So, is this it?
Maybe history will record that wacko 1.49% Ontario credit union’s fixed-rate mortgage as the moment of maximum insanity. When lenders were giving away money for less than the inflation rate so kids could buy houses at the apex of bloativity.
The Bank of Canada blinked again today. After the shock-and-awe of its January cut, brought in because the economy was killing it, our central bank passed on raising rates at its setting in March, and has done so once more. This came even after boss Stephen Poloz called the economy “atrocious” a few weeks ago, and in the wake of the latest jobs report showing employers are punting full-time-workers in favour of cheap temps.
So, was Poloz just scaring us three months ago with his move that sent the dollar plunging? Was he merely being a wuss? Did he overreact to the oil slide? Who knows? But I’d say there is a good chance you have just seen the cheapest mortgages of your life.
Here are five reasons why:
* Things are looking better, kinda.
Sure, it sucks in Calgary. And Halifax. And Saskatoon (despite the pelicans at the weir). But in general the economy is not falling off the oily cliff that loomed ahead of us in February. The latest jobs report was better than most economists expected, with a net gain – even if we’re turning into a part-time nation. Oil prices have stabilized (maybe) north of the fifty-buck mark, even though production and inventories romp higher. That could mitigate the body count in Cowtown.
And look at the stock market. The TSX, drenched as it is in energy and financials, has rewarded investors even as Poloz fretted. So far this year (and it’s less than four months) that market has romped ahead over 6%. Compared to one year ago, the gains are better than any real estate market in the country – an increase of 11%. Hardly dire. And Poloz knows another rate cut will just send stocks up again, as it signals months more of loose monetary policy.
* Inflation’s back.
Checked the price of an iPhone lately? Brutal. The 80-cent dollarette makes life way more expensive in a country which imports so much, including most of its technology. Cheaper money in Canada just tells the world we’re a mess and have to devalue our currency in order to survive. Capital flows to jurisdictions where it can earn a better rate of return and preserve value, so with the US Fed preparing to raise its key rate this year, Canada stands to be hollowed out with another cut here.
A cheap loonie is supposed to help exporters. Fine. But this is a consumer economy now. Jacking up the cost of Harleys and Apple Watches is totally unfair to all of the working families who cannot survive without such staples. So, Poloz could inadvertently trigger an inflationary pop with another cut – which would take several increases to quell. Dumb.
* Lenders have gone berserk.
It would be nice to assume financial institutions are not run by omnivorous weasels but, alas, evidence to the contrary abounds. The race to the bottom is in full force these days, now that the elfin deity F is no longer with us to kick the bankers where it hurts. Five-year, fixed-rate mortgages have never been this cheap, forced lower since the January central bank mistake by brutal competition in our two remaining bubble housing markets.
Canada now has teaser mortgages – the kind that helped blow up the American real estate market. People here are borrowing at 1.49% or 2.4% for terms of 18 to 36 months, when it is certain they’ll have to renew at higher costs. Bankers know this. But they don’t care. It’s all about market share, and getting the asset on their books. Rest assured it will be a shock for many families because…
* People believe rates will never rise again. That’s economic poison.
Read the comment section of this pathetic blog. It’s riddled with the words of deniers who say we’re now Japan, that ‘the government’ will never raise rates because people can’t afford them or that soon banks will be paying borrowers to take their money, and houses will all cost $4 million.
This is what six years of emergency interest rates will do. It makes the extreme seem normal. Our recency bias kicks in, making us think what we have today sets the base line for the future – always-cheap money, always-rising houses. It’s economic poison, since people are happy to borrow from the future in order to have today what they cannot afford when they believe there are no consequences.
Poloz knows this. In a recent speech he warned: “Low nominal interest rates that came with low and stable inflation led investors to increase leverage and risk tolerance in a desire to boost their returns… We learned that these vulnerabilities can build up over time, raising the risk of a crisis even while the economy looks to be safe and sound.”
So the biggest reason rates are hitting bottom is simple:
* We have zero discipline.
Drop rates to dumbass levels and guess what? People can’t borrow enough. Since the little rate slice in January, consumer debt’s spiked again. New all-time high. Mortgages top $1.2 trillion, while the savings rate is in decline and house prices swell. All of that is no surprise to the guys controlling the cost of money. They gambled that more borrowing would help the economy struggle through the oil collapse, knowing full well the downside is a long-term residue of debt.
But there’s a limit. And this is it. If debt rises much more, consumer spending will be hobbled for years since mortgages endure for decades. The punch bowl will soon be taken away.
This is why we’re at the bottom. But if I’m wrong and rates drop again, kindly remember to turn the lights out.
206 comments ↓
I don’t think we’ll see *lower rates, but a part of me wants to see negative mortgages in Canada.
Garth, is there a reasonable way out of this madness? The only way out I see involves a whole lot of tough love. Who will be brave enough to give this to us this?
When will you run for PM?
Wow Garth,
What’s up with the oil surge … doesn’t make sense to me.
OK so we have a report that says:
“The IEA lowered its prediction for North American oil production in the second half of the year by 160,000 barrels a day. That’s partially due to the drop in U.S. rigs.’
Fine, but in the same report:
” The Organization of Petroleum Exporting Countries’ crude production rose the most in almost four years in March, the International Energy Agency said Wednesday in a report. Output grew by 890,000 barrels a day to 31.02 million a day, the biggest monthly gain since June 2011′
How does that qualify as bullish and sends oil prices upwards is interesting … :)
http://www.bloomberg.com/news/articles/2015-04-14/oil-advances-a-fifth-day-as-iran-calls-on-opec-to-reduce-supply
Paging blog dog Poloz.
About time we bottom out.
The Six Too Big To Fail Banks In The U.S. Have 278 TRILLION Dollars Of Exposure To Derivatives
http://theeconomiccollapseblog.com/archives/the-six-too-big-to-fail-banks-in-the-u-s-have-278-trillion-dollars-of-exposure-to-derivatives
Sick of bank fees? Here are some alternatives
http://globalnews.ca/news/1940587/sick-of-bank-fees-here-are-some-alternatives/
I’m not sure if this means anything, seen it here before, Here goes.
# 1 !!!!!
Did I steal somebody’s Thunder ???
Re “in the wake of the latest jobs report showing employers are punting full-time-workers in favour of cheap temps.”
I came from decades of Aerospace. Retired during the tailspin along with a lot of people called to HR and not allowed to return to their desks to clean out or tell co-workers or staff goodbye. Brutal !!
I sat with 2 twenty-somethings, their first job, and heard me talking to someone else about their supervisor just being let go. They had no idea. One of them had a full blown anxiety attack.
The company, well known, is bleeding experienced people at a watershed of their history. They let go people but then there was a rush of experienced people eligible for a pension and other highly qualified people who could find other employment heading to the door.
Guess what. They are hiring Contractors through several agencies to fill the job functions they desperately need. In fact people they let go are now back as contractors.
A 1.49% interest rate is virtually a loss leader after operating expenses are incorporated. Although instead of the loss being made up in other areas I suppose it will be made up for in that exact same asset once rates increase. How many people making $20 an hour are going to buy a place using almost all their disposable income because rates are so low?
The stool bus is future interest rate increase; the driver looking through is windshield and not paying attention is a levereged mortgage owner. When the twain meet, there will be sh*t in the streets.
These are the final days of house price appreciation in Canada before the bubble deflates.
As time goes on Canadians will realize that lower house prices and rising interest rates will be the new norm in Canada for many years.
Canada’s housing bubble took 15 years to inflate and it will be years before prices in Canada reach bottom.
Victoria’s housing bubble began to deflate in 2010 and continues to do so today. More and more Victorians are realizing that the new norm in Victoria is falling house prices even with today’s record-low interest rates.
A massive housing bubble with extreme levels of household debt doesn’t solve the economic problems of any nation.
Housing bubbles always deflate and house prices inevitably fall from inflated levels. This is all part of the unpleasant unwinding process that dramatically weakens the economy.
Canada will not avoid this.
Garth,
Early tonight.
I guess I am still rather confused. The dollar seems to have strengthened a bit today.
What do you see as the future exchange rate? How long will it stay there?
Thank you
Re #8 I spent 25 Min. composing my comments and lost out the No1 slot. C’est la vie.
I had hoped to take these blog comments out of the RE mire. No luck.
Rates could still go down. In Europe there are negative rate mortgages. Paid to borrow money to buy a house, savers paying money to save cash. What a messed up world!
PS.Can we talk unemployment and economy ???
[…] Source: http://www.greaterfool.ca/2015/04/15/scraping-bottom/ […]
Wouldn’t the real cure for the Banks racing to the bottom with mortgage rates be the elimination of the CMHC? If the banks had to accept the full risk of the inflated housing values I’m sure not only rates would be higher, but the lending standards would be a lot tougher as well….just my opinion, I could be wrong.
0% financing for 5 yrs on a car loan is awesome. Why cant we have that for mortgages?
http://www.nytimes.com/2015/03/30/business/foreclosure-to-home-free-as-5-year-clock-expires.html?partner=socialflow&smid=tw-nytimesbusiness&_r=1
In Florida and New Jersey you can have a free house!
The beginning of the end is here. Watch the banks. They’re circling the wagons. Selling off operations. Firing people. They’re preparing for hard times. [email protected] called me last week, suggested that my cash account which holds the money for a possible purchase of a cottage should be broken up and moved into a number of accounts where it will be protected by CIDC. I’ve never had TNL call and suggest that before. What is it that she is expecting to happen? The banks may not be the canaries in the coal mine. Perhaps, vultures, but when I watch vultures circling overhead, I know that something is happening. They don’t gather and circle for no reason. Do they fear a Grexit? An American sharp rise in interest rates? Garth, you understand banks better than any of us. What do you think is up?
Does this mean no posts from Mark this week?
Rates are at rock bottom, but it only applies to residential real estate, not commercial re, not equipment, or other productive parts of the economy.
the question i have is, harper’s low low rates or harper’s CMHC backing the banks, which is a bigger factor in the RE-insanity?
the answer is probably both. so that makes it 2 things our guys in charge are not doing.
Politics.
Pure Politics.
Poloz has been told by King Harpie, that there shall be grease on many palms on Bay Street, and here’s another couple of hundred billion reasons why an Election seems more important, than fiscal sanity.
Doesn’t anybody READ HISTORY, anymore?
Haven’t you been paying attention, as Mr. Turner has been trying to explain this lunacy, and how dangerous this is?
The Financial Times today trumpeted “Global Property Bubble Fears Mount as prices and yields spike”.
Crikey.
Young people don’t understand the power of youth, in investment terms. What’s the point of pigging out on debt and having to be a debt slavefor the rest of your life? Every dollar saved and invested at 25 is equivalent to almost $8 at 65. Think about that for a second. Every single dollar you save will give you $8, yet you lust for houses.
