‘Terrified.’

EDGE1

At least we know more now about Poodlenomics.

Why did the Bank of Canada abruptly cut its key rate, risking what BMO economist Doug Porter says could be a miserable outcome?

“After four years of scolding Canadians about taking on too much debt,” he moans, “the Bank (of Canada) has pretty much said ‘Oh, never mind, we’ve got your back’, despite the fact that the debt/income ratio is at an all-time high of 163 per cent.”

Exactly. We’re just weeks away from a new spring-time Mortgage War with virgins descending on For Sale signs like crazed bugs. Sadly thinking lower rates mean higher prices, the moist ones are setting themselves up for a huge surprise. Because Canada’s sinking. The poodles knew that a week ago. Didn’t let on.

On Wednesday, as oil tanked and the dollar slipped below 80 cents, StatsCan dropped a bomb, restating employment numbers to reflect reality. Job losses were far worse – 11,300 last month rather than the 4,300 originally reported. In all of 2014, while the US created just shy of 3,000,000 new jobs, we added 121,000. And just wait until Target (17,600 layoffs) and the oil patch (perhaps 20,000 thus far) click in, starting in numbers to be released a week from Friday.

The fewest number of people are currently working in Canada since back in 2000, which is a big black eye for a government that slashed interest rates, crushed the dollar and added $170 billion in national debt over the last six years. Now it doesn’t even have the stones to bring forth a budget, or clearly warn people from scarfing down more debt when the party’s clearly over. Sad.

Then, there’s oil, now at $44 and at a 52-week low. Looks like it’s on its way to forty, and likely to stay there for a while. The industry revealed this week expenditures will drop by at least $23 billion in 2015.

Jonathan is a high-end caterer in Calgary. “I have contacts in Suncor, BP, Athabasca, Tourmaline, TransCanada, Spectra, North West Redwater – you name it, and I know someone from there. To be honest, the best info comes from the administrative assistants, though I do know a few higher-ups,” he says.

“Things are bad. Suncor has shut down catering completely and they are re-budgeting for $45 oil (‘Thank God those windows don’t open!’ quipped one of my middle management clients), and I haven’t heard from a few others since the start of the year – and it’s not from lack of trying,” he continues. “Thank God I diversified and got into lawyers and accountants offices, and weddings! I’m sure the oil will come back, but I’m not holding me breath (or putting anyone on account.) One client went so far to tell me that he was ‘terrified.’”

Perhaps you saw this comment posted here earlier today:

“The husband of one of my wife’s good friends is a fly-in/out (Vancouver Island) contractor in the oil patch and has made well over $200k/annum the last few years. This week he was told once his current project is done (a couple of more weeks to go) he won’t have any work until at least June. And that depends on oil prices. He claims 10, 000 people have lost their jobs in Fort Crack over the last week. I have no idea how reliable that number is though.

“This couple are just like all the others, living high on the hog with a big property, toys out the ying-yang and hardly any savings. Now the wife has started looking for work to help pay the bills. Sheesh.”

Or this, from yesterday:

“Neighbours’ son just back from Ft Mac today, fairly high up crane operator, told me that 1000 guys got laid off yesterday, no warning at all, said lots of layoffs happening but no one reports it in the media. Its not just the big names letting people go everyone is battening down the hatches.”

Yes, these are just anonymous words on a blog. They’re anecdotal. None of this is finding its way into the mainstream media, or getting to downtown Vancouver or Toronto, where the big lenders are quickly trying to Hoover up all of the virginal business possible, before it does. But it’s a fair bet the poodles at the Bank of Canada knew this well when they decided to pull the rate lever, once again distributing opiate to the addicted masses.

Meanwhile, CanOils has issued a report nobody in Alberta will want to read:

Less than 20% of leading Canadian oil and gas companies with oil-weighted production will be able to sustain their business long-term at US$50 a barrel. The longer that benchmark prices stay this low, the quicker and deeper the decline in expenditures on exploration and new development – and consequently on Canadian oil production – will be. Externally-sourced finance for development could also be limited; the inevitable writedowns of assets that will accompany the falling oil price could harm companies’ ability to borrow based on their reserves going forward and low share prices may discourage companies from securing finance by issuing equity.

Well, on Wednesday listings in Calgary were up 84% and sales lower by 34%. It’s a train wreck. As I told you yesterday, TD Bank says housing will decline this year in eight of 10 provinces. And are we now seeing cracks in Toronto?

As I told you days ago, sales in the GTA have turned negative on a year/year basis. The price of the average detached house in 416 is lower than it was one year ago. Factor in land transfer tax to buy plus commission to sell, and it’s an asset that’s lost 12% of its value in a year. Are condos next?

In the last few weeks two high-profile condo projects have been abruptly turned into rentals. About 300 buyers are out of luck and will have their deposits returned – with up to three years of interest at the Bank of Canada rate (0.75% per annum). It certainly indicates developers are getting cold  feet about a saturated and volatile market, and see more security in catering to renters.

By the way, Singapore has joined Canada – the 9th country this month to diddle with monetary policy in the face of deflation, oil collapse and stuttering global growth. Like ours, its currency was toppled. Singapore has reduced its expected inflation rate to negative .5%, as real estate values there fall.

Remember all I’ve told you about the transfer of wealth from real assets to financial ones? Looks like it’s here.

315 comments ↓

#1 TurnerNation on 01.28.15 at 6:35 pm

CPD will be a great buy when it comes down to historical resistance level. A slam dunk yield play.

#2 LJ on 01.28.15 at 6:42 pm

Dateline Calgary: When paying for fuel this morning, the attendant mentioned that sales were extremely slow lately, even with the low price.

Stick a fork in Cowtown, it’s done!

Go figure.

#3 retired Boomer - WI on 01.28.15 at 6:42 pm

This slow down. the oil Dive, and interest falling smells suspiciously like deflation is clawing at our a$$.

Market was quite wobbly again. CNBC talking heads were spinning more than Rosemary’s Baby.

To the about to be de-employed I give you my best, as I do the recently booted. There is tomorrow, where change may buy a tidbits.

#4 Fatima Llewellyn on 01.28.15 at 6:42 pm

I was just in Vancouver, visiting from the United States. I met, probably, 20-25 people when I was there. Few of them knew each other. Each conversation I had somehow turned to Vancouver real estate. I’m not exaggerating – just about every conversation transitioned from kids, hockey, the Super Bowl, what have you, to the state of Vancouver real estate. By conversation #10, I was wondering…what the heck is wrong with these people. It’s like they’re obsessed.

Everybody was glowing with smugness, talking about how much their houses were worth. Stating unequivocally that the good times were just going to continue. People scoffed at the notion that real estate was overvalued in Vancouver. I was looked upon as the cute little American, that didn’t understand things. “Poor little American…does she not understand how they are not making any more land in Vancouver, and that the economy here will continue to flourish for ever? Silly girl.”

I feel badly for people in Vancouver. They truly have their heads up their arses.

#5 Babblemaster on 01.28.15 at 6:43 pm

Crack in the TO RE market? I don’t think so. We’ve been hearing these same rumors and warnings for years. Well we all know how RE responded.

#6 Cara on 01.28.15 at 6:45 pm

Husky brought down the hammer company wide this morning. Cut over 200, some here in GP. Haven’t heard exact numbers but they’re letting employees with 16 years seniority go.
I’m in Grande Prairie and things feel a LOT quieter than a couple months ago. The fear is palpable. No one here is jumping all over real estate.
I’m in healthcare. Recession proof – I forsee higher stress levels reflected in more mental health issues going forward.
If anyone is feeling a lot of stress, or thinks that friends may be experiencing stress, talk to them. Be blunt. There is a high rate of suicide in young men in Northern Alberta already, this isn’t going to help.

#7 mark on 01.28.15 at 6:46 pm

Unfortunately the cure for low oil prices is low oil prices. I hate to see what the inevitable rubber band back upward will look like when well declines seriously kick in.

#8 Waterloo Resident on 01.28.15 at 6:59 pm

Yesterday I was talking with a 57 year old contractor, he has tons of experience with the economy and he told me that he’s never seen it like this since about 2008 (really slow business), and he said that deflation is slowly settling into the world stage.
I spent about 4 hours last night checking up on his claims and he is BANG ON. So this morning I sold everything, all of my holdings of UPRO/ SPXL and by the end of the day all of them were about 5% lower than where I had sold them. add in the 1% drop in the Canadian dollar and I’ve come out 6% ahead, and that’s just on one day alone.

Just look at the 3 year price chart of Copper, its falling as if a depression is coming:
http://stockcharts.com/h-sc/ui?s=$COPPER&p=D&yr=3&mn=0&dy=0&id=p00901260234

I’m not sure what I’ll invest in, Probably bonds like TLT for the next few months. The economy is heading into the crapper, that’s for sure.

#9 Montellino on 01.28.15 at 7:01 pm

What (where) are the 2 high profile condo projects turned rentals?

Thanks

#10 Incubus on 01.28.15 at 7:07 pm

“Less than 20% of leading Canadian oil and gas companies with oil-weighted production will be able to sustain their business long-term at US$50 a barrel. ”

Probably the same in USA.

Bank of Canada will cut again very soon.

I wonder when they will be negative?

#11 Victor V on 01.28.15 at 7:09 pm

http://www.cbc.ca/news/business/tim-hortons-layoffs-long-time-employees-escorted-out-the-door-1.2934853

Dozens of corporate Tim Hortons workers, including pregnant women and staff who had been with the chain for 30 years, were summoned to meet with outplacement agents and then escorted out the doors of its regional offices and headquarters yesterday as part of a nationwide restructuring.

An employee who asked to remain anonymous described the scene and estimated about 40 per cent of Tim Hortons corporate workforce had been let go.

But another source familiar with the downsizing plans says the actual number of layoffs is closer to 20 per cent, representing 350-400 employees.

#12 its OVER for Canadian oil sands on 01.28.15 at 7:09 pm

I feel sorry for the people of Alberta that will lose their homes and go bankrupt. Don’t worry coal will save Alberta..lol. I also feel sorry for realtors on this blog who kick and scream about millionaires coming to Canada and they will “save” us. Rich people are rich because they are smart .Why wouldnt the rich let Canada crumble under the debt bubble and then buy everything for pennies on the dollar? California makes Canada look like a frozen tundra. Do you know what you can get for a million there vs here in Canada? The Housing bubble crashed in the US why no rich people saved them? The realtors in the US gave the exact same demented logic.

#13 Mike S on 01.28.15 at 7:09 pm

“About 300 buyers are out of luck and will have their deposits returned – with up to three years of interest at the Bank of Canada rate (0.75% per annum)”

Seems to me they are the lucky ones…

#14 Happy Renting on 01.28.15 at 7:10 pm

#6 Cara

You’ve brought up the human cost to all this (both the bust and some of the conditions required to cash in on the boom.) For all facing hard times: you are not your job, your possessions, nor your paycheque. There is recovery and life after income drops or layoff. I particularly like this comic strip that suggests we have many “lives”:

http://www.smbc-comics.com/?id=2722

#15 Mike S on 01.28.15 at 7:14 pm

“CPD will be a great buy when it comes down to historical resistance level. A slam dunk yield play.”

CPD down, because the expectation is the US going to raise rates
Bonds up, because???

#16 Vancouver coastal on 01.28.15 at 7:16 pm

Here is a little ying for your yang Garth….bc union boilermaker here , I make my living for the year doing the spring and fall shutdowns then pretty much hang out in summer and winter, this spring is still scheduled to be busier then the last two years combined , yes capex is slashed 30 percent but existing projects all need maintenance and upgrades, the veterans have been in this spot before and understand we are in a boom and bust industry , just wanted a lil opposite opinion, don’t want your readers jumping to extreme conclusions, now all you blog dogs can jump in and tell me how it’s gona go down since your all industry experts

#17 Mike S on 01.28.15 at 7:17 pm

” I was wondering…what the heck is wrong with these people. It’s like they’re obsessed”

Unfortunately it is true, and witnessed in other parts of the world, during peaks of their housing bubble …

#18 T.O. Bubble Boy on 01.28.15 at 7:19 pm

@ #1 TurnerNation on 01.28.15 at 6:35 pm
CPD will be a great buy when it comes down to historical resistance level. A slam dunk yield play.
—————————————
CPD has fallen almost 3% in just a couple of days… could be soon.

#19 Mike S on 01.28.15 at 7:19 pm

“Crack in the TO RE market? I don’t think so. We’ve been hearing these same rumors and warnings for years. Well we all know how RE responded”

Let’s wait for that Feb/March/April reports, shall we?

Will be interesting how exactly the detached sector will look compared to 1M average it was last winter…

#20 Obvious Truth on 01.28.15 at 7:19 pm

About a decade ago I had a chat with a much older fellow who was watching all of this wondering what the heck was going on in the world. The insanity was apparent back then to this gentleman.

I said I figured it would end when having money is worth more than having stuff. To which he nodded.

Of course nobody could predict if or when this would happen and the exact course to getting there.

You just knew you had to have money if we did.

I guess Zloty, cad and ct money all count.

#21 Rental Woes on 01.28.15 at 7:24 pm

In 2012 the Ontario gov’t passed a law limiting rent increases to 2.5% annually. I have been renting an apartment for 12 years now and this rule seems to be a curse. Now we are getting an above board rent increase ( regulated rate plus 3%) every second year. When the case goes to arbitration or court it’s as if the outcome is predetermined , the arbitrator or judge has always sided with the landlord even though many of the repairs have been routine maintainance . Just got another one in the mail today for 4.6% and I’m not even going to waste my time going to the hearing . Most people would say just move but when you live in a smaller city the choices can be scarce for something decent. Thinking about buying a house again but with the recent rate cut, prices will be going higher still . Is anyone else out there getting hit with constant above board rent increases since the new ruling ? Our building is owned by a large Toronto Reit.

#22 Catalyst on 01.28.15 at 7:25 pm

Its going to be an interesting spring. May get even more inflated with another 25bip cut.

R/E has been a valued asset class long before (and long after) tech companies, and many other businesses the only downside is being able to diversify to mitigate price swings. Sadly, I don’t think this can be realistically be understood by the masses. The school system pumped me full of knowledge about our settlers and square roots but not one financial planning class. I’m pretty sure the only econ I took was an elective and replaced with gym by most.

It’s going to be a tough slog but Garth and the affectionately named jar lady are my favourites.

#23 Smoking Man on 01.28.15 at 7:28 pm

Your post paints a rather gloomy pictorial. But There is the Herd, The Spring, and good old MSM. They will fight you all the way.

I’m not even going to give you an argument, you’ve depressed me.

Going to hit the LCBO and do some more writing. My new found love.. If it wasn’t for this blog, would never have discovered how bloody talented I am.

Last fall I invented a new way to write. I’ve told you guys best place to write is somewhere between the second and third wine..

The problem with that is, if your a raving lush like me, you only have but minutes before you’re out of the zone. Your on the fifth, the sixth losing fine motor skills.

Well the solution is… O one more thing, I discovered that all my characters sounded like me, I had to change the way they sound. So I read out loud, it helps..

So since Sept, I’ll get hammered, rather than type, I talk into my phone recorder, standing up, and acting the scenes. This is no problem when your home alone.

However when you’re out with folks from work, and get JD wasted. Then something in your mind snaps. And you act out a screen in a black out state.

This happend to me, I turned into Blithe Barrington.. Accent and all..

I’ll post it on my blog later, what I wrote the day before, then snapped and actually did it, with no recollection of doing it..

People look at me funny now at the tax farm.

Wish I could explain it to em.. My brand damaged beyond repair.

Moral of the story, Drink Alone.

#24 OttawaMike on 01.28.15 at 7:29 pm

In other news, Brad Lamb is on CBC tonight with Mansbridge to talk about condos.

Anybody want to guess what the message will be?

Shortage of rentals, never been a better time to buy, my $500k Bentley runs great in the cold weather..

#25 cliff on 01.28.15 at 7:32 pm

Just to be clear:

Us oil production increased 5mb per day from 2010 to 2015.
That is actually the greatest increase in oil production anywhere ever, literally the greatest creation of wealth in history.
The next major down leg in oil will be because electric car sales are really taking off several major companies
Are building battery factories.

#26 Republic_of_Western_Canada on 01.28.15 at 7:33 pm

big hairy deal.

It’s all small potatoes compared to the NEP crash of the early 1980’s.

A hundred-mile convoy of semi trucks running from Nisku down to Montana carrying sold rigs which would never work in Canada again. Entire new subdivisions (curbs, lights, new water/sewer) of Calgary abandoned. And new 3-bdrm detached houses in Edmonton going for $87,000; old ones for quite a bit less.

As noted earlier, those who were recently working in the industry largely were able to sock away a healthy cushion for the deflation about to come. If you’re smart enough to pull a 6-figure salary, you’re generally smart enough to take care of it. It’s those people trying to keep up who saturated themselves in HELOCs.

But guess what? At continuous global consumption of 1 billion barrels of oil every 10 days, 24×7, the biggest thing we have to look forward to is a sudden and massive price increase when supply peters out. Remember, all the easy oil is long gone – and the Saudis are pumping mostly water with any produced oil in many cases.

The world’s populations do not currently understand just how precious hydrocarbons are. But they will. Again.

#27 Willy H on 01.28.15 at 7:34 pm

This StatsCan re-statement is unprecedented in it’s scale. I don’t recall a revision this large ever occurring in the past. We know the Reformicon’s have a hate-on for StatsCan. Beginning to wonder if all those cuts have done some real damage. StatsCan was once world renowned for it’s impeccable data collection.

#28 ShawnG in TO on 01.28.15 at 7:36 pm

I was just reading Zero (for entertainment purposes only!)

I read the title “Meet The Extreme Super Rich: A List Of The 80 People Who Own As Much As The World’s Poorest 3.6 Billion”, and think, man those in the Third world countries have miserable lives.

Oh, wait a minute. When Canadian housing bubble bursts, we’ll add a few million to that 3.6 billion, because they’ll all have negative equity.

Hmmmm. that’s hitting home. I should do something for the poor. Oh wait, BoC just did.

#29 its OVER for Canadian oil sands on 01.28.15 at 7:37 pm

New 52 week low for COS dropping 85 cents or 10.87% to $6.97 . ECA fell 92 Cents or 6.73% to $12.75 on the US exchange. This is very bullish for the oil sands. The average drop was 6% or greater drop for the other crumbling oil sand companies. The Canadian dollar dropped to under 80 cents US which is somehow bullish to demented realtors and other vested interests. Btw COS was trading at $24 six months ago with idiots calling the bottom @ $18, 15 ,13 ,11 ,9 and I am sure more bottom callers at $7. Don’t worry the millionaires are coming to save us since we are so special. Lol

#30 May on 01.28.15 at 7:37 pm

Wait… I thought we already had misery week. Sheesh

#31 For those about to flop... on 01.28.15 at 7:41 pm

#23 Smoked Meat.
Thanks for Nothin’

#32 harry on 01.28.15 at 7:45 pm

How are we seeing deflation? Only thing that’s come down is gas prices and slightly housing. Grocery store restaurants electronics are all going up.

#33 james on 01.28.15 at 7:46 pm

#4

I have the same experience when I visit. People in Vancouver talk about real estate incessantly. They don’t talk about forming businesses, developing new products, investing, etc. They talk about housing. Sometimes they talk about education, but only to help them move up the pay scale in order to afford a place.

