91 Retired Boomer - WI on 12.15.14 at 11:39 pm

#56 SMOKING MAN

Never fear your posts are always interesting, and enjoyable. Gotta wonder what all those ‘DELETED’ ones might have contained…. probably best left just wondering

A fan

#92 Mark on 12.15.14 at 11:41 pm

“It looks like 2015 for us will be like 2005 in the States. The best time to scoop up deals was in 2010 for the U.S., so it looks like it might take another 5 years for the bubble to fully plop. “

The USA likely has another severe leg down for its housing market. After all, interest rates are nowhere near normalizing, not to mention the traditional cyclical overshoot that is usually involved.

Additionally, 2005 in the USA is more analogous to 2013 in Canada — the peak of the housing market. The past year and a half, just like 2006-2008 in the USA, has largely been a period of falling prices only masked by a significantly shifting sales mix.

If history is any indication, it will probably take approximately 8 years from the peak to achieve an optimal stock market to house price ratio. In Canada, this could be, for instance, a 60,000 index level on the TSX, but current prices. Experienced roughly a decade from now. If you plot Canadian house prices against that of the stock market, and observe the cycles, the periodicity can be estimated at around 10 years, with the optimal “time to trade stocks for houses” at approximately 8 years into the cycle.

http://pacificapartners.com/blog/wp-content/uploads/2012/07/Long-Term-Canadian-Home-Prices-over-SP-TSX-Price-Index.png

#93 Smoking Man on 12.15.14 at 11:53 pm

#91 Retired Boomer – WI on 12.15.14 at 11:39 pm
#56 SMOKING MAN

Never fear your posts are always interesting, and enjoyable. Gotta wonder what all those ‘DELETED’ ones might have contained…. probably best left just wondering

A fan.

….

I would pay a fortune for those deletes.. I have no idea what they are… I can speculate, adventures with details. Short term rental properties.. But I don’t know.

Could be someone like this..fhhkddrf

But hell, my fan count is up to 29…you made my day.. Thank you..

#94 Mark on 12.15.14 at 11:55 pm

“What free money? What tax dollars? The only injustice here is your bigotry.”

I didn’t see any bigotry there, but rather, statements of fact. Its no secret that new comers to Canada have been one of the most prolific growth areas of mortgage credit in Canada. CMHC is taking the risk, and although at the moment they do not require explicit taxpayer support, as the housing market continues to decelerate and price declines accelerate, a significant number of these recent buyers, increasingly underwater, are going to default.

If we do a back-of-the-napkin analysis, assuming that only 5X leverage is prudent for the CMHC, and assuming current capitalization available to pay insurance claims is $20B, the CMHC will likely require $160B of explicit taxpayer support. Of course, the number could go far higher.

This, of course, is free money accorded the RE industry. And anecdotally, the credit backstop of CMHC subprime mortgage insurance has allowed many newcomers to incrementally accelerate their remittances overseas, either to support relatives, to prop up failing business ventures, or simply to secret money outside of the reach of Canadian creditors.

What a sad, unsubstantiated condemnation of people who risk much to come and help build our country. — Garth

#95 Victor V on 12.15.14 at 11:59 pm

Subprime lending market in Canada skyrockets to record as banks tighten reins

http://business.financialpost.com/2014/12/15/subprime-lending-market-in-canada-skyrockets-to-record-as-banks-tighten-reins/

Subprime lenders’ share of the Canadian mortgage market has reached record levels, according to data obtained by the Financial Post, putting increased risk on the housing market.

Alternative lenders, who are major beneficiaries of that subprime market, now underwrite 2.2% of all mortgage loans — probably not enough to cause any major structural damage to the housing market in the event of defaults, but their market share has exploded.

The data, compiled by CIBC World Markets based on Statistics Canada figures, shows that the value of loans from alternative lenders grew by 25% during the past year while the overall market for mortgages increased by 4% during the same period. The Statistics Canada data was derived from information obtained from Revenue Canada.

#96 Drill Baby Drill on 12.16.14 at 12:00 am

#49 Mark
Once again you are proving yourself to be a first class moron. IT in the O&G industry leads all others in technical abilities. All O&G producers rely heavily on IT for custody transfer as well as production accounting for their earnings. You Mark are not as technologically savy nor as advanced as you let on. You are a small person trying to sound big but ………

#97 Mark on 12.16.14 at 12:07 am

“Once again you are proving yourself to be a first class moron. IT in the O&G industry leads all others in technical abilities. “

But its a very, very small portion of the overall O&G industry, and is heavily outsourced. Alberta’s IT job market is crap, and has been getting progressively crappier with the “oil boom” because of the departure of a significant number of IT firms.

Nobody denies that O&G firms use computers. But the industry, as a whole, employs very few high-end IT professionals, relatively speaking.

#98 Mark on 12.16.14 at 12:18 am

“What a sad, unsubstantiated condemnation of people who risk much to come and help build our country.”

They have outbound undeclared currency inspection of international (ie: non-USA) flights departing YVR and YYZ for a reason, after all. Currency sniffing dogs. And do newcomers really risk much, when most are only bringing enough to buy a used Honda and an apartment rental damage deposit to Canada?

Not only is their significant evidence of extreme leverage in the most bubbly places in Canada, but these cities tend to be concentrated with new-comers. Correlation isn’t causation, but serious consideration must be given to the probability that significant remittance outflows exist — remittances that are at least partially enabled through the residential credit bubble. For honourable and perhaps not-so-honourable reasons.

#99 Waterloo Resident on 12.16.14 at 12:19 am

I was just reading about some experts in the oil field talking about how they feel that oil prices will stabilize around the mid 50’s level over the next few days before sinking lower some time in January. So very soon, in one to 3 days we should begin to see the stock markets rising up quite dramatically from these recent lows. I’ll let you know when a buy signal comes around, right now nothing.

#100 Sheane Wallace on 12.16.14 at 12:21 am

#46 Mark

There is nothing farther from the truth.
Ca is destined to decline due to the overwhelming levels of debt. Either that or we implode and default. It is that simple, inflate or die.

lack of demand where, in Asia?
prices are determined in global markets these days, what you are saying is relevant to closed, isolated markets.

Global demand for goods is actually rising so expect everything that could be exported elsewhere to cost more tomorrow.

#101 blobby on 12.16.14 at 12:30 am

@#70 :

quote : “I wonder if this oil hit to the Canadian economy would cause any related ripple effects that might change CMHC policy of backing risk loans which probably are getting riskier now?”

I think this answers your question (it’s yes btw)

http://www.cbc.ca/news/politics/joe-oliver-says-ottawa-looking-at-hot-housing-market-as-ministers-meet-1.2873239

#102 Cici on 12.16.14 at 12:33 am

As Sheldon Cooper would say: “Well played Janet. Well played.”

#103 45north on 12.16.14 at 12:34 am

gas was 91.9¢ at Canadian Tire this morning. This has got to impact the oil and gas industry. The impact is a lower Canadian dollar, unemployment in the oil and gas industry.

I think that I’m out-of-touch. Obviously CBC doesn’t think that it’s a big deal. Check it out, there’s no mention of a collapsing economy:
http://www.cbc.ca

same thing for yahoo Canada:
https://ca.yahoo.com

and here I was going to preach about what the Canadian government should do and what it had to do.

