Guess what?

FAT modified

Europe’s now deflationary. We’re on the way. This doesn’t suggest your lettuce gets cheaper (it’ll actually cost more), but it does mean many other prices will fall (cars, laptops, houses). Sadly, it also guarantees profits and wages go along for the ride.

There are a few rules of deflation we should all understand:

First, falling prices are not cool, unless you’re an old retired snort on fixed-income government dole. But even so, it’s unlikely you’ll be buying big-ticket items with declining pricetags, as opposed to food and crap from China. So, this is still not a good gig.

Falling prices, as with houses now in Calgary, make reasonable people delay their buying decisions. Consumer spending goes down, and the economy along with it. Recall that 65% of the Canadian GDP is based on consumers, and almost a quarter is directly tied to residential real estate.

Second, when people spend less, businesses make less. They cut back on their own spending. They lay people off (Bombardier, Suncor, Tim Horton) or they give up (Target, Mexx, Sony, Jones New York). Or they tell people their wages and salaries will be decreased, as is now happening in the oil patch. Or they make employees become contractors, without benefits.

Third, when prices fall so do profits. Margins are squeezed. Look at the banks, several of which were downgraded this week by analysts who understand what lower mortgage rates and less consumer spending means. In a recessionary/deflationary environment (and we learned yesterday that our economy is actually shrinking. Fast.) companies lose the ability to raise fees or prices. So they have to cut overhead. Like CIBC, which trashed its IT department and punted 500 employees.

As a result, and the fourth component of deflation, employment falls and consumer spending follows. We’re living this now, as you saw this week with a revision of Stats Canada numbers showing job losses in December were three times worse, and our track record for all of 2014 was piteous. Now with the oil contagion spreading, things will only deteriorate. I would hate to be selling truck nutz in Alberta these days. (Actually I’d hate it any day.)

The last (and worst) part of deflation is what it does to people with debt. As profits, incomes, jobs and prices fall, money gets more valuable, which means debts are harder to pay. Canada is pickled in debt. People on your street have never owed as much. A growing number of families – over four in ten – live paycheque-to-paycheque. Savings and investments are being concentrated more in the hands of the 1%, while debts are accumulating in the lives of the 99%.

The IMF warned again this week that “domestic vulnerabilities in the housing sector and the household sector are elevated,” saying our real estate is inflated by 20%, and destined to fall. And yet, the sheeple do not learn, as evidenced from new bidding wars in Vancouver and some parts of Toronto in the wake of the Bank of Canada’s regrettable little nip in interest rates. As you might expect, this is being egged on by a voracious and irresponsible real estate industry.

So what happens now?

More of it. Few people alive today have any real experience in fighting deflation. So far central bankers have printed money, flooded economies with liquidity, supported banks, eased credit restrictions, paid people to buy cars and build decks and slashed interest rates. Governments have gone deeply into debt running deficits so they can keep social spending high even as tax revenues crater.

These things have been happening for up to six years. In the US, they worked. Elsewhere, including here, not so much. But the collapse in oil is a net positive for Americans, the world’s biggest consumers of it, while it is negative for Canada, one of the largest producers. Now the Bank of Canada has dropped its rate to .75%, and there may be more coming. The US is on track to raise its central bank rate by the summer. If so, it suggests a far weaker Canadian dollar and higher consumer prices even as deflationary pressures mount.

Sadly, there’s nothing much to be done for the house-lusty and the debt-infused masses surrounding us. Nor for the struggling retailers, oil guys or idled engineers. This week US banker JPMorgan said “there will be blood” in Canada because of the oil collapse. Despite this warning, the lousy GDP numbers, the layoffs, store closures, we can see how people respond to the notion of cheaper debt – they want more.

So, I give up. There’s no point trying to change things. Human frailty wins.

This blog will henceforth allow only astute, prescient, unhorny people to read it. Govern yourself accordingly.

384 comments ↓

#1 1st BBQ Squirrel on 01.30.15 at 6:58 pm

Now that cat would bounce!

#2 Mark on 01.30.15 at 7:00 pm

“First, falling prices are not cool, unless you’re an old retired snort on fixed-income government dole.”

Even government will have to cut back on the money paid to the old people. After all, deflation implies significantly lower tax revenues. The government has also leveraged the GoC’s balance sheet to house prices by writing $900B of subprime mortgage insurance at the CMHC, which will also force austerity upon the government as defaults against such subprime insurance accelerate.

#3 mark on 01.30.15 at 7:01 pm

I saw truck nutz on a Ford Fiesta the other day. I guess that’s deflation.

#4 jimmy on 01.30.15 at 7:02 pm

DELETED

#5 Paul on 01.30.15 at 7:03 pm

Just when you think mortgages rate won’t go low how about a negative rate.
http://www.zerohedge.com/news/2015-01-30/denmark-you-are-now-paid-take-out-mortgage

#6 2nd Poached salmon on 01.30.15 at 7:03 pm

There is a gene for house lust born from our evolution in caves….. too many always want the bigger cave.

#7 nothing to fear but fear itself? on 01.30.15 at 7:03 pm

Deflationary forces are definitely scary, but Garth – can you backup your assessment this is really happening?
It was only about a week ago that you thought we could bank on interest rates rising… and boom! A few quick days and now everything is going to be cheaper.

Besides, if this was so bad, don’t you think the governments of the world could put enough pressure for, e.g. Saudia Arabia to cut oil output and force gas prices upwards to help combat global deflation? Or is this just going to be localized to a few countries like resource-rich Canada?

Really confused about which direction (if any direction) we are headed.

#8 Mark on 01.30.15 at 7:03 pm

“If so, it suggests a far weaker Canadian dollar and higher consumer prices even as deflationary pressures mount.”

Raising US interest rates is not USD$ – bullish. If anything, it is profoundly bearish for the USD$, as the implication is that inflation is rising, and purchasing power is declining in the US.

The curveball that Canadian house buyers, who have this glimmer of hope that current prices might be sustainable, might be facing is the CAD$ going up quite considerably from these levels. Forcing Canadians to repay housing loans with increasingly expensive CAD$, even as interest rates remain low.

#9 leafsfaninyvr on 01.30.15 at 7:06 pm

Say it isn’t so Garth. You’ve succumbed to the “sky is falling”, “doomsday” crowd. Tin foilers rejoice.

#10 3rd Fried shrimp on 01.30.15 at 7:06 pm

Don’t bet against USA!

https://www.youtube.com/watch?v=e8z1EzDouNs

#11 GeeWilly on 01.30.15 at 7:07 pm

The spiral begins….

#12 Randy on 01.30.15 at 7:10 pm

….when the tide goes out….

#13 Muffintop on 01.30.15 at 7:10 pm

First

#14 4th Steak on thr barby on 01.30.15 at 7:11 pm

Pump it up!!

http://calgaryherald.com/business/real-estate/interest-rate-cut-could-give-slumping-calgary-housing-market-a-boost

#15 House Horny Millennial on 01.30.15 at 7:11 pm

Garth – I am trying to read today’s blog entry but it appears blank on my screen.

What’s up with that?

Oh well, I’ll be on MLS. Let me know when you’re back up and running.

#16 Mike S on 01.30.15 at 7:11 pm

“Sadly, there’s nothing much to be done for the house-lusty and the debt-infused masses surrounding us. Nor for the struggling retailers, oil guys or idled engineers. This week US banker JPMorgan said “there will be blood” in Canada because of the oil collapse. Despite this warning, the lousy GDP numbers, the layoffs, store closures, we can see how people respond to the notion of cheaper debt – they want more.”

You did more than enough. Thank you for the dedication over the years!

Those who listened will do fine. Those who didn’t are beyond help. Some people can only learn from their mistakes

#17 Torey S on 01.30.15 at 7:12 pm

Garth,

I sold my house a couple years ago and put it all in my diversified financial portfolio which has done very well. I am 32, have 500K in liquid assists and no debt, with an income of $175-210k a year (not in the oil industry). I currently rent a condo for $1500/mth, no other payments aside from that. Now i am debating borrowing 100k and slowly building an energy portfolio in the first half of the year because I can an investment loan relatively cheap (3.5%) and its tax deductible. Leveraging can be dangerous but given the current prices and my ability to hold this for a few years do you think it is too risky?

#18 bdy sktrn on 01.30.15 at 7:12 pm

presenting the financial outlook of the damn kids today….

I knew my rent was gon’ be late about a week ago
I worked my ass off, but I still can’t pay it though
But I got just enough
To get up in this club
Have me a good time, before my time is up
Hey, let’s get it now

Ooh I want the time of my life
Oh baby

This is the last $20 I got
But I’m a have a good time ballin’ or out
Tell the bartender line up some shots
Cause I’m a get loose tonight

#19 bdy sktrn on 01.30.15 at 7:13 pm

pit bullllll
https://www.google.ca/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&cad=rja&uact=8&ved=0CB8QtwIwAQ&url=http%3A%2F%2Fwww.youtube.com%2Fwatch%3Fv%3DyRTSV_uk7a8&ei=Kg_MVNSaCJfeoATFk4KwAQ&usg=AFQjCNEvgn9Rr5UzUKLMlEcvQSXfmrAwtQ&sig2=ocMmoB0YzMgBJuVnlHASIQ

#20 Republic_of_Western_Canada on 01.30.15 at 7:13 pm

This is what happens when you have economics types running banks instead of engineers:
http://www.zerohedge.com/news/2015-01-30/denmark-you-are-now-paid-take-out-mortgage

But federal Lie-berals would STILL insist on CHMC coverage for those loans, no doubt.

#21 asp on 01.30.15 at 7:13 pm

“fixed-income government dole” does not exist in this country.

1st, retired Canadians have earned their “dole”.
2nd, it is indexed to inflation.

OAS is dole. Indexing? Seriously? — Garth

#22 samadam on 01.30.15 at 7:14 pm

Don’t give up.

You are doing great by educating people in the right direction which include myself.

Thanks

SAM

#23 NoOneOfConsequence on 01.30.15 at 7:14 pm

Should a person be holding any cash whatsoever at the moment? Should all of our net worth be invested in the balanced portfolio, featuring a whole lot of USA?
Should one be holding ANY Canadian denominated assets at all? I mean…this is looking like a 60 cent dollar is well on its way….

#24 mitzerboy aka queencity kid on 01.30.15 at 7:15 pm

sometimes …
oh what a joy to hear the utterance of a rasta

#25 jimmy on 01.30.15 at 7:15 pm

Garth Rocks.

One, Two, Three O’clock, Four O’clock Garth,
Five, Six, Seven O’clock, Eight O’clock Garth.
Nine, Ten, Eleven O’clock, Twelve O’clock Garth,
We’re gonna rock around with Garth tonight.
We’re gonna rock, rock, rock, ’till Smoking Man’s passed out,
We’re gonna rock, we’re gonna rock around with Garth tonight.

Can’t get enough of them Garthy pics! They’re ggggggreat!

#26 Ronaldo on 01.30.15 at 7:16 pm

OMG, that is one big jezzus cat. Kinda reminds me of a bloated housing market.

#27 F'D IN THE HEAD on 01.30.15 at 7:17 pm

Two out of three enough to keep reading?

Any doubts see name above.

Will hold off on the NG till the summer.

#28 Happy Renting on 01.30.15 at 7:19 pm

Your patience has been superhuman, Garth. :) Have a good weekend!

#29 bill on 01.30.15 at 7:19 pm

wow -el gato gorgo!
does the kitty represent debt Garth?

#30 Fatima Llewellyn on 01.30.15 at 7:20 pm

Canadians, especially Canadian homeowners, are very smug. This is just Chapter 1 of a long and painful book being written for Canadians.

“This day will the LORD deliver thee into mine hand; and I will smite thee, and take thine head from thee; and I will give the carcasses of the host of the Philistines this day unto the fowls of the air, and to the wild beasts of the earth; that all the earth may know that there is a God in Israel.”

That’s right biotches…Samuel 17:46. Deflation here we come!

#31 JG on 01.30.15 at 7:20 pm

“So, I give up. There’s no point trying to change things. Human frailty wins.”

amen, Garth

#32 Republic_of_Western_Canada on 01.30.15 at 7:20 pm

One more thing.

Deflation is a necessary cure for the ridiculous short-sighted excesses now permeating urban consumer society.

If you can’t get HELOCs from nervous banks anymore to buy any more rubber dogshit out of china, then you probably won’t. More thought into ‘needs’ vs ‘wants’ will be made.

If you don’t have work to engineer pipelines and rail terminals for foreign multinationals to exploit raw resources any more, then you won’t. You’ll engineer repairs to your vehicle and designs for a small house instead.

And so on.

#33 Estrella on 01.30.15 at 7:21 pm

When should we start hiding our bills in the mattress? First?

#34 H on 01.30.15 at 7:21 pm

Guess What.

Too much oil was shut off. Soon you will see what happens when the largest drillers shut off 10% when we are oversupplied by 1.5%

Hedges have ended for many drillers
Front end capital that was supposed to back fill declining wells is gone.

Hope you are filling your tank up.

Ps–you will notice oil spiked 8% yet our “petro currency” did otherwise.

#35 MGTOW on 01.30.15 at 7:22 pm

DELETED

#36 Ronaldo on 01.30.15 at 7:23 pm

”Or they make employees become contractors, without benefits.”

Exactly what happened in the recession of the early 80’s when the BC Gov reduced the government worker by 1/3. Remember the Solidarity Movement. Many were hired back as consultants at greater cost but they disappeared when the work ended. Probably should be looking at that again.

#37 Darryl on 01.30.15 at 7:25 pm

Best overall place to live:

10. Chicago

9. Sydney

8. Washington, DC

7. Zurich

6. Melbourne

5. San Francisco

4. Amsterdam

3. Stockholm

2. Montreal

1. Toronto

Hmmmm
Who is missing in the Economists best places in the world to live.:)

#38 Darryl on 01.30.15 at 7:25 pm

I see San Fran but not….

#39 tony on 01.30.15 at 7:26 pm

thanks garth

#40 GM salesperson on 01.30.15 at 7:26 pm

Umm our car prices in our dealership are rising due to higher US dollar. In other instances, we are not getting models that are made in the USA. We have been told no more 2015 corvettes until a price adjustment is made. So not seeing deflation in cars.

#41 Neta on 01.30.15 at 7:26 pm

Our honorable Joe Oliver just said that there is no housing bubble in Canada, and that Canadians don’t buy houses they cannot afford. Well, I have nothing to add to it. Canada deserves what is coming, whatever it will be. We elect our Government, so we are responsible for its actions and policies.

#42 H on 01.30.15 at 7:29 pm

And if you would like to do a little research.

End of January. Post Global crisis. “We are all going to die” Price of oil…….$35

Prediction by the brightest? $10.

June 2009………$76

Prediction by the brightest?…$250

Why, too much was shut off. Over shot down.

Prepare to ready this in the next 4 weeks as the rig count that just crashed most since 1987 is absorbed.

In a time when we are using 90 million barrels a day.

In 2009, is was 81 million barrels per day

#43 unbalanced on 01.30.15 at 7:29 pm

And now the bleeding begins. Feel sorry for some. Others they deserve it. I am debt free.

#44 Lolo on 01.30.15 at 7:30 pm

Need to rant. I got a new financial advisor last year. Asked dear hubby to come along for the initial interview. Hubby couldn’t come to second meeting, so i went, signed all the forms to transfer my accts over, and they pre-filled forms for him to transfer his. Fricken more than 1 year later, the forms are STILL not signed. Now my portfolio is up more than 14%. How is his doing I ask? Dunno. All his MUTUAL FUNDS in his RRSP (mostly Cdn oriented) are from different sources, he gets separate statements and he has no clue how they’re doing. Oh, the nonRRSP account he had for 10yrs with a big five made a whopping 5% annually. They charge 2%. I tell him my guy charges 1%. I tell him to i want to set up a spousal rrsp for him but i need to know how much his rrsp is worth so i can estimate what the discrepancy between retirement income will be and how much to start contributing to the spousal. Still no action from him. I make more than him, maxed out my TFSA and RRSP (he has not, for either) and am younger. He’s got it good. You dogs that think the women are the ones creating the financial problems are SO WRONG in this case. BTW, we rent. I guess i’m allowed to read your blog Garth?

#45 JSS on 01.30.15 at 7:30 pm

Banks got heavy hit today. If another interest rate cut comes around, their dividend might be in trouble.

#46 Ardy on 01.30.15 at 7:32 pm

No more congratulating themselves for our politicians ?

Or will they tell us the budget will remain balanced, hand out election goodies, and continue to pat themselves on the back ?

#47 Skylo on 01.30.15 at 7:39 pm

Hi Garth,

Correct me if I am wrong but When calculating Inflation (CPI) houses price are not included right? If they were The CPI SHould have been a lot higher this past decade due to the crazy run up in price and they would have raised interest rate at some point calm the party. So why when price goes down it suddenly matters?? House price going down should not be seen as deflation just like house price going up is not inflation??

I personally think these price should have been included in the CPI so they would have have to raise the rate earlier and we would not be in this mess. But it feels good when it’s going up right, they did not want to ruin the party.

Also, we have heard lately that the US was the new SAudi Arabia in term of crude production, so this drop in price should also affect them ? We produce about 3.6 Million barrels per day and they produce 8.5 mbd. This is not all good for the US

#48 Blacksheep on 01.30.15 at 7:40 pm

Mark # 324,

“At the rate bond yields keep crashing, soon savers will be paying debtor’s coupons..” -SM

“Well if rates go near or below 0%, money will simply disappear out of the banking system and not be available for credit growth.”-Mark
—————————————————–
Don’t worry Mark, just take your banking history, combined with your signature to any commercial bank and it will create all the credit you need : ]

#49 Darryl on 01.30.15 at 7:41 pm

Two weekends ago a house on my street went up for sale .( Mississauga ) Last weekend it sold after one open house. 986k asking and not sure on selling yet.

Today I see another for sale sign . Wonder if it’s a trend . Maybe it’s time for me to sell.

#50 Harbour on 01.30.15 at 7:44 pm

#45 JSS on 01.30.15 at 7:30 pm
Banks got heavy hit today. If another interest rate cut comes around, their dividend might be in trouble.

………………………………………………………………………

No dividend trouble, but there’s no rush or reason to buy banks either.

#51 Lillooet, BC on 01.30.15 at 7:44 pm

Oil rebounds 8% in a single day.

Due to a large drop in US oil rigs and ISIS approaching oil fields in Iraq. Reducing supply, increasing demand and the threat of major geo-political events like ISIS will eventually drive oil back up to $90 sooner rather than later. The Canadian oil companies will benefit due the lower Canadian dollar/higher $US, lower costs due to recent layoffs and more pipelines opening up to the Gulf coast. Banks will recover their lost ground too.

It’s a real shame the IT staff at the big banks are taking the brunt of the cutbacks while senior bank execs and CEOs (and other fat cats) get outrageously higher and higher bonuses.

#52 William of the North on 01.30.15 at 7:45 pm

A rebuke of ‘falling prices causes people to hold off their purchases’. Cell phones drop in prices… Televisions.. computers; who waits to buy these?

https://www.youtube.com/watch?v=uCLLYoP2N7o

People won’t buy… because they don’t have the money; and can’t get any more easy credit to let the good times roll. (But they still… really, really want the stuff.) Kinda sounds like a drug addict.

I need a Cuban Cigar.

#53 Marco on 01.30.15 at 7:46 pm

#40 GM salesperson

Thanks Garth your explanation on how deflation effects our reality is much better than Wikipedias.

I think what Garth is implying (please correct me if I’m wrong) is that consumer sentiment and perception drives prices. If cost of living goes up, with the lower purchasing power of our dollar, people will delay purchasing the big ticket items thus putting pressure to reduce prices at you dealership to attract buyers. And will also decrease the amount of autos being bought by the dealership in the supply chain.
Cheers.

#54 Mark on 01.30.15 at 7:46 pm

“But federal Lie-berals would STILL insist on CHMC coverage for those loans, no doubt.”

The problem with negative interest rates is that banks simply won’t lend to retail customers at them. Nor will depositors lend to the banks either. They’ll stick their money in their mattresses, or alternatively, in the vaults as cash.

With so much money effectively out of circulation, and with credit contracting, asset prices are predisposed to collapse. While the value of money soars on account of its scarcity and the heavy demand to repay debt at the previously inflated values.

The only way that a central bank can extricate itself from such trap is through some sort of devaluation of the currency itself. For instance, the central bank could simply decree that every “current” dollar is now worth $0.5 of a “new” dollar. Or, in the past, when a ‘gold standard’ existed, the official exchange rate from fiat to metal can (and was) changed. The romans dealt with the deflation problem through debasement of coins, progressively removing their precious metallic content and replacing such with less valuable metal, so as to effect a devaluation.

This is why it is so important, in a balanced portfolio, to own, amongst other asset classes, a small allocation to the most deeply countercyclical asset class that currently exists, the precious metals. Yes, most of the time they won’t make you any return, but its those rare years that they do make you a return that makes up for all the years of lost opportunity.

#55 Whinepegger on 01.30.15 at 7:48 pm

Wow, Garth. Joe Owe sent a shot across your bow two days ago and not a peep from you?

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

Thought for sure you would have taken him to task. Mellowing much?

#56 Mark on 01.30.15 at 7:49 pm

“Umm our car prices in our dealership are rising due to higher US dollar. In other instances, we are not getting models that are made in the USA. We have been told no more 2015 corvettes until a price adjustment is made. So not seeing deflation in cars.”

Good luck with that then. There was already a large buffer built into Canadian car prices to take into account the probability that, at least at some point in the cycle, the CAD$ would go lower. If GM wants to sell any cars in Canada, especially competing against the foreign competition or even Canadian production, they’ll need to lower their prices in line with the market and sacrifice their previously excessive margins.

Besides, with consumer credit deeply in trouble in Canada on account of credit-worthiness, the situation for car sales demand already was pretty cataclysmic.

#57 Uh Oh Canada on 01.30.15 at 7:50 pm

Garth-

Your patience and faithfulness to this blog saved me and a few more- so not all the sheeples are lost. Those who are liquid walk the narrow road.

Sad to see deflation come but the party has to end sometime. I am prepared due to my two years old balanced portfolio (mostly dividends and it’s growing like a weed thanks to investing in US currency) and some gold (not your advice, but just in case).

Also, renting so if work dries out, we can relocate easy. It looks like a long five years ahead- we’re following the footsteps of the US.

#58 Mark on 01.30.15 at 7:51 pm

“Banks got heavy hit today. If another interest rate cut comes around, their dividend might be in trouble.”

At payout ratios that are barely scratching 40%, and significant excess capital on their balance sheets? Not a chance! The Canadian banks are taking steps to reorganize their businesses now that consumer credit expansion is not the driving force. This will have good results for shareholders.