If you buy an iPhone 6 for $900 it’s actually costing you $5400. A 1million dollar home better be worth $8million plus the rate of return of the interest you paid.
My advice for a 20 something is save and invest as much as possible. If you’re able to save 40k a year you could retire by 40. Think about that!
A Consumer Economy
But this is a consumer economy now.
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Yes, but why else would an economy produce things except for consumption?
For export? Well, are the proceeds from export not spent on consumption?
Anyone have a link to show that consumers consume a much larger share of the economy (GDP) than they did years ago? No? I thought not.
Can someone please explain what the heck has been going on with CPD???
well, i do think that rates have bottomed but, once the Bank hikes the first time following the States, housing will wobble, causing the Bank to panic and cut again, so, i expect extreme volatility in CAD/USD for the next 2-3 years, with the pair hitting .75 or maybe lower. The interesting thing will be whether the boomers start a panic sell off of real estate once the media starts reporting price declines. we all know they have no savings and are getting close to retirement
It appears a certain blogger wants to be done before the first puck drops.
Negative Mortgage Rates…
… are NOT coming to a neighborhood near you.
They poped up in Spain only because of old mortgages written at prime minus 1% or whatever and lo and behold prime went below 1%.
No bank anywhere in the world is likely to ever write an original brand new mortgage that has a negative interest rate built in over the term of that loan. A Bank could do minus 1% for one year as long as you lock in four additional years at 4% but that is not really negative interest, not over the term of the loan.
Rate cuts in Canada? It is so over. So very, very over. Rich? In what? So-called “home equity?” That home equity is vanishing quickly. Smash! Smash! Smash!
https://m.youtube.com/watch?v=wDQTvuP1Dgs
Yes, It’s politics. The Poloz, Harper, Flaherty trifecta. They’re doing a Richard Nixon.
I wrote about this happening a year and a half ago when we were all being told interest rates were soon to rise…
http://www.poletical.com/harper-and-interest-rates.php
Jeez Garth, could have used this advise in yesterday’s post…
Debt jubilee plz
Today’s blog post, there is definitely no humor
and I can sense Garth’s frustration
and it occurs to me, I come to this site because I feel the same.
#23 Bill Gable
Doesn’t anybody READ HISTORY, anymore?
Nope. Unfortunately this is the direction we’re going…
From yesterday
Anyway, one of the presenters remarked that teachers should no longer be teaching kids to calculate any figure that requires a formula. All that is necessary is for the student to “google” whatever it is they are seeking and, abbracadabra, there is the answer.
That to me is disturbing. And what I find more disturbing is this…
It was fun to watch her relate to us all that she had learned. She was so excited for her students (grade sixers), for herself and for the direction teaching is going.
Why learn to calculate formulas and all that boring stuff, or even find out who is behind google?
Talk about a future generation of drones
Reading this blog… Priceless
I have in my hand a 1985 newspaper with Canadian mortgage rates and GIC rates.
The 5-year fixed mortgage rates from October 8, 1985 ranged from 11.75% to 12.25% and this was from 24 banks and Trusts.
The 5-year GICs were mostly 9 to 9.25%. But Trusts were offering up to 11.125%.
On the same newspaper page was a story about the bankruptcy of the Canadian Commercial Bank. This was in the Edmonton Sun. One editorial blamed the bankruptcy on deadbeats who did not pay back their loans. Others were blaming the National Energy program.
Remember the banking crisis of 2008? For some reason almost no one blamed the real culprits, the deadbeats. It was politically incorrect to do so. After all the banks had tricked them into taking out the loans and forced them to lie about their incomes (yeah, right).
#28 The REAL hockey season begins today on 04.15.15 at 6:06 pm
It appears a certain blogger wants to be done before the first puck drops.
—————————
And the Flames are going all the way with the tiny Johnny Hockey.
#17 Curious on 04.15.15 at 5:36 pm
Wouldn’t the real cure for the Banks racing to the bottom with mortgage rates be the elimination of the CMHC? If the banks had to accept the full risk of the inflated housing values I’m sure not only rates would be higher, but the lending standards would be a lot tougher as well….just my opinion, I could be wrong.
******************************************
No kidding Sherlock…lol
Mortgages rates and bond rates, yields as well as GIC rates, dividend rates, yields etc. will all rise but they will be in range bound.
We may see a 50 basis points to 100 basis points range up and down from current rates, yields but I can see being this an up and down scenario only.
A 3.0% to 3.5% 5 year, fixed, closed mortgage rate can be here in 1 year, 18 months but we can go back to 2.5% to 2.75% for 5 years which is not that far off today.
Even the Fed mentioned rates will not be the normal of the past.
“So, was Poloz just scaring us three months ago with his move that sent the dollar plunging? Was he merely being a wuss? Did he overreact to the oil slide?”
Nope. It was weak GDP, a decrease in full-time employment (Q3), weak retail sales data and consecutive trade deficits. Poloz himself said that sustained gains in exports and business investment must lead the economy back to full output over the next two years. The rate cut helps make that a reality. Now the bank is waiting for data to support their decisions. Like the US Fed and BoE, they are “data dependent”. Nothing to do with consumer debt or mortgage rates.
Lenders may have gone berserk, but the terms in Canada (borrowing at 1.49% or 2.4% for 18 to 36 months, when it is certain they’ll have to renew at higher costs) are nowhere near as low as US teaser rates circa 2005 (some approaching zero) and the spread between the teaser rate and the rate that comes after the honeymoon period likely less than the US in 2005 (~4%).
http://www.wsj.com/articles/SB110842654850854633
I’m starting to worry that we’re further from where the US was in 2005 than we realize, and may still have a ways to go in terms of predatory lending and government intervention (lower down payments and longer amortization) before the party ends. Hope I’m wrong…
Rates rising? Rates falling? I am a simple man try to avoid making assumptions. This is why being diversified, balanced, and liquid is my portfolio of choice. Being vulnerable to rising or falling interest rates is high risk. It is the same as me choosing to get married when the divorce rate is 50%. Risk is too high, for I am a numbers man and always put my Freedom First in every area of my life. Thankfully, there is women who get this, as I have always enjoyed having a girlfriend.
#24 I’m stupid
I don’t necessarily agree with that.
Young people definitely understand the power of youth when it comes to saving. The problem is the ability to save with limited job prospects and pay. After OSAP is paid off and you get a decent job (if ever), you are usually around 28-32. By then it’s time to buy a house/start a family and before you know it boom you are already in debt again.
What young people don’t understand is how to invest properly and put any savings you have to use in assets other than real estate. Like Garth always says, when we think investment we think real estate only because everything else is confusing and dangerous. Add that real estate has been on a tear for most of our lives and you can see why.
A lot of people think that if they are making 2500 a month, why not put 1800-2000 towards a mortgage “investment”, and use whatever little is left to live off of instead of pay most of your income towards rent which has no future value and end up with nothing. Saving 200 a month = 2400/year. Even with stellar returns on stocks you end up with little. Leverage is what is so attractive to many. Job prospects are key.
MF
Shawn Allen #35
Why do you think they created the ECB and other central banks?
It is to control monetary policy, money supply and keep interest rates low as possible.
Read research about James Grant on the net and see how he talks about The Federal Reserve is the biggest price fixer in the world, cost of money, interest rates.
Production ain’t romping higher in the US. You can believe what some guy, who went to columbia journalism school, and now copies parts of investment bank reports into articles for bloomberg wrote, or you can go to the sources.
https://www.dmr.nd.gov/oilgas/stats/historicalbakkenoilstats.pdf
The last three rows are the indicator and similar declines started showing up in Texas Railroad Commision data for January when that was released last month. OPEC might stink things up, but when the EIA releases more monthly numbers based on states reporting the US production peak will have been way back in December.
The lag on US oil production numbers and how they get reported weekly by an algorithm would be CREA approved stuff.
#26 tb on 04.15.15 at 6:02 pm
Can someone please explain what the heck has been going on with CPD???
Yes, please. I hold XPF and I am looking at it, thinking why the drop?
Garth,
You’re seeing this logically, which is nice, I guess, instead of seeing this as a politician. You know that Harper is looking to get re-elected on the backs of Albertans and these guys still want to export stuff they dig out of the ground. So, he’ll tell his new puppet to get him re-elected if he wants to keep his job, and we’ll see another rate cut.
I have a question however: How long did it take between the first appearance of teaser/subprime loans, and the actual crash in the States? Can we model that and figure out how long we got on our side of the border?
#26
CPD:
http://www.theglobeandmail.com/globe-investor/investment-ideas/preferred-share-etfs-feel-interest-rate-pressure/article4318853/
We’ve witnessed interest rate capitulation.
As in stock market terminology… we’ve seen the bottom.
#35 Shawn Allen
I normally agree with your posts, but do you really think the US banks bore no responsibility for lending money to people who could not afford a pot to piss in?
And when a corporate entity gets a government bailout, don’t they qualify as the deadbeats?
You might give this a listen:
http://m.thisamericanlife.org/radio-archives/episode/355/the-giant-pool-of-money
Or read the Big Short by Michael Lewis.
Toronto Maple Leafs SUCK!!
Need I say more, Hockey starts tonight!
Why is CPD at $14.75
tb on 04.15.15 at 6:02 pm
Can someone please explain what the heck has been going on with CPD???
******************************************
I took a look at this ETF on iShares
http://www.blackrock.com/ca/individual/en/products/239836/?referrer=tickerSearch
With the price at $14.75, I figured they must be holding a bunch of pref shares at $15 and less.
Actually almost nothing they hold is priced that low.
I believe what happened is the bought a pile of prefs at prices above $25, (well above $25.)
Now the weighted average of what they hold is at $22.70 but it must be that they paid at LOT more than $25. It looks a bit odd really.
Also the management fee explained a bit of this…
I was going to blame it on rate reset prefs which have tanked. But very few have the word reset in the name of the pref.
Absent a pile of rate rest prefs and/or a bunch of credit downgrades this thing should have gone up in price as interest rates fell.
Would take a forensic audit to figure out what the heck is happening.
There are no negative mortgage rates. Whenever you see one advertised in Europe, keep in mind that those are variable rate mortgages, the negative rate applies only for limited period of time. These mortgages are so idiotic that they will only appeal to, well, idiots.
1.49% may be an 18 month teaser but those trying to qualify have to demonstrate the income to support 4.7%. These aren’t the people to worry about future rate increases (certainly not at 18 months from now). That was (part of) the U.S.’ problem in fall 2008.
The time of reckoning will come in 2019 when the heavily discounted 5 year fixeds come up for renewal and many could go into a substantial rate increase underwater.