#104 80'sKID6$4 on 12.16.14 at 12:42 am

#90 Saskatchewan Roller
#69 Grounds for Treason
I’m not really sure what blog you’re reading but I’ve never read about the ad vocation for fiscal implosion of other provinces here. However, I have read calls for people who live in these provinces to more critically examine their economic situation and related decisions. (I.e. Buying a 65,000 dollar truck on credit then spending 10k jack it up then hanging a set of balls off the trailer hitch when your job is semi-dependent if not fully dependent on commodity prices)

#105 J man on 12.16.14 at 12:55 am

What a sad, unsubstantiated condemnation of people who risk much to come and help build our country. — Garth

Oh save me. They are leaving oppressed countries with little to no opportunity to come line their pockets in the land of plenty. I certainly don’t begrudge them trying to make a better life but lets not over romanticize what is happening. Not to mention much of the money is exported back to the family and not helping Canada at all. Its not about color or creed. Its about protecting some of what existing Canadians (of all colors) have worked hard to build rather than selling out for dimes on the dollar to enable a few muckity mucks short term gains.

#106 rk usa on 12.16.14 at 1:01 am

re: #56 Smoking Man on 12.15.14 at 9:37 pm

you are so full of yourself

idiot

#107 Common sense on 12.16.14 at 1:04 am

#91 Retired Boomer – WI on 12.15.14 at 11:39 pm

#56 SMOKING MAN

Never fear your posts are always interesting, and enjoyable. Gotta wonder what all those ‘DELETED’ ones might have contained…. probably best left just wondering

A fan
—————

Good idea. Maybe more should be deleted.

#108 rk usa on 12.16.14 at 1:04 am

re: #69 Grounds for Treason

I think what drives Garth’s comments is the relative smugness of Canadians and how they think they are so much smarter than the average bear

#109 rk usa on 12.16.14 at 1:09 am

re: #79 Willy H on 12.15.14 at 11:06 pm

The Alberta housing market will take a temporary hit with oil at $50 bucks a barrel but the reverse may be the case for GVA and GTA. One of the causes of the 2008 melt-down was the rise in oil prices in concert with Wall Streets fraudulent paper building a house of cards that backed major banks around the world.

you nailed it, oil/gas prices is what spooked the consumer down here to curtail spending and bring down the housing market and the banks followed

#110 waiting on the west coast on 12.16.14 at 1:11 am

Could it be that we just don’t get it…

Check out…

http://www.realestateforwomenonthemove.com/

Especially the section on Parents of Teens… “Do you want your kids to end up as bums, barely making ends meet…”

Seriously, I retract my position and disavow Garth. I am going to take their course on how to buy a home – they make it fun!

#111 rk usa on 12.16.14 at 1:12 am

re: #81 winter peg

when to vulch

like I said it will take four years for the market to bottom out, that is what happened here in the US, 2007 peak, 2011 low

#112 rk usa on 12.16.14 at 1:14 am

re: #91 Retired Boomer – WI on 12.15.14 at 11:39 pm

please don’t encourage this rambling drunken self centered fool

#113 4 AM Sunrise on 12.16.14 at 1:25 am

Had to see [email protected] today. She works for the guy in the bowler hat. I mentioned to her that I was in the process of cashing out my RRSPs. She quickly chirps, “ooh, is it to buy a place?” FYI: I live in West Vancouver, home of “we can’t be in a housing bubble if the place down the street just sold for $5 million.”

Facepalm moment of the day.

I had to explain to her that I’m cashing out my RRSPs while I’m in a non-taxable stage of my life and shuffling that money into my TFSA.

#114 4 AM Sunrise on 12.16.14 at 1:30 am

#12 Jimmy on 12.15.14 at 8:28 pm

Costco always mystified me. I’ve tagged along inside with cardholders before (this one time following in the footsteps of an Asian family who unknowingly adopted me), and I’m just not crazy about the prices. I’m obsessed with comparison shopping, and I find that for most basic food things I know for sure I can get it cheaper somewhere else.

#115 Quebec is Great on 12.16.14 at 1:33 am

#69 , #90
Wow, just wow. The one place in Canada where you will find no doublespeak, no membership fees and a plan for all Canadians to improve their financial future if they choose to heed his advice.

the outright hate in your two posts is stunning. In this country full of media that lies to you, you’re pointing a finger of treason at Garth? Open your eyes fool!

#116 Gregor Samsa on 12.16.14 at 1:39 am

>In Russia interest rates rise you!!!!

A better way of putting it: “In Russia, bank pays _you_”

To say that Russia is taking a wildly divergent philosophy towards economics than the west would be an understatement.

#117 lookoutbelow on 12.16.14 at 1:44 am

So, let’s just take a breather and look at the big stuff:

The price of oil is controlled by much bigger producers than Canada. The price is what it is and there is not a thing we can do about it. Western Canada Select is already at $40/barrel.

Could it go to $30? Sure, why not. Since every other major country is slowing down economically! The only question now is, how long will the price stay at these low levels and the collateral damage?

The debt-laden oil and gas sector will have to consolidate. No one is talking about this high yield debt and the associated derivative hedges. This will directly affect the banks as there is no “CMHC” for these loans.

And then the collapse of the Canadian Dollar will surely demand a response from the Bank of Canada to keep inflation within the preferred range. Inaction will drive up inflation and guess what that means.

It’s going to be a “wild ride” for the country. Perhaps we can depend on the real estate industry once more and more household debt to save us.

No, not this time!

#118 Tony on 12.16.14 at 1:48 am

The big vultch in Edmonton as I suggested on this blog about 4 years ago was the 50 thousand dollar condos and apartments in Edmonton. There were a few 50 thousand dollar townhouses at the time but not many. The people who lived in Edmonton with half a brain could realize at the time it costs to own about one-half of what it costs to rent. Sadly it took the locals years to figure it out. Today the 50 thousand dollar condos and apartments are now 100 grand apiece. That was the big vultch.

#119 Tony on 12.16.14 at 2:17 am

Re: #79 Willy H on 12.15.14 at 11:06 pm

The Alberta housing market will take more than a temporary hit when the property owners start getting property tax increases on the order of 10 to 15 percent increases each year to make up for budget shortfalls that I can assure you.

#120 Winnipeg2Edmonton on 12.16.14 at 2:56 am

We are in the same boat as Janet.

We are in our early 30s, heading to Edmonton from Winnipeg to start my job with the GoA. We found a 900ft2 bungalow by the ravine, great central location for $1600/month. I started telling people here in Winnipeg about it and they all told me I was crazy. “What the hell are you doing paying that in rent, why don’t you buy!?” Good thing I’ve been reading your blog for a couple years now. I’ve never been so pumped to become a renter again, a great seat to have to watch everything unravel.

We also have a 3BR, 1100ft2 two-storey in westend Winnipeg. Super cheap place to maintain, bought it in 2009 for 100K, only have 52K left on it. We also have about 27K in savings. We have a family member moving in to cover most of the costs but I’m wondering if we should move quickly to offload the place, grab the cash and run! However, I view the place as insurance against a total collapse in Alberta with me losing my job and a quick return back to Winnipeg where we can resume our very affordable homeowner life.

Sell or Keep?

#121 Lillooet, BC on 12.16.14 at 2:59 am

My prediction is oil will not stay at or below $60 for a full year. I’ve been following the oil market for many years and have watched many peaks and lows. They never last more than two months.

For example, the price crash down to $55/barrel today is about as logical as the spike of $147/barrel was in 2008. Both are not due to supply/demand but to other causes like politics, speculation, power-plays, manipulation. $147 oil didn’t last that long, and for the same reason $55 oil will not last long. The basic reason for this is GREED. Yes, good old-fashioned greed will drive the price of oil back up sooner rather than later.