#34 james on 01.28.15 at 7:47 pm

#4

And yes, they do the same condescending ‘but it is different here’ nonsense. ‘They aren’t building more land’, as if Miami was land rich.

Hubris, plain and simple. The idea that Vancouver is divorced from any implications of high housing prices is kind of laughable.

#35 its OVER for Canadian oil sands on 01.28.15 at 7:49 pm

http://www.cbc.ca/news/business/canadian-dollar-slump-hikes-cost-of-u-s-imported-goods-1.2898150

What good is rate cuts when prices of everything goes up? Who is going to buy RE when they have no job? Alberta is going to sink canadian RE. Many high school realtors in the GTA just don’t understand it.

#36 karl hungus on 01.28.15 at 7:52 pm

so 80% of OandG companies will be fine? Seems okay to me.

The report states 80% could fail. — Garth

#37 ALBERTASTROPHE on 01.28.15 at 7:54 pm

February will be brutal in Alberta. The layoff numbers will be much clearer. I expect home prices to drop between 10-20% by month end.

Much, much worse is on the way, sadly.

#38 ToppleDopple on 01.28.15 at 7:55 pm

A friend of mine in one of the ‘B’ig Canadian banks informed that there is 10% across the board cost cutting. In her dept 90% cost is employee cost.

#39 Guy on 01.28.15 at 7:56 pm

Here is an interesting article on David Stockman’s web site that explains the rational of the low interest rates in the US.
http://davidstockmanscontracorner.com/the-wreck-of-the-monetary-hesperus/?utm_source=wysija&utm_medium=email&utm_campaign=Mailing+List+AM+Wednesday

#40 CPG on 01.28.15 at 7:59 pm

Garth. Are you terrified enough to change your prediction that house prices in Canada will not crash.

I have not said they will. But declines are inevitable and many tears. — Garth

#41 James on 01.28.15 at 8:01 pm

The SGD has been v strong within the band. The actions of the MAS are understandable given the strength of the currency. This was not a panic loosening of monetary policy but a sensible readjustment given where the SGD was trading. The Gov of Singapore is very cognizant of the dangers of excessive house price appreciation and last year implemented draconian policies to cool the market and redirect investment accordingly.

#42 TheManwhoStaresatSheeple on 01.28.15 at 8:02 pm

Garth, I am partial to some of today’s statements and I find them outright incorrect.

First – with the original release of the LFS for Dec.2014 (done Jan.9,2015) there was announcement than there will be change in the methodology and there will be a new and final revision on Jan.28.

The government do change regularly the methodology on how they calculate CPI,GDP,employment. wages, etc. – because if they do not adjust them the sheeple will finally understand that “the world is not the way they tell it is”. I do not recall you discussing the relatively recent change in the way USA calculates their GDP (giving them an instant bounce of 3%), or how they distribute around the Obamacare dollars and their effect on the GDP boost.
Our government does the same – and it was announced in advance.

Second – “The fewest number of people are currently working in Canada since back in 2000, which is a big black eye for a government that slashed interest rates, crushed the dollar and added $170 billion in national debt over the last six years.”

This above is simply not true – unless you are talking about the participation rate – but then again I do not understand why you do not compare it with the booming USA – and their participation rates is currently a whole 3% lower than ours (65.7% for us versus 62.7% USA). And we at least have the same participation rate as of 2000 while the booming USA have this one dropping from 67.3% in 2000 and in the same time “creating” a millions of new jobs (just shy of 3,000,000 in 2014 alone)

The total employed people here in Canada has increased 20% – from 14,822,200 to 17,765,900

Construction – up 72.5% – from 790,300 to 1,363,600

Manufacturing – down 25% – from 2,249,300 to 1,691,200

FIRE – up 25% – from 876,200 to 1,090,800

Education – up 33% – from 983,400 to 1,307,700
Public sector part – from 868,400 to 1,140,000

Health Care – up 47% – from 1,525,700 to 2,241,500
Public sector part – from 760,500 to 1,028,700

Public sector at large – up 26% – from 2,848,400 to 3,585,500

Public administration – up 17% – from 763,400 to 892,300

#43 Bobs ur uncle on 01.28.15 at 8:02 pm

#26 Republic_of_Western_Canada

“If you’re smart enough to pull a 6-figure salary, you’re generally smart enough to take care of it.”

Riiiight.

The province with the highest incomes is just coincidentally the province with the highest household debt.

#44 Macrath on 01.28.15 at 8:03 pm

So lets say you`ve held 10k of CPD for 10 years @ a tax advantaged 5% yield . 5k of profit in the bank.

10 year CPD chart– http://tinyurl.com/or3ezck

We will be really generous an say you paid $18.50 for your 540.5 shares rather than over $20. Today’s price $15.71 for $8491.00.

$10000- $8491=1509 capital loss

$5k-$1509= $3491 for 10 years or $349.10 per year on your $10k. This equals a 3.39 % on a 10 year investment.

Great investment or Bankster con game you be the judge.

Never heard of rebalancing, did you? Do the math, buying in 2009 and enjoying a 5% yield, at 50% less tax, for the past six years. — Garth

#45 Steevee on 01.28.15 at 8:04 pm

Perhaps someone a little more knowledgeable about oil pricing can help me out with an answer to a question. As Western Canadian Select has a price differential of about $17 USD to West Texas Intermediate, does this mean oil sands producers are actually getting about 28 USD per barrel (or approximately $35 CDN)?

#46 ToppleDopple on 01.28.15 at 8:04 pm

I meant one of big 5

#47 Sue on 01.28.15 at 8:11 pm

#4 Fatima Llewellyn
#17 Mike S

I am reminded of Portugal and Ireland just before the big property crash. I have relatives in both places that I visited in 2005 then again in 2007 (or 2008, I forgot, nm).

On the second trip it was the same story, people mad about property. I tried to talk to them about fundamentals but they wouldn’t listen. One set even offered to get me a really good deal on an “executive” home in Wexford!

The Irish family got hit so badly that they lost the whole “property portfolio”. Several generations of a big family’s wealth gone, young people moving abroad just like their parents. The parents had made out well in England and returned to Ireland with their money.

Of course, there it was “financial services” i.e. setting up tax swindles, not oil, but the effect of a bubble in a small marginal market is pretty bad.

#48 famcy_pants on 01.28.15 at 8:17 pm

It’s Alberta, what could possibly go wrong?

http://www.macleans.ca/economy/economicanalysis/why-this-oil-crash-could-be-worse-for-alberta-than-the-one-in-2008/

http://news.nationalpost.com/2015/01/28/calgary-just-spend-5-9-million-on-a-pedestrian-bridge-thats-hundreds-of-tonnes-one-problem-its-too-short/

http://calgaryherald.com/news/crime/authorities-remove-201-dogs-in-distress-from-southern-alberta-property

http://www.cbc.ca/news/politics/nafta-probe-of-alberta-s-tailings-ponds-blocked-by-canada-1.2935004

http://www.edmontonsun.com/2015/01/26/busy-day-of-resignations-at-the-alberta-legislature

http://news.nationalpost.com/2015/01/26/todays-letters-alberta-doesnt-have-a-revenue-problem-it-has-a-spending-addiction/

#49 ANON on 01.28.15 at 8:17 pm

Not many comments this evening, so hopefully everyone is too busy with the scott-towels cleaning all the liquid drops on the floor.
Those with too much to mop, are are clearly terrified:
http://3.bp.blogspot.com/-8cG4JeR6aYA/VMk9GBDU2II/AAAAAAAAYJA/KSsioUv5GOQ/s1600/tlt.png

#50 Kothar on 01.28.15 at 8:25 pm

Taxes and foreign exchange. I bought USD a while ago and now see that I have gained due to the drop in CAD. If I sell my USD to CAD and realise a gain, am I obligated to report this as income, and how is it taxed if so?

#51 Wish I was wrong on 01.28.15 at 8:27 pm

#4 Fatima Llewellyn
I have lived in Van for all of my 54 years. My family (not me) has been in the land development business for more than that. I believe in the same market forces and principles as GT, and everything tells me the market in Van–according to official statistics–should be ripe for a big fall due to over valuation. But it won’t. It will survive a downturn in the CDN economy, it will survive lower oil prices, it will survive despite official income statistics say otherwise. Van is an anomaly. There are forces at play in this city that are not reflected in traditional statistics. I wish I were wrong, but I’m not.

Full disclosure, I’m a renter, have been for 10 years. I would like to buy, but won’t at these prices.

I’ll go on record again, house prices in the lower mainland will be higher in a year from now. GT, want to take that bet?

It’s not a game. — Garth

#52 Republic_of_Western_Canada on 01.28.15 at 8:28 pm

#32 Bobs ur uncle on 01.28.15 at 8:02 pm

#26 Republic_of_Western_Canada

“If you’re smart enough to pull a 6-figure salary, you’re generally smart enough to take care of it.”

Riiiight.

The province with the highest incomes is just coincidentally the province with the highest household debt.

Most are not in that income bracket, although the average is somewhat higher than unemployed auto workers and paper pushers in Ontario. But they like to feel like they are, so use RE leverage to HELOC their way to stardom. That’s the Vancouver Effect.

But those who I know have worked with substantial overtime in the trades and engineering over the last few years aren’t hurting.

#53 Nomad on 01.28.15 at 8:29 pm

While most investors obsess staring at their oil stocks, wondering if banks will follow suit, they are missing out on companies that are not negatively impacted by low oil.

West Fraser and $WEF (forestry), CGI and OpenText and Avigilon (tech), Westjet, Intertain (gambling), Patient Home Monitoring (healthcare). Yes, I own all, but look at their price over the last 3-6 months relative to XEG and ZEB.

#54 Macrath on 01.28.15 at 8:29 pm

Never heard of rebalancing, did you?
—————————————————-
rebalance what? it`s done nothing but drop since inception. Cut your losses would be the better term.

#55 Cato the Elder on 01.28.15 at 8:29 pm

Garth, how does reducing the rate lead to less inflation? It’s the exact opposite.

Every prediction I’ve made has come true. How? It’s VERY easy to predict the actions of government when you recognize who they work for – and it isn’t us. They work for big banks and big business. PERIOD.

Everything in Canada is about to get much more expensive from food to heating to electricity. Inflation doesn’t flow into all asset classes at once – it flows where governments direct it with legislation or where the flame is fanned via speculative investment.

Inflating the currency is a crime – it’s no different from counterfeit. It doesn’t increase the wealth or productivity of a nation – it only transfers purchasing power from the poor, middle class, and savers to debtors and speculators that get access to credit first.

What a shame. What a crime. Time to get out the pitchforks.

But don’t go after the entrepreneurs – the hardest working and most vital to an economy. Go after the unproductive parasitic class of politicians and their cronies in big business. Those are the culprits.

#56 Vancouver ,,,really ??? on 01.28.15 at 8:31 pm

DELETED

#57 ‘Terrified.’ | Realties.ca on 01.28.15 at 8:31 pm

[…] Source: http://www.greaterfool.ca/2015/01/28/terrified/ […]

#58 Fleabitten Monkey on 01.28.15 at 8:32 pm

Yeah I’m still shocked by the BoC move considering all they had been preaching about debt/income ratios. What will be their response when the 163% begin to ascend yet again? Really, what are they going to say? How the [email protected]#% are they going to put it? Are they really going to accept no fault in it?

#59 AACI Home-Dog on 01.28.15 at 8:33 pm

#23…Smoking man…I agree wholeheartedly…

http://www.bing.com/videos/search?q=george+thorogood+i+drink+alone&FORM=VIRE7#view=detail&mid=C591F92654A46E11A5DAC591F92654A46E11A5DA

#60 Ollie on 01.28.15 at 8:34 pm

Everyone I know in Toronto is worried for their job right now. Including me. Except one who’s a police officer. The market is made of individuals with their emotions. No amount of mortgage rate drop would change these feelings. Fear is stronger than greed. My bet is the spring market in TO will whimper. As in having a few delusionally fueled sales and lots of stale ones. This can be twisted into a good show by the media, but the reality will hit home this year, not the next one. It doesn’t take a whole year for reality to smack one when laid off.

Other “good” signs, like the Land Rover wait line of 7 months touted by a blog dog yesterday? Of course. That crap of a car maker didn’t expect the sheer amount of idiots overwhelmed by the transitory exuberance of cheap oil coinciding with lingering high incomes. Wishing to ride a crumbling down flashy logo is just that, misplaced exuberance. Wait for the first repair bill, which is so premature with Land Rover. If I really wanted one I would wait a little and get a one year old at third the price. On the spot.

#61 Harbour on 01.28.15 at 8:35 pm

#28 ShawnG in TO on 01.28.15 at 7:36 pm
I was just reading Zero (for entertainment purposes only!)

……………………………………………………………………….

Isn’t that what this blog is for… lol

#62 Ret on 01.28.15 at 8:37 pm

#6 “I’m in healthcare. Recession proof – ”

What’s that? “The Minister of Health in Alberta is about to make an important announcement concerning …” and your life just turned on a dime faster than Timmy’s could walk one of their head office workers off the plank.

There is way too much volatility out there to crystal ball anything. Hope for the best, but plan for the worst.

#63 neta on 01.28.15 at 8:40 pm

Canada is sucked into the vortex. Regardless of rate cut, or any other tricks, the vortex will pull us much, much deeper with all the pain associated with it. Sinking dollar will cause huge real inflation, hitting people’s pocket, and .25% rate cut is not even close to offset the impact.the mist leveraged, over-mortgaged segment will be hardest hit. Out Dollar is like a dropping knife. Don’t even try to catch it. At some point it will stabilize, but don’t be too optimistic about its stimulating affect for our manufacturing. It will take many years, my guess is 4 -5 years to see to see a material impact of it. And on top of it, even 30% drop for the Loony is not sufficient. No manufacturing revival can take place in the country where industrial workers are living in $500k townhouses. Sorry, won’t happen… In order to reinvent itself and become competitive again, Canada must come down the earth, pay for bad decisions we took at the times of plenty, and once and for all, part with an illusion that we can find the way to the prosperity by digging the earth and competing along this path with Namibia, Nigeria, Kazakhstan, Mongolia and Russia. Sorry folks, won’t work.
The real estate will deflate. There is no way around. We already tried easy ways. There are no more left.

#64 Vancouver ,,,really ??? on 01.28.15 at 8:42 pm

DELETED

#65 deaner on 01.28.15 at 8:42 pm

Related topic:

Singapore has an interesting idea we should try here as a long term solution to our imbalances: progressive property taxes.

Singapore probably has as much HAM as Vancouver (although there they probably just call it money).

The Demographia survey lists Singapore affordability as between Toronto and Montreal. Singapore is as dense as Vancouver planners want Vancouver to be, so no new SFHs as an affordability release valve.

In contrast, in Vancouver, with its most ridiculous property prices, has Canada’s lowest property taxes. Since our municipal politicians are owned by the Real Estate development industry, Van property taxes could probably be lowered further or stay flat once the burden of paying for Translink is pushed to PST with this stupid referendum.

Progressive property taxes would be a wealth tax that actually worked, no?

#66 Irwin on 01.28.15 at 8:45 pm

@ #45 Steevee on 01.28.15 at 8:04 pm

I didn’t do the math, but you’re probably correct.

The good news is that most or many producers have hedged their production – locked in oil prices.

If memory serves, Canadian Oil Sands Ltd (COS) is one company that did NOT hedge production.

Here’s a snip from G&M article:

“Companies that hedged production earlier this year are now enjoying a cushion from oil’s big drop. Calgary-based Encana Corp. said it hedged about 30,400 barrels a day of expected oil production between July and December of this year at an average West Texas intermediate price of $97.34 (U.S.) a barrel.”

The rest here:
http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/for-oil-producers-that-hedged-less-pain-from-the-plunge/article21136761/

#67 Big English on 01.28.15 at 8:47 pm

#4 #33 I agree, people are ‘special’ here in Vancouver. Based on the chatter in cafe’s, it can only go up. Friends look at me with strange sideways looks, as I’m renting with a young family. I must be without a soul.

Realtor’s are hungry and so much as a glance at a for sale sign and there all over you.

Wife took me to a Vancouver Special (buyer asking $1.1M) been on the market 7+ months, may require $200K to make habitable. 3 offers have fallen through due to ‘financing difficulties’.

So if we assume the offer(s) were over $1M, and the banks are saying no…….why so risk averse?

Surely, in Vancouver, it can only go up.

#68 ANON on 01.28.15 at 8:53 pm

About inflation being “a crime”; it’s more like a misdemeanor. Big Bad D will readjust the felony seriousness’ scale quite a bit, I’m afraid.

#69 Self Employed on 01.28.15 at 8:56 pm

“The fewest number of people are currently working in Canada since back in 2000”

Thats because everyone has incorporated and are taking dividends for pay :)

Only the fools are working salaried.

How did this blog turn into a Mecca for pricks tonight? — Garth

#70 BlackDog on 01.28.15 at 8:56 pm

This is an off topic comment, but finance related, and a warning (unless I am totally off base with this): for those of you who have had someone come into your home to care for your children while you work, did you treat this person as a contractor or an employee?

When I was in this situation years ago, I treated the young lady who cared for our children as an employee, paid EI premiums, CPPC, Workers Comp, and deducted taxes, etc from her pay cheque. The other half thought I was nuts and wanted to treat her as a contractor (i.e. just pay her and let her take care of her own taxes), but some internet investigations on my part lead me to believe this was the wrong way to go.

A couple years ago, my eldest daughter worked for someone in their home as a childcare giver over the summer holidays. The employer did not treat her as an employee (no T4, no taxes deducted, no EI premiums, etc). Recently, CRA sent my daughter a letter asking for the T4 she never got and who paid her the income she claimed that summer. I think the couple that hired her are about to get into trouble with CRA.

#71 Washed Up Lawyer on 01.28.15 at 8:59 pm

#44 Steevee

You said and asked:

Perhaps someone a little more knowledgeable about oil pricing can help me out with an answer to a question. As Western Canadian Select has a price differential of about $17 USD to West Texas Intermediate, does this mean oil sands producers are actually getting about 28 USD per barrel (or approximately $35 CDN)?

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

I do not claim to have any more knowledge than you. I believe you are correct. WCS is an inferior product to WTI as the refining costs are higher.

My knowledge of economics is slim to none, but the heavy oil/bitumen differential to WTI has always made me wonder about the often floated argument about the critical need to gain tidewater access for bitumen via pipelines.

The repeated contention is that if we could only export more bitumen across the ocean, we could narrow the differential or as they state it, “receive world prices”. How does shipping more inferior product to a market close the differential price measured against a superior product?

Does that mean the export of more Kia’s will narrow the price difference measured against an Audi?

Mark? Andrew Woburn? Inglorious Investor? Calgarians generally?

#72 dutch4505 on 01.28.15 at 9:03 pm

although not related to oil or the low interest orgy the following is an example of how CDN federal government policies have unintended consequences. supply management in agricultural which allows a select few (dairy farmers) make millions per year while forcing single moms to shop in the USA to buy their milk and cheese. the Costco in our local town of Bellingham was again full of BC cars even with the current exchange rates. oh by the way the buggies were full of USA milk, and the local paper has reported record profits for Washington state dairy farmers.

#73 No man's an island - try as we might on 01.28.15 at 9:04 pm

Islands for sale..including one called sheep.

http://www.calgarysun.com/2015/01/28/fantasy-islands-live-the-bc-dream-on-your-own-terms-with-these-five-islands-for-sale

#74 Whoa! on 01.28.15 at 9:04 pm

Fortunately that glint in the middle isn’t the headlight of an oncoming train.

