The queasy middle

HOCKEY modified

In case you missed it – what with all the flurry over the invasion of Canada by socialists – we lost 19,700 jobs last month. The US created 223,000. This continues a broad pattern that’s been with us for a couple of years. It’s why you should have twice the exposure to US and international markets as you do to Canadian ones. Also why you should sell your house if you’re a wrinklie. Or live in Calgary.

Oil prices are weakening too, as this blog suggested they would. No surprise there. The world is awash in the stuff. OPEC has a new report out saying anyone expecting to see $100 crude in the next decade is dreaming. Best case scenario? Oil is $76 a barrel in 2025. But it could also be forty bucks then just as easily, the producers say. (The price on Monday was $59.)

And have you noticed all the ink being spilled lately over debt? It’s like the mainstream media just discovered we’re pickling ourselves in loans, and that the overwhelming reason for this is house lust. It’s simple. Incomes are flat. Savings are declining and yet spending is increasing. Houses cost a stupid amount. Mortgage rates are dirt cheap. So we have an historic bloat in debt.

Here are the latest worrisome factoids:

  • Three-quarters of all families now have debt. We owe $1.8 trillion, which is more than the economy.
  • Households earning over $100,000 hold 38% of all the debt. Families making over $50,000 account for 75% of it. Yup. Homeowners.
  • Old people are just as dumb. Over 43% of those retiring have debt – a record. Fifteen years ago it was barely over 20%.
  • Our collective debt has soared by 50% in the last 13 years – along with real estate.
  • In 1982 people saved over 19% of what they make. Today it’s just 3%.
  • Days ago I told you that, on average, families will spent $17,100 this year on renovations, more than double what people will put into retirement savings and TFSAs combined.

Mortgage rates have never been this cheap, nor mortgages this big. It’s a massively risky situation. If real estate falls or rates rise, household finances are screwed. For example, look at Calgary to see what a shock does. House sales are 36% below last year, prices are declining and it takes twice as long to sell a home. Money doesn’t cost any more to borrow in Cowtown, and you’d think that with such choice or properties, plus motivated sellers, that shoppers would be plentiful.

So glue a few of these things together. Crappy job creation in Canada. No big oil rebound coming. Record loans and falling savings. Middle-class families the biggest debt slaves. Moist millennials in hock. Retirees in debt. Peak house.

Borrowing to finance your daily life is normal now. House, cars, education, trips and renos all involve borrowing. The weapon of choice is rapidly becoming the HELOC – the secured home credit line – allowing people to access the bulk of the equity that’s magically appeared in their inflated real estate. Up to 65% can be taken as a variable-rate LOC with interest-only payments, and another 15% as an amortized loan.

Unfortunately, house values fluctuate, and are likely to do so a lot more in the future. Debt does not. So with job growth spotty, incomes flaccid and the economy in an oil funk, it’s going to be a long, long time before debt levels decline. Maybe never. After all, new debt’s still being added on at a record pace.

Some people argue that this is why house prices will never fall. Impossible, they say, or all these families will take it in the neck. With so many mortgages and swelling lines of credit – every one hinged to the property market – people simply won’t ever sell for a loss. How could they? The middle class would be crushed. The government wouldn’t allow it.

The Americans proved otherwise. The strongest country on the planet spent trillions to reverse the housing collapse, and was unable. Only seven years later, with prices still 17% below their 2005 peak, is that nation emerging into growth. Millions of average families will never recover. They were crazy enough to borrow against the illusory equity gains in their houses, in order to finance their daily lives. You know. Cars, college, trips, renos.

By the way, housing starts in Calgary collapsed by more than half last month. That’s a lot of construction work evaporating. The federal agency doing the counting says it’s because of a weaker economy and so many people with resale homes who can’t find buyers.

Funny, isn’t it, how you never see trouble coming?

259 comments ↓

#1 Elizabeth May is a PIG on 05.11.15 at 5:53 pm

DELETED

#2 None on 05.11.15 at 6:00 pm

Socialism doesn’t mean what you think it means.

You’re right. Likely worse. — Garth

#3 Broke Dick on 05.11.15 at 6:03 pm

I could’ve been first.

#4 [email protected] on 05.11.15 at 6:06 pm

Just a quick point, not every house in the USA lost value some areas faired the same as canada, Calgary is not Halifax which is not van.

#5 waiting on the westcoast on 05.11.15 at 6:07 pm

I am so gun shy about saying this is out of whack… Too many false calls based on the fundamentals/value. That said, it does seem that the confluence of negative factors should finally lead to a pullback soon in Van. Could this exceptionally irrational last few months be indicative of the top….? All it takes is one offside event.

#6 Hopeless canada on 05.11.15 at 6:07 pm

So with job growth spotty, incomes flaccid and the economy in an oil funk, it’s going to be a long, long time before debt levels decline. Maybe never. After all, new debt’s still being added on at a record pace.

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

Exactly, which is exactly why rates will not and cannot ever rise.
How can people not see that ????????????
Oh and uh, Elizabeth May is an oinker…..

#7 T.O. Bubble Boy on 05.11.15 at 6:11 pm

I think we’re back to the point where literally every Garth blog post could end with:

This will not end well.

#8 Hopeless canada on 05.11.15 at 6:13 pm

To follow…….a 50c loonie mamby along with massive QE canadian style but certainly no rate hike.

#9 ILoveCharts on 05.11.15 at 6:13 pm

On the local forums, I am seeing a lot more people from Calgary asking about moving to Vancouver for work…. they are in for a surprise when they find out what kind of an economy we have in store… I hope they like part time jobs at coffee shops.

#10 S.Bby on 05.11.15 at 6:19 pm

Crazy things:
Went to two open houses in Burnaby on the weekend. Both SFH. One $900K another $750K. Swarms of people. Everyone looking serious, no eye contact, very competitive atmosphere, agents on their phones out on the sidewalk. A real circus.

True story:
Elderly retired couple with not much money get a pitch from their financial “advisor” at the bank that they should “invest” in Real Estate. No lie. This is coming from their so-called financial advisor! Where will they get the money to buy real estate? Oh right, the bank will give them a mortgage (so they can plough their meager bank mutual fund investment returns into a mortgage). TD bank is really scraping the bottom of the barrel now.

#11 Hopeless canada on 05.11.15 at 6:19 pm

DELETED

#12 Yogi Bear on 05.11.15 at 6:20 pm

I too wonder what prompted almost every national paper in the country to do a lengthy piece of household debt.

Was there some news that triggered this?

#13 TurnerNation on 05.11.15 at 6:20 pm

Watching for batman trouble on Dollarama chart…

#14 Patient in Richmond on 05.11.15 at 6:23 pm

i guess it is slowly boiling over ?????

http://www.vancitybuzz.com/2015/05/petition-restrict-foreign-ownership-vancouver/

#15 Saint John on 05.11.15 at 6:24 pm

I simply can’t understand how people can avoid saving; and “Today it’s just 3%.” as described above…

I’m saving 50% these days to catch up on my retirement savings, and it’s reasonably easy. But I rent ;)

#16 rk usa on 05.11.15 at 6:26 pm

Canadians will struggle with not only with lower housing prices for years but a lower dollar

the Bank of Canada in order to prevent complete collapse of the housing market and the larger economy and an effort to boost manufacturing will lower interest rates and then lag behind the US for years before raising them

60 something cent dollar on the way

#17 Eco Capitalist on 05.11.15 at 6:27 pm

It took decades to vilify smoking and almost as long to make drinking and driving socially unacceptable. If we add DEBT to that list now, we might be able to salvage things in 20-30 years…

#18 Squirrel meat on 05.11.15 at 6:28 pm

Funny, isn’t it, how you never see trouble coming?
—————————————————-
That’s because everything is just an illusion!

https://www.youtube.com/watch?v=YycAzdtUIko&feature=youtu.be

#19 Prairieboy43 on 05.11.15 at 6:29 pm

Garth I have been spreading the message. Canadiens have gorged on debt. I don’t think many believe what I have to discuss. Most just ignore.
I think I will just enjoy my popcorn, and watch the show.
PB43

#20 Linda on 05.11.15 at 6:31 pm

This exploding personal debt issue will be on people’s minds a lot this year and will sway a lot of folks come election time. That’s why the TFSA increase won’t do much for votes, but larger cash giveaways to the middle class like Trudeau’s might.

Lots of talk today about Elizabeth May. Drunk or on Nyquil, whatever, she was over the top.

But you know what?

As a disaffected conservative myself, I stop and think about her comment that Khadr has more class than anyone in the Harper cabinet.

Baird? Poilievre? Raitt? Calandra?

She was actually right. I would be more willing to put some trust in a lawbreaker who has done his time than any of the subservient bootlicking ideologues who Harper surrounds himself with. No wonder Garth could not stand that place.

Funny, eh? In her very awkward way, Elizabeth May told the truth.

#21 TurnerNation on 05.11.15 at 6:32 pm

Because this is a bike blog…is this BMW an antique on or a modern reproduction?:

http://imgur.com/gNXDSue

I see drum brakes only, but shaft drive? That’s aggressive.
Would expect larger cooling fins.
That’s one smooth gearbox…literally.

Disclosure: Cager here.

#22 Clearwater on 05.11.15 at 6:33 pm

We just layed off 50 people today and took a 15% paycut for everyone left. No OT means the paycut is more like 40%. This will not make the msm. Lots of stories like this in cowtown that fly under the radar. More to come when spring break up ends and the rigs dont come back like they usually do. Thats 75 people that cant make their mortagage next month on top of all the reported and unreported layoffs.

Hope for the best, plan for the worst.

#23 Smoking Man on 05.11.15 at 6:35 pm

Can’t argue with your post, its been awhile but lots of code smith gigs in NYC paying 900 to 1500 for a pro day for front office.

My auto in box had been quite for the last 7 years, as off late its exploded with offers. Quite astonishing.

Turner nation.. Keep your eye on batman.

#24 Squirrel meat in Albertastan on 05.11.15 at 6:36 pm

On the plus side.. seems that brains first started to evolve in Western Canada… way back in the day.

So us Western knuckle draggers should find a way through… anyone want to buy my house?

http://www.iflscience.com/plants-and-animals/500-million-year-old-brain-hints-how-heads-evolved

#25 Willy H on 05.11.15 at 6:38 pm

Days ago I told you that, on average, families will spend $17,100 this year on renovations, more than double what people will put into retirement savings and TFSAs combined.

___ ___ ___ ___ ___

Astounding. These must be the same folks who can’t save for their kids education? Are these the same folks who are buying coffee each morning at Starbucks?

#26 Puzni on 05.11.15 at 6:44 pm

On the other hand housing starts in Vancouver soar again, according to the latest stats. Could this city be the next Hong Kong or NewYork? – who knows. Will this boom ever end? no one knows. Lets see how that will end.

#27 Victoria Real Estate Update on 05.11.15 at 6:45 pm

The US experience is only one example of what happens to the finances of a country’s citizens as its housing bubble deflates. There have been many other recent examples around the world as well, including Greece, Ireland, Spain, Iceland and so on.

Canada’s housing bubble is, perhaps, the biggest the world has ever seen.

Americans were careless with their finances as their bubble inflated, thinking it was different there. Canadians have taken that stupidity to the next level and beyond.

Canada’s housing bubble will deflate. The rest of the world knows it and they are watching. They musy think Canadians are stupid to continue to borrow the way they are after what has recently happened in other countries.

This won’t end well.

#28 crowdedelevatorfartz on 05.11.15 at 6:46 pm

My apologies Garth.

Elizabeth May was right and she wasnt joking.

#29 Freedom First on 05.11.15 at 6:50 pm

Yes, when our own msm has joined the chorus of International agencies and news reporters warning of Canada’s toxic debt levels you know that “The $hit is Hitting The Fan”. Of course, until it hits Joe average, Joe thinks everything is A OK. Until it isn’t.

Stupid is as stupid does.

#30 JSS on 05.11.15 at 6:52 pm

after reading this blog regularly over the years, I ain’t worried.

#31 Nagraj on 05.11.15 at 6:52 pm

– can’t find anything to disagree with in “The Queasy Middle”, not even a minor point to get me into heckling mode.

So, moving on, what’s next? I, for one, can’t see the great Canadian housing bubble, the great Canadian debt bubble, resolving themselves slowly and nicely.
As over half of working families live paycheck to paycheck, for any such family any cash flow interruption – would be immediately ruinous.
I can’t see an improving jobs picture, or a run-up in retail sales.
My gut instinct informs me that the nation is QUEASY in toto already; in other words, there’s national ANGST motivating the Zeitgeist, and the Tenor of the Times is hoarse. Canadians are not collectively confident.

Seems to me it wouldn’t take much to get to – politically unstable – from here.

#32 PM on 05.11.15 at 7:00 pm

Spot on.

My only disagreement is on the price of oil. Forecasting out that far is folly.

Best case scenario? Oil is $76 a barrel in 2025.

It could just as easily be $176 or $7.60.

Doesn’t matter for Alberta. The damage is done. If oil was $100 tomorrow the recovery to 2014 levels would take 2 years.

I have zero debt and savings. It’s not schadenfreude as I don’t wish ill on others but I’m just hoping whatever reckoning that’s going to happen, happens soon. I know it’ll be tough on some but I’ve done what is conventionally prudent finance wise and I want to reap the rewards. At this point my peers who are over leveraged on real estate are still ahead on paper.

#33 pinstripe on 05.11.15 at 7:05 pm

on my last trip to Vancouver, the geezers there made it loud and clear that if it wasn’t for the offshore money and the money laundering by drug lords, vancounver and most of bc would be screwed financially.

no one in government wants to address the issues on the west coast. Political Suicide.

here at home, at the coffee shop, the talk about the alberta PCs continues. the PCs are DEAD in alberta. prentices made a total mockery in his bid as premier. Rachel is getting big praise. harpo is on his last leg as everyone is calling him a differnet name.

no one with money is willing to invest in Canada because of the stupid political BS presented by harpo et al.

#34 Mark on 05.11.15 at 7:06 pm

“To follow…….a 50c loonie mamby along with massive QE canadian style but certainly no rate hike.”

More like a $1.50 loonie. Do you know what deflation does to a currency as people race to repay debt, decrease personal consumption, and increase savings?

#35 rawdiswar on 05.11.15 at 7:11 pm

So is buying and holding the banks through CPD still the best way to profit from all of this?

After all, the banks are protected and I assume dividends will continue to be churned out like butter.

#36 Mister Obvious on 05.11.15 at 7:13 pm

The ink currently devoted to Canadian personal debt seems to have a common and disturbing theme.

It is this: Deep debt is becoming normalized. Just a necessary fact of life these days. Not really cause for excessive concern. Borrow what you feel you must and get on with life. We’re all in this together aren’t we?

Well, no actually. For every dollar borrowed there is a dollar loaned attached to a solemn obligation to pay it back. That’s the cornerstone of the system.

You know the system? The one that is terrible except for all the others?

Will this debt ever be forgiven? Even a portion?

Not a chance, I’m thinking.

#37 What? No bidding wars? on 05.11.15 at 7:13 pm

#10 S.Bby

I’m sorely disappointed. Fully expecting another “real estate is hot, hot, hot piece” on Global News today.

The entire Southern part of this Province is so much invested into the real estate bonanza, it’s not even funny anymore. I thought it was funny for a while but now I just think it’s disgusting. From politics to media to the obvious professional beneficiaries, the topic is so blatantly promoted that it just makes my gut turn and my head spin.

This is the equivalent the crazy days during the gold rush at the Klondike.

Just wait until there’s no more gold “in thar hills” and the circus will move away. In the meantime, it’s not really a good place to live as the wealth is so flashy and people get corrupted.

Locals have a choice now. They can sell and take gains off the table, find a rental and sit in cash. Or they can hold out and try and sell when the market turns. Timing that will be difficult. I think we’re at peak and that there will be a stampede of sellers looking to make hay soon.

Listing volume is still low and buying interest is high. When that turns, it will trigger a flash flood of listings.

#38 Not Mark on 05.11.15 at 7:15 pm

#34 Mark on 05.11.15 at 7:06 pm
“To follow…….a 50c loonie mamby along with massive QE canadian style but certainly no rate hike.”

More like a $1.50 loonie. Do you know what deflation does to a currency as people race to repay debt, decrease personal consumption, and increase savings?

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

Please dude, just take your meds already.

#39 MSM-free Zone on 05.11.15 at 7:16 pm

“….Socialism doesn’t mean what you think it means…..” You’re right. Likely worse. — Garth
_________________________

I’m no so sure.

Right-wing? Left-wing? Capitalist? Socialist?

Whether a country (or province) blows its financial brains out seems more dependent upon the pool of ethics running the show rather than any moniker attributed to a governing party. For every Venezuela there is another Norway.

With a higher spending per capita than any other province in the country, Alberta’s (c)onservatives were not exactly stewards of their own finances. I remember a TransCanada freeway overpass built to service a non-existent golf course near Canmore while dozens of motorists (including one Ralph Klein daughter) became injured or almost killed at a stop-sign controlled intersection of the TransCanada & Highway 9.

Perhaps it’s time to ignore party monikers and concentrate solely on party ethics.

After all, if Obama can resurrect the U.S. from the ashes of the Bush era, perhaps Rachel Notley can resurrect Alberta from the short-sightedness of the Ghetty/Klein/Redford/Prentice era.

#40 Entrepreneur on 05.11.15 at 7:17 pm

#14 Patient in Richmond…We signed the petition. I applaud Australia and other countries who do.

#20 Linda…When no one laughed then it must be true. Elizabeth May is a real Canadian, right or wrong on the humour. She came out speaking like a human being.

As for the housing bubble & debt, the system is saved but so much for the debtors. Is that why so many live off-the-grid?