Here’s why. Think about all the oil executives, oil ministers, oil employees and government officials in Iraq, Saudi Arabia, Iran, Russia, Norway, Venezuela, Nigeria and a dozen other countries who depend on oil revenues to pay for their government services, year-end bonuses, limousines, private jets. They were getting $100/barrel 6 months ago, now only $60 or so. That is a major hit to their finances. The internal pressures within their oil companies and board rooms and political offices is to DO SOMETHING. The people in Sauda Arabia and Iraq and Russia need the oil money as much, if not more than anyone else. Therefore, the tough talk by the Saudi minister is part of a chess game or poker game, but will not last long.

My prediction is that in a short period of time, maybe a week, maybe a month, the OPEC ministers will get together (either publicly or privately) and hammer out a deal to curb production and stabilize prices. They will do so because they are GREEDY. Who in their right mind would sell something for $55 when they could be getting $100? Immediately after this meeting, the price of oil will jump $10/barrel. Then within a week another $10, and then slowly creep back up to $90. Just you watch.

#122 Steve French on 12.16.14 at 3:16 am

“He had the same trouble as all intellectuals– he was ineffectual. He knew too many things, and they confused him.”

– Journey to the End of the Night.

Louis-Ferdinand Céline

#123 Pulp Faction on 12.16.14 at 4:15 am

“And then there are the billions who don’t read this pathetic blog and think I play guitar.”

You’re not too old to learn. You already have the bad boy look mastered.

#124 The American on 12.16.14 at 4:28 am

At #69:grounds For Treason, wow, what an interesting perspective you have! So, stating the obvious and providing fair warning to Canadians for behaviors they have been echoing of the U.S. Is considered treason? Stating the obvious that another economy is clearly doing better than your own is treason? By the way, the U.S. wasn’t the only country involved in the “fraud” that took down economies a handful of years ago… As memory serves, European nations were buying it up as fast as it could be packaged and delivered, knowing full well the quality of credit backing those securities. Hell, they too know how debt ratios work. And, as for Canada, please know your country was and is STILL just as involved in this “fraud,” including the very hush hush bailout that American taxpayers helped front to keep your so-called healthy banks afloat. As it turns out, Canadian banks needed bailout much larger than American ones on a per-capita basis. Want to know why? Because your nation was and still is behaving worse than all other when it comes to being debt hogs. Just the way it is. Check it out…http://m.youtube.com/watch?v=9K_N0uOXkQA

#125 observer on 12.16.14 at 5:25 am

Talking to a co-worker today who owns 3 houses all leverage on each other. He thinks is a good time to buy.

OMG.

My take on Canada is: like a star trek episode.

Kirk: we need those shields up
Scotty: we need more power from those dilithium crystals….

Well well, canada doesn’t have anymore dilithium crystals, shield are down and they are surrounded by klingons. In terms of interest rates. It simply can’t go lower otherwise they will collapse the already collapsing dollar.

I’m surprise the rating agencies hasn’t already downgrade the canadian dollar to junk.
1)- we have huge debt almost 163. Just a year and a half ago we were at 140. (so now we know who has been buying those bungs and how they funded it)
2) Ontario is broke
3) Oil is going lower, and Obama / US is using it to spark their economy.
4) US is going to go nut, and thier dollar will once again be a safe haven, and people will simply exchange to USD to get into the action
5) With less tax revenue I expect their major industries
OIL and Real estate to take a hit. Remember the major growth in canada was in alberta, thanks the the jobs created by oil.
6) with 17% in real estate and probably about 30 percent in mining. That mean close to 50% of our major industries will get hit. Meaning less revenue for the Government and more being paid out in EI benefits.

This is going to get super duper ugly.

#126 Jacky Bluedog on 12.16.14 at 6:30 am

How much exposure and how far out have you purchased your USD Treasury contracts Garth? Are your ETF’s hedged against the collapse of the $C that you predict? How hedged are you in your portfolio’s against Canadian exposure.

Have you bought your hedge and shorted against the $C? It would seem that shorting Canada would be the only thing that can be done before the government wipes us out.

I would imagine a smart guy like you has zero Canadian dollar exposure in your portfolio. I have to think you have dumped all ETFs and Bonds that are in $C denomination given your access to the best minds in the biz.

Any hints for the little guys to avoid the final crash? Would you suggest we dump CDN citizenship and head south? I’ll go tomorrow on your say so.

Neither the C$ nor the economy will collapse. But I expect under performance, which is why smart people have balance and diversification. Of a 60% growth-asset weighting, only 15% or so of that should be maple. The rest, for you, can be hyperbole. — Garth

#127 Don Pittis on 12.16.14 at 7:09 am

Housing could be the next oil

http://www.cbc.ca/news/business/we-must-face-the-fact-that-houses-could-be-the-next-oil-don-pittis-1.2873740

#128 oil going to $40 lonh term on 12.16.14 at 8:42 am

Delusional people of Alberta think $40 is temporarily have another thing coming to them. Canada will take a huge economical hit. If you think Canada losing out on Billions and billions of dollars and think it won’t hit the whole Canadian economy have a rude awakening Btw oil is down AGAIN. We are now under $55 and headed to $40vand maybe less.

#129 CIA Rectal Feeding Team on 12.16.14 at 9:20 am

Greetings Blog Dogs,

In case you are wondering where Cato the Elder has been, we have apprehended him per Garth’s instructions and are subjecting him to questioning about why the hell he posts so much crap here.

We had expected a confession and conversion by now but things are taking longer. After being subjected to 12 rounds of rectal feeding (and this is NOT torture, just ask Cheney) he has still not been forthcoming, and in fact appears frequently to smile and enjoy the procedure.

In fact, just yesterday he told us, “Rectal feeding, why that’s basically what I do to Garth’s blog everyday – knock yourselves out, lads!”

We are looking for more effective protocols, if any of you have any suggestions.

http://www.bloomberg.com/news/2014-12-10/rectal-feeding-of-detainees-called-abuse-with-guise-of-treatment.html

#130 fancy_pants on 12.16.14 at 9:27 am

#46 Mark on 12.15.14 at 9:28 pm
The loonie may very well have declined, but purchasing power is increasing

? lower loonie has an upside for exporters but the flip side is anything imported will cost more. No difference if your buying maple syrup or beaver tails but for almost everything else purchasing power would decline.

not really a demand thing. whether 10 million ipads or 2 million ipads are in demand + imported, the cost for each will be higher than before.

At least Canadian retailers now have an excuse for the price gap burden

#131 David McDonald on 12.16.14 at 9:57 am

I echo the sentiments of Quebec is Great(116). Garth has a lifetime of service to Canada behind him. Amid a cacophony of competing opinions his is one voice I trust. He has been promoting savings, investing and diversification for years while the federal government has effectively enabled the exact opposite. Now the chickens are coming home to roost and of course he is frustrated. It comes across as ‘I told you so’, but in fact he did.

#132 Steve-0 on 12.16.14 at 9:59 am

You don’t buy bonds for the yield, or ever own to maturity. — Garth

If I don’t buy them for yield, or own to maturity, what do I look for in a bond ETF? How diversified should one be within the bond component.

I feel like I am trying to solve a riddle… I hate riddles.

#133 Leo Tolstoy on 12.16.14 at 9:59 am

What a sad, unsubstantiated condemnation of people who risk much to come and help build our country. — Garth

Mark posts unsubstantiated informations?! Say it ain’t so!

Oil, gold and the CAD are going lower. Guaranteed. Ignore this trend at your own peril.