#59 Obvious Truth on 01.30.15 at 7:53 pm

Nobody talks about how to structure life to enjoy it anymore.

They have found the way to the prosperity promised land. Just swap one tulip for a bigger one with more colours. And of course nobody will see it coming. It’s already here and there is no acknowledgment.

And Those with interests have Brought in a new ball. But the ball feels squishy.

Maybe if coach B explains it on cnn some would listen Garth.

#60 Mark on 01.30.15 at 7:54 pm

“Ps–you will notice oil spiked 8% yet our “petro currency” did otherwise”

That’s because the CADUSD pair is pretty much a momentum play at the moment, by hedge funds and speculators gone wild and completely out of touch with the fundamentals. And they’re likely to get burned, just as the “short the USD$” did going into Q3, 2008.

#61 Smoking Man on 01.30.15 at 7:55 pm

Speaking of deflation.

I’ve told you wee earthlings that the universe is shrinking, not expanding. I should know, no one flys this Galaxie like me. Well, the holy grail of science, the expansion theory just shot to shit.

http://m.space.com/28423-cosmic-inflation-signal-space-dust.html?utm_medium=twitter&utm_source=twitter

Now, if there are any of you in school taking physics, working on a Theseus… Study my diagram of the shrinking universe. Should get you a PhD. It was Blithe Barringtons area of study back on Nictonite.

http://dyslexicsmokingman.blogspot.com/2013/11/the-shear-lunacy-of-science-and.html

#62 Bruce MacLean on 01.30.15 at 7:57 pm

My FB friend Nuriel predicted a double dip when we were slipping into recession in 2007. Looks like he was right. Barter is in our future. Better plant a garden. Love the first two condo projects being flipped into rental units in Toronto. Bet we’ll see a surfeit of cranes on the market soon.

#63 Ws on 01.30.15 at 7:59 pm

Why give up? I think this blog has helped many people. Although you couldn’t prevent the sharp housing correction that is probably approaching, there are probably hundreds if not thousands of Canadians who read this blog, took your advice and are in a financially stable position because of it. And for the thousands who didn’t take your advice, at the worst, they probably thought long and hard about it, and made a decision with a better understanding of the risks involved. Thank you Garth .

#64 B Riding Dirty on 01.30.15 at 7:59 pm

I am business partners with I guy who after 16 months just finished building his family home (was going to be a 20 year stay)of course into it way over budget, but in his area with the price swing cranked way up in Port Coquitlam (30mins from Vancity)he could get all his money back if he sells NOW. He started reading this blog, and he is selling and planning on renting! Your blog does hold merit, and so does some of the blog dawgs comments.

#65 ANON on 01.30.15 at 7:59 pm

“There’s no point trying to change things.”

^^^
Maybe there is, but there truly is no point in trying to change the inevitable :)

#66 Mark on 01.30.15 at 7:59 pm

“1st, retired Canadians have earned their “dole”.”

No they haven’t. OAS/GIS is funded out of general revenue, and over $1T of debt at various levels of governments was accumulated, largely at the behest of “retired Canadians”.

If anything, a good argument can be made for a special tax on older Canadians explicitly to pay off the government debt they made the decision to accumulate. Rather than dump all the debt onto the younger generation who desperately need to accumulate financial resources for themselves to drive the next generation of growth.

#67 brydle604 on 01.30.15 at 8:01 pm

Being astute, prescient, and unhorny I will continue to read this blog.
Thanks Garth

#68 Smoking Man's Old Man on 01.30.15 at 8:03 pm

We’re strange creatures that’s for sure.

We smoke until the doctor tells us are lungs are cancerous, than feel sorry for ourselves…

We drink til our livers are poached and cry in our beer over the unfairness of life…

Now all the debtors will want to blame the banks/government for their financial woes…

Don’t feel too sorry for stupid people.

#69 Daisy Mae on 01.30.15 at 8:11 pm

“This blog will henceforth allow only astute, prescient, unhorny people to read it. Govern yourself accordingly.”

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

LOL Good luck with that! Garth, you have saved qalot of us. You done good.

#70 Brian Ripley on 01.30.15 at 8:13 pm

Garth:”Europe’s now deflationary. We’re on the way”

I just posted 3 charts on this page.
http://www.chpc.biz/history-readings/show-me-the-money

The top panel shows Canadian Government Spending vs Labour Force Participation and the lower panel shows Canadian Jobs Added on an Annual Basis all since 2008. Government spending on itself and the household sector combined with ultra low borrowing rates have not yielded growth in Canadian Labour Force Participation. If Treasury Yields are a measure of price and wage inflation, it’s just not happening.

#71 Daisy Mae on 01.30.15 at 8:13 pm

Well, actually, I meant ‘alot’ — not ‘qalot’. You get the drift. Damn keyboard….

#72 Suede on 01.30.15 at 8:13 pm

Omg, GT is saying there might be another rate cut.

Realtors are gonna go nuts promoting this.

Whats the Contrarian play now? RBC and BMO are 15% cheaper than their highs.. Money in the bank

#73 Marco on 01.30.15 at 8:13 pm

#38 Darryl

“I see San Fran but not…”

Uhm… Vancouver, the San Fran of the North?

Haha!

#74 Audit CMHC - Audit BOC on 01.30.15 at 8:19 pm

Mark
I certainly, but as i can see few other enjoy your posts.
i think they make more sense than blundering of Cancer man..LOL
being in financials i can see how you think.

do you have your own blog?

also can you post ideas for investment. it is not prohibited here where mother Garth is trying to encourage us to be reasonable and save until eligible to get under his wings…

#75 calgaryPhantom on 01.30.15 at 8:24 pm

With bond yields falling, why are preffereds going down? Off course, i am loading up on them. But just wanna know the reason. They are on steady decline since december of last year.

Is it because Canadian banks are not rocks anymore?

Of course not. US rates will be rising. — Garth

#76 CPG on 01.30.15 at 8:26 pm

I think stories like the following one are a powerful incentive for Canadian people to borrow & spend less and save & invest more.

Police buy back wedding ring Ontario man pawned to feed wife

http://www.thespec.com/news-story/5294416-police-buy-back-wedding-ring-ontario-man-pawned-to-feed-wife/

#77 prairie person on 01.30.15 at 8:28 pm

Some of us are old enough to understand deflation. In Manitoba, there was a boom in the early 1900s in cottage lots. Wages were as little as a dollar a day. Lots, divided up and sold by the CPR, promoted heavily by the CPR on their rail line, went to 1200 dollars. The CPR ran trains out to these lake properties so the buyers could see what a bargain they were. This drove surrounding properties up in price. Speculators jumped in. People selling recreation lots to each other. Then it all crashed. Lots went down to fifty dollars. No buyers. Lots became overgrown, forgotten. In 1967, I bought seven lots for 300 each. They had gradually risen from the bottom of the crash price. The seller was someone who’d been stuck with a large block of lots and was glad to be rid of them. Three years later, I flipped them for 2,000 and thought I was a genius. None of us understood that a boom had begun. Credit was getting easier to obtain. Now, those same lots would sell for around 70,000. With deflation appearing will lots that have gone from 300 to 2000 to 70,000 go back down? Has the value of that land gone up or is it that the value of the dollar has been steadily going down? As Garth says, the value of money goes up in deflation, at least for some products. How much is a lot worth if you cannot find a buyer? How much is a house worth if you can’t find a buyer? In Winnipeg, in my father’s time, you couldn’t find buyers? People let out their houses in return for people paying taxes and heating them. Seems impossible, doesn’t it? A product without a buyer isn’t worth anything–drive hwy 1 and look at all the abandoned farm houses–it doesn’t matter how much we paid for it.

#78 Euphoric on 01.30.15 at 8:30 pm

#17 torey. Get lost

#79 Guess what? | Realties.ca on 01.30.15 at 8:31 pm

[…] Source: http://www.greaterfool.ca/2015/01/30/guess-what-2/ […]

#80 Cow Man on 01.30.15 at 8:35 pm

Personal Shopper Garth:

Deflation will not entice me to hold off buying new tires, to replace the bald ones on my vehicle. Nor will the potential of lower prices ahead stop me from getting my hair cut, teeth cleaned, grass cut, snow plowed, house painted, roof replaced, or buying my wife flowers for Valentines Day. Deflation in consumer prices will increase sales over time and leave more money for discretionary spending. Keep on shopping.

#81 Ex-Cowtown on 01.30.15 at 8:43 pm

“oil jumps 8% today……!!!”
++++++++++++++++++++++++++++++

End of month options expiry and short coverings drive the price up. Same thing happened last month end.

Floggings will continue until morale improves.

#82 Nothing Surprises on 01.30.15 at 8:46 pm

I read your blog for entertainment and for enlightenment on a regular basis.
I find your insight very much on the mark about real estate and some other topics.
Your level of commentary regarding OAS may be technically true as you describe, but it is very much needed by those who receive it in the majority of cases and your references to it only reinforces the theory “you can kick the Conservative out, but you can never kick the conservative out of him”.

Your slight aside, OAS is dole. You contribute nothing directly to it, unlike CPP. People who must rely on $537 a month in public funds in old age should be ashamed that, in 65 years, they failed to prepare for their own future. Nothing political about that. — Garth

#83 notagreaterfool on 01.30.15 at 8:47 pm

With respect to IT cuts in Banks, BMO told it’s contractor IT resources they must work and bill 30 hour work weeks in Jan. Now, I hear investment dollars are being removed from projects.

#84 TimP on 01.30.15 at 8:49 pm

“This blog will henceforth allow only astute, prescient, unhorny people to read it. Govern yourself accordingly.”

If a blog were a person, this would count as a suicide note….

#85 Mark on 01.30.15 at 8:53 pm

“Deflation will not entice me to hold off buying new tires, to replace the bald ones on my vehicle. Nor will the potential of lower prices ahead stop me from getting my hair cut, teeth cleaned, grass cut, snow plowed, house painted, roof replaced, or buying my wife flowers for Valentines Day. Deflation in consumer prices will increase sales over time and leave more money for discretionary spending. Keep on shopping.”

But for most people, deflation will truncate their salaries, and the value of their investments/savings. Most peoples’ incomes and investments are pro-cyclical, not counter-cyclical. So it shouldn’t be taken for granted that you will have the resources to simply spend without abandon.

Small ticket items, of course, will still sell well, although perhaps not with the vigour as experienced in the past. Very large ticket luxury items will probably sell well in the future as well, as deflation redistributes wealth to a new upper class. Its the middle-class ‘luxury’ that will suffer the most. Department stores in Canada are likely toast. Severe over-capacity exists in Canada’s airlines — a discretionary middle-class luxury consumption item. Mid to high-end car lessors are ripe for the kill as well.

#86 Freedom First on 01.30.15 at 8:56 pm

Canadians were able to leverage up to record levels in mortgages and consumer debt after so many other countries in the world imploded from the exact same behavior. Canada, we really are #1.

For myself, I don’t feel good seeing others who have been de-nutzed already, and the ones who are afraid of being next, or the one’s who are oblivious, but I do feel more grateful with every passing day. Placing freedom first is always a good decision, and time always proves it. Like right now.

#87 Robert Agnew on 01.30.15 at 8:57 pm

Harper the war general , esteemed hockey pro, piano man and all round economic genius. the cupboard is bare with profilgrant waste, tax cuts to rich supporters , and loon ball projects . Yep folks why deal with reality and facts when you can blubber on with new con nonsense . The sun will rise – let’s enjoy the deflation with a cheaper Tim bit. Let’s thanks Joe the Undetaker Oliver too.

#88 A Yank in BC on 01.30.15 at 8:58 pm

Just everybody root for the NFC team this weekend. (That would be Seattle.) Then all will be just fine.. ah.. well, in the U.S. anyway.

#89 Mark on 01.30.15 at 8:58 pm

“How much is a lot worth if you cannot find a buyer? How much is a house worth if you can’t find a buyer? In Winnipeg, in my father’s time, you couldn’t find buyers?”

“Can’t find buyers” is just a euphemism for the price being too high. We heard that a lot in the 2008/2009 US RE collapse, where the Realtors complained that, “the banks aren’t lending”. The banks, of course, were lending, but credit-worthy people simply didn’t exist based on the “new” standards of credit-worthiness in contrast to the free-wheeling, lend to anyone with a pulse environment that existed just a few years prior.

#90 Smoking Man on 01.30.15 at 9:00 pm

#72 Suede on 01.30.15 at 8:13 pm
Omg, GT is saying there might be another rate cut.Realtors are gonna go nuts promoting this.

Whats the Contrarian play now? RBC and BMO are 15% cheaper than their highs.. Money in the bank

#91 lou on 01.30.15 at 9:01 pm

I think a tiny, hairless cat would have been more apropos…
US GDP for 2014 is ‘in the bag’ at 2.4%. I guess 2015 will be the year for 5.0% GDP, eh Garth…USA rocks! and their stocks are rocking too…boom shaka laka….

BOC still has a few moves to ZIRP, then what? hyperbole?’ or Qe?
‘another retired snort, oink, oink’

US GDP Q3 = 5%. Q4 = 2.6%. Consumer spending +4.2%. All is good. Worry about Canada. — Garth

#92 cgc on 01.30.15 at 9:02 pm

Financial literacy, I think, is grossly under-taught in schools.

Sadly, the people who need the most help are not the ones reading this blog.

You are preaching to the proverbial choir

#93 Smoking Man on 01.30.15 at 9:02 pm

Shit, I forgot to comment on above post,
It’s Friday night forgive me.

Suede, not only once but twice.. 60 cent dollar on the way..

#94 KAC on 01.30.15 at 9:06 pm

#66 Mark wrote:
“If anything, a good argument can be made for a special tax on older Canadians explicitly to pay off the government debt they made the decision to accumulate. Rather than dump all the debt onto the younger generation who desperately need to accumulate financial resources for themselves to drive the next generation of growth.”
——————————————–

Here’s an idea. Rather than punish all the older folks, some of whom are selling wedding rings to feed their dementia suffering spouses, let’s just implement an inheritance tax.

An inheritance tax merely returns any accumulated fortunes to the state for the good of all, rather than channeling it into the undeserving hands of their children who did nothing to earn it.

Any fair minded younger person should embrace the idea of their parent’s wealth going into general revenues. Let’s have a vote on that. Millenials can vote first. :-)

#95 D on 01.30.15 at 9:15 pm

My sincere thanks Mr. Turner.

Started reading your blog 1.5 years ago. Tried to sell the house then but couldn’t convince my spouse to go along. Sold this past November and just closed.

Your efforts are indeed helping families like mine.

#96 nonplused on 01.30.15 at 9:17 pm

And I was thinking about selling my RV and the truck that pulls it. Won’t get anything for them now I figure.

I don’t think I have ever delayed purchasing a computer or TV because prices would be lower later. But we’re pretty long these things at this point so I don’t think I’ll be buying any more in the near future even if prices fall considerably. There is a point where you are saturated.

I recently replaced the batteries in my UPS (yes you have to do that periodically) and the new batteries were more than I originally paid for the UPS. However it was worth it because it’s difficult to find such a big UPS these days and the little ones you can find only last 20 minutes and cost more yet again. But the batteries come from China so perhaps there is an exchange rate story.

And then there is the delayed obsolescence thing. We all know about this from cars but now I have 5 people in my family who all need a new computer and phone every 5 years. How do they figure that additional expense in the inflation numbers?

#97 For those about to flop... on 01.30.15 at 9:18 pm

Off to the hospital to have an MRI to see how badly the tendon is torn in my ankle.
Have a beer/ wine for me.

#98 screwed on 01.30.15 at 9:21 pm

Driving through Vancouver. Dozens of listed places sporting the good ‘ole SOLD sticker. In January.

Old boxes, new boxes anything. SOLD SOLD SOLD

Vancouver’s market is RED hot.

Slow down only in the number of building permits issued. Contractors taking a wait and see approach due to general economic uncertainty.

Will put extra pressures on already tight supply.

Really seems that Vancouver’s market is decoupled from the rest of the country. Lord have mercy!

#99 jerry on 01.30.15 at 9:23 pm

Well, how long do nations with otherwise fairly diverse resources tend to stay in deflationary modes?

Canada?

#100 Mark on 01.30.15 at 9:23 pm

“Here’s an idea. Rather than punish all the older folks, some of whom are selling wedding rings to feed their dementia suffering spouses, let’s just implement an inheritance tax.”

Already exists in Canada. Problem is, in most cases, the inheritances are negligible, and the estates of the newly deceased barely cover the last few years worth of medical bills they’ve racked up.

#101 economictsunami on 01.30.15 at 9:23 pm

The Canadian and US economies in a nutshell; against a backdrop of the failing economic recovery narrative.

‘There will be blood’ in Canada from oil price collapse, JPMorgan warns:

“Canada is more dependent on energy than ever before as one in five cap-ex dollars, one in four export dollars, and 13 per cent of GDP through direct and indirect effects are derived from the sector,” he added.

“In the context of all of this is a very mature household sector including: About a 70 per cent record high home ownership rate; record high real per-capita consumer spending; record high renovation spending; record high house prices; and a household debt-to-after-tax income ratio that may have stabilized but that remains elevated around records,” he said.

http://www.theglobeandmail.com/report-on-business/top-business-stories/oil-and-the-canadian-economy-there-will-be-blood/article22716555/

Memo To Yellen: What ‘Escape Velocity’—-The Q4 GDP Report Was Not “Solid”

http://davidstockmanscontracorner.com/what-escape-velocity-the-q4-gdp-report-was-not-solid/

Who to listen to?

Bond or equity markets…

#102 devore on 01.30.15 at 9:28 pm

#299 Daisy Mae

There are a variety of options which could give a better return than 2.5%…

Qualified ultra-safe reasonably liquid fixed income? Not really. Risk free money won’t earn you above inflation. These people aren’t investment professionals, it’s not their money, and they’re not being paid for it. Why would they stick their neck out? Last thing a strata who needs to access their fund monies wants to find out is that there’s less in it than they put in.

#103 Apocalypse2015 on 01.30.15 at 9:31 pm

Some friends well connected in HR circles tell me there is lots of buzz about plans being made for major upcoming layoffs across sectors and all over Canada this winter.

Late February into March/April will be brutal. Expect 40,000 to 80,000 total layoffs in those months. Maybe more.

The dollar should test .75 next month and be about .62 by this time in 2016. Our economy has nothing left to support it, and is getting worse in fact.

#104 Mark on 01.30.15 at 9:31 pm

“Well, how long do nations with otherwise fairly diverse resources tend to stay in deflationary modes?
Canada?

Can be a very, very long time, especially if the country accumulated a significant foreign trade surplus and doesn’t have a particularly significant source of domestic demand.

Japan, for instance, is heading into 25 years of very slow growth, currency strengthening, and low interest rates.

Who knows how long the Canada/US would’ve stayed in their deflation/depressions, had it not been for WW2. Failure to liquidate malinvestment can have a significant prolonging impact.

IMHO, the best thing that can happen is for Canada’s RE prices to drop rapidly, the CMHC to take the $500-$900B hit, and for the economy to move on with a much smaller banking system, much greater salaries for producers, and much lower compensation for those involved in previously over-invested sectors such as the public service and the FIRE sector. But it probably won’t happen and they’ll drag it out as much as they can because the people in charge have way too much to lose.

#105 pwn3d on 01.30.15 at 9:33 pm

#99 Mark on 01.30.15 at 9:23 pm
“Here’s an idea. Rather than punish all the older folks, some of whom are selling wedding rings to feed their dementia suffering spouses, let’s just implement an inheritance tax.”

Already exists in Canada.
—–

OMG do you have to be wrong about everything? There is no inheritance tax in Canada. Try something easier, like “it gets dark at night”.

#106 Rob on 01.30.15 at 9:36 pm

http://m.huffpost.com/ca/entry/6580758?utm_hp_ref=canada-british-columbia

None of the buyers are foreign buyers lol

#107 debtified on 01.30.15 at 9:38 pm

So, I give up. There’s no point trying to change things. Human frailty wins.

This blog will henceforth allow only astute, prescient, unhorny people to read it. Govern yourself accordingly.
***********************************************

Hallelujah!

Garth, does this mean no more blog entries like yesterday’s? Seriously, what the hell was that for? I mean: (1) You read their emails. (2) You actually gave them some thought. (3). You bothered to make a blog entry about them. (4) You made me read about them!

WTF?! I mean: (1) You know full well that it is pointless with these kind of people. If they can still write you those kind of emails after reading your blog, du’h! (2) Real astute, prescient and unhorny people do not find any satisfaction knowing that people like them exist. It is better to just let them be. No point engaging in them especially when they are strangers we can’t possibly care about.

Looking forward to more proactive ideas that I can actually make informed decisions with instead of dwelling on how bad most people are. I don’t care if people are house horny (even if they cause house prices to be as stupid as they are) – I can’t control that. I only care about, given the sorry state majority of our countrymen (and our leaders and policy makers) have imposed on all of us, what I can do to protect myself. Think Aikido.

You have done a lot of us here a great favour by imparting knowledge and ideas – free of charge! For that, I thank you once more. Keep up the great work!

#108 45north on 01.30.15 at 9:38 pm

Few people alive today have any real experience in fighting deflation. So far central bankers have printed money, flooded economies with liquidity, supported banks, eased credit restrictions, paid people to buy cars and build decks and slashed interest rates. Governments have gone deeply into debt running deficits so they can keep social spending high even as tax revenues crater.

that hurts! Ontario voted to keep social spending high. Because we could. Vote I mean.

#109 Mark on 01.30.15 at 9:39 pm

“OMG do you have to be wrong about everything? There is no inheritance tax in Canada. Try something easier, like “it gets dark at night”.”

The inheritance tax in Canada is being forced to pay taxes on, at usually the top marginal rates, any deferred capital gains, RRSP money, death benefits in a RPP/IPP, etc.

Trust me, its pretty significant, cutting a cheque to CRA for 1/3rd of a loved one’s estate.

#110 devore on 01.30.15 at 9:39 pm

#241 Josh in Calgary

What’s wrong with a Preferred Share ETF now?

The same thing that’s wrong with bond funds. Or rather, not wrong, but different.

A bond or preferred ETF does not, generally, hold assets to maturity. As people buy and sell fund units, the fund manager must also buy and sell the underlying assets.

Therefore, if you really wish to be balanced and diversified, you must own these instruments directly, rather than with a fund, so that they balance out equities better.

A bond held to maturity returns 100% of its face value. If rates go up, and you must sell your bond, you will have to offer a discount.