#75 Smoking Man on 01.28.15 at 9:04 pm

#69 Self Employed on 01.28.15 at 8:56 pm
“The fewest number of people are currently working in Canada since back in 2000″

Thats because everyone has incorporated and are taking dividends for pay :)

Only the fools are working salaried.

How did this blog turn into a Mecca for pricks tonight? — Garth
………..

Man you just gave me a great idea.. Need to see if its legal.

We have our Corp, issue a bond, paying a coupon of 100% per year, then buy the bond from out TFSA.

#76 Ray Skunk on 01.28.15 at 9:13 pm

Dozens of corporate Tim Hortons workers, including pregnant women and staff who had been with the chain for 30 years were summoned to meet with outplacement agents and then escorted out the doors

Are these two groups supposed to be immune to having their positions are eliminated? You want equality – you got it!

Shortage of rentals, never been a better time to buy, my $500k Bentley runs great in the cold weather..

The big bald lad drives a Roller. Heaven knows I’ve seen him poncing up and down King St. in it enough times…

#77 Republic_of_Western_Canada on 01.28.15 at 9:14 pm

#53 Nomad on 01.28.15 at 8:29 pm

Not to mention gold is up nearly 10% since New Year’s Day.

Gold is a security blanket for all sorts of ills, not just inflation. Also deflation, housing crashes, wars, famine, etc, etc. Those will bring people into the security of precious metals. Same thing with bonds although bonds are much less well understood by the general population.

And gold can be used as a means of exchange – money, in other words.

Gold is decidedly not money in Canada, and will suffer in prolonged deflation right along with other commodities. — Garth

#78 Jimmy Sausage on 01.28.15 at 9:17 pm

The US is dying like a rocket going upwards.

Enjoy the ride & don’t get burnt up.

We’re so profound tonight. BTW, the US created 2.95 million jobs in 2014. — Garth

#79 For those about to flop... on 01.28.15 at 9:18 pm

I was just watching global b.c and they stated that there is to be a 41% tariff for re-bar coming in from overseas .
They also stated that this cost will be passed onto the consumer and to expect large price increases in real estate.
Combine that with the new bylaw about making new construction wheelchair friendly and building costs are about to skyrocket.
When it rains it pours!

#80 Steevee on 01.28.15 at 9:19 pm

To #66 Irwin and #71 Washed Up Lawyer

Thanks for the replies, fellows. Makes me wonder how even the lowest cost producers can afford to pump at that price.

#81 prairie person on 01.28.15 at 9:21 pm

Anyone who knows Victoria, knows that Government Street has been a major tourist attraction with its multitude of shops. Now, it is a line of empty storefronts. Part of the problem is new building that is taking people away from the downtown. However, with the Canadian dollar down, Victoria should be filled with Americans on a cheap holiday. It isn’t happening. Stores are closing. Jobs are being lost. This is the unvirtual circle. Opportunities are disappearing. American money isn’t flooding back. The endless planeloads of Japanese and Chinese are also becoming less. A chill is in the air. Fear and depression are more easily caught than the flu. A TV program about a woman in Russia who has two kids and now can’t make the payments on her apartment may not be an exact copy of what is happening here but it is close enough to make people nervous. We keep hearing about how house prices have gone up in places like Phoenix but there are still lots of places in the US where house prices are down. No speculator exuberance there. So far, it is all bits and pieces, rumors, anecdotes, but already it is enough for many to become nervous and fearful. A friend of mine put his house up for sale in Winnipeg. No offers. None. Not one. He can’t afford to take less than his ask. He says, I’ll probably be here until I die. Pumpers only succeed in pumping when there is unbridled optomism. Doesn’t work when your work mates are losing jobs, when your neighbours can’t sell their house. I was let go once. My wife said why are you home so early? I said, I haven’t got a job anymore. Try it. You won’t like it. It leaves scars decades later.

Victoria Mayor Lisa Helps is floating the idea of a property tax exemption for some property owners along Government Street to combat a spate of retail vacancies that have left one of the city’s main streets full of empty store-fronts.
– See more at: http://www.timescolonist.com/business/victoria-mayor-seeks-tax-break-for-ailing-government-street-1.1744618#sthash.zOSGW1PC.dpuf

#82 Self Employed on 01.28.15 at 9:21 pm

How did this blog turn into a Mecca for pricks tonight? — Garth

My My. What did i post wrong? I’ve noticed increasingly nasty language lately. You aren’t considering closing this blog, are you?

And spend my days with normal people? Pshaw. — Garth

#83 Daisy Mae on 01.28.15 at 9:25 pm

“Now it doesn’t even have the stones to bring forth a budget, or clearly warn people from scarfing down more debt when the party’s clearly over. Sad.”

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

Yeah? Well, I say it’s criminal.

#84 Republic_of_Western_Canada on 01.28.15 at 9:25 pm

#71 Washed Up Lawyer on 01.28.15 at 8:59 pm
[…]
How does shipping more inferior product to a market close the differential price measured against a superior product?

The intention is not to send dilbit to ‘world markets’. It is to send it en masse to Gulf Coast refineries which have been retrofitted to deal with high API feedstock.

So that global integrated multinationals can use their own ‘in place’ resources to more cheaply refine it. And get brownie points from the US gov’t for adding value in the U.S. instead of Western Canada.

The insanity of pumping large volumes of bitumen and gas liquids diluent one way, then diluent back again on a doubled pipe leg with associated extraction and recycling costs is mind-boggling.

Much better to upgrade and refine everything here, and sell smaller quantities of high-value added product overseas. Like grease and petrochemical products in boxcars and ships, diesel and sovents in pipelines and train cars, etc.

#85 olderthanaboomerm on 01.28.15 at 9:25 pm

Kothar:
Hang on to your USD acct, and get thyself a US dollar credit card. I used all my stash up in AZ last spring, replaced it and more at .94, there you go, capital gain.
But no, not taxable unless a huge amount.
I like it for online shopping, etc.

#86 Frustrated Kiwi on 01.28.15 at 9:28 pm

Hilarious video on Australia’s property mindset (ignore the commentary, not sure how to just link to the video):
http://www.macrobusiness.com.au/2015/01/anz-ceo-australia-is-different/
Given the comments above, it seems like you could replace the word “Australia” in the video with “Vancouver” (or maybe Canada) and do just fine.

#87 Lala on 01.28.15 at 9:28 pm

YellooowwwwWww, TSE:QSR and BBQ sorry BBD are the best picks for now. China is ordering a large number or wagons, by the end of the Feb the stock it will be at $4, a steel at 2.85. Lala who.

#88 ANON on 01.28.15 at 9:29 pm

Same thing with bonds although bonds are much less well understood by the general population.

——-
True, but they can me made more widely understood, a bit later on. Look-up “Victory Bonds”, both issues.

Savings bonds are not akin to marketable bonds. — Garth

#89 Italians love real estate on 01.28.15 at 9:30 pm

It’s been a long time since I have posted.

Seems to me Garth that the long awaited housing correction seems to elude you and the posters here who come to post day after day with dire warnings of a housing crash, correction , decline whatever.

Seems to me the only poster who has the pulse of T.O correct is smoking man, in that , the ‘herd’ is more powerful than any of the macro economic forces at work and those in power who try to manipulate them , for ” the greater good”

I would add to smoking mans beatings that the herd is influenced by their overwhelming immigrant mentality , which dictates that they buy ” real assets” at the sacrifice of all others . ” I want to see my money” is a constant refrain in my community as is ” I want control of it” and the all consuming” I don’t trust stocks”

I feel sorry for your reluctance to accept the immigrant herd thinking that drives the overwhelming obsession with bricks .

I regret to inform you that it will continue unabated

Since when was the herd worth emulating? — Garth

#90 Mike on 01.28.15 at 9:30 pm

Garth. Are you terrified enough to change your prediction that house prices in Canada will not crash.

I have not said they will. But declines are inevitable and many tears. — Garth

Yea, except the places people actually want to live in, namely the 416 and the 604.

#91 Sheik Yerbouti on 01.28.15 at 9:34 pm

Garth,

Amidst all of this mounting hysteria, and in the spirit of community service, allow me to share a soothing zen tale to help calm the nerves. I am sure it can be tweaked to apply to RE investors as well.

“Once upon the time there was an old farmer who had worked his crops for many years. One day his horse ran away. Upon hearing the news, his neighbors came to visit. “Such bad luck,” they said sympathetically.“Maybe,” the farmer replied.

The next morning the horse returned, bringing with it three other wild horses. “How wonderful,” the neighbors exclaimed. “Maybe,” replied the old man.

The following day, his son tried to ride one of the untamed horses, was thrown, and broke his leg. The neighbors again came to offer their sympathy on his misfortune. “Maybe,” answered the farmer.

The day after, military officials came to the village to draft young men into the army. Seeing that the son’s leg was broken, they passed him by. The neighbors congratulated the farmer on how well things had turned out. “Maybe,” said the farmer.”

#92 Second Class on 01.28.15 at 9:36 pm

Own no home and id guess 80% of my investments are US and International. Even a bunch in those dreaded mutual funds. All not currency hedged of course.

Seems I am up 10% in the last few months in CAD. Sure I havent made anything in real USD terms but if I slowely swing a good chunk back into canadian investments when things are done tanking I can buy more canadian assets with my US money.

I still have yet to get into the bond game. Missed out on some gains but when interest rates finally climb the prices on already issued bonds will be in the dump.

#93 Daisy Mae on 01.28.15 at 9:36 pm

“This couple are just like all the others, living high on the hog with a big property, toys out the ying-yang and hardly any savings. Now the wife has started looking for work to help pay the bills. Sheesh.”

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

My son and family spent five years in Fort McMurray. He’s a Civic Tech. Years ago. Anyway, they pulled out before they became ‘lifers’ — described as those so deeply in debt there’d be no leaving.

#94 Republic_of_Western_Canada on 01.28.15 at 9:37 pm

Gold is decidedly not money in Canada, and will suffer in prolonged deflation right along with other commodities. — Garth

Any commodity in demand will inflate. Whether it’s water in the parched U.S. states, or car parts in Cuba, or natural gas in an especially cold February in Ukraine, the price will go up whenever its wanted. In whatever can be offered for it.

Gold holds security for the majority of the world’s population. Therefore it will increase in value by whatever the market will bear in times of serious uncertainty. Even at the cost of postponed haircuts, new shoes, or fresh meat.

Finally, it is a store of value and a recognized means of exchange whether common or not – therefore money. At least, until the gov’t explicitly makes it illegal to own like Nixon did – U know something we don’t?

Gold is not legal tender and the only thing you can buy with it is money. End of this discussion. — Garth

#95 Bob on 01.28.15 at 9:39 pm

@Self Employed and Garth
He does have a point — that many people who are wealthy are in business or in professions that allow themselves to be incorporated. e.g. doctors, IT consultants, small businesses.

I don’t have any stats… but I wonder if Vancouver, with its fixed supply (i.e. West is water, North is mountains, etc.) that comparing affordability across Canada to average incomes may not be the most accurate way. Call it a spin on HAM… except now, think self-employed money.

#96 Washed Up Lawyer on 01.28.15 at 9:39 pm

#84 Republic

“The insanity…”

Noted and thanks.

#97 fisheman on 01.28.15 at 9:39 pm

I’ve been incorporated for 29 years & never knew it was that easy to sneak by CRA. Well , maybe it is if you can find a crooked CA. Not that we weren”t looking. Accountant types never seemed keen on learning how to secrete small packages up their rectum.

#98 Italians love real estate on 01.28.15 at 9:44 pm

It’s been a long time since I have posted.

Seems to me Garth that the long awaited housing correction seems to elude you and the posters here who come to post day after day with dire warnings of a housing crash, correction , decline whatever.

Seems to me the only poster who has the pulse of T.O correct is smoking man, in that , the ‘herd’ is more powerful than any of the macro economic forces at work and those in power who try to manipulate them , for ” the greater good”

I would add to smoking mans beatings that the herd is influenced by their overwhelming immigrant mentality , which dictates that they buy ” real assets” at the sacrifice of all others . ” I want to see my money” is a constant refrain in my community as is ” I want control of it” and the all consuming” I don’t trust stocks”

I feel sorry for your reluctance to accept the immigrant herd thinking that drives the overwhelming obsession with bricks .

I regret to inform you that it will continue unabated

Since when was the herd worth emulating? — Garth

Perhaps you are right but in the case of its behavior towards real estate and the tsunami of events that should have de railed real estates ride higher a long time ago, me thinks you ignore at your own peril.

Trust me, I am not at peril. — Garth

#99 TheManwhoStaresatSheeple on 01.28.15 at 9:45 pm

#71 Washed Up Lawyer

I do not claim to have any more knowledge than you. I believe you are correct. WCS is an inferior product to WTI as the refining costs are higher.
=====================================

It is but the refineries in the Gulf of Mexico are not suitable for the new light shale oil. In order to use it without major retooling (takes time and $$$) they need our inferior bitumen – once mixed together it is not a problem. This is why Keystone is needed.

#100 Jumbo on 01.28.15 at 9:47 pm

Saw two cow town license plates in hog town today. Looks like the exodus has begun.

#101 Kenchie on 01.28.15 at 9:48 pm

Scary forecast… check out the chart too

“Don’t deny it, this oilmageddon is epic”

http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/dont-deny-it-this-oilmageddon-is-epic/article22672736/

Chart:
http://arcfinancial.com/assets/588/2015%20Commodity%20Price%20Sensitivity.pdf

#102 MSM-free Zone on 01.28.15 at 9:51 pm

“…..None of this is finding its way into the mainstream media, or getting to downtown Vancouver or Toronto……”
_________________________________________

There is a reason the shortest day of the year is December 21, yet the coldest months of the year are January and February. Same goes for June 21st and July and August.

Titanic didn’t turn on a dime.

#103 Mike on 01.28.15 at 9:53 pm

I hope the blog rules don’t prohibit the use of ‘idiotic’ to describe the following:

#68 ANON on 01.28.15 at 8:53 pm
About inflation being “a crime”; it’s more like a misdemeanor. Big Bad D will readjust the felony seriousness’ scale quite a bit, I’m afraid.

Crime? It’s more like a financial genocide for the average person. I honestly pray that you never experience hyperinflation or anything close to it. The 7-10% of real inflation we are seeing today is nothing compared to 20%+ which is well on the way. (Cue the greatest fools telling me it’s 1%)This is the time to get into hard assets (honestly take your pick), before your monopoly money turns into toilet paper, sorry plastic, you can’t even properly wipe your a$$ with.

The so called Deflation you speak of serves no one. Think about that for a minute.

#104 Republic_of_Western_Canada on 01.28.15 at 9:54 pm

#89 Italians love real estate on 01.28.15 at 9:30 pm
[…]

Seems to me the only poster who has the pulse of T.O correct is smoking man, in that , the ‘herd’ is more powerful than any of the macro economic forces at work and those in power who try to manipulate them , for ” the greater good”

Be careful what you wish for.

When it is known that a bunch of bullheaded immigrants will break their backs just for overpriced real-estate, everyone and his brother will pile into the system to exploit that.

Seems to me that’s whats actually going on in Vancouver & Hogtown. Fine by me, as long as the general taxpayer doesn’t have to pick up the pieces through CMCH.

#105 Abby on 01.28.15 at 9:54 pm

#51 Wish I was wrong

“I’ll go on record again, house prices in the lower mainland will be higher in a year from now. GT, want to take that bet?”
———————
#89 Italians love real estate

“I feel sorry for your reluctance to accept the immigrant herd thinking that drives the overwhelming obsession with bricks .

I regret to inform you that it will continue unabated”
————————-
#90 Mike
Garth. Are you terrified enough to change your prediction that house prices in Canada will not crash.

I have not said they will. But declines are inevitable and many tears. — Garth

Yea, except the places people actually want to live in, namely the 416 and the 604.”
——————–

Couldn’t agree with the 3 of you more! Toronto and Vancouver will see higher prices for a while yet.

A 416 detached costs less than one year ago. — Garth

#106 Obvious Truth on 01.28.15 at 9:56 pm

Banks have reigned in the debt frenzy folks. Look at the charts. Money tells every time.

They are facing real headwinds and investors are asking questions.

Too many just aren’t realizing the financial and social significance.

Spring or fall won’t change any of this. It’s not an orbit thing. Its a tectonic shift. We all know what is happening around us. I have never seen the job headlines we are seeing right now. It feels like I’m watching cnbc in 09/10.

Everybody thinks they are important or special or different. Until life humbles you. The more special you feel the more frequently it will happen. Money is just one part of this. The easy part.

#107 Karma on 01.28.15 at 9:57 pm

#4 Fatima Llewellyn on 01.28.15 at 6:42 pm
“I was just in Vancouver, visiting from the United States. I met, probably, 20-25 people when I was there. Few of them knew each other. Each conversation I had somehow turned to Vancouver real estate. I’m not exaggerating – just about every conversation transitioned from kids, hockey, the Super Bowl, what have you, to the state of Vancouver real estate. By conversation #10, I was wondering…what the heck is wrong with these people. It’s like they’re obsessed.

Everybody was glowing with smugness, talking about how much their houses were worth. Stating unequivocally that the good times were just going to continue. People scoffed at the notion that real estate was overvalued in Vancouver. I was looked upon as the cute little American, that didn’t understand things. “Poor little American…does she not understand how they are not making any more land in Vancouver, and that the economy here will continue to flourish for ever? Silly girl.”

I feel badly for people in Vancouver. They truly have their heads up their arses.”
—————————————–
Hahahaha. That’s just one of the reasons many normal Vancouverites move elsewhere. Too much materialism in that city…

Did you at least smoke some bud? The stoners are usually relaxed and not so clique-y or have their heads up their asses.

#108 Ollie on 01.28.15 at 9:58 pm

@Smoking Man – Bond
That’s brilliant. Will go down as a precedent called the Smoking Man Maneuver. The only problem, to be able to buy it in the TFSA you have to make it a public instrument. Then some idiot will snap it before you can get it. You can default on your one junk bond, but the CRA will want taxes on the income of the sale. Bummer.

#109 Karl hungus on 01.28.15 at 9:59 pm

#69 self employed

If you were really self employed you would know that taking dividends or salary works out to be the same, its a wash tax wise, the rules are not what they used to be.

#110 Drill Baby Drill on 01.28.15 at 10:01 pm

#45 Steeve
The WTI (west texas intermediate) $45.81/bbl USD vs the WCS (western canada select) $31.91/bbl USD differential is today @ $14/bbl USD. The WCS is sold at a discount to WTI because it is heavier (ie: API 10 degrees vs API 40 degrees for WTI), sour (H2S), shipped great distances by pipeline or rail car. Western Canadian producers of WCS are getting $31.91/bbl USD x 1.25 (0.80 cents CAD per USD) = $39.89 CAD per bbl

#111 Nobleton Bill on 01.28.15 at 10:02 pm

BIG Question to Readers: Does anyone else see 2.15% variable mortgages as a HUGE opportunity to pay down mortgages? If your willing to commit, I’ll bet you can shed 5yrs off your amortization. Use the baby bonus increase, add an extra $100/month and take advantage of 2% rates…..Take 5 years off your Amortization with little more then a little effort and $100/month extra

I also want to give a shout out to “Smoking Man” who has become a GreaterFool Rockstar!
In case you missed it (again) Here’s my tribute to our Super Blogger…Smoking Man!!!
https://www.youtube.com/watch?v=4TAixFYnDh4

Garth: 300+ comments these days, look how far you have come,people are waking up….except those with HELOCS

Why pay off a negative rate mortgage to put more net worth in an endangered asset? — Garth

#112 ANON on 01.28.15 at 10:03 pm

I don’t usually feed the trolls, so this will be the only exception:

Mike, I lived 2 (two) inflations turned hyper, and I was born in a deflation. Trust me, I know first hand which one is worse. Benefiting has nothing to do with anything.