#134 BigM on 12.16.14 at 10:07 am

Russia’s Ruble currency continues to collapse – now 100 to euro, 80 to dollar .

It was 60 to the USD yesterday.

Russia’s economy was $1.2 trillion a few hours ago – now it less than a trillion as Ruble collapses.

Going to be a cold winter.

#135 Daisy Mae on 12.16.14 at 10:11 am

#12 Jimmy: “No sign of trouble whatsoever here in YYC if you go by the traffic seen at the malls and Costco stores. Chinook Centre, Market Mall, Cross Iron Mills have zero parking …”

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

They’re in denial…and they’re using credit. The SHTF in 2015….

#136 Daisy Mae on 12.16.14 at 10:32 am

#30 nonplused From yesterday:

“…whereas now you pay for 5 cell phones so $500 a month if you have 3 kids.”

FIVE? These are ‘wants’ — not ‘needs’. Do you break down costs, kids paying their own?

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

“…2 incomes of $50,000 each get taxed less than one income of $100,000. And you get more RRSP room. And you get 2 CPP cheques when you retire rather than just one.”

Not enuf to make a difference. We all know ‘two can live as cheaply as one’.

#137 Meanwhile in the GTA on 12.16.14 at 11:02 am

Oil down, gas down = More disposable income
Oil down, dollar down = Good for manufacturers and exporters
More manufacturing = More jobs, lower unemployment
Talk of interest rate hikes = Herd thinking they need to buy a house before rates go up

I think this spring will be a very hot market for houses in the GTA.

#138 earlybird on 12.16.14 at 11:05 am

Its easy to look at history to determine where oil is headed, however the there has been a change. It is more a natural market, all competing for market share…a beautiful thing. Culling of the higher cost producers all over the world will push prices higher again. Too high stalls economies….to low hurts exporters….price discovery is on its way. It will force better technology, efficient production. The world economy on the whole will really benefit, it was created with cheaper oil. There is too much leverage in Alberta Real Estate…lots of folk with rentals that are a job loss away from disaster…it will only take a small portion of forced selling to change sentiment. The duration of low prices will be the determining factor.

#139 Rational Optimist on 12.16.14 at 11:12 am

Oh, you’re NOT him?

(Just looked it up: Fred, not Garth. But I think the blog writer is still a very accomplished individual.)

#140 mishuko on 12.16.14 at 11:15 am

CHMC released foreign owners/investors for condo’s… 2.5% in Toronto.

Hmm… so now we can’t blame that ‘HAM’ anymore can we?

There are greater fools indeed!

#141 chapter 9 on 12.16.14 at 11:20 am

#122 Lillooet,BC

OPEC will meet June 5,2015 Vienna, Austria again

#142 Cici on 12.16.14 at 11:22 am

#111 waiting on the west coast

OMG, I checked out that link and felt like I’d been syphoned into the Twilight Zone.

That sight is surreal, and representative of one of the rare cases in which feminism has failed us.

#143 Rational Optimist on 12.16.14 at 11:23 am

Okay, the other day (maybe Thursday), I asked if Russia could default. Mark replied “of course not” because of their low public debt. I asked why it’s “of course” and not “probably,” especially as many state-owned companies in Russia have huge debts that may grow with falling oil; and because most of their debt is not denominated in their own currency.

I’m really wondering, moreso this morning: what is the probability of a Russian default? Is the answer different if the ruble falls another 10 or 20 percent, or if oil is at 40 dollars for a prolonged period? I understand that they have a low public debt to GDP ratio (since they defaulted on their debt pretty recently), but their own central bank now anticipates a contraction of more than 4 percent next year.

Anyone know how much of their foreign reserves they’ve spent to hold the ruble to “only” a fifty percent drop (so far)?

#144 robert on 12.16.14 at 11:24 am

I am a big believer Alta is in deep trouble here but i just donot understand why others here get such joy in this. This is going to deeply impact many families and yes that means children. I agree the parents should of known better but that is a lesson we have all learned one way or another. Anyone on this board wish to dispute this? So why cast stones at glass houses? Besides if you think that this will not impact all families in Canada renters or owners, you are delusional. Energy has a huge spin off from the East Coast to the West Coast. My take here is to try and sort through these events and insulate your financial well being by measuring how they will impact You and your Family. Have a heart for those families that will be devastated when the pink slips start to arrive in the new year and they will!

#145 Daisy Mae on 12.16.14 at 11:34 am

#12 Jimmy: “Crazy long lines and full carts – hasn’t that been a Costco tradition for a few years now?”

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

People buy case lots of everything…and as Snowboid states, nothing has changed.

#146 Daisy Mae on 12.16.14 at 11:43 am

#83 Sheik Yerbouti : #69 Grounds for Treason

“Try adjusting the meds dosage b4 posting…..that was painful to read, must have been even moreso to write…”

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

…and not worthy of comment.

#147 Alex N Calgary on 12.16.14 at 11:59 am

Hey! I’m in IT and in AB, with a wife who works at the city in our 30’s, ain’t livin in no 850$ one room tiny condo though, brutal! (house rentals are lame though, being forced to move every year or two is insane!)

The head of our oil and gas division gave a presentation to all our staff about how much we all suck and how our Aussie bosses are disappointed in our profits, sigh. Nobody here understands (except the immigrants who see RIGHT through the bubble, Chinese guy laughs at the “soft landing” he said no country every in the world has ever had a soft landing) the wider implications to the housing market. The fact is that a ton of houses have been sitting on the market a long time now with no bites, boomers trying the market and taking it down and up.

The only places selling are the cheapest ratholes on the outskirts of the city, the new ones that young oil-hands and construction kids go for (2hr commute a day, worth it right?….)

The big Q is how low will oil go? nobody seems to know, or at least all the people who have an idea won’t tell us ANYTHING, so not to spook the employees until the day they drop the pink slips. Reminds me of the lies the Gov. pumps at us to keep em spending. The Malls are still packed here, nobody is being told the truth, despite the layoffs that have already happened, most people have the attitude that we can’t do crap about oil prices, so why worry? yeah why worry about crushing financial pressure and stress, no probs.

Alberta is ripe for a bloodbath, the crazy construction that has happened here, the masses of people who moved here from other provinces will all leave when the projects are cancelled. House inventory goes up, house prices go down, construction halts, they go broke, more houses, news actually reports it now that its already on Fire totally, people stop spending money, retail goes to crap, more job losses, Garth has been telling the spiral tail for years.

The Q is where does oil go? 40$, 30$, 20$, 50$, it will make a big difference. Nobody here seems to have a good answer for me (even long time oilmen at our company) where the Well-Idle price point is, or when projects get cancelled.

Its gonna get cancelled, and then this companies future is very uncertain for 2015.

Then the Q is really when is the bottom, when do we buy, hmmmmmmm, interesting times!

#148 Grantmi on 12.16.14 at 12:15 pm

I love this!

http://screencast.com/t/9OOPBHkue

I get these Google News Alerts, and I laughed at the last alert on this week’s.

The Province
Vancouver housing prices: There’s no ‘bubble,’ say realtors predicting modest increases in 2015 . http://bit.ly/1vVSpyG

#149 Alex N Calgary on 12.16.14 at 12:17 pm

Hey to the guy who tells us to feel bad about people who will get pink slips and lose their houses, why? Most people I know can’t be bothered to read the news or due diligence when buying property, or taking a job in an unstable industry, they just plow away ignorantly. I, like many people here, have worked hard on research, reading, and I personally have moved 4 times in rentals waiting for prices to moderate, I didn’t see them moving at -38c in march to another rental did I?