Likewise, a preferred (of the right kind) is redeemed at “face” value, $25. If you buy it for $25 or less, you can hold it until it is redeemed (either on a schedule as per the prospectus, or because the issuer has an option to buy it out) and receive 100 cents on the dollar, plus the income it regularly kicks out.

You buy bonds and preferreds for stable income. When you buy a bond or preferred ETF, it behaves more like a dividend stock. If you’re looking for income and balance, you will research and buy a high quality preferred that gives it to you.

#111 Not Good on 01.30.15 at 9:41 pm

#82 notagreaterfool on 01.30.15 at 8:47 pm
With respect to IT cuts in Banks, BMO told it’s contractor IT resources they must work and bill 30 hour work weeks in Jan. Now, I hear investment dollars are being removed from projects.
——-

I second that. It’s not just IT.

#112 Nemesis on 01.30.15 at 9:41 pm

“There’s no point trying to change things. Human frailty wins.” – HonGT

#WhatEverLolaWants,Or… #SmokingManIsDeceived… #ByAShowLoungeMarquee… #Promising’Puss’InBoots…

http://youtu.be/Rxn-KDDZ8RI

#113 lala on 01.30.15 at 9:44 pm

What’s the point of having money in this frozen land. Kids stay at school till 6 pm so parents can work longer. And then a child became a parent and work, money, housing, jobs is all they talk. And then we have that fabulous health system to keep people alive to work some more till dementia kicks in. Suckers, including me for not growing the third ball.

#114 Darryl on 01.30.15 at 9:44 pm

Smoking man said
Shit, I forgot to comment on above post,
It’s Friday night forgive me.

Suede, not only once but twice.. 60 cent dollar on the way.
——-////
I disagree. CAD won’t go below 62 cents

#115 pinstripe on 01.30.15 at 9:44 pm

Your slight aside, OAS is dole. You contribute nothing directly to it, unlike CPP. People who must rely on $537 a month in public funds in old age should be ashamed that, in 65 years, they failed to prepare for their own future. Nothing political about that. — Garth

———————————————————-

In the 1960s the politicians preached how the government will look after the people from cradle to grave. There was no need to save because health care, education, jobs, etc would be available and life woulde be good. free housing for the old folks. free travel for the young. free free free everything supplied by the governemtn. FREE.

I was responsible and saved and because of saving I was not able to take advanteag of many social programs. I am punished for saving.

I have been on oas for 23 years. I plan my finances so that I do not get clawed back. I pay a price for that planning but I demand that oas.

I was promised a lot of social benefits and now I demand some of those benefits and am not able to qualify for them because of my income, whereas those that didn’t save and getting every benefit available. WHY am I being punished because I was responsible and saved money for the rainy day?

IMO, it is all about politics.

If you do not require the money, yet desire it, you are greedy. No wonder young people hate entitled geezers like you. — Garth

#116 Mark on 01.30.15 at 9:49 pm

“I second that. It’s not just IT.”

Cool. So you mean not only do banks get to enjoy wider spreads (as they didn’t lower Prime the full 25bp), but they also are saving on their employee salaries?

Sounds like we’ll have yet another awesome quarter of earnings releases come the last week of the coming month.

#117 Ret on 01.30.15 at 9:51 pm

I get one of those government cheques. I’ll be glad to take the same cut as those taken by police, fire departments, teachers, nurses, city workers etc. and I’ll expect adjustments downward to my property taxes, insurance premiums and water rates to reflect the new deflation numbers.

We are all in this together as Canadians, aren’t we?

#118 ANON on 01.30.15 at 9:53 pm

My, oh, my, what a huge surprise this deeflashun thingy is shaping up to be…

On a completely unrelated note, of course, one of these days, I was just looking at antonyms. A fine method to improve general knowledge and vocabulary, that is. Highly recommended. I think I looked up the word “credit” in there, not for any particular reason, just popped up in my mind.

#119 Sideshow Rob on 01.30.15 at 9:54 pm

#51
“Oil rebounds 8% in a single day. ”
End of month window dressing and a stampeding of the shorts. The deck is now cleared for an uninterrupted dump below $40 / bbl in Feb.

#120 Blacksheep on 01.30.15 at 9:58 pm

“OAS is dole. You contribute nothing directly to it, unlike CPP. People who must rely on $537 a month in public funds in old age should be ashamed” – Garth
————————————————–
Ashamed of what…lacking the skill to compete?

Pretty harsh language for those who likely slaved their lives away, paying taxes and for what ever reason, never caught a break.

I believe Seniors (survivors) deserve a little more respect than that.

Simply being old does not mean you should collect public money, unless you require it. Those who do failed to provide for themselves. — Garth

#121 Suede on 01.30.15 at 9:58 pm

Smokey

If it goes to 0.62 awesome. Sometimes it’s nice to get paid in USD.

Also, the wife will spend less money in Vegas finally.

#122 pinstripe on 01.30.15 at 10:06 pm

If you do not require the money, yet desire it, you are greedy. No wonder young people hate entitled geezers like you. — Garth

———————————————————–

I don’t give a darn if the young people hate entitled geezers.

I demand the entitlements that were PROMISED to me. Nothing more. Nothing less.

nothing wrong with greed.

Yikes. — Garth

#123 Leo Tolstoy on 01.30.15 at 10:08 pm

#8 Mark on 01.30.15 at 7:03 pm
Raising US interest rates is not USD$ – bullish. If anything, it is profoundly bearish for the USD$, as the implication is that inflation is rising, and purchasing power is declining in the US.

Totally wrong. Again.

#124 Nothing Surprises on 01.30.15 at 10:11 pm

Your slight aside, OAS is dole. You contribute nothing directly to it, unlike CPP. People who must rely on $537 a month in public funds in old age should be ashamed that, in 65 years, they failed to prepare for their own future. Nothing political about that. — Garth

If the definition is dole for $537 a month paid to a citizen qualified to receive it and has not contributed any money, what is the term we should apply to someone no matter what age over 18 elected to parliament or appointed to a body called the senate receiving funds for life after a very minimum tenure and presently called a pension when no contribution of money was made by these citizens receiving these monies?

Honourable Dole ?

This is greater shame then you refer to and we have yet to compare what is provided to veterans when they retire.

Elected people contribute to their pensions the same as the rest of us. Most MPs never serve long enough to collect anything. Senators, however, are indefensible. — Garth

#125 Catalyst on 01.30.15 at 10:12 pm

A new Bmo study says 50% of Canadians are looking to buy a house in the next 5 years and 75% of millenials. Let’s face it, we are addicted to real estate and the recent choppy waters we have experienced wont offset this pent up demand.

#126 devore on 01.30.15 at 10:16 pm

we can see how people respond to the notion of cheaper debt – they want more.

When the price of something decreases, more of it is demanded. Econ 101.

#127 Smoking Man on 01.30.15 at 10:17 pm

#119 Suede on 01.30.15 at 9:58 pm
Smokey

If it goes to 0.62 awesome. Sometimes it’s nice to get paid in USD.

Also, the wife will spend less money in Vegas finally.
………

If you brought 100 contracts of USACAD when it bottomed at around. 95 it cost about 30 k of real money to get in the trade. Today you would be looking at a P&l of around + 3 Million.
My math might be a bit off, hammered
out of my skill at moment

moment.

I dident buy that much, but enough not to worry about what my wife spends at senica for the rest of our lifes. But I bought a few condos in Florida Feb 2013
Its called diversification.. It’s in archives I think.

Gartho was telling everyone, I was a non believer, but when I got down there, it was pocket change, the units had renters. No brainer.

#128 pinstripe on 01.30.15 at 10:18 pm

#116 Ret

I get one of those government cheques. I’ll be glad to take the same cut as those taken by police, fire departments, teachers, nurses, city workers etc. and I’ll expect adjustments downward to my property taxes, insurance premiums and water rates to reflect the new deflation numbers.

We are all in this together as Canadians, aren’t we?

————————————————————

NO WAY.

When the policy makers were informed that their policies are not attainable and not sustainable, their immediate response is “relax and lighten up. The money people are confident in the numbers”.

I DEMAND what was promised to me.

#129 Sean on 01.30.15 at 10:19 pm

Your slight aside, OAS is dole. You contribute nothing directly to it, unlike CPP. People who must rely on $537 a month in public funds in old age should be ashamed that, in 65 years, they failed to prepare for their own future. Nothing political about that. — Garth

=========

Nicely, nicely said! Garth, you really should run for PM one day. Not that you would want to, and not that you would win with that sort of talk… but it would be an incredible feeling to cast my vote for someone I actually believed in… as opposed to the usual “lesser of two evils” selection of muppets we normally choose between.

#130 Eric on 01.30.15 at 10:21 pm

And so begins the “Gelded Age”.

#131 prairie person on 01.30.15 at 10:23 pm

#88 Mark
Yes, “can’t find a buyer” is often a euphemism for a too high price but that is not always the case. There was no buyer, no buyer, at any price, for Craigdarroch Castle in Victoria. Beautiful building, great grounds. No buyer. It finally was auctioned off. Tickets were a dollar each. When credit and liquidity dry up and there are no buyers, we see the result. Houses, towns, businesses are simply abandoned. Detroit is a good example. They are bulldozing large sections of the city. The houses were close to being given away. No buyers. Let us hope that the Detroit effect doesn’t come to us. Or anyone else. We’ve been through some recessions in recent decades but not serious deflation. Those abandoned farm houses on the prairies can be had for the asking. Just haul them away. No buyers. They sit and disintegrate. There are lots of items in our society for which there are no buyers. No reason that the same situation can’t apply to houses.

#132 Reno HELL on 01.30.15 at 10:24 pm

http://news.nationalpost.com/2015/01/30/home-sweet-homewreck-this-is-the-worst-reno-story-you-will-ever-hear/

#133 Smoking Man on 01.30.15 at 10:24 pm

My account must be on another bender. I need to know if this is legal.

Garth, answer this one. And I promise not to post for the rest of the night.

Can my Corp issue a bond, or a structured think, that I buy with my TSFA that pays 200% then it matures, I’m paid back.. Then I take it all and buy another one the next year.. At 200%.

Is that doable?

#134 Ray Skunk on 01.30.15 at 10:27 pm

Hey Clarence (from yesterday) – read this:

http://news.nationalpost.com/2015/01/30/home-sweet-homewreck-this-is-the-worst-reno-story-you-will-ever-hear/

Now, are you still priapic about blowing 3/4 of a mil on that townhouse?

#135 Marco on 01.30.15 at 10:28 pm

@pinstripe

“nothing wrong with greed”
Lol.

“greed is good”. Gordon Gecko.
https://m.youtube.com/watch?v=PF_iorX_MAw

#136 Walter Safety on 01.30.15 at 10:29 pm

The OAS is not dole. It was originally funded with a special tax levy and the funds segregated as The Old Age Security Fund.
Then it became expedient or convenient for the government to roll the fund into general revenue and revamp the tax rates in 1972.
We are all paying for OAS with a higher general tax rate.

#137 devore on 01.30.15 at 10:30 pm

#47 Skylo

I personally think these price should have been included in the CPI

Assets/investments are not included in the CPI, nor should they be. Housing is, in the form of rent. Guess where rents have gone the last 10 years? In most of Canada, nowhere.

#138 Godth on 01.30.15 at 10:33 pm

#127 pinstripe on 01.30.15 at 10:18 pm

You’ll have to fight the youngsters that were promised a shiny new future that they’ll never see.

Buckle up, it’s going to be an adventure into the unknown. What happens when, after decades of kicking the can down the road, the road runs out?

Exponential curves don’t last forever.

#139 Rudyard Kipling on 01.30.15 at 10:35 pm

Let’s have a little levity for once.

Poems of Home III

There was a small boy of Quebec
Who was buried in snow to his neck
When they said “are you friz?
He replied “yes I is–
But they don’t call this cold in Quebec”!

with compliments to GOOG

#140 Mark on 01.30.15 at 10:35 pm

“we can see how people respond to the notion of cheaper debt – they want more.”

Debt actually gets more expensive, in real terms, in a deflation. Even a 0% loan is awfully expensive against an asset that might be deflating at 5-10%/year.

Totally wrong. Again.

Not wrong at all. Are you done trolling Mr. Tolstoy? At least I lay out the reasons for what I write, and am glad to explain the theory behind it. You do nothing of the sort, other than take random shots at people.

#141 Mark on 01.30.15 at 10:36 pm

“Can my Corp issue a bond, or a structured think, that I buy with my TSFA that pays 200% then it matures, I’m paid back.. Then I take it all and buy another one the next year.. At 200%.”

RRSP/TFSA rules, more or less prohibit related party transactions. For obvious reasons.

#142 Waterloo Resident on 01.30.15 at 10:39 pm

Remember a little while back, how I said I would be dancing in the street if gasoline fell below 99 cents? Well, in some places around the Guelph are gas is going for 81 cents, and yes, I’m really, really happy about that.
As for jobs disappearing; heck, they have been disappearing for the past few decades in the manufacturing fields; nothing new about that.

Nice picture of the pet cat, but this one’s better:

https://www.partyvibe.com/forums/attachments/jokes-humour/5028d1273529769-big-kitty-mancoon.jpg

#143 Nomad on 01.30.15 at 10:40 pm

If the rate cut really does encourage canadians to go buy houses at even higher prices, then that means lending will keep doing well, in which case bank stocks should do fine no? There’s seems to be a bet that this will not be the case, or else bank stocks wouldn’t be down 12-20% from their highs.

I can’t wait to see which of the two happens:
– a lot less home buying & decreasing bank stocks
– similar home buying & recovering bank stocks

Also, usually, when a company cuts its workforce, the stock goes up. CIBC Investors see a sad earnings report coming up? Hold on to the boat my fellow sailors the TSX could get hit by a nice big wave.

#144 Obvious Truth on 01.30.15 at 10:41 pm

#106

Can’t be said any better.

Having said that many people are led that way. You have to feel for mant young families.

#145 Mike on 01.30.15 at 10:45 pm

Sorry to say, but the fools can’t see the hyperinflationary rainforest, just behind the short term single deflation tree. Just as they don’t see the current depreciation of the CND as a de facto RE correction (in the two cities that matter) It’s the same three-card monte routine that never fails.

First, give the sheep a good shearing with the weakening dollar. By the time most of the damage is done they’ll be running like a bunch of chickens into another paper game they have very little understanding of – buying at the all time highs of course. Just as they get comfortable with their on paper profits, the rug is pulled under them yet again. At this point, the smart money has long repositioned into hard assets and the game resets..at ever increasing prices, valuations, etc, etc.

Forget about all the gut wrenching battery-acid toxicity permeating from this blog and ask yourself just one question:

What will your Starbucks barista be making in 5 years time (without tips): $15, $20, $25+/ hour? Think about that. Now, try to put things in perspective.

#146 Nothing Surprises on 01.30.15 at 10:48 pm

Re: 123

“Members of parliament contribute to their pensions.”

They receive an unrealistic payback in pension compared to what they personally contribute.
If the average citizen received the same proportion back in pension they contributed in CPP based on the same ratio elected members receive, OAS may not be required!

I am defending nothing, merely pointing out an error. — Garth

#147 Marquis de Sale on 01.30.15 at 10:49 pm

OAS should be going to seniors that have an income up to $30,000 a year! We have fossils with millions in net worth collecting this when we have $600 billion in debt! Lunacy! Btw. Garth will you be penning Dean’s life story ,”the Book of Ginoes”? Canada’ Greatest Fool

#148 Retired Boomer - WI on 01.30.15 at 10:50 pm

The mouthy Yank weighs in…

Here we have Social Security. One works for 10 years to qualify. You pay 6.5% your employer kicks in the same. Self employed you pay BOTH haves. Tax phases out at $118K.

For the really poor there is SSI ‘supplemental security income.’ You need to be next to broke to qualify.

They call Social Security an “Entitlement” today.
Bullshit, in a word. I have been paying this ‘payroll tax’ since age 15. Decided to collect at 63 based on MY 40 odd year earnings record. Seeing the breakdown of money in that account, had it been invested in a broad market fund since 1966 until I started collecting in late 2014 the earnings would be about 3.4% better in the market.

(Remember we have to double my contribution because employers also paid their half).

Point is, NO ‘entitlement’ I paid for it in wages, and higher prices to cover the employer’s part. You surely believe their costs included employee mandated benefits, right?

Good thing I smoke, drink, and do not plan to live a long & ‘careful’ life. An actuarial marvel already!

#149 devore on 01.30.15 at 10:50 pm

#79 Cow Man

You are correct in your 1st paragraph, however, all the items you listed are NOT discretionary spending. Deflation postpones discretionary spending, until it can no longer be postponed.

Take an example. In an inflationary, easy and cheap money environment, legions of people bought granite, stainless appliances, hardwood floors, flat screens, etc, regardless of need. In a deflationary environment of falling wages and no consumer credit, a new fridge is bought only when the old one stops working, a new counter is bought only when the old one becomes a health hazard, and new floors are bought only when even the dog goes outside to do its business, a new TV is bought only when the old one just shows static. If I have a tablet or phone that still works fine and gets the job done, and my wife is laid off and my income is down 20%, I’m not lining up to buy the latest iPhone or iPad.

Deflation delays a spurious discretionary purchase into a necessity that cannot be avoided. That is deflation, and if you believe that is good for a consumer driven economy, you are in fairytale land.

#150 pwn3d on 01.30.15 at 10:56 pm

#108 Mark on 01.30.15 at 9:39 pm
“OMG do you have to be wrong about everything? There is no inheritance tax in Canada. Try something easier, like “it gets dark at night”.”

The inheritance tax in Canada is being forced to pay taxes on, at usually the top marginal rates, any deferred capital gains, RRSP money, death benefits in a RPP/IPP, etc.

Trust me, its pretty significant, cutting a cheque to CRA for 1/3rd of a loved one’s estate.
——-
That isn’t inheritance tax, that’s just tax. If you don’t want to pay what you owe the government when you die, you are more than welcome to pay before you die. You can unwind your RRSP, take your capital gains ect. Items which have already had tax paid on them, like TFSA, cash, cars, primary residence ect are not taxed, hence, no inheritance tax.

Not much in life is fair but I find that to be completely fair even if it adds up to 1/3 of their estate.

#151 Entrepreneur on 01.30.15 at 10:56 pm

Stay away from credit, only short-term credit should be offered and only to small businesses. (Right now credit is not working.) Make the money grow and filter through the community: Anything big (big box stores) should not be allowed in a community, they kill the little guy. Gambling and casinos should not be allowed as revenue for the government as this takes away work for the people. (Sorry Smoking Man). As a society we need as a whole to act and behave responsible to one another and to the environment. The government should never use a deficit to create social spending, use only money. Add and subtract
but never use credit. My thoughts.

#152 Washed Up Lawyer on 01.30.15 at 10:57 pm

SWL1976

Pipe up tonight. Up here in the taiga, I enjoy your comments.

Tell me something. When you fly in / fly out are you using a company owned / facility airstrip or the new YMM “International”. It certainly eased the pain. The old tin shack that we suffered through was built for 250,000 passengers per year but was serving 1.25 million per year and was certainly painful. With the Subway sandwich shop and the bar smaller than Smokey’s rec room, it was hard to take.

Among other things I follow at work is the FIFO workforce and flights to the region. I read an article in an industry magazine that stated Suncor operated the third biggest airline in Canada with 25,000 passengers per month. I have not researched the point and it may not be true but it is illustrative

#153 Ryan on 01.30.15 at 10:58 pm

Garth mentions a flight to financial assets, away from real assets. How does my balanced portfolio do well when consumer spending falls and all my equity positions suffer? I feel like cash is king and I should take my gains and sit on the side lines.

Market-timers rarely do well. But go ahead. Buy back in when everything costs more. — Garth

#154 AfterTheHouseSold on 01.30.15 at 10:59 pm

“So, I give up. There’s no point trying to change things. Human frailty wins.” Garth

Thanks be to blog, we saw the light and sold our house a few years ago. Instead of us going to work to maintain the house, the house (proceeds) went to work to maintain us! Thanks Garth. Don’t despair. You have saved many.

#155 mike in kelowna on 01.30.15 at 11:00 pm

Can’t agree Garth. U.S. will not raise interest rates this year or next, or the next..Would cause the US buck to go up more and kill the faltering US stock market. The economy in the States is not as strong as you like to make it out to be. Globally would result in a recession/depression..

#156 debtified on 01.30.15 at 11:01 pm

It’s really disconcerting to read and hear about people who demand (whether they need it or not) or depend (when they could have avoided it) on entitlements!

They say: I was promised and I paid for them in taxes, dammit!

First of all, if you ended up depending on the entitlements when you reach the age that you are most vulnerable, good luck to you. There won’t be much. Secondly, seriously, what is wrong with being the one who is giving instead of being the one who is receiving?

My T4 has consistently shown over $50K of deductions for several years now (plus more when CRA comes to collect). I am okay with that because despite the ills of our society, Canada remains a great country to live in. Putting things in the right perspective, it’s really hard to complain.

Sure we have problems (which country doesn’t?), like the stupidity of Canada’s House Porn, but out of that we get people like Garth who helps us find a way to navigate through these challenging times. If after reading Garth’s blog you still plan on depending on entitlements, then you have just wasted Garth’s time.

Despite the high house prices, I am still able to live in an affordable and comfortable house. So there is a way. Obviously, I am renting. My choice and I am happy to save over 25% of my income, stay liquid and diversified, while living comfortably and enjoying life to the fullest.

#157 tony on 01.30.15 at 11:09 pm

I have a variable 2.5% mortgage with Scotia. Just noticed tonight that my rate went to 2.35% by the biweekly payment went up $70. How is that possible?

#158 Marco on 01.30.15 at 11:10 pm

Garth, do you think they will increase CPP contributions so as to double benefits? Obviously not to solely secure ones retirement on, but doubling it without paying much more a month seems like a no brainer.
Thanks.

http://www.canadianlabour.ca/action-center/retirement-security-everyone/retirement-security-reform-1-double-cpp-benefits

No. — Garth

#159 joseph on 01.30.15 at 11:11 pm

Deflation will never happen because the powers-that-be won’t allow it to happen. Remember Ben Bernanke said he would drop money from helicopters if necessary to stave off deflation. If we ever started to get into a deflationary trap, the Central Banks will simply make a decision to print money and send $1000s to every household to extricate ourselves from it. Barring a nuclear war or an asteroid striking the earth, I don’t believe we will ever see a depression in the Western economies again. Too much is at stake to let it happen.

#160 Mukadi on 01.30.15 at 11:12 pm

Welcome to the nation of sheep (sheeple!).

BTW the exchange rate today is at 1.27 CAD/1 USD. On track to meet Nostradamus’ forecast of 1.35 by December even earlier.

