Bottom feeding

GATOR modified

Rates are at the bottom. The banks know this, and are getting set to profit handsomely. Before you lock in your mortgage, think about the implications. [email protected] could be a piranha.

First, despite what you read in the steerage section of this blog, rates will be higher next year. The Fed moves this autumn. Then, according to a new survey of economists, the Bank of Canada starts to tighten in mid-2016 – even if there is a small and brief dip in the meantime.

However, bond traders don’t believe the central bank will cut again. Banker’s acceptance contracts (called ‘Bax’) predict rates, and are currently priced at 1% by the end of the year. That suggests the market thinks the rate cutting’s done. And I’m pretty certain the bond market knows more than the geniuses posting here. Meanwhile the Bank of Canada has followed the lead of the Fed over 90% of the time, so taking an opposite position is a stinky bet.

Hell, even the prime minister is part of the rate/mortgage debt thing. “There are some people who are overexposed,” the emperor said this week, “so we encourage people to exercise caution in terms of their borrowing.”

The banks are smart. They know when people sniff any rate increase they lock down fast. These days a majority have already opted for long-term, fixed-rate mortgages. If the banks had their way, every single borrower would eschew variable-rate and short-term loans and sign up for the max.

In fact CIBC yesterday nudged public opinion a little further in that direction with a new ‘survey’ that said 74% of Canadians want a medium (three to five years) or long (ten years) mortgage commitment. Just 19% say they like short.

The bank has reinforced this with some candy. It’s introduced a four-year, fixed, locked-in mortgage with an intro rate of just 1.99% for the first nine months. Hmmm. Now why would the bank do that? Why do all the banks want people to lock up their mortgages even when rates are destined to rise starting next year? Would they not make more money pushing folks into short-duration loans so they can nail them for more in 2016 or 2017?

Actually, bankers match the cost of borrowing their funds with the return they receive renting them. So when rates rise, they’ll be forced to pay more for GICs and high-interest savings accounts, for example. In addition, bond yields will stiffen and funds raised in that market become more expensive. Even though bankers will be collecting more interest in the years ahead, they’ll be paying more for funds.

So here’s the bank’s advice to people:

“If interest rates rise in the next year or two, homeowners with shorter-term mortgages or variable-rate mortgages could see their payments move higher,” Barry Gollom, vice president, mortgages and lending at CIBC. “Having a medium or longer term fixed rate can act as a measure of stability and protection – especially for those who have recently bought their first home.”

You can bet there’ll be massive stampede over the next six or eight months as even more people lock into historically-low rates, ending up with five-year loans in the 2.5% range and decade-long mortgages around 3.5%.

But is this wise?

Maybe not. A third of Canadians move at least every five years. About 15% move annually. First-time homebuyers usually pack up and move after three years. And house sales nationally are near record levels, meaning 481,000 families changed location last year. It’s a safe bet that most of those people broke a mortgage in order to do so – and paid a penalty.

The typical mortgage-break fee is calculated as the IRD – interest rate differential. That’s the difference between your rate and current rates over the term left in your original mortgage. Most lenders use the posted rate (not the discounted one borrowers actually get) as the benchmark for determining this penalty.

Right now at TD, for example, the posted 5-year rate is 4.64%, but that same mortgage is available at 2.74%, or lower if you haggle. So it’s not a stretch to assume the posted five could be over 5% by the end of 2016 and close to 6% twelve months later.

A TD mortgage fixed for two years is currently available at just 2.2%, which might be a whole lot safer bet for anyone thinking they could change houses by the end of 2017. Besides, rates will rise slowly, gradually and smoothly lest the economy be wounded, meaning anyone renewing short now and then again in a year or two could be looking at big savings over going with a fiver that needs breaking mid-term.

And here’s more advice from a MortgageBrokerNews.ca, reminding you of another great option – the variable rate loan, which eliminates the whole thorny issue of the IRD:

“Definitely go into a variable rate – five year variable; if rates start to climb, the discounts increase on a variable. It’s unlikely they will climb over a quarter to a half point in the next few years, but if it should happen to climb a whole point the discount will increase as well and at that point you just break the mortgage, pay the three month penalty, refinance with the bigger discount and get the mortgage back down again. Long-term variable always wins.”

Moral?

When your bank offers to protect you, run.

166 comments ↓

#1 TurnerNation on 05.15.15 at 6:02 pm

Smoking man did you too catch the bottom on TLT.US.

3 Days in play then take your pay is the old saw see.

This is funny name http://www.blacklabbath.com

See ya all at oil $65

#2 Irish Stew on 05.15.15 at 6:11 pm

Canadian economy is slowly sinking.
Titanic is sinking and the lifeboats are full.