.

#113 Macrath on 01.28.15 at 10:05 pm

Do the math, buying in 2009- Garth
—————————————————-
Augh ! 2009, most of my peers were suffering from post traumatic stress after their retirement funds had evaporated.
That strange far away look in their eyes and not talking much. How many stayed invested I`m not sure. But plenty lost big time and haven`t recovered.

I was lucky, loaded with gov bonds at the time and in a buying mood, but not for more CPD. I built that balanced portfolio you talk about and I`m glad I did.
3.5% tax advantaged in a ZIRP world is better than a loss.
There is plenty of risk on the horizon. The FED Titanic just might go down for good this time around.

Your buddies only ‘lost’ in 2009 because they bought high and sold low. That’s why we have the 1% and the 99%. — Garth

#114 Edward on 01.28.15 at 10:08 pm

Bill Gross says Fed will start to raise rates by .25 points sometime this year in a highly symbolic move only. That said, he believes the pace will the “very, very slow.” Right now, the market is anticipating rates will reach 2 percent in February 2019, a notion he said he doesn’t disagree with.

4 years to reach 2%? And with the BOC cutting, rising rates won’t be popping the Canadian Real Estate market anytime soon.

http://www.cnbc.com/id/102376873

Like I said, US rates start their ascent in 2015. — Garth

#115 Kenchie on 01.28.15 at 10:10 pm

#9 Montellino on 01.28.15 at 7:01 pm
“What (where) are the 2 high profile condo projects turned rentals?

Thanks”

1) “The Selby” – Bloor and Sherbourne
2) “Kingsclub” – King W and Atlantic

http://www.thestar.com/business/real_estate/2015/01/27/builder-quietly-cancels-condo-complex.html

#116 Smoking Man on 01.28.15 at 10:12 pm

It blows my mind how many of you relish at the prospect of home owners, particularly young family’s getting crushed from a real estate crash.

I understand why you want me crushed.

What’s the motivation behind this, where you abused as children. What did that uncle do to you..?

Probably not, just Canadians, nothing pisses you off more than someone breaking the rules and winning.

It’s not what your were taught at school. They told you hard work, honestly will be rewarded. Laziness and short cuts would lead to failure.

Except, it doesn’t realy happen that way in the real world.

Now your grown up, somethings not right. You followed the rules, and your not quite there..

So rather than look inward, challenge the belief system impregnated into your hard drives by equality programed instructors.

You last out…

The Herd!!!!!

#117 Edith on 01.28.15 at 10:14 pm

A 416 detached costs less than one year ago. — Garth
————————–

Could you provide a link or point me to an article or site that states that. Becuase, I’ve only ever read here.

TREB stats. — Garth

#118 Mark on 01.28.15 at 10:20 pm

“The repeated contention is that if we could only export more bitumen across the ocean, we could narrow the differential or as they state it, “receive world prices”. How does shipping more inferior product to a market close the differential price measured against a superior product?”

That’s a good point, and perhaps part of the ‘scam’ the industry is running to get certain pipelines approved. Or alternatively, part of the propaganda put forth by the oil equity “sell side”. Much like contemporary Realtors are still trying to convince us that Toronto/Vancouver house prices are still rising despite an abundance of evidence to suggest they’ve been falling for almost the past 2 years.

Obviously there is a long-term issue with pipeline capacity for stable long-term production. But I’d have to agree with you, just building pipelines isn’t going to magically correct the overcapacity issue in the Canadian oilsands by severely narrowing the differential over and above lowering the spread arising from transportation. Which is likely to get worse in coming years as USD$ depreciation starts to pick up pace, and the CAD$ goes back up to a more stable level.


Does that mean the export of more Kia’s will narrow the price difference measured against an Audi?

That’s an interesting analogy. If more KIA’s came to market and were ubiquitous and cheap for the long term, then the Audi would face at least some pressure. After all, there’s a number of drivers who would prefer to drive a new KIA every 2 years, instead of a new Audi every 10. Much like some refineries might enter into long-term supply arrangements and re-configurations to use WCS, even if, at least temporarily, WTI might have better economics. But I do agree with you generally that its rather silly that they think a pipeline built to Kitimat or Saint John, NB for shipping will magically cure the oilsands’ pricing differential problem. It won’t. The whole idea of thinking that Alberta oil will be exported on water out of the east coast is about as silly as it gets.

#119 Leo Tolstoy on 01.28.15 at 10:23 pm

#69 Self Employed on 01.28.15 at 8:56 pm
Only the fools are working salaried.

Leona Helmsley is that you?!

#120 Biff on 01.28.15 at 10:26 pm

CIBC dumped about 5% of their tech staff last week. Not sure about the business side. They’re good at keeping it out of the media.

#121 TakingResponsibility on 01.28.15 at 10:28 pm

Whew! Glad to have that cleared up! No Bubble here, according to Joe Oliver! “Canadians not buying houses they can’t afford…”

http://business.financialpost.com/2015/01/28/we-dont-think-theres-a-bubble-oliver-says-canadians-not-buying-houses-they-cant-afford/

No worries.

On the other hand, the usually cheery un-bearish oil sands Prof at the u of a has taken a decidedly bearish turn in his latest article:

http://www.macleans.ca/economy/economicanalysis/why-this-oil-crash-could-be-worse-for-alberta-than-the-one-in-2008/

Yikes.

IMO, Folks do need to pay attention. It’s not doom and gloom to live in Reality. And, realistically, Canada is the world’s 10th (or 11th?) largest economy and we don’t have a lot going on for us right now.

#122 Smoking Man on 01.28.15 at 10:29 pm

Like I said, US rates start their ascent in 2015. — Garth

They have too, it’s a matter of credibility, but they know there is a currency war on right now. World has changed recently, but bravado, ego, saving face. There going to do it in spite if it being the wrong thing to do for the USA economy.

They will do it once, and once only..canada will benifit hugely.

I thought they would try and talk down their dollar today.. I was wrong..

#123 kommykim on 01.28.15 at 10:34 pm

RE: #44 Macrath on 01.28.15 at 8:03 pm
So lets say you`ve held 10k of CPD for 10 years @ a tax advantaged 5% yield . 5k of profit in the bank.
10 year CPD chart– http://tinyurl.com/or3ezck

Slight problem with your data. That is a slightly less than 8 yr chart, not a 10 year. According to iShares, the total annualized return since inception was 2.14% which IS pretty terrible.
Maybe OK as part of your fixed income but terrible if held on it’s own.

#124 Cici on 01.28.15 at 10:35 pm

#16 Vancouver Coastal

We aren’t worried about you; we’re worried about the non-unionized workers.

And not just in BC…

#125 Edith on 01.28.15 at 10:41 pm

“A 416 detached costs less than one year ago. — Garth

Could you provide a link or point me to an article or site that states that. Becuase, I’ve only ever read here.

TREB stats. — Garth”
————————-
Sorry Garth, but I’m on their site right now. The latest numbers that they provide are from December 2014. It says that for Greater Toronto, prices for detached homes are up 8.64%. There is not want sub area in their numbers that is in negative territory.

Jan 16 report, 416 detached, negative 4.2% y/y. — Garth

#126 crash callaway on 01.28.15 at 10:41 pm

Calgary’s newly built pedestrian Bridge is too short.
Very fitting… as Calgarians are about to discover that they too are on the short end of the stick.

Calgary Mayor raises concern over drug and alcohol use by members of City Council.
Sheesh… Are they trying to compete with Toronto?
Or are they just getting the jump on the long lineups about to be formed at the liquor stores by the mass unemployed.

#127 Buy when they cry Sell when they yell on 01.28.15 at 10:44 pm

@ #16 Vancouver coastal

I thought I was the only Boilermaker on here!

#128 Kenchie on 01.28.15 at 10:48 pm

#26 Republic_of_Western_Canada on 01.28.15 at 7:33pm
“big hairy deal.

It’s all small potatoes compared to the NEP crash of the early 1980’s.”
—————————
The NEP crash coincided with the last time the Saudis tried to maintain their market share. That episode lastest for a long time.

Oil consumption as a % of GDP fell from 5.4% in 1983 to 2% in 1988. 5 years of consistent falling demand.

Then it jumped a bit in 1990, but fell to a new low of 1.2% in 1993.

Went up to 2% by 1996, but fell to below 1% in 1998.

From there it grew steadily back to 5% by 2006.

But the financial crisis made it fall back to 2% in 2008. It rebounded quickly to 5% by 2011, and stayed in that area for 2012 and 2013. But in 2014, it fell to about 2.5%.

The question is will it stay down for a long time, like from 1983 to 1988, or will it bounce back like after the GFC? According to the FT, the Saudis did a market share grab in the mid-1980s. Today’s situation is likely more similar to that episode than any other scenarios showed in the link below.

http://www.ft.com/intl/cms/s/0/772c130c-a606-11e4-9bd3-00144feab7de.html#slide0

#129 45north on 01.28.15 at 10:52 pm

The poodles knew that a week ago. Didn’t let on.

http://en.wikipedia.org/wiki/Poodle_(insult)

well we’re catching on

Fatima Llewellyn: “Poor little American…does she not understand how they are not making any more land in Vancouver, and that the economy here will continue to flourish for ever? Silly girl.”

I feel badly for people in Vancouver. They truly have their heads up their arses.

that’s my thought too. Canadian cities are ranked by their affordability – that is the median house price divided by the median income. Vancouver stands out as far and away the most unaffordable city in Canada.

Republic_of_Western_Canada: It’s all small potatoes compared to the NEP crash of the early 1980’s.

not according to Famcy_pants:
(that must be fancy_pants): from his link :

Why this oil crash could be worse for Alberta than the one in 2008
Corporate balance sheets and government budgets will show the full impact of the oil crash in the next couple of months, and the picture won’t be pretty

Andrew Leach

Its Over: The Housing bubble crashed in the US but rich people didn’t save them. The realtors in the US gave the exact same demented logic.

yeah they did

https://www.youtube.com/watch?v=h9JArvEJ64M

dutch4505: supply management in agricultural which allows a select few (dairy farmers) to make millions

10 years ago in the US there was a glut of milk on the market. Dairy farmers slaughtered their herds because they couldn’t sell their milk. Meanwhile in Canada, dairy farmers just kept on milking.

prairie person: However, with the Canadian dollar down, Victoria should be filled with Americans on a cheap holiday. It isn’t happening. Stores are closing. Jobs are being lost. This is the unvirtual circle. Opportunities are disappearing. American money isn’t flooding back. The endless planeloads of Japanese and Chinese are also becoming less. A chill is in the air.

that got my attention

#130 CJ on 01.28.15 at 10:55 pm

Garth is a smart man. Rips real estate boards for fudging numbers. And, now, he compares year-over-year inventory in Calgary, which means little to nothing.
January 2014 – the city had among the lowest inventory EVER.
So it only makes sense that we see such a high year-over-year increase.
Garth, be a bit more honest and research inventory in the city over the past 10 years. That paints a different picture.

Get used to negative numbers, realtor buddy. More to come. — Garth

#131 Edith on 01.28.15 at 10:58 pm

“Jan 16 report, 416 detached, negative 4.2% y/y. — Garth”
————
Got it, thanks. We’ll see if the trend continues. The first two weeks of January usually is not the best indicator.

Just say you’re sorry. — Garth

#132 [email protected] on 01.28.15 at 10:59 pm

I like being a salaried worker. I enjoy the work I do and the people I work with.

Kinda stinks that our job numbers are hurtin’ and seemingly going to get a lot worse. I do feel for the folks that will be going through this..including myself if things swing that way.

Good to see that the knowledge economy is still running strong (i.e. CGI). Hopefully this trouble will lead to bigger push in that direction for the economy as a whole.

My only recent regret is not buying USD a few weeks ago when I was certain of some upcoming travel down south. I waited to long and lost what will probably be a dime per dollar for my procrastination. Rough. Wouldn’t be the first time that procrastination burns me..and certainly will not be the last.

#133 Macrath on 01.28.15 at 11:00 pm

Your buddies only ‘lost’ in 2009 because they bought high and sold low. That’s why we have the 1% and the 99%. — Garth
—————————————–
Yea that`s one of my theories . They have these gatherings in exclusive Davos , Switzerland and figure out how to panic the herd over the the cliff, then swoop in to carve up the t-bones and filet mignon, but some times they just end up with over priced souvlaki.

Nothing but ignorance and fear makes people sell at the bottom. — Garth

#134 Ole Doberman on 01.28.15 at 11:01 pm

My bold prediction at this time is foreign RE money starts fleeing Canada which will cause a double impact in the crash to come.

Some of this money is avoiding bail ins by hiding it in real estate – but a 10% bail in is better than a 30% housing crash that may not recover for decades.

#135 Edith on 01.28.15 at 11:02 pm

Smoking Man said: “They will do it once, and once only..canada will benifit hugely.”
————————-
How?
Low Rates?
CAD up?

#136 Edith on 01.28.15 at 11:08 pm

Just say you’re sorry. — Garth
————-
I am truly sorry.

#137 Peter on 01.28.15 at 11:11 pm

The fact is that what they said about the Toronto/Vancouver markets came true, and the majority of your readers including me are priced out of the market.

I bet 99.99% of people on this blog would jump at buying a place if they returned to their 2005.. or even 2010 levels.

Buy what you can afford as part of a diversified life. A house is not the holy grail. Experience is. — Garth

#138 Dual Citizen in Canada on 01.28.15 at 11:11 pm

#117 Edith on 01.28.15 at 10:14 pm
A 416 detached costs less than one year ago. — Garth
————————–

Could you provide a link or point me to an article or site that states that. Because, I’ve only ever read here.

TREB stats. — Garth

Tonight, Garth had his cake and “Edith” too.

#139 Ronaldo on 01.28.15 at 11:15 pm

#8 Waterloo Resident

”I’m not sure what I’ll invest in, Probably bonds like TLT for the next few months. The economy is heading into the crapper, that’s for sure.”

Why not some copper stocks, dirt cheap right now. Buy low sell high. Now’s the time to buy when they’re on sale. You can bet that China is loading up on the stuff now that its so cheap. Probably also looking at buying into some of the producers as well. Did the same back in 08. Loading up on cheap oil as well. Why wouldn’t they be? It’s on sale.

#140 hohoho on 01.28.15 at 11:16 pm

> … It’s not what your were taught at school. They told you buying big house, investment property will be rewarded. Renting and diversified investments would lead to failure. Except, it doesn’t realy happen that way in the real world …

> … foreign RE money starts fleeing Canada which will cause a double impact in the crash to come …

all it takes is a bi-lateral anti-corruption MOU or extradition treaty with no death penalty guarantee :-O

#141 Smoking Man on 01.28.15 at 11:17 pm

#135 Edith on 01.28.15 at 11:02 pm
Smoking Man said: “They will do it once, and once only..canada will benifit hugely.”
————————-
How?
Low Rates?
CAD up?
……..

Our dollar goes in the shitter.

Exports baby, probably including me.

#142 Retired Boomer - WI on 01.28.15 at 11:18 pm

115# Smoking Man

One of the silliest posts ever from you! I expect better.
Sure, sometimes cheaters prosper. Sure, sometimes the builder who cuts corners gets away with it for awhile. Sure, the tax cheat who screws the government never gets caught.
-or-
Do they? When the next sale is to be made, are you ever going back to the place that screwed you? Ever going back to that used car dealer? Going to stay working for the guy who screws his clients?

People have a few things called “integrity” and “ethics” and “morals.” Some have a LOT of it, others very little of it.
I have NEVER met the successful long-term business owner, or manager who did NOT have great integrity. Never met the successful investor, developer, who did NOT have great ‘ethics’ and ‘integrity.’

To believe in lies, cheating, and the rest, well…. is that the new Canuck thing?? I do believe it is a Smoking Man thing.
You may even be successful – for awhile.

Just remember, time wounds all heels.

#143 The Consumer on 01.28.15 at 11:18 pm

“This couple are just like all the others, living high on the hog with a big property, toys out the ying-yang and hardly any savings. Now the wife has started looking for work to help pay the bills. Sheesh.”

This is called “rented lifestyle”. What’s their net worth? I bet close to nil.

#144 tkid on 01.28.15 at 11:18 pm

#112 ANON, can you speak more of your experiences re: the 2 hyperinflations and 1 deflation? I would like to learn more, especially why you though the deflation was worse.

#145 Retired Boomer - WI on 01.28.15 at 11:19 pm

oops #116 Smoking man reference..

#146 Wildrose truffles on 01.28.15 at 11:21 pm

Party on……..

http://business.financialpost.com/2015/01/28/we-have-all-seen-this-before-in-calgary-end-of-the-oil-boom-has-yet-to-sink-in/?__lsa=5b2d-c6d1

#147 Italians love real estate on 01.28.15 at 11:21 pm

#134 Ole Doberman on 01.28.15 at 11:01 pm
My bold prediction at this time is foreign RE money starts fleeing Canada which will cause a double impact in the crash to come.

Some of this money is avoiding bail ins by hiding it in real estate – but a 10% bail in is better than a 30% housing crash that may not recover for decades.

Cdn$ is some 20% cheaper than it was a year or so ago and you think money will be fleeing??

Central 905 anywhere near 407 along yonge corridor , think richmond hill , markham thornhill will be a magnet for foreign money looking to ” lick bricks”

You are done here. Again. — Garth

#148 Vancouver ,,,really ??? on 01.28.15 at 11:21 pm

DELETED

#149 Not the last word on 01.28.15 at 11:28 pm

They ain’t impressed..

http://www.economist.com/news/business-and-finance/21640394-lower-oil-prices-prompts-bank-canada-loosen-monetary-policy-risky-business

#150 For those about to flop... on 01.28.15 at 11:28 pm

Why do I have to be taxed on a non registered savings account ?
This is money I saved after taxes paid on income.
Isn’t this double dipping on the governments part?

#151 IKnow on 01.28.15 at 11:35 pm

Vancouver people are optimistic about real estates because we are all betting on China money will flow in non-stop for the next 50 years!
We will borrow $1M to buy just the smallest lot, no blinking , no sweat.
Because we BELIEVE in China money!

#152 its OVER for RE GTA realtors on 01.28.15 at 11:36 pm

The demented and delusional realtors who spend hours a day spreading the FUD and nonsense about millionaires and immigrants who will “some how” buy RE regardless of the price. News flash most immigrants have barely enough for rent money let a lot overvalued RE. Throw in job loses everyday and falling dollar which raises the cost of everyday items you have a nightmare that will sink RE across Canada. The same idiotic reasons why parts of GTA will be different was the same reasoning realtors in the US gave.

#153 TurnerNation on 01.28.15 at 11:39 pm

Finally….furrrst??
Hanging with my Realtress.
Don’t mention the war..

oil’s going to 20. oil’s going to 200!
Tradreable bottom.