#161 TurnerNation on 01.30.15 at 11:15 pm

Panicked Kanadians and realtors are turning to this weblog’s pathetic comments to swap squirrel recepies anew. Record commenting volumes.
Voluminous vesteges of mercurial, staid Kanadian way-of-life stories brim this final resting place like an online tome which tolls.

No I’m not drinking.

#162 james on 01.30.15 at 11:17 pm

OAS is dole. You contribute nothing directly to it, unlike CPP. People who must rely on $537 a month in public funds in old age should be ashamed that, in 65 years, they failed to prepare for their own future.

—————————————————————-

Your comment is utterly ignorant of the fact that our tax base pays for OAS, and ignorant of the circumstances of the many people, including many elderly women who have lived through incredibly unfair gender discrimination in their financial lives, who collect OAS. And what about those who have saved, only to have our third world financial regulators not do their jobs in cases of market fraud and pension underfunding.

Blame the victims?

Truly a douchebaggy comment, Garth.

Not up to your usual standards, I’m afraid.

#163 umami on 01.30.15 at 11:20 pm

Why is the CREB website no longer showing the number of active listings? End of the month or something more desperate?

#164 Washed Up Lawyer on 01.30.15 at 11:20 pm

Let me find and re-read that article again. Suncor flying 25,000 per month sounds ridiculous. I’ll let you know next week. Unless they were flying other companies’ workers in and out, which they probably were. Given how companies share airstrips.

#165 Blacksheep on 01.30.15 at 11:20 pm

“Simply being old does not mean you should collect public money, unless you require it. Those who do failed to provide for themselves. — Garth”
———————————————–
Your of course, right…

I’m an alpha / sociopath so I really don’t give a shit about the old dudes, I apparently had fleeting moment of empathy, but now it’s past. Time for a drink.

#166 devore on 01.30.15 at 11:22 pm

#130 prairie person

There are lots of items in our society for which there are no buyers.

This might sound like nitpicking, and I’ve posted enough today already to qualify for blog dog counseling, but this is wrong. There is always a buyer, at some price. Academically, this is easy to see in most cases; drop the price far enough, someone will step up.

Practically, however, there are some goods for which that price is negative. That house sitting on the farm that can had for the taking, costs money to transport, and probably requires extensive renovations. An industrial plot might require toxic cleanup. A widget or a car wreck needs to be stripped and taken to a recycler. A house might need to be torn down or rebuilt. A business might have more debts and liabilities than assets.

In those cases, you might have to PAY someone to buy it. But you have to balance that against keeping it around, or having to look after its disposal yourself.

Yes, there’s a buyer at some price. If that price is zero and still no takers, you have to sweeten the pot to increase its value, either by doing some work to it, or just outright handing the buyer some money.

#167 Getting old on 01.30.15 at 11:23 pm

So, I give up. There’s no point trying to change things. Human frailty wins.

Really Garth! do I sense frustration. I don’t thing you would know how. Give up that is.

#168 Linda Pearson on 01.30.15 at 11:26 pm

#135 Walter Safety on 01.30.15 at 10:29 pm
The OAS is not dole. It was originally funded with a special tax levy and the funds segregated as The Old Age Security Fund.
Then it became expedient or convenient for the government to roll the fund into general revenue and revamp the tax rates in 1972.
We are all paying for OAS with a higher general tax rate.
**************************

Man, oh man, I hope your explanation is the truth. Otherwise, I am sitting here feeling lower than pond scum because I rely on OAS to be part of my household’s retirement funds. It seems our host thinks those of us who do already or will in future need OAS to live reasonably secure in our senior years are undisciplined deadbeats – full stop.

#169 Mister Obvious on 01.30.15 at 11:26 pm

#130 prairie person

“There was no buyer, no buyer, at any price, for Craigdarroch Castle in Victoria.”
—————————————-

I’m not surprised.

Craigdarroch Castle is falling apart at the seams from decades of neglect. I’ve seen the cracks in those 125 year old walls first hand. You’d need to compensate someone handsomely to take on that burden.

Perhaps it’s a bit like ‘Downtown Abby’, a tired vestige of old world money that never received the care it deserved since the middle of the 20th century.

The filming location of the fictional TV series ‘Downton Abby’ is actually ‘Highclere Castle’. Thanks to the money generated from the show they have been able to do urgently needed restorations to the second and upper floors which were, until recently, uninhabitable.

#170 BBQ Squirrel on 01.30.15 at 11:27 pm

Nothing wrong with swapping squirrel recipes

https://www.youtube.com/watch?v=hpj2lei7uSI

#171 Snowboid on 01.30.15 at 11:29 pm

#124 Catalyst on 01.30.15 at 10:12 pm…

What happens to addicts when you take away the fix?

The story of one addict and her recovery…

http://clubthrifty.com/real-estate-confessions-of-a-houseaholic/

#172 HFT Dude on 01.30.15 at 11:32 pm

To all those wondering why preferred ETF’s went down rather violently this week, you have to understand that it is the rate-reset preferreds that have taken it on the chin. The dividend on these babies resets every five years to a predetermined rate based on the yield of the 5-yr GoC bond plus some spread. Bond yields went down, so reset rates should now be lower than initially thought and Mr. Market is pricing that in. On the other hand, perpetuals barely moved this week.

Therefore, ZPR, which only contains rate-reset preferreds went down abruptly this week, while CPD, which also includes perpetuals, was more tame.

If I remember correctly, Garth recommended holding perpetuals in corporations with good credit ratings, namely banks and insurers.

Personally, I do not buy preferred ETF’s as they hold issues with poor credit rating, for no other reason than these issues are constituents of the index tracked by the ETF. History has shown that credit rating is perhaps the most important factor influencing returns on preferred shares.

#173 ANON on 01.30.15 at 11:36 pm

“No I’m not drinking.”

RESTECP! :)

#174 Ollie on 01.30.15 at 11:46 pm

Danish bank, Nordea Credit, has negative floating mortgage rates. WTF!

#175 Washed Up Lawyer on 01.30.15 at 11:46 pm

Paid my tuition for a class at U of Google. Suncor is between the 10th to 12th largest airline in Canada.

http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/air-oil-sands-a-new-flight-path-in-alberta/article543552/?page=all

Early onset and reefer madness has affected my memory I guess.

#176 Mark on 01.30.15 at 11:48 pm

“Garth mentions a flight to financial assets, away from real assets. How does my balanced portfolio do well when consumer spending falls and all my equity positions suffer?”

If your portfolio is truly balanced, all your equity positions won’t suffer. Even in a generalized deflation.


I feel like cash is king and I should take my gains and sit on the side lines.”

Might turn out to be a good move in the short term, but exposes you to a huge amount of risk. As does any “one asset” strategy.

“I have a variable 2.5% mortgage with Scotia. Just noticed tonight that my rate went to 2.35% by the biweekly payment went up $70. How is that possible?”

Call Scotia and ask. There might be some sort of acceleration clause buried in the fine print of your loan contract they’re exercising, especially since house prices have modestly fallen over the past while. Perhaps the letter informing you of such hasn’t hit the mailbox yet?

“I read an article in an industry magazine that stated Suncor operated the third biggest airline in Canada with 25,000 passengers per month”

No, that would be Jazz or Transat as #3. And a few other operators are considerably larger than that.

“Not much in life is fair but I find that to be completely fair even if it adds up to 1/3 of their estate.”

The way that capital gains tax is applied on assets which have already been purchased with after-tax income is profoundly unfair, especially with the full amount due, at the top marginal tax rates, upon death. Many small businesses meet their demise this way, when the principal owner passes away, and the heirs/successors are forced to leverage it to pay the taxman.

But anyways, I believe over the medium-long term, the ‘old’ will be taxed by way of having their fixed income assets devalued through inflation. And eventually the young will see good returns in equity and in salary compensation to make up for the mess created. But certainly government would have been wiser not to create such a mess of debt in the first place.

“Can’t agree Garth. U.S. will not raise interest rates this year or next, or the next..Would cause the US buck to go up more and kill the faltering US stock market. “

Rising interest rates imply that the US has an inflation, and hence, a depreciating currency. The key difference between Canada and the US is that the US has an extreme amount of demand available offshore for its goods and services, in repayment to USD$ sitting offshore. While there is comparatively little CAD$ sitting offshore, hence, no source of external demand on Canada’s domestic pool of goods and services.

When that external US demand starts hitting the US, yes, the economy will feel buoyant, and yes, exports will accelerate, but it will be at the cost of domestic consumption. Interest rates will have to rise in an effort to suppress that consumption, lest confidence in the USD$ melt away further at such point. Its not quite apparent right now with the strong USD$, but a tipping point is likely soon as the USD$ is dramatically overvalued.

#177 devore on 01.30.15 at 11:50 pm

Ok, I’m gonna extend my run, and clarify myself.

People often come up with a price for something, without taking into account some negative externalities.

A practical example.

A friend tells you he sold his house for $450,000. Bought it for $400,000. A clear and easy $50,000, right? Well, what he didn’t tell you, is that just weeks before listing it for sale, he paid $75,000 to renovate the kitchen and bathrooms so that the house would sell “for top dollar”. So how much money did he make? He could have just sold the house for $375,000, right, and “lost” $25,000?

Another example.

A plot of land should be valued at $500,000, according to comparables. But there’s no buyer “at any price”. The price is $0, and no one’s signing on the dotted line. Why? The soil is contaminated. the cleanup will cost $1,000,000. What can the seller do? Well, they can hold on to it. He can pay someone $500,000 to take it off their hands, or he can pay for the clean up, then sell for $500,000, which is just the same thing.

Price is what you pay, value is what you get. That land is worth $500,000, but what is the price?

#178 Marco on 01.30.15 at 11:53 pm

The New Democrats and the Canadian Labour Congress, for example, have proposed a doubling of the current CPP monthly benefit, phased in over a seven-year period, an increase they say could be covered through relatively modest premium hikes amounting to a contributions increase of 0.43 per cent of pensionable earnings per year for workers and employers.
Their plan would see the CPP cover up to 50 per cent of pensionable earnings, from the current 25 per cent.
Critics say boosting contributions would put too much strain on the still-fragile economy, but Kolivakis says “now is the time” to reform the CPP.
“The reality is it will improve productivity of workers, because they know they’ll have safe retirements,” he said. “And it will mean lower social welfare costs down the road.
“The best thing to do is expand CPP. It’s portable, you can take it with you wherever you work … and the money is being managed by professionals.”

This is a 2012 article.

#179 Mark on 01.30.15 at 11:55 pm

“Let me find and re-read that article again. Suncor flying 25,000 per month sounds ridiculous. I’ll let you know next week. “

They have what, 3 90-seaters in their fleet, and 1 50-seater? 4 flights a day * 3 aircraft * 30 days/month = 32,400 seats. Doesn’t sound ridiculous at all.

http://www.planespotters.net/Airline/Suncor-Energy-Inc

#180 Smoking Man on 01.30.15 at 11:59 pm

Christ, I’ve got the cast and writers of Banshee, eating up Smoking Man on Twitter..

I’m a writer, who would have known.. Love you dogs for encouraging me, for setting me on this new path.

Specially Gartho.. Ok I’m being nice so you all know it’s wine.

JD tomorrow night at Fallsview. Don’t approach. JD not good on old time hockey enforcers.

#181 Irish Stew on 01.31.15 at 12:06 am

Is there a point in time that RE becomes a good investment as prices fall?

Is this a good time to consider leveraging (interest low, can be written off and decent US returns)?

Signed – 39 years old and looking for help.

#182 Ollie on 01.31.15 at 12:09 am

On the negative mortgage rates… It actually makes sense. When the “asset” you mortgage is expected to go down in price the bank earns on the differential. To cross the zero line requires a lot of conviction on the part of the bank. It means to me deflation is not incoming, it’s been around for a while and expected to get deeper.

#183 TRT on 01.31.15 at 12:10 am

@smoking man,

Buddy has P&I totalling $2,750,000 from initial investment of $250,000. Got lucky on the first drop from 94 to 91 cents. Then he went all in and added positions.

Me not so much. Hence the headache. Was a great opportunity to retire. But I see one more coming in the next 18 months. Risk $100,000 and make $900,000. I know the trend but just for to time it right neat the peak/trough.

#184 Michael on 01.31.15 at 12:11 am

Old Age Security System – for a brief explanation read:

http://publications.gc.ca/Collection-R/LoPBdP/MR/mr58-e.htm

If you don’t have time to read the whole article, just scroll down to the section: THE OLD AGE SECURITY FUND

Anyone who thinks OAS is free is mistaken. Garth, I usually find your sarcastic/acidic comments simply dubious comedic relief, but really let’s not be mean to our retired seniors. Just like you and me and your blog followers, they contributed money into the OAS. Anyone paying income tax pays for it, and if seniors need it it’s there to help them.

-Michael

#185 Frack Baby Frack on 01.31.15 at 12:12 am

http://www.resilience.org/stories/2015-01-29/did-alberta-just-break-a-fracking-earthquake-world-record

#186 Big Leafs Fan on 01.31.15 at 12:17 am

Marco.
Quit drinking the union/NDP Kool Aid. Double the CPP? Right. Lets turn more money over to the Goverment so they can change the rules later to suit themselves. No thanks. Cut the Gov’t in half, let me opt out of CPP, reduce my income taxes and I’ll look after myself. Like we live in a free country? Right

#187 earlybird on 01.31.15 at 12:20 am

Why is Oil/energy a factor in deflation, but excluded when they calculate inflation?

Why when the spread between supply and demand in oil so small that the price swings are so large.

It doesn’t add up, and if all commodities are falling…is that global lack of demand?

Anyone? Happily renting in Cowtown!

#188 Leo on 01.31.15 at 12:24 am

As usual, my questions is, would you vote for this government?

#189 Mean Gene on 01.31.15 at 12:26 am

OAS is free money, akin to an old school welfare cheque with the same stigma. It should only be paid to people with a low net worth and be means tested, the current claw back threshold is too high.

#190 Peter on 01.31.15 at 12:31 am

Garth, how can you be so certain about the future. No matter how smart one is, how can they take into account all the factors especially in something like Economics? I feel if one is really learned, they would also know their own shortcomings and the uncertain nature of this field of guessing the future.

But you are so certain, and that is somewhat baffling.

Go ahead. Delete this post.

#191 SWL1976 on 01.31.15 at 12:32 am

You can lead a sheep to slaughter but you cannot make it think

These new anti terrorism laws should fix all our problems and make things right in this world…

Hey Steve, you’re trying too hard lipstick doesn’t look good on pigs

Thanks Garth, for all that you do, you are a Nobel member or Canada

#192 Smoking Man on 01.31.15 at 12:32 am

#166 Linda Pearson on 01.30.15 at 11:26 pm
#135 Walter Safety on 01.30.15 at 10:29 pm
The OAS is not dole. It was originally funded with a special tax levy and the funds segregated as The Old Age Security Fund.
Then it became expedient or convenient for the government to roll the fund into general revenue and revamp the tax rates in 1972.
We are all paying for OAS with a higher general tax rate.
**************************

Man, oh man, I hope your explanation is the truth. Otherwise, I am sitting here feeling lower than pond scum because I rely on OAS to be part of my household’s retirement funds. It seems our host thinks those of us who do already or will in future need OAS to live reasonably secure in our senior years are undisciplined deadbeats – full stop.
…..

I can teach you how to trade forex.. Do you have a pic
..

#193 Observer on 01.31.15 at 12:35 am

I’m still baffled….if a country wants to encourage families (and more kids), then why would pricey shelter and family budgets saddled with high levels of debt, be a good thing?

#194 crash callaway on 01.31.15 at 12:37 am

The House Horny Mantra:

When you’re so far in debt you have to stand on a chair just to see the poverty line… don’t sweat it
When your backs against the wall… you need a bigger house!

#195 Habs76-79 on 01.31.15 at 12:38 am

I too find it a chore to not give up passing onto others learned info, be it by reading it at a place like Garth Turner’s blog or of course through one’s own life of hard lessons.

Two cases in point.

I have relatives, a sister and her husband. I’ve done my best in the past to inform them of what are serious pitfalls and mistakes one can make concerning credit/debt etc. I’ve tried to explain how too much credit, be it on a home or for all too many toys today can really screw you up. I noted that using home equity loans to consolidate other smaller debts etc. is STUPID! IE: taking a car loan and folding it into your mortgage. Well they have done just that. Take out (all be it two cheaper used car loans) and rolled them into their mortgage. They now say that they have NO CAR LOANS! WTF!!!!! Sure you do, but instead of paying them off in say 2-3-4 years etc. you will now pay them off with the balance of your mortgage (about 15 years) UGH!!!! So much for them listening to sage advice!

Case two, a co-worker and a fancy new car financed at 96 months. Well her and her hubby will in three years when their mortgage comes up take the balance of said car loan and roll it into the mortgage and YES THEY TOO will say they the have NO CAR LOAN!
Yes, I too in recent times explained to her about the silliness of such things prior to her buying her new ride. I even tried to explain to her that it would be better to get a good, few year old used car and save a few bucks if she felt the need for a new to her car.

UGH! I GIVE UP!

These are the types of people who often wonder how do the rich get to be so? They think most do it by cheating.

The wealthy (the real wealthy folks and not you dolts who say you are because you live in and pay a huge mortgage on an overpriced house that are huge liabilities to you) learn how to MAKE MONEY WORK FOR THEM! Oh yes maybe when they were younger they too had to WORK FOR MONEY! But in time and with shrewd and prudent investing of all sorts the money they invested began to and still WORKS TO INCREASE VALUE TO THEM! and as such now works for them even when they rest their little, rich heads asleep on their pillows at night.

NOPE! I ain’t one of them :-( . I began to learn about money in a real way too late. But I do now try to use what I learn to better my future and to make fewer mistakes most of which like all too many folks are just DUMB CHOICES!

#196 Smoking Man on 01.31.15 at 12:56 am

150 Entrepreneur on 01.30.15 at 10:56 pm

Hammered out of my mind I see you. Your a communist, fake smoking dude.

#197 DonDWest on 01.31.15 at 1:07 am

Deflation, debts, economic collapses, terrorism, ISIS, housing bubbles, jobs, temporary foreign worker programs, immigration, government scandals, etc.

Canadians are missing the big picture. The big picture is that the Chinese, right now as I speak, are invading this country without firing a shot. Our politicians and “free market capitalists” are allowing them to do so all in the name of funny economic theories like “free trade” and “globalization.”

#198 pravchaw on 01.31.15 at 1:08 am

Ha Ha Ha Its good to be king (aka fat cat).
https://www.youtube.com/watch?v=StJS51d1Fzg

#199 kilby on 01.31.15 at 1:23 am

#86 Robert Agnew on 01.30.15 at 8:57 pm
Harper the war general , esteemed hockey pro, piano man and all round economic genius. the cupboard is bare with profilgrant waste, tax cuts to rich supporters , and loon ball projects . Yep folks why deal with reality and facts when you can blubber on with new con nonsense . The sun will rise – let’s enjoy the deflation with a cheaper Tim bit. Let’s thanks Joe the Undetaker Oliver too.

PERFECT! Well stated. Morons at the helm! Lots of talk about the fall election and the fear that split votes will result in another term by Herr harper…

#200 Jerry on 01.31.15 at 1:30 am

Is there an individual/website/organization who has a track record of accurate forecasting of the CAD/USD exchange rate? If there is someone who could call the bottom for the CAD it would greatly assist me in some pre-retirement holding adjustments.

#201 drydock on 01.31.15 at 1:35 am

#141 Waterloo Resident on 01.30.15 at 10:39 pm
Remember a little while back, how I said I would be dancing in the street if gasoline fell below 99 cents? Well, in some places around the Guelph are gas is going for 81 cents, and yes, I’m really, really happy about that.
As for jobs disappearing; heck, they have been disappearing for the past few decades in the manufacturing fields; nothing new about that.

Nice picture of the pet cat, but this one’s better:

https://www.partyvibe.com/forums/attachments/jokes-humour/5028d1273529769-big-kitty-mancoon.jpg

Holy Toledo, that’s a cat and a half.

#202 Guy on 01.31.15 at 1:36 am

Lets face it, central banks can print money from now til the cows come home. The law of diminishing returns come into effect. A central bank can do its best to create inflation by devaluing the dollar. There comes a point main street can not afford to pay anymore. The only people who gain from it are those involved in the carry trade.

For years now, companies have been getting tax benefits for off shoring jobs. This creates jobs and a tax base in a different country and unemployment here. That damages the economy here! This is unsustainable.

Not only that, governments around the world are quick to bail out big business who had risky venture fail. Thus the debt goes up. Thus the government needs inflation to ease the debt burden.

I can’t run my home finances like that. I have to be responsible but inflation eats up my savings and it costs me money to keep it in a bank. As an average Canadian, I am tired of this irresponsibility!

#203 wallflower on 01.31.15 at 1:44 am

#97 screwed on 01.30.15 at 9:21 pm
Driving through Vancouver. Dozens of listed places sporting the good ‘ole SOLD sticker. In January.

Old boxes, new boxes anything. SOLD SOLD SOLD

Vancouver’s market is RED hot.
= = = = = = = = =
SOLD stickers are a poor proxy for SOLD activity. I walked the west side streets for 31 days of October and saw the same signs with the same SOLD sticker the entire month. One theme that became clear was that many of these properties were gorgeous $5M unlived in homes and many others were trainwreck multi-million dollar properties – sometimes many properties adjacent side by each. Seems to me many of these are just transactions and not actual residence move-in move-out scenarios. So, the agents take great advantage of the absent property owner having zero interest in signage on the property.

#204 drydock on 01.31.15 at 1:52 am

http://www.peakprosperity.com/discussion/91643/house-worth-how-much

Ya gotta check out this house,it’s mind boggling.

#205 Bring it on on 01.31.15 at 2:19 am

I dont see deflation being a big problem for me, because of Casl I’m focusing my selling on business in USA. They are pro business there not petty little whiners who want to live in a nanny state like Canada and then cry when the house of cards collapses?

We have to much crap in Canada how many people cant even park in their garage because its full of crap? Having no money maybe they can start using that crap instead of buying more!

If house prices crash hard great it’ll look good on the fools who overpaid on for a cardboard shack!

The idiots on the last entry who couldnt live on 105,000 with two kids money was tight are you freakin kidding me? This shows how stupid and irresponsible people have become. I so hope they buy a house and get really screwed maybe then the lights will come on!!!

#206 SquareNinja on 01.31.15 at 2:19 am

I need some advice, Garth and fellow blogdogs!

We all know where real estate in Canada is headed, but the missus and I want to buy a $150,000 2-bedroom house in St. Catharines, ON, with a 25% downpayment. Property tax is about $2,200 yearly.