Cash is King.

#3 NEVER GIVE UP on 05.15.15 at 6:39 pm

I want to vent a little bit about 3rd world style corruption in CANADA and the Canadian sense of fairness and moral hazard.

I am an importer. When I received a container last week the CBSA decided to examine it. They charge me $2500.00 to examine it and then release it to me with not a word.

After paying for this charge 6 times over the last 3 years I have finally turned my head into accepting it. Kind of like Stockholm Syndrome.

So to kick a man when he is down the CBSA gives back the container after the exam with no notice and delivers it back to the port.
The shipping company gets the bill and they are HO’d in Toronto.
So I cannot pay them by bank transfer so I pay their agent here with a $50.00 charge,(kick me) on top of the $50.00 admin fee the shipping company charges me.(kick me)
Then it takes a day to get them the money and a day to release the container.
But I have only 3 free days at the port starting FRIDAY. They also count free days on SAT and SUN. So I have to pay them $300.00 per day storage charge starting Monday even though I cannot pay my bills or pick up the container on Saturday or Sunday. (kick me hard!) So by the time all the releases were done and the bills were paid and the Trucker takes a day to get an appointment to pick up the container. I was billed $750.00 in Storage fees.
Guess what, you are paying this fee. I have to pass it on. I will bet that Canadian Tire or Home Depot will not get as many customs exams as me on average.

I have sent emails to Lisa Raitts office to complain but all you get back is form letter emails passing the buck.

When there was a Truckers strike last year. Some of the truckers were whining they were not making enough money and could not compete in the real world. So what did the government do in great Canadian Tradition. Eliminate competition and give preferential treatment to the big operators.
How?
They used to charge a $150.00 charge per year for trucks to get access to pick up customers containers at the port.
Now the charge is $30,000.00 per year for 15 trucks minimum.
That’s how you beat up the little guys.
I am ashamed to be Canadian sometimes.

#4 North Burnaby on 05.15.15 at 6:44 pm

By ignoring HAM, Garth would never be understand how undervalued Vancouver’s real estate is. $3mil house today will be worth $5mil 5years from now.

#5 IloveCharts on 05.15.15 at 6:46 pm

My time has come. Pressure from the wife is reaching epic proportions. I’ve found a hood I’d like to live in for the long term. Even Garth is saying interest rates won’t rise for another year. I might just have to buy.

#6 Nora Lenderby on 05.15.15 at 6:56 pm

Excellent post, very good advice.

When I had a mortgage rates were going down, so it was a good deal, but you’re right, I never kept the house/husband long enough to get to 5 years!

#7 TurnerNation on 05.15.15 at 6:58 pm

Were both males and females polled on their preference for convexity and duration?
Convexity of course means curvature at the long end.

#8 Tony on 05.15.15 at 7:00 pm

The bond market is wrong. Rates will turn negative in America just like in Europe.

#9 Realtor007 on 05.15.15 at 7:04 pm

IRD is only an issue when the rate is lower then your locked in rate at the time of the break, if you say rates are going higher then we hit bottom and it’s no issue at all, there are lending institutions who use the discount rate as their regular rate so you don’t have to worry about posted rate vs discounted rate if breaking a mortgage, ask your mortgage broker about all your options before signing up.

#10 Montellino on 05.15.15 at 7:07 pm

When they mention discounts, they are talking about a difference between 5yr fix and 5yr variable?

They will move up in tandem but due to the spread, the overall rate is better on variable. Did I get that right? It actually makes sense over the long run. Awesome. My wife is gonna kill me :D

#11 Heisenberg on 05.15.15 at 7:12 pm

@ #3 NEVER GIVE UP

The CBSA doesn’t usually do inspections of random containers. With a 3% inspection rate, they focus on the ones that are suspicious or are associated with suspicious parties.
If you’ve been inspected several times, it’s for good reason.

#12 Shawn on 05.15.15 at 7:19 pm

Interest Rate Differentials

IRD’s should apply only when the true market (not posted) rate till end of term is lower than the rate being paid. That is the penalty the bank actually faces.

One problem is the four years into a fiver, the differential is the contracted rate being paid minus the market rate on a ONE year term (since there is just one year left to end of term). In this scenario using the higher posted rate on the one year would actually favor the breaking borrower.

Does the bank use the posted rate on the fiver minus the posted rate on the one year?

We need some real examples here. Anyone got real numbers as to how it was actually done to them and how the posted rate was used on either the original mortgage or the current market.

I need to be shown in crayon please.

If rates rise a lot then IRDs may be negative in which case a three month interest penalty usually applies as a minimum break fee.