#154 Fed-up on 01.28.15 at 11:39 pm

Construction – up 72.5% – from 790,300 to 1,363,600

Manufacturing – down 25% – from 2,249,300 to 1,691,200

FIRE – up 25% – from 876,200 to 1,090,800

Education – up 33% – from 983,400 to 1,307,700
Public sector part – from 868,400 to 1,140,000

Health Care – up 47% – from 1,525,700 to 2,241,500
Public sector part – from 760,500 to 1,028,700

Public sector at large – up 26% – from 2,848,400 to 3,585,500

Public administration – up 17% – from 763,400 to 892,300

——————————————————————————

Public this, Public that Public blah blah and FIRE on top of it all.

What a productive and innovative country, SMH.

#155 Franco on 01.28.15 at 11:40 pm

Really worried about our dollar, if it goes down any further the BoC may have to start raising rates or it may go down to a point where it will be a total disaster. I sure hope not, but it does not look good.

Florida snow birding is going to be out of reach.

#156 The Fuzzy Camel on 01.28.15 at 11:43 pm

Paying off a mortgage at 2% interest is dumb, when that money could be making you 10%+ in the right ETF, or if you have balls of steel 200%+ on the TVIX which has entered a wonderful uptrend.

If US raises interest rates it will collapse the derivative market and your paper money will be worth the paper its printed on.

If interest rates rise, you’ll be renting your home from the World Bank in exchange for the deed. Is it coming? Keep an eye out for June, lot of heartbreak coming.

But don’t worry, the new world government will have your back, they’ll bail out all these home owners and rent them back their homes. Oh how the sheep will beg for help soon. I can already see them begging for mercy, oh please help us UN. And voila, world government with people begging for it. This world government is going to play nice at first, win peoples trust. Then population control. Oh ya, it’s coming.

Alright I gotta go get really high and pop some oxy’s.

#157 Steve on 01.28.15 at 11:44 pm

#12

“Rich people are rich because they are smart”

I couldn’t agree more! https://m.youtube.com/watch?v=HveMAHf2UBg

#158 Bottoms_Up on 01.28.15 at 11:44 pm

#70 BlackDog on 01.28.15 at 8:56 pm
————————————————
That’s called working under the table. Babysitters don’t claim income….nor does the 14 year old that cuts your grass or shovels your driveway. If your daughter was going to claim babysitting money as wages, then that should have been negotiated up front, and the ’employer’ should have been paying EI/CPP premiums and also a vacation amount. The CRA may just drop the case as it’s peanuts (they laid off a bunch of people in the fall).

In terms of hiring a full-time nanny, they are typically paid as an employee.

#159 Kenchie on 01.28.15 at 11:47 pm

#95 Bob on 01.28.15 at 9:39 pm
“@Self Employed and Garth
He does have a point — that many people who are wealthy are in business or in professions that allow themselves to be incorporated. e.g. doctors, IT consultants, small businesses.

I don’t have any stats… but I wonder if Vancouver, with its fixed supply (i.e. West is water, North is mountains, etc.) that comparing affordability across Canada to average incomes may not be the most accurate way. Call it a spin on HAM… except now, think self-employed money.”

The self-employed don’t easily get bank financing for mortgages. Otherwise, my condo would have sold 3 months earlier in the Olympic Village.

#160 Sheane Wallace on 01.28.15 at 11:48 pm

DELETED

#161 macroman on 01.28.15 at 11:49 pm

Hi Garth, virgin webdawg here.

You are very right on renting…I’m in a 1.6 mil Ok Lake house, now worth maybe 1.1. For 2k a month.

I figure the opportunity cost lost to the Doc landlord is about $85k per annum.

Now I think you are way off base on the Yankee economics. They are as bad as we are…where do you think we got these bad fiscal policies from?

Oh and stop picking on the Rednecks…as much as they need a tic or two down, the kids are suffering.

#162 Stellerjay on 01.28.15 at 11:54 pm

Update from Suncors Firebag site. I flew out a day ago off my rotation there where about 60 layoffs mostly cleaning and maintenance staff lots of misery and tears shed. Just wait for the spring, most the drilling and major work commences in January because that’s when the money is released from the budget. It’s gonna get bleak up here, there’s blood in the water ooops I mean bitumen.

#163 Waterloo Resident on 01.28.15 at 11:54 pm

This is the article that I read this morning that really got me thinking that maybe, just maybe, this might be the beginning of a long slide in the stock markets:

https://finance.yahoo.com/news/too-already-bear-market-110124065.html

Quote: (( “This condition has happened two other times, in March 2000 and December 2007. In each of the following years, the market lost more than 30%.
I am so bearish, I am growing fur! ” ))

If there is a compelling reason corps will stop making money, the market will decline. But, at least in the U.S., that is not the case nor expected to be. A correction? Of course. Bring it on. — Garth

#164 BBQ wildrose salmon on 01.28.15 at 11:58 pm

Must be a full moon night….howlers, yikes who let them all out

#165 Condo petrified on 01.29.15 at 12:02 am

Condo life.. ain’t it sweet

http://www.cbc.ca/news/canada/british-columbia/condo-parking-dispute-b-c-couple-refute-court-of-appeal-ruling-1.2934642

#166 Vancouver ,,,really ??? on 01.29.15 at 12:04 am

DELETED

#167 Matt Gamon on 01.29.15 at 12:06 am

There are no cracks in TO market. I get daily tosolds.ca email, still 80% of the sales are above the asking price.

#168 Ollie on 01.29.15 at 12:07 am

Smoking Man, I will take a stab at explaining why some wish this market to crash and the same time why some people like your image and many others hate it.

There is something called morality, related with ethics, which you equate with stupidity. You brag a lot about not having any and that makes you a super-being. I am sure it’s not so.

Morality is an ingrained behaviour which can be better exemplified as consideration for your fellow. Did you hear about “do not do onto other what you wouldn’t like done onto yourself”? I think not much… It is not thought in schools anymore, so don’t worry about that. Morality is a trait that indeed makes an individual weaker, since it has to let go of some things for the benefit of others… Heresy in the SM world. How would you get rich then? Of course, you wouldn’t, or would be very difficult. But that is not the whole point. The lack of consideration for the fellow being is what got us here. Over hundreds, if not thousands of years. The real interpretation of the amoral (with an A) behaviour is being parasitic.

Let’s try an example of what morality and amorality would mean for a very limited group of individuals, like a pack of wolves. They have to hunt in group. They have to collaborate to get food, at least during the winter. An amoral wolf would exploit the effort of the pack and somehow drive the weakened pray to a separate place where he could eat alone, after using the whole pack effort to wear it down. What would happen soon? The pack will disappear from the lack of nutrition. And big surprise, the “smart” wolf too. The parasite killed his host.

You are just a mosquito, like many others, so you wont be able to wear down the society on your own. But we are crumbling because of the ones like you. People, mostly educated to be moral, at school in older times or at home, cannot stand you. You represent what is worst. But you created an image that confuses. Also, nowadays, morality is seen in a similar way as you see it, stupidity.

Now, back to why some people hate the RE market and want it crushed, together with the “poor young families that have a home”? Because it reeks against what these some people, me included, always thought it is right, and moral. YOU HAVE TO WORK FOR SOMETHING. Or else it’s stealing. When CMHC distorted this market and actually triggered unequal benefits for the ones who just wanted to borrow and not save first, it actually created a scision from the people that had a moral bone. They felt betrayed. The more this market left them behind they started to feel hateful. It’s only human. I am not saying it’s right, but this is what you get. “I want them punished”.

I know your post is just a face, pleading for the “poor homeowners” is just another social experiment of your superior brain. But it might make some bite the lure, and I would HATE that.

#169 hohoho on 01.29.15 at 12:12 am

> Why do I have to be taxed on a non registered savings account ? This is money I saved after taxes paid on income.

you get taxed on the interest (ie. pre-tax income), not the principal (after tax savings).

#170 Kenchie on 01.29.15 at 12:13 am

#141 Franco on 01.28.15 at 11:40 pm
“Really worried about our dollar, if it goes down any further the BoC may have to start raising rates or it may go down to a point where it will be a total disaster. I sure hope not, but it does not look good.

Florida snow birding is going to be out of reach.”

My colleague was telling me that her mother (living in MTL) “decided” to not go to Florida this year. So she’s coming to visit her daughter in TO. Bet she wasn’t the only retired (fixed-income) snowbird to make such a plan…

#171 Not deleted on 01.29.15 at 12:17 am

Polish-Swiss love. Ouch!

http://www.nytimes.com/2015/01/29/business/international/polish-homeowners-feel-the-weight-of-a-heftier-swiss-franc.html?hpw&rref=business&action=click&pgtype=Homepage&module=well-region&region=bottom-well&WT.nav=bottom-well&_r=0

#172 Mike on 01.29.15 at 12:20 am

Don’t worry about those high paying lost jobs. We all know most of those are not coming back. Globalization will keep taking care of that. Now, accept that fact and stop fretting, worrying and all the other things they tell you to feel on TV.

Get the right attitude, then get the right skills. Adapt, learn, grow. Stop hating, start participating.

The obvious truth really is, that we are in a midst of a paradigm shift. Sharing economy, digital innovations(making our jobs easier and some redundant altogether), decline of car culture..just some of the few.

All of these have a downward price pressures due to decreasing product demand while the cost or need for labour is decreasing, albeit at a bit of a slower pace.

That sucks big time, because that means lower profits…and tax revenues. The only way to keep it going is with the inevitable increase of money supply into the real economy which can come in any number of ways…annual minimum wage increases based on inflation, a basic living stipend of some sorts for all those not working, massive gov’t spending which can be announced overnight in this opportune low-interest rate environment…any number of ways really..all at the cost of a much weaker CND.

Imagine this, in a few short years: Your Starbucks barista will be making $20/h, Your latte will be $10, Your 1+Den( in the 416 obviously) near the expanded Subway will be 450,000. As for your employment situation, read the second paragraph again.

#173 Sheik Yerbouti on 01.29.15 at 12:22 am

#95 Bob on 01.28.15 at 9:39 pm

Let me finish off your brilliant “acronymical” idea…..S-P-A-M
Self-employed Professional Assets and Money

#174 actual question on 01.29.15 at 12:22 am

how much money is needed to have a balanced portfolio in todays markets?
100k?
250k?
350k?
500k?

#175 Ray Skunk on 01.29.15 at 12:27 am

#115 Kenchie

“Kingsclub” – King W and Atlantic

Buyers dodged one hell of a bullet there. Another identikit Urbancorp pile of shit slammed up right next to the preceding 7-8 Urbancorp piles of shit on a small parcel of land wedged between Queen, King and the tracks.

Amused me no end when I would see the sales centre reinvent itself every couple of months to peddle their latest incarnation.

My suspicions regarding the quality and haste (akin to the rapid concrete barfing all over Europe post-WWII) more than confirmed by the dozens and dozens of unsatisfied purchasers moaning and groaning in the usual RE outlets.

I wouldn’t rent one of their poxy units if I was paid to.

#176 Sheik Yerbouti on 01.29.15 at 12:28 am

#108 Ollie on 01.28.15 at 9:58 pm

Shouldn’t that be “Smoking Man Gambit”?

#177 DisgustMadeMePost on 01.29.15 at 12:28 am

Anecdotal …
1. Over the years I have repeatedly been told that when everyone from the hairdresser to the mechanic is talking about how they are making a killing in one investment, it’s time to get out. Well, the other day a work colleague told me that her 30 y o son (who is NOT a contractor) decided he would try contracting. He’s building a house on a lot he and a friend bought. This is in Vancouver. Of course, the words had hardly been uttered before I realized it must be time to get out.

2. I remember the early 80’s. I was in my 20’s. My uncle lost his home. My parents were ok as they had paid off their hovel earlier. Folks were buying all the way up to the interest peak and then prices started to crash. 1981 to 1984 the prices dropped even though interest rates had been declining. By 1984 I and my significant other had some money saved and as it happened decided to stay together and buy a house. Flukey but great timing. Even though interest rates on that first mortgage were 13.5 % we managed… a $70,000 mortgage was doable. Is there a point? Haha probably not! Was just thinking back to the various cycles.

#178 Sheik Yerbouti on 01.29.15 at 12:30 am

Wonder if there is any chance that BBD could absorb all the freshly unemployed and ramp up their Canadian-based works once they get their first big order for the C-series

#179 Bcd on 01.29.15 at 12:31 am

Garth. How many of those 3 million jobs the usa added in 2014 are McJobs or jobs related to shale oil–which are about to go “poof”. You think they are immune to a downswing. Oil propped them up like it did us. Get real. Fed hinted today there is no rise in rates coming. Greece about to turn Europe into chaos. Everyone is nervous. Friday will be epic.

#180 DisgustMadeMePost on 01.29.15 at 12:38 am

#171 Not deleted on 01.29.15 at 12:17 am

I have a relative working in Warsaw. He recently told me that many of his Polish coworkers have their mortgages in Swiss…tried to beat the interest rate. They are HURTING!!! The comment from one of his friends was that the penalty was too high to get out of the mortgage.

#181 Conrad on 01.29.15 at 12:39 am

to #81 prairie person
“Anyone who knows Victoria, knows that Government Street has been a major tourist attraction with its multitude of shops. Now, it is a line of empty storefronts.”

I was just walking down government at lunch. A few places for lease but its certainly not a ghost town. Big line up down at MEC I got stuck in..

“American money isn’t flooding back. The endless planeloads of Japanese and Chinese are also becoming less. A chill is in the air. Fear and depression are more easily caught than the flu.”

huh? the last few years have been banner years for tourism. Check the calendar its January. Should be a very good summer with the dollar where it. I’m not saying the economy is in great shape, but the hyperbole is laughable.

#182 Vancouver coastal on 01.29.15 at 12:39 am

Just say you’re sorry. — Garth
—————
Garth! you said real men never ask for an apology!

#183 devore on 01.29.15 at 12:51 am

#116 Smoking Man

It blows my mind how many of you relish at the prospect of home owners, particularly young family’s getting crushed from a real estate crash.

Probably not, just Canadians, nothing pisses you off more than someone breaking the rules and winning.

Buying real estate is hardly “breaking the rules”, in fact that’s just following the herd.

Stop posting the same thing every day already, get some originality.

#184 Suicide Rush on 01.29.15 at 12:55 am

Businessmen, analysts, money managers and pundits have all been saying the same thing about Stephen Poloz…..everything from exposing his lack of experience, lack of education, common sense….poor judgement…struggle with facts…etc etc etc This ‘Maple Peso’ is a made in Canada disaster. The BOC’s actions have been irresponsible and have been a major contributor to the economic uncertainty.

#185 devore on 01.29.15 at 12:56 am

#171 Not deleted

Polish-Swiss love. Ouch!

It’s almost like they learned nothing. I’m shocked. Shocked!

#186 devore on 01.29.15 at 12:58 am

For some background that is probably less than obvious, Poles, and many central/eastern Europeans, took out mortgages denominated in Swiss Francs, because the rates on loans in that currency were much lower than in the native Zloty. Three times now in the last decade these fx speculators have been creamed by currency risk.

#187 earlybird on 01.29.15 at 1:05 am

I believe the “Herd” in the US was fleeced….

#188 Reality check on 01.29.15 at 1:07 am

Scoff at it all u like but peak oil IS a reality and the pissing Contest with Saudi etc… will end eventually …. Demand for oil will slow down but supply of easy oil will eventually stop and boom will go prices …. Unless we kill our dependence on dirty oil it will end badly like a drug addict going cold turkey ..we will have no choice but to pay the piper. Aka oil sands etc…. Simple physics guys … Why would they be pumping water. Aka water cut it there is SO much easy oil duhhhhh

#189 No Canada, No on 01.29.15 at 1:12 am

Sad, sad, sad. Canada has never had a banking crisis, maybe its the time.

#190 Reality check on 01.29.15 at 1:16 am

LOL macroman I can top that .. I live in a okanogam lake front property recently appraised at 1.6 MILLION $$$$$. Free water, sewer, huge 2 car garage , boat lauch, all the free fruit I can eat for ONLY $900.00 per month. Talk about being subsidized…. Top that eat ur heart out ..

#191 Too bad so sad on 01.29.15 at 1:17 am

Responsibility – people took on bloated loans for homes that were overpriced in their mania they have no one to blame but themselves. They will learn the lessons the hard way so tough luck Charlie! Lol

#192 Andrew Woburn on 01.29.15 at 1:18 am

#71 Washed Up Lawyer on 01.28.15 at 8:59 pm

The repeated contention is that if we could only export more bitumen across the ocean, we could narrow the differential or as they state it, “receive world prices”. How does shipping more inferior product to a market close the differential price measured against a superior product?
———————————

From what I can find out, heavy oil is not necessarily an “inferior” product. It does cost more to process, which is why it sells for less, but the end products are comparable so the gross margin is higher to compensate for the higher investment and processing cost. As bitumen and WTI are different products I don’t understand the idea they should sell for the same price and so I’m not sure why access to tidewater would suddenly boost the bitumen price.

Conventional light oil is getting harder to find but heavy oil is plentiful and cheaper. The world is moving towards building “complex” refineries which can handle a wider range of input oil weights and produce a wider range of end products. The MSM can leave one with the impression that the only place Canadian bitumen can be processed is the US Gulf but China has over 20 complex refineries in various stages of progress. Canada is getting its own bitumen refinery near Edmonton, the North West Redwater Partnership, now in construction.

The best argument for tidewater access is that Canada can produce more than the US can use and the world demand for heavy oil is increasing. However in a global market, whether that access is the Gulf of Mexico or a Canadian port doesn’t really matter. If half our bitumen exports go to the Gulf and the rest goes elsewhere, the Keystone line seems to make the most sense.

In general it is more efficient to locate a refinery close to the end-user market. If we wanted to increase capacity in Canada, building in the East makes the most sense but who would be the customer? The US is not likely to welcome much competition. The market growth area is Asia and they are building their own capacity. Anyway it makes more sense to ship crude to Asia than refined products. A complex refinery costs north of $10 billion. I don’t think we are going to see more than a couple built in Canada so yes, we will need tidewater.

#193 Freedom First on 01.29.15 at 1:41 am

Leverage up. Bankrupt down. Exhilarating up. Terrifying down.

Living debt free at all times……priceless. The emotions of fear and greed have the power to kill. For what? Nothing is worth it.

I enjoy my life, and always put my freedom first.

#194 Harp Sangha on 01.29.15 at 2:02 am

I remember Sept 2008 like yesterday, I tried to have have $100k wired to Tanzania while I was there. After 1 week I was told by my bank that they will not send money to a “crazy place” like that….lol. 2 weeks later the US Fed injected $250 trillion into the Cdn banking system, and guess what my wire transfer went out. Subsequent to that “WE” Canadians bragged to the world how sound our system was, it was never sound!!! If not for the US Fed backstop we were dead.

The next six months will be very painful.

#195 800 RMK on 01.29.15 at 2:06 am

to the WCS to WTI differential poster. Diffs In general have tightened up on other crude blends. WCS is not an “inferior” product to the extent you may think. Golf coast Refiners have retooled to run Canadian crude over Mexican and Saudi oil.

At $40-$50 per barrel oil, there will be a huge supply gap in the future due to massive declines on the new production gains seen in the states, which will be realized from North Dakota BAkken, the Texas permian and eagle Ford plays. When this happens remains to be seen. But some 4 million barrels per day has come on in recent years in the states from shale plays. Average industry declines are running at close to 30%. It won’t take long for natural declines to wipe out any supply surplus. Without $80 wti , capital won’t be spent to back stop those declines

Don’t let the noise out there fool you, not very many oil plays around the world can be developed with a reasonable rate of return at current prices. Middle eastern countries can talk tough all they want but they are as addicted to $100 per barrel oil to keep their people at bay and run their countries, as are US shale plays and Canadian oil sands reliant on $70-$85 WTi to make a return on capital.