In light of the fact that the price is so cheap compared to the major cities, what do you all think are the chances of a dump in prices? Even if it’s only a couple tens of thousands, hey, it’s still money!

Any and all advice or thoughts would be sincerely appreciated!

#207 On a positive note... on 01.31.15 at 2:22 am

With all the new condos sitting empty and SFD foreclosures about to happen…..
maybe we just solved the Homeless problem.

#208 domain on 01.31.15 at 2:25 am

Our banks are headed for trouble, and they have been downgraded again. They have been fed by mortgage and consumer credit expansion, now the Canadian consumer de-leveraging and liquidation begins, and the systemic risk rises.

An important detail is that when you deposit money at a bank, you become a creditor to the bank. If your bank becomes capital-impaired, and we find ourselves in a bail-in scenario, (many think is impossible, but even Garth won’t say the risk is 0%), depositors may feel comforted in the knowledge that deposits are protected by the CDN Deposit Ins Corp. However, when you look at the Deposit Ins Corp. annual report, you will note that to insure 665B dollars in deposits in 2014, there has been 1.2B dollars set aside for covering losspes to those deposits. Yes, that is correct – 0.18%…

No bank will fail. Stupid talk. — Garth

#209 Setting the Record Straight on 01.31.15 at 2:41 am

@#41 Neta on 01.30.15 at 7:26 pm
Our honorable Joe Oliver just said that there is no housing bubble in Canada, and that Canadians don’t buy houses they cannot afford. Well, I have nothing to add to it. Canada deserves what is coming, whatever it will be. We elect our Government, so we are responsible for its actions and policies.

*******
Pretty funny!
Collective guilt?

If you vote you are not responsible for the
State and its actions. However you are participating the madness of crowds. Stop doing that!

#210 Setting the Record Straight on 01.31.15 at 2:57 am

#38 Darryl

“I see San Fran but not…”

Uhm… Vancouver, the San Fran of the North?

Haha!
*******

Toronto prefered to San Francisco?
Montreal to Sydney?
Stockholm to Almost anywhere? Really ?
People are willing to pay for such high powered analytics?

#211 Keith on 01.31.15 at 3:01 am

“Elected people contribute to their pensions the same as the rest of us” Not exactly Garth, most employers don’t contribute 25 dollars for each dollar the employee puts in. I’d like that deal.

#212 jane24 on 01.31.15 at 4:32 am

I hope for the sake of my Canadian family that this new deflation cycle corrects some of the services overcharging in Canada.

The only two reasons I have ever come up with for Canadians paying so much for services is that they usually don’t travel too far and have no idea what other developed countries pay and the second is cartels within Canada.

Let me give you some examples of some service prices in Canada and prices in the UK. I am using $1.90 Canadian to the British pound £ here. Bearing in mind that it used to be $1.60 to the £, you can see that the price of Canadian services were even more out of whack with the rest of the world.

Dentist – just had a check-up and two x-rays for $50.

Any drug prescription – set price of $15.48 as govt supported.

House insurance building and contents on $650,000 bungalow – $380 per year

Car insurance on VW 4×4, 2011 model, for everything but no stock car racing, for two old people – $570 per year. Hubby’s car cheaper but he drives a small Toyota.

Property tax on that $650,000 bungalow – $2850 per year

Cable TV, basic 50 or so channel package, superfast internet, netflix, home phone and various add-ons –
$110.81 per month

Water for said bungalow – $195 per year

I know for a fact that Italian and German prices are cheaper for many services as I pay Italian ones. Hey we pay through the nose for petrol so take the bus.

Canadians are over-charged but there doesn’t seem to be the competition to bring service prices down. Smash the monopolies.

#213 Borna Gain Virginial on 01.31.15 at 4:33 am

Garth, I love the Blog. Thanks for doing this.

What do you suggest a 31yr old debt free renter do with 4k a month extra money? Same deal- Diversified portfolio? But in what? My TFSA is maxed on some risky investments.. But thats what I chose to do. So where should my real savings go? especially if I want to scoop up a good deal on a house in the future years. rrsp? idk who could advise me about stuff like that?

thanks, bourna ;)

#214 Rabi Dmangycur on 01.31.15 at 4:40 am

Vancouver Real Estate on Drugs explained.

Fifth Estate Unicorns and Marijuana
Stephen Harper and BoC cannot stop:

http://www.cbc.ca/player/Shows/Shows/ID/2651118859/

Best 5th Estate Ever.

#215 macroman on 01.31.15 at 4:42 am

Dang Garth, I bet you have stars and stripes for drapes.

The hockey stick US GDP needs to get from 2014 2.4% to your promised land of 5% is going to need duct tape.

The US is the epicenter of economic shenanigans the rest of the world is forced to deal with.

Those drapes will come in handy south of the Mason/Dixon line when you move.

#216 crossbordershopper on 01.31.15 at 6:20 am

poor people in hamilton have no credit because they have no income because they have no job because they have no education because their parents had the same.
you mention deflation to people in hamilton and they think your talking about the football story of new england and if they were going to win the super bowl.
deflation!!!, there poor man, always have been, always will be.
in terms of garth saying that the oas is a welfare cheque for seniors, sure, whats that any different then getting one by another name for the preceeding 30 years of your life.
this constant talk about real estate prices, and listings going up and down, or diversified portfolio of stocks, or stay liquid sounds all good.
but in reality, a good 1/3 of canadians retire with about zero. that little cpp and oas cheque is all they got and they live on it. go to the down and out grocery stores on barton street you will see the low end buy their sodium filled packaged food, they eat poorly, live poorly, bad teeth, bad relationships, no job, poor housing etc. this is the reality that i see every day.
i still have yet to see a person with a half million dollars in a portfolio who rents a little 2 bedroom from the guy downstairs. it simply doesnt happen. poor people rent not by choice, i dont understand why anyone with means would not own their own place, its just one house. even animals know to have a place, its basic instinct and minus 12 degrees out there.

#217 economictsunami on 01.31.15 at 8:14 am

Policies to pump up the wealth effect and preferably have bubbles unwind (as opposed to pop) had worked rather well for decades.

Once in a life time though, you hit a high saturation rate of both consumer/ business debt, and the ‘new’ tricks no longer work on the old dog.

A new outbreak of buggar-thy-neighbour threatens global growth and stability:

http://www.cbc.ca/news/business/falling-loonie-part-of-a-new-race-to-the-bottom-1.2934962

It’s not just oil: Canada’s slumping GDP reveals troubles in just about every sector:

http://business.financialpost.com/2015/01/30/canadas-slumping-gdp-reveals-troubles-in-just-about-every-sector/

Cheerleaders and funeral directors for US GDP:

http://www.usatoday.com/story/money/2015/01/30/first-take-gdp/22582817/

How does it work again, when everyone wants a low currency, to become an exporter, just when end demand has effectively contracted?…

#218 Rapier Wit on 01.31.15 at 8:26 am

What would Garth say to this couple?

http://www.theglobeandmail.com/globe-investor/personal-finance/retirement-rrsps/young-professionals-not-sure-what-they-can-afford-for-their-first-home/article22727751/

The advisor does not seem to address the issue of RE not always moving up.

#219 Hicksville Alberta on 01.31.15 at 8:36 am

Month end Bloodletting in the field and shops of the oilpatch service companies in Brooks yesterday. Way worse than the 1980 NEP slaughter as that was caused by just one dink and was local to Alberta and the west and not international.
Didn’t matter who you were, who you knew, how good you were, how much you needed your job. It just didn’t matter. Two youngest sons lost their jobs along with a female cousin together with a lot of the friends they grew up with and went to school with.
One of the sons had a good run. He has three trades and is just finishing a fourth and took on anything including a good run of twelve to fourteen hour days for months with no time off, and has kept most of his funds (after tax of course) and will have no real problem finding something if he needs it.
I hear already the equipment auctions are all booked up for months on end and have heard of things like good backhoes and such going for $15,000 to $20,000 far from normal resale pricing.
I’ll bet the same kind of thing has happened all over the Province yesterday in one way or the other and the fallout will be intense unless this ends up being only temporary and the price of oil and gas start going up again in price significantly. (not my bet though. I think this has legs)
Meanwhile the new premier has asked for a 5% cutback in salaries of the elected Provincial MLAs which unfortunately just shallow tokenism when probably half of the cutback is tax anyway. Should have been at least 20% to 25% followed by an order of the same to the drone factory of the privileged civil service class in all areas along with a cutback of at least 20% to 25% of Provincial employees in number and a very significant cutback in their pensions. That could be a model for the whole country and it is at least necessary to get this country back on track somewhat.
That won’t happen though. In fact the City of Calgreedy went on with their raises and literally laughed off the rest.
And Harper and the Feds not content with gutting the savers and their families with no interest on their savings has now devalued the currency which they are in by close to 30% in just over the past year.
Maybe if they piss off and hurt enough people with their arrogance and ignorance changes will be made.
I hate to see good people hurt by the actions of ignorant selfish effers and those type seem to abound in this country.

#220 cropgrower on 01.31.15 at 8:49 am

KAC #93…..now that was funny. Did you notice how 90% of the bloggers here swallowed hard when they read your post……and Garth is defending mp pensions

I defend nothing. I simply point out errors, prejudices, myths, falsehoods, misconceptions and brain rot. I’m busy. — Garth

#221 eric on 01.31.15 at 8:56 am

CIBC also said they plan to hire 5000 people too. Don’t you think this is important?

Also, JP Morgan is only predicting 20% fall? Right, how much RE has risen since 2008?

#222 Morten Baltzersen on 01.31.15 at 9:21 am

Mr. Turner, you know too well that the vast majority of us are kept behind a huge “credit” wall errected by a few priviledged holding the monopoly franchise of money creation. Absolutely no reason in portraying in demeaning tone and style the “choices” we are faced with along our pathetic existance and especially during our retirement years. Apart from this, your endeavour deserves respect.

#223 Yuus bin Haad on 01.31.15 at 9:27 am

Let’s celebrate Garth’s epiphany! All the “FIRST!”ers will leave and Garth can be shown the secret handshake.

#224 Elcheapo on 01.31.15 at 9:28 am

167-Mister Obvious….it’s DOWNTON ABBEY. Downtown Abby is that nice blonde who works at the corner of Jarvis and Gerrard. Lovely girl. Maxes out her TFSA first every year.

#225 Bottoms_Up on 01.31.15 at 9:41 am

#210 jane24 on 01.31.15 at 4:32 am
————————————————–
Part of it is probably our small population and large land size, but also lack of competition, and regulations that allow monopolies (ontario beer store for example), and also that regulate high prices on milk and cheese and alcohol.

Ontarians pay the highest automobile insurance rates in NORTH AMERICA, despite having some of the safest roads and drivers. When my premium went up 10% year over year and I inquired, it was because ‘owners of the same car type got in more accidents that year’. Nothing to do with me, my driving habits or history.

My house insurance premium just went up 10% and I was told this was due to the increased claims last year ‘due to flooding’. I can’t recall any flooding in my area, nor city, so can only assume they are distributing massive claim expenses (from Calgary flooding?) across Canadians.

#226 Bottoms_Up on 01.31.15 at 9:43 am

#209 Keith on 01.31.15 at 3:01 am
——————————————–
Keith, you’re wrong.

The Pension Reform Act amended the Members of Parliament Retiring Allowances Act so that MPs will pay 50% of the pension plan’s cost. The age at which MPs can retire with an unreduced pension will also rise from 55 to 65, as of January 1, 2016.

http://actionplan.gc.ca/en/initiative/pensions-public-servants-and-parliamentarians

Also worth noting: the average MP lasts 4.5 years in office and collects no pension. Don’t believe everything you read. — Garth

#227 maxx on 01.31.15 at 10:18 am

“So, I give up. There’s no point trying to change things.”

Nutz to that! Don’t you dare give up!

Change is here, it simply doesn’t engage and deploy until a sufficient amount of pain is felt via attempting to repay excess debt within the framework of new employment realities. New employment realities were forged mainly by the single goal of corporate balance sheet protection, forced by ratings agencies. The resulting job cuts play hell with people’s security and life optics.
The speed and magnitude of job loss and business migration out of Canada is happening frighteningly fast and the indebted will be scrambling madly to pay off debt. Those with jobs, that is. Those without will try their luck with credit counselors, but without a job, even they cannot help.

#228 unbalanced on 01.31.15 at 10:37 am

Dole, call it whatever you want. I paid into the system and I want what is entitled and promised to me. Great idea. Take the OAS money and stand outside a liquor store in Winnipeg. Hand out booze, cigs and money for VLT’s to the people who didn’t pay anything into the system.

#229 Nomad on 01.31.15 at 10:58 am

Hello Garth.

For those who have followed your advice, renting and accumulating wealth. May you have a future blog on where to put it as far as etf’s are concerned. I have recently bought etf’s from Horizon, iShared, BMO and Vanguard. How much impetus should you put on MER’s vs. Dividends. Thanks.

#230 CD on 01.31.15 at 11:08 am

Jane24

Your bills are definitely lower than ours.

House – assessed at 740K – taxes $7200.00/yr
Insurance $1200/yr
Home phone, internet, cable TV and 4 cellphones (2 for kids and 2 for me and hubby $410.00 (ripoff)
17 year old wants to drive his own car but insurance quoted is $500 per month ( yeah right – no deal)
so he drives our car as an occasional driver for $140 per month)
Water (we have our own well so no charge)
The only thing we can try to cut is the Rogers bill but hubby watches sports so we can’t cut the cable bill and dear kids don’t want to part with their cell phones.

#231 Victoria Reality on 01.31.15 at 11:21 am

#130 prairie person

“There was no buyer, no buyer, at any price, for Craigdarroch Castle in Victoria. Beautiful building, great grounds. No buyer. It finally was auctioned off.”
—————
First of all, Craigdarroch Castle has the tightest Historical designation possible. Meaning it can’t be altered in any way. No other use will be allowed than the preservation as a museum. No restaurants, no discos, no antique stores…

Second, the City and Province will not allow any additional density to be built on it’s grounds. So that rules out any developers with ideas of building condos next to it.

Third it’s in a desperate state of disrepair. It will require millions to upgrade the existing building nevermind retrofit for the seismic upgrading it requires.

So, maybe choose a better example to heighten your fear mongering.

#232 Alex N Calgary on 01.31.15 at 11:34 am

Things are dark at my oil and gas co lately, they’re working hard to show #’s that justify our existance to MegaCorp and not shut us down and move limited operations to the new facility they just bought for peanuts in the USA, not looking good, so many hard working immigrants at work, gonna be out on their toots, its a great job too, I will miss it if we get chopped.

I heard on the radio last night a DJ talking about how we’ll all get through these hard times. Not 2 weeks ago the premier was preaching this would be a bump in the road nobody would even remember next year….

Fancy girl at work with her expensive cars and purses is finally starting to look grim after pumping for months we’d be fine of course and better then ever….

People are still buying houses somehow around here, rathole down the street has a for sale sign at around 600k list but I think its a conditional sale.

After nearly 4 months of telling my best friend in ontario who works remotely for a O&G services company to save his money, come here in person and lock down a job for his Health-services wife, please please don’t buy that new car for Xmas, just wait bro, wait till april, I called like every day for 4months warning and pleading, he ignored every single word until he got the call from his boss yesterday….zero savings, mass expenses, wife out of work in country-ontario, you can lead a horse to water right?

I was trying to find Data from the US collapse of another city that was so one trick pony, like Calgary and how fast it went down, Miami was my guess, but is there any? so many people who came from out of province fleeing AB, could we have 50,000+ empty houses here? We have to move again rental in a month, 5th in 5yrs, but it might finally be worth it.

Me and the only other family in Calgary it seems, who are renting and waiting, were talking about the political motivations of the Cons for engineering this massive bubble, could you explore the reasons behind it? why the opposition has never spoken of it, why are people so attached to houses its become total Taboo to speak about it openly. People here have no idea, they just see oil, EVEN that people are just glossing over now, is it human nature? we just don’t get it.

Thanks for doing such a great job all these years and we’re finally here, keep up the great posts I’ve been directing as many people here as I can, even though for most of them its far too late :)

#233 Financial Freedom at 40 on 01.31.15 at 11:40 am

Today is month-end detailed portfolio review. Noted one actively managed fund is now 50% in cash, when it is usually 100% equities. So the suits who do technical analysis and boast quant models are making a piece of me defensive. Wonder when it will hit 100% cash… On the self-managed side, India aka Modi-mania, keeps showing well (helps not to be an oil producer?). Comfortably real estate frigid, really doesn’t turn me on. Hopefully ready for February volatility, and trying to stay employed by keeping head down and producing.

#234 honeybooboo on 01.31.15 at 11:51 am

#49 Darryl on 01.30.15 at 7:41 pm
Two weekends ago a house on my street went up for sale .( Mississauga ) Last weekend it sold after one open house. 986k asking and not sure on selling yet.

Today I see another for sale sign . Wonder if it’s a trend . Maybe it’s time for me to sell.
============
Are you on Blackheath?

#235 Ret on 01.31.15 at 11:55 am

#204- A $150,000 house in St. Catharines could be good but not if you are trying to commute to Hamilton or Toronto every day. If this is a “drive until I qualify” situation, forget about it.

Don’t expect prices to appreciate in St. Catharines, Welland, Port Colbourne, Fort Erie etc. While cheaper than the GTA, cheap money has artificially goosed prices in this area which is essentially an economic black hole.

Any turn down in RE prices will hit the burbs first and hardest. The Niagara Peninsula has already peaked IMHO.

If the place is only$150,000, how much are comparable house rentals a month?

#236 Incubus on 01.31.15 at 11:56 am

Mortgages frames negative rate for the first time in Denmark.

https://translate.google.com/translate?sl=auto&tl=en&js=y&prev=_t&hl=en&ie=UTF-8&u=http%3A%2F%2Fwww.dr.dk%2FNyheder%2FPenge%2F2015%2F01%2F30%2F0130122132.htm&edit-text=

#237 rosie "moving forward" in the knowledge that, "this won't end well" on 01.31.15 at 12:07 pm

The issue of politicians pensions is simple to address. When some one is elected to any office they shall receive a payment, for pension purposes, equal to the amount they were contributing prior to getting elected. For example, if you were an economist contributing say 10% of your income into a defined pension. That amount would be locked in, with cola, until you retired or were turfed. Your pension would be guaranteed at your pre politician rate. Of course if you were elected with no pension contributions then the taxpayer would be off the hook for you. You probably should not have been elected in the first place.

And we end up with rich, patrician leaders. Just like the 19th Century. Brilliant. — Garth

#238 Ontario's Left Coast on 01.31.15 at 12:11 pm

Mr. Garth, I’ve never seen you so close to capitulation, or perhaps it’s just utter exasperation with the sheer insanity that surrounds us. Rest assured that you have shepherded countless souls through a strange, barren wilderness at what can only be described as a tipping point in the history of our country. For that, you deserve our most sincere thanks.

#239 Marco on 01.31.15 at 12:18 pm

@big leafs fan.

Why not if your employer has to pay a bit more in to it as well. With stagnate wage increases in the private sector and a bloated public sector, seems like a good idea. Flahert also considered the idea but he said he would wait for a stronger economy (guess not now) and didn’t want to burden the employee and employer with more tax, albeit slight. Probably just appeasing his electorate.

Cheers from a non Kool Aid drinking Habs fan.

#240 Retired Boomer - WI on 01.31.15 at 12:20 pm

After reading all the differing opinions on Friday’s posts, it looks like a convention of economists. That crack means they are all pointing in different directions!
Some doomers, “Canada’s done”; “the U.S. is all smoke and mirrors.”
Very few who offer any solutions for a “fix.”

We do NOT know the future, but we can see where what we are currently doing will likely lead. YOU are likely the biggest cause, as well as the biggest cure for your own dilemma. Some are managing well, being aware of their limitations, earnings, spending, etc. I hope you weather the times well.

I am taking a break from commenting. I don’t understand the current situations around the globe. I think I know what I’m doing for this house, but that is not your house.

February is defrost in Florida month for the Retired Boomers, so we embark to visit the warmth, and bum the sands of the Gulf. Tough job, but somebody must step up.
Gas is lower, so are portfolio numbers presently, but they always move with the market.

Solve the problems of the world, I’ll be back next month, or maybe not, as we never know….

Honorable Garth,

keep stating the truth to nonsense. There has been so much good, free, actionable advice over the years – truly, a Public Good!
My portfolio, now balanced, and growing reasonably, and I thank you!
See you all next month, same bat time, same bat channel

#241 Obvious Truth on 01.31.15 at 12:25 pm

Thanks to Hicksville and Alex. A real perspective frm thoughtful hard working individuals and their families. Good luck to your families and kids. You both will obviously do what you can to help.

As Alex points out there is plenty of blame to go around. It appears to be mostly on the policy side. Alex gave just one example. The politicking is ridiculous. Cue the joe o comment that the boc doesn’t see a housing problem. Somebody should point him to the presser where he said the overvaluation was 10 to 30%.

It will be important to keep the right perspective and not be divided by which sector of the economy people work for. That’s tough though in the heat of the moment. When self preservation mode kicks in. Just read a great piece about Greece and the human emotions that lead people to certain behavioural outcomes. Let’s hope we can do better.

#242 Blacksheep on 01.31.15 at 12:35 pm

Alex # 230,

“why the opposition has never spoken of it,”
———————————————————-
Two heads, one snake….

#243 Marco on 01.31.15 at 12:42 pm

@Jane24

Good post. We are overcharged on service charges here because of not enough competion. Also I think because people here are made to feel like they are richer then they think (is that trademarked?) With high house selling prices “heck just load it onto the Bank of House.”Deflation should take care of this when big ticket prices come down and the service industry is clambering for clients that can or are willing to pay their exorbitant prices. They will be looking for bargains. We may even see more choices coming down the pipe. Competition is a good thing and it creates more jobs.
Cheers.

#244 Obvious Truth on 01.31.15 at 12:43 pm

#231

Feels like everyone is protecting themselves from a potential messy Greece situation. There is lots of bearishness. I’m betting that the bears have to get back in soon. Just too much money sloshing around.

Greece will get what they want. They invented politics. Europe has too many troubles right now and like it or not this syriza crew has got game. They haven’t even broken a sweat. And I don’t think they can be bought. The people have spoken. Seriously, what’s a couple hundred billion euros these days.

Can’t say I blame people for protecting though. Db is what I watch and I don’t see a new low.

#245 Snowboid on 01.31.15 at 12:46 pm

#219 eric on 01.31.15 at 8:56 am…

“…Right, how much RE has risen since 2008?…”

Although this compares last summer with 2008 in Kelowna, the math speaks for itself!