What a mess.
In my experience people do not pay attention to the cost of credit or the amortization period of their mortgages. Only the monthly payment matters.
Nibbling around the edges of CMHC policy has done next to nothing. It is far past time to go back to basics, which should be assistance to 1st time home buyers for the purchase of a modest home.
“The 5-year fixed mortgage rates from October 8, 1985 ranged from 11.75% to 12.25% and this was from 24 banks and Trusts.”
And we paid 8.25 in 1999.
I think the problem/solution is the cap on qualifying for CMHC. Once that (traditionally at ~250k depending on location) was removed, all hell broke loose.
Love to see them try to reduce it further than the $1Mil it’s at now. Even $800k would make a huge difference and pop those bubblicious cities.
Even when they do raise rates, how long is it going to take for the BoC to claw interest rates high enough to actually affect these bloated house prices? Or is any rate increase predicted to trigger some sort of cascading domino effect on prices.
#26 tb
Can someone please explain what the heck has been going on with CPD???
========================
The terms for prefs are set by the issuers for the benefit of the issuers. Mr. Investor holds a pair of deuces while the issuers consistently deal themselves a full house. Just be thankful your not holding a bag of rate reset ZPR.
http://www.cbsnews.com/news/why-you-should-avoid-preferred-stocks/
So as I understand it, C$ dropped 20%, and C stock market has risen 6% (or whatever, close enough for argument sake).
Net gain: -14% ? roughly, if you evaluate it in US$.
It would take a really big gain to convince me there was a real gain at all. Better than a mortgage on a house, but still not inspiring.
(a) We live in C$. (b) Houses certainly have not appreciated 6% since January. — Garth
Ambrose Evans Pritchard reported yesterday, that the fed is not only going to move interest rates up, but faster than expected. So, by keeping the the status quo, the Poloz poodles will shortly have a defacto interest rate cut as the spread between the USA and Canada widens anyway. O, and we’re so hot that Toyota just announced they’re moving some production out of Cambridge to Mexico. Take that cheap dollar. Take that carbon taxing sticky palms Ontario….
In the bank making a payment to reduce debt today – saw this ad which said ‘Need some time off? Take a mortgage vacation’. The deal being, you can stop paying your mortgage & presumably use the cash that would have made the payment to fund a nice little vacation instead, because hey, you deserve it. Those who fall for this kind gesture do indeed deserve what they will eventually get. Which is more debt, since those missed payments are for sure going to generate a lot more interest revenue for your financial institution. But I bet lots of people are taking advantage of this ‘deal’.
I’m stupid on 04.15.15 at 5:56 pm
Young people don’t understand the power of youth, in investment terms. … Think about that for a second. Every single dollar you save will give you $8, yet you lust for houses.
If you buy an iPhone 6 for $900 it’s actually costing you $5400. ….
__ __ __ __ __
Well said. Sadly it’s even worse. How about an I-Phone for each member of a family of four? How about 4 data plans at $50-$70 per month for each family member? One perhaps two fly away vacations per year. Not content with one family dog? How about 2 or 3 of the same breed? Every kid I see in Vaughan (north T.O.) is wearing a Canada Goose jacket @ minimum $500 bucks a pop! LOL
Many folks I work with complain they can’t save a nickel for retirement. One has her house cleaned once a week and hires contractors to shovel her 5 meter driveway in winter.
Where the heck did a little thrift go?
The opportunity cost of all this discretionary spending is destroying the middle class just as much as stagnating wages.
Canadian debt bubble a ‘myth’: experts
“With the average owner of detached home in Toronto now a millionaire (joining Vancouver), the value of assets owned by Canadians has soared.”
“The debt-to-income measure is perhaps the most widely cited warning sign used by experts such as the IMF to suggest Canadians are borrowing too much. But the rise in assets such as houses puts the debt-to-income measure “in perspective” ”
http://globalnews.ca/news/1889329/canadians-net-wealth-hits-new-highs-debt-bubble-a-myth-experts/
Flawed logic, which led US families into a black hole. Asset values mean little until they are converted into money. That is real wealth. — Garth
#24 I’m stupid on 04.15.15 at 5:56 pm
[..] Every dollar saved and invested at 25 is equivalent to almost $8 at 65. Think about that for a second. [..]
You should watch Marry Poppins again my friend.
You sound just like the old grumpy bankers trying to convince the kid to invest his penny.
Who wants to spend their younger years thinking about how rich they will be at 65?
There’s a serious demographic bias on this comment section.
From CBC –
————-
‘Pure fantasy’
Some say that optimistic view borders on implausible, however. The bank’s reasoning expressed “confidence that the January cut was enough and that the economy … will rebound strongly in the second quarter and never look back thereafter,” said David Madani, an economist with Capital Economics in Toronto.
“We think this is pure fantasy and expect the oil price shock to hit the economy hard this year.”
If this is really it, the bottom then I’m disappointed.
So much drama for this?
Where’s the oil shock spreading through the country?
Where are desperate owners selling at a discount?
Where’s the “blood in the street”?
Why does it feel like the indebted won?
The ride cannot be over.. Can it?
Screw this, I’m going to start taking life advice from Smoking Man.
The cartoon moment I enjoy most is when Whilie Coyote looks down after running off of a cliff and realizes he is screwed. He soon becomes a small puff of dust at the bottom of the canyon. People who are buying real estate now with cheap high leverage loans will soon experience their own special “Whilie Coyote” moment.
“If debt rises much more, consumer spending will be hobbled for years”
On the positive side, less people buying crap, good for the planet. Who needs an iWatch?
Wait a second, could Poloz be an extreme environmentalist?
In any case, his rate cut gave a boost to HomeCapital, Genworth and our banks by scaring the shorts. Now those stocks are all *just * 8-20% under. $MIC.CA $HCG.CA $ZEB.CA over the last month.
At#40: Underhoused (aka realturd), you said, “I’m starting to worry that we’re further from where the US was in 2005 than we realize, and may still have a ways to go in terms of predatory lending and government intervention (lower down payments and longer amortization) before the party ends. Hope I’m wrong…”
Keep dreaming, buddy. Canada has way surpassed the U.S. on the atupid train with rates and lending practices as a whole. Home ownership in Canada has passed U.S. at peak, Canadian consumer debt far surpasses U.S. Consumer debt, expendable income is much lower in Canada than the U.S., GDP per capita is lower in Canada (like way lower), and the weather is sorta miserable up there. How’s that credit orgy going to end? I would bet it’s ugly, and getting worse. Teaser rates are coming out predominantly more in Canada.
prairie person: The beginning of the end is here. Watch the banks. They’re circling the wagons. Selling off operations. Firing people. They’re preparing for hard times.
that got my attention.
Darryl: Does this mean no posts from Mark this week?
here’s what he said:
So BoC policy rate cut tomorrow or not?
I vote “yes”, rate cut.
If I am wrong, I’ll make a pact with y’all — I won’t post again till the weekend.
All right?
so according to his pact he has to wait until Friday’s post
Mark: Production ain’t romping higher in the US.
actually I think the word “pact” was too strong. I think Mark really meant “fingers crossed”
http://en.wikipedia.org/wiki/Molotov%E2%80%93Ribbentrop_Pact
I was going to blame it on rate reset prefs which have tanked. But very few have the word reset in the name of the pref.
That would be most of the reason. There are, in fact, many rate resets in the index that have dropped quite a bit on the realization that their dividends are going to be cut shortly.
Buy preferreds for fixed dividends. — Garth
Damn, missed the huge move in USDCAD today.
Was off site for a few critical hours, its OK Old Bollinger coming together nicely. Hitting the sack, no bozze tonight setting my alarm for 3am. That’s when I figure the thing will start to move.
Got to recharge before AC this weekend.
Nothing else explains the price of WTI which is closing in on Brent at record pace.
Must have been one hell of a short position that was blown up. Wondering who was on that side of the trade? Hopefully GS for a change.
Those moves don’t inspire investors to put more money into exploration or oil cos. to increase drilling.
#ForgetTheStoolBus… #JustKeepOnRockin’Me,SweetBaby… #Well… #It’sAlmostFriday… #PayAttentionMark… #Smokin’ManDisregard… #YourFunQuotaThisMonth… #IsAlreadyExhausted…
https://youtu.be/5V7JKYaYeuM
#24 I’m stupid on 04.15.15 at 5:56 pm
Young people don’t understand the power of youth, in investment terms. What’s the point of pigging out on debt and having to be a debt slavefor the rest of your life? Every dollar saved and invested at 25 is equivalent to almost $8 at 65. Think about that for a second. Every single dollar you save will give you $8, yet you lust for houses.
If you buy an iPhone 6 for $900 it’s actually costing you $5400. A 1million dollar home better be worth $8million plus the rate of return of the interest you paid.
My advice for a 20 something is save and invest as much as possible. If you’re able to save 40k a year you could retire by 40. Think about that!
———
There is a massive youth employment crisis all over the world, including in Canada.
25 years old people don’t have full time jobs, in Canada government program offers wage subsidy for them – last thing is on their mind is to save $40K per year, then they can retire at 40.
Always wanted to ask: Is Garth short for Gartholomew?
Huge move in the last 1/2 hour. USDCAD now at 1.2250 , crude not moving, no news. So no trade ..when you don’t understand , stay away.
Maybe , the market is re pricing , no USD spike, No CAD rate cut.
Good night.
Maybe this is what is making the banks nervous.. http://business.financialpost.com/investing/cascade-of-woes-feared-as-fed-prepares-to-pull-trigger-to-end-era-of-cheap-money
#72 You are stupid
Exactly. See my post at #42
Savings are none existent not because y
Hit the return key by accident.
Rest of the post is:
“Not because youth don’t value saving, but because youth have crap job prospects”.
Older folks often don’t seem to understand this. Some do but most do not.
MF
#70 Oil shorts blew up today
Nothing else explains the price of WTI which is closing in on Brent at record pace.
Must have been one hell of a short position that was blown up. Wondering who was on that side of the trade? Hopefully GS for a change.
Those moves don’t inspire investors to put more money into exploration or oil cos. to increase drilling.
——
I doubt that anyone knows anything anymore.
The world economy is like a huge ship that never existed before – the well known currents, winds applicable for small ships just seemingly randomly don’t apply any more. Even the most experienced captains are at loss.
I doubt that anyone has any clear idea where this ship is heading and how this journey goes into the history books.
#202 FrankyP on 04.15.15 at 3:54 pm
———————————————–
It is silly for you to say there must be a debt collapse because ‘any growth rate is exponential’.
If you look at the big picture, economies with a low growth rate will only have a ‘growth rate problem’ at a very far time point in the future (world GDP has been increasing for 100,000 years).