#13 Kyle on 05.15.15 at 7:22 pm

I thought most of the large banks will offer mortgage ‘porting’ transfers on those 5 year-fixed where they blend the two mortgages rates based on an average of the current home and the new home interest rates. Or is there a penalty hidden in there somewhere?

#14 DV01 on 05.15.15 at 7:24 pm

“Besides, rates will rise slowly, gradually and smoothly”

#Comedy

#15 David McDonald on 05.15.15 at 7:24 pm

Garth is quite right about the risk associated with the housing bubble. On the other hand this home fetish does produce beautiful neighborhoods. I road my bike around Ottawa on Thursday and I must say the well maintained homes were lovely.

Yesterday Garth graphed the trade deficit after removing oil. Clearly we have suffered from the Dutch disease during most of Harper’s term.

In the 1970’s the Dutch failed to foresee the loss in industrial competitiveness due to excessive reliance on the resource sector. It was a novel situation and they weren’t prepared; that’s forgivable.

Canada on the other hand has ignored the Dutch experience and Norway’s solution to the problem. In fairness to the Dutch maybe it should be called Canadian disease.

#16 Freedom First on 05.15.15 at 7:30 pm

I have known since I was a teenager that all I am to Banks and every other business is a wallet. I have never forgotten what the world is like when you are a teenager and self-supporting, through unforeseen circumstances, and have no money. I have been extremely blessed to learn what I learned at a very young age.

It is not fun to watch people being financially castrated through their failure to learn and live by sound financial principles. Both recent history, and past history, have failed to deter many people world wide from such a cruel fate. It doesn’t have to be. Sound Financial Principles stand the test of time. No exception.

#17 Joseph R. on 05.15.15 at 7:36 pm

“Then, according to a new survey of economists, the Bank of Canada starts to tighten in mid-2016 – even if there is a small and brief dip in the meantime.”

Full of certitude!

You haven’t mentioned about the BOC looking into changing its inflation target , which is due for renewal in 2016:

“Canada targets 2 per cent inflation, the midpoint of a 1 to 3 per cent inflation-control target range. Since the last renewal of the agreement in 2011, the experience of advanced economies with interest rates near the zero lower bound has put the 2 per cent target under increased scrutiny. After taking all factors into consideration, the Bank will undertake a careful analysis of the costs and benefits of adjusting the target.”

http://www.bankofcanada.ca/core-functions/monetary-policy/renewing-canadas-inflation-control-agreement/

As a matter of fact, many economists are ready to change their stands on the ideal 2% target and let inflation run a bit higher, an option that the BoC may take:

“Inflation Targeting in the Post-Crisis Era.”

http://www.bankofcanada.ca/2014/11/inflation-targeting-post-crisis-era/

Granted, it’s not yet a given, as it would require government approval before any change in BoC inflation-target policy and it may fall flat. However, Joe Oliver considers this new policy as “Forward thinking”:

http://business.financialpost.com/news/economy/joe-oliver-says-inflation-target-review-with-bank-of-canada-looks-forward

#18 So no housing market melt then? on 05.15.15 at 7:37 pm

So, if rates are not coming down for another year, and the average mortgage coming up for renewal in say 5 years, we will have to wait about 6 years until mortgage holders are starting to feel real pain. So, it seems safe to say that the earliest that the housing market will come down again is 6 years from now. Good luck renting for the next six years!

Actually, eight of ten markets are already fading and rate increases, however modest, will make things worse for sellers. — Garth

#19 Oot der Hoos on 05.15.15 at 7:44 pm

I am sorry, #3 NEVER GIVE UP.

They stole from me too. Pray for protection from the faceless rule makers, their cheerleaders and the unanticipated consequences.

#20 CREIT on 05.15.15 at 7:56 pm

About 3 weeks ago I reported that my rental property just South of Edmonton went vacant. Both tenants worked for the oil companies but lost their jobs. I’m happy to report that a new lease has been signed and new tenants will be moving in on June 1. :)

#21 Ed on 05.15.15 at 7:56 pm

To think anyone knows where rates are going is foolish although sooner or later rates may go up (or down) and the pundit will attain rock star status as a prophet.

#22 Washed Up Lawyer on 05.15.15 at 7:59 pm

How to ruin a perfectly good long weekend in Fort McMurray.

The Real Estate Board posted its April results and put a comma in the wrong place resulting in a year over year drop in median prices of duplexes of 91%.

Lots of unhappy heavy drinking folks at barbeques tonight.

http://www.fmreb.com/sites/5098200ae7e1b41bc50042de/content_entry50bf9565e7e1b41bc501133d/5555208c5918ad788800252a/files/April.pdf?1431642252

#23 Sheane Wallace on 05.15.15 at 8:10 pm

#17 Joseph R.