Residential SFH:

Summer 2008 Median – $470,000
Summer 2014 Median – $450,000

Condo:

Summer 2008 Median – $247,500
Summer 2014 Median – $225,000

Residential Waterfront:

Summer 2008 Median – $2,925,000
Summer 2014 Median – $1,500,000

#246 Mr. Frugal on 01.31.15 at 12:48 pm

Your slight aside, OAS is dole. You contribute nothing directly to it, unlike CPP. People who must rely on $537 a month in public funds in old age should be ashamed that, in 65 years, they failed to prepare for their own future. Nothing political about that. — Garth

Way to go Garth!!! Call it like it is.

#247 Souvereigninternational on 01.31.15 at 12:55 pm

Excellent, simple explanation of deflationary mechanics. Next blog I assume will be called “what follows ? Inflation”. Also may have placed an asterisk after “there, it worked” with explanation – see blog dogs for rebuttals. I guess it depends on what one assumes the goal of that work was suppose to be. It was certainly not a long term economic stability and prosperity. To generalize, it worked-sort of.

#248 crowdedelevatorfartz on 01.31.15 at 1:02 pm

@#230 Alex in Calgary

Houston might be a better comparison to Calgary for real estate stats.
Found a link that goes back to 2009 house stats.
http://www.google.ca/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=1&cad=rja&uact=8&ved=0CC8QFjAA&url=http%3A%2F%2Fwww.har.com%2Frs_houston_market.htm&ei=aQnNVP_NI8jcoAS9qIDICA&usg=AFQjCNHXWuaT-R0myTEXTMSd4HNTyKf7Jw

#249 Mr. Frugal on 01.31.15 at 1:05 pm

OAS is welfare anyway you look at it. It’s a more dignified approach than roadside beggars or the poor house. But it’s still a social safety net for those that were unable to set aside enough for retirement. Those seniors that bitch and wine about their entitlements should be ashamed of themselves.

#250 NoOneOfConsequence on 01.31.15 at 1:05 pm

GARTH!
To take this blog over the top…you should add a rating system to the comments!
I have to say that myself and pretty much everyone else would be happily up-voting and down-voting with gusto!
Do it!

#251 Short Canadian Banks on 01.31.15 at 1:16 pm

These CIBC layoffs are just the tip of the iceberg.

Middle management at the bank I work for are in full cover-your-ass, batten-down-the-hatches, survivor mode. My guess is the real fireworks begin after fleecing, I mean, RRSP season.

A TSX short is looking better than something like “freefall mode” CPD for the portfolio.

Sorry about your employment security, but jobs are being cut to protect dividends. This is probably a buy sign. — Garth

#252 Yuus bin Haad on 01.31.15 at 1:24 pm

P.S. Careful kids – Mother Nature’s back in charge.

#253 Nemesis on 01.31.15 at 1:34 pm

#GuessWhat!?!… #YourSillySaturdayPotPourri…

#NoWesternValuesForYou!…

[SCMP] – Chinese universities ordered to ban textbooks that promote Western values

…” Teachers must also not grumble in class to avoid “passing on negative emotions to their students”, Yuan reportedly said.”….

http://www.scmp.com/news/china/article/1695524/chinese-universities-instructed-ban-textbooks-promote-western-values

#SoHow’sThatWorkingOut?… #Ooops…

[TumblrFeed] – University of Beautiful Cars: Struggling students need new Porsche…

http://universityofbeautifulcars.tumblr.com/

[SCMP] – Dirty and decadent: Double D burger joint to go head to head with Hooters

…”With a tagline “Dirty and Decadent”, the brand is making no apologies for its use of double entendres and it is, in fact, a requirement for prospective staff to have a “double sense of humour”…

…But with a huge billboard of women clad only in lingerie, and a playful, yet questionable job ad for staff, the restaurant’s plans are already on the radar of Hong Kong’s equal opportunities watchdog.”…

http://www.scmp.com/news/hong-kong/article/1697298/dirty-and-decadent-double-d-burger-joint-go-head-head-hooters

#ShornOfTheirDoubleD’s… #AndBereftOfLamborghinis… #London’sPeasantsAreClearlyRevolting…

[Guardian] – Thousands gather in London to protest against lack of affordable housing

…”Leading the march as it crossed Tower Bridge in driving rain was single mother Jasmin Stone, from Newham in east London, who chanted “social housing not social cleansing” with her friends.

The 20-year-old said skyrocketing rents and unscrupulous landlords had already forced a number of her peers from a capital they can no longer afford.

She said: “I’ve already lost quite a few of them, it’s extremely unfair that young people cannot afford to stay in the city they love and grew up in.”

Behind her, protesters warned Johnson that the march was just the start of their campaign by holding aloft a huge banner that read “this is the beginning of the end of the housing crisis.”…

http://www.theguardian.com/society/2015/jan/31/hundreds-gather-london-march-for-homes-protest-city-hall-affordable-housing

#TheEstablishmentPrepares,Or… #MeetBrigade77…

[Independent] – New British Army unit ‘Brigade 77’ to use Facebook and Twitter in psychological warfare

…”The troops are supposed to deliver “means of shaping behaviour through the use of dynamic narratives” with teams focusing on psychological operations and interaction with the media.”…

http://www.independent.co.uk/news/uk/home-news/return-of-the-chindits-mod-reveals-cunning-defence-plan-10014608.html

#254 SWL1976 on 01.31.15 at 1:34 pm

#162 Washed Up Lawyer – I don’t think those numbers are too far out of line. I fly charter from Calgary right to site which will remain nameless and have only ever been into the city of Fort Mac less than a handful of times. With construction here in full swing it was regular to have a few 737’s in and out of here full everyday of the week and peak days they were shift changing 1500 a day.

Lots of fresh cuts this week and running lean and mean seems to be the new order of business. Welcome to doing more with less which will be an adjustment for most, but for me… Well I grew up on a farm and have worked on the coast in saw mills with no budget. Let’s just say I know how to improvise and keep things running when required

#255 rosie "moving forward" in the knowledge that, "this won't end well" on 01.31.15 at 1:35 pm

We might end up that way but that would be up to the voter. In the 19th Century you had to be male and a landowner. Only land owning males could vote. I don’t know if Canadians would embrace wealthy white males more now than then. Seems that they vote for regular citizens who they know. Teachers and police officers and the like.

http://www.parl.gc.ca/parlinfo/Lists/Occupation.aspx?Menu=Parl-Sen&Section=03d93c58-f843-49b3-9653-84275c23f3fb&Parliament=1924d334-6bd0-4cb3-8793-cee640025ff6&Name=&Party=&Province=&Gender=&CurrentParliamentarian=True&Occupation=&OccupationType=

#256 Sky on 01.31.15 at 1:38 pm

Mr. Turner, do you really feel such contempt for those collecting their meager OAS that you term their contributions ” nothing”?

What of those who paid in blood ? Those countless women and children who lost husbands and sons in WW2 and were left to quietly eke out an existence forever having lost their main means of support. What of the young men who did come back, albeit with a much diminished earning capacity because they returned minus a limb or blinded? Perhaps head injured or suffering a lifetime of PTSD. Do you begrudge this generation their OAS?

Or is it the boomers you take issue with? Of course there’s no money in the system to pay the commoners OAS benefits. How can there be?

Big Govt spends big bucks on war games and war toys. Or yet another agency to foster the latest social engineering experiment, yet another useless study. Beyond lavish salaries and pensions for those folks though.

And it’s the army of govt employees with their taxpayer subsidized pensions who are really sucking the system dry. These are the retirees who get to retire early and in style. Their biggest worry is how to fit in both the lobster and the king crab on their latest Caribbean cruise.

Non-govt workers, for the most part, have been bled dry and crippled by the very system that promised them at least a very marginal subsistence in their old age. Hahaha! They promised us decent health care too.”Health care” sounds so much better than what it really is – disease management for the sheeple.

Listen up now, boomers. It was a shakedown racket all along. Huge chunks of your hard earned money went to fund Big Gov. and their coddled minions. They may throw some of it back to us as OAS… or they may not. They might to choose to kick us all to the curb now that we have fulfilled our purpose in providing THEM with their lives of security and comfort. So what!

We are the battle hardened denizens of our own frozen country, our own Siberiana. We will survive. What’s another kick in the teeth, even from you, Garth Turner? We’re so numb we can’t even feel it.

I have a new religion. It’s called Political Atheism. Anybody care to join?

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

( BTW- fabulous DVD )

This blog has achieved a new level of whiny hyperbole. To blame everything, and everyone, other than yourself – what a relief that must be to you. — Garth

#257 Panhead on 01.31.15 at 1:43 pm

Was on the picket line last night as we have been locked out by “the company.” My cohorts are mostly half my age, all were making good money out here in YVR land. I mentioned around the burning barrel that the latest interest rate drop was not good for us. The first thing one of them replied was “it’s gonna be a buyers market now.” I know we’s forked …

#258 A good squirrel takes care of his nuts on 01.31.15 at 1:44 pm

Hey Frugal, you’re a sweet human.

#259 CalgaryRocks on 01.31.15 at 1:46 pm

So, I give up. There’s no point trying to change things. Human frailty wins.

This blog will henceforth allow only astute, prescient, unhorny people to read it. Govern yourself accordingly.

It’s usually when people capitulate and give up that the markets turn around and go their way.

#260 pinstripe on 01.31.15 at 1:47 pm

I was born in 1926 and as a kid witnessed some of the hardship with the depression.

people with money did okay. people with debt got screwed but in the long term they did better than okay.

for example, where I was raised, grain that was worth one buck fifty dropped to ten cents a bushel. farmers who had grain in storage were forced to sell the grain to pay the storage fee asap. interesting that grain prices dropped but storage fees stayed the same or were increased. that is how business works.

this blog provides a lot of value to the young people. as a senior I am willing to share the ups and downs of how the system is designed to reward the irresponsible non savers and punish the responsible savers. there is a big gap between the promises made and promised kept by the policy makers.

With the possibly of a depression. if I was young today, I would borrow as much money as possible, wait and buy real estate. the irresponsible people with debt will be rewarded. the responsible people with saving are being punished already.

There is no depression coming, nor debt forgiveness. Your advice is a bomb. — Garth

#261 I know where my nuts are. on 01.31.15 at 2:07 pm

Harpo’s got no clothes.. couldn’t have happened to a sweeter dud.. thanks Harpo

http://www.theglobeandmail.com/report-on-business/economy/canadas-economy-slumps-in-november-as-factories-energy-sector-hit/article22716702/

#262 Victor V on 01.31.15 at 2:08 pm

http://www.newstalk770.com/2015/01/30/labour-minister/

The downturn in the economy caused by plummeting oil prices has resulted in thousands of layoffs in Alberta. Twenty to 25 thousand job cuts have been announced in the oilpatch so far, with additional losses in other industries, and more yet to come such as when Target leaves Canada.

However, Ric McIver – Alberta’s Jobs, Skills, Training and Labour Minister – says the government’s priority won’t change, that it will be on finding jobs and training for Albertans and Canadians. McIver acknowledges that strategies will have to change to accommodate the downturn, but even with the expected 22 percent increase in the number of unemployed workers, which is a serious number, Alberta’s overall jobless rate will still reflect a balanced labour market.

McIver says historically the economy has had its ups and downs, so the government and employers have to think long-term about retaining skilled workers for when the good times return.

#263 Keep yer nuts safe. on 01.31.15 at 2:11 pm

Load up up on debt.. yeah pinstripe….. that’s the ticket!

#264 MarcFromOttawa on 01.31.15 at 2:14 pm

#248 NoOneOfConsequence

Speak for yourself and go back to CBCnews to complain about Harper on a story about NFL football

#265 Don't put yer nuts all in one bin. on 01.31.15 at 2:20 pm

Well I certainly don’t want the government making me comfortably numb.. that’s my job…. but I have no problem with OAS… claw it back to only the truly needy… a little compassion goes a long way

#266 };-) aka Devil's Advocate on 01.31.15 at 2:23 pm

* * * ALERT * * *

BUYING OPPORTUNITY

Without question there are concerns about our economic future. I personally have had two real estate deals go sideways because of the recent changes in the Alberta oil industry. But it is “fear” which most drives such SHIFTS and invariably it seems those concerns never play out quite so intense as our fears suggest they may.

The economic failing (correction) of 2008 did not affect real estate prices nearly so much as most of the posters on this blog thought it would or should.

90% of what we worry about never does come to fruition.

Right now fear is driving the market. Sellers are not reducing their prices accordingly in hopes that these market concerns will blow over and I am sure, in due time, they will. That said, faced with a strong offer on the table Sellers are looking long and hard at their options as they too must admit they have concerns about our economic future and maybe that offer sitting on the table before them is one they might regret not having taken should they not.

If you are considering a buy now may be an opportune time for you to carve out a deal with that seller that otherwise may not have been so keen on working with what you have to offer.

I personally am confident this time of concern, as practically every one before it, will not play out nearly as dramatic as the masses believe it will. It is what it is, was and will be. You can’t do anything about the past and you can’t predict the future but you can influence your own future by what you do today.

It is the masses which move the markets emotionally and invariably you can use that to your own future advantage if you understand how SHIFT happens… and learn to ride the tide. Think about it… if not print this and tape it to your fridge for reference a year from now.

};-)

#267 Honey Dripper on 01.31.15 at 2:52 pm

How about split shares? are they a good buy in the current environment? is there a place for them in a portfolio?

#268 Mike T. on 01.31.15 at 2:55 pm

‘To take this blog over the top…you should add a rating system to the comments!
I have to say that myself and pretty much everyone else would be happily up-voting and down-voting with gusto!’

NEVER NEVER NEVER do this
not everyone shares your ‘gusto’

instead of dreaming about voting up and down comment (seriously, of all activities available to you on Earth this is what you would choose?) go outside and live and be free and happy

who cares what a bunch of random people (myself included) think

the irony of my post is not lost on me so you don’t have to bother

#269 death over house on 01.31.15 at 2:58 pm

Tragic

http://www.msn.com/en-ca/news/canada/home-sweet-homewreck-this-is-the-worst-reno-story-you-will-ever-hear/ar-AA8Ngju?ocid=mailsignoutmd

#270 pinstripe on 01.31.15 at 3:03 pm

#261 Keep yer nuts safe.

Load up up on debt.. yeah pinstripe….. that’s the ticket

————————————————————-

How much debt is held by the feds?

how much debt is held by the provinces?

How much debt is held by the municipalities?

How much debt is held by individuals?

When is the policy going to change to punish debt holders and reward savers?

#271 Cow Man on 01.31.15 at 3:10 pm

# 254 Sky:

You posting is right on target! Well said. Thank you The big disconnect is not between the 1% and the 99%. The big disconnect is between the defined benefit tax payer sponsored retirees and the rest of the Canadian Population.

#272 Detalumis on 01.31.15 at 3:14 pm

#214, you forgot one thing, the life expectancy in that part of Hamilton is now a whopping 65.5 so third world, yeah. They won’t live to the new OAS age, they won’t be filling up the LTC beds for years with Alzheimer’s like the healthy old-birds because they just-drop-dead before that. That’s what a lifetime of living in poverty does to you, you live your life on fast forward but it seems that people really do not care.

1/3 of the population are just not all that intelligent and they all can’t be retrained as engineers and RNs. Manufacturing used to be a sort of “sheltered workshop” that let you live a half-decent life but we don’t think that 1/3 of Canadians are worth even that. We prefer to blame the victims.

#273 Retired Boomer - WI on 01.31.15 at 3:28 pm

#258 Pinstripe

Advice to “go into DEBT borrow as much as you can.”

Well there ARE effects from dementia aren’t there? Born in 1926 were you? Puts you at about 89. Congrats on making it this far, you’re bettering the averages.

My dad born in 1910 got to see his father lose the family farm when the Bank their savings were in -and the mortgage on the farm went bust in the early 30’s. Someone bought the mortgage but nobody ever found the savings. Remember that was before deposit insurance.

People with no debt, or minimum debt have the most control in tough times. We can guess about tomorrow, or speculate (bet). I do that all the time with holding stock equity funds and bond (debt) funds of varying stripes.

Could it all go to shit, and I lose it all? Possible, but not very likely. Could I lose my home, or cars? No, they’re paid off. Could I lose my health? Sure. My life? You bet.

Why worry over what you have no control over, that is…. stupid. I’ll worry about today, and we can let tomorrow arrive, and then work through that day. I have what I need for today.

#274 Marco on 01.31.15 at 3:36 pm

@Pinstripe

With all due respect, you are joking right? I refuse to buy an over inflated priced house from a boomer to help finance their retirement. Not going to happen. It would be irresponsible for a young person to take on debt and then buy right when prices start slipping. Wait it out, save, invest, rent and don’t give in to outside pressure and propaganda. Who do they think are going to be able to afford to buy their houses in the future?
Cheers.

#275 kommykim on 01.31.15 at 3:45 pm

RE:#254 Sky on 01.31.15 at 1:38 pm
Listen up now, boomers. It was a shakedown racket all along. Huge chunks of your hard earned money went to fund Big Gov. and their coddled minions. They may throw some of it back to us as OAS… or they may not.

At least you got to collect your OAS at 65. The rest of us have to wait till 67 and maybe longer if Harper gets in again. Quit your whining. Garth is right, the people who pissed away their money in their youth have no one to blame but themselves.

#276 Mark on 01.31.15 at 3:46 pm

“Is there a point in time that RE becomes a good investment as prices fall?”

Don’t know if you read one of my previous posts on the topic, but I personally wouldn’t “invest” in residential real estate until it was beneath historical ratios, and actually presented itself as an investment-worthy prospect based on cashflows and rents alone.

In a previous post, I argued that the long-term P/E of a stock that only grew its earnings at the rate of inflation, was only justifiably equivalent to 8-10X GAAP “earnings”. If you translate this back into rents by netting out expenses, taxes, depreciation, etc., you would be looking at paying 5-8X annual rent to buy real estate.

In the practical world, this works out pretty close to the often-cited “never pay more than 100X monthly rent for real estate”, or paying around 1.5-2X average annual income. It represents market conditions which are obviously profoundly disenthusiastic for real estate.

Until such market conditions appear, it is quite likely that there are other investment-worthy investments. The contemporary P/E of the Canadian housing market is around 35X earnings. It is relatively trivial to buy a stock index fund that grows its earnings in-line with nominal GDP growth for a mere 15X earnings. Real estate, hence, is not the least bit interesting to a long-term value investor at this point, and the elevated P/E multiple implies that it has a long ways to fall on a relative basis.

#277 theAwakenedOne on 01.31.15 at 3:47 pm

I like this fuzzy fat pussy cat ! … now… imagine dropping this big fat one right onto Emperor Haute Couture’s hairy naked lap…

Here: the real questions for Garth and all prescient, astute & un-horny (and horny) readers:

What would happen next, hmm ?? Will Canada’s economy & housing market fit the same scenario here?

#278 Victor V on 01.31.15 at 4:15 pm

http://www.theglobeandmail.com/report-on-business/economy/canadas-economy-slumps-in-november-as-factories-energy-sector-hit/article22716702/

The surprise nature of last week’s rate cut has ramped up the uncertainty surrounding the central bank’s policy path, and as a result, any additional cutting would call for some detailed explanation from Bank of Canada Governor Stephen Poloz, to keep financial markets up to speed with the bank’s thinking. For that reason, the bank may prefer to wait until its April 15 rate decision, when its scheduled announcement will be accompanied by a Monetary Policy Report and a news conference with Mr. Poloz, rather than just the usual one-page policy statement that will accompany the March decision.

But given the sour November numbers and the prospect of things getting worse before they get better as the impact of the oil shock deepens, a growing number of economists feel the situation warrants quick action – the central bank should cut again at its next available policy-setting opportunity.

“The contraction in November increases the likelihood that the next move will be in March,” Mr. St-Arnaud said.

#279 Victor V on 01.31.15 at 4:26 pm

http://www.theglobeandmail.com/report-on-business/top-business-stories/the-big-easy-how-the-canadian-dollar-would-sink-if-poloz-cuts-again-in-march/article22721932/

Here’s what Camilla Sutton, the chief currency strategist at Bank of Nova Scotia, would expect to see if Mr. Poloz grew ultra-easy and indeed cut again in March, and why:

A second cut would mean that oil prices are even lower, because the central bank would otherwise not feel the need to act.

Coupled with that is the fact that markets are now pricing in a 28-per-cent possibility of a March move, and a 75-per-cent chance of action within six months.

That means they’re not overwhelmingly counting on a cut at the central bank’s next meeting. Which, in turn, means another cut would be another surprise and, thus, a “significant reaction” for the Canadian dollar.

Such a scenario could drive the loonie down to the 75-cent range, Ms. Sutton said.

#280 Washed Up Lawyer on 01.31.15 at 4:32 pm

#271 Retired Boomer – WI

Enjoy your trip to Fla. Look forward to hearing from you. Meanwhile, I’ll just keep stoking the furnace up here in the taiga. Minus 32 Celsius today. Sunny though.

#281 mnpr on 01.31.15 at 4:33 pm

#254 SKY

here here

#282 Darryl on 01.31.15 at 4:40 pm

#232 honeybooboo on 01.31.15 at 11:51 am
#49 Darryl on 01.30.15 at 7:41 pm
Two weekends ago a house on my street went up for sale .( Mississauga ) Last weekend it sold after one open house. 986k asking and not sure on selling yet.

Today I see another for sale sign . Wonder if it’s a trend . Maybe it’s time for me to sell.
============
Are you on Blackheath?
——————————–
No

#283 Rob on 01.31.15 at 4:41 pm

#272 Marco, You wrote “Who do they think are going to be able to afford to buy their houses in the future?” It’s only a number. In 10 years time the prices will be higher. I remember way back when people thought, who can afford to buy a house at $150,000? It will never go up? Don’t fight the fed. They want higher prices and will do anything to keep the party going and to get re elected.

#284 Marco on 01.31.15 at 4:59 pm

@Rob

You said: “Don’t fight the Fed”.

Don’t have to they seem to be doing that just fine on their own.

#285 Mark on 01.31.15 at 5:20 pm

” For that reason, the bank may prefer to wait until its April 15 rate decision, when its scheduled announcement will be accompanied by a Monetary Policy Report and a news conference with Mr. Poloz, rather than just the usual one-page policy statement that will accompany the March decision.”

The previous announcement basically wrote into stone that there would be additional cutting if oil was <$60/barrel. So I don't see why there would be any need for Poloz to go into a long-winded explanation already given, and that is, that the economy is heading into deflation, recession, and that policy measures are required.

Its better that the BoC try to get ahead of the curve, than remain behind the curve, finding that the curve inverts, and risking a liquidity crisis.

IMHO, cuts down to zero, and eventually QE will be required in Canada. The next 'shoe' to drop will be the CAD$ going much higher.