You must also take into account stagnant or negative growth that can occur (nuclear winter anyone), as well as human capability to adapt (think of China’s 1-child policy).
So I would argue that low growth is NOT exponential.
Re: The Jump in the Price of WTI
It might be due to the shorts unloading. I don’t know.
It might be the battleships in the “Gateway of Anguish”, the Bab el-Mandeb, the 20 mile wide strait in which 4 million barrels per day from Saudi Arabia are shipped every day.
The Saudis are at war with Yemen.
I’ll leave it to the experts.
https://ca.news.yahoo.com/pc-leader-jim-prentice-plans-230920199.html
Progressive Conservative leader Jim Prentice says his government will not negotiate public sector raises until the provincial budget is balanced.
“We’re going to have to take a firm position at the collective bargaining table that we start from zero increases,” he said.
Prentice said he would cut the number of agencies, boards and commissions by 25 per cent by the end of 2015-16.
He also promised to tighten controls on severance payments, freeze management salaries for three years and limit hiring. He also pledged to extend the scope of the so-called Sunshine List, which publishes the names and salaries of people making over $100,000.
Remember the banking crisis of 2008? For some reason almost no one blamed the real culprits, the deadbeats.
Really? I remember quite a few voices saying almost precisely this. Somehow the banks were forced, at gunpoint no less, to loan to supposed degenerates.
#24 I’m stupid on 04.15.15 at 5:56 pm
“Young people don’t understand the power of youth, in investment terms. What’s the point of pigging out on debt and having to be a debt slavefor the rest of your life? Every dollar saved and invested at 25 is equivalent to almost $8 at 65. Think about that for a second. Every single dollar you save will give you $8, yet you lust for houses.”
Well ya, but at least they were taught the Pythagorean Theorem.
#72 You are stupid on 04.15.15 at 8:23 pm
—————————————————–
That is a great point, they are more concerned with how to live off $1500 per month. Although it helps when you live in your parents basement.
“Jacking up the cost of Harleys and Apple Watches is totally unfair to all of the working families who cannot survive without such staples….”
****************
Good luck with that…jacking up prices. If we can’t pay, we won’t.
I think the problem/solution is the cap on qualifying for CMHC. Once that (traditionally at ~250k depending on location) was removed, all hell broke loose.
——————————
It will never happen – just another example of politicians bribing us with our own money.
Housing remains the bright spot in an otherwise moribund Canadian economy – not politician in election year is going to risk F**ing it up.
(Ok maybe it might happen after the CDN housing market melts down and CMHC is left holding the bag but ultimately politicians do not care – its not their money.)
“The latest jobs report was better than most economists expected, with a net gain – even if we’re turning into a part-time nation…..”
*****************
Oh, goody! Those receiving minimum wages won’t be buying Harleys and iPhones….
Called it. No move by the BoC to drop rates.
I need a sign.
@tb, post #26:
I don’t know what’s going on with CPD, but when I look at the price the term “on sale” comes to mind. It’s reminiscent of 2013 when CAR.UN was as low as $20, and is presently closer to $30 now.
@Ray of light, post #64:
My thoughts exactly. There’s the saying that when something is unsustainable, it will come to an end. Whilie Coyote is going to find that out the hard way.
Could be worse. If you are the Swiss government you have to pay them to take your money. Swiss 10 year bonds are yielding -0.15%. Yes that is minus.
* We have zero discipline.
Drop rates to dumbass levels and guess what? People can’t borrow enough
It isn’t just the rates, Garth. It’s the market driven increases in property values that have allowed lenders to flog HELOCs ( the ATMs attached to houses) that have also allowed the undisciplined to rack up debt.
#80 Washed Up Lawyer on 04.15.15 at 8:37 pm
It might be due to the shorts unloading. I don’t know.
It might be the battleships in the “Gateway of Anguish”, the Bab el-Mandeb, the 20 mile wide strait in which 4 million barrels per day from Saudi Arabia are shipped every day.
The Saudis are at war with Yemen.
I’ll leave it to the experts.
—-
The experts spoke already: calling $20 per barrel.
There are no experts left who are experts the way you think of the experts.
Derek # 166,
Wow….That didn’t take long. Shawn your back on top again.
I’ll remind you of what you wrote yesterday:
———————————
#92 Blacksheep on 04.14.15 at 10:46 pm wrote:
“1) Money, does not exist, anywhere.”
“Okay.”(Derek’s acknowledgment)
Along with your epiphany :
“He gets it from John’s bank or he doesn’t get it at all”
———————————————
Yay….everybody, Derek figured out. Since no other money exists, the extra $ 10 must come from John’s bank and since even John or his bank have zero money, Bob MUST borrow more, Creating a new deposit ($) into existence.
Yayyy! Derek….good job buddy!!
I called for 1.49% rates.Just wait and see,1.49% fixed 5 year rate and 1.89% 10 year rates will be here in the next 2 years.The dollar will be below 70 cents.BOC have no choice but to keep rates for many years to come.Why do you see many smiling faces in Toronto and Vancouver because they own a house and are millionaires.The sad faces are the ones who could have bought a house years ago and didn’t
http://business.financialpost.com/investing/cascade-of-woes-feared-as-fed-prepares-to-pull-trigger-to-end-era-of-cheap-money
The United States is poised to raise rates much more sharply than markets expect, risking a potential storm for global asset prices and a dollar shock for much of the developing world, the International Monetary Fund has warned.
The IMF fears a “cascade of disruptive adjustments” as the U.S. Federal Reserve finally pulls the trigger for the first time in eight years, ending an era of cheap and abundant dollar liquidity for the international system.
The Fed’s long-feared inflexion point is doubly treacherous because investors seem badly ill-prepared for what lies ahead, and levels of dollar debt outside the US have reached an unprecedented extreme. The IMF said future contracts are pricing in a “much slower” pace of monetary tightening than the Fed itself is forecasting.
http://www.thestar.com/yourtoronto/education/2015/04/15/high-school-teachers-union-osstf-walks-away-from-negotiations.html
The union representing Ontario’s public high school teachers has walked away from provincial bargaining just days before strikes could be called in a number of boards, saying the offer on the table includes an unpaid day off and a slower move up the salary grid.
In a memo to members, the union said it would return when the government and the school boards’ association “are ready to enter serious discussions” and remove contract strips – or clawbacks – from the table.
Re : #76 #77 “Not because youth don’t value saving, but because youth have crap job prospects”
——————————————————————-
I fully agree youth have shit jobs, but by my daily observation that doesn’t stop them from daily purchase of lattes , soup , sandwiches etc . They have disposable income for pre-work coffee , lunch , mid afternoon snack etc. So where can they save any money when all is spent on “living” LOL!
“Bonds beware as money catches fire in the US and Europe
Broad M3 money indicators point to a reflationary mini-boom in America and Europe by the end of the year, but be careful what you wish for”
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/11539696/Bonds-beware-as-money-catches-fire-in-the-US-and-Europe.html
#20 – Prairie person
The beginning of the end is here. Watch the banks. They’re circling the wagons. Selling off operations. Firing people. They’re preparing for hard times. [email protected] called me last week, suggested that my cash account which holds the money for a possible purchase of a cottage should be broken up and moved into a number of accounts where it will be protected by CIDC. I’ve never had TNL call and suggest that before
Another Cyprus money steal?
What is TNL?
17 Curious on 04.15.15 at 5:36 pm (among other commenters…)
Wouldn’t the real cure for the Banks racing to the bottom with mortgage rates be the elimination of the CMHC? If the banks had to accept the full risk of the inflated housing values I’m sure not only rates would be higher, but the lending
standards would be a lot tougher as well….
After what I’ve witnessed right next to me (my best friend) I’m not convinced at all, lemme explain:
I’m in Quebec, where houses are not inflated too much in price. Friend of mine, 49, works as a waiter in a greasy spoon, earns a max of 40K gross. Always good credit & steady jobs. No pension & has a 25K RRSP. Also has a car & a dog to feed & maintain. Wants to buy a house of 250K, puting 50K down payment. Calls bank for pre-approval, bank says “not sure, we call you back”. Few days later bank calls and says “OK we lend you up to 250K”.
So, no need for CMHC here. The bank lends on his reputation & good credit & job history. The bank assumes all the risk if something goes wrong. Quebec economy is doing soso.
My conclusions:
All this doesn’t seem to scare the bank. Creditworthy but quite risky.
Bank does not foresee near or mid-term trouble, housing bubble, significant RE depreciation or crash.
Bank has confidence in economy & people will keep having a job.
Maybe it IS different this time after all -or- maybe it is different in Quebec. (well, it IS different in Quebec, that’s for sure, tabe**ak!)
Maybe the bank is clueless or stupid, which I highly doubt.
As for my friend, I’m happy for him and hope he doesn’t lose his job. I suspect he’s about to find out just how really fast the end of the months arive!!
http://www.theprovince.com/news/Smyth+Christy+Clark+getting+rough+ride+over+fire+sale+Coquitlam/10975306/story.html
Must listen…
So our beloved BC Liberals (related more to the federal cons than the federal libs) sold a swath of land below market value to a political donor. I say more related to the federal cons because they often swap political stooges and operatives…
#History’sHarshLessons… #ForPolicy
TakersMakers… #OnTheWrongSideOfTheBarricades…https://youtu.be/I_lnqMe5d7c
Interesting post tonight Garth. Glad Poloz didn’t cut further.
This got me thinking, who benefits if the U.S. raises rates? Long term rates are really set by the int’l bond market, not the U.S.
A move of say .75 or even 1% would be a systemic shock to most here, but I see a net benefit. A step toward that elusive goal “normalization” and nobody seems to have a definition we can agree upon for that.
Maybe I’m nuts, but I think in today’s environ 3.5% – 4% would not be too ‘high’ – a reasonable return for intermediate term rates, a bit less for short, a bit more for long bonds. Hey! are we THAT far off course right now? No, not really, and the market has been pricing in a rate hike.
Low inflation, average goods & loan demand? Why not let Janet Yellin pull the trigger on the ‘first round.’
You really are stupid…
Boohoo, I deserve a good job, I deserve everything I dream of. I don’t need to do anything and things will just workout for me. Since no one is going to give it to me I’m going to do nothing but complain and say that everyone is out to get me. That’s the exact attitude that gets you no where in life. It’s perfectly ok to be poor when you’re young and can still wipe your own ass but when you’re old the game changes.
The problem with 20 somethings is that they think they’re special. Their parents failed them so now they feel entitled. Ask yourself this question: What have I done today that will get me to where I want to be. If the answer is nothing, you have a problem and it’s not society, it’s you. The definition of insanity is doing the something over and over and expecting a different result!