#41 Squirrel meat on 05.11.15 at 7:20 pm

What an incredibly ridiculous story.. they are nuts, but that’s what creates those debt numbers – probably very typical of thousands.

http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/house-poor-couple-debt/article24370722/

#42 brent lockwood on 05.11.15 at 7:23 pm

Your buddy Mr. Lamb is in the news for poor quality condos.
http://ottawacitizen.com/news/local-news/developer-of-anticipated-gotham-condo-building

#43 BMW bike R69S on 05.11.15 at 7:24 pm

#21 Turner Nation

That BMW bike looks like a hybrid based on the classic R69s

http://en.wikipedia.org/wiki/BMW_R69S

Cool find. Where did you see it?

#44 deflation on 05.11.15 at 7:26 pm

#34 Mark
More like a $1.50 loonie. Do you know what deflation does to a currency as people race to repay debt, decrease personal consumption, and increase savings?

——–

Where are the jobs coming from to support accelerated debt repayment, increased savings?

#45 MSM-free Zone on 05.11.15 at 7:28 pm

So…..the little guy at the top left hurling chunks for the camera…..I’m guessing that’s a young, already hockey-obsessed Harper, shortly after his coach advised him that he’d never amount to anything other than a mailroom clerk.

#46 Ray Vasquez on 05.11.15 at 7:29 pm

Isn’t it amazing that between 1993 to 1997 when interest rates started to be cut alot by the U.S. Fed and Bank of Canada, economists, financial analysts, advisers were all saying borrow money to spur economic growth.

Now, 22 years later, with mortgage rates and interest rates are at least 78% cheaper from 11.5% to 2.5%, we are supposed to be surprised with all this binge borrowing in the U.S. and Canada.

This was simply planned to make people become borrowers and not savers, investors. This is the oldest trick in the book and I can’t understand why people still can’t see how they got fooled!

#47 Shawn on 05.11.15 at 7:35 pm

The Preposterously Prodigious savers of 1982?

•In 1982 people saved over 19% of what they make. Today it’s just 3%.

****************************************
No matter how many times that 19% figure is repeated and no matter that it comes from Stats Canada, anyone who was out of their Huggies by 1982 knowsfirst hand that people were not saving anything like 19% in 1982.

In fact the country was in a sharp recession with high unemployment and high inflation. “Help wanted” signs were nowhere to be seen, and I mean nowhere. Wages were having a tough time keeping up with inflation.

Thousands upon thousands lost their homes in 1982 and just prior. Jingle mail was popular in Alberta. Alberta was in a ‘bust” due to the national energy program.

Gasoline and home hating and may other costs were absolutely soaring. Where was the money for this 19% savings coming from? It’s preposterous.

Futhermore, that suspect Stats Can data itself I believe shows no other year close to 19% as I recall.

Whatever accounts for that supposed 19% savings figure it was NOT the average or typical family saving 19%.

Sure those that could may have been saving big as interest rates were high. But the typical family (if there is such a thing) was struggling.

There was a book called “Blink” that talked about when you can know at a glance that something is wrong.

Blink and I know 19% is an absolutely misleading and preposterous average savings rate for 1982.

If there was a blip in “savings” that year it was probably just mortgage debt going down as people lost their homes and the bank wrote off a hunk of the loan. This reduced debt and might be called “savings”. No-doubt some people were also paying down mortgages as fast as possible due to high interest rates. That probably counted as “saving”.

#48 Cici on 05.11.15 at 7:36 pm

Another great post, Mr. Turner.

And this economy is definitely making me feel queasy. Financial Post reporting today that we’re in for a rough ride, and according to Joe Chidley, “this time aound, we might not be so lucky.”

But the housing stupidity just might continue on some…after all, say the FP experts, we can still lower interest rates another three quarters of a point before we flatline at zero!! If this continues, even if a 50% crash hits the marketplace, homes in YVR will still be selling past the $1M mark.

Although, I have to say that I do really like the way they are promoting the TFSA as an alternate tax break for people who don’t want to own a home:

http://business.financialpost.com/personal-finance/tfsa/how-about-a-tax-break-for-people-who-dont-want-to-own-a-home?__lsa=4922-c55f

#49 Ex-Cowtown on 05.11.15 at 7:36 pm

I think Elizabeth May really just said out loud what the watermelons speak of in hushed tones between themselves. The eco-loons have nothing but utter contempt for western society and a secret longing for an absolutist totalitarian regime…. providing they’re in the driver’s seat of course.

I don’t doubt that Mulcair shares the same vision as May.

Disgusting comments really. I think the kid in the back row of todays picture was only responding to Elizabeth May.

#50 H on 05.11.15 at 7:40 pm

Garth,

With all due respect the repeating of the oil call by OPEC is a mistake.

There is absolutely no way oil is staying below $100 even for 12-18 months from now.

This is not speculation but common sense and reading the facts.

OPEC is not stating the facts. Keep in mind OPEC was mocking shale oil as useless just a few years ago. Now they are scrambling to contain it.

As mentioned in previous posts:

Oil in Jan 2009 was trading at $35 a barrel. By June it was $76 and headlines were re written to say $250 a barrel instead of the $20 prediction from a few months earlier.

The world wide crises in 2009 was in full swing.
120 million barrels were floating at sea
3.8 million barrels per day (BPD) was shut off by OPEC
That is 114 million barrels of oil PER MONTH shut off.
Contango 12 months out was $18- $20 a barrel.

Look it up.

Now today?
No “spare” 3.8 BPD waiting to come back on
20 million Barrels are at sea which is NORMAL.
Cushings DID NOT reach capacity and will drop AGAIN this week.
Contango? Umm… its $3.75 spread for a barrel TWELVE MONTHS from now. Hardly a crisis.

By summer the headlines will be the same. “what happened to all the oil glut”

That is why is has gone from $40 to $60 in 5 weeks.

#51 Lead Paint on 05.11.15 at 7:41 pm

If only there had been some sort of blog warning Canadians about high debt levels…

#52 young & foolish on 05.11.15 at 7:42 pm

“Just waitin’ for the world to change …. “

#53 Lloyd on 05.11.15 at 7:46 pm

Blah blah blah. Good thing we have mega millions. Sitting at our house in Naples right now sipping good wine and counting our self made blessings.

#54 gut check on 05.11.15 at 7:55 pm

#12 Yogi Bear on 05.11.15 at 6:20 pm
I too wonder what prompted almost every national paper in the country to do a lengthy piece of household debt.

Was there some news that triggered this?
—————————————————————-

yeah. the election upcoming in October. Harper wants everyone to remember that HE’S YOUR DADDY and since it has worked so nicely in the past one can bet that they’ll take the papa is head of the household / pays the bills route again.

I would like to believe that people will see through it, but most won’t. Remember, we’re talking about a generation of voters that think an economics degree actually means that you learn how to handle money.

#55 Q and Hpfly A on 05.11.15 at 7:55 pm

Turner Nation and Smoking Man, can you please explain what you are talking about when you mention Dollorama? I remember skimming over past comments but forgot to ask the last couple times. Is it due to currency fluctuations and the fact that inventory was probably purchased when the CAD was stronger? Or just due to the fact that Canadians have less money and look for cheaper goods? Or am I off altogether?

Side note. Anyone have an opinion as to why Canucks tickets were so easy and cheap to get this season? From years of sellouts at ridiculous prices to sellers not being able to get rid of their tix at cost. Please don’t just say” because the canucks suck.” They’ve had poor seasons with max attendance.

#56 CG on 05.11.15 at 7:58 pm

#47 Shawn:

Regardless of what you think of the savings rate reported for 1982, this chart basically shows a huge consistent decline in the savings rate. This is not a blip.

http://www.statcan.gc.ca/pub/13-605-x/2012002/c-g/c-g04-eng.htm

#57 45north on 05.11.15 at 8:01 pm

Some people argue that this is why house prices will never fall. Impossible, they say, or all these families will take it in the neck. With so many mortgages and swelling lines of credit – every one hinged to the property market – people simply won’t ever sell for a loss. How could they? The middle class would be crushed. The government wouldn’t allow it.

I sense an inflection point. Like the US Fed raising interest rates to 1% this August. Shock and awe.

#58 gut check on 05.11.15 at 8:02 pm

“#17 Eco Capitalist on 05.11.15 at 6:27 pm
It took decades to vilify smoking and almost as long to make drinking and driving socially unacceptable. If we add DEBT to that list now, we might be able to salvage things in 20-30 years…”

—————————————————-

It’d be impossible unless the entire system changed. the system we currently live under depends entirely on debt. ENTIRELY. Where do you think all the money comes from for the top .01% From debt and its derivatives, of course.

They will not go quietly.

#59 David McDonald on 05.11.15 at 8:02 pm

Last week Garth predicted lower oil prices and a lower Canadian dollar in our near future. It’s a brave call but Garth’s reasons look solid to me. It stopped me from considering beaten down oil stocks like Suncor. I am 40% Canadian cash after selling US equities in March. I will stay that way until there is some clarity on US interest rates and Greece.

Rates up, Greece down. — Garth

#60 Well-T on 05.11.15 at 8:07 pm

Mr Turner, an amazing test case for the point you are making about the greater fool. It really wraps it all up nicely in one story:

http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/house-poor-couple-debt/article24370722/

$800,000 crappy Mississauga house bought with the help of relatives since the owners don’t have any actual money. They are stretched to the limit and the first bad break will ruin them and take down their cosigner. Like… hey, she’s pregnant! That’s a nice surprise. Now where are those rate hikes? And both work in the financial sector. Ouch.

#61 RayofLight on 05.11.15 at 8:09 pm

#39 MSM-free Zone: …..After all, if Obama can resurrect the U.S. from the ashes of the Bush era, perhaps Rachel Notley can resurrect Alberta from the short-sightedness of the Ghetty/Klein/Redford/Prentice era.
—————————————————————
The US recovered in spite of Obama

#62 gtrz4peace on 05.11.15 at 8:10 pm

View from Van: For those who say harvest your gains now and rent, you certainly have not been searching for a rental on the North Shore of a home with garage. Rentals all seem to be over $1000 per month more than our mortgage, or we would be joining that pilgrimage pronto.

Another concern – we are hearing more and more about people with fixed or limited incomes being pushed out of rentals as they are either placed on the market or “gentrified” into pricier properties.

This is also what happened in San Francisco, now experiencing a REAL housing crisis, and other markets. Starting to happen in Seattle too.

The crazy bus is in full gear here. I have had no less that 4 realtors approach us, and one really pushy one who kept insisting I do a Buyer’s Contract with him and he will just magically sell our home in an instant. To which I replied –“We do not have anywhere to move to. We are not flippers, this is our home and we will not sell without a place to move to.”

Once you tell the realturds that you can hear the crickets.
But the amount of realtors contacting us this past week is stunning given we can’t find ANYTHING — even a tiny SFH for less than $800-900K.

#63 omg the original on 05.11.15 at 8:12 pm

The world is awash in the stuff. OPEC has a new report out saying anyone expecting to see $100 crude in the next decade is dreaming.
————————

Its always fun to see these long-term “forecasts”. They are complete and total BULLS**T.

I did not get a lot out of my 25 years as a economist in the private and public sectors, but what I did get was an understanding that…….

…..long-term forecasts (anything over 3 days)…….

………are only correct by sheer LUCK.

Want me to prove it – search up OPEC’s oil price forecast from 1990, 2000, 2005 and 2010.

How did they do?

’nuff said.

#64 H on 05.11.15 at 8:14 pm

Sorry on another note on shale oil coming back on.

This too is a fallacy.

It is true there are thousands of wells drilled. What is NOT true is the oil can just be turned on like a valve.

There are several things that need to occur prior. For example:

1)
The crews that perform the fracking are furrowed. These are TEAMs who perform the well completion service. The teams work as well oiled machine at peak in a very dangerous environment. As such, they rely on each other and will require the re training and certifications to be updated prior to heading out.

2) The environmental permitting EXPIRES on wells. Quickly. This is tied to the liability associated with the well. These inspections would need to be renewed.

3) Water services, engineering, planning, scheduling, health and safety–all are scaled back. They need to be geared back up. Baker and Schlumberger let go 20,000 alone. Weatherford another 7,000.

4) Unlike the last major oil downturn, the oil workers this time likely LEFT the industry. As other industries are NOT dead like the last downturn.

5) And the final one. Cannibalization. In order to conserve CASH frack companies have been pulling pulling parts of idled rigs. It is VERY common in the industry. If this is to start back up this needs to be reversed. It also means they have to raise capital budgets to pay for it.

Here it the bottom line. Don’t let a few “quotes” from ceo’s fool you. Yes, they are saying they will be returning to the shale, but they HAVEN’T yet.

#65 omg the original on 05.11.15 at 8:18 pm

Yes Turner speaks the truth about housing in Canada being grotesquely overvalued.

But I do not believe we will see any kind of meaningful correction until interest rates increase in a meaningful way (and by that I do not mean by 2%).

And the way the Canadian economy is going that could be a long time.

This has been a generational shift in thinking about the cost of housing – people in TO, YVR and Victoria believe a normal house to be fairly valued at 6 to 12 time average annual incomes. This will not change quickly unless there is a catalyst and about the only catalyst on the horizon would be interest rates.

#66 Maxine on 05.11.15 at 8:20 pm

Garth, late last week there was close to a Bond market catastrophe. Most seem not to have been aware of it or the potential consequences. Would you be good enough to offer your opinuion on what happend? Thanks.
http://blog.milesfranklin.com/i-bet-you-didnt-even-notice-it

Stop reading that gold-pumping crud. — Garth

#67 Shawn on 05.11.15 at 8:22 pm

Thinking versus Knowing or Believing obviously incorrect data

CG on 05.11.15 at 7:58 pm #47

Shawn: Regardless of what you think of the savings rate reported for 1982, this chart basically shows a huge consistent decline in the savings rate. This is not a blip. http://www.statcan.gc.ca/pub/13-605-x/2012002/c-g/c-g04-eng.htm – See more at: http://www.greaterfool.ca/2015/05/11/the-queasy-middle/comment-page-1/#comment-372199

****************************************
Granted it declines steadily. But the data only starts in 1981.

And I don’t see a definition for how “savings” are calculated.

In any case, I was there and I know that the typical families in my town were not saving anything close to 19%. Nor were those in Ontario who were losing their houses due to high interest rates. Nor in Alberta.

I believe the official unemployment rate was close to 12%. Certainly in the Maritimes it was.

I notice the chart revised the figure lower from an earlier 20% figure. The archives of this site can attest that I said it was wrong when it was earlier reported here as 20%. Maybe a few more corrections and they will get it right.

10% is generally considered a high savings rate. In what world would the average ever be 19%? How much were the poor and unemployed saving? 19% average is simply preposterous. I know, again, I was there.

#68 Jonathan on 05.11.15 at 8:23 pm

Turner Nation / Smoking Man

Not convinced that Dollarama is in batman mode, sorry. May just be seasonal flux, and I am an investor, trading is for losers/deniers so don’t care about short term flips.

You been in one lately? I own $30K in shares, and make a point of visiting a store weekly.

The place is EXPLODING with customers and new products. The new price points are not an issue, and now you can regularly beat places like No Frills on food staples. More and more of the heavily indebted Garth writes about are making Dollarama their one-stop food shop – hell they even sell fresh bread there now.

I’m not saying that is healthy, for their bodies or as a sign of the economy, but neither is real estate horniness, and this debt fiasco is what makes me think DOL. has a long way to go. I bought at under $30 before the split, and expect to see another double from here, but will be happy with just 10% growth for a few years. (Then my bomb shelter will be stocked and I will bail, LOL)

People are WICKEDLY in debt and Dollarama is one of the biggest canaries in the coal mine of just how bad things are going to get in Canada. Ride the wave I say, better than crying with the ones about to lose their shirts.

#69 just nej on 05.11.15 at 8:25 pm

wondering if anyone has any thoughts about the southwestern ontario real estate market…while prices are not anywhere near toronto, it’s still very difficult to find anything decent under 350,000 –while this might seem like peanuts to a lot of people, to people making under 100,000 ( most of the real people i bump into or know)…a 1600.00 mortgage plus all the extras, saving for post-secondary, pensions etc…it’s a lot…
can we expect that prices will come down to what they average family can afford? we wait, rent, and save away…but my husband is getting tired of me talking about how prices are inflated and will come down one day…

#70 TRT on 05.11.15 at 8:25 pm

Green Party works for the Conservatives…to split vote.

Conservative MP rescued Green Party leader after she was damaging party brand.

Don’t be a sheep. Green Party exists to split the vote.

#71 Fred on 05.11.15 at 8:26 pm

Also saw the Globe discuss overseas investors and the Star discuss the increasing flow of people coming to Canada through ports and not cliaming cash they have on hand in excess on $10,000. Fed Gvt said this has increased in recent years. How to launder dirty money, buy real estate in cash.

‘Overseas investors’ with $10,000 buying houses? Seriously? — Garth

#72 ulises on 05.11.15 at 8:28 pm

GArth, you mention nothing about the demise of the temporary foreign worker program, due to abuse by capitalists, but are very ready to talk down about NDP, who wants to raise the Alberta minimum wage.

The Fed Knows Why Walmart Raised Wages

http://www.forbes.com/sites/timworstall/2015/03/05/the-fed-knows-why-walmart-raised-wages/

#73 omg the original on 05.11.15 at 8:29 pm

MY VICTORIA OPEN HOUSE EXPERIENCE

Went to an open house down the block on the weekend.

1911 house fully renovated in 2005 but very cut-up without any natural flow. 3 beds and 3 baths and $1.125m. Its in Oak Bay which is one of the more expensive areas of Victoria, but on a secondary collector street – so your kids are not playing shinny on the street.

But of interest I asked the agent how the market was – she said it was on fire. Where are the buyers from? – local, she said.