So should be feel bad for people who should have known better? who should have spent 10min a night reading the news? or make a salary sacrifice to take a job in a more stable industry (then oil and gas or construction?) You have to work hard in life, with information avaliable on the internet you have no excuses to be ignorant anymore, immigrants to canada aren’t ignorant for the most part, its the locals, and I don’t feel sorry for what is coming for them, lessons will be learned and life will go on.

#150 dosouth on 12.16.14 at 12:17 pm

Oh no could it be true????….

Housing market could fall like oil…

#151 highway61 on 12.16.14 at 12:21 pm

Alex N Calgary: The big Q is how low will oil go?

here’s the answer: mid 50s for 6-8 weeks and slowly up to mid 60s where it will stay until next summer, than another leg up to 70 where it will stay for 18 months. after that – we will see.

consequences for Calgary real estate market: minimal (no huge price increases for next 18 months).

#152 IM in C on 12.16.14 at 12:43 pm

http://www.thestar.com/business/2014/12/16/percentage_of_toronto_condos_owned_by_foreign_investors_is_very_low_cmhc_says.html

Here is the latest from Susan P. Sounds like she is carefully hedging her bets. (The market will always go up up up…but if it crashes it was due to HAM). Garth, I would be interested in you take on that CMHC “survey”

#153 Mike in Toronto on 12.16.14 at 12:48 pm

#122 Lillooet, BC

Oil will recover when Putin’s out of power. This looks like economic warfare and it’s been very effective so far.

The crashing of oil benefits Saudi Arabia directly. Foreign companies get washed out with bankruptcies while waiting for prices to recover. If Canada, Russia and the US were producing oil too cheaply, then it will hurt Saudi Arabia’s bottom line long term. Shaking up the industry will bring up costs. E.g., all those pipelines in Canada and Russia took years to get moving.

#154 Jackie Bluedog on 12.16.14 at 12:49 pm

“Neither the C$ nor the economy will collapse. But I expect under performance, which is why smart people have balance and diversification. Of a 60% growth-asset weighting, only 15% or so of that should be maple.”

Whew…that was close…I had the VW Van filled with bud and was headed south before I plugged in the Wifi at the 7-11 in time for your capitulation. The $C has already lost 15% this year on the back of Poloz’ bashing Canada generally. I guess it was unnerving to foriegn investors to put money here with a clown at the helm of the BOC.

My second comment is on ‘under performance’. That is why one should never buy ETF or mutual funds, you have to take the really bad with the mediocre. The ‘stock market’ is really a market of stocks. You have to buy good companies, not nationalism or nations.

I bought a great CDN company called Saputo, it’s really nor Canadian but international, now one of the largest chees, dairy and milk suppliers. It was $18 dollars when I bought it, trades over $30 today, much better than a 60/40 balanced portfolio, yes?

I bought CP at $78, trades at over $200 today. Agrium at $48, over $100. TD Bank at $14 many years ago, made a killing. Ditto with so many of the issues I own.

My Tims ( THI) got bought out. I paid $18, I got $108 in Burger King Shares. BK is on fire, I might just keep the shares. I’m expecting more M&A not less. I believe the oil rout is politically motivated not fundamental.

My TLM was bought out today, resulting in more cash freed up to buy more stocks for income, which in turn will buy more stocks, that will lead to a much better performance than any ETF I can see, because in an ETF there are fifty under performers, several major losers and a few more Steady Eddies, for every stellar holding. Wouldn’t you rather just buy good companies that have good prospects for the future, and invest in five sectors of the economy that will accomplish that for you, while paying juicy dividends?

I agree with in one aspect, that we must hedge the $C by buying US equity. But one must weigh losses aginst potential and decide if it is the market they own, or the holdings in their portfolio which has underperformed.

As it stands I predict the market bottomed yesterday. If I’m right I would rather be ‘in maple’ than anything else. “When they’re cryin you should be buyin”, goes the old saw.

#155 TurnerNation on 12.16.14 at 12:53 pm

Santa rally. Paging Chancellor Rebalancer to the weblog.

#156 SWL1976 on 12.16.14 at 1:05 pm

#69 Grounds for Treason

Sheesh! Don’t kill the messenger. Garth has provided a great service to this country as an elected official, and continues even after he got the boot. If there is any ‘Grounds for Treason’ that should fall on the one or one’s who punted him.

Just because one points out the flaws in a system that is failing doesn’t make him a Canadian hater

Really who can stop this slow motion train wreck that is about to happen?

I don’t agree with everything he says, but his blog has been and continues to be a great place to visit to get some stories straight

Have some respect for the man who gives us all such a great forum to share thoughts, ideas, and let’s us bitch and moan about a crumbling system that is failing us ALL equally…

Surfdom knows no borders in the 21st century

Great work Garth. Your optmism about America keeps me postive BTW. I hope there is hope

#157 Same Story Since 2007 on 12.16.14 at 1:12 pm

In modern history, the price of a barrel of Brent crude, adjusted to the value of U.S. dollars in 2011, rose above $40 only twice before 2004: during the energy crisis in the ’70s and early ’80s, and for a very brief period during the first Gulf War.

Otherwise, Brent has traded mainly below $40.

So, everyone just got to relax, things will be fine.

#158 Same Story Since 2007 on 12.16.14 at 1:19 pm

No more talk of Carbon Tax…. Wooo Hooo

#159 Smoking Man on 12.16.14 at 1:22 pm

Wonder what Jeff Rubin is doing these days… Garth?

#160 Same Story Since 2007 on 12.16.14 at 1:27 pm

Saudi’s have always said during the previous boom, they don’t like high oil prices as it increases competition….It also causes price instability….

Price stability at around $65 to $70 is a good thing.

#161 Renter's Revenge! on 12.16.14 at 1:37 pm

#158 SWL1976 on 12.16.14 at 1:05 pm

“Surfdom knows no borders in the 21st century”

Sounds totally gnarly, dude! Hang ten!

#162 Same Story Since 2007 on 12.16.14 at 1:44 pm

What a sad, unsubstantiated condemnation of people who risk much to come and help build our country. — Garth

Very true… The rate of success is astonishingly high among the immigrants compared to others.

Most come with nothing and no head start.

Yet Like Lannisters , they do pay their debt.

#163 robert on 12.16.14 at 1:51 pm

Well Alec N Calgary I have owned no fewer than 6 houses over the last ten years and now own my home clear title. Do i feel the need to look at renters as idiots? Absolutely not!I have been retired since i was 57 and I hate to admit it here but my retirement funds came from 60% real estate and 40% from a Junior Gold Company. Without those fortunate events i would still be working. My highest annual salary was 72k annually and trust me i know what it costs to raise a family. My wife and I decided that she needed to be home for our children and that is a decision we will never regret. We bought homes that were at the top of our affordability range and stepped way down for our retirement home which is ours and no one can ever come knocking on our door saying you owe us. For someone who has been there i choose to feel for the families in Alberta. Be careful you do not spend your life pointing fingers at others rather than worrying about your own well being.

#164 Blacksheep on 12.16.14 at 1:58 pm

To who (whom?) ever supplied the unicorn video, thanks.

My Hairdresser wife and I, got a good laugh from it!

#165 Sheane Wallace on 12.16.14 at 2:14 pm

Neither the C$ nor the economy will collapse. But I expect under performance, which is why smart people have balance and diversification. Of a 60% growth-asset weighting, only 15% or so of that should be maple. The rest, for you, can be hyperbole. — Garth
…………………………..
Ca dollar could fall all the way to 0.7 USD, maybe even 0.65 and 0.5 Eu.
If this is not a collapse (coming from parity or even above USD) I don’t know what is,
As of the prices of imports….