Good luck with your attitude I’m sure you’ll have a wonderful life underground in a basement somewhere.
#97 Semore Debt
It’s because decent coffee and a hearty sandwich numbs the pain of knowing boomers will have had a better standard of living than their parents and their kids. The caffeine buzz helps us sort out how we’re gonna prevent the healthcare system and other social benefits from imploding due to your generations poor planning. “LOL”
David #2 There is no free lunch ,those car loans for 0% are made up by a higher over price. You can rarely even get a good cash discount these days
Negative Swiss Bond Yields
Senta on 04.15.15 at 8:56 pm
Could be worse. If you are the Swiss government you have to pay them to take your money. Swiss 10 year bonds are yielding -0.15%. Yes that is minus.
********************************************
Backwards. The Swiss government is the one being paid to take money from investors.
Normally governments pay interest to borrow. In this case the Swiss government receives interest from the borrower.
robert james: from your link: The United States is poised to raise rates much more sharply than markets expect
like 1% this summer
WTI: The world economy is like a huge ship that never existed before. Even the most experienced captains are at loss.
I doubt that anyone has any clear idea where this ship is heading and how this journey goes into the history books.
you’ll be fine
https://www.youtube.com/watch?v=nX76Xz86MTo
Theres still life left in real estate ..
Evidence on the influence of foreign funds in Canadian housing is finally here..
http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/immigrants-come-to-canada-with-an-average-47000-in-savings/article23970582/
$47,000 on average.
20% don’t bring any savings at all. So heavier weightage much greater than 47K from the other 80%
44% use the money to make a major purchase such as a house or car.
The narrative has always been about foreign investors.. it should have been about foreign money irrespective of who brings it.
Wow. Imagine landing in a new country with a whole $47,000 to your name. I bet you’re envious of them, especially when they use that massive pot of money to steal houses from the locals. Pathetic. — Garth
On the subject of return on investment, we’re in the wrong business, ladies and gents. A person at the HuffPo claims that [in] the last 5 years, the 200 most politically active companies in the US spent $5.8 billion influencing our government with lobbying and campaign contributions. Those same companies got $4.4 trillion in taxpayer support — earning a return of 750 times their investment. If you can afford to buy access, times have never been better.
http://www.huffingtonpost.com/josh-silver/taxation-without-represen_1_b_7069384.html
750 times? 75,000 percent? Blimey.
Meanwhile in Canada, a bunch of Actors are complaining that Nova Scotia is going to stop “helping” them to appear in profitable movies.
https://youtu.be/Gt5c6hdcGfM
#104 I’m stupid
Actually, the “you are worth it” is not a GenY slogan.
RE: #51 Shawn Allen on 04.15.15 at 7:03 pm
Why is CPD at $14.75
******************************************
I took a look at this ETF on iShares
http://www.blackrock.com/ca/individual/en/products/239836/?referrer=tickerSearch
With the price at $14.75, I figured they must be holding a bunch of pref shares at $15 and less.
It doesn’t work that way. The initial unit price of an ETF has nothing to do with the absolute price of the shares it holds. BlackRock seems to like to start their ETFs off at a unit price of $20 whereas BMO likes $15 and Vanguard likes $25.
Garth,
Not ten days ago, you mentioned that rate reset preferred shares were the best. In a comment above, you refer to buying preferred shares with fixed dividends.
Would you mind clarifying your position?
Thanks!
“People believe rates will never rise again.”
Only the hoi polloi and realtors. But the more perspicacious believe they CANNOT rise again.
Central banks are boxed in, in a no-real-net-growth economy amidst peak debt. They will grow more and more impotent and irrelevant.
The debt buildup in this country is unprecedented. Individuals, governments, small businesses are all loaded to the gills with mostly useless debt… As in debt not attached to a money making asset. History suggests that the collapse of this gasbag will be breathtaking. It will feed on itself and will affect all of us, It will take a decade or 2 to recover from. No idea when the stuff hits the fan. I’m sure it will be held up until after the election.
After that it’s coming. Whomever wins the next federal election, if they have a shred of intelligence, should demand a recount.
Million dollar homes being bid up by shadows and phantoms.
Stuttering economy, shifting more and more towards part time work. Massive overbuilding.
A third of the population heading back to wearing diapers.
Soft landing my crater.
#112 Ponnaps
Funny spoke with the lady at my bank. When She landed here 25 years ago she had $ 36.00.
Now has two cars, a home and three kids.
Oh by the way her and the hubby worked there butt off.
#93 Mark on 04.14.15 at 10:48 pm
Most of the public will go down with the ship. 70% of Canadians own. There are exceedingly few credit-worthy and interested buyers even left amongst the 30% who do not own.”
Interesting point there Mark….To pull a bit of classical economic theory out of the econo-magician’s cap, this is where someone like Marx would argue that capitalism’s biggest weakness lies, the 70% will scrap it out amongst themselves for diminishing returns, while at the same time there is an increasing concentration of capital…of course Marx would also have called for the impoverished have not prols in Canada (the 30%) to shed their chains and iPhones and rise up with hockey sticks(super blades for the lower income earners), sickles, etcetcetc….of course we all know that doesn’t work in reality, but it will be interesting to see how this scrap amongst the 70% plays out in the Great White Tundra….the solution in some countries is to allow immigration of an economically disadvantaged class, so the lowest 30% get bumped off the bottom and lose their sense of outrage…however this has to continue endlessly like a Ponzi scheme to keep refreshing the bottom of the pool with fresh and poor newbies…
There is nothing poloz can do. Canada is a nothing burger economically. It can’t influence anything.
Policy has been lacking for a long time. Investors and investments have not reaped any rewards in canada.
Governments keep adding to the burden and go back on promises. Nobody wants to invest in that kind of climate.
CEOs, investors and smaller business people alike are generally smart. They see what has happened to their profits. They know the broken promises and shareholders want the most they can get.
Toyota moving the corolla is one more example. They placate by saying they will build something else. I call bs. Just like ford and gm promised.
Adopting the hyrivna won’t help. Lower rates do nothing for corporations flush with cash. The boc is powerless here because it’s about certainty of policy.
At #66 The American
Hilarious that you think I’m a Realturd. I do something that couldn’t be further from selling real estate.
After reading Garth’s post today, I was simply curious to find some data on US teaser-rate mortgages before the US bubble blew; I was surprised by the numbers that I found since they are far more shocking than what is being offered in Canada at the moment.
Of course I am aware that Canadians have surpassed US indebtedness. But personal finance in Canada and the US have some very different elements including the structures of taxation and mortgages, the allotting of benefits and pensions (especially DB pensions), and the costs of post-secondary education and healthcare. Canada has a problem, but it is unclear that US data provides a seamless comparative tool for understanding that problem: useful, but perhaps not definitive. If US data were an EXACT predictor of the Canadian situation, our bubble would have collapsed at the same indebtedness ratio that the US real estate market did. But Canada is still frothing away…
How low will the bottom be? The recent rate cut certainly deepened my cynicism about how the nanny state might address the current mess or what Stephen Harper might do to get re-elected.
#107 I’m stupid on 04.15.15 at 9:59 pm
—————————————————–
Regardless of the entitled attitude of some of our young, you really have to put yourself in their shoes.
Massive student loans, limited good job prospects. Is it parents that have failed them or society (or both).
In 1960 you could apply to medical school (in Canada) after high school and fairly easily get in as part of a regular university program. You got out at the age of 24 as a full fledged doctor.
Today you have to graduate university, get a PhD, save a small village, and if you’re lucky at the age of 30 beat out 2000 other applicants for a spot. You graduate at the age of 37 and begin earning some money to pay back $250,000 in debt. You’re lucky if you have enough time to save enough for a decent retirement!
Times have changed and what are parents to do? Tell their 20-something kids to go teach English in Korea?
#107 I’m stupid on 04.15.15 at 9:59 pm
You really are stupid…
Boohoo, I deserve a good job, I deserve […]
Good luck with your attitude I’m sure you’ll have a wonderful life underground in a basement somewhere.
—————————————————————–
That was one of the most pointless and irrelevant rants I’ve read on this blog. If you’re going to rant, at least do it with style like Smoking Man.
You seem to be unwilling or unable to process the points that were made by other posters.
Nobody said they deserve anything, most of the reply merely stated that the the job prospects/salaries were possibly not the same when you were younger (I assume you’re older).
At, were you really but trying to make your 65 years old self comfortable? That would explain the mood.
#118 – the debt is going to come home to roost eventually. Overheard while waiting in line at the bank today – bank employee informing the man at the counter that his account is now over drawn. Hope for his sake that is temporary because deposits didn’t hit his account yet, not because there is nothing left to come in & he has used all his available funds. Eek.
Just bet we haven’t hit bottom yet….I’d put another 1/4 pt on it at least. May isn’t that far away but the world is turning faster than it was in the last boom and bust cycle.
#HistoricalMezzanines…
http://youtu.be/bS3O5zg290k
#107 I’m stupid
Lol agreed! Just curious how old you are?
I actually agree with you in that our generation is very entitled and I blame not only parents, but also social media/tv etc. I’m an older millennial though (early 30’s).
Everyone thinks they are a rockstar and Facebook, Twitter, Instagram etc. exploit that to the max.
I don’t think our parents failed us though, on the contrary they babied us and gave us everything they could. That is how it was for me anyhow. A lot of people remain delusional until they are around 25+ and into the job market for a few years.
When I was in high school (late 90’s early 2000’s) the advice was simple: if you are good at school go to university. College was kind of shunned (I went to university and studied health science but I wish I went to a vocational college instead).
If you dig deep enough though, I think you will see that a lot of us realize it was our fault for not doing enough research on job markets, trends and the like. Obviously hindsight is 20/20 though. Most of us would like the opportunity to work hard.
Mark has touched on this issue, but the problem is that a whole generation of older millennials have graduated directly into a stagnant post recession job market, without having really gained a toehold. That whole generation is getting older, wants to start families now, buy homes like their parents did, and the like. Thus massive borrowing for real estate (low interest rates make it all seem affordable…for now).
That is why this blog is so important. Garth tries to show us the path to financial independence by shunning debt, learning to invest, being liquid and mobile etc.
If you came on here to knock millennials then you are using the wrong forum. Some of us are heeding the message and adapting as best we can.
MF
#84 Victor V on 04.15.15 at 8:39 pm
————————————————–
The $100,000 “Sunshine” list is equivalent to earnings of:
$12,650 in 1960
$16,550 in 1970
$35,150 in 1980
$55,700 in 1990
$73,500 in 2000
$93,000 in 2010
http://inflationdata.com/Inflation/Inflation_Calculators/Inflation_Rate_Calculator.asp
Garth’s nemesis Larry Berman says cpd and other preferreds falling because retail investors selling. Institutions holding. Yield getting juicier. Soon time to buy.