Indeed when I looked on her sign-in sheet only one name could possibly be seen as being “HAM” and he self identified as being from Victoria. (sure call me a politically incorrect bigot, but not a lot of Smiths or Greens from Asia)

Everyone else had obviously non “HAM” names and identified themselves as being from Victoria. Except one who identified as being Vancouver.

Including me there were 15 people on the list.

Kind of puts a lie to the Victoria RE board’s recent pitch that the HAM are coming, the HAM are coming.

#74 HJD on 05.11.15 at 8:32 pm

#2 None – “Socialism doesn’t mean what you think it means.”

“You’re right. Likely worse.” — Garth

Both of you should perhaps get out of your intellectual cages. Our society obviously represents a blend of socialism and capitalism.

#75 Maxine on 05.11.15 at 8:38 pm

But Garth, many non precious metal sites carried this news.. You are a very smart man. And you know what the implications are. Forget the gold bugs…You have to be at least a bit concerned what happened..

http://www.zerohedge.com/news/2015-05-11/bond-pocalypse-sends-stocks-sldiing

#76 Smoking Man on 05.11.15 at 8:38 pm

#68 Jonathan on 05.11.15 at 8:23 pm
Turner Nation / Smoking Man
…….
Who knows who cares. Up down all around.

My book sucks, I’m never going to a writer, it started of really good, but the end sucks.. and I don’t how to make it better and don’t feel like re doing it.

Today I discovered Walmart no longer highers greeters , my retirement plan is doomed.

Depressed….no god reason.

#77 lionsroarin64 on 05.11.15 at 8:39 pm

Something for blog dawgs to chew on:

Don Cayo, Vancouver Sun business columnist, spoke recently with “Dr. Doom, a.k.a. Nouriel Roubini, the economist who gained international prominence when he correctly predicted the U.S. housing crash and the ensuring financial crisis.”

Cayo’s discussion with Roubini focused on the economic gender gap in Canada, but as the columnist notes:

“Roubini didn’t mention housing in his presentation. But when the man famed for forecasting the bursting of the American housing bubble is in town, I couldn’t resist asking him what parallels and what differences he sees in our market today compared to the U.S. before the crash.

‘The similarities are that there has been a good deal of home price inflation,’ he said. ‘There are increases in household debt related to mortgages.

‘But there are differences related to your financial system, which is slightly better regulated and supervised. So the excesses of subprime lending that occurred in the United States have not occurred in Canada.

‘In the U.S., a massive glut of supply led to the prices falling. Here, especially in Vancouver, some of the demand is driven by foreigners coming from Asia and buying property as a long-term investment. That demand is going to stay.

‘So I wouldn’t say the Canadian market is in a bubble. I would say there is some frothiness in terms of excessive price inflation and the valuation of homes compared to rentals.’

In short, ‘I don’t see a housing bust in Canada. But there may be some correction in prices.'”

http://www.vancouversun.com/opinion/columnists/Cayo+Better+policies+would+women+contribute+more/11041714/story.html

#78 zedgt87 on 05.11.15 at 8:40 pm

Of course people saved more money in 1982 than today You could actually save money and make interest on it.

#79 omg the original on 05.11.15 at 8:40 pm

60 Well-T on 05.11.15 at 8:07 pm

$800,000 crappy Mississauga house bought with the help of relatives since the owners don’t have any actual money. They are stretched to the limit and the first bad break will ruin them….she’s pregnant!
————–

The husband says they are $1000/m short when his wife goes on mat-leave.

This is one way high house prices are changing Canada.

Think the birthrate was low before? Let’s see how many kids those hipsters with $800k mortgages pump out – hmmm dear maybe we should just get a kitten.

We will have to ramp up immigration big time so there are enough people that can actually work and pay my health care costs when I am an old and frail 70 year old.

#80 OttawaGUYRenting on 05.11.15 at 8:42 pm

Brad Lamb at it again

http://ottawacitizen.com/news/local-news/developer-of-anticipated-gotham-condo-building

#81 Interstellar Old Yeller on 05.11.15 at 8:42 pm

$17k average on renos? That same sum would make a handsome contribution to an RESP, RRSP, TFSA, or plain-old non-registered account. A new kitchen seems like a lot of bother and less fun.

We were approached the other day by a smiling man handing out balloon animals to kids while flogging group RESP plans. I resisted the urge to tell him, “Garth Turner says you’re a baby vulture.” Instead, I told him I manage kiddo’s RESP and he saved his energy for easier prey.

#82 Washed Up Lawyer on 05.11.15 at 8:42 pm

Well, that’s that.

I am going to compel my kids to start reading this blog. They do not have any money but it seems to me that they should start learning about money management before they start making some.

The 19 year old daughter, a penniless university student, will do fine. She is a skinflint like her mom. Somehow, right now, she is down in Cancun for 10 days on her savings from her $10.75/hour part time jobs slinging lattes and pizzas. Alchemy.

I have seen little evidence that the 21 year old son is literate. I have never seen him read. However, if you need an old Honda Prelude hot-rodded, he is the Man. He brought his home in six pieces and using his iPhone, rebuilt it. There is some hope yet.

As a parent, I am batting .500. Better than Robin Yount.

Next, the lesson to be delivered to them is that you have to create your own job. The job creators ain’t.

#83 Daisy Mae on 05.11.15 at 8:44 pm

“Funny, isn’t it, how you never see trouble coming?”

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

It really does appear to be a human failing. We can’t see ‘past our nose’.

#84 Mark on 05.11.15 at 8:55 pm

“Where are the jobs coming from to support accelerated debt repayment, increased savings?”

No jobs needed for that. Just people cutting back their consumption dramatically. As Canadians stop speculating on houses, cut back their discretionary travel, cut back on eating out, etc., the amount of personal income in Canada is easily enough to support a high personal savings rate and debt repayment. Basically the home equity machine that drove the expansion of all of such and, in many cases, told Canadians that they didn’t need to save — is now well into reverse and austerity is slowly setting in.

As seen with the oil market, just a slight reduction in consumption can have dramatic consequences on the prices of products. Deflation in action.

#85 gwcanuck on 05.11.15 at 8:55 pm

Garth, the ‘debt’ stats…..are they just debt or net worth? I mean, if someone has $600k in RRSP’s and a defined benefit pension, is a $150k HELOC balance that big of a deal?

#86 Realtor007 on 05.11.15 at 8:57 pm

my, my, my, the fear mongering continues…

rates will be dropped another 50 basis point in the next 6 months, RE will keep on chugging along or worst case scenario remain stagnant for a years BUT don’t expect a drop worthy of waiting for.

I’ve been quite busy working with buyers/sellers as we search for homes and let me tell you, that market is moving fast, there is no time to sit around and think about a house for a few days because offers and acceptances are coming in at warp drive.

#87 Hawk on 05.11.15 at 8:57 pm

There is one problem with the comparison to America.

They are a people that are willing to accept responsibility for their actions and suffer it out. I fear that when the shit hits the fan here, us ants will get killed by the many more socialist grasshoppers that will get the government to confiscate our savings.

But one can hope……………….

#88 SWL1976 on 05.11.15 at 8:57 pm

Without new debt added, the system will simply collapse in on itself. So, we are now finding that complete debt repayment is a bit of a catch 22. Hoodwinked.

Now for a solution to this complex problem?

Well there is no easy cure but by not acknowledging the full extent of the problem is a very bad start. People need to stop skirting the real issues that are plaguing or society and start talking about them even if they are uncomfortable and awkward.

Sadly the window for freedom of speech is closing. Look around, bill C-51, the Patriot Act, free speech zones at G-20 protest. That doesn’t even make sense. We need to stop falling for government lies and propaganda. All of these things happening to society is not all by chance. There is a carefully orchestrated plan going on that has been generations in the making, and this plan has no borders.

Now from yesterday, Blacksheep brings up a very good point about sounding like a nutbar when trying to wake people up too fast. And I agree, but the time for easing into this stuff was yesterday.

HD, I watched the link you provided and found it somewhat generic and they did a lot of talking without saying much. I don’t agree that climate change should even be in the subject of conspiracies. I think talking about climate change as a conspiracy or hoax is just a distraction to keep us from talking about the real ones. Climate change is happening without a doubt, but so is geoengineering yet no one is talking about that. Carbon tax is a scam to siphon even more money from us to them.

Now I know I come off as a nutbar to the ones who either choose not to, or simply do not see. But alas, I am now fine with that. The window for freedom of speech is closing and I have now decided to use it or lose it. At the end of the day I would rather be on the side enlightenment than live a lie.

And why are governments now so threatened by words these days anyways?

The further a society drifts from truth the more it will hate those who speak it ― George Orwell

#89 Clearwater on 05.11.15 at 8:58 pm

I see that I am the only one who posted a factual number today but got no reaction or comment even though we layed off more people than tim hortons and all thses jobs likely paid more. People continue to jiber on about statisics and economic theories. Low oil prices = bad for canada, 1/3 of layoffs are ontario migrants, 1/3 are bc migrants. 1/2 the rest are from alberta and 1/2 the other rest are tfw’s. This economy is screwed and I would like to see more boots on the ground updates and fewer bs opinion.

Cheers and gfys.

#90 Maxine on 05.11.15 at 8:59 pm

Garth, thanks for allowing my last post. I hope everyone here links to this crtical issue.

The bond market starts to collapse then the RE and so many other markets are toast..

Thank you Sir…

Maxine

The bond market is not collapsing. I can’t believe that needs stating. — Garth

#91 Obvious Truth on 05.11.15 at 9:02 pm

The internals of the jobs report were terrible again.

Comments on dollarama are correct. Lots of high end cars at discount grocers. Quiet malls and less kids signed up for sports and activities. These are easy things to go after in family budgets.

We also heard about people planning to spend less on home renovations.

It always starts small but its clear folks are stretched. It’s been happening for almost a year now already.

Likely time for early year market trends to reassert. Sorry H(oil bull) and mark (cpeso bull). Looks like you guys are overbought. Im thinking the other way. At least a retest. But that’s what makes a market.

Good fun.

#92 DisgustMadeMePost on 05.11.15 at 9:05 pm

#77
‘So I wouldn’t say the Canadian market is in a bubble. I would say there is some frothiness in terms of excessive price inflation and the valuation of homes compared to rentals.’

…….

Big difference?

Does he not think the debt level is concerning?

#93 Linda on 05.11.15 at 9:09 pm

Garth, question about the debt in your post – you say families w/income over $100,000 have 38% of the grand total; families w/income over $50,000 have 75% of it – those two percentages total 113%. Did you mean to say families with $50,000 plus income have 75% of the remainder of the total debt? If not, should not one of the two numbers be adjusted so it totals 100%?

Regarding the advice to sell to wrinklies etc – this is good advice, but if everyone took it would that not precipitate the very housing apocalypse this blog forecasts?

Regarding the price of oil – yes the end is nigh. Last time oil prices were in the toilet it was said it would take decades to recover etc. but hey, it was not that long a time period & as soon as prices shot up & held everyone forgot the bad times. I think saying prices won’t recover for a decade or more is unrealistic – one good mid-East squabble or war will see prices shoot up & as far as I can make out, squabbles/wars are pretty much the hobby of choice for that region. Plus I never underestimate how people can use up a resource faster than one thought possible. Lots of people apparently turning in their electric car & replacing it with an SUV, albeit a more fuel efficient one.

Debt for families >50k = 75% of total debt, of which 38% are >100K. — Garth

#94 Smoking Man on 05.11.15 at 9:11 pm

#91 Maxine on 05.11.15 at 8:59 pm
Garth, thanks for allowing my last post. I hope everyone here links to this crtical issue.

The bond market starts to collapse then the RE and so many other markets are toast..

Thank you Sir…

Maxine

The bond market is not collapsing. I can’t believe that needs stating. — Garth
…..

Bonds way over sold, time to buy more, China cut their rate, currency war still on . who’s next.

#95 Realtor007 on 05.11.15 at 9:17 pm

#68 Jonathan on 05.11.15 at 8:23 pm

Good comment on DOL

Don’t listen to Mr Nation, he has been talking DOL down for well over a year closer to two, since then DOL has increased by leaps and bounds.

Support your local Canadian business, DOL, take that Obie

#96 Herf on 05.11.15 at 9:20 pm

“By the way, housing starts in Calgary collapsed by more than half last month. That’s a lot of construction work evaporating. The federal agency doing the counting says it’s because of a weaker economy and so many people with resale homes who can’t find buyers.

Funny, isn’t it, how you never see trouble coming?”

But . . . but . . . but, it’s supposed to be different here (there). All the local yocal home-owners, realturds, media, property virgins, business people and politicians (have I missed anybody?) said so.

#97 [email protected] on 05.11.15 at 9:22 pm

Rates up, Greece down. — Garth

——–
Links? Stats?

#98 Drill Baby Drill on 05.11.15 at 9:24 pm

Dear Pathetic Blog: As I have written here many times in the past “Do not count out the Alta oil patch”. Today the Saudi oil ministry for the first time since the oil price plunge stated “it was going to review the production quotas during the June OPEC meeting”. It seems the domestic demand for cash from Papa King Saud by his spoilt nephews and the whining from the other OPEC members is finally taking it’s toll. Oil today is at $59/bbl USD WTI. Look towards $65 by July 01.

#99 Interstellar Old Yeller on 05.11.15 at 9:27 pm

#90 Clearwater on 05.11.15 at 8:58 pm

It is telling that no one has called you a liar, accused you of exaggeration, or dismissed your story as atypical. There is greater acceptance that S is hitting the fan.

I’m sorry for the people laid off and those whose financial foolishness is now causing a cash crunch. Sounds like you saved for a rainy day and will come through all right, as will many blog dogs.

I have no boots-on-the-ground story to share at the moment, but will when I do.

#100 HD on 05.11.15 at 9:32 pm

@#89 SWL1976 on 05.11.15 at 8:57 pm

HD, I watched the link you provided and found it somewhat generic and they did a lot of talking without saying much. I don’t agree that climate change should even be in the subject of conspiracies. I think talking about climate change as a conspiracy or hoax is just a distraction to keep us from talking about the real ones. Climate change is happening without a doubt, but so is geoengineering yet no one is talking about that. Carbon tax is a scam to siphon even more money from us to them.

Now I know I come off as a nutbar to the ones who either choose not to, or simply do not see. But alas, I am now fine with that. The window for freedom of speech is closing and I have now decided to use it or lose it. At the end of the day I would rather be on the side enlightenment than live a lie.

And why are governments now so threatened by words these days anyways?

——————————

But you do believe that 9/11 was an inside job, don’t you? (Plz, correct me if I misunderstood your position).

So according to you, those who believe the official story about the twin towers have been deceived, correct?

Therefore, these people need to be awakened by someone like you who discovered the ‘truth’ by using their ability to see reality for what it really is.

Or you somehow have access to information that most of us cannot obtain.

Or we have access to the same information but we lack the intellectual sophistication to form an accurate picture of reality.

Or a combination of the 3 statements above.

Please let me know if I missed something or misrepresented your views in any way.

Best,

HD

#101 Herf on 05.11.15 at 9:33 pm

#22 Clearwater

“We just layed off 50 people today and took a 15% paycut for everyone left.”

You poor saps that are left should all inform your employer that you’ve all been constructively dismissed, demand your severance and get out of there. At the very least, it might pay to hire a qualified employment lawyer to advise all of you of your exact rights, options and entitlements.

#102 Sheane Wallace on 05.11.15 at 9:44 pm

#34 Mark

more like 0.35 USD loonie.

#103 Sheane Wallace on 05.11.15 at 9:46 pm

The bond market is not collapsing. I can’t believe that needs stating. — Garth
………………………………………..
you mean strongly negative interest rates are here to stay for a long time?

I don’t think so.

http://www.marketwatch.com/story/mohamed-el-erian-warns-of-trouble-as-bond-liquidity-dries-up-2015-05-06

the guy knows what he is talking about, he managed PIMCO for Alianz ( a German company)

#104 Tim on 05.11.15 at 9:47 pm

Not going to happen here. People in the states were much more leveraged, sure there is a small portion of Canadian home owners that are highly leveraged but no where near the portion of Americans that were highly leveraged.
http://www.theglobeandmail.com/life/home-and-garden/real-estate/some-wonder-if-its-time-vancouver-acts-to-slow-foreign-buyers/article24341903/

#105 Andrew Woburn on 05.11.15 at 9:47 pm

47 Shawn on 05.11.15 at 7:35 pm
.. anyone who was out of their Huggies by 1982 knowsfirst hand that people were not saving anything like 19% in 1982.
============

In 1982, I was well into my post-Huggies phase, and I agree that 19% seems a little enthusiastic. The only thing that I can think of was that these were the dark ages when you still needed more than a pulse to get a credit card. Many people still clung to the prehistoric idea of saving cash until they had accumulated the full price of something they wanted to buy. They even had a phrase for it, “Waiting until I can afford it”. “Afford”! What an archaic and antisocial word, like something out of Dickens.

#106 Sheane Wallace on 05.11.15 at 9:52 pm

#79 omg the original

Nice house in Mississauga was worth 200 k in 2000. Now crappy is 800 k. My observation for house prices in Toronto matches the 4 times increase in the last 15 years. While incomes have been stagnant.

The question is who is going to pay the bill. It ain’t gone be me.

#107 Andrew Woburn on 05.11.15 at 9:55 pm

The Economist blog looks at the “real” US unemployment rate.

http://www.economist.com/blogs/freeexchange/2015/05/americas-unemployment-rate?fsrc=scn%2Ftw%2Fte%2Fbl%2Fed%2Famericasunemployment

#108 Karl hungus on 05.11.15 at 9:55 pm

Since when is OPEC a reliable source?