Of course there would be no inflation in Poloz’s stats.
Cheers savers!

How much were these bonds paying? 2 % on 10 years T-Bills?
The yeild for 10 years is gone simply with the decline of the CAD this year!

#166 Mark on 12.16.14 at 2:14 pm

“No difference if your buying maple syrup or beaver tails but for almost everything else purchasing power would decline.
not really a demand thing. whether 10 million ipads or 2 million ipads are in demand + imported, the cost for each will be higher than before.

Absolutely a demand thing. The global economy is slowing dramatically, hence, prices on those items are coming down. The Canadian dollar may have fallen against a single currency, but the goods priced in that currency are falling in tandem. Transportation is a very significant portion of the cost of putting an item on the shelf in Canada, and $55 oil represents a dramatic reduction in such. And of course, those electronic trinkets have a very long and rich track record of almost always going down in price.

CHMC released foreign owners/investors for condo’s… 2.5% in Toronto.

Hmm… so now we can’t blame that ‘HAM’ anymore can we?

Precisely. And likely the same situation in Vancouver. HAM simply doesn’t exist to any statistically meaningful extent, but Vancouver and Toronto are heavily characterized by extreme uses of leverage amongst home purchasers. Enabled by the ubiquitous availability of CMHC insured subprime mortgage credit.

#167 bdy sktrn on 12.16.14 at 2:22 pm

Wouldn’t you rather just buy good companies that have good prospects for the future, and invest in five sectors of the economy
———————————
do tell….

would you buy saputo/agrimum/td/tmi at todays prices?

#168 Mark on 12.16.14 at 2:23 pm

“There is nothing farther from the truth.
Ca is destined to decline due to the overwhelming levels of debt. Either that or we implode and default. It is that simple, inflate or die.”

And debt deflation is profoundly supportive of the currency. Just look at the United States over the past number of years.


lack of demand where, in Asia?”

Worldwide. Haven’t you been noticing the price of oil and commodities falling off a cliff recently? That’s a global phenomenon.


Global demand for goods is actually rising so expect everything that could be exported elsewhere to cost more tomorrow.

That’s not been the case recently. Prices are falling, if not crashing. Pointing to lower demand.

#169 bdy sktrn on 12.16.14 at 2:24 pm

#157 TurnerNation on 12.16.14 at 12:53 pm
Santa rally. Paging Chancellor Rebalancer to the weblog.
————————-
i get a feeling the grinch may still be lurking, open those presents quick!

#170 Fortune 500 on 12.16.14 at 2:26 pm

For those still arguing that this is not a locally created problem …

http://www.cbc.ca/news/business/condo-foreign-ownership-less-than-2-4-cmhc-says-1.2874899

#171 Mike S on 12.16.14 at 2:29 pm

“We borrowed almost $25 billion in the last three months in fresh mortgages alone, and the rate of new debt surpasses growth in disposable incomes”

BTW, the debt load is going to grow for months (maybe 1-2 years) to come. This is because many of the RE deals were not financed yet, as supply (condo and new SFH) waits to be completed by the builders

#172 miketheengineer on 12.16.14 at 2:30 pm

Garth et al:

Would not the too big to fail oil and gas companies have a “war fund” for these crisis?

So if they do not have some way to weather da storm…I will not shed and tears for them.

They have been living high off the profits from record high oil and gasoline sales…so too bad for them if they mis-managed their profits and did not prepare for the lean times….and they (ie oil and gas) know there are ups and downs. Since 2009 it has been all Up Up and Away.

Question is: Did the big player prepare for a day like this?

Next thing you know, they are going to ask for a bail out, just like the banks…I expect that in Feb.

#173 apoint on 12.16.14 at 2:30 pm

So I just wanted to say that many people had problems with the idea of 250% and 350% of incomes and that idea.

It would be good for them to think of it as that they are living 2.5 and 3.5 years in the future in terms of spending. Thinking of it like that it seems more impressive. I hate to be even one month behind on my visa payment, but knowing that you used your spending and bet it all 3 years into the future, is crazy.

#174 Kenchie on 12.16.14 at 2:32 pm

CMHC says 2.4% of condos in Canada are owned by foreigners.

http://www.cbc.ca/news/business/condo-foreign-ownership-less-than-2-4-cmhc-says-1.2874899

#175 bdy sktrn on 12.16.14 at 2:37 pm

CHMC released foreign owners/investors for condo’s… 2.5% in Toronto.
Hmm… so now we can’t blame that ‘HAM’ anymore can we?
Precisely. And likely the same situation in Vancouver. HAM simply doesn’t exist to any statistically meaningful extent, but Vancouver and Toronto are heavily characterized by extreme uses of leverage amongst home purchasers. Enabled by the ubiquitous availability of CMHC insured subprime mortgage credit.
——————————-
ZERO cmhc credit for sfh in ham areas of van. 20% down or walk. Been that way for many years. how do you get cmhc on a 2.1m teardown?

#176 Mark on 12.16.14 at 2:45 pm

“ZERO cmhc credit for sfh in ham areas of van. 20% down or walk. Been that way for many years. how do you get cmhc on a 2.1m teardown?”

We’re only talking about a very small number of properties in such case compared to the overall stock of housing in Canada or even the lower-mainland. And there will always be, for various reasons, wealthy people doing those deals if they think they can make money at it.

But as suggested, and as the low “HAM” stats would show, the statistically relevant parts of Canada’s housing market are *not* being inflated by foreign ownership. This is intuitively obvious since credit/leverage is off the charts, and foreign buyers traditionally do not have access to Canadian mortgages. Also can be seen on the basis of no meaningful net investment inflows into the local economies.

#177 Obvious Truth on 12.16.14 at 2:47 pm

The big inflows into canada in October got crushed. They won’t make that mistake again.

Who’s left to buy canada except the contrarians on this blog?

#178 @kenchie on 12.16.14 at 2:59 pm

Definition of foreign investor : in this study, someone who has never visited or has no ties to Canada. Excludes visitors, foreign students, locally set up corporations with foreign directors, etc

Be careful not believe this drivel.

Show us your methodology. — Garth

#179 Mike in Toronto on 12.16.14 at 3:05 pm

#175 apoint

I think those 250% and 350% numbers assume you don’t have to eat or pay taxes.

Most people are lucky to save $10k/year, which means they’re really 60-80 years in debt.

And people laughed at Britain’s 99 year mortgages.

#180 @kenchie on 12.16.14 at 3:05 pm

This blog is a prime example of group think.

#181 prairieboy43 on 12.16.14 at 3:05 pm

Cheers Blacksheep. Is she a Unicorn??
Keepin it light. Everyone is so serious on this blog lately. Except maybe SM.

#182 JL on 12.16.14 at 3:19 pm

I could be vengeful and rub this in the faces of everyone who told us we’re “throwing money away” renting just to make themselves feel better, but it seems pointless. They’ll just blame the oil, like no one could have possibility seen this coming.”

Take it easy on the smugness Janet, prices haven’t fallen yet. Maybe they drop 5% in Edmonton. With $2000 per month in rent you could have a $400,000 mortgage and half your mortgage payment would be going to principal. In five years the $400,000 mortgage is down to $340,000 so you’re up $60,000 in five years with the same monthly outlays and the opportunity to add value to the home through sweat equity and improvements.