#286 HD on 01.31.15 at 5:20 pm

@ Retired Boomer – WI

Take care and enjoy the sunshine. Really enjoy your posts.

Best,

HD

#287 happity on 01.31.15 at 5:22 pm

The whole world is in deflation.

USA has the privilege of the world reserve currency so it will crater last, and worst.

IMF and FSB have been putting in place and talking about a new global multilateral currency and financial system.

When interest rates rise later this year or next, that’s when the poop hits the blades

The US is nowhere near deflation. — Garth

#288 happity on 01.31.15 at 5:29 pm

QE does not create sustainable demand, and the longer it goes on the more it destroys purchasing power and the less likely a real solution can be implemented.

Greece is a small example of what is to come globally.

#289 Kenchie on 01.31.15 at 5:57 pm

#97 screwed on 01.30.15 at 9:21 pm
“Driving through Vancouver. Dozens of listed places sporting the good ‘ole SOLD sticker. In January.”

You know some realtors lie, right? Or, at minimum, they put it up when it’s signed, not necessarily when it’s closed.

#290 Marco on 01.31.15 at 6:01 pm

“QE can fail to spur demand if banks remain reluctant to lend money to businesses and households.”
We are already at 160% average debt to income. Businesses are closing. In a slowing economy it would seem Banks would remain reluctant to lend.

#291 Shuffling the nuts around on 01.31.15 at 6:05 pm

Keep yer nuts safe n dry.. enjoy each day…. savers win some days, debtors win others times… there is no conspiracy!!!. man-o-man….reckless debtors are crazy, but well there ya go……….life in canada is still wonderful

#292 Shuffling the nuts around n around on 01.31.15 at 6:06 pm

Hey happity… get out more.. be happy!

#293 happity on 01.31.15 at 6:13 pm

The US is nowhere near deflation. — Garth

Translation: it can’t happen here

Actually, it won’t. — Garth

#294 Marco on 01.31.15 at 6:28 pm

@Mark

The increase in the value of the currency would only happen if the Banks lend out the money the Gov printed from thin air, and bought long term bonds with? Also to keep this QE reserve going wouldn’t taxes have to be increased. “The central bank always has the option of restoring reserves to higher levels through raising interest rates or other means”

#295 Marco on 01.31.15 at 6:33 pm

@ Mark

Meant to say wouldn’t interest rates have to be increased, not taxes.

#296 Andrew Woburn on 01.31.15 at 6:38 pm

#204 SquareNinja on 01.31.15 at 2:19 am
I need some advice, Garth and fellow blogdogs!

We all know where real estate in Canada is headed, but the missus and I want to buy a $150,000 2-bedroom house in St. Catharines, ON, with a 25% downpayment.

In light of the fact that the price is so cheap compared to the major cities, what do you all think are the chances of a dump in prices?
=====================

I agree with the comment that trying to commute from St. Catharines is a bad mid-term bet because $70-80 oil is virtually guaranteed in the next 2-5 years as higher cost producers shut down. However, if you are lucky enough to work locally, here’s what I looked at when we moved to Nanaimo.

At first everything looked cheap to us after Vancouver so I needed a point of reference. I decided that 2004 was a reasonable base line since prices really moved after that. I found that prices in the areas we liked peaked in 2008 and slid back to 2005 levels in 2011. I concluded that further decline was possible but a catastrophic drop was unlikely. However real estate can always go down so we had to decide if we could live with a 10-15% drop. So far this hasn’t happened but I can’t rule it out.

The other thing we looked at was community growth. I suspect commercial growth has been weak in St. Kits but it looks like the sort of community GTA retirees might downsize to if they don’t want to be too far for family visits. Nanaimo has nearly 20% over 60’s and a reasonable amount of secure government employment so SFH values look fairly solid. That said Canada is facing stormy financial weather so be prepared for a 10% “loss” at some point. If you are not planning to sell for 10 or more years, it probably wouldn’t really affect you anyway.

#297 Vanecdotal on 01.31.15 at 6:42 pm

#201 wallflower

“So, the agents take great advantage of the absent property owner having zero interest in signage on the property.”

+1

Excellent observation. I’ve noticed this as well on the Westside, and (when there was lots of SOLD activity – although not so much anymore), in White Rock & area as well.

#298 Russ L on 01.31.15 at 6:45 pm

Just yesterday in Nanaimo, gasoline went up 5 cents to one dollar per litre.

5% vs. 8% gain in spot oil, an immediate correction?

It really is different here!

#299 Smoking Man on 01.31.15 at 6:46 pm

Everyone so God damn worried about money. Do you bastards nor realize how lucky all of you are.

The way I see it.. Your dad, was fantasizing about the hotties he scene on the bus. Winks at mom in bed. They go.

What is it. A few million swimmers, and yours hits the prize.. Your born nine months later..

Every day should be a celebration..

But your teacher, wasn’t going to let you have fun with that lottery win..

Humans… I have so much work to do.

#300 Andrew Woburn on 01.31.15 at 6:48 pm

#97 screwed on 01.30.15 at 9:21 pm
“Driving through Vancouver. Dozens of listed places sporting the good ‘ole SOLD sticker. In January.”
=================

When we were looking for a realtor to sell our house, we drove around the neighbourhood seeing who was selling the most houses. A “sold” sign is pure gold for a realtor so don’t be surprised is they go up as soon as possible and stay up as long as they can get away with it.

#301 Getting old on 01.31.15 at 6:52 pm

http://business.financialpost.com/2015/01/30/the-incredible-shrinking-adviser-how-onerous-new-rules-are-driving-away-new-planners-in-droves/

Suffer the many for the few.

#302 Andrew Woburn on 01.31.15 at 6:59 pm

Hmmm.

SHENZHEN, China (Reuters) – Taiwan’s Foxconn Technology Group, the world’s largest contract electronics manufacturer, will cut its massive workforce, the company told Reuters, as the Apple Inc supplier faces declining revenue growth and rising wages in China.

Under its flagship unit Hon Hai Precision Industry Co Ltd , the group currently employs about 1.3 million people during peak production times, making it one of the largest private employers in the world.
Special assistant to the chairman and group spokesman Louis Woo did not specify a timeframe or target for the reduction, but noted that labor costs had more than doubled since 2010, when the company faced intense media scrutiny following a spate of worker suicides.
“We’ve basically stabilized (our workforce) in the last three years,” Woo said. When asked if the company plans to reduce overall headcount, he responded “yes”.

https://ca.news.yahoo.com/exclusive-apple-supplier-foxconn-shrink-workforce-sales-growth-102032643–finance.html

#303 Andrew Woburn on 01.31.15 at 7:03 pm

The urge to save humanity is almost always a false front for the urge to rule.

H. L. Mencken

#304 Entrepreneur on 01.31.15 at 7:11 pm

About people collecting OAS, they “should be ashamed
that, in 65 years they failed to prepare their own future.” Unless you are a hard working Canadian who thought your future was already set; instead, has turned around through political interference.

#254 Sky…Good call. We have supported the system throughout our lifetime. Times changed a lot of things including our livelihood, part-time jobs and lower expectations including pensions. Reality. Time for everyone to get into reality and reduce, substantially, especially at the top.

#305 Washed Up Lawyer on 01.31.15 at 7:14 pm

#301 Andrew Woburn

Glad I am not the only fan of H.L. Mencken on this blog.

If I get a cold or diabetes I will submit “… to a heroic pummeling from a retired piano mover.”

From “On Chiropractic”.

#306 Andrew Woburn on 01.31.15 at 7:23 pm

If Garth is right about US interest rates moving up, and this guy is right about the correlation between gold prices and TIPS, it might be wise to wait before buying gold producers.

“This indicator will warn before gold sinks again”

http://www.theglobeandmail.com/globe-investor/inside-the-market/how-long-will-the-gold-rally-last-heres-a-hint/article22715366/

#307 Diversify yer nuts on 01.31.15 at 7:46 pm

Ok this is nuts….

http://business.financialpost.com/2015/01/30/why-more-canadians-are-turning-to-non-traditional-lenders-for-mortgages/

“We just have to make sure that it’s not being abused.”

#308 Ralph Cramdown on 01.31.15 at 7:56 pm

Just one question on the OAS issue:

If I’m looking after the affairs of infirm elderly relatives, do I have a moral and fiduciary obligation to structure their finances so as to maximize (or minimize) their OAS receipts, if doing so is otherwise consistent with good investing practice?

People managing their own finances are certainly free to forego benefits they may be entitled to, on moral grounds. Managing others’ money isn’t quite the same thing. I’d always considered government benefits maximization to be no more or less immoral than structuring investments to minimize or defer tax.

Am I wrong? Do I have an obligation to structure others’ income streams so as to make them ineligible for OAS? This seems to me to run contrary to fiduciary responsibility.

#309 AB Boxster on 01.31.15 at 8:01 pm

#247 Mr. Frugal
“Those seniors that bitch and wine about their entitlements should be ashamed of themselves”

—————————————————-
What a doofus comment.
Kind of like saying:
“Those young kids that expect me to be subsidizing the cost of education should be ashamed of themselves”

or perhaps

“Those sick disabled folk that expect me to be subsidizing the costs of their health care should be ashamed of themselves.”

Garth you should be ashamed too.
Other than CPP, feel free to provide any ‘real examples’ of any federal government programs (other than CPP) that anyone directly pays into with expectation of benefit

Military, CSIS, Employment Insurance, Maternity benefits, Tax collection, public works projects, health care transfers, provincial transfers, education, civil defense, aboriginal affairs, elections Canada, etc.
(the list is massive)

I don’t get to chose to directly pay into any of these, yet someone somewhere benefits. It sure ain’t fair to me though, since the taxes I pay are likely far above the average.

But unlike many, I’m not whining about it.

That’s the deal we have in this country.
Higher earners get to pay more tax, and gov’t gets to spend it as they see fit.

Should OAS payments be means tested? Maybe.
Its a good debate.
Maybe we should just cut it off.

Should health care services be means tested? Maybe.
Maybe we should just cut it off.
Sure, lets see how that goes over.

Should all public services be means tested?
Or maybe we should just cut them all off.

How about we all just get to decide what we want to pay into?
Mr. Frugal can choose not to have his taxes to go OAS.

I will choose that my taxes don’t go to subsidize his health care.

What could go wrong?

I said those who must collect $537 a month in public funds in order to get by, after 65 years of life, have failed financially. Seems obvious. — Garth

#310 M on 01.31.15 at 8:12 pm

We are not in deflation yet (accent on yet).
Deflation, in a fiat system is a reduction in CREDIT CREATION.
Price deflation is always a consequence of deflation. But not only.

In order to get (hyper) Inflation we have to have TWO things:
1. Money supply (i.e. availability of credit-> which we richly have)
2. An increase in MONEY VELOCITY

And here is the catch: Money Velocity became smaller and smaller over the last few years. We can see this in companies sitting on massive amounts of cash. As a result everything slowed down: it LOOKS like deflation but it ain’t YET.

However: asset bubble popping has a deflationary effect. Oil drop of such a magnitude in such a short period of time has humongous effect upon CDO of price insurance. Not only that, but those pesky CDO’s have been long sold to other suckers in such way that risk is non-assesably spread in the system. Very much like 2008 sub prime mortgages risk.

When THIS baby will pop then we’ll see LESS lending DESPITE low interest rates.

And THEN my friend we’ll see the much publicized deflation.

Yes, I know, it’s an awkward way to get int it but this is what it is.

The beauty of it is all the morons will panic and move into gold :)

..and THEN my friend, you’ll hear a earfull from the “metal heads”

:)

such is life :)

#311 Love my Kia on 01.31.15 at 8:26 pm

I work in post secondary education and not too worried about layoffs. My job is secure because with layoffs come retraining incentives for people to go back to school. The people who left town for the riches of Alberta will be back home with hat in hand looking for another opportunity that might only come with upgrading. There’s always a silver lining someplace in the chaos we are in.

#312 Daisy Mae on 01.31.15 at 8:28 pm

#266 Mike T.: “To take this blog over the top…you should add a rating system to the comments!
I have to say that myself and pretty much everyone else would be happily up-voting and down-voting with gusto!”

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

And, just what would the point be? Speak for yourself.

#313 Waldguy on 01.31.15 at 8:31 pm

Gotta question US rates rising in 2015 when long bond yields keep dropping off the cliff: 10 yr bond rewards you with 1.64%????? http://www.bloomberg.com/markets/rates-bonds/government-bonds/us/

#314 Rexx Rock on 01.31.15 at 8:31 pm

Canada is a great country.High cost of owning a home,high taxes,unafordable day care,high tuition fees,lousy infrastructure and transportation,high airline travel fees,the war machine that wasted billions of dollars instead of going to fight poverty and homelessness.The list is endless,then they decide to devalue our currency and give you 1% if you hard work and save.Can it get any better.

#315 Kenchie on 01.31.15 at 8:38 pm

#121 pinstripe on 01.30.15 at 10:06 pm
“I don’t give a darn if the young people hate entitled geezers.

I demand the entitlements that were PROMISED to me. Nothing more. Nothing less.”

You were not promised anything. Don’t you know politicians lie?

“nothing wrong with greed.”

Yes there is. The majority of the world’s problems derive from greed.

I’m sure you’re not an asshole (normally), and that you really mean that there is “nothing wrong with making money”. But “greed” does not equal “making money”.

#316 Save yer nuts for a rainy day on 01.31.15 at 8:44 pm

The FIAT vs the METAL heads… and we wonder why OAS is needed

#317 Don't keep all your nuts in one bag. on 01.31.15 at 8:53 pm

There are no pros… these are a bad idea…and there is going to be a lot more of them down the road…no OAS for these idiots

http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/cash-poor-but-house-rich-retiree-the-pros-and-cons-of-reverse-mortgages/article22170702/

#318 Andrew Woburn on 01.31.15 at 8:53 pm

#306 M on 01.31.15 at 8:12 pm

Money Velocity became smaller and smaller over the last few years.
==========================

Investopedia defines money velocity as:

The rate at which money is exchanged from one transaction to another, and how much a unit of currency is used in a given period of time. Velocity of money is usually measured as a ratio of GNP to a country’s total supply of money.

I assume that the four trillion dollars printed by the Fed has to be counted as part of the “total money supply” denominator so wouldn’t this account for a lot of the slowdown even though it’s not really circulating on the street?

#319 Andrew Woburn on 01.31.15 at 8:56 pm

Take a bow, conspiracy theorists. You were right all along.

“Are crude conspiracies right? Research shows nations really do go to war over oil”

https://theconversation.com/are-crude-conspiracies-right-research-shows-nations-really-do-go-to-war-over-oil-36846

#320 Double bag yer nuts - keep em safe. on 01.31.15 at 8:57 pm

Canada is a wonderful country… 1st world problems Rexx

#321 My nuts are invested on 01.31.15 at 9:00 pm

Invest in those problems yer bitching about Rexx..change your world

#322 AnotherCalgaryRenter on 01.31.15 at 9:26 pm

RE: #161 umami on 01.30.15 at 11:20 pm
Why is the CREB website no longer showing the number of active listings?
End of the month or something more desperate?
—————————
Mike Fotiou explains the changes on his website:

http://calgaryrealestatereview.com/2014/11/15/upcoming-changes-to-creb-statistics/comment-page-1/#comment-98189

“CREB® will be switching to a new MLS® System early in 2015 as the current one will no longer be supported…
What this means for the real estate statistics…single family, condo-apartment and condo-townhome
will be changed to attached, detached, apartment and land.
That means beginning in February there will be little point in referencing earlier
monthly stat packages released by CREB® because they’ll no longer be an apples-to-apples comparison…
As soon the 10-year historical stats are released with the updated data structure, I’ll be sure to
make that available so you can continue tracking the stats accurately.
There might be some downtime with my weekly stats around February as I update
all my spreadsheets with the new data, so please bear with me.”

#323 BG on 01.31.15 at 9:36 pm

A man in Toronto commits suicide after a downward spiral started by a Real Estate acquisition.

http://www.msn.com/en-ca/news/canada/home-sweet-homewreck-this-is-the-worst-reno-story-you-will-ever-hear/ar-AA8Ngju?ocid=mailsignoutmd

#324 kommykim on 01.31.15 at 10:10 pm

RE:#307 AB Boxster on 01.31.15 at 8:01 pm
Should OAS payments be means tested? Maybe.
Its a good debate.

There’s really no debate. OAS is already means tested:
http://www.servicecanada.gc.ca/eng/services/pensions/oas/pension/recovery-tax.shtml

#325 My nuts are heavily invested. on 01.31.15 at 10:35 pm

The OAS cut-offs are too high. GIS is really meant for those truly destitute.. They should be combined and only for those truly in need. At $70k/y no need for OAS.

#326 Phaneuf's a pylon on 01.31.15 at 10:50 pm

Geez Oilberta.. ya could be saving the world instead…

http://www.theglobeandmail.com/report-on-business/rob-magazine/how-norways-guilt-is-saving-the-planet/article22654133/

#327 Keith in Calgary on 01.31.15 at 10:54 pm

ROTFLMAO……!!

CREDB is changing the way they do stats again in the middle of a crisis…..LOL !!!

They did that back in May 2007 if I remember correctly as well.

#328 Fancy_pants on 01.31.15 at 10:57 pm

Deflation. No kidding. I missed the memo on that one. Everything imported will/ should get more expensive if the buggy keeps going down the same path. In fact, crystal balls that actually work are at a premium these days. A little green guy with pointy shoes and big ears told me so. Not sure why he was riding a witch’s broom though… must be a sale on those.

#329 Grow yer nuts on 01.31.15 at 11:05 pm

Off to the races… First we take Berlin

http://www.theglobeandmail.com/news/world/spains-anti-austerity-party-draws-thousands-to-pre-election-rally/article22733304/

#330 ozy - MAN SHALL NOT LIVE WITH FEAR on 01.31.15 at 11:27 pm

MAN SHALL NOT LIVE WITH FEAR, GOD said

in order to do that, MAN must not be stupid. Like man, must have read books like “think and grow rich” or “the richest man in Babylon” or “the wealthily barber”

NOTHING CAN CAM UPON THE LAND from a financial perspective to make that real man blink.

STOP THE fear incubation in her tracks. BE POSITIVE, FELLOW KANATIANS and FIRST NATIONS, the dark clouds will dissipate by June 2016. Guaranteed. Now, go and read some smart book, and stop the fear incubation in your heart

#331 observer on 01.31.15 at 11:30 pm

#296 Russ L on 01.31.15 at 6:45 pm

Just yesterday in Nanaimo, gasoline went up 5 cents to one dollar per litre.

5% vs. 8% gain in spot oil, an immediate correction?

It really is different here!
=============

That is because the Loonie aka the dead duck has been dropping. The OIL prices are in world currency USD because the Dead duck has been on a tailspin dive, the
price of gas goes up.

Also notice the price of vegies , rice, coffee all has exploded. Poloz protected the house prices and left the needy out in the cold. Good luck to the poor Canadians which is having a hard time making ends meet, because Poloz is not thinking about you

#332 Harbour on 01.31.15 at 11:36 pm

20K

http://www.realtytrac.com/propertydetails/ga/macon/31217/apple-blossom-way/58122830?a=b&recordtype=r&realtyinventoryid=58122830&propparcelid=25283185&fulladdress=453+apple+blossom+way&streetname=apple+blossom+way&state=ga&city=macon&zip=31217&utm_medium=3&utm_source=1042898&utm_campaign=3450&accnt=1042898

#333 Nomad on 01.31.15 at 11:56 pm

Property taxes in Calgary are increased by 4.5% for 2015. The tax guy doesn’t care about oil prices it seems.

#334 chapter 9 on 02.01.15 at 12:00 am

#268 pinstripe

The financial obligations for all levels of government in this country for fiscal year 2011/12–$4.1 Trillion. This includes direct debt,debt guarantee’s,contractual commitments and unfunded programs.
So every Canadian citizen, get your cheque book out cause you owe $117,948.00

And if you really want “good” news look into the Auditor General’s reports for the past 25 years everything from cost overruns, inaccurate reporting of financial information, waste but you know it only amounts to about $200 Billion that has been pissed away by both the Libs and Cons.
Sad and Pathetic

#335 @Observer Post #328 on 02.01.15 at 12:09 am

How dare you come on here and spew truth?

#336 SquareNinja on 02.01.15 at 12:09 am

#233 Ret – Thanks for the advice! I definitely will not be commuting, I’ll be working locally (and working on my own businesses).

I don’t expect any appreciation at all, but I would be happy if the “going price” did not drop. Would still be okay with it if it started to slide slowly… I’m just wondering if prices there might take a dump along with the GTA, even though they haven’t appreciated that much compared to the GTA.

Do you think the Niagara Peninsula area will also drop with a drop in the GTA? Apparently, it has appreciated 5-7% YOY for the past decade. However, because it’s an economic black hole, I’m thinking it might not take the same dump in prices?

Funnily enough, the rent on a 2-bedroom house with a sale price of $150 – $175,000 would be about $1,000.

#294 Andrew Woburn – Thank you for your detailed reply! I wouldn’t be terribly upset with a 10% decline in prices, but I would be a bit upset with a 20% decline… unless it was a slow slide into the abyss. I’d much prefer a slow slide, although even $150,000 is not much for a house these days in Canada’s big population centres.

St. Catharines and surrounding area is definitely a place where retirees go. The cheap housing allows them to stretch their fixed incomes and it’s honestly a quiet, calm area (i.e. boring). I don’t expect any kind of growth… in fact, I maybe expect the local economy to worsen, but I’m totally fine with that!

Well, it sounds like you are encouraging the move, as long as I’m okay with a possible decline! ( ^_^)

#337 Timing is Everything on 02.01.15 at 12:21 am

There’s no point trying to change things. – Garth

“I see change, But inside we’re the same as we ever were.” – D.D. (Living on a Thin Line)

http://tinyurl.com/qxnycqu
—————————————————
#229 Victoria Reality

Yup.

Watch out! Prairie ‘dogs’ about!

[Craigdarroch Castle] was designated a National Historic Site of Canada… – wikipedia
http://tinyurl.com/86z7elg

http://thecastle.ca

Well, why not, eh?…other National Heritage sites…
http://tinyurl.com/7qapd5b
—————————————————
#266 Mike T.

+1
——————————————————–
Grexit…The implementation of Grexit would have to occur “within days or even hours of the decision being made”
http://tinyurl.com/pyslbdj

tic-tac, tic-tac…
http://tinyurl.com/kseayhs

http://tinyurl.com/n5wvwcf

#338 bdy sktrn on 02.01.15 at 12:32 am

from our favorite socalist;
there’s really no debate. OAS is already means tested:
http://www.servicecanada.gc.ca/eng/services/pensions/oas/pension/recovery-tax.shtml

————————–
means, as in net worth, i think.
eg. i have 2mil in gold bars and 500k cash, but no income. shoud i get OAS?