#109 Andrew Woburn on 05.11.15 at 9:56 pm

Everyone Is Looking in the Wrong Place for the Answer to Low Real Rates

http://www.bloomberg.com/news/articles/2015-05-11/nangle-everyone-is-looking-in-the-wrong-place-for-the-answer-to-low-real-rates

#110 Sheane Wallace on 05.11.15 at 9:58 pm

The bond market will experience significant turbulence in the next 3-5 years. Significant. There is no way around it.

Interest rates might normalize much faster then we would like. Then Canada is toast. How would inflation of 7 % + and interest rates of 6 -8 % sound? Not possible? If they want to save the currencies it is very likely. If not….

Cheers retirees and savers.

#111 rwm on 05.11.15 at 10:02 pm

So just to be clear, when you say:

“It’s why you should have twice the exposure to US and international markets as you do to Canadian ones.”

Is that to be interpreted as:

10% CDN
21% Int’l
21% US
8% REIT

Or:

18% CDN
18% Int’l
18% US
6% REIT

More to the point, are you saying double Int’l/US combined vs. CDN or double Int’l and US individually vs. CDN?

#112 TS on 05.11.15 at 10:03 pm

Oil is crashing?

Oil is at $60 a barrel and the time to buy is over. But if it does crash again, I’ll just double down.

Just like the preferred share “crash” a couple of months ago.

Always be the contrarian.

#113 Julia on 05.11.15 at 10:05 pm

Only these? http://m.thestar.com/#/article/opinion/editorials/2015/05/11/the-high-price-of-speaking-out-in-ottawa-editorial.html

#114 Smoking Man on 05.11.15 at 10:09 pm

#104 Sheane Wallace on 05.11.15 at 9:46 pm
The bond market is not collapsing. I can’t believe that needs stating. — Garth
………………………………………..
you mean strongly negative interest rates are here to stay for a long time?

I don’t think so.

http://www.marketwatch.com/story/mohamed-el-erian-warns-of-trouble-as-bond-liquidity-dries-up-2015-05-06

the guy knows what he is talking about, he managed PIMCO for Alianz ( a German company)
….

Stop being a celebrity worshiper. Dude has a big bet. And its wrong..

Peasents are not going to save the day….. They’re broke.

Yes negative rates coming .. Bet accordingly.

#115 Julia on 05.11.15 at 10:12 pm

#60 Well-T

A $650,000 mortgage on $128,000 of family income? Yikes! Had to borrow from family from the downpayment and now a baby on the way too?
They may have qualified for the loan, somehow, but they certainly don’t budget.
That’s not going to end well.

#116 Sheane Wallace on 05.11.15 at 10:26 pm

#112 Smoking Man

Yes negative rates coming .. Bet accordingly.
————————————–
Yes I do, I do, I do, I do, I do, I do… (ABBA)

Negative rates are possible only with full monetization of debt and 100% purchase of bonds by central banks. The last straw before….

#117 Smoking Man on 05.11.15 at 10:30 pm

#117 Sheane Wallace on 05.11.15 at 10:26 pm
#112 Smoking Man

Yes negative rates coming .. Bet accordingly.
————————————–
Yes I do, I do, I do, I do, I do, I do… (ABBA)

Negative rates are possible only with full monetization of debt and 100% purchase of bonds by central banks. The last straw before….
….

Yes I already know, when that don’t work , a black helicopter will fly over your house, and drop thousands of thousand dollar bills.

Spend bitches….

Saver is doomed..

#118 mirror, mirror on the wall on 05.11.15 at 10:36 pm

“It’s why you should have twice the exposure to US and international markets as you do to Canadian ones.”

Garth, Isn’t this just a panicky following of the herd and assuming the future will follow the past. US equities have outperformed over the past couple of years….now is the time to start unwinding those positions and looking outside the US, towards Europe, emerging markets and then right back to Canada

You must be new here. — Garth

#119 Sheane Wallace on 05.11.15 at 10:36 pm

Bloomberg on bonds:

http://www.bloomberg.com/news/articles/2015-05-10/it-s-not-just-greece-china-s-retreat-threatens-european-bonds

#120 Mark on 05.11.15 at 10:41 pm

“Interest rates might normalize much faster then we would like. Then Canada is toast. How would inflation of 7 % + and interest rates of 6 -8 % sound? Not possible? If they want to save the currencies it is very likely. If not….”

How does inflation actually rise that much when demand in almost every facet of the economy is dead?

In other words, just where the heck is the inflation supposed to come from?

It will take years to re-deploy the workforce that is now in the process of being displaced from the housing downturn. Oh, and since there’s so much room to improve on the productivity-front in Canada, the chances of inflation are even less here. Deflation seems like a far more likely scenario for the next decade or two in Canada.

#121 Retired Boomer - WI on 05.11.15 at 10:42 pm

There will be NO Bond “collapse” as interest rates RISE new bonds will be issued reflecting the higher coupon rate demanded of investors, conversely making existing bonds less desirable, there by ‘worth less.’ Equities may take a temporary slide as well.

There will be no “DEBT Jubilee” yeah, maybe in ancient mideast times that was a fact every 50 years, but here? Get thee REAL!!

Nobody gives a shit if you bought “too much house,” or “too much car,”or “too much student debt,” or “too much credit card stuff,” or “too much of all of the above.”

IF you can’t pay for it… you default. You lose the car, the house, go broke. Understand this, it nobody’s fault, problem, or choice – but yours!

OLD movie, we have seen, and lived this before….ho-hum

#122 Chris on 05.11.15 at 10:43 pm

At the same time, strike season begins again, all middle school and high school teachers on strike. Wonder what their students think of them secretly. Would the students think “wow, I should do that too when I grow up.” or “wow, they are my teachers?” or “wow, so all you have to do to get more money is this?” In the meantime, tons of education majors that are recent graduates are desperately looking for a teaching job, any job.

#123 Mark on 05.11.15 at 10:45 pm

“Negative rates are possible only with full monetization of debt and 100% purchase of bonds by central banks. The last straw before….”

Have to disagree here. Investors bid up negative yield instruments all the time. Have you looked at Amazon, Salesforce, Twitter, etc., stock over the past few years? Companies that have never earned anything and continually destroy capital are still being bid for top dollar. If investors are willing to do it in stocks, no reason why they wouldn’t be willing to do it in bonds.

Hyperinflation requires that money be in the hands of spenders. There is no evidence that QE actually creates demand in excess of supply. In fact, since most QE was paid to the investor class, QE, at best, actually stimulated more supply and heightened the probability of and severity of a deflationary collapse.

#124 Shawn Allen on 05.11.15 at 10:51 pm

Will debt increase?

SWL1976 on 05.11.15 at 8:57 pm

Without new debt added, the system will simply collapse in on itself. –

*****************************************
For how many centuries do you suppose debt, GDP, population, and debt per capita and GDP per capita have been increasing? For how many centuries do you suppose people have been saying it has to end soon?

We do have a lot of debt. But unless interest rates rise substantially we will have more debt per capital in ten years and twenty years, count on it.

We are living through the finalization of the economy. 200 years ago people worked very hard on farms and much of what they produced was not traded with others for money.

Today, increasingly, almost everything we do is traded for money. We call it specialization. It is wonderful. This process is not over yet and the growth of debt per capita is also not over yet.

#125 mirror, mirror on the wall on 05.11.15 at 10:56 pm

#89 SWL1976 on 05.11.15 at 8:57 pm

To tsick with your Orwell theme, I would like nominate Garth for the Canadian Orwell Award….
Example, Orwell said,

It sounds as though Garth may actually be chaneling the spirit of Orwell. In some ways, the blog is even starting to resemble The Road to Wigan Pier,

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

especially the bits about “middle class oblivion”.

#126 Shawn Allen on 05.11.15 at 10:58 pm

Andrew Woburn on 05.11.15 at 9:47 pm 47 Shawn on 05.11.15 at 7:35 pm .. anyone who was out of their Huggies by 1982 knowsfirst hand that people were not saving anything like 19% in 1982. ============

In 1982, I was well into my post-Huggies phase, and I agree that 19% seems a little enthusiastic. The only thing that I can think of was that these were the dark ages when you still needed more than a pulse to get a credit card. Many people still clung to the prehistoric idea of saving cash until they had accumulated the full price of something they wanted to buy. They even had a phrase for it, “Waiting until I can afford it”. “Afford”! What an archaic and antisocial word, like something out of Dickens. –

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

Andrew, I am glad you agree that the savings rate in 1982 was not likely 19%.

I agree that credit was not as easy to get in 1982. Then again, actually, neither was income as easy to get.

People did use credit back then. Most stores allowed people to buy on credit. People owed money to stores all over town quite often. That practice faded out when credit cards became common. In those days it was not unusual to get a bank loan for just a couple hundred dollars. Banks stopped giving out small loans when credit cards and lines of credit came along. Cars were often bought on credit but generally paid for in three years. Then again most of the cars of the 70’s especially were absolute junk and started to rust in about three years.

#127 mirror, mirror on the wall on 05.11.15 at 11:02 pm

drum roll…this is what Orwell said,

“In a time of deceit telling the truth is a revolutionary act.”

#128 Cici on 05.11.15 at 11:04 pm

#82 Washed Up Lawyer

That was hilarious….thank you!

Wonder how my Dad talks about me behind my back?? Hopefully with similarly wry and ironic mastery.

#129 Waterloo Resident on 05.11.15 at 11:04 pm

Oh oh, I think I just figured out what is going to make this bubble pop.

And when I talk about this bubble popping, I’m not just talking about the Canadian housing bubble popping, or the Canadian debt bubble popping, or the student loan debt bubble popping, or the American government debt bubble popping, or the European Union debt bubble popping, I’m talking about all of these bubbles popping simultaneously, all together, bringing down the entire house of cards.

Rates in the U.S. are raised a few months sooner than most experts have predicted. That starts the whole ball in motion.

A few weeks later, a large hedge fund in the U.S. declares itself to be insolvent, it has $250 Trillion in derivatives ready to explode. And explode they will. Even the U.S. and the E.U. together don’t have the financial power to save that one from popping. A week later interest rates on bonds start to skyrocket, no one wants to hold debt, not when such a massive amount of debt is now turning into PURE JUNK, worthless junk. So rates go up, 5%, 10%, 20%, 50%, 100% and so on.

Yup, you’ve got it, anyone with debt at that point will say “forget it, I’m not paying 100% per year on my mortgage, no way.” That’s when the debt bubble truly ‘POPS’. And that might be a lot sooner than anyone thinks, probably some time in 2016 if I’m right.

You haven’t been yet. — Garth

#130 Shawn Allen on 05.11.15 at 11:26 pm

We are living through the finalization of the economy.

Freudian slip? should read financialization (even if that is not an official word)

#131 Bobby on 05.11.15 at 11:39 pm

For #73 OMG,

I’m looking at houses here in Victoria also. I’ve recently gone to a number of open houses as we are looking. First, they aren’t busy and second most are just local buyers. No, there is no influx of HAM. It is just a real estate ploy to try and move houses in the upper end. One realtor said all of the sales are only between $400-675k. Above that most homes are just sitting or are moving slowly. Lots of inventory sitting at $1.05 million plus.
The last person I look to for realtor advice is a realtor. A bank manager just told me many home appraisals are coming in a lot lower than many people think they will, requiring some price adjustments.

#132 TurnerNation on 05.11.15 at 11:41 pm

Smoking man yes agree on bonds. Watching TLT.US 118 level for beep beep.

Dollarama stock recently was added to a TSX low volatility index. Says it all.

#133 Nagraj on 05.11.15 at 11:44 pm

#106 Andrew Woburn mentions Dickens.

Dickens wrote a whole book about DEBTORS PRISON, “Little Dorrit”.
In those days, if ya couldn’t pay up they threw you in DEBTORS PRISON and ya stayed there until you (or yer friends) paid up, and if nobody paid up you stayed there until death. And that was that.
Altho the protagonist of “Little Dorrit” comes into a lotta money and pays up and finally gits out – turns out the long prison stay has cost him his sanity.
Little Dorrit is his heroic daughter.

Of course we shall pen a Canadian version – after rates rise – chronicling the misfortunes of Canadian bankrupt families, “Little Potato Chips”.

#134 meslippery on 05.11.15 at 11:47 pm

The real problem as I see it and live it is.

Wages, 1980’s vs 2012
Found after a quick google search.
Anyone else notice this in their life?

I recently reviewed my employees performance, and had to decide on their merit increases. Every time I do this, I am amazed. My first job after I was discharged from the Navy paid $6.00 an hour, by 1986, I was earning $11.80 an hour.

My newest hire is making $15.00 an hour. 26 years after I was earning $11.80, the wage for a position on-par with the responsibilities I had 26 years ago has only gained an hourly wage of $3.20 more. I supported my wife and I with few issues in 1986. I cannot imagine that someone making $15.00 an hour today could do the same.

I left the hourly ranks in 2000, at the time I was making $30 something an hour (non-union I might add), and took a major hit to my income when I went into management. My last year as an hourly, I made $98,487.00. (I loved overtime, I was upset that I didn’t break 100 K.) My first year in management I made $50 K.

Fast forward 12 years, and I have made up for that income gap and then some. But as a single provider for 5 people, my income is stretched tighter than it was 26 years ago. My highest paid mechanic makes $24.00 an hour. I was earning that in 1993.

Consider what $24.00 bought in 1993 compared to what it can buy today, and you can see the dilemma. Consider what $6.00 bought in 1984 compared to today. We Millrats have been screwed constantly, and consistently since 2000.

My personal view about unions is slowly changing.
http://www.dailykos.com/story/2012/04/27/1086758/-Wages-1980-s-vs-2012

#135 Carousel on 05.12.15 at 12:03 am

CHMC will be bringing in new changes end of June, a little too late by my guess. I wouldn’t run out and buy right now, unless you want to join the black hole of the uncertainties. I expect Realtor’s are a little on edge, so their propaganda is spreading on how RE is looking so great. They fail to see what ever goes up eventually comes down, very much like the Stock Market, just have to be patient and likely a strong stomach.

Rally on……

#136 B Riding Dirty on 05.12.15 at 12:03 am

“Moist millennials in hock” Garth

Thank you for giving us lonely Pawn Brokers a shout out. People forget we were the first style of loans dating back to 3000AD.

All I can say is I closed in on a dividend payout in 70 days, usually I pull them every 90 days. So let the last resort worn (maybe my new name here) last time I saw profits flowing this good was in 2009.

But hey Im just a “hock shop” owner, what do I know

#137 Carpe Diem on 05.12.15 at 12:05 am

#94 Linda

Linda …. you ask a good question.

Garth’s post was about “The queasy middle”.

Garth’s statement of:

“over $100,000 have 38% of the grand total; families w/income over $50,000 have 75% of it”

Means people making between 50K and 100K have 37% of the debt.

Meanwhile people making more than $100K have 38%.

People above 100K means 101K, 200K , 500K, 1M, 2M, 5M, 10M ….

have 38% of the debt.

That means “The queasy middle” sure have a lot of debt for their meager earnings …..

Now add the other 25% that the $0-$50K have ….

Does look good and confirms …

You can’t cure stupid!!

Carpe

#138 bill on 05.12.15 at 12:10 am

#21 TurnerNation on 05.11.15 at 6:32 pm
my guess would be its an R68/9 BMW with Corbin Beetle bags on it with a couple of vintage BMW badges on them.Check out the fins on BMW Boxer twins . Over the years ,as the engineers gradually increased the power resulting in more heat. This led to more fins -the ‘air’ heads.Followed by a period of oil cooling and finally water cooling of today.

http://corbin.com/bmw/r12bag.shtml

#139 Red Deer Rob on 05.12.15 at 12:33 am

@ Clearwater

If you really want an idea of how things are going job wise in Alberta look at the resumes posted on kijiji. There are many people, myself included, who’ve been layed off and are looking for work. It was already difficult before the oil price collapse to find a healthy paying job where the employer would be willing to on-board you into the company. Now we’re collectively eff’d. At least I’m debt free.

Sitting in Tim Horton’s I have heard on several occasions people discussing they’ve been looking for work. The impact of the oil price collapse is being felt.

#140 cramar on 05.12.15 at 12:37 am

#69 just nej on 05.11.15 at 8:25 pm

wondering if anyone has any thoughts about the southwestern ontario real estate market…while prices are not anywhere near toronto, it’s still very difficult to find anything decent under 350,000 –while this might seem like peanuts to a lot of people, to people making under 100,000 ( most of the real people i bump into or know)…a 1600.00 mortgage plus all the extras, saving for post-secondary, pensions etc…it’s a lot…
can we expect that prices will come down to what they average family can afford? we wait, rent, and save away…but my husband is getting tired of me talking about how prices are inflated and will come down one day…

————————–

I guess it is about what you call decent? And exactly where are you talking about. Here in Leamington, you can get a newer 3BR, 3Bath, double garage, brick house for under $350K. If you set your sights lower, there are still plenty of options. Houses on my street are listed under $170k for brick bungalows with garage.

I suspect that already cheap digs in SW Ont. will only go up. I was talking to a RE agent a week ago who has decades of experience in Windsor. I asked if things are improving in Windsor. He said houses are going up at 5-6% per year now, and there is much demand for “desirable” properties (whatever that means). For these, he said bidding wars are common as are selling prices above list. Dare we say that finally people are waking up to the fact that in SW Ontario you can get a similar house for 1/4 to 1/2 of what you pay in the cities surrounding the GTA.

#141 Former Fool on 05.12.15 at 12:43 am

Another great commentary by Mr. Turner. The debt people take on is eye popping. I used to be one of those people via owning a marginal property that I was underwater on for a while. Glad I got out, discovered Garth’s blog, and invested my proceeds.

Interesting story here: http://www.cbc.ca/stevenandchris/life/moneyt-lessons-celebrity-edition.