As it has been in Edmonton for some time, the buy vs. rent decision is not clear cut. With price to rent ratios in the 14-17 range the decision is very dependant on the person. Certainly an argument can be made depending on circumstances that renting is better in many cases, but Janet’s smugness is overdone.

#183 bdy sktrn on 12.16.14 at 3:30 pm

We’re only talking about a very small number of properties in such case compared to the overall stock of housing in Canada or even the lower-mainland
——————-
nobody ever claimed ham was buying 2br walkups in new west

ham is only interested in ‘ a very small number of properties in such case compared to the overall stock’.

ham is the one and only reason that very high income (300k family) couples are buying houses on the east side, not the west.

the top has been blown out by ham and other cash from around the world, the spillover is seen right here. no ham at all in comm drive but west side refugees have pushed prices to the moon

#184 saskatoon on 12.16.14 at 3:32 pm

who cares about foreign ownership of condos?

let’s see the stats on foreign arable/waterfront land purchases.

according to this oldish article, it seems to be a one way street:

http://www.cbc.ca/news/canada/real-estate-rules-don-t-discriminate-against-foreigners-1.1216517

are there restrictions in ontario and b.c., much like those found in alberta, saskatchewan, quebec, and manitoba?

#185 Mark on 12.16.14 at 3:42 pm

“Who’s left to buy canada except the contrarians on this blog?”

A not-so-small Spanish oil company recently made an offer on one of Canada’s big oil companies. A significant consequence of Canadians overly-speculating in houses (aided by CMHC subprime credit) instead of putting a solid bid beneath the stocks of our resource industry.

In previous episodes, Falconbridge and Inco were basically sold off to foreigners for a song. Same deal, Canadians refused to value them correctly. The assets of Nortel were stripped clean, again, at a fraction of their long-term value, particularly the wireless patents.

But on a more serious note, buybacks and dividends should be pretty good over the next several years. And there is a high probability of BoC rate cuts making investing in the TSX even more attractive. The best time to buy stocks is when there is minimal public enthusiasm for the stock market. Conditions are setting up, particularly with low energy prices and collapsing base metal demand, for extremely favourable conditions in the precious metals mining sector.

#186 NoName on 12.16.14 at 3:58 pm

interesting read

i’m cooking, who is coming for dinner
http://www.thinkgeek.com/product/e5a7/

fire sale
http://www.themoscowtimes.com/business/article/moscow-sees-1-billion-in-elite-apartment-sales-as-ruble-falls/513342.html

desperation or stupidity, play to find out
http://www.bloomberg.com/news/2014-12-08/russians-snap-up-porsches-as-falling-ruble-erodes-savings.html

#187 Setting the Record Straight on 12.16.14 at 4:00 pm

@#181 AB Boxster

Soon we’ll be telling people how foolish and greedy they are for:

1. Wanting to raise children
2. Having your children complete college without crushing debt
3. having a job that pays a living wage
4. having a pension that can be relied upon when your retire
5. Having some job security when you do a good job
6. Having a government that works for the 99% and not just the 1%
7. Having affordable housing

You know.
All of things that once characterized a thriving middle class.
All the stuff that your generation just took for granted.
**********+*++
That’s so ‘Father Knows Best’.

#188 NoName on 12.16.14 at 4:00 pm

and this one, bargen hunters
http://www.themoscowtimes.com/news/article/kazakhstan-demand-for-ruble-rockets-as-bargain-hunters-head-to-russia/512731.html

#189 Setting the Record Straight on 12.16.14 at 4:04 pm

“WE ARE ALL CANADIANS…NOT BC’ans, ALBERTANS, SASK’ians, ONTARIANS, but CANADIANS. ENOUGH with this Canada bashing already!!”

Humbug

#190 Stop it. on 12.16.14 at 4:11 pm

Show us your methodology. — Garth

No need. $1,250,000,000,000.00 moved out of China illegally in 2013. Biggest Asian population outside Asia is in Vancouver. Just a coincidence that Vancouver prices are highest in the world? Read it in the Main newspaper of my grandfather’s homeland.

http://www.scmp.com/business/banking-finance

or is this money being stuffed under mattresses?

#191 bdy sktrn on 12.16.14 at 4:12 pm

site c – go ahead imminent

juice for the next million BC’ers – anybody got 14B?

really it’s solar power, the sun lifts the water , we just catch it on the way down

who needs oil anyway?

#192 Setting the Record Straight on 12.16.14 at 4:17 pm

“I’ve opined before on the issue of a national energy distribution project wherein every Canadian home, business, school, hospital and so on has constant access to “reasonably-priced” natural gas.

Costs would have to be negotiated between the producers, the West and Newfoundland/Labrador, and the Rest of Canada.

If the resource price was somewhere north of the basic cost of finding, producing and distributing same, and locking in that price for negotiated periods of time, then Canada would have a leg up on dealing with trading partners no matter what any economic “situation” anywhere (something like Norway?).”

*****
So many collectivists on this Board. Perhaps everybody should have access to reasonably priced automobiles.
Let’s see — we could call it NEP –the Energy Program.

Alberta

#193 Holy Crap Wheres The Tylenol on 12.16.14 at 4:21 pm

Gee-sh Smoking Man was really getting smoked, yesterday and today. Perhaps Smokey you should try to at least amble on with words written in native English for us poor regular folk how are not in tune with the UCC.

#194 TnT on 12.16.14 at 4:22 pm

#179 Mark

http://content.time.com/time/world/article/0,8599,2079756,00.html

And it’s just a coincidence that we have these types of articles documenting billions of dollars leaving China and the rise of our own Real Estate values?

Pouring water into an already full bucket still causes an overflow, no mater the amount or where you pour it.

#195 Lumberjack arch on 12.16.14 at 4:27 pm

Let’s be clear, the article is about foreign ownership of “purpose built rental condos”not the huge majority of strata condos so everyone relax this is not news

#196 markymark on 12.16.14 at 4:33 pm

# 133 stevo.

You don’t need bonds if you got big nut crakers.
Any government aaa bond fund will reduce volatile swings VAB, XBB etc.

#197 Retired Boomer - WI on 12.16.14 at 4:34 pm

#69 and #125
69
I think you are absolutely wrong in your criticism of this blog. It’s idea is to save idiots from themselves. It is occasionally successful to those who can read AND understand. While not everyone is blessed with the rudimentary abilities to view the news and understand it with meaning, one must realize innate abilities, education, and perception abilities vary widely.

#125
Interesting, but the Federal Reserve loaning a sum of $33 Billion to Canadian Banks ranks right up there with your neighbor borrowing a cup of sugar when baking.
Yet I wonder how many Canadian citizens realized that
three of their big banks were technically insolvent, while their elected officials were touting the ‘safety’ of the Canadian banking system? Seems like quite a bit of hubris in that. At least, American Banks weren’t the only ones who needed a “bailout” by whatever term you wish.

#198 DM in C on 12.16.14 at 4:37 pm

#151 Alex

Exactly. That’s like me feeling sorry for my brother — 44 yo mechanic who decided he didn’t like his job and quit. With three kids, and a newborn. No savings and no job on the horizon. Hasn’t found anything, but got mad when other brother said no to a loan.

Bullshit. Look inwards people, and quit projecting.