Further, from your link, OAS clawback starts at 71K . holy crap!

OAS is not for the poor, it’s for all but the very rich.

apparently only 2% of CDNS get it all clawed back.

as a couple, we can take 71k each, plus 10k each tax free from tfsa for an equivalent of about 170k/year gross before we lose OAS.

170k +OAS in retirement! wooo, hooooo.

we have never spent half of that much in a year even with high income.

#339 Washed Up Lawyer on 02.01.15 at 12:38 am

#329 Harbour

Wow!! If the Allman Brothers Band is living in the basement, Garth would join us in the purchase and bring his Strat to team up with Dickey Betts.

Greater Fool Garage Band

#340 Happy Renting on 02.01.15 at 2:26 am

#306 Ralph Cramdown on 01.31.15 at 7:56 pm

A thoughtful question. If you are managing their affairs and you describe them as infirm, I assume your elderly relatives cannot give you direction on this issue.

If there’s no worry your relatives’ money will run out, even with possibly costly care in their final years, I would forego the OAS. At that point they’re so rich $6k a year is peanuts and not needed. Presumably you were picked to manage their finances not just for ability but your judgment and values (if you weren’t picked for those reasons, too bad, you’re what they got! They could do worse than someone who ponders ethical issues.)

If they may reasonably outlive their money, claim what entitlements they are eligible for. Later, if you feel it was unnecessary or excessive, you can always donate it back (whatever that box is at the end of the income tax form – contribute to reduce the federal debt?)

The grey area is, how much is enough so they won’t outlive their money? I don’t have any familiarity with elder care costs. Perhaps someone knowledgeable can put forth a range of estimates on how much money is “enough”?

#341 AB Boxster on 02.01.15 at 3:00 am

Garth
‘Those who must collect $537 a month to get by, have failed financially”

———————————————————
Seriously Garth?

Surely there are many people in the world that have contributed far more to society and others, (care givers, mothers ) often at the expense of their financial security.
Many individuals (in fact the majority of the population) don’t really judge their success in life by the size of their portfolio. Much of important work done in society is often the most underpaid, of not paid at all.

That some people may collect this $537 per month is ok with me.
That many people need this amount to survive,especially given the absurd rise in housing costs, user fees, utilities, food, is sad given that $537 is a pittance.

The government has made a commitment on OAS and I see no issue with including this in any financial plan. The Parliamentary Budget Office has indicate that this plan is sustainable through the baby boom demographic and into the future.

Politicians can change this policy any time they like, and if they do I’m sure that people will adapt. The politicians are free to take this to the electorate at any time.

#342 Mark on 02.01.15 at 4:01 am

“The increase in the value of the currency would only happen if the Banks lend out the money the Gov printed from thin air, and bought long term bonds with?”

No, as I theorize, the value of the CAD$ will/should rise as banks stop lending. Which will occur as interest rates trend to zero, the yield curve inverts, and there’s nothing creditworthy to actually lend to in the Canadian economy.

Exactly what happened in the USA circa 2008/2009.

No lending = no “shorting” of the currency = higher currency, especially as there’s a rush to repay CAD$-denominated debt and domestic austerity amongst the consuming class sets in.

I know it might seem incredulous to suggest that the CAD$ belongs much, much higher, but in the short term, speculators can push it any way they want. Fundamentals always win out over the long term though.

#343 Mark on 02.01.15 at 4:08 am

“Gotta question US rates rising in 2015 when long bond yields keep dropping off the cliff: 10 yr bond rewards you with 1.64%?????”

If you think that’s bad, the CAD$ bonds are even “worse”. At 1.25% for the 10-year. In a currency which has depreciated recently and the speculators are all lined up against in terms of sentiment.

If the USA is any template, Canada will need years of ZIRP and QE to get out of the mess they’ve created by overstimulating consumers.

#344 Honey Dripper on 02.01.15 at 5:20 am

“If you want to buy hamburgers why would you want the price of ground beef to go up” – Warren Buffet

#345 Bottoms_Up on 02.01.15 at 9:39 am

#331 chapter 9 on 02.01.15 at 12:00 am
—————————————————-
The only obligation the government has toward debt is to service it. As Garth has said in the past, government debt is not meant to be repaid. They only need to manage it so that it’s not an overwhelming expenditure.

So come back here quoting debt-to-GDP ratios, and current interest rates, and then we can resume the discussion about how much every Canadian ‘owes’.

#346 Daisy Mae on 02.01.15 at 10:25 am

Old Age Security (OAS) pension
Regardless of your marital status $563.74
$114,815 (individual income)

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

Ridiculous.

#347 Dc on 02.01.15 at 10:28 am

Garth, you’ve been getting a lot of comments lately. I think it’s time you improve your system… You need something like voting up/down messages or threads/branching or listing in reverse chronological order.

Thanks

Who care if you like or dislike a comment? I don’t. — Garth

#348 Musty Basement Dweller on 02.01.15 at 10:38 am

Mark,

If I am understanding you correctly you are thinking that it might be quite plausible that we see a decent recovery in the Canadian dollar value?

If my understanding is correct, what would be your prediction on when some decent movement (recovery) in that direction might occur?

Just curious, I am going to be spending a lot of time in the states in the near future and like many I am kicking myself in the butt for not converting more CDN money to US.

Thanks

#349 Mr. Frugal on 02.01.15 at 10:41 am

#256 A good squirrel takes care of his nuts
#307 AB Boxster

OAS is basically welfare for seniors; but without the usual stigma that is attached to welfare. We should just call it what it is; Old Age Welfare (OAF). It’s a social safety net for those that did not accumulate any wealth during their working years. It’s pretty sad that so many seniors on here are bitching about their “entitlements”. Since when does this country owe you a living?

#350 Daisy Mae on 02.01.15 at 10:48 am

http://www.cbc.ca/news/business/canada-s-richest-1-aren-t-the-only-ones-prospering-1.2931928?cmp=rss&cid=news-digests-canada-and-world-morning

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

Hey, we’re all doing greeaaat…..

#351 Daisy Mae on 02.01.15 at 10:55 am

http://www.theglobeandmail.com/report-on-business/economy/canadas-economy-slumps-in-november-as-factories-energy-sector-hit/article22716702/

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

Or, are we?

#352 Renter's Revenge! on 02.01.15 at 11:02 am

“Also notice the price of vegies , rice, coffee all has exploded. Poloz protected the house prices and left the needy out in the cold. Good luck to the poor Canadians which is having a hard time making ends meet, because Poloz is not thinking about you.” – observer

Poloz is an impartial, rational economist, and is not thinking about anyone. All he cares about is getting his 2% inflation, because that is what makes for a strong, stable economy. If the price of houses, cars, electronics and furniture creep downwards, then the price of food, water, heat and electricity must explode upwards to compensate, or the economy would collapse. But don’t worry; Poloz is much smarter than us – that is why he gets paid the big bucks.

#353 Daisy Mae on 02.01.15 at 11:07 am

#338 AB Boxter: “Politicians can change this policy any time they like, and if they do I’m sure that people will adapt. The politicians are free to take this to the electorate at any time.”

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

Yes, they could. However, considering the vast majority of the 99% receive OAS, not a good idea.

#354 Daisy Mae on 02.01.15 at 11:08 am

Correction: Vast majority of those 65 years of age and older. (gulp)

#355 Harbour on 02.01.15 at 11:12 am

#336 Washed Up Lawyer

I had a contract in Macon, Georgia with Verizon. I liked it there.

Not only the absurd price difference opens your eyes, but notice RealtyTrac and the information provided.

#356 Daisy Mae on 02.01.15 at 11:12 am

#335: “OAS is not for the poor, it’s for all but the very rich.
apparently only 2% of CDNS get it all clawed back.”

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

There ya go….not all of us are losers.

#357 Ronaldo on 02.01.15 at 11:19 am

#338 AB Boxter

Garth said:”Those who must collect $537 a month to get by, have failed financially”

———————————————————
AB Boxter said: Seriously Garth?

—————————————————
If you think that’s a lot of money, here is what the Swiss are proposing for themselves.

”http://www.bloomberg.com/bw/articles/2014-01-16/inequality-fight-swiss-will-vote-on-minimum-income”

#358 H on 02.01.15 at 11:29 am

Inflation will return.

Population of the planet will grown 25% between now and 2030.

Oil demand will continue to rise.

While that occurs, companies like Chevron will set the stage for the oil price to come:

_______________________________

“It’s very clear that the incremental barrels are coming for more complex developments over time,” Watson said. ”With all the enthusiasm around shale, I think it’s important to remember, it’s 4 million barrels a day out of a 92 million barrel base.”

The majority of the barrels produced still come from conventional fields, he said, many of which continue to decline each year.

“The 3-5 percent decline on a 90-plus million barrel-a-day base is significant, so you need investments in new fields,” he said. “And $50 does not support large, new-field developments.”

____________________________

Translation:
4% of 90million barrels (decline) is 3.6 million barrels per day of lost production.

At this point the sky is falling with 1-2 million barrels per day of over capacity.

Currently there is a lot more than 1-2 million barrels coming down from both CURRENT and future supply.

What you see on the business news channels are investors who don’t give a crap if oil goes UP or DOWN. there job is to make money. And Shorting a market or going long do both.

Friday was an example of massive short covering. There are a lot of people short oil spending this weekend wondering if they in fact are on the wrong side of the trade now. If perhaps a 20% drop in the rigs in the past year with 1/3rd being in the last week; might turn the market too fast.

Either way. Inflation will return. And it will be in the crippling energy bill we will be paying.

#359 northman on 02.01.15 at 12:05 pm

Garth – I respect your views on a lot of things. You’re a smart guy. Don’t buy into the “people will put off buying things if they know prices are going to go down” mantra. It’s utter BS. With the exception of housing prices, which as we both know are one of the few ‘consumer goods’ subject to the boom/bust cycle, name one single thing you wouldn’t buy if you knew it would be 2% cheaper in a year.

That’s the one lie that has been perpetuated to back-up the failed dogma of Keynesian economics. Deflation is the natural state of things. It makes us all better off. Deflation due to productivity gains and the specialization of labour, that is (as opposed to debt deflation caused by a massive over financialized economy in the first place). People spend their whole weekend driving around looking for cheaper prices and you’d have me believe that cheaper prices will delay their buying decision? I’d argue that they would instead buy more of said product and sooner than under an inflationary environment.

And don’t forget: as those precious corporate revenues go down, so do corporate input costs. The only people that deflation works against is debtors, and I’d argue we shouldn’t base our economy around accommodating those who’ve taken on too much debt.

#360 Setting the Record Straight on 02.01.15 at 12:23 pm

@306
Let’s assume that you invest their funds conservatively and this qualifies them for OAS or

You could invest a portion of their funds in growth rather than income stocks to ensure they do not outlive their assets and once again qualify for OAS
OR
You invest their funds in high dividend payers to avoid their qualifying for OAS thereby increasing their risk.

It seems to me your obligation is to choose one of the first two options to put them on an efficient risk return frontier.

#361 Alberta in total denial ! on 02.01.15 at 12:23 pm

The current rate of layoffs is stunning considering breakup is 60 to 90 days away. Most expect to see a sea of pink slips after breakup. Spoke to a driller this week who was drilling away a week ago with a series of 14 targets to drill. On the first hole they encountered problems and upon reviewing the results the driller was told to pack it up as they decided to cancel the project immediately. IMO the real pain will be felt in the second quarter as the entire industry comes to understand that $70 oil is not a reality. It will be like a runaway freight train that gathers momentum by the minute. Traffic patterns in GP and FM are already slowing in the morning and evening drives. Hotels that were once packed are starting to shows signs that their parking lots are paved. Those waiting times to get into an eating establishment are quickly disappearing. Car Dealerships are showing little signs of life and lots of customer parking. Take a look at Auto Canada whose stock traded as high as $90 this year and is now $32. Huge Alberta exposure! I understand the denial as who wants to believe that their lives are about to be turned upside down. The billions of cap spending cutbacks can only mean that the pain has just begun. Drives me crazy that some on this site seem to revel in others misery. Pathetic little people!

#362 liquidincalgary on 02.01.15 at 12:27 pm

a few weeks ago, my landlord put the house up for sale.

rental sale update:

two open houses, second showing monday afternoon…after 2.5 weeks on market.

#363 A louer on 02.01.15 at 12:43 pm

Nice article about MTL

http://montrealgazette.com/news/local-news/montreals-economic-stagnation?__lsa=c73f-b6f0

Well imagine that….

“Even the real estate activity that’s dominating private investment in Montreal these days is of some concern to economists. They point out that it’s largely speculative and does little to improve productivity, innovation or the knowledge base of the local economy.”

#364 Getting old on 02.01.15 at 12:43 pm

#254 Sky

could not agree more.

What Garth does not seem to comprehend is, the way an individuals mind functions. Not all are born with the capacity to succeed financially. Some are not be aware of what is required to do so, regardless of all the available information. This is evident in many cultural lines in Canada. Could governments do better? Yes of course. Could people do better? They sure can. However, governments have to lead by example which I don’t see evident at any level for many years.

I am well aware most people will fail financially. That’s why they don’t come here. — Garth

#365 rsv on 02.01.15 at 12:49 pm

OK, lets go back to Econ 101… Oh yeah, Shakespeare wasn’t much into that was he, so just bear with me for a minute…

The USD is not exploding because the US economy is so healthy.

It is exploding because victims of the debt based mess that is the world economy are losing (have lost) confidence in said system.

The USD is the reserve currency, so any country settling trade (of which the vast majority is in USDs… for now), MUST buy USDs to settle trade.

So, people rush to the reserve currency for the “liquidity” and “relative” safety (eventually they’ll figure out the bankers have been lying to them and the the USD is but a poor imitation of “real money”… Gold, which has been demonized by the western banking cabal and the “journalists” they own, while China, Russia, India, etc have been accumulating it hand over fist (while the west has been selling to manage the price).

So, after quarterbacking the west into this spiralling out of control debt/debasement crisis, The Fed will perhaps raise the prime rate all the way to 0.50% (Grannie’s savings account set to soar once more… lol)… to save, and put on a happy, face.

Not because it saved the US economy, whose workforce participation (just a simple head count of those working) is as low as it’s been since 1978… before the majority of women (thanks to the banks debt slave model) were forced to join the workforce in order to provide a decent standard of living for their family.

BTW, under threats of being blocked out of international trade by the BIS, Canada (and the few other growing economies not yet under the debt death grip) agreed to begin lending from banks at interest (instead of issuing it’s own debt free money to plug income gaps to fund the government as we had done up to that point).

Take a look at Canada’s Federal Deficits, and National Debt, since 1974 (nice little exponential curve isn’t it)!

Yup, the bankers have been working hard to make the world a better place for the common man, and any who dare question their motives are obviously whacked out “subversives” that must be spied on, ferreted out, and marginalized… before the rest of the sheep wake up!

Oh what’s this, Harper just passed new laws approving even more invasive spying on social media accounts… hmmmm!

#366 old timer on 02.01.15 at 1:11 pm

So OAS is dole. I guess health care is too seeing as I never directly paid into it. Shame i didnt save enough for my bypass…..

Health care is a service, not an income supplement. — Garth

#367 For those about to flop... on 02.01.15 at 1:19 pm

Welcome to the STUPID BOWL.

Stephen Poloz is the RECEIVER who is looking for a soft landing.

Joe Olive is the RUNNING BACK who has dropped the ball.

Stephen Harper is the QUARTER BACK who needs to be sacked!

Also whilst these guys fumble the ball ,they expect all off us to keep a TIGHT END!

#368 Middle Timer on 02.01.15 at 1:24 pm

Hey Frugal.. yer a gem.. luv ya.

#369 zedgt87 on 02.01.15 at 1:45 pm

I welcome deflation with open arms. We need it, it will help straighten out the economy. Of course though our central banks will just try to debase our currency to get out of it which clearly does not work.

#370 dosouth on 02.01.15 at 1:48 pm

Wow Garth, over 350 comments…you’re on fire!

#371 Nemesis on 02.01.15 at 2:20 pm

#’Funny’AuldWorld…

#FromDireStraitsToTheSultansOfBling…

[Independent] – Britain’s widening poverty gap should be causing outrage at the start of the election campaign

…”Kensington Palace Gardens is known as Billionaire’s Row. The mansions are immaculate and supercars wait behind huge iron gates. Residents are said to include the steel magnate Lakshmi Mittal and the Sultan of Brunei, who controls a fortune worth £40bn.

According to Bloomberg, with a discount for second-home status, the Sultan paid £1,942 a year in council tax for his house here in 2012: just £32 a month more than the council tax paid by the Braithwaites, a pensioner couple living with their daughter and grandchildren in a rented home in Golborne.”…

http://www.independent.co.uk/news/uk/home-news/britains-widening-poverty-gap-should-be-causing-outrage-at-the-start-of-the-election-campaign-10016052.html

#ETradeBabies?…

[SCMP] – Probe into China Minsheng chief Mao Xiaofeng just tip of iceberg in banking world of corrupt alliances: Investigation into Mao Xiaofeng opens window into world of corrupt alliances in financial sector

…”The banking system can be a hotbed for the devious because existing government monopolies allow party officials to take decision-maker posts, causing many corrupt officials using it as their private coffers to embezzle state assets,” he said.

Hu cited the example of the Bank of Beijing, which has been reported by mainland and overseas media as having dozens of shareholders below the age of 18.

One of its major shareholders is a one-year-old child, while a 10-year-old was reported to have stocks valued at 29 million yuan (HK$36.5 million) in 2007.”…

http://www.scmp.com/news/china/article/1697106/chinese-bankings-rising-star-mao-xiaofeng-faces-probe-over-links-ex

#372 Snowboid on 02.01.15 at 2:21 pm

So it’s not just Alberta…

http://tinyurl.com/Oil-in-NDakota

#373 Ralph Cramdown on 02.01.15 at 2:34 pm

#356 northman — “With the exception of housing prices, which as we both know are one of the few ‘consumer goods’ subject to the boom/bust cycle, name one single thing you wouldn’t buy if you knew it would be 2% cheaper in a year.”

Once you’ve conceded on housing, we don’t need to debate whether people time their purchases of dogfood or toilet paper.

Housing is the largest cyclical component of a typical english-speaking consumer economy and it DOMINATES. The housing cycle drives the white goods and renovation businesses. Through the miracle of consumer HELOCs, it drives auto sales and the vacation and leisure industries, and pretty much anything else that people can put on a credit card and then roll into their mortgage payments.

You want to know what consumers will be buying less of in a deflationary environment? Stick around and find out.

#374 tkid on 02.01.15 at 2:36 pm

#328, you cannot have everything.

Everyone in this country was given 7 years of low interest rates. It should have been taken as an opportunity to eliminate as much debt as possible, and once debt was paid off, to save as much money as possible. We were given brand new TFSA accounts to save that money in, and were told any money we made in those accounts would not be taxable. Over this period of time the Canadian dollar appreciated from 65 cents against the US dollar to 105 cents. We had 3 marvelous opportunities to get our acts together.

Instead, everyone got themselves further into debt, and as much debt as possible seemed to be the mantra. With interest rates about to go up, that debt is now unaffordable, the TFSA account is empty, and the Canadian dollar is going back to 65 cents against the US dollar.

Of course the price of food is going up. What did you think was going happen? That unicorns and rainbows made of Skittles would save you?

#375 pinstripe on 02.01.15 at 2:45 pm

the more I read about the mileniums in our society, the more I am accepting that they are too stupid to figure it out how they are screwing themselves in the long term.

how many of the mileniums have a DB pension?

how many have a pension plan of any sort?

why do these mileniums spend so much money on JUNK, junk that depreciates in value starting the day it is bought?

Why do so many mileniums not be willing to hear out the elders in society and learn that history does repeat itself?

some questions to ponder on.

#376 Marco on 02.01.15 at 2:49 pm

@Northman

“The only people that deflation works against is debtors, and I’d argue we shouldn’t base our economy around accommodating those who’ve taken on too much debt.”

Aren’t we though with ultra low interest rates?

#377 That don't make it junk on 02.01.15 at 3:05 pm

It’s “milleniums”.

They don’t want a pension.. and they ain’t buying your house!

https://www.youtube.com/watch?v=DYmF8AIqR4E

#378 bdy sktrn on 02.01.15 at 3:10 pm

should i cash out the tfsa for 2 tkts to the game?

only 40k for 2 tickets.
a sweet deal.

maybe 2 months in europe with the family would be a better value.

#379 chapter 9 on 02.01.15 at 3:17 pm

#342 Bottoms_Up

The average person cannot even begin to comprehend billions or trillions easier to digest on a individual level.
Direct net debt for all three levels of government $1.2 trillion is 68% of GDP that is up from 55% GDP 2007/08 on $872 billion.
Even with ultra low interest rates the debt servicing costs were $61 billion for 2013/14.
Interest rate hike,good luck!!

#380 Ray Skunk on 02.01.15 at 3:34 pm

the more I read about the mileniums in our society, the more I am accepting that they are too stupid to figure it out how they are screwing themselves in the long term.

how many of the mileniums have a DB pension?

You mean millennials, I assume.

Yep, they are absolutely screwing themselves over by not getting themselves a DB pension.

By the way, aside from the government, how many employers are offering a DB pension these days?

Those stupid millennials, screwing themselves over by not obtaining something that doesn’t exist for over 80% of the workforce.

Another Pinstripe pearl of wisdom.

#381 Daisy Mae on 02.01.15 at 3:45 pm

#366 dosouth: “Wow Garth, over 350 comments…you’re on fire!”

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

The failing economy is an emotional subject….

#382 Ralph Cramdown on 02.01.15 at 4:05 pm

http://activehistory.ca/2012/11/a-short-historical-primer-on-canadas-old-age-security-debate/

#383 Madoff on 02.01.15 at 9:12 pm

I guess I will half to keep the 1998 Volvo on the road for a few more years since it still runs like new. LOL The debt pigs will get what they deserve living a life they can not afford the great reset is about to happen in Canada!!!! Any body can make money it takes a lot smarter person to hang on to the money so my 90 year old father would tell me.Is he right or wrong? The next few years will tell the truth.Garth I have been reading your blog for many years and this is my first comment. Lessons in life will be coming for the granite club. I live with no debt no pension and no govt payday each month so let the pigs get what the deserve. In five years you can talk about the great home deals in the west.
Madoff from Ottawa

#384 bill on 02.02.15 at 5:56 pm

#382 Ralph Cramdown on 02.01.15 at 4:05 pm
thanks ralph!