People could learn something from this story. If Leo DiCaprio, who has a net worth of $200M, drives a Prius (his only car), why the hell does somebody making $50k a year need to drive a Benz?!? If Jennifer Lawrence still clips coupons (with $40m in the bank), why does Joe Blow making $200k in Fort Mac need all the latest toys? People are funny.

#142 Benchwarmer on 05.12.15 at 1:00 am

A plumber friend of mine phoned and asked if I was hiring.
New home construction in Cowtown has ground to a halt and the plumbing company is cutting everyones hrs in the hopes of staving off layoffs .
Calgary is circling the drain .

#143 jingle bell on 05.12.15 at 1:03 am

people will walk away from their under water mortgages
banks executives will retire with millions
banks will be bailed out by Govt/tax payers
foreign investors / flippers will be first to flee

#144 Babblemaster on 05.12.15 at 1:03 am

“The strongest country on the planet spent trillions to reverse the housing collapse, and was unable. Only seven years later, with prices still 17% below their 2005 peak, is that nation emerging into growth.” – Garth

——————————————————–

I predict that in a significant RE reversal, Canada will also spend massively (and foolishly) to save the housing market with about the same results as in the US. Regardless, as in the US, not all areas will be similarly affected. The GTA with it’s massive immigration, will weather any downturn quite well.

#145 Keith on 05.12.15 at 1:04 am

Re #71 Fred, Garth, its not 10K. That is the legal limit before you have to declare it. It’s much higher than that, and another statistic where Vancouver leads the nation!

http://www.vancouversun.com/news/Vancouver+airport+tops+country+seizures+undeclared+cash/8043419/story.html

#146 Godth on 05.12.15 at 1:07 am

No Bubble Here: $1.5 Million for 750 Sq. Ft. Flat, Rent a Bed for $1,000/Month, or 20 Beds in 7-Bedroom House for $21,000/Month
http://charleshughsmith.blogspot.ca/2015/05/no-bubble-here-15-million-for-750-sq-ft.html

#147 Leo Trollstoy on 05.12.15 at 1:10 am

No jobs. No economy. Saving trend negative. Debt unbearable. Currency falls.

#148 PM on 05.12.15 at 1:42 am


http://www.statcan.gc.ca/pub/13-605-x/2012002/c-g/c-g04-eng.htm

So savings rate correlates with interest rate? What counts as savings? Guaranteed investments? If so that makes sense and there is no crisis. If you count investments then we’re probably just fine. Super misleading statistic I see trotted out all the time.

#149 whitehorn on 05.12.15 at 1:50 am

Clearwater #22
“We just layed off 50 people today and took a 15% paycut for everyone left. No OT means the paycut is more like 40%. This will not make the msm. Lots of stories like this in cowtown that fly under the radar. More to come when spring break up ends and the rigs dont come back like they usually do. Thats 75 people that cant make their mortagage next month on top of all the reported and unreported layoffs.”

I agree with your last statement – unreported layoffs. I recall the financial crisis downturn in Calgary, the traffic was immense pre downturn in the industrial area, and in early 2009 traffic was nonexistent. It was a night and day comparison. You don’t hear about the companies that employ fewer than 50 people getting laid off. You only hear about the corporations. That forms a large part of employment. Anyways, I did a project in a major oil town in AB – Drayton Valley pre oil collapse this last fall. Now the town is extremely “dead” amazing how the oil downturn quickly changes as the summer was very busy. Interesting times in Alberta, watching it all unfold.

#150 Made in BC on 05.12.15 at 2:01 am

#47 Shawn on 05.11.15 at 7:35 pm
The Preposterously Prodigious savers of 1982?

•In 1982 people saved over 19% of what they make. Today it’s just 3%.

****************************************
No matter how many times that 19% figure is repeated and no matter that it comes from Stats Canada, anyone who was out of their Huggies by 1982 knowsfirst hand that people were not saving anything like 19% in 1982.
++++++++++++++++++++++++++++++++++++

The other thing that never gets mentioned about 1982 is people kept 100% more money in their pockets than they did today because taxes are double what they were back then. That is how they had money to save.

#151 Blacksheep on 05.12.15 at 2:10 am

HD,

You seem interested in this topic.

Question: Do you, believe the complete and official 9/11 story ? I want to know what you, think.

Respectfully,
BS

#152 Mike T. on 05.12.15 at 2:27 am

I think the best way to explain the difference between being awake and being not-awake is to use an analogy.

Take anyone in the world and take a police officer.

Take them to a mini mall, ask them what they see.

Anyone will see a shoe store, the bank, a bakery, café etc.

A police officer will see shoplifters, a drug deal going down, purse snatcher etc.

Same place, different worlds.

No one needs waking up, it’ll just happen. Or not.

#153 PM on 05.12.15 at 2:47 am

Canadian debt bubble popping, or the student loan debt bubble popping, or the American government debt bubble popping

Canadian and US govt debt levels are safely within historical norms. No one gives a shit about student debt.

bringing down the entire house of cards.

People who don’t understand the economy are apt to call it a house of cards.

#154 Londoner on 05.12.15 at 4:31 am

Bonds have indeed been oversold lately. Over here in the UK, 10 year gilts back above 2%. Time to load up.

Btw – there’s no chance that inflation or interest rates in Canada will hit 7% in the next few years. If it does then you will be partying as your wages will go up at an equivalent pace.

If you want to know which direction rates are going, watch the UK inflation report – out tomorrow and presented by your former BoC governor Carney. He’ll tell you how it is. Or you can keep listening to the US Fed – who will steer you in the wrong direction, again.

#155 Oot der Hoos on 05.12.15 at 6:24 am

The Picketty marxism people on here, who want to tax and confiscate capital, need some economic education about accumulation of capital and its benefits to real wages. Picketty is wrong that inequality comes from capital accumulation.

https://www.lewrockwell.com/2014/08/gary-north/comrade-piketty-cut-to-ribbons/

Canada is going into stagnation as savings are consumed in house construction instead of savings going into capital goods, thus we cannot compete, productivity drops. The world interest rates are artificially low, causing inflation higher than its natural negative rate that should be happening for this short era. That central bank policy causes consumption instead of real saving and thus less productivity and less capital accumulation, thus lower wages, thus higher taxes by Liberal and NDP economic illiterates, thus more consumption by me, instead of saving, because I know they will “progressively” loot me one day.

Here it is:
http://www.georgereismansblog.blogspot.ca/2014/07/pikettys-capital-wrong_28.html

Capital accumulation and more production, not egalitarianism and its absurd theories and programs, are the foundation of rising living standards in general and rising real wages in particular.

If enacted, the program Piketty urges would be as devastating in its consequences as his knowledge of sound economic theory is slight. The popular success of his book is a measure of the economic ignorance of our time. The endorsements given his book should be taken as evidence of the economic ignorance of those who gave them.

the Author
George Reisman, Ph.D.

This excerpt is fascinating because profits are now very high relative to GDP history in USA:

The actual relationship between profits and saving was understood by Adam Smith, who wrote: “But the rate of profit does not, like rent and wages, rise with the prosperity, and fall with the declension of the society. On the contrary, it is naturally low in rich, and high in poor countries, and it is always highest in the countries which are going fastest to ruin.”[30]

Piketty is out to illustrate the truth of Adam Smith’s proposition by means of pushing the United States, and as much of the rest of the world as may be foolish enough to adopt the policies he recommends, substantially further in the direction of “going fastest to ruin”.

#156 saskatoon on 05.12.15 at 7:05 am

garth,

u.s. march job numbers revised down (-41,000)…weakest in three years.

april job numbers will most likely be revised down as well.

93 million people now NOT in labour force (record high).

223,000 (net) jobs created…yes.

BUT 252,000 FULL-TIME JOBS LOST!

as yellen said repeatedly: interest rates going up are contingent upon improving “data”.

the data is NOT improving.

rates will NOT go up.

if yellen couldn’t raise interest rates a few months ago because the “data” didn’t support such a move…

how could she even consider raising them now (or shortly into the future) when data is worse (worsening)?

Wait and see. — Garth

#157 crowdedelevatorfartz on 05.12.15 at 8:39 am

@#90 Clearwater

50 of you got wacked and the rest have to eat a 15% wage cut.
This was a surprise in Oilberta?
Or you work for the PC party?
Or your company is sending the NDP a message at your expense?

Well you can do what I did when the company became a crappy work environment where they treated the workers like garbage.
Tell THEM to gfys instead of us and walk out.

Options ……. always have options ( unless, of course, you just bought a house…..)

gotta go. coffee’s ready

#158 torontorocks on 05.12.15 at 8:40 am

#80 – Mr Sheep is building the exact same condo over on King street West across from Roy Thompson hall. Same design. Same big headed buffoon.

Huff Post says Toronto is the most in demand place for offshore money and luxury home purchases

Roubini says no bust, some correction.

Prices seem like they’re here to stay. IF you managed your portfolio correctly, you could crush 5% returns on housing yoy over the past 10 years and hopefully get in on a relative basis where you could have been all those years ago.

#159 Ralph Cramdown on 05.12.15 at 8:50 am

#151 Made in BC — “The other thing that never gets mentioned about 1982 is people kept 100% more money in their pockets than they did today because taxes are double what they were back then.”

The top marginal Federal Tax rate is 29% this year. in 1985 it was 34%. Federal taxes for the top bracket were 17% higher then. Ontario tax was 48% of basic Federal tax, for a combined marginal (asymtotic) rate of 50.32%.
http://www.cra-arc.gc.ca/formspubs/prioryear/t1/1985/5006-s1/5006-s1-85e.pdf

https://youtu.be/HFXGBDhi6X8?t=73

#160 james on 05.12.15 at 8:59 am

156 Oot der hoos

Wow, wow, wow.

Are you really that stupid?

That link you posted, and the author Reisman are such pure garbage it’s hard to know where to start.

His attacks on Piketty are shallow ad hominem nonsense betraying his own weak but very ideological grasp of economic theory.

His website, when not flogging products, reminds one of other extremist sites that are best left unvisited.

Piketty’s work remains the best researched, most data-intensive/exhaustive analysis of the excesses of wealth disparity we have seen in decades, perhaps a century.

And you want to distract the thinking readers on this blog with conspiracy-nut type crap like this?

You embarrass yourself here.

#161 davikk on 05.12.15 at 9:05 am

No Bubble Here: $1.5 Million for 750 Sq. Ft. Flat, Rent a Bed for $1,000/Month, or 20 Beds in 7-Bedroom House for $21,000/Month

http://investmentwatchblog.com/no-bubble-here-1-5-million-for-750-sq-ft-flat-rent-a-bed-for-1000month-or-20-beds-in-7-bedroom-house-for-21000month/

#162 Shawn on 05.12.15 at 9:16 am

A Savings by any other name is just as sweet?

PM on 05.12.15 at 1:42 am

http://www.statcan.gc.ca/pub/13-605-x/2012002/c-g/c-g04-eng.htm

So savings rate correlates with interest rate? What counts as savings? Guaranteed investments? If so that makes sense and there is no crisis. If you count investments then we’re probably just fine. Super misleading statistic I see trotted out all the time.

************************************
Thank you, my point as well its misleading to suggest that the savings (whatever that means) rate has fallen from 19% to 3%.

#163 Shawn on 05.12.15 at 9:21 am

Income taxes rates have doubled?

Made (up) in BC said at 151:

The other thing that never gets mentioned about 1982 is people kept 100% more money in their pockets than they did today because taxes are double what they were back then. That is how they had money to save.

************************************
I take you were not a tax payer in 1982. You made that up and it is totally false.

As I mentioned, in 1982 unemployment was considerably higher than today and huge numbers of people were struggling with double digit interest rate mortgages. Inflation was high. I don’t think taxes were all that much lower (certainly not near 50% lower) though there was no GST. Dream on. Times were actually a lot tougher then.

#164 HD on 05.12.15 at 9:44 am

#152 Blacksheep on 05.12.15 at 2:10 am

HD,

You seem interested in this topic.

Question: Do you, believe the complete and official 9/11 story ? I want to know what you, think.

Respectfully,
BS

——————

I am more interested in how people’s mind work. The 9/11 and any conspiracy stuff…not so much.

But since you ask… I accept the official account of what happened on 9/11. I am aware that I’m not privy to all details of what exactly went down but the overall reporting is acceptable to me. Until I have good reasons to believe otherwise, that is the position I hold.

What about you?

Best,

HD

#165 Oot der Hoos on 05.12.15 at 9:50 am

To #161 james

I see I hit a communist nerve by undermining the main Picketty premise that accumulation of wealth causes low incomes for others.

No, it does not.

You claim ad hominem is bad and then you call me stupid and conspiracy-nut.

You embarass yourself there.

You say it is hard to know where to start so you never started with any rational argument.

#166 Rational Optimist on 05.12.15 at 9:56 am

69 just nej on 05.11.15 at 8:25 pm

“wondering if anyone has any thoughts about the southwestern ontario real estate market…while prices are not anywhere near toronto, it’s still very difficult to find anything decent under 350,000”

Which towns are you looking in? I find this hard to believe. In London, for instance, you would be getting a lot of house indeed for 350,000. I suppose in Waterloo and Guelph prices are more like that, but those are not southwestern Ontario.

In my opinion, it depends where you’re looking. If you’re lucky enough to have a good job in a small centre in southwestern Ontario (there are only small centres there), buy. If you don’t earn enough to buy without stretching yourself, though, ask yourself where in a place like London (or Chatham or Leamington) the job growth is going to come in the future to support even the relatively modest home prices? There are no jobs; the good ones are leaving.

#167 Rational Optimist on 05.12.15 at 10:02 am

79 omg the original on 05.11.15 at 8:40 pm

“Think the birthrate was low before? Let’s see how many kids those hipsters with $800k mortgages pump out – hmmm dear maybe we should just get a kitten.”

I agree with you that we’ll have to ramp up immigration big time. I don’t consider that a bad thing, though something tells me a mix of natural and migrant population growth is probably healthier for a society. The nutty thing is that the example in the article is more than likely first generation Canadian. Canada is doing so well at “integrating” them (in spite of what some of the lunatic fringe says) that within a generation they too want a 3500 square foot house, even if it means not having a family.

Good article. Use of the term “forever home” always depresses me, however.

#168 Ralph Cramdown on 05.12.15 at 10:04 am

#156 Oot der Hoos — “The Picketty marxism people on here, who want to tax and confiscate capital, need some economic education about accumulation of capital and its benefits to real wages. Picketty is wrong that inequality comes from capital accumulation.”

Last point first. You’re arguing against a truism. If we all have nothing, we’re all equal.

Most of economists’ praise for Piketty wasn’t about his theories, but about the data he collected. Most of his book was about the data.

From your first link: “Thomas Piketty, a French Marxist, got rich this year on book royalties. That his unreadable 700-page book […]”

Now I don’t know if the French original was unreadable, or if Gary North tried to read it without knowing French, but I found the english translation quite readable. I got through it in under a week. If North says it’s unreadable, maybe he hasn’t read it? And why would you read a critique by someone who didn’t read (or understand) the book?

Your second link starts: “Over the course of several generations, the US government has taxed away trillions upon trillions of dollars that otherwise would have been saved and invested and thereby added to the capital of the American economy.” I don’t think we need to read any further, do we? Is the author suggesting that the government just burnt the money in a furnace? Are all the roads and bridges and schools and jails I see in America a mere figment of my imagination?

I don’t think you’ve read Piketty, and I don’t think the critics you point to have either. The second one might have, but he does a pretty good job of misrepresenting it.

#169 Rational Optimist on 05.12.15 at 10:05 am

I mis-spoke: the subjects of the article are in fact New Canadians. Eleven years to be infected by our insane house lust.

#170 Holy Crap Wheres The Tylenol on 05.12.15 at 10:06 am

The Americans proved otherwise. The strongest country on the planet spent trillions to reverse the housing collapse, and was unable. Only seven years later, with prices still 17% below their 2005 peak, is that nation emerging into growth. Millions of average families will never recover. They were crazy enough to borrow against the illusory equity gains in their houses, in order to finance their daily lives. You know. Cars, college, trips, renos.
________________________________________
So are Garth I surmise those who do not learn history are doomed to repeat it?

http://www.msn.com/en-us/money/realestate/us-homebuyers-are-facing-a-tough-spring/ar-BBjAX4s

#171 Chris on 05.12.15 at 10:11 am

It’s difficult to compare income tax rates from 35 years ago, because the tax structure has changed. The best I’ve seen is the data from Armine Yahlnizyan which suggests that income tax rates at the very top (0.1%+) were a lot higher, but tax rates at the 1st percentile and lower were roughly the same as now, or lower. Sales taxes and other fees are up across the board.

For me, it’s easier to just compare the cost of living based on my parents’ experience. I am in the same profession as my father (arguably with a better position than he had, comparatively, though with less job security), but on virtually every axis (savings rate, percent of home owned, net mortgage debt as a percentage of income, etc.), he was in a better position financially at that time than I am now. So I think higher savings rates back then are believable.

#172 Derek R on 05.12.15 at 10:22 am

#121 Mark on 05.11.15 at 10:41 pm asked:
“Interest rates might normalize much faster then we would like. Then Canada is toast. How would inflation of 7 % + and interest rates of 6 -8 % sound? Not possible? If they want to save the currencies it is very likely. If not….”

How does inflation actually rise that much when demand in almost every facet of the economy is dead?

In other words, just where the heck is the inflation supposed to come from?

Bankruptcies. Bankruptcies destroy outstanding debt without reducing the amount of money in circulation. As a result the ratio of circulating money to debt repayments rises. And too much money chasing too little debt is inflationary.

Having said that, bankruptcies tend to occur in a deflationary environment, so the inflationary effect is more likely to cause a reduction in deflation than 7% inflation.