#199 BahBop on 12.16.14 at 4:40 pm

Here is some great advice from the star…

http://www.thestar.com/business/personal_finance/spending_saving/2014/12/16/why_young_people_shouldnt_worry_about_retirement_saving_mayers.html

#200 jess on 12.16.14 at 4:41 pm

http://euobserver.com/justice/126924
…” who really owns what in Europe’s offshore firms, trusts, foundations, and other opaque structures. ”

=
‘I acted from conviction:’ PwC whistleblower speaks out (16 Dec 2014)
Whistleblowers should be protected, not prosecuted (16 Dec 2014)
Luxembourg tax whistleblower says he acted out of conviction (16 Dec 2014)

#201 Sideshow Rob on 12.16.14 at 4:50 pm

#108 Mark

No loss. Talisman is a black hole of stupidity where capital goes to die. They can have that pig. Existing shareholders just got the break of a lifetime.

#202 Rational Optimist on 12.16.14 at 4:50 pm

185 JL on 12.16.14 at 3:19 pm

“In five years the $400,000 mortgage is down to $340,000 so you’re up $60,000 in five years with the same monthly outlays and the opportunity to add value to the home through sweat equity and improvements. “

Tie up $80,000 and take on insurance, property tax and maintenance obligations; and interest rate risk for the right to “sweat” to improve a house and hope to be “up” $60,000- on paper? And all I have to do is tie myself to the same place for five years?

Where do I sign up?

#203 Mark on 12.16.14 at 4:53 pm

“And it’s just a coincidence that we have these types of articles documenting billions of dollars leaving China and the rise of our own Real Estate values?”

Credit expansion in Canada can explain the entirety of the house price bubble in Canada. So what does the situation in China have to do with the situation in Canada?

Of course, any country that produces a lot of wealth, Canada included, will have a segment of its population that invests overseas. Garth even encourages Canadians to, in this blog. Chinese money has occasionally shown up in acquisitions of Canadian assets. For instance, Nexen was sold at a fire sale price to CNOOC, a Chinese company. However, evidence is scant that “Chinese” money is being used to buy Canadian RE. In fact, it is rather profoundly insulting to suggest that the investors who got rich buying low in China, would use their funds to buy some of the most expensive real estate in the world.

#204 Mark on 12.16.14 at 4:59 pm

“Yet I wonder how many Canadian citizens realized that
three of their big banks were technically insolvent, while their elected officials were touting the ‘safety’ of the Canadian banking system? “

No Canadian banks were insolvent in the 2008/2009 crisis. However, there was the very serious risk that they would have had to significantly raise the rates on floating-rate mortgages, which would have sent a significant number of borrowers into default.

So they arranged a deal with the CMHC, BoC, Federal Reserve, whereby their assets would be accepted for loans. Not a bailout. Not a sign of insolvency. But rather, an effort by the bankers to avoid triggering a systemic meltdown of the economy.

Had the BoC/CMHC not acted to provide liquidity, then the subprime loans involved would likely have defaulted. CMHC would be on the hook for the almost the full amount. And the banks would have still gotten their money anyways.

In other words, one outcome was traded for a nearly identical outcome that was somewhat more palatable. The system was desperately short on liquidity if you recall the era.

#205 Ray Skunk on 12.16.14 at 5:04 pm

#202

Care to offer us the high-level overview?

Some of us don’t wish to give that utter shitrag the benefit of another site hit.

#206 jas on 12.16.14 at 5:22 pm

Garth
what do you think: Is it too late to convert can $ funds to Us $ to get currency gain?

Of course not. Then buy a condo in downtown Calgary. What could go wrong? — Garth

#207 BahBop on 12.16.14 at 5:28 pm

#208 Ray Skunk

Basically it quotes different people trying to justify not starting to save for retirement until later on in life. Some of the dumbest arguments I have ever read, good for a laugh.

#208 TheLaughing(e)CONomist on 12.16.14 at 5:30 pm

Mattamy Homes to buy Monarch Corp. in $330-million deal

http://www.theglobeandmail.com/report-on-business/economy/housing/mattamy-homes-to-buy-monarch-corp-in-330-million-deal/article22104223/

Is this the ultimate top in the Canadian RE market – “…Taylor Morrison CEO Sheryl Palmer said on a conference call that her company decided to sell its Monarch division because it was seeing lower margins from the Canadian business,…”

And other strictly unrelated news:

Good 2 minutes to watch:
https://www.youtube.com/watch?v=qq0ykF2mHgQ

And for the booming USA – Congress bill passing with “unanimous consent” (google short link):
http://goo.gl/gYjHjO

#209 Victor V on 12.16.14 at 5:31 pm

http://www.theglobeandmail.com/report-on-business/economy/housing/cmhc-releases-long-awaited-data-on-foreign-condo-owners/article22101935/

The controversial issue of foreign ownership of condominiums in Canada finally has some hard data to go by.

Canada Mortgage and Housing Corp. says the highest percentage of foreign investment in condos across the country is in Toronto, at 2.4 per cent.

That’s considerably lower than what some critics say.

==========================

Sometimes, there isn’t any green eggs with ham.

#210 SWL1976 on 12.16.14 at 5:40 pm

#130 CIA Rectal Feeding Team

————————————

That was tasteless and is really quite horrible to joke about torture that the CIA has participated in

#211 Obvious Truth on 12.16.14 at 5:41 pm

#188.

You are asking for a lot. Over a long period of time. Which means a lot can go wrong. This kind of damage takes a long time to fix. Why bother.

Money is moving into the us. It’s likely to continue. You get all kinds of exposure in the s and p. There are so many great companies with great leaders to buy. And the government likes investors. I don’t feel I need to overthink this.

But this is what makes markets.

#212 jas on 12.16.14 at 5:43 pm

Thanks for quick reply but i did not get your comment about condo in calgary. Is it some kind of joke?

I give up. — Garth

#213 $20 oil soon on 12.16.14 at 6:14 pm

So much taken for granted in Canada and USA.

1) Jobs.
2) Clean air and water.
3) Abundant health.

A totally misplaced focus on the north american continent.

In the words of a chinese mainlander: “You have two arms, two eyes, two legs. What’s your excuse?”

The rest of the world laughs at the things that westernized “society” thinks are important.

Likely things will stabilize or someone will get pissed and start world war 3.

#214 Happy Renting on 12.16.14 at 6:15 pm

I give up. — Garth

LOL. You need a vacation from us, Garth. Take a few weeks off and just have your webmaster post pictures of balanced portfolio porn every couple of days to keep us bickering and foaming at the mouth. :)

#215 I'm stupid on 12.16.14 at 6:18 pm

#191 Stop it

That proves nothing. Do you think the profit companies like apple, mc Donald’s, etc etc making in China stay in China? What about Chinese companies that diversified outside of China and bought companies in other parts of the world? Can I prove some didn’t go to buy Vancouver Realestate, of course I can’t but neither can you.

How much money left Canada last year? Did it all go to Florida to buy retirement homes? What about the US? Money circulates, and a Chinese citizen that buys US equities is effectively taking money out of China. Just saying!

#216 bdy sktrn on 12.16.14 at 6:37 pm

#207 jas on 12.16.14 at 5:22 pm
Of course not. Then buy a condo in downtown Calgary. What could go wrong? — Garth
—————————————
dude, if you hung around here much you’d know garth preaches that one should use speculation to un-balance on a day trading basis.

he forgot to say put the rest in bitcoin.

good luck.

#217 Smoking Man on 12.16.14 at 6:42 pm

Just crazy, our aggressiveness toward a country with 6000 nukes..

#218 Standard Deviation on 12.16.14 at 7:14 pm

Can’t help but think that this sheeple behaviour is aligned with the “Thelma and Louise” approach to debt management? But you cannot buck the Law of Large numbers trend when it comes to dumbing down everything.