#196 jane24 on 01.29.15 at 2:11 am

Wow 171 comments on here already and only 6 am here in the UK. You lot are still sleeping so there must have been a comment frenzy when Garth first posted.

Cannot believe that the Canadian $ just dropped to $1.90 to the British pound. This is wild volatility with people’s lives. I don’t feel so bad now about paying a 25% withholding tax on a RSSP withdrawal a couple of years ago as the Canadian $ was 1.55 to the £ then.

Very strange that there are so many layoffs on this blog but hardly any in the Canadian media. What is going on?
I just read the Toronto Star online and other than Tim Hortons, no real economic reporting at all. More Canadian financial news over here. Bloomberg has added the Cdn $ to £ exchange rate to its standard every 3 min reporting so they see a story there. Never commented on before.

Justin Trudeau, the Red Prince, has had it as no-one votes for risk in this kind of environment.

Not expecting too many Canadian visitors this year.

Can I repeat again that I was a Canadian RE agent for 15 years and in the 1982 housing drop, the tap just turned off. Phones ringing one day and silent the next. I bet it is happening now.

#197 David on 01.29.15 at 2:21 am

Sounds like the time to pull out that unused crock pot avec recipe book, buy some garden seeds for spring and set up a SOHO consultant operation in the rumpus room and displace the nearly 30 year old corporate intern squatters.
Mitch Poloz is so au courant.

http://davidstockmanscontracorner.com/the-wreck-of-the-monetary-hesperus/

http://www.telegraph.co.uk/finance/economics/11373208/Falling-oil-price-a-curse-not-a-tax-cut-for-British-economy.html

#198 FedFollies on 01.29.15 at 2:35 am

16 yrs ago, a fellow by the name of Steven Polosz gave some dire warnings about where the global economy was heading. This comprehensive report was largely ignored by the press at the time, and most of the world’s financial institutions gave it little more than a passing thought. If this name sounds familiar, you’re absolutely correct. Today, this man is the head of the Bank of Canada, having taken over the reigns from Mark Carney two years ago. Mr. Poloz was also a “guest” who attended the 62nd Annual Bilderberg conference in Copenhagen, Denmark, which took place between May 29 – June 1, 2014. And here is the link to that essay he so eloquently wrote. Are not the contents of this masterpiece EXACTLY what’s transpiring before our very eyes, the majority of which of is being played out right now? YOU tell ME.

http://people.mcgill.ca/files/christopher.ragan/wea6_poloz.pdf

#199 Industrial Guy on 01.29.15 at 2:40 am

#167 Matt Gamon
“80% of the sales are above the asking price.”

Oh brother ……..
Real estate agents are the Kings and Queens of sophistry. If you list a house and the agent tells you to lower the price five times and you sell at the last price, it’s 100% of the asking price.

Secret bids, phantom bids, collusion between agents … You are always going to pay the maximum you can afford. The game is rigged. Young couples are stampeded to over bid. Buy now or you’ll never afford a home.

Why can’t we have open bids? Everyone knows what the other person is bidding. Every bidder must be identified. Numbered companies must list owners. That way you know that the magic bid that materialized last evening came from the agent down the road who happens to be your agents brother in law and is working with your agent to boost the price.

Never volunteer too much information. You agent isn’t your friend. He’s a wolf and you’re the next lamb.

It’s a really simple formula. 100% commission = everyone gains by fleecing you. The seller, the agents … feeling lonely? Want a hug?

#200 Juanito on 01.29.15 at 2:46 am

#16 Vancouver coastal on 01.28.15 at 7:16 pm

—————————————

I will reply to that. Our company has a sizable share of the T&M market. I will confirm that 2015 and 2016 will be significant in terms of turnaround scope. I’m in earshot of contract discussions between my managers, and so far the mood hasn’t been pessimistic at all. I also get to hear the general feeling of our competitors in this business. Not everyone is ‘terrified,’ here’s the underlying facts:

1. Contracts aren’t being pulled. Again, as I’ve commented before on this blog, operating budgets for maintenance and turnarounds for major players typically remain in place, even as the rest of the economy crumbles. Our clients have made it clear that their plants are still making money and will make money at these prices, but certainly not as much.

2. Contract rates are being re-negotiated. Everyone is looking for cost saving opportunities. Service providers, such as ourselves are responding fairly with the owners. A cooperative mood currently exists between owners and contractors. Some petrochemical producers that are not hindered by but even benefit from low oil prices are now thinking that they can jump on this contract re-negotiation bandwagon. It will yet be seen if they will be given the same slack though as oil producers.

3. For the most part, upstream and midstream producers are being reasonable in the special rate re-negotations that are taking place between most major producers and major service providers (This has been happening for several weeks now). I have no idea yet if these rate re-negotiations will effect union/non-union wages, so far the impact is solely on the net-earnings of service providers. Some firms may be willing to roll back staff wages to shine for their clients, but that would be their call. I don’t see that happening in our company.

4. Even at $40 oil, NOT ONE of our clients have eluded in any way to cancelling or even reducing scope of the work they have scheduled and planned for the upcoming shutdown seasons. The consequences for not performing scheduled maintenance and repairs is too severe for these companies to take that risk.

No terror in those statements if you stand to benefit from the upcoming shutdown work. Work smart, work efficient, work safe and don’t believe all the hyperbole. Hope this helps.

#201 experienced.optimist on 01.29.15 at 2:50 am

Re – # 42 TheManwhoStaresatSheeple
“Garth, I am partial to some of today’s statements and I find them outright incorrect.”

You actually let the PMO on your blog tonight.

Re – #66 Irwin on 01.28.15 at 8:45 pm

@ #45 Steevee on 01.28.15 at 8:04 pm

“I didn’t do the math, but you’re probably correct.

The good news is that most or many producers have hedged their production – locked in oil prices.”

Someone can correct me if I am wrong, but is not hedging a 2 way street. Winners and losers. And who is holding the losing hand. Banks?

Just Google “Plummeting Oil Prices Could Destroy The Banks That Are Holding Commodity Derivatives”

#202 BigM on 01.29.15 at 3:09 am

@155 Franco

The BoC has already decided to pooch the dollar, especially with that last rate cut.

Dollar to .75 by March, .70 by summer.

@171 A lot of Europeans took mortgages in Swissies, much better interest rates. I guess no one bothered to explain the risks. Your nice friendly neighborhood bank.

#203 Mr Stats on 01.29.15 at 3:25 am

Dollar approaching 78 cents!

Rate cut to 0.50% already prices in. Question now is will we see 0.25%??

I think so since they did the impossible in some people eyes.

2.75% 10 year fixed rates?? It is coming!

#204 Setting the Record Straight on 01.29.15 at 3:53 am

@#169 hohoho on 01.29.15 at 12:12 am
> Why do I have to be taxed on a non registered savings account ? This is money I saved after taxes paid on income.

you get taxed on the interest (ie. pre-tax income), not the principal (after tax savings).

Yes but he could have taken the savings down to Arizona and had a Super Bowl Party. No taxes paid to the Canadian governments. Instead he saves it and is taxed on the interest income. His question is why should that be taxed?

#205 debtified on 01.29.15 at 7:56 am

Buy what you can afford as part of a diversified life. A house is not the holy grail. Experience is. — Garth

Amen!

#206 fancy_pants on 01.29.15 at 8:25 am

#48 famcy_pants on 01.28.15 at 8:17 pm

my bad. my pants are still fancy.

Alberta’s not so much. There are fallouts when relationships go sour. Just ask Alberta (Canada for that matter) who got caught with their pants at the knees. not so fancy

#207 Snowpocalypse Toronto on 01.29.15 at 8:46 am

Terrified? You bet.

Garth, please prepare to shut down the website early today in preparation for the horrific snowfall even about to hit the only place that matters.

Readers, please leave work by noon today so you have time to sprinkle salt on your front steps and buy a Starbucks.

Calgary real estate? Who cares on a day like this?

Boots may be necessary, Torontonians.

Eeeeeeewww :(

#208 Ray Vazquez on 01.29.15 at 9:11 am

To #10 Incubus

If you think rates will go negative then you are looking for a bunch of Canadians that will have negative equity, owing more than the house is worth.

It is being underwater financially so to speak.

Also, if people think that they can get much equity out using a reverse mortgage when house prices drop 30%+ then good luck too them.

Reverse mortgage companies already only give maximum about 40% of the market value of their house but after all this is done, they will be lucky getting 25%.

A $500,000 house will only bring in $125,000 lump sum. I would not be surprised if many will not be eligible for reverse mortgages at all.

#209 a bit off topic on 01.29.15 at 9:47 am

# 138 Dual Citizen in Canada

“Tonight, Garth had his cake and “Edith” too.”

Come on people, that was really funny!

#210 Karma on 01.29.15 at 9:59 am

Let’s see how many Vancouverites read this commentary piece in the Vancouver Sun today:

“Vancouver’s high housing costs mean less cash on hand to pay more taxes”

Subheadline: “Due to crushing housing costs, we have far less discretionary income than other Canadians”

http://www.vancouversun.com/business/affordability/Barbara+Yaffe+Vancouver+high+housing+costs+mean/10768207/story.html

#211 BG on 01.29.15 at 10:12 am

#109 Karl hungus on 01.28.15 at 9:59 pm

If you were really self employed you would know that taking dividends or salary works out to be the same, its a wash tax wise, the rules are not what they used to be.
*********************************************

My unerdstanding is it is still interesting if you can live with 45k a year.

#212 Non Sense on 01.29.15 at 10:18 am

#196 FedFollies

Nonsense, Poloz is only commenting in that 1999 1-pager on the events at the time. There is nothing forward-looking there, let alone insights that have since unfolded. No surprise, given the disaster he is currently steering us into. Thus guy would have been a good financial advisor or realtor, in the sense of being able to put together a credible-sounding story on the basis of a bunch of facts, without being mentally capable of extrapolating from there into multiple longer-term scenarios. Then again, few people can, university studies do not in any way train students for this kind of intelligent thinking; I myself have a phd in mathematics from two decades ago, and looking back at my 22-year educational track I shocked by how little relevant real-world skills I was taught, indeed almost the exact opposite. I have been a business owner for the two decades after that, which is a much more valuable path to learning how the real world works and to be able to develop future scenarios by critical thinking. Our current leaders have no actual experience working in the real world, they come straight out of university, often with even too little talent to be eligible for an academic career, and then proceed with applying their ignorant thinking to the population at large. Here we are, what a mess. Poloz, Carney, Bernanke, you name it, all the same mediocre small-brain academically trained anglos with a sense of self-entitlement and superiority.

#213 Karma on 01.29.15 at 10:21 am

#151 IKnow on 01.28.15 at 11:35 pm
“Vancouver people are optimistic about real estates because we are all betting on China money will flow in non-stop for the next 50 years!
We will borrow $1M to buy just the smallest lot, no blinking , no sweat.
Because we BELIEVE in China money!”
—————————————————-

Hate to be a debbie, but the Communist Party of China is doing a survey of their members to see how many of them have committed suicide since Xi Jinping took over.

The fact that they need to do a survey is quite a bad omen in itself. That can’t be good for HAM going into Vancouver if the prospective buyers decide to end their lives…

http://www.ft.com/cms/s/0/5c2c8f9c-a79f-11e4-8e78-00144feab7de.html?siteedition=uk#axzz3QDhL1xD2

#214 LOL Canada on 01.29.15 at 10:23 am

Great time to get into USD! Looks like LOL Canada is going to kill CADs value just like Russia did.
CAD falling and US equities rising is going to make you cash. The only downside is that everything is going to cost more. A lot more.
That’s the price we need to pay to stay away from deflation though.

If we add in that property values gained nothing in the last year. Cost 10% to unload, and the dollar has gone down about 0.2 in the last year, then a home has taken a real beating in the last 12 months.

If you owned a million dollar house, outright, then you would have lost at least $300,000 last year vs a portfolio fully invested in US investments.

And people say that the prices always go up in Canada…

#215 Dominoes Lining Up on 01.29.15 at 10:42 am

The author Nassim Nicholas Taleb (who popularized the idea of Black Swans), as quoted in the Globe today, perfectly nails the problem we face in our housing bubble.

This is a dead-on description of what incompetent and stupid Harper/Flaherty/Oliver/Carney/Poloz policies since 2008 have done to us.

“Stifling natural fluctuations masks real problems, causing the explosions to be both delayed and more intense when they do take place,” Mr. Taleb wrote in a more recent book, Antifragile: Things That Gain From Disorder. “As with the flammable material accumulating on the forest floor in the absence of forest fires, problems hide in the absence of stressors, and the resulting cumulative harm can take on tragic proportions”

As Globe writer Yakabuski closes, “For Canada, a housing crash might be the next black swan. But, for now, it’s just the elephant in the room.”

http://www.theglobeandmail.com/globe-debate/you-cant-predict-a-black-swan/article22686928/

#216 Ralph Cramdown on 01.29.15 at 10:44 am

#199 experienced.optimist — “[I]s not hedging a 2 way street. Winners and losers. And who is holding the losing hand. Banks?

Just Google “Plummeting Oil Prices Could Destroy The Banks That Are Holding Commodity Derivatives”

The natural players on the other side of the trade are petrochemical companies and other large consumers of fuel/oil, who ALSO hedged by locking in their supply prices.

What makes anybody think that a bank would have a large net long position in oil futures that wasn’t hedging something else? Or that it would continue to hold and roll over that position through a 50% decline in the underlying?

Googling the phrase, the first page shows results from theeconomiccollapseblog.com, infowars.com, zerohedge.com and doomsteaddiner.net. I bet if I actually bothered to read the article, it’d be long on big numbers like the total notional value of all derivative contracts, but short on details like numbers specific to the oil market or banks’ net exposure thereto, or even which side of the market banks are on, net.

Go to a website whose authors’ daily assignment is 300 words on why the world is going to shit, and that’s what you’ll get to read. If a negative outlook is baked into their domain name, your chance of getting anything but negative spin on negative news is zilch. But if you are going to read such, see if you get hard, specific names and numbers rather than vague, unverifiable portents of doom.

#217 industrial Guy on 01.29.15 at 10:44 am

#12 its OVER for Canadian oil sands

“Rich people are rich because they are smart” .

Yepper, a lot of rich people were very careful to choose their parents carefully. Being part of the lucky sperm club takes planning.

https://ca.finance.yahoo.com/blogs/pay-day-/canada-pending-inheritance-boom-could-worsen-wealth-gap-183515296.html

#218 Rusty Venture on 01.29.15 at 10:47 am

If I were running TransCanada, it would be an excellent time to start building the Energy East pipeline.

Labour and steel will be getting cheaper!

#219 Ralph Cramdown on 01.29.15 at 10:49 am

#71 Washed Up Lawyer — “My knowledge of economics is slim to none, but the heavy oil/bitumen differential to WTI has always made me wonder about the often floated argument about the critical need to gain tidewater access for bitumen via pipelines.”

Tidewater access isn’t designed to eliminate the differential between WCS and WTI, but the discount between WTI and Brent which is also applied to Canadian oil sold into the central US. US law prohibits export of US crude, so a central US glut often results in lower prices paid for crude there than elsewhere in the world. And we sell into that market. Dumb.

#220 CalgaryRocks on 01.29.15 at 10:51 am

#109 Karl hungus on 01.28.15 at 9:59 pm

If you were really self employed you would know that taking dividends or salary works out to be the same, its a wash tax wise, the rules are not what they used to be.

Yes that’s true, however it allows to spread your income over several years.

So if one year you make tons of coin, you won’t have to pay top marginal tax on your personal income as long as you don’t withdraw it all from the corporation.

Maybe the year after you work less, go back to school or take a sabbatical. Then you can withdraw with no or low taxes paid money that you would have paid at the top rate otherwise.

#221 debtified on 01.29.15 at 10:57 am

#168 Ollie on 01.29.15 at 12:07 am

Dude, lighten up! This is the internet. Not your house.

I actually read your long post because you started it with “Smoking Man”. Don’t worry, Smoking Man is harmless (even with his so-called fans like me). If he acts like he is acting here in your own house, then maybe you can lecture him about morality then.

I got your back, Smokie! ;) My favourite posts of yours are “DELETED”. My imagination runs wild when I read it! Keep it up! Here is something that will make you proud: I was going to buy a brand new Harley with the money I made from Y (thanks partly to you) but I wasn’t happy with the deal the dealer was offering (-$3K only and I wanted -$4K) so I am going to buy BBD instead. The gambling portion of my portfolio has the least amount but gives me the most fun (so far). :P

#222 Alex on 01.29.15 at 11:01 am

Reading the last few days of this blog has made be contemplate anti-depression drugs !! Wow … The glass is definitely not half full over here … I walked over to my window, opened it up and wanted to jump … Having a bungalow, realized very quickly that this would not be an effective way to stop the pain … That I would survive and be around to absorb more horrific headlines. But then I started thinking ….
I want oil prices to drop to $30
I want a $0.60 CDN dollar
I want nationwide layoffs
I want housing to collapse
I want lower rates
I want a massive recession/correction to clean the slate and reboot the system – we need an upgraded operating system and its coming whether we like it or not.

You see, during the last 10 years I and many other wise fellow Canadians have taken advantage of the economic gifts that were handed out and built a tremendous amount of wealth … We are now in a position to take serious advantage of a massive downturn … Yes, on paper, we also get “hit” but that’s par for the course. Gas is cheaper, interest rates going lower, investments will become less expensive. Having lived through the prior oil collapse, real estate collapse, tech bubble – I know what’s coming and it was a matter of time … What’s your excuse? How can one allow themselves to be in a position of owning over-valued real estate? Credit card debt? Etc. losing a job, for the most part, is something you can not control – but the aforementioned was! If there is one thing that I was always able to count on, and will continue to count on, is good old fashioned GREED. GREED GREED GREED will always bite you in the ass.

There are 3 certainties in life, death, taxes and GREED.

#223 cramar on 01.29.15 at 11:12 am

Did you see that virgin dude on the TO news (Global) last night? He is ticked because his expected condo is being turned into a rental unit. Seems he put a $40k deposit down in 2010 for his long-term condo investment and he is getting his deposit back plus interest. He is thinking of suing and is soured on the condo market.

I think, he should be thankful for his good fortune in getting his money and some interest back, rather than taking possession of something that will collapse in value. He doesn’t realize how lucky he is.

#224 Daisy Mae on 01.29.15 at 11:15 am

CBC: Falling loonie part of a new race to the bottom

“Economists will tell you a falling currency is good for exports. But even as the loonie heads below 80 cents US, it won’t work if everyone else does the same thing.”

#225 Nuke on 01.29.15 at 11:30 am

Opened up what I thought was junk mail, but a statement from an investment account. I made one deposit into a balanced international equity fund in 1986. The account is up 800%. Nice surprise.

#226 someone in BC on 01.29.15 at 11:32 am

I saw on the news last night that there was a big snowstorm that hit the US North East. Not sure how much of that hit Eastern Canada.