#173 jh on 05.12.15 at 10:25 am

#87 Realtor007 on 05.11.15 at 8:57 pm
my, my, my, the fear mongering continues…

I’ve been quite busy working with buyers/sellers as we search for homes and let me tell you, that market is moving fast, there is no time to sit around and think about a house for a few days because offers and acceptances are coming in at warp drive.
—————————————————————–
yes, everyone! Listen to what the realtor says! When making the biggest buying decision of your life, don’t think about it…thinking is bad. buying is good.

pfffttt….give me a break, man. I’ve never heard such a load of BS. sounds like high pressure sales tactics to me.

#174 Setting the Record Straight on 05.12.15 at 10:32 am

@142
People could learn something from this story. If Leo DiCaprio, who has a net worth of $200M, drives a Prius (his only car), why the hell does somebody making $50k a year need to drive a Benz?!? If Jennifer Lawrence still clips coupons (with $40m in the bank), why does Joe Blow making $200k in Fort Mac need all the latest toys? People are funny. – See more at: http://www.greaterfool.ca/2015/05/11/the-queasy-middle/#comments

$$$$$$$$
Really? That great envionmentalist DiCaprio?
Who needs more than one car when you are constantly flying yourself and friends back and forth LA to NY by private jet?

If you are going to pick examples try doing some research. The hypocrisy of the Hollywood green jet set is staggering.

#175 Shawn on 05.12.15 at 10:47 am

Piketty

I own and have red the book

I agree that the rich get richer. I took it as a “how-to” book rather than a mope and wail session. Collectively we should do something to prevent the rich from accumulating too much, and I support that. But individually we should join the party. (We can’t all, but some can)

Oot der Hoos at 156 said:

“Canada is going into stagnation as savings are consumed in house construction instead of savings going into capital goods”

Houses ARE capital “goods”. They last long and provide accommodation. Shelter is one of the three bare necessities of life, especially in Canada. The other two are food and clothing. Labour and materials are not “consumed” in house construction, they are invested.

#176 saskatoon on 05.12.15 at 10:50 am

#161 james

ad hominem?

actually, this article simply calls piketty “ignorant”…which reisman then attempts to substantiate.

you, on the other hand, call reisman “stupid”, “garbage”, “nonsense”, “weak”, “shallow”, “extremist”, “crap”, and “conspiracy-nut”.

unfortunately, you are most likely incapable of recognizing the irony here.

of course, who would expect more?

such is the way of the psychologically unhinged left-wing wackjobs!

#177 maxx on 05.12.15 at 10:52 am

“The weapon of choice is rapidly becoming the HELOC – the secured home credit line – …”

Good choice of words for a phenomenon so pathetic: a weapon so many Canadians are using against themselves.

It’s different here all right….an excess of hosers with little or no concept of the power they have (or had) to become rich.

When you look into the eyes of the rich and listen, you quickly realize that they, and no one else, forged their own futures. Often underpinned by a great desire for independence, their stories are full of details about never (again) being reliant on others for income. In Canada, far too many have gambled their, and their children’s futures, on re.

It’s not always easy, but neither is it a slog. Mostly happens in far less time than it takes to pay down a mortgage, and they emerge independently rich.

The result is a life of real options: an occupation or business you love, playing when you want, wherever you want, the luxury of time to socialize more often. Quality of life becomes much richer.

Far too many simply don’t believe that they can achieve the dream of being rich. They just believe that since money’s cheap, they can get a house.

#178 Shawn on 05.12.15 at 10:54 am

The low Savings rate in Canada? Really?

According to Statistics Canada, fully 20% of GDP goes into business investment and another 4% into government investment. I believe this is investment into capital structures and other assets. Some of that certainly includes replacing worn out structures.

http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/econ04-eng.htm

(I calculated the 20% and he 4% from the figures in the table)

It looks to me like that is a actually a HUGE savings rate for the country, if not for individuals. Then again, individuals own the businesses.

I don’t know how to reconcile the 3% with this 20% figure. How is that funded if not from savings of someone? Debt you say?, one man’s debt is another man’s savings. Borrowed outside the country? I don’t think so, not to any great extent.

#179 Shawn on 05.12.15 at 10:55 am

I own and have red the book

another Freudian slip, read not red, though the book is red I suppose.

#180 Mechanized on 05.12.15 at 11:12 am

OPEC is calling for low oil prices forever because they want the shale/tar oil production to bleed money. Keep in mind that production is the ONLY reason we’re awash in oil. Peak Oil, as in peak production of easy-to-get oil, happened in 2005. We’re riding that plateau as you read this. That’s a fact.

Bond yields are creeping up. Also a fact.

The US just lost a couple hundred thousand full-time jobs and replaced them with a couple hundred thousand part-time jobs. That’s the story behind the numbers, and has been prevailing trend. Those jobs don’t entail high-paying wages. Fact.

Greece just settled up their $750M IMF installment with money that the IMF gave them previously. That’s effectively a default, and no new agreement has been reached even as of today. Fact.

Inflation is low because they keep changing the way inflation is calculated. Right now it’d be creeping up on 10% otherwise. Yes, your stuff IS getting more expensive. Also fact.

If the bond market keeps creeping up they’ll have no choice but to raise rates. I think they’ll do everything they can to stop that from happening. (Speculation).

#181 Investorz on 05.12.15 at 11:13 am

Now you’ve done it:

I sold my RRSP canadian index ETF and put it on ZSP which is an unhedged SP500 ETF.

At 20 times earnings, 30% of energy related stocks, 20% of material stocks, canadians borrowing to the max, that late CAD rally, the canadian index just doesn’t make sense relative to the well-diversified ZSP. I owned plenty of US before this move, but now I own less of Canada.

Maybe I’ll be wrong. $ZSP versus $ZCN. Let’s see who wins over time.

#182 Mike on 05.12.15 at 11:29 am

Regarding unreported layoffs in Alberta – Unless a company lays off more than 50 people, they don’t have to report it to Alberta’s Ministry of Jobs, so obviously it’s not going to make the news because they don’t want to tell anyone they’re struggling.

I’ve been umemployed now for nearly a month (Middle manager office work for an oilsands supply company) due to lack of work and I’ve only had in-person interviews with one company. A couple of brief phone interviews with others, and a few more with head hunters. Things aren’t looking rosey here in Edmonton (At least for me) Good thing I have tons of savings and zero debt.

#183 Ponzius Pilatus on 05.12.15 at 11:30 am

#55

Side note. Anyone have an opinion as to why Canucks tickets were so easy and cheap to get this season? From years of sellouts at ridiculous prices to sellers not being able to get rid of their tix at cost. Please don’t just say” because the canucks suck.” They’ve had poor seasons with max attendance.
——————
Change in demographics.

#184 Leo? Really? on 05.12.15 at 12:05 pm

“$$$$$$$$
Really? That great envionmentalist DiCaprio?
Who needs more than one car when you are constantly flying yourself and friends back and forth LA to NY by private jet?

If you are going to pick examples try doing some research. The hypocrisy of the Hollywood green jet set is staggering.”

Exactly. Of the 20 or so times Leo has flown to Calgary in the past year I can assure you that exactly zero flights were commercial. LOL celebs will say anything for greenie cred. Watch what they do, not what they say.

#185 Bottoms_Up on 05.12.15 at 12:08 pm

#183 Mike on 05.12.15 at 11:29 am
———————————————–
lots of open tenders out there for Alberta:

http://www.merx.com/

#186 SWL1976 on 05.12.15 at 12:08 pm

#101 HD – I think I made my position on 9/11 ultra clear a few days ago with my post. Now with respect to Garth this is not a 9/11 blog.

Now I have no special access to any information that everyone is not privy already, all the evidence is right here on the internet. Though I know the powers that be want to censor it, they haven’t YET. Anyways I find youtube is a better source than google to get the real story. The CIA is behind google and they will throw out a bunch of ‘debunking’ stories on popular conspiracies such as this to lead you off the truth, and most people stop there. Now careful with youtube as well as I have noticed more recently that the same is happening there. It is definitely hard to know what to believe these days as the web of lies is so thick, but the truth is out there. The people telling the truth are not actors the ones telling lies are.

Now there is a myriad of evidence that has been gathered by and sifted through by some very smart and genuine individuals. There are stories from survivors, people who worked in the buildings before, eye witness accounts of people coming forward, who feel they need to or needed to speak up about this crime against humanity.

Now it has been a while since I have researched the subject but there are many good informative documentaries on youtube that will open your eyes. I believe ‘In plane site’ is a good one, but I have not personally watched it. Look and you will find.

#125 Shawn Allen

For how many centuries do you suppose debt, GDP, population, and debt per capita and GDP per capita have been increasing? For how many centuries do you suppose people have been saying it has to end soon?

I never said it was ending, I just stated that without new debt the system will collapse in on itself. Which is true. It is simply impossible to repay all of the debt. How long it will last? Beats me, but history proves gold will out last paper currency at least 10 fold, and I suspect digital currency will also be short lived, but we are not quite there yet.

Today, increasingly, almost everything we do is traded for money. We call it specialization. It is wonderful. This process is not over yet and the growth of debt per capita is also not over yet.

This is just a clever way for the state to skim tax off every transaction out there. Now I am not for not paying taxes and going back to the stone age, but it’s getting ridiculous. Why do you think cash is the new enemy to governments?

#187 Made in BC on 05.12.15 at 12:14 pm

#181 Mechanized on 05.12.15 at 11:12 am
OPEC is calling for low oil prices forever because they want the shale/tar oil production to bleed money. Keep in mind that production is the ONLY reason we’re awash in oil. Peak Oil, as in peak production of easy-to-get oil, happened in 2005. We’re riding that plateau as you read this. That’s a fact.
+++++++++++++++++++++++++++++++++++

Any “proof” of peak oil? Or is that phoney theory going to ride like Global Warming?

There are tons of reports of how “empty wells” magically fill up again years after they were thought empty. Another reason for lots of oil being available.

We need to start demanding “proof” for all of these so called theories. I’ve read more debunking to them than I have proof.

#188 Ogopogo on 05.12.15 at 12:15 pm

#60 Well-T on 05.11.15 at 8:07 pm
Mr Turner, an amazing test case for the point you are making about the greater fool. It really wraps it all up nicely in one story:

http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/house-poor-couple-debt/article24370722/

$800,000 crappy Mississauga house bought with the help of relatives since the owners don’t have any actual money. They are stretched to the limit and the first bad break will ruin them and take down their cosigner. Like… hey, she’s pregnant! That’s a nice surprise. Now where are those rate hikes? And both work in the financial sector. Ouch.

It’s hard to tell what’s the worst part about this: their jaw-dropping financial illiteracy or the fact that both dole out financial advice to others. No wonder Canada is a nation of debt slaves! They will learn a horrific lesson soon enough. Sad and pathetic.

#189 eddy on 05.12.15 at 12:24 pm

@ mike t

Yes different worlds

http://vigilantcitizen.productionshardl.netdna-cdn.com/wp-content/uploads/2015/05/patch5.jpg

#190 Ralph Cramdown on 05.12.15 at 12:27 pm

#166 Oot der Hoos — “I see I hit a communist nerve by undermining the main Picketty premise that accumulation of wealth causes low incomes for others. No, it does not.”

Once again, you’re arguing against a truism, though this one isn’t as obvious as the last one.

– One person’s spending is another person’s income
– Poor people generally spend all their income
– Richer people spend less than their entire income
– The richest often spend a small fraction of their income

Maybe you can figure out the rest given those clues? There’s nothing Marxist about any of this.

#191 Prairie Girl on 05.12.15 at 12:32 pm

Today Garth said: “families will spend $17,100 this year on renovations, more than double what people will put into retirement savings and TFSAs combined.”
and 2 days ago, he wrote “the average RRSP contribution […] was just under $3,600. The average TFSA contribution, […] is $4,800.”

The first statement is only true if the ‘family’ is a single-parent family. If the ‘family’ is a 2-parent family, then their combined RRSP & TFSA contributions are roughly the same as what they plan to spend on renovations this year.
_____________________________________________

#69 just nej: wondering if anyone has any thoughts about the southwestern ontario real estate market…while prices are not anywhere near toronto, it’s still very difficult to find anything decent under 350,000 –while this might seem like peanuts to a lot of people, to people making under 100,000 ( most of the real people i bump into or know)…a 1600.00 mortgage plus all the extras, saving for post-secondary, pensions etc…it’s a lot…
can we expect that prices will come down to what they average family can afford? we wait, rent, and save away…but my husband is getting tired of me talking about how prices are inflated and will come down one day…

I feel the same way, here in a small city in Saskatchewan (Pop 17K). We’re renting a 600sq ft house for $825/month which is a sweet deal but we’ll need a bit more space in a few years and house rentals range upwards from $1300/month and I’m not being picky. We are averse to buying because of everything Garth has said (Rule of 90 etc). I hope the price of residential real estate in our area will go down enough to make our choice to rent now pay off. I’d like to keep our savings/investing rate at 25%. But moving into a slightly larger home with a rent of $1400/month sounds crazy.

I’d like to see some statistics that exclude Vancouver and Toronto. Don’t those two areas skew the spread of data points from around the country? When you see a skew, shouldn’t you opt to use the mean instead of the average? Are homes overvalued in my area? I hope so, because that is what my husband and I are basing our decisions on, but sometimes I don’t know for sure because of the skew factor.

A long time ago, Garth mentioned that usually it is the smaller urban centres that feel the effects of a price correction before the larger centres. Can someone comment on this? When Canada goes through the slow melt, will my area feel it or not?

#192 pBrasseur on 05.12.15 at 12:32 pm

«How does inflation actually rise that much when demand in almost every facet of the economy is dead?» Mark

Inflation is simply the loss of value of your currency.

Inflation can happen when you have a sinking currency, just as deflation may be a threat if your currency is too strong (examples current Denmark, Sweden vs the Euro).

This affects Canada, lower oil and commodity prices drive down import revenues, or/and if economic prospects become doubtful, investor then steer away, this all drives down the currency, commodities and imported goods become more expensive to us.

The second blow could come directly from the monetary mass that has grown too fast relative to true (and I mean TRUE not the condo mirage type) wealth. This has happened for years during which the Canadian banking system with the support of the federal government fabricated money (you may call it credit if you like nevertheless that money is in the economy) out of thin air to inflate the real estate bubble. The result of all this is that we are pooper than we think and have far less REAL wealth than we think to keep economic growth at acceptable levels. This will drive down investor’s interest in Canada, our currency will suffer and inflation will make us all poorer.

#193 Renter's Revenge! on 05.12.15 at 12:37 pm

@ Shawn 176:

“Houses ARE capital “goods”. They last long and provide accommodation. Shelter is one of the three bare necessities of life, especially in Canada. The other two are food and clothing. Labour and materials are not “consumed” in house construction, they are invested.”

Yeah, but houses are also liabilities (they require maintenance). This blog is about the widespread over-investment in housing in Canada. Once the basic requirement of shelter is met, more house does not mean more shelter, but it does mean more expenses. So there is a point beyond which the use of labour and materials to build houses no longer counts as investment, but as consumption. The portion of labour and materials “consumed” as housing could have been invested in other, more productive ways. Balancing expenses with income (from other investments) is point of every personal finance blog. Finding the point of diminishing returns is arguably the point of every discussion of economics.

#194 BS Meter Reader on 05.12.15 at 12:39 pm

Oot der hoos

Let me guess:

You haven’t read Piketty, you’re too lazy to even read the sources you linked to and see how flawed they are, and on your resume where you detail your education it says “some college”.

May I suggest you go back to reading the short and sweet bits on the ‘D’ stream internet that suit your confirmation bias and don’t challenge your intellect too much.

You wouldn’t want to get a headache from thinking too hard.

#195 MF on 05.12.15 at 12:39 pm

Feeling a little down today.

Just finished chatting with a buddy of mine. He’s 32 like me and has school loans to pay still. We live in Toronto. After this conversation, it seems no one cares about debt anymore. it is almost seen as healthy. My generation has got to be the stupidest that has ever lived. This market is not going anywhere for years. Drives me nuts because this city is a joke.

He said his friend bought a condo, made 100k off of it, and now has reinvested it into 3 other condos and the renters are “paying off his mortgages”.

Man…first it has taken me years and years to save up 50 k to invest and this idiot gets capital gains double that in like 3 years by doing nothing. What bullChit. Who knows how long it will take to get to 100k net worth myself. Even at a measly 5% a year.

Second, I tried to explain that debt does not equal wealth but my buddy rhymed off all the usual hype (houses only go up, interest low forever, renting enriching some other guy’s pockets, immigrants buying like crazy, condos selling like hot cakes etc).

I think I figured it out. No one wants to be the guy enriching the pockets of someone else: their amateur landlord. I fight this feeling as well. It is a me first society and I was born and raised in it whether I like it or not. Everyone would rather pay the faceless bank corporation than look the person who’s mortgage they are paying in the eyes. I don’t think landlords are subsidizing renters at all like some say on this blog. It is the opposite.

Sometimes it is hard to stick to the plan. You can see the attraction in housing. Big numbers..even condos (100k profit). Meanwhile my diversified portfolio of investments were down 1000 bucks last time I checked. I refuse to look until rebalancing time.

Who is winning? I’m still on the fence.

Never thought i’d say this but you can’t fix stupid. How cliche.

MF

#196 Renter's Revenge! on 05.12.15 at 12:47 pm

@169 Ralph Cramdown:

“Your second link starts: “Over the course of several generations, the US government has taxed away trillions upon trillions of dollars that otherwise would have been saved and invested and thereby added to the capital of the American economy.” I don’t think we need to read any further, do we? Is the author suggesting that the government just burnt the money in a furnace? Are all the roads and bridges and schools and jails I see in America a mere figment of my imagination?”