As I said many times already – high inflation, zero interest rate.

Run away from Canada and the Canadian dollar.
It will go all the way to 35 cents US.

Inflation helping economy while interest rates are at zero? What are these idiots drinking?

#24 Sheane Wallace on 05.15.15 at 8:12 pm

#4 North Burnaby

5 millions confetti, not money. Whoever is stupid enough to hold them,

#25 Ray on 05.15.15 at 8:20 pm

Cramar: “Chick-agoo” comment from yesterday was too funny.

#26 sockeye sam on 05.15.15 at 8:21 pm

Decided to sit tight for another 5 years at least on the little $3mil. lot on w. 19th in vancouver. No debts and it’s clear title so what the hell. I guess we’ve turned into greedy little pigs.What keeps entering my mind is when my Dad sold the farm on west side of Edmonton back in the late 60’s. I was just just a little kid. This Arab looking guy would pull into our yard in this beautiful bright red Chevy Nova. He’d always pull my Dad aside and they would have a ten minute talk. I could never hear them and my Dad would be shaking his head no. This went on for around 3 times a year for two years. Then one Day my dad said “I’ve sold the farm”. 60 acres on 170th st. and 62nd ave for $260.000.00 right across the street from the Edmonton golf and country club and part of it had river bank property.The little Arab guy was Mr. Ghermezian his family bought up all the farms around us. He owns the West Edmonton Mall and the Mall of America. I’m sure to my Dad’s dying day at 74 years old he was thinking, “if only I had hung in for a few more years”.
I could be wrong but these lots in Vancouver are going up up up . To the moon Alice!

#27 Joe Schmoe on 05.15.15 at 8:30 pm

#3

Get a better broker and use more specific tariff codes for your imported goods.

There is much trade action against China globally and it is spilling over as circumvention into other emerging Asian countries.

What you are bringing in may be subject goods so watched closely.

You can get pre-determination letters from the CBSA if you explain what you are doing/bringing in, and the company you are buying from have a “clean record” or willing to subject to CBSA audit protocols.

I think the CITT may outline some of this process.

#28 Cici on 05.15.15 at 8:33 pm

#3 NEVER GIVE UP

I feel for you, that’s a friggin’ joke. Why did they send the container back to the shipping company. That shouldn’t even be legal.

Pathetic…you would think that in a slowly sinking economy they’d be doing everything they can to HELP small business…after all, if all the little guys stop bailing out the ship, the whole sucker goes down.

#29 babblemaster on 05.15.15 at 8:43 pm

“First, despite what you read in the steerage section of this blog, rates will be higher next year.” – Garth

—————————————————

With all due respect Garth, you’ve been repeating essentially this same message for years. Hasn’t happened. Nobody can predict the future.

#30 ANON on 05.15.15 at 8:47 pm

“rates will rise slowly, gradually and smoothly”

As to avoid a mild commotion, I’m sure. A gentlemanly panic, so to speak. :)

#31 Mark on 05.15.15 at 8:53 pm

“IRD’s should apply only when the true market (not posted) rate till end of term is lower than the rate being paid. That is the penalty the bank actually faces.”

Well, in response, I would say that the bank has costs in placing a new loan to replace the one which was prematurely repaid. Liquidated damages reflect this fact, and are set forth in the contracts that borrowers willingly sign with their lenders. Yes, its true that the bank probably would not be able to replace such investment at the posted rate, but they still need to be compensated for the fact that they are unable to amortize their origination costs over the entire agreed-upon term of the loan. This alone would imply liquidated damages in excess of strictly the IRD calculated based on true ‘market’ rates.

The mortgage market in Canada is incredibly competitive, with a large number of players including banks, mortgage brokers, provincially regulated institutions, etc. Consumers can shop around and find loan terms that work well for them, if the IRD calculated at the ‘posted rate’ is a major problem.

“As a matter of fact, many economists are ready to change their stands on the ideal 2% target and let inflation run a bit higher, an option that the BoC may take: “

Its pretty clear, at least to me, that this is an example of BoC “jawboning”, in that, the BoC sort of recognizes that it is facing the prospect of fighting significant deflation and currency strengthening in the Canadian economy, but, at least for the moment, wants to try and scare money out of bonds so that speculators at least have some fear of front-running the BoC when it is eventually forced to engage in QE.

Watch the actual Canadian (deflating, in desperate need of lower policy rates and additional stimulus) economy, rather than the random nonsense that the financial media reads into whatever Poloz happens to say. Its almost, dare I use the word, schizophrenic, these days. Almost all data points point to the need for lower interest rates