“Wow. Imagine landing in a new country with a whole $47,000 to your name. I bet you’re envious of them, especially when they use that massive pot of money to steal houses from the locals. Pathetic. — Garth”
And with that “huge” nest egg, they decided to massively overbid to drive up “our” market price…. Really???
That said – Canuck’s leading going into the 3rd!
Garth:
Let me apologize in advance. I know this is not a sports blog and I have crossed the line a few times.
I just spent a few minutes watching the Nucks/Flambes and it is over in four with the Canucks victorious.
I will try and accept the loss with the grace displayed by Retired Boomer-WI with the Packers and the Badgers losing the Super Bowl and the NCAA Finals respectively.
As usual on the prairies, it is next year country. Another crop failure.
Like the farmer after a hailstorm which pounds the crop into the ground, I will raise my fist into the air and yell “God Damn the CPR.”
Well done Vancouver. Stan Smyl rules.
#107 I’m stupid
” It’s perfectly ok to be poor when you’re young and can still wipe your own ass but when you’re old the game changes”.
—————-
This should be BMO’s RRSP marketing slogan.
#20 prairie person on 04.15.15 at 5:47 pm
…at some point all the bundled and sold debt associated with ‘the fracking miracle’ is going to blow up, bigger than the same sort of financialization of housing debt that we know as 2008.
unsustainable means just that.
http://www.peakprosperity.com/podcast/92330/john-michael-greer-god-technological-progress-may-well-dead
#82 Bottoms_Up on 04.15.15 at 8:36 pm
you understand nada. god help us.
“Flawed logic, which led US families into a black hole. Asset values mean little until they are converted into money. That is real wealth. — Garth”
================================
Truer words was never spoke!
During the incredibly heady days of the RE runaway here in the USA during 2005, 2006, and 2007, so very many here thought their “paper” wealth was so real they could leverage it to death into ever increasing debt, RE, and even margin debt in the financial markets.
The age-old addage that “a bird in the hand is worth 2 in the bush” never was very popular, with the results of a huge financial failure that wiped out trillions of dollars of hard-earned phantom “wealth”.
Over the last 5 years or so, I have listened patiently as scores of my former Canadian countrymen have insisted that, “it’s different here.”
I suppose it is the height of hubris to insist that parallel courses of financial action will magically result in different outcomes, but it appears that Canadians, who ironically appeared as a group so very risk-averse when contemplating the financial markets, should now find themselves being swept into the very financial vortex they so smugly thought was the province of American mis-management and greed.
Cry beloved country.
#ArsGratiaArtis…
http://youtu.be/n-nFa6R0qFU
Following Mark’s lead – no more comments from me for 1 month. I will be back mid-May with my pithy comments on the price of WTI and Fort McMurray real estate.
#117 Kreditanstalt
Kudos for use of ‘perspicacious’.
#112 Ponnaps
” Funny spoke with the lady at my bank. When She landed here 25 years ago she had $ 36.00.
Now has two cars, a home and three kids.
Oh by the way her and the hubby worked there butt off.”
There those good for nothing immigrants go again, having kids that a wholesome Canadian family could have had instead…not to mention the hard work that cost some true Canadian a 25 year career. An orphanage could have been built on that land if she hadn’t built that house; now those orphans are probably dead. Just selfish…
When will immigrants learn that resources are finite and each nation’s homegrown citizenry must be allowed to hoard them. Historically it’s always been that way: Did anyone ask the Aztecs give away their gold? Nope. Did the Asians allow some foreigners dictate the price of tea exports? No way, my understanding is that pricing decisions were outsourced to someone named Opium. The ordinary born and bred people of Africa are today synonymous with precious mineral wealth, because they were cunning enough to keep it all for themselves! That’s why they aren’t here stealing our houses, because they’re living it up with their riches in Africa…why can’t these immigrants understand that??
But now they’re are coming here, bringing several thousands of dollars in at a time and buying things in a free market and affecting prices. It’s just so very patently unfair to regular Canadians, and indeed all westerners, who have only ever treated others fairly and asked for the same in return…
#67 RayofLight
Wile E. Coyote is the correct speeling (sm). Normally I hate people who nit pick, but hey he is a cultural icon. You are right just a distant puff of dust at the bottom of the canyon.
PinksPoignant
#TimelyMessageForThoseSoCalledMGTOW
https://youtu.be/wwmUMvhy-lY
#86 joblo on 04.15.15 at 8:39 pm
“Well ya, but at least they were taught the Pythagorean Theorem.”
Lets not forget quadratic equations,they sure rocked my world.
“Prentice is doing what he has to do.” So what. It is possible he won’t be re-elected.
Harper certainly won’t be re-elected.
The horse-toothed yellow-haired old lady, Ms Wynne, is facing the prospect of public sector strikes. Oh how very unexpected!
M. Couillard will – in the end – go the way of Charest.
“Cheaper money in Canada just tells the world we’re a mess”. The world already knows that Canada’s already a mess. (Ditto for cousin Australia.)
As for stock mkts “romping” ahead – early mornin’ rain and old women dancin’ don’t last long
Is it some sort of national DIGNITY that we’re elegizing here? Can one think of anything more POMPOUS than the CBC’s “The National”? Talk about extremes vs normal.
Did anyone other than BNN’s venerable Ms Horodelski feel that “in my personal opinion the next BoC rate move will be to hike”? She shoulda said SHOULD not WILL.
As for that rehydrated apple doll of a BoC gov, Lazarus of a finmin, and creepy-coiffed PM, let them load up on oil patch junk bonds.
Magnificent Housing Bubble Unravels in Much of Canada
http://investmentwatchblog.com/magnificent-housing-bubble-unravels-in-much-of-canada/
“But there’s a limit. And this is it. If debt rises much more, consumer spending will be hobbled for years since mortgages endure for decades. The punch bowl will soon be taken away.”
Boggles the mind, doesn’t it? I think that the punch bowl ought to be taken away from the boC and tptb. This chronic ultra-low interest rate mechanism has only succeeded in pushing a growing problem down the road, whilst causing a huge amount of debt.
Now, gubbermint is worried about consumer fatigue and an ailing real economy. Well boo-hoo. A reliable and permanent source of economic strength has been stripped out: cash flow from normal interest rates. When all else fails, those with actual cash would still be spending in the real economy. This important source of consumer confidence has been completely stripped away.
Now, charity shops, second-hand shops and online resellers have gone mainstream. Even if the thought of shopping in these places turns people off, a visit, just for information’s sake would be an eye opener.
Although I can afford new, I absolutely refuse to buy new. I unquestionably visit a second-hand store first and 90% of the time, I find what I need- for up to 90% off- and most often, tax-free and of better quality than I would normally buy. Divine, consumer heaven.
But the problem with this is that, once people start buying of the “retail grid”, it is so sweet a deal that before long, it’s a lifelong habit. I’ve saved an absolute fortune- and have the satisfaction of knowing that the tax I didn’t have to pay will now not be wasted by idiotic decisions.
Walk into any second-hand store and witness the never-ending supply of bounty that someone else paid full price for- you could say that they are in effect working for you!
After you bag a bargain, calculate what you’ve saved, add the taxes and then gross that up by your marginal tax rate.
Bargain safaris! Fabulous.
DELETED (Racist)
#136 Godth on 04.16.15 at 12:08 am
————————————————–
Arguing that 1-2% economic growth is dooming us all is ridiculous. Worrying about “Exponential growth” of a world economy that is growing at 1% is a CONCEPT with no realistic application in many lifetimes, it has no bearing in the reality in which we live.
Please, please, please show me different.
Love the picture of the honeywagon.
I think Garth may be onto something with rumblings of the US Fed Reserve rate hikes.
They went through the RE reset already and have many folks locked into cheap rates at more affordable prices. Now they can raise rates and rock and shock the rest of the world.
Isn’t that the game, protect one’s own sovereignty and security at the rest of the world’s expense?
Through that angle of the foggy crystal ball, Canada is so screwed. Do we still have the tundra to sell off?
When the public sector is striking that just means the government is doing it’s job. The job of managing the country’s finances prudently, not digging a bigger hole and filling it with more taxes.
Find me a politician that brings all of these entitled guys to the streets and doesn’t back down and I will vote for him even if he smokes crack in his spare time. (A shout out to Mr. Ford!)
Bonus points if they make them strike in January.
Double bonus if he fires them and replaces them with TFWs.
I’m pretty sure Wynne is not that politician.
@ Bill Gable (#23)…Doesn’t anybody READ HISTORY, anymore?
You sexist pig. What about HERstory?
#133 Washed Up Lawyer on 04.15.15 at 11:53 pm
Garth:
Let me apologize in advance. I know this is not a sports blog and I have crossed the line a few times.
I just spent a few minutes watching the Nucks/Flambes and it is over in four with the Canucks victorious.
I will try and accept the loss with the grace displayed by Retired Boomer-WI with the Packers and the Badgers losing the Super Bowl and the NCAA Finals respectively.
As usual on the prairies, it is next year country. Another crop failure.
Like the farmer after a hailstorm which pounds the crop into the ground, I will raise my fist into the air and yell “God Damn the CPR.”
Well done Vancouver. Stan Smyl rules.
——————————————————–
No wonder you’re washed up….. helps to watch the ending.
Flames kicked Van Butt….
#48 Ray Skunk
What is that? the first hit on Google Finance?
The article is from 2010.
Why the Price of Preferred ETF CPD is so low
Kommykim at 115 responded:
With the price at $14.75, I figured they must be holding a bunch of pref shares at $15 and less.
It doesn’t work that way. The initial unit price of an ETF has nothing to do with the absolute price of the shares it holds. BlackRock seems to like to start their ETFs off at a unit price of $20 whereas BMO likes $15 and Vanguard likes $25.
********************************************
Point taken, This particular ETF holds only preferred shares, the vast majority if not all of which were issued at $25.
But I agree you are correct since the ETF itself may have never been at $25.
As others have pointed out the decline is likely because of holding a lot of rate reset pref shares which have declined.
Most of these prefs do no use the term reset in the name which is annoying.
I don’t know if Blackrock provides details on what percentage of the ETF is rate reset as opposed to perpetual. They are vastly different.
Also some perpetual prefs may be retractable by the issuer which again makes them vastly different.
From a quick look at the link I could not see the nature of the prefs in this ETF. Maybe it’s there?
http://www.blackrock.com/ca/individual/en/products/239836/?referrer=tickerSearch
#148 maxx — “Now, gubbermint is worried about consumer fatigue and an ailing real economy. Well boo-hoo. A reliable and permanent source of economic strength has been stripped out: cash flow from normal interest rates. When all else fails, those with actual cash would still be spending in the real economy. This important source of consumer confidence has been completely stripped away.”