Close to burning it in a furnace. They’re probably referring to all the bombs and bullets fired off by their military. Defense spending takes up a fairly large portion of the budget and doesn’t add any capital to their economy. In fact, it destroys it quite efficiently. Make love, not war (for the economy’s sake).

#197 Ralph Cramdown on 05.12.15 at 12:48 pm

#179 Shawn — “Borrowed outside the country? I don’t think so, not to any great extent.”

http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/econ01b-eng.htm

Certainly not 15% of GDP, but not chickenfeed, either.

#198 Oot der Hoos on 05.12.15 at 12:58 pm

To #169 Ralph Cramdown

My equality reference is about the wealthy eating the same good breakfast as me, whereas under a communist system we have less to share, not more. In other words, the actual wealth of the wealthy is not relevant to my breakfast. I am not jealous. That was drawn from the lengthy article. That “inequality” sentence was my inadequate summary.

Your presentation presupposes there is not less from the trade off of taking, as you present some roads and jails as false evidence, not knowing the other outcome. Better use of capital has more roads and schools and everything.

The idea of sharing by stealing should be reconsidered, since no good from God would come of it.

Let’s get to the meat. Roads and bridges and jails are not the main destination of taxation by Piketty. Rather, you know redistribution, sizable income transfer, is the main topic of Piketty as he attempts, unsuccessfully, to justify a wealth tax. Look at the current spending pie graphs of current governments. It is largely transfers.

Piketty is a rehash of Marx without the beatings and slogans, yet. I am appalled somebody on here did not know Mao’s version of Marx was proved failure when Communist China allowed private ownership of agriculture in 1979 and some government stealing ended and bigger production resulted. Getting the product is better than owning the farm.

By the way, I am not talking about the criminal acquisition of wealth by Jihad-Barry and Eric Holder driving the getaway car for the multiple bank frauds of 2008. Those two should be in jail along with several top bankers.

Also, I acknowledge democracies and central banks have been captured by the wealthy to steal by laws and rules. Piketty (more stealing) is not the solution. Rule of law and God, and less government, is the solution.

No, I did not read Piketty. I read the boring old communist conclusion: redistribution of wealth. Why would you waste time on that dead storyline again?

I think the current income inequalty is because the welfare state is failing. I think there is less and less production because of the taxation and transfers damaging capital investment. Wages low and house prices high is one such result of our socialism.

#199 Mr.Hulot on 05.12.15 at 1:02 pm

Natives are getting restless.

http://news.nationalpost.com/news/canada/richmond-couple-wants-to-talk-to-their-neighbours-about-trimming-a-hedge-but-nobodys-home-ever

#200 Oot der Hoos on 05.12.15 at 1:11 pm

#176 Shawn

Capital goods produce a product or service. Houses produce nothing. They are a durable consumption good, lasting many years.

A capital good is a tractor to pull a plough, instead of an ox pulling the plough.

In a communist country we all use ox because we spent all our money on houses and have no time to left to build tractors. We are very poor, but we have one road and one jail room for Obama.

In a capital system we build a tool, a tractor, a capital good, and thus we have time, after planting, to also build a two room jail, one for Eric Holder and one for Obama and two schools and more roads.

(Ok, part of that is joke, rubbing it in the face of communists and house buyers. Leave it alone. ha)

#201 Toronto_CA on 05.12.15 at 1:17 pm

#196 MF on 05.12.15 at 12:39 pm

MF – a person who takes a windfall on a Toronto condo (a windfall due entirely to cheap money and house horny idiots) and invests at this time in 3 additional condos is taking on an enormous amount of risk. If he/she took the capital gains and bought a nice SFH to live in for a long time rather than an investment, they’d have done well. Or if those gains were invested in a diversified portfolio, also well done.

Buying THREE condos in a market saturated with condos at what is possibly the peak of it all is taking on huge huge huge risk. There are people in other countries (notably our southern neighbours) who have lost everything by following this “strategy”. Heck, people in Canada (outside of certain markets) are also learning the hard way about “investment properties”.

That aside, would you really want to be a landlord to 3 sets of tenants? That has the potential to turn into a full time job, and a nightmare if you get a bad tenant that has to be evicted. Only takes a few months of no rent and court fees to remove any trace of (fully taxable) profit from such an “investment”. As a child I rode around with my mother collecting rent cheques from her tenants during the early 80s recession in Texas, it scarred me for life.

#202 Godth on 05.12.15 at 1:20 pm

#187 SWL1976 on 05.12.15 at 12:08 pm

https://www.youtube.com/watch?v=8XRMrMdn0NQ

https://www.youtube.com/watch?v=4fvJ8nFa5Qk

…if you haven’t read this old book you’d probably like it.
http://www.amazon.ca/Between-Two-Ages-Americas-Technetronic/dp/0313234981

A Nation of Snitches
http://www.truthdig.com/report/item/a_nation_of_snitches_20150510

the first comment sums up why people don’t care and continually screw themselves.

#203 Preacher on 05.12.15 at 1:26 pm

I for one don’t see what the big deal is over debt.

The US as you mention are doing so well, have repeatedly
said in the past that deficits don’t matter.

So Canada has a $1.8 Trillion debt, the US $18T+

Japan, they just passed 1 QUADrillion

Let’s see that is one thousand million million
or one thousand trillion and we’re sitting at a lowely 1.8T?? Common — give us a break!

#204 Oot der Hoos on 05.12.15 at 1:37 pm

To #191 Ralph Cramdown

I am trying to not write too much. Those are not complete arguments. They are summaries. I let the link do the arguing.

What you think is a truism is maybe not such.

For example, the spending of a corporation is several multiples of its income and that income admittedly might be mostly not spent by the wealthy person for personal consumption. However, investing it to create another capital good is spending it 100%.

I am starting to think socialists/communists/keynesians really do not entirely understand the role of capital is to produce more with less and many consumption and income arguments are not correct.

#205 HD on 05.12.15 at 1:38 pm

#187 SWL1976 on 05.12.15 at 12:08 pm

#101 HD – I think I made my position on 9/11 ultra clear a few days ago with my post. Now with respect to Garth this is not a 9/11 blog.
————–
Sorry, I didn’t read your post where you made your position ‘ultra clear’. Correct, this is not a 9/11 blog. You may have missed it in one of my earlier post but I don’t care about 9/11 or any other conspiracies. I am merely interested in the ‘decision making process’ people use to reach certain conclusions.
So I took from your answer that your thinking goes something like this:

“We have access to the same information but we lack the intellectual sophistication to form an accurate picture of reality.”

Thanks for the exchange.

Best,

HD

#206 Blacksheep on 05.12.15 at 1:39 pm

HD # 165,

Re: Blacksheep # 152.

BS, “Question: Do you, believe the complete and official 9/11 story ? I want to know what you, think.”
———————————-
HD, “I am more interested in how people’s mind work. The 9/11 and any conspiracy stuff…not so much.”

BS, Agreed, this was the purpose behind the 9/11 questions posed to Daisy & Yourself.
———————————-
HD, “But since you ask… I accept the official account of what happened on 9/11. I am aware that I’m not privy to all details of what exactly went down but the overall reporting is acceptable to me. Until I have good reasons to believe otherwise, that is the position I hold.”

BS, I find this, a very surprising comment. I would be interested to now, how many people on this blog are honest enough to admit this, as It tells me, you’ve put your full faith and trust in the Gov. & MSM.

Have you considered, that your lack of exposure on the topic, limits your ability to form an educated decision on the events of 9/11?
————————————-
HD, “What about you?”

BS, I did a lot of research back in the day. Tried to stick to the ‘events’ were the physics, simply failed to support the official story line. If one actually looks, you’ll find a number of glaringly obvious irregularities, that at the time was quite discomforting.

So no, I don’t not believe the official 9/11 story, as presented.

Thanks for the response.
—————————————

#207 young & foolish on 05.12.15 at 1:49 pm

“Meanwhile my diversified portfolio of investments were down 1000 bucks last time I checked. I refuse to look until rebalancing time.”

Yup, choppy markets ahead. Looking for 7% average return in the years ahead? Maybe “regency”.

#208 Oot der Hoos on 05.12.15 at 1:55 pm

ha
#195 BS Meter Reader

I think my good work here is done, Blacksheep Meter Reader.

#209 Pontius Pilatus on 05.12.15 at 1:55 pm

#204
it’s been said that if you owe 10k, the bank controls you, but if you owe 1 quaddrillion you control the bank.
Food for thought for bank shareholders.

#210 pinstripe on 05.12.15 at 1:56 pm

this morning the coffee shop crowd was at their best. full house. an alberta pc die-hard supporter was telling us what went wrong with the last election and why voting ndp is bad, telling us how the premiers after ralph were doing the right thing. that is when he was told to leave us alone and go spread his word to his own choir. he offered to pay for the coffee but was told to go-to-hell. on the way out we did inform him that the PCs are DEAD in alberta.

harpo is receiving a lot of reviews, I wonder why they are so negative. people are fed up with the phony fear mongering.

Elizabeth may received a lot of support, mainly for speaking the truth about harpo.

#211 cramar on 05.12.15 at 2:02 pm

@ #196 MF on 05.12.15 at 12:39 pm

Just because your buddy believes that debt equals wealth does not make it true. You know otherwise!

Don’t forget the old adage:

It’s not how you start the race, or even how you run the race, that counts. It’s how you finish!

#212 Steve on 05.12.15 at 2:04 pm

@ #196 MF:

I live in Toronto as well, owner of a big condo suite in a hot area. Have owned this condo for the past 4 years and I know for a fact it has NOT gone up 100k. As a matter of fact, most condos have not appreciated that much UNLESS they bought it preconstruction. I guarantee you it is no longer possible to make that kind of money in the condo market.

Second of all, the only landlords who have people paying their mortgages for them are landlords who do not fully report their rental income. Rental income on non-downtown condos, after 30% tax, simply cannot cover prop. taxes + condo fees + mortgage payments (even after mortgage interest deducted as a carrying expense).

Landlords are simply exaggerating numbers due to self-justification bias. I have done the math and in 99% of cases it simply does not work out without extra out of pocket money.

Let’s hope CRA catch them.

#213 H on 05.12.15 at 2:17 pm

For those following oil today… :-)

OPEC revises the global demand up
EIA Revised US demand up

OPEC and EIA revise production down.

And my favorite:

Dr. Verleger earned his Ph.D. in Economics from MIT in 1971. He began his work in energy as a consultant to the Ford Foundation Energy Policy Project in 1972. He then served as a Senior Staff Economist on President Ford’s Council of Economic Advisers and as Director of the Office of Energy Policy at the US Treasury in President Carter’s administration.

May 11th
“The data must be wrong,” according to veteran oil analyst Phil Verleger, who wrote in a blistering note that the Energy Information Administration is probably overestimating U.S. oil production by 1.6 million barrels per day.

Verleger argues substantially lower U.S. production is the most likely explanation for why global stocks are not rising as fast as predicted and discounts for storing barrels are narrowing (“Notes at the margin” May 11).

Other reasons why the stock build is smaller and the forward price structure is firmer could be stronger demand and/or more oil stockpiling in developing countries.

But if Verleger is correct, U.S. production would be only 7.7 million barrels per day (bpd) compared with the 9.3 million bpd reported in the agency’s most recent weekly and monthly statistics.

#214 prairieboy43 on 05.12.15 at 2:34 pm

Igloo’s are cheap, environmentally friendly, easy to move, low carbon footprint. Millenial friendly.
Call Santa today!

#215 saskatoon on 05.12.15 at 2:43 pm

#201 Oot der Hoos

*chuckles*

#216 SWL1976 on 05.12.15 at 2:56 pm

#206 HD

“We have access to the same information but we lack the intellectual sophistication to form an accurate picture of reality.”

Thanks for the exchange.

——————–

I don’t think it has anything to do with intellegence. There are many contributers here with probably much higher IQ’s than myself. Personally I think it boils down to your level of programming, or your level of indocternation to the system.

Que the Smoking Man obedience certificate

#217 HD on 05.12.15 at 2:57 pm

@ #207 Blacksheep on 05.12.15 at 1:39 pm

BS, I find this, a very surprising comment. I would be interested to now, how many people on this blog are honest enough to admit this, as It tells me, you’ve put your full faith and trust in the Gov. & MSM.

Have you considered, that your lack of exposure on the topic, limits your ability to form an educated decision on the events of 9/11?

———–

Incorrect, I haven’t put my “full faith and trust” in the Gov. & MSM. I do however have some trust in the Gov. & MSM.

Garth (and many other grounded/reasonable people I know) doesn’t believe that 9/11 was an inside job as far as I’m concerned. Has he been deceived as well?

Should I also doubt the reports on the 1st man on the moon? How does one really find out?

I accept official reports most of the time (balance of probability) unless I have a very good reason to question them.

According to you, my lack of exposure on the topic limited my ability to form an educated decision on the events of 9/11. But, what if your overexposure to the topic clouded your judgement through disinformation and hindered your ability to make an educated decision?

How do you know when you become the truth holder?

I personally don’t know. I just accept what is and I try to keep an open mind. Reality is a hard thing to grasp.

I appreciate the exchange. Thank you.

Best,

HD

#218 saskatoon on 05.12.15 at 2:57 pm

#189 Ogopogo

seriously:

what happens to the debt if this dude and his wife just get on a plane tomorrow, and go back to india?

#219 Centurion on 05.12.15 at 3:04 pm

http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/house-poor-couple-debt/article24370722/

They may be leveraged to the absolute hilt, but thank goodness they have granite counters and hardwood flooring. I was worried they’d settle for carpet.

#220 raisemyrent on 05.12.15 at 3:07 pm

sigh. I’m going to try to summarise my exchange with a friend in a small town in the Laurentides. I know/hope Garth reads all comments, so this might help illustrate the prevailing attitudes about real estate despite the facts.
background: small 1 bedroom bungalow bought with no inspection in St Adele QC. But hey, it’s less per month than rent. Off to a great start. Of course, she never worked in that town and commuted 1-2 hours a day ever since.
Thought about selling which meant thought about renovating. Skeletons all around, so we might be about $20k into the reno and it’s not done yet (she actually won’t tell me how much she’s dumped into it). This while she quite her job at a big corrupt engineering firm that has 3 letters for a name. So she’s waitressing (she has a PEng) and dumping money into a sinking ‘asset’, and planning to move for a job in BC. Talk about illiquid and lack of mobility. Our exchange today (text) went something like this:
F – have to finish house estimator is coming soon
RMR – are you listing it?
F – renting first otherwise I would lose money (notice how the money isn’t lost already)
RMR – but real estate will keep going down and rates will rise and reality will kick in, plus you’re paying interest on an asset that’s going down, and will likely renew your mortgage at a higher rate and lesser value
F – payments will be $700 all up, renting it out you can deduct interest and property tax. I’ll get $850/m so looking at $150/m income plus what is paid down on the mortgage, so around $400/m profit. here, the market is flooded so not a good time to sell
RMR – the $150 is taxed at your marginal rate too, plus are any gains you eventually achieve if you sell at a profit. need to look at the entire analysis not just month to month! it’s orders of magnitude different what you end up paying in interest and what a simple 10% downturn can mean when you sell. the mortgage portion that is paid down is only profit if you sell for the right price eventually and you have to weigh all the interest that it cost you to achieve that “asset” portion of it. and the opportunity cost for that cash somewhere else. plus the burden monthly.. anyways… beware realtor math.
F – I spent the last year fixing up my house and lots of $$ so why would I sell it now at a loss when I can gradually bring up my gains in a long run. Plus by having the house I have leverage for future investments (!). besides, where is your return spending $2,800/m on a place that is not even yours (my Yaletown penthouse). anyways touchy subject, let’s not go there (<—real estate is about emotions, not facts!).
RMR – well it's just assuming that eventually it goes up enough for all the money you spend on it. that's not investing, that's gambling. I don't treat my rent as an investment. it's cost of having a roof (and what a roof). the same place mortgages for about 4k/m plus taxes and fees etc so that's on the landlord they're subsidising me. (after I noticed her last) agreed let's not talk about this anymore.
F – :)

so there you have it. even people tens of thousands in the hole, illiquid, immobile, still don't get it.
I'm losing friends, and we're losing the economy. good luck to everyone; everyone to their own.

#221 Ralph Cramdown on 05.12.15 at 3:10 pm

#205 Oot der Hoos — “For example, the spending of a corporation is several multiples of its income and that income admittedly might be mostly not spent by the wealthy person for personal consumption.”

Don’t confuse yourself with corporations until you can model your economics simply, with only living, breathing people. After you’ve got the basics down, you can add corporations to your model, and governments, and financial intermediaries.

No person, natural or legal, can spend more than its income unless it previously spent less than its income and has an accumulated surplus, or it borrows from another person with an accumulated surplus.

We in the West are not facing a shortage of capital, without which we cannot invest in manufacturing capacity to meet our needs. To the contrary, we face a shortage of needs, and capital is increasingly devoted to creating luxury goods or services, along with the marketing to convince us of our desires for those goods and services. What are the most talked about things in the last year at your favourite mass consumption media outlets? Not automatic washing machines, I’m betting. Television shows, the Apple Watch, famous people, professional sports, and this season’s must have colours, flavours and styles. I’d recommend Adam Curtis, who covers this quite nicely in video format, since you don’t appear to be much for books.

#222 bdy sktrn on 05.12.15 at 3:34 pm

how to win a west side war.
—————————————-
http://www.vancouversun.com/opinion/columnists/Barbara+Yaffe+Realtors+devising+creative+strategies/11047711/story.html

In the absence of official curbs on foreign purchasing, some Vancouver realtors are trying to conjure an advantage for their homegrown buyers.

Re/Max agent Leslie Cannon saw long odds last week for her buyers in a bidding war on a $1.99-million Dunbar home.