Here in Vancouver it feels like we are a world away from all that. It’s the mildest winter in years. All we had was a light dusting of snow out in the suburbs for one day in late November (nothing to speak of in the city itself). For the past week, it’s actually been quite warm. Almost hit 17 degrees in West Vancouver the other day. Some people are out in shorts and T-shirts. In the morning, you just need a light spring jacket to wear to work. The days are getting longer too. We’ve been able to smell spring in the air in Vancouver for the past week. And it’s not even raining.

#227 Newman on 01.29.15 at 11:36 am

@ Cramar

Yep, those are going to be nice rentals. Wonder if it will eventually turn to rent to own at half price. That would be a sweet deal.

#228 G on 01.29.15 at 11:43 am

Thank you for your advice Garth about leveraged investing.

It seems like stocks are sliding down steady in Canada, but even in the US (BABA -10% today).

There is no “blood on the street” yet, but it feels like starting to build a $200-$300K portfolio might bring promising result on a 10-15 year time frame.

#229 Daisy Mae on 01.29.15 at 11:44 am

Canada/EU summit reception: “It was a grand affair — which is just as well. For $162,863, you want more than cheese dip and some dried-up carrots.”

#230 rosie "moving forward" in the knowledge that, "this won't end well" on 01.29.15 at 11:45 am

Okotoks is in it’s own little bubble. Where’s Okotoks, sounds dreamy.

http://www.westernwheel.com/article/20150128/WHE0801/301289967

#231 NeverAgainCon on 01.29.15 at 11:58 am

TheManwhoStaresatSheeple? Thought I heard a girly squeal…

#232 The real Kip on 01.29.15 at 12:16 pm

I can’t believe crane operators are feeling the pinch too!

#233 Chris on 01.29.15 at 12:16 pm

Silly question for y’all: I’m sitting on approximately $150,000 of diversified investments (ETF’s, stocks, mutual & index funds, etc.), but denominated in CDN. Should I worry, considering the falling dollar, or will the appreciating USD continue to benefit my current US holdings regardless of denomination? Hypothetically, if CDN is at $0.65/USD, will my US/foreign holdings increase substantially to reflect that?

I’m relatively young and have just been stuffing my RRSP & TFSA over the years without considering that it’s all denominated in CDN…

Thanks!

#234 BlackDog on 01.29.15 at 12:16 pm

@Bottoms_UP re#158,

‘Under the table’ – what’s that? Seriously, I get that no one treats their occasional babysitter as an employee (I never did), but this situation is different.

The couple that hired my daughter for the summer, claimed what they paid her as child care expenses, and KNEW she was claiming her income on her taxes as they had discussed and confirmed with each other what her total income had been for the summer so that their child care expense jived with her income on her tax return.

The point I was trying to make here is that some people are not aware that hiring a babysitter or nanny or whatever you want to call her on more than just a casual basis, is likely going to be considered an employer/employee relationship by CRA.

I am thinking the couple that hired my daughter might be able to get away with this, only because it was a TEMPORARY summer gig, but since they claimed the child care expense, they might have some explaining to do. I am pretty sure they have had other nannies/sitters and not just in the summer, so it sounds like they were just totally clueless about the whole thing employer/employee versus contractor thing which I suspect a lot of people are.

#235 bill on 01.29.15 at 12:23 pm

#211 Non Sense on 01.29.15 at 10:18 am
”Poloz, Carney, Bernanke, you name it, all the same mediocre small-brain academically trained anglos ”
they are not ‘anglos’….. they are of ukrainian ,irish and ukrainian jewish ancestry respectively I believe…..
or to be quite correct -2 Canadians and an American

#236 Party on...... on 01.29.15 at 12:24 pm

http://calgaryherald.com/business/local-business/food-and-drinking-sales-on-the-rise-in-alberta

#237 Mister Obvious on 01.29.15 at 12:24 pm

This morning the on-line National Post is leading with a story that spanks the GoC and BoC for its one-asset financial strategy. This blog has been warning of that very thing for years.

Betcha dollars to donuts they don’t read greaterfool.

#238 Ralph Cramdown on 01.29.15 at 12:31 pm

#221 Alex —
“I want oil prices to drop to $30
I want a $0.60 CDN dollar
I want nationwide layoffs
I want housing to collapse
I want lower rates
I want a massive recession/correction to clean the slate and reboot the system”

https://www.youtube.com/watch?v=J1okpAj7Fhw#t=63

#239 Chris on 01.29.15 at 12:32 pm

Sorry– I mean to say if the CDN falls to $0.65 against the USD…

#240 Ain't no rats in Oilberta on 01.29.15 at 12:36 pm

Crank up the printers…..

http://www.standard.co.uk/business/business-news/bank-of-englands-mark-carney-tells-eurozone-to-spend-its-way-out-of-stagnation-10010561.html

#241 Victor V on 01.29.15 at 12:38 pm

http://business.financialpost.com/2015/01/28/terence-corcoran-the-canadian-economy-nobody-saw-coming/

BMO Chief Economist Douglas Porter commented as he watched the dollar fall: “Just two short years ago to this day, the Canadian dollar was within a cent of parity, back in the days when oil was trading in the mid-90s and a fellow named Carney was still BoC Governor. Given Wednesday’s latest spillage, the currency has promptly shed 19.5% in that two-year span. That is the largest two-year decline in the Canadian dollar ever.”

For this decline in value, added Mr. Porter, “there will be consequences.”

#242 BCD on 01.29.15 at 12:40 pm

Like I said, US rates start their ascent in 2015. — Garth

They have too, it’s a matter of credibility, but they know there is a currency war on right now. World has changed recently, but bravado, ego, saving face. There going to do it in spite if it being the wrong thing to do for the USA economy.–Smoking Fool
__________________________________________

So why are they staying “patient”?

http://www.cbc.ca/news/business/federal-reserve-remains-patient-about-next-u-s-rate-hike-1.2935088

No rate hike until 2016 or later. If I was a betting man I’d say they might cut the rate after the air is released from all the shale oil jobs lost and Greece and Canada swirl away in the toilet bowl.

Looks like a June move. — Garth

#243 Donnie740 on 01.29.15 at 1:01 pm

Hey Mark, you see the Bulls on RFD getting owned? Not one person can refute the shiller index, mean reversion, or stagnant job growth.

#244 Happy Renting on 01.29.15 at 1:01 pm

#208 a bit off topic on 01.29.15 at 9:47 am

# 138 Dual Citizen in Canada

“Tonight, Garth had his cake and “Edith” too.”

Come on people, that was really funny!

That pun was terrible, I did a face-palm. (My other half thought it was amazing, though!)

#245 not so fortunate on 01.29.15 at 1:09 pm

Again Garth, I don’t know how to thank you for this very informative blog. I love the feedback from your followers and I take every piece of information seriously. Being unemployed can change the way you spend money and believe it or not, its kind of like a freedom when you get rid of unnecessary spending and slow down to a calmer lifestyle. We can make time for family and friends without the stress of working long hours because we are slaves to our homes.

Stepping outside without a care in the world to walk my furry best friend who gives me more than any human I have ever met.

I did make most of my fortune through real estate but it is all strategy. I never bought anything I couldn’t live in. I took advantage of the low interest rates in order to rake in a couple hundred thousand more for my retirement. I am now pedalling backwards and moving into one of my rentals until I am left with one Toronto home.

It is going to be one wild spring market for real estate so buckle up folks!

#246 Bottoms_Up on 01.29.15 at 1:18 pm

#232 Chris on 01.29.15 at 12:16 pm
—————————————-
Not sure, but if you look at SU trading in the states vs. SU trading in canada, the former has lost 30% in share price vs. 15% loss in canada.

#247 Ralph Cramdown on 01.29.15 at 1:19 pm

#235 Mister Obvious — “This morning the on-line National Post is leading with a story that spanks the GoC and BoC for its one-asset financial strategy.”

More unintentional humour from Corcoran. He doesn’t mention the GoC at all, only the BoC, and specifically Carney.

Regardless of what anybody thinks about Mark Carney, Corcoran is the first person I’ve seen to suggest that Canada’s reliance on oil exports was somehow the Bank of Canada’s fault or responsibility, even partially, or that the bank should have acted differently with its target rates because of it.

An uncharitable person might say that Corcoran’s goal is to blame the BoC, focusing attention away from the Harper Government. But I’m loth to credit him with that much intelligence.

#248 Bottoms_Up on 01.29.15 at 1:23 pm

#222 cramar on 01.29.15 at 11:12 am
————————————
But to him, he’s looking at 2010 prices compared to 2015 prices and thinking he easily has doubled his money if not more. Of course he’s not factoring in fees to sell, fees to carry the condo etc., but it would be difficult thinking you’re going to start with maybe $80,000 equity but instead be given $40,000 cash.

#249 leafsfaninyvr on 01.29.15 at 1:23 pm

Ok, you didn’t like my short retort about your caterer pal. Let’s try this. Spinning anecdotal garbage from the perspective that supports your argument is no better than the anecdotal garbage that realtors spew all over this pathetic blog. By the way, lots of “sold” signs all over the GVRD. See how that works?

#250 Mike T. on 01.29.15 at 1:26 pm

Oh my, has everyone heard the big news?

Bigger than oil, real estate, economies and ebolas combined?

Canada has finally reached the holy grail.

We’re getting SUPERBOWL ads
(in 2 years)

if anyone is listening, I am ready to leave, I am pretty sure I have learned everything I can here on Earth….

#251 For those about to flop... on 01.29.15 at 1:28 pm

202 setting the record straight
@#169 hohoho on 01.29.15 at 12:12 am
> Why do I have to be taxed on a non registered savings account ? This is money I saved after taxes paid on income.

you get taxed on the interest (ie. pre-tax income), not the principal (after tax savings).

Yes but he could have taken the savings down to Arizona and had a Super Bowl Party. No taxes paid to the Canadian governments. Instead he saves it and is taxed on the interest income. His question is why should that be taxed?
———————–
Thanks you guys for trying to answer my question.
If I pay tax on the interest and then 12 months later the money is still there I have to pay the tax again.
I should be rewarded for not wasting that money ,not penalized .

#252 Mike in Toronto on 01.29.15 at 1:32 pm

#222 cramar

I feel for the guy getting ripped off.

It’s one thing to not have your condo built because the economy shifted and the builder couldn’t do it. It’s another to find out that they’re building it, it’s just more profitable for them to sell the unit en-mass to a rental company than to let you get it for what you promised to pay 3 years ago.

Why should they honour any contract? Just sell all the units at $40k down, sit on the money for three yeasr, then if the units appreciate 30%, break all the contracts, sell the development to a sister company and re-sell all the units for the higher market price.

#253 Pre-Retiree on 01.29.15 at 1:32 pm

Why insulting poodles everywhere? I love poodles. Intelligent, loyal, and great for those with allergy to dogs.

#254 Victor V on 01.29.15 at 1:36 pm

https://ca.finance.yahoo.com/news/tim-hortons-layoffs-blindsided-workers-100000224.html

Jane is not her real name. She wants that withheld for fear she will face repercussions from the company if it discovers she’s speaking out.

U.S.-based Burger King bought Tim Hortons last year. The company has remained tight-lipped about the layoffs, refusing to make public how many jobs were cut. Until the axe fell, more than 2,000 people worked at Tim Hortons corporate offices and distribution centres in Canada.

Jane estimates 40 per cent of staff may have been laid off from head office in Oakville, Ont. She had worked in middle management. In her department, she says 60 per cent of employees were cut. She also believes some other departments were entirely gutted…

Jane says the big layoffs that were announced the following Monday and Tuesday hardly showed respect for employees.

She explains that on Monday, some of the more senior vice-presidents were let go. She also says a team from an external outplacement agency arrived “to essentially perform all the dirty work.”

She says the team set up shop in offices left vacant by the laid-off executives “and called us in one at a time, letting us know that this is your package, you’re on your way out and we’ll escort you to the door.”

“It was just really poorly executed,” says Jane, because employees got no adequate warning. “There was a lot of crying, just emotion running high in the office.”

#255 Pre-Retiree on 01.29.15 at 1:37 pm

#6 Cara: “”I’m in healthcare. Recession proof – I forsee higher stress levels reflected in more mental health issues going forward.””
_______

Cara, healthcare is not recession proof. Here in Ontario, with the government having to slash its self-created deficit (due to uncontrolled spending), there is a cut in hospital budgets, and physician compensation. While it is true that the demand does not stop, and grows even, the government holds the purse, and can decide unilaterally how much it wants to spend on it. Remember the Rae days?

#256 Bottoms_Up on 01.29.15 at 1:38 pm

#184 Suicide Rush on 01.29.15 at 12:55 am
———————————————–
Come on, if you think any of these country’s banks are acting independently, think again:

http://en.wikipedia.org/wiki/Bank_for_International_Settlements

#257 Retired Boomer - WI on 01.29.15 at 1:49 pm

Canadian Loonie .7998 on the charts this morning.
Goldman says it is headed for .71 that impacts your pocketbook with higher cost imports.

Sure, all currencies don’t move in tandem to USD but, I would not be contemplating any big purchases right now.

XOM reports soon, I want to see how much blood in there before making any dumb moves.

Gas up here .03 overnight to $1.99 gallon locally
(3.89 litres) for those who forgot the conversion
or .51 a litre.

#258 Incubus on 01.29.15 at 1:49 pm

Effective from 30 January 2015, Danmarks Nationalbank’s interest rate on certificates of deposit is reduced by 0.15 percentage point to -0.50 per cent. The lending rate, the discount rate and the current account rate are unchanged.

The interest rate reduction follows Danmarks Nationalbank’s purchase of foreign exchange in the market.

Danmarks Nationalbank’s interest rates are:

Lending rate: 0.05 per cent

Certificate of deposit rate: -0.50 per cent

Current account rate: 0.00 per cent

Discount rate: 0.00 per cent.

#259 Victor V on 01.29.15 at 2:05 pm

Bank of Canada will cut interest rate again, loonie to continue its slide: CIBC

https://ca.finance.yahoo.com/news/bank-canada-cut-interest-rate-again-loonie-continue-170012301.html

#260 Steven Harpur on 01.29.15 at 2:20 pm

We are worried about deflation. Blah blah blah.

We manufacture everything in Canada so inflation will be close to zero percent even with a 60 cent dollar. Hope the sheeple buy it.

A house that was worth $400,000 USD is now worth close to $310,000 USD.

This idiot has got to go.

#261 pwn3d on 01.29.15 at 2:21 pm

#168 Ollie on 01.29.15 at 12:07 am

Now, back to why some people hate the RE market and want it crushed, together with the “poor young families that have a home”? Because it reeks against what these some people, me included, always thought it is right, and moral. YOU HAVE TO WORK FOR SOMETHING. Or else it’s stealing. When CMHC distorted this market and actually triggered unequal benefits for the ones who just wanted to borrow and not save first, it actually created a scision from the people that had a moral bone. They felt betrayed. The more this market left them behind they started to feel hateful. It’s only human. I am not saying it’s right, but this is what you get. “I want them punished”.

—————————

Wow whoever thinks like this is a f-ing loser! I can see why people who think this way have nothing, because they take no responsibility. It’s CMHCs fault you don’t own a house? That’s the dumbest thing I’ve heard since the last Mark post.

#262 Steven Harpur on 01.29.15 at 2:24 pm

My family doctor says he might leave for the U.S. if our loonie sinks any further. Talk about a government that purposely has destabilized Canada.

Do not split the vote. These guys will make you poor. Food about to go up 20% along with everything else.

#263 Victor V on 01.29.15 at 2:26 pm

http://www.theglobeandmail.com/report-on-business/small-business/sb-managing/succession-planning/retirement-dreams-fading-for-many-small-business-owners/article22533810/

Retirement isn’t looking so golden for many small business owners in Canada. More than three-quarters of small business owners don’t have retirement plans in place for themselves or their employees, according to the Canadian Federation of Independent Businesses.

Considering that the majority of small business owners in Canada are over the age of 40, it’s critical they take these steps to start saving now in order to realize their dreams of retirement.

#264 bdy sktrn on 01.29.15 at 2:44 pm

#249 For those about to flop…
———————–
Thanks you guys for trying to answer my question.
If I pay tax on the interest and then 12 months later the money is still there I have to pay the tax again.
I should be rewarded for not wasting that money ,not penalized .
——————

only income is taxed. the principal is not.

eg. make $140 -pay income tax- keep $100

invest that 100 make $10

you pay tax on the ten, not the 110.

next year you invest the 107 and make $11

again pay tax on the GAINS only(11), not the 107.

———————–
WI boomer – 3.78

#265 Rational Optimist on 01.29.15 at 2:51 pm

258 Steven Harpur on 01.29.15 at 2:20 pm

“We manufacture everything in Canada…”

Beg your pardon?

#266 Happy Renting on 01.29.15 at 2:52 pm

#249 For those about to flop… on 01.29.15 at 1:28 pm

Your original question was for a non-registered savings account, so here’s an example.

You save $1000 of your after-tax income one year and put it in the savings account.

A year later, you have earned a totally badass 1% on that ($10 interest on the original $1k.)

Since the account is non-registered (not tax sheltered), you pay tax on the interest at your marginal rate (for many high-rolling blog dogs, it’s 40%-ish).

$10 interest – 40% tax = $6 after-tax interest earned.

You resist the siren song of the Arizona Super Bowl party and leave the $1006 in the account. A year later, you’ve earned another rockin’ 1% on that ($10.06). You then pay tax on the interest earned that year (40% on $10.06). You’ve already paid tax on the principal ($1006), it doesn’t get taxed again (just the interest earned in the most recent year.)

A note: savings accounts pay next to nothing, and what little you get is taxed at your marginal rate. That sucks. In a non-registered account eligible Canadian dividends and capital gains are taxed more lightly than interest income, so if you have any kind of risk tolerance and time horizon at all, don’t stuff your savings account, invest instead.

#267 Blacksheep on 01.29.15 at 2:52 pm

Someone # 225,

“I saw on the news last night that there was a big snowstorm that hit the US North East. Not sure how much of that hit Eastern Canada.”

“Here in Vancouver it feels like we are a world away from all that.”

“We’ve been able to smell spring in the air in Vancouver for the past week. And it’s not even raining.”
—————————————————-
19 cities listed on this: Temperature in Canada wiki site, but only one city were the average low temp, remains above zero.

This is how I’ve come to reason out Vancouver’s valuation anomaly. Think of it like the next election.

Do you get to choose between multiple, political rock stars ?

Or are you voting for whom you perceive to be the least painful, of the ‘three stooges’ ?

That’s Vancouver, the least painful location, if you don’t like the cold (who does) but wish to remain above the 49 th.

http://en.wikipedia.org/wiki/Temperature_in_Canada

#268 Chiming in on 01.29.15 at 2:56 pm

Hi–I’m sure most have seen this by now, but I had to laugh (a little ruefully) when I read the headline….

http://business.financialpost.com/2015/01/28/terence-corcoran-the-canadian-economy-nobody-saw-coming/

LOL–Garth did! And those of us who paid attention have benefited as a result. So, thank you. :)

#269 Non Sense on 01.29.15 at 2:58 pm

#233 Bill:

From wikipedia: “In Canada, and especially in Canadian French, the terms Anglophone, Anglo-Canadian or simply Anglo, are widely used to designate someone whose mother tongue is English, as opposed to Francophone, which describes someone whose mother tongue is French, and to Allophone, which describes someone whose mother tongue is a language other than English or French.” So, yes, they are all anglos in my use of the word.