How big is that effect? Look at every dollar currently being lent. The overwhelming sources of those funds are pension plans, retirement funds, insurance companies and banks. When they get an extra dollar of income, they don’t spend it. Borrowers, however, almost certainly do spend a dollar saved on interest. When Paul Volcker jacked up interest rates in the “Saturday Night Massacre,” bondholders didn’t pour into the streets to spend their new windfalls. Or if they did, they were overwhelmed by borrowers who stopped spending. There’s plenty to argue about in economics, but suggesting that higher interest rates are stimulative isn’t one of them.
“Now, charity shops, second-hand shops and online resellers have gone mainstream. Even if the thought of shopping in these places turns people off, a visit, just for information’s sake would be an eye opener.”
No need to visit, just view it on Youtube (though this correspondent has actually visited the place whose exterior and interior are shown):
https://www.youtube.com/watch?v=QK8mJJJvaes
#102 LL on 04.15.15 at 9:40 pm
#20 – Prairie person
The beginning of the end is here. Watch the banks. They’re circling the wagons. Selling off operations. Firing people. They’re preparing for hard times. [email protected] called me last week, suggested that my cash account which holds the money for a possible purchase of a cottage should be broken up and moved into a number of accounts where it will be protected by CIDC. I’ve never had TNL call and suggest that before
Another Cyprus money steal?
What is TNL?
————————————-
Let me get this right. You have over $100,000 in a bank account and think we might have another Cyrpus because TNL has called to give you very prudent advice?
Putting over 100k in a bank account netting 0 interest is very stupid.
At the very least move this over to multiple high yield accounts or buy an interest ETF like psa.to
thoughts?
http://www.msn.com/en-ca/money/topstories/saskatoon%E2%80%99s-housing-inventory-nears-record-high/ar-AAb4qq9?ocid=mailsignoutmd
bloativity is that even a word
There was a little Dominion
Of moderate opinion
Situated between three oceans
When the economy was good,
It was very good indeed,
But when it was bad it was atrocious
http://www.peakprosperity.com/video/85828/crash-course-chapter-3-exponential-growth
#150 Bottoms_Up on 04.16.15 at 7:47 am
Enjoy.
http://www.peakprosperity.com/video/85828/crash-course-chapter-3-exponential-growth
EE-EYE-EE-EYE-OH
Some of you dear people seem to have it in for a liberal arts education, especially when the stress is on arts.
What business is that of yours?
Since when, pray tell, do you sign up for Medieval Drama 101, or Perspective&Monet, with the idea that this will help you GT A GD JB
I recall one Eng prof starting out by informing the class that – if it’s money you’re after, the School of Dentistry is that way, the Polytech is that way, and the door’s behind you; embalming pays well too.
Reminds me of a cartoon (perhaps in The New Yorker): there’s this bunch of white-clad scientists in a lab, high-fivin’ it, jumpin’ up and down joyfully, singing Old McDonald Had A Farm
– What’s going on?
They’re celebrating a great discovery.
– Why are they singing Old McDonald Had A Farm?
It’s the only song they know.
#154 Hot Albertan Money on 04.16.15 at 9:06 am
@ Bill Gable (#23)…Doesn’t anybody READ HISTORY, anymore?
You sexist pig. What about HERstory?
——————————————————-
As George Carlin once said :
A historectomy should be called a herstorectomy and a hernia should really be called a hisnia. Still makes me laugh …
#12 Louise:
“Garth,
Early tonight.
I guess I am still rather confused. The dollar seems to have strengthened a bit today.
What do you see as the future exchange rate? How long will it stay there?
Thank you”
________________________________
I am always amazed at these sorts of questions. Yes, Garth is knowledgeable in all things financials. Yes, he does have some amount of insider information. But does he know the future? Does he have a crystal ball? No. Why ask?
http://www.cbc.ca/news/canada/edmonton/edmonton-housing-market-showing-strong-growth-1.3035172
Bread and circuses: Ontario selling hydro assets to corporate raiders and allowing beer sales in grocery stores.
Don’t mind the man behind the curtain.
Btw Nova Scotia Power preferred shares have good yield. Beat em at their own game.
Major training drills in the US this summer… The Fed moving from NY to Chicago due to possibility of of a natural disaster or let me quote “ever-escalating (cyber) threats to our operations.”
Interest rates are going up as Garth has predicted, now it’s just a matter of how much and how fast
I would also wager a bet that averages Joe’s like us may be locked out of the market in the near future while the bankster’s and Wall St crooks deal with this cyber threat they have created
Today, our Bunn Coffee maker died. I can do many things, but living without an on-demand coffee maker is NOT one of them.
We bought your first BUNN well, back in the 80’s somewhere… This one has been on duty less than 3 years.
Read the book, 3 year warranty.
Called BUNN who is headquartered in neighboring IL. Explained the situation, they are sending out a NEW one -NO questions asked, just return the ‘dead’ unit when the new one arrives!
We bought that $100 coffee maker, as it was American Made. I was so impressed by the durability, quality, and now customer service -WHY should I get one of those
‘El Cheapo’ $19.95 pots???
Sharing good news of quality – it never goes out of style.
155 Calgary is AWESOME on 04.16.15 at 9:21 am
#133 Washed Up Lawyer on 04.15.15 at 11:53 pm
—————————————————–
No wonder you’re washed up….. helps to watch the ending.
Flames kicked Van Butt….
———————–
the ending was the important part!
congrats , one for you in the bag.
the only but kicking i saw was the last 2-3 min.
flames took over.
you will need more than 2 next game.
and don’t forget we suck at home, but rock on the road.
now if someone could just wake up the twins for the playoffs all will be fine.
#165 Nagraj on 04.16.15 at 11:15 am
Trivium Quadrivium – bah, who needs it when there’s money.
https://www.youtube.com/watch?v=MzHvj6roWwM
http://www.amazon.com/Lectures-Ancient-Philosophy-Manly-Hall/dp/1585424323
Stock markets are moving closer to a catastrophic tipping point.
This week in Forbes, Richard Lehmann writes that the current US stock market bubble is being propped up wild speculators in the absence of any real good news and the ending of quantitative easing.
“…only TGFT (the greater fool theory) is maintaining the momentum”
He recommends getting out of US equities and buying shorts, comparing the US market bubble to the 2007 housing bubble, and decrying the oil collapse, lower earnings, unreliable unemployment stats that ignore labour force drop-outs.
He is especially concerned that leverage has increased so enormously since 2008, positioning the US for a new disaster.
http://www.forbes.com/sites/investor
(The Greater Fool Theory Meets Mr. Market)
“Readers, we have the makings of a perfect storm”
Didn’t you used to be Apoccalypse2013? — Garth
Ha, this must be The Real Kip
http://www.theglobeandmail.com/news/toronto/raccoon-drops-in-on-toronto-crane-operator-more-than-210-metres-up/article23984335/
http://business.financialpost.com/personal-finance/mortgages-real-estate/move-over-stephen-poloz-heres-the-real-reason-mortgage-rates-are-so-low-in-canada
Canada’s overheated housing market is starting to feel the effect of Europe’s negative interest rates.
Yields on about $8.8 billion of Canadian mortgage bonds denominated in euros and francs are being pushed below zero as European Central Bank asset purchases help to drive down borrowing costs worldwide.
Canadian banks turned to Europe for cheap funding over the past few years as regulators and the Bank of Canada sought to keep the housing market from turning into a bubble. Although Europe is only one avenue for financing, that European investors are willing to pay for the privilege to park cash in the bonds shows how the ECB’s program is being felt across the Atlantic.
“That’s why you’re seeing five-year mortgage rates where they are,” Altaf Nanji, who helps oversee $17 billion for Manulife Asset Management, said by phone from Toronto. “Regardless of what the Bank of Canada does, it’s really a reflection of where the yield curve is.”
#107
Not all millenials are like that,my best friends son graduates from high school this year and already has his first year of trade school under his belt.He already has a couple of job offers at $25.00/hr+,if he works hard he will be making with overtime close to $100,000 in his first year.The one company that is trying to recruit him has offered him a second trade as soon as he is done his first one,dual ticket by the age of 25 and never having to worry about being unemployed again.The boy is smart was looking at university but realized the cost/time and return on investment wasn’t worth it.While his peers go to school for four years he will already ahead of them by 500,000 when they are just starting out.
Here’s what the Master thought when he was the Student:
http://dspace.ucalgary.ca/bitstream/1880/24345/1/1991_Harper.pdf
Atlanta Federal Reserve President Dennis Lockhart sounded a dovish tone in a speech Thursday, saying “heightened uncertainty” about economic growth made waiting to hike interest rates more feasible.
A “murky economic picture” has created uncertainty about the future track, he said, a day after the Fed released a Beige Book that also contained cautious statements about current conditions. Lockhart’s own Fed branch, through its GDPNow tracker, is putting first quarter gross domestic product gains at just 0.1 percent.
_____________
Must be weather related.
If the comments here sometimes go off the rails I don’t know what it’s called at the hockey page comment sites
Apparently when you are assaulted by another hockey player with a stick, and your arm is broken, and you continue you try and play, you are a wuss?
and the guy that assaulted you shouldn’t be punished?
weird eh?
these are thoughts from people who believe in endless terrorist wars and that immigrants with no money are taking their houses in a country running out of land
ie
it’s worse than we can imagine
#63 JustMe: “With the average owner of detached home in Toronto now a millionaire on paper…”
******************
‘Flawed logic’ is right. Values ‘on paper’ can change in a flash….and the experts know it.
#174 Apocalypse 2015
Maybe should be read as “A Pack of Lies 2015” as my read on it.
What we have here are DEBT Strapped companies, AND consumers who have pretty much reached the end of their DEBT ‘chains’ and will soon be reeled in my more expensive credit, or no access to further credit.
What has been created with artificially ‘cheap debt’ over the past 6-7-8 years is the expectation that investors will be willing to accept cheap rates in perpetuity. No will do.
The now natural unravelling of zombie corporations kept artificially alive by cheap debt, as well as marginal consumers who loaded up with the same. The cure is bankruptcy, or restructuring, or tighten up your belts and pay down debt. Sorry, greater fools DO abound.
We have increasing oil prices, a booming healthcare sector, and mostly stable profits. Yeah a sure recipe for more “doom and gloom” but, it might sell a moribund tabloid. By my estimations most stocks are not “over valued.” If earnings this quarter really suck, we might see a pullback, and 10-20% would be a welcome break.
http://wolfstreet.com/2015/04/16/bankruptcies-soar-across-corporate-america-not-just-oil/
In the first quarter, 26 publicly traded corporations filed for bankruptcy, up from 11 at the same time last year, Reuters reported. Six of these companies listed assets of over $1 billion, the most since Financial-Crisis year 2009. In total, they listed $34 billion in assets, the second highest for a first quarter since before the financial crisis, behind only the record $102 billion in 2009.