She had seen this movie before, with competitive bidding the norm for detached properties and interested foreigners usually beating out local buyers who have tighter budgets.

“I visited the sellers,” recounts Cannon, aware her clients were confronting competing bids and that their $2.05-million offer would not be the highest bid.

She told the Dunbar homeowners, Ian and Mary Ann Carter, that her clients, from Tsawwassen, wanted the house to live in. They would renovate, not demolish, and were keen to become part of the community.

The sellers not only accepted the bid that Cannon presented, but arranged a gathering so the buyers could meet the neighbours.

Cannon described her strategy as “appealing to people’s pride in their community. It is not a case of everyone just being money hungry.”

The Carters had lived in their home for 24 years and wanted to safeguard “the integrity of the original design” of the 81-year-old residence as well as its landscaped gardens.

Another Re/Max agent, Heather MacLean, says that 90 per cent of in-demand detached properties attract bidding wars these days.

MacLean has used the same strategy as Cannon and says it works, except when the difference in offers is substantial.

Some offshore buyers even use the tactic, she says, assuring sellers they will not tear down the home — “but they end up tearing it down.”

The pitch on behalf of locals “is most effective with seniors downsizing from a large detached home,” says realtor Marty Pospischil of Team Pospischil.

On occasion, Pospischil asks clients to attach a personal letter to their bid, describing themselves and why they love the home and neighbourhood.

The approach “can save up to $100,000 on the price of a home, when competing with buyers who wish to tear the house down.” At other times, the initiative may have no impact.

#223 MF on 05.12.15 at 3:35 pm

#202 Toronto_CA

Thanks for the response.

You are completely right. This dude did the dumb thing and reinvested in a market that is overvalued beyond belief. But like you alluded to, a few markets in Canada like Toronto and Vancouver are defying all odds. Sure we are the laughing stock of the world, but those that took the gamble and bought in these markets have made a killing 100%. No one can deny that. Leverage in real estate is amazing. Leverage cuts both ways but when you win you win big and everyone here has won BIG. Bigger than my measly portfolio.

It is the public sentiment that will keep this going. My buddy is like the average millennial who believes housing only goes up. What is to stop a market where everyone wants in? Higher interest rates perhaps? I believe Garth and I think they will rise eventually, but that is years away.

If that guy had invested in a diversified portfolio he would also have done well. Thus my frustration. 100k profit is profit. What someone does with it is up to them.

#208 young & foolish

What makes you say that? And isn’t a falling market a good thing where buying opportunities exist?

I have only been invested in the markets for a whole month. Might as well have a massive correction now and get it over with since the markets always shoot higher afterwards.

MF

#224 PM on 05.12.15 at 3:40 pm

Who is winning? I’m still on the fence.

Never thought i’d say this but you can’t fix stupid. How cliche

He’s winning. Calling him stupid doesn’t change the fact that he made the right decision years ago. You MAY be right but until that happens he’s smarter than you.

#225 Nagraj on 05.12.15 at 3:44 pm

#130 Waterloo Resident: ” . . . anyone with debt at that point [when rates rise] will say ‘forget it, I’m not paying 100% per year on my mortgage, no way.’ ”

As I recall studies done in the US on how the impecunious arranged their debt priorities when house prices crashed, the mortgage payment came dead last on that list. Because the banks were willing to renegotiate and because it takes forever to foreclose.

First priority: keeping one credit card alive. Second priority: hang onto at least one car.

Thought: given the incomprehensible sense of entitlement of the “innumerate” Canadian house buyer, I can’t see “our boys” cheerfully makin’ the mortgage payment (even if they have it) when they find themselves simply under water on the mortgage. They’ll balk, they’ll raise bloody political hell.

Bear in mind that Canadians hate the banks, hate the oil companies, hate landlords, CEO = thief, politician = liar, stock mkt = casino.

#226 Winston Smith on 05.12.15 at 3:50 pm

You have to write something on this SARM: South Asian Retarded Money.

http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/house-poor-couple-debt/article24370722/

#227 CJ on 05.12.15 at 3:51 pm

Garth,

Are you hyper-ventilating after reading this? I hope you’re OK!

http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/house-poor-couple-debt/article24370722/

#228 devore on 05.12.15 at 4:05 pm

#187 SWL1976

Anyways I find youtube is a better source than google to get the real story. The CIA is behind google and they will throw out a bunch of ‘debunking’ stories on popular conspiracies such as this to lead you off the truth, and most people stop there.

Pro tip: Google owns Youtube.

#229 Mister Obvious on 05.12.15 at 4:06 pm

#196 MF

“I don’t think landlords are subsidizing renters at all like some say on this blog. It is the opposite.”
————————-

Perhaps you need to come to Vancouver if you really want to get a piece of that action. In BC we’ve had rent controls in place for a very long time. Rents have not kept up with RE cost. Not by a very long shot.

The apartment I rent in False Creek is beautifully appointed and well located. I rent it for about 50% of what it would cost to buy. That means ALL costs including the opportunity cost of the money that would languish unproductively if I actually owned the place.

I have the means to buy an equivalent place if I wanted. But that would be financial madness. Identical to shoveling money down a black hole.

You need to change how you think. Soon.

Garth can help. Good sign: you are reading this blog.

#230 Mr. Pink on 05.12.15 at 4:15 pm

Wow

“Bank of Canada Governor Stephen Poloz is considering whether to deliver another surprise: changing the central bank’s 2 per cent inflation target.”

http://business.financialpost.com/investing/another-bank-of-canada-surprise-stephen-poloz-mulls-raising-canadas-price-target

#231 pwn3d on 05.12.15 at 4:18 pm

#200 Mr.Hulot on 05.12.15 at 1:02 pm
Natives are getting restless.

————–
Is that worse than a bad neighbour? Hard to tell. But since HAM doesn’t exist I guess this house was purchased by a local and they just forgot to move in.

#232 Mark on 05.12.15 at 4:30 pm

““Bank of Canada Governor Stephen Poloz is considering whether to deliver another surprise: changing the central bank’s 2 per cent inflation target.””

That’s pretty funny because the BoC, with its tight money policy and high interest rates relative to the state of the economy, has no realistic hope of even hitting 2%.

But reading between the lines, it appears that it is very likely the BoC is cueing an interest rate cut in 2 weeks.

#233 MF on 05.12.15 at 4:33 pm

#221 PM

Word.

Did you read my entire post though? RE is on fire here in Toronto. He’s a genius. Everyone and their wannabe Donald Trump brother looks like a genius. I will tell you right now I am jealous. Didn’t have the money to invest in 2009 or 2010 or I would have.

Reinvesting and being highly leveraged in three condos in 2015 may not be the brightest move though.

MF

#234 Mark on 05.12.15 at 4:38 pm

“This has happened for years during which the Canadian banking system with the support of the federal government fabricated money (you may call it credit if you like nevertheless that money is in the economy)”

I’d have to strongly disagree with this premise. The government has not ‘fabricated’ money. Every dollar that was lent to households to buy houses and consume, was saved and lent by savers.

What government has done, by way of the CMHC, was to induce a preference towards the savers lending their money to a certain sector, namely lower-grade credit in the housing sector which has given us the high prices we have experienced. To the detriment of credit to other sectors. But this is not, in any way, the ‘fabrication’ of money by the government.

#235 MF on 05.12.15 at 4:39 pm

#230 Mister Obvious

Yeah it seems even though the Toronto market is overvalued, Vancouver is even more over valued if that’s possible. Lol what a mess.

I’ve been reading this blog for years actually. Garth is great. The blog dogs are great. I actually just invested into a balanced portfolio after saving for a while. So I’ve been on board for a while.

Thing is 100k is about double my portfolio that took a few years to save up and lots of sacrifice. I’m not complaining, it is not supposed to be easy as many posters here more experienced than myself have said, but the 100k number is what compelled me to rant a bit today.

MF

#236 MF on 05.12.15 at 4:46 pm

#213 Steve

Thanks for that perspective. Lots of hidden costs of ownership that people gloss over to make themselves appear more successful and savvy.

I’d still be happy with 10k profit, nevermind 100k lol.

MF

#237 Samantha on 05.12.15 at 4:54 pm

I don’t think the price of oil will stay that low, for that long. This will require orchestrated halt of money printing by the world governments, and good luck with that :).

#238 SWL1976 on 05.12.15 at 5:22 pm

#229 devore

Pro tip: Google owns Youtube.

——————

I know. I think they are just catching up and having a harder time finding actors than typers

#239 PM on 05.12.15 at 5:24 pm

I rent it for about 50% of what it would cost to buy.

I rent in the area. I’m not sure I agree. A 1BR costs $1600. To buy that costs $450K. With $100K down that’s about $1900/month (mortgage + tax + strata). If you get 7% on that 100K you’re giving up $600/month opportunity cost. So we’re at $2500/month cost.

That’s not close to double and ignores any tax-free appreciation of the condo.

I agree that renting makes more sense but not as much as you say.

#240 saskatoon on 05.12.15 at 5:44 pm

#235 Mark

“Every dollar that was lent to households to buy houses and consume, was saved and lent by savers.”

how can you imply that:

1. government does not create money; and,
2. bank credit plays no role in loan creation

?

#241 Tornado Bob on 05.12.15 at 5:46 pm

Our Clown Prince BOC Gov Poloz is now pondering widening the inflation band to 3% instead of two…..increasing imported food prices even more. Let them eat what…..cotton candy?

Garth….is Poloz taking doggy bags home from the Parliamentary cafeteria?….and what are the selections offered for breakfast , lunch and dinner? Somehow Mr Poloz has forgotten that Canadians have to pay for food and have no per diems and greasy fat civil service pensions to fall back on.

#242 H on 05.12.15 at 6:06 pm

Cue up another weekly decline in oil Inventory.

2 million more was drained out of US inventory
870,000 came out of Oklahoma.

This adds up to the THIRD week in a row for declines an a full MONTH earlier than the seasonal draw downs.

For those wondering why oil is going up so much? Why Goldman and Citi are in panic?

Because Oil was priced in to have Cushings reach capacity and other storage seeing the same.

Contango is closing in on Neutral meaning ZERO premium for storage.

We will likely see Backwardation by mid summer when the true effects of the cut off capital shows up.

#243 rjrt on 05.12.15 at 6:10 pm

the socialsists are coming! the socialists are coming! ewwwwwww. scary socialists.

#244 Maria - housing up thsi year on 05.12.15 at 6:18 pm

housing up this year – but stocks down a lot in Canada

Glad I only have a small amount in locked in pension in the bonds.

The TSX is up 4% in the last 4.5 months, surpassing gains on the S&P and the Dow. — Garth

#245 Mark on 05.12.15 at 6:32 pm

“I rent in the area. I’m not sure I agree. A 1BR costs $1600. To buy that costs $450K. With $100K down that’s about $1900/month (mortgage + tax + strata). If you get 7% on that 100K you’re giving up $600/month opportunity cost. So we’re at $2500/month cost.”

A few things missing from your calculation. First, 7% assumed return on 4.5X leveraged money is way, way too low. I’d probably double that.

Secondly, you haven’t incorporated reserves for long-term maintenance expense. Which is in addition to the strata fees. Strata fees only cover the building itself, not interior unit maintenance. And even then, there is a serious question of whether the fees themselves are set high to even cover that. In many cases, condo fees are set too low relative to long-term maintenance/capital requirements. Plus you have to amortize the roughly 5% Realtor transactional fee over your time in the unit — which can be a considerable chunk of money unless you have a very long tenure.

So 50% sounds about right.

#246 Julia on 05.12.15 at 7:09 pm

#196 MF
“He said his friend bought a condo, made 100k off of it, and now has reinvested it into 3 other condos and the renters are “paying off his mortgages”.”

I agree with Toronto_CA and #213 Steve

I would be curious if he really made $100K, after all costs. Easy to say you “made $100K.
Now he has the cost of 3 – double land transfer in Toronto! – the hassle of 3 condos/tenants, market risk and now taxes as well. It’s a business now isn’t it?

#247 Daisy Mae on 05.12.15 at 7:09 pm

#142 Former Fool: “People could learn something from this story. If Leo DiCaprio, who has a net worth of $200M, drives a Prius (his only car), why the hell does somebody making $50k a year need to drive a Benz?!? If Jennifer Lawrence still clips coupons (with $40m in the bank), why does Joe Blow making $200k in Fort Mac need all the latest toys? People are funny.”

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

Some are secure in your own skin…some are not.

#248 Daisy Mae on 05.12.15 at 7:11 pm

“their” not “your”. *sigh*

#249 Mark on 05.12.15 at 7:13 pm

“That’s not close to double and ignores any tax-free appreciation of the condo.”

What about tax-free depreciation of the condo? Its not a given that housing will always appreciate. A quid pro quo of the no capital gains, is that there’s also no deductibility of capital losses.

#250 nonplused on 05.12.15 at 7:19 pm

Canada did not get invaded by socialists. Alberta, if that is the reference, got invaded by public sector unions. And it only happened because the popular vote was split. That will be fixed next election and the number one policy plank will be “disband public sector unions”, which will be what happens.

Yay! No more teacher’s union in 4 years! They over-played their cards and now they get their walking notice.

#251 Daisy Mae on 05.12.15 at 7:22 pm

#165 HD: “I accept the official account of what happened on 9/11….”

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

This will be debated forever. We still wonder what really happened to Marilyn Monroe….

#252 nonplused on 05.12.15 at 7:23 pm

PS, unions have their place. GM can have an auto-workers union. Sure, it’s the employees against management and let’s split the profits fairly.

Public sector unions should not exist. If you don’t like your public sector wage, go work for GM. The public sector will raise wages to acquire the workers they need but they should never be held at gun point.

The idea of a “teacher’s strike” is mind-numbing. Can you imagine soccer coaches going on strike???? Fire them all, and hire them back at 50 cents on the dollar.

#253 nonplused on 05.12.15 at 7:28 pm

Oh and and and!

Yes, for a lot of kids, next to dad and mom the soccer coach was the most influential person in their early life, and he or she did it for free.

Teachers suck. They have pink tee-shirts but if the kids actually report bullying the teachers then bully the kids who reported! “Oh so and so would never do something like that, you are a tattle-tale! But if you do ever see some real bullying you know you can trust me!” In every case I know about involving bullying the teachers sided with the bullies.

Thank Dog the internet is about to replace them all. It’s all already there, waiting for adoption.

#254 Made in BC on 05.12.15 at 7:49 pm

Teachers suck. They have pink tee-shirts but if the kids actually report bullying the teachers then bully the kids who reported! “Oh so and so would never do something like that, you are a tattle-tale! But if you do ever see some real bullying you know you can trust me!” In every case I know about involving bullying the teachers sided with the bullies.

Thank Dog the internet is about to replace them all. It’s all already there, waiting for adoption.
+++++++++++++++++++++++++++++++++++++

Yes correct. We have young kids that will be of school age in about 3 years. And they will NEVER see the inside of a public school. My 2.2 year old already speaks full sentences, reads and does some math. All from internet courses for kids streamed to the big TV. They do this for 90 minutes a day in the morning. The 1.2 year old is catching up fast…..

#255 nonplused on 05.12.15 at 7:51 pm

I’m so pissed off about this bullying thing because today I had to listen to my good friend talk to the principle about his son.

“So my son is bullying? So who punched who? You are saying my son got punched but he didn’t punch anyone? No, if he got punched he let that kid punch him and did not retaliate, he has a green belt.”

“No you don’t understand my son has a green belt (he’s 8) if he wanted to fight somebody would be on the ground, and it wouldn’t be him.”

But the administrator was convinced that the kids who wanted to pick a fight were in the right.

That’s why I tell my son the playground is the roughest of environments, and if somebody wants to pick a fight with you, make sure he never wants to again. Even if you loose, make sure he doesn’t want to repeat the experience. And do not count on the teachers, useless in all regards.

#256 nonplused on 05.12.15 at 7:54 pm

And PS, as a soccer coach, none of this stuff happens under my watch. I see it creep up, but I deal with it. That’s why parents put their kids in soccer.

#257 G and T on 05.12.15 at 11:55 pm

Having lived in both Vancouver and Victoria I totally agree with the above statement that HAM is not driving the Victoria real estate market. However Victoria house prices have been flat as a pancake since 2008, no gains in 7 years. This despite the fact that the median family income in Victoria is $10,000 higher than in Vancouver I guess the people of Victoria are smarter and less house horny than their provincial friends across the water. I highly doubt it…there must be something else driving the Vancouver market then? What could it be? It is HAM, just because the local Vancouver Board doesn’t report it doesn’t mean it is not there. The proof is in the numbers that you provided, Victoria has no HAM and prices have been flat for 7 years while Vancouver prices have been on a steady climb. If HAM is not to blame then implementing foreign buying restrictions should have no effect on the market, so lets implement some and see what happens.

http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/famil107a-eng.htm

http://www.housepriceindex.ca/

#258 Trojan House on 05.13.15 at 8:38 am

RE: Piketty

Ah, Piketty, today’s Robin Hood. Why does someone always want what someone else has? Must be human nature.

Funny how we on this blog criticize people for wanting the big house, the luxury car(s), the wide screen tv, the toy poodle but on the other hand want to take money from the rich for our own purpose just because they are wealthier than we are.

How hypocritical. Stop worrying about how much others are making and how much you can take from them and start worrying about what you can do to improve your own situation.

#259 Rainclouds on 05.13.15 at 6:51 pm

Canada,

Rumoured to be a modern society with presumably the wherewithal to actually glean statistical data…..Uhh Maybe not

All we know is that in Vancouver, real estate has been de-coupled from the local economy.”

Another survey tracked where municipal assessments of property values were sent and found that less than 1% was mailed overseas to China.

http://www.economist.com/blogs/americasview/2014/06/housing-vancouver