#270 Blacksheep on 01.29.15 at 3:01 pm

Steven # 258,

“A house that was worth $400,000 USD is now worth close to $310,000 USD.”
————————————————-
So has your real net worth decreased, on a global scale?

#271 Oil Is Sticky on 01.29.15 at 3:11 pm

FIRE – up 25% – from 876,200 to 1,090,800

Education – up 33% – from 983,400 to 1,307,700
Public sector part – from 868,400 to 1,140,000

Health Care – up 47% – from 1,525,700 to 2,241,500
Public sector part – from 760,500 to 1,028,700

Public sector at large – up 26% – from 2,848,400 to 3,585,500

Public administration – up 17% – from 763,400 to 892,300

——-

Nice to see the Herpes Govt has 74 BILLION DOLLARS PER YEAR laying around to hire new Public Sector workers.

I find it hilarious how people say “MPs and their golden pensions”. Please read above again. 74 BILLION DOLLARS a year MORE for employees despite the economy going down down down since 2008.

Your govt at work…….

#272 Daisy Mae on 01.29.15 at 3:36 pm

“After four years of scolding Canadians about taking on too much debt”– which, we must remember, the feds encouraged with their stupid initiatives. They knew what they were doing alright. But what they were doing was….stupid. There is no back-tracking. And they can’t go forward. It’s just too late. “Because Canada is sinking”.

#273 Nemesis on 01.29.15 at 3:43 pm

#21stCenturyLessonsIn’Management’… #”TrustTheProcess”,Or… #[email protected]… #Don’tFearTheReaper?…

http://youtu.be/MIexe6aa14w

#20thCenturyLessonsInEffectiveLabourRelations,Or… #WhyDoRoustaboutsAlwaysGetPaidFirst?…

http://youtu.be/TArcc_WduhE

#274 Waldo on 01.29.15 at 3:47 pm

#156
You can’t guarantee interest rates will be 2% forever, heck we were led to believe they were rising this year. For a not so savvy investor or one that wants to avoid long term pain when the rates rise, paying down the mortgage is a viable plan not to be overlooked even with today’s rates. Much better then letting your money die in a savings account.

#275 Victor V on 01.29.15 at 3:48 pm

http://business.financialpost.com/2015/01/29/jones-new-york-to-close-its-127-stores-including-36-locations-in-canada/

NEW YORK — Jones New York announced Thursday that it is closing its 127 retail stores, including three dozen locations in Canada, and discontinuing its wholesale business.

The privately held women’s clothing company said it decided on the move after a review of the brand’s recent performance and outlook. The company did not say how many employees would lose their jobs.

#276 Daisy Mae on 01.29.15 at 4:14 pm

“A bargain…at twice the price”

How’s this for greed? West Kelowna, BC — the house is on the market for $10.9 million. The assessed value is only $4.6 million. Think of the break you get on your property taxes…

#277 kothar on 01.29.15 at 4:15 pm

I believe that all these central banks had this planned long ago with the onset of GFC. The US was in a supreme mess and the only way to salvage things was to do massive QE. ..driving usd down vs all currencies. All other central banks had to allow their currencies appreciate regardless of effect to their exports. Remember brazil crying when the real was Hugh and their minister was saying currency war going on. Now that USA has rid of QE all other currencies are rushing to devalue and go back to historic valuations…but in a very quick and market distorting way. Off course that’s just my opinion.

#278 For those about to flop... on 01.29.15 at 4:18 pm

Thanks Happy Renting and bdy skrtn for your explanations.
I know this is basic stuff but no one ever pointed out the facts to me.
I am slowly moving my savings into my TSFA and am going to invest in that as I only have a small portfolio compared to the other folks on this blog.

#279 David McDonald on 01.29.15 at 4:21 pm

So many posts! Garth needs a file structure for posts based on likes; soon nobody will be able to find all the good ones.

I am getting more and more concerned by all the down side risk. Garth’s main hypothesis is that the U.S. is ok and is generally better off with lower oil prices. I invested my money in consequence and so far so good. But with many countries actively debasing their currency like Canada won’t the U.S. trade deficit blow up and weaken the current US recovery?

#280 aL pacino on 01.29.15 at 4:21 pm

Yup.
Economy in the shitter, loonie taking a huge dump and of course imminent Real Estate bull market around the corner,thanks to our interest rates taking a dump as well.
This is not a normal country and our leader …….
Lets just say I have no words to describe how i feel about that individual……

#281 tkid on 01.29.15 at 4:22 pm

#250, the man took a risk and it did not pay off. If he wanted to be certain to get his condo, he should have bought something already built. But if you are willing to wait so that you can pick out your countertops and cupboards and flooring, then you take the risk that the condo may not get built.

#282 experienced.optimist on 01.29.15 at 4:34 pm

Yes, I do read ZeroHedge. And I suspect a lot of others that come to this site do also. Please note I also read the The Greater Fool, and post now and then. I also read a lot of other Financial blogs and Financial sections from on-line newspapers and news sources. It is a retirement hobby of mine. And it is winter. My wife calls it Financial Porn. I do notice that whenever Zero is brought up it seems to elicit some strong push back from some , even Mr. Turner. I often get push back from friends and relatives when I recommend they read Garth Turner’s blog. Real estate is sacrosanct. However whether it is a economic doom and gloom website or a cheering section for real estate and banks I read it all. And keep my salt shaker handy. I come here and to all the other sites I reference to learn. As I stated here a year or so ago, this blog is nice and Canadian and I do follow others’ links if it looks interesting.

#283 Holy Crap Wheres The Tylenol on 01.29.15 at 4:38 pm

A devalued dollar is going to kick every Canadian in the ass sooner or later. What a crock of $hit people spiel out that the lower dollar is good for export. Whats good for export is being competitive. Everything that we don’t manufacture is now slowly going to creep up in cost. Some A-hole in Ottawa is tinkering with the dollar and pulling some strings. Well good luck people with your beaver peso!

#284 Holy Crap Wheres The Tylenol on 01.29.15 at 4:38 pm

Oh yes and to the guy in picture, just jump! Do it!

#285 Mark on 01.29.15 at 4:47 pm

” Some A-hole in Ottawa is tinkering with the dollar and pulling some strings. Well good luck people with your beaver peso!”

It might be worthwhile to note that exactly the same thing is happening with the AUD$. And just like Canada, there are huge deflationary forces in Australia’s domestic pipeline. Hence, it is very likely that the declining CAD$ and AUD$ against the USD$ is the result of currency speculators run amuck in NYC and elsewhere, not the long-term shortcomings of either the Canadian or the Australian economies.

As we see in the US, as we see in Switzerland, lower interest rates tend to be extremely positive for their currencies after, of course, a relatively short interlude of selling.

#286 Waking Up on 01.29.15 at 4:54 pm

I have a question if someone can help again.
I have some money in RRSP that I want to invest and I am planning to add some to TFSA.
In terms of distribution, I gathered so far that US E

#287 Nemesis on 01.29.15 at 4:56 pm

#NoPalaceForYou!,Or… #DowntonAbbeyRedux… #NixedByNascentBolsheviks!?!…

[Guardian] – Westminster council rejects Qatari royal family’s plans for £200m palace

“The stories about the mega-rich parking their money in Westminster have got to the point where even Westminster council is embarrassed at what is going on. There is no need for more multimillion-pound houses. The issue isn’t finding homes for the Qatar royal family or any other monarchy. We need to find homes for people on medium and low incomes.” – Paul Dimoldenberg, Westminster Councillor

http://www.theguardian.com/society/2015/jan/29/westminster-council-rejects-qatari-royal-family-plan-palace

#BonusBolshevism,Or… #”OnlyInCanada?Pity!”…

http://youtu.be/NUnbJAWk6gM

#288 Waking Up on 01.29.15 at 4:57 pm

Sorry, posted mistakenly..

I gathered so far that US Equity should be in RRSP. Also that Bonds should be in TFSA. Is this true?

I am going to have only about 15% of total in TFSA to begin with, but that no. should go up as everything will go in TFSA going forward.

#289 its OVER for Canadian oil sands on 01.29.15 at 5:07 pm

Canadian Oil sand stocks took another pounding of 5-6% even though oil prices were flat for today. You people in Alberta want to know why or keep your head in the sand? Lol you like your head in the sand? Ok I will tell you anyways. Here it is…. Canadian oil sands will be a fraction of what it once was if it doesn’t shut down completely. They are shutting it down in an orderly manner to not totally sink Canada over night. The canadian dollar is being sacraficed in order for this to happen. Your $700k houses will be worth under $50k. Canada is facing the storm it avoided in 2008 only this time it will be much harder. The short Canada bet will pay off in spades. RE is toast as job losses only increase through out canada.

#290 rosie "moving forward" in the knowledge that, "this won't end well" on 01.29.15 at 5:07 pm

You’re not alone Corcoran. The Post is Harper’s own personal blog.

http://www.telegraph.co.uk/news/uknews/theroyalfamily/3386353/The-Queen-asks-why-no-one-saw-the-credit-crunch-coming.html

#291 Dave P on 01.29.15 at 5:20 pm

So, we have a $0.79 dollar that some expect to bottom-out at $0.71…
Bought a FLA condo in Ocean to river barrier island for US$210,000 in 2009 with $0.96 dollar. Market appreciation now suggests value of about US$260,000..
If dollar bottoms at $0.71 and I decide to sell I would see CDN $366,000..yes would have to pay cap gains and broker fees etc but temping none the less. Then again, I will never again have the chance to buy US property at a 45% discount (2009 vs 2006) with anything close to an at-par dollar. Could always rent though…..What to do????

#292 BigM on 01.29.15 at 5:24 pm

US Senate just passed Keystone.

Now we watch Obama veto it, just when we could use some good news.

Thanks, Obama.

#293 Harper - Soon Unemployed on 01.29.15 at 5:26 pm

6 years after the great recession, this is what Harper has done for us:

Racked up huge government debt.
Decimated the Manufacturing sector more.
Failed to get Keystone approved.
Record household debt by Canadians.
Unaffordable housing and getting more unaffordable.
Allowed CMHC to become vulnerable.
While giving the banks a free ride.
Loans to any homeowner but not to small business.
Unemployment now moving up.
Bad relations with China & the US.
Messed up immigration policies.
Slowed foreign investment into Canada.
Destroyed the Loonie.
Lowered the net worth of Canadians internationally.
And will soon get Justin elected.

Ask yourself, are you better off now?

Regrettably, I voted for him – twice. But soon, I’m going to vote to fire him.

#294 Dollar question? on 01.29.15 at 5:29 pm

I’m wondering they say a low dollar is good for manufacturing so the manufacturers can be competitive. Then why when the dollar was high say at par didn’t they discount their product for 20 – 30 percent less because really isn’t that what they are doing now? Plus now they have to pay 20 plus percent extra for any materials they may need from USA so i don’t see it – enlighten me?

#295 Seth Perry on 01.29.15 at 5:32 pm

ELI5 – “Following a regular review of the Bank’s policy in relation to Assets Eligible as Collateral under the Bank of Canada’s Standing Liquidity Facility (SLF), the Bank is planning to add certain Canadian-dollar denominated term asset-backed securities (ABS), including those backed by residential mortgages, to the list of eligible collateral, effective 31 March 2015.”

http://www.bankofcanada.ca/2015/01/planned-changes-assets-eligible-collateral/

#296 Oil Is Sticky on 01.29.15 at 5:39 pm

#291 Harper – Soon Unemployed on 01.29.15 at 5:26 pm
6 years after the great recession, this is what Harper has done for us:

Ask yourself, are you better off now?

Regrettably, I voted for him – twice. But soon, I’m going to vote to fire him.

——

Welcome to Rome….err….I mean Canada.

#297 Seth Perry on 01.29.15 at 5:42 pm

RE #292 – Residential Mortgages being added to Mortgage Backed Securities in Canada? Allowing banks to offload some of the risk on to Canadians?

I’m so clueless… help.

#298 Andres on 01.29.15 at 5:44 pm

@289 Dave P

Sell. Then you aren’t stuck going to the same place for vacation every year.

#299 Mike S on 01.29.15 at 5:49 pm

“Just say you’re sorry. — Garth”

Clearly he doesn’t understand what happened. The average detached house prices are going down in Toronto since last Spring, but it was masked by positive YoY gains vs. the year before

To have a positive YoY number for a detached house, during the coming months, the prices need to go up significantly (and be in the >1M average)

This is a very long shot, because clearly there is no ability to finance that. A mere 0.15% (or more) rate drop won’t solve it, especially in a deteriorating job market …

The reason for the appreciation in the other sectors, is the herd mentality: “We are out-priced from the detached sector in Toronto, let’s run and buy anything we can get, before we be out-prices of that too”.
This creates a some demand for “still affordable” sectors, like townhouses, or detached in the far ends of the GTA

Let’s wait and see how the herd reacts to below 7% YoY gains (probably even negative) in the detached sector. MAYBE houses don’t always appreciate???

Any thoughts on that? Smoking Man?

#300 eddy on 01.29.15 at 5:52 pm

Re gta
A year ago there was a devastating storm in December
Which created pent up demand in january
jus sayin’

Sayin’ you need an excuse? Poor realtor. — Garth

#301 Mark on 01.29.15 at 5:57 pm

“Residential Mortgages being added to Mortgage Backed Securities in Canada? Allowing banks to offload some of the risk on to Canadians? “

Not really. Bank of Canada term facilities do not effect an offloading of risk. However, they do provide liquidity for banking institutions in the case of a crisis or bank run.

In a normal banking system, central bank term loan facilities are not needed as banks are fully funded by their depositor base, shareholders, bondholders, and buyers of bankers’ acceptances/commercial paper/etc. that they might emit to the markets.

However, if, for whatever reason, a run were to develop on any of those instruments, chartered banks have the ability to, in exchange for loans from the Bank of Canada, pledge certain assets as collateral. Generally the required collateral was GoC bonds or other high quality equivalents, so BoC lending would theoretically be risk-free. By including lower-quality MBS/ABS in the mix, well, they’re just increasing the range of collateral acceptable.

Simply put, the BoC is committed to protecting the integrity of the Canadian banking system, and will go to almost any lengths to ensure that there is no systemic collapse. Even if there’s a crisis of confidence. The recent interest rate cut is just yet another example of such. Too-big-to-fail is alive and well in Canada. Of course, such policy is no guarantee of good shareholder returns in Canadian banks, but as Garth repeatedly points out, there’s no risk to depositors in the Canadian banking system, even in a systemic house price collapse scenario. The lack of risk, facilitated by the BoC/CMHC is why the banks can get away with paying practically nothing on deposits, despite their balance sheets being full of subprime mortgages and other loans probably of dubious quality.

#302 For those about to flop... on 01.29.15 at 6:02 pm

With the rocky economy is now a good time to load up on bonds instead of equity?
Help the rookie out!

Don’t load up on any one asset class. Build a balanced portfolio, taking advantage of current weaknesses to do so at an excellent time. — Garth

#303 Mike S on 01.29.15 at 6:04 pm

“Really worried about our dollar, if it goes down any further the BoC may have to start raising rates or it may go down to a point where it will be a total disaster. I sure hope not, but it does not look good.”

BoC clearly doesn’t share your worries …

#304 Karma on 01.29.15 at 6:11 pm

Greece is done…

The Eurozone should kick them out.

http://www.theguardian.com/world/2015/jan/28/alexis-tsipras-athens-lightning-speed-anti-austerity-policies

#305 For those about to flop... on 01.29.15 at 6:20 pm

Thanks Garth ,gonna load up on shares in a sunscreen company as it is so mild in Vancouver!

#306 espressobob on 01.29.15 at 6:23 pm

#286 Waking Up

Try reading ‘Investing for Canadians for dummies’. The learning curve is your responsibility. Wake Up!

#307 Oil Is Sticky on 01.29.15 at 6:28 pm

#292 Dollar question? on 01.29.15 at 5:29 pm
I’m wondering they say a low dollar is good for manufacturing so the manufacturers can be competitive. Then why when the dollar was high say at par didn’t they discount their product for 20 – 30 percent less because really isn’t that what they are doing now? Plus now they have to pay 20 plus percent extra for any materials they may need from USA so i don’t see it – enlighten me?

——

It’s BS. They only say that because they are embarrassed that Canada has the laziest, most unproductive workforce in the G20.

#308 HD on 01.29.15 at 6:33 pm

#286 Waking Up on 01.29.15 at 4:57 pm

Sorry, posted mistakenly..

I gathered so far that US Equity should be in RRSP. Also that Bonds should be in TFSA. Is this true?

I am going to have only about 15% of total in TFSA to begin with, but that no. should go up as everything will go in TFSA going forward.

——————————————

Please review the following.

http://canadiancouchpotato.com/2012/03/12/ask-the-spud-investing-with-multiple-accounts/

http://canadiancouchpotato.com/2014/08/13/managing-multiple-family-accounts/

http://canadiancouchpotato.com/2012/03/12/ask-the-spud-investing-with-multiple-accounts/

Best,

HD

#309 bill on 01.29.15 at 6:34 pm

#267 Non Sense on 01.29.15 at 2:58 pm

ok , fair enough. your all sassenach eh? unless your a highlander
I am small ‘b’ bill by the way
big ‘B’ and Nobleton Bill would be the others fellows…you know I think there might be another…

#310 Drink up on 01.29.15 at 6:47 pm

And Spendshi the taxaholic complains about his Calgary councillors being drunk on the job..

Whack emback..onward!

http://news.nationalpost.com/2015/01/29/harry-wallop-churchills-feats-impossible-to-match-beginning-with-his-daily-alcohol-consumption/

#311 Ollie on 01.29.15 at 6:50 pm

Got a letter from TD telling me to hurry and lock the LOC rate at prime + 2.25% until March 16. Or else forever miss it. Seems to me they plan to drop the rates end of March.

#312 HD on 01.29.15 at 6:51 pm

#300 For those about to flop… on 01.29.15 at 6:02 pm

With the rocky economy is now a good time to load up on bonds instead of equity?
Help the rookie out!

Don’t load up on any one asset class. Build a balanced portfolio, taking advantage of current weaknesses to do so at an excellent time. — Garth

———————————–

Alright…..I am going to try one more time. Remember that book I recommended the other day? (Millionaire Teacher)

Ready it if you are serious about learning. Honest.

Hint:

What you described above is an attempt to time the market. Waste of time. You will most likely fail if you do that.

Figure out your asset allocation (60% equity / 40% fixed for example) and commit to it no matter what. Rebalance once a year.

Simple.

You do that and you are guaranteed to do better than 85% than all actively managed portfolios out there.

It is counterintuitive but you will understand the mechanic of it better if you read up about it.

That is all.

Best,

HD

#313 its OVER for Canadian oil sands on 01.29.15 at 7:04 pm

Karma #302

Greece is not done and now that they told the bankers to bang themselves Greece will do well and even boom JUST like Iceland. Remember Iceland when they said go bang yourself bankers? Every brainwashed NA idiot said Iceland is done. They are doing well now.

#314 For those about to flop... on 01.29.15 at 8:08 pm

Thanks HD ,I wasn’t trying to time the market or anything like that .
I was just wondering what asset class should I spend for the TSFA contribution this year.
I know your trying to help me and I appreciate it .
Thanks for the tough love.

#315 Cici on 01.30.15 at 2:18 pm

Oops, our banks are being downgraded:

http://business.financialpost.com/2015/01/30/rbc-bmo-td-hit-with-barclays-downgrade-as-bank-stocks-face-worst-start-in-25-years/