This isn’t the list of a single troubled sector that ran out of luck. This isn’t a single issue, such as the oil-price collapse. This is the list of a broader phenomenon: too much debt across a struggling economy. And now the reckoning has started.
#169 TurnerNation on 04.16.15 at 12:13 pm
Bread and circuses: Ontario selling hydro assets
—————–
How about a referendum whether the constituency approves it or not? Wynne must go…
SO what does it take to run for president of the usa 1billiondollars of insanity
Doug Hughes, a 61-year-old mailman from Ruskin, told his friends he was going to do it. He was going to fly a gyrocopter through protected airspace and put it down on the lawn of the U.S. Capitol, then try to deliver 535 letters of protest to 535 members of Congress.
with this message on campaign finance :
“I’m demanding reform and declaring a voter’s rebellion in a manner consistent with Jefferson’s description of rights in the Declaration of Independence,” he wrote in his letters. “As a member of Congress, you have three options. 1. You may pretend corruption does not exist. 2. You may pretend to oppose corruption while you sabotage reform. 3. You may actively participate in real reform.”
Maybe he read this by Michael Isikoff
The mystery moneymen behind Ted Cruz’s super-PACs
Michael Isikoff Chief Investigative Correspondent
April 10, 2015
https://www.yahoo.com/politics/the-mystery-moneymen-behind-ted-cruzs-super-pacs-116037797361.html
If those who live in Puerto Rico have the right of U.S. citizenship, then why should they not be subject to U.S. tax law?
http://www.bloomberg.com/politics/articles/2015-04-08/exclusive-new-ted-cruz-super-pacs-take-in-record-haul
#183 Bubbles to Bubbles
Ceasers Entertainment, and Radioshack – two companies I know a wee bit about that went belly-up in the Wolf’s report. Both over levered, & a dying business model, too bad, time to roll over!
We need not worry too much here, unless you are a radio enthusiast and can’t find your needed resistors, or capacitors.
Lot’s of hype not much meat there.
@25 Shawn Allen:
“Yes, but why else would an economy produce things except for consumption?
For export? Well, are the proceeds from export not spent on consumption?
Anyone have a link to show that consumers consume a much larger share of the economy (GDP) than they did years ago? No? I thought not.”
I always figured this means that output of the economy is geared more toward personal consumption products (iPhones and Harleys) and less towards capital investment products (steel, machinery, tools, building products, etc.) than in the past. Sorry, I don’t have any links to back up this assumption though.
MillMech – that’s fantastic! What is his trade?
The Economy is Consumer Driven?
Renter’s Revenge! on 04.16.15 at 4:02 pm
@25 Shawn Allen:
“Yes, but why else would an economy produce things except for consumption?
For export? Well, are the proceeds from export not spent on consumption?
Anyone have a link to show that consumers consume a much larger share of the economy (GDP) than they did years ago? No? I thought not.”
I always figured this means that output of the economy is geared more toward personal consumption products (iPhones and Harleys) and less towards capital investment products (steel, machinery, tools, building products, etc.) than in the past. Sorry, I don’t have any links to back up this assumption though.
****************************************
You are quite correct. As I explained in another place:
Who Consumes Canada’s GDP?
Canada’s 2014 GDP was consumed in the following fashion:
Personal Consumption: 54%
Government expenditure: 21%
Non-profit expenditure: 1%
Business Investment (buildings and equipment): 20%
Government Investment: 4%
Net Exports: -2%
Total: 100%
http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/econ04-eng.htm
When you hear that Consumers “account” for about 54% of Canada’s GDP, that does not mean that business accounts for little. In fact Business and (yes) government create the GDP and Consumers consume the largest share. This should not be considered surprising or alarming. Why else should things be produced except for consumption? (and for some investment to fuel future consumption).
A surprisingly large 24% of Canada’s GDP consists of investment in longer lasting assets such as buildings (including houses) and equipment rather than being consumed for immediate gratification. This includes replacing worn out buildings and assets which may account for it being so high.
I’m pretty sure that this Spring, prices will just go even higher than they are now due to the crazy rates. Too tempting!!!! But does anything think confidently that Oakville and Burlington prices, will hold for at least 2 more years?
I’m looking at the Spring of 2017 to list.
I’ve been in West Oakville for 10 years now , so I am pretty happy with what I paid compared to what prices are listing for today……I would be happy if the prices just held at where they are now.
Thanks Mel
#48 maxx
Thank you. Best post of the year and living like that is basic and fundamental and for the most part is one of the best educations you will ever get in your life.
The funny thing is that you are even getting paid ( by saving ) much more than ever by reversing the tax effect on your income by the low prices you pay.
There is so much fantastic old wrinklie stuff coming out that it is being thrown out instead of repurposed that is almost a crime in and of itself.
Should be Post 148 from maxx
#187 Renter’s Revenge! — “I always figured this means that output of the economy is geared more toward personal consumption products (iPhones and Harleys) and less towards capital investment products (steel, machinery, tools, building products, etc.) than in the past. Sorry, I don’t have any links to back up this assumption though.”
Think beyond even smartphones and RVs: Tourism, insurance, personal services/servants and apps. Rapidly industrializing economies need large quantities of steel, cement, copper, machine tools etcetera. But absent a disaster, a country only goes through that phase once.
It’s pretty sad that our PM is hosting India’s PM, who says that India is going to industrialize and grow rapidly, so they’ll need Canada’s raw materials. Meanwhile Toyota is moving Corolla production to Mexico, rather than increasing automation so the Canadian plant could remain competitive. I guess it’s a minor miracle that it was competitive for as long as it was in such a low margin segment of the car market.
http://ftalphaville.ft.com/files/2013/09/Screen-shot-2013-09-09-at-3.49.05-PM.png
Own a new house? Join us by posting a “housie”.
Sorry loser renters do not fall within the guidelines to play.
http://www.tdhousie.com/english/how-to
I’m not saying that it’s easy but it’s not impossible. Gainful employment is a competition and you need to be the best at whatever you do. Having a safety net (your parents giving you hand outs) doesn’t help you become independent. It just makes you lazy.
Opportunity always knocks, you just need to be able to answer the door. Being in debt is equivalent to having a wall in front of the door. Don’t rush to get yourself into debt because it will ultimately trap you.
Yes Garth, I will be patient with you. Interest rates are NOT at the bottom yet! It won’t be over, until Bank of Canada drop interest rates to 0%, or max .25%.
Hold your pants Garth, more is coming. It shows you how Bankers mismanaged the economy. It is a vicious cycle to nowhere.
#186 Retired Boomer – WI on 04.16.15 at 3:54 pm
#183 Bubbles to Bubbles
Ceasers Entertainment, and Radioshack – two companies I know a wee bit about that went belly-up in the Wolf’s report. Both over levered, & a dying business model, too bad, time to roll over!
We need not worry too much here, unless you are a radio enthusiast and can’t find your needed resistors, or capacitors.
Lot’s of hype not much meat there.
Ceasers is paying my flight, hotel, bar tab and meals in Atlantic City this weekend..
Also a full week in Vegas in June.. Same deal.
Go figure
I’m stupid
Read my comment at 129
MF
#120 Paul
Overbloating of house prices didn’t take 25yrs in the making.. the spike is much recent fuelled by said foreign money now established beyond doubt. The couple you speak of is from a totally different demography from a different time.. that demography are now reaping the benefits of this bull market..
Wow. Imagine landing in a new country with a whole $47,000 to your name. I bet you’re envious of them, especially when they use that massive pot of money to steal houses from the locals. Pathetic. — Garth
Garth – its much more that 47K as 20% bringing nothing at all.. and well the survey is about money brought upon landing only.. we haven’t touched upon the other avenues of bringing money in..
Im not debating the rights or wrongs of foreign money, but we must acknowledge when prices get this high its just not low mortgage rates that make buying expensive real estate possible..
#194 Musty Basement Dweller on 04.16.15 at 5:01 pm
How does TD not buy that woman a housie skick? Guess generation selfie is falling into TD’s trap.
I guess the tulip craze was also due to foreign money…
Sure, there are plenty offshore buyers in Canada who have their own reasons to either buy and hold or even live here.
But it is undeniably a fact that house lusting native Vancoverites or Torontonias have piled into RE, taken on massive amounts of debt and hoping that one day they can sell their million Dollar shacks to one of those foreign buyers.
You heard of the Bernanke “put” that for 4 years basically guaranteed the floor wouldn’t fall out of the stock markets. The foreign buyers are theoretically the buyers of last resort who will hopefully come to the rescue when hundreds of natives want to cash in on the possible equity in their four walls.
There’s also something to be said for an exit strategy. Many native home-owners don’t have it. They carry hundreds of thousands in mortgage debt over many years. Hopefully the paycheques keep coming and hopefully there won’t be major repairs down the line. Then hopefully in 15 or 20 or 25 years someone will buy the mansion when the kids move out and the couple wishes to downsize.
The entire RE economy is like a cancer on this country. Has been for at least a decade now.
#195 I’m stupid
I’m not saying that it’s easy but it’s not impossible. Gainful employment is a competition and you need to be the best at whatever you do.
———-
Yes… of course… obviously… competition and the best.
Too bad, on the Bell curve the spot for the best is the tiniest part… How about the bulk part, where most of the population falls statistically?
What’s their solution?
#197 Smoking Man
As long as their promises are good, you are golden. Enjoy!
Alberta is falllllllling.
http://calgaryherald.com/business/real-estate/calgary-housing-market-sees-steepest-sales-decline-in-canada
#158 Ralph Cramdown on 04.16.15 at 9:48 am
Ralphie, you ought to get out more often rather than just sourcing from the interweb- these shops are full of great stuff, and much of it not smelly at all:
-Hermès Constance Elan, perfect condition;
-Louis Ferraud sheared mink 3/4 length in perfect nick;
-Chanel sapphire flap (with serial number, thank you)- perfect condition;
– Gucci vintage handbag (with serial number)- perfect condition;
– Louis Vuitton cherry blossom flap (perfect condition);
-Louis Vuitton Alma (perfect condition);
– Burberry bag (perfect condition);
-Christan Dior belt;
-Michael Kors boots, patent leather UGGs (never worn), Ferragamo, Bally and Geoxx loafers (never worn);
– Celine shirt…………….
I’ll cram those down my shopping bag any day! :-)
No plunge protection team intervention today.
Next week should be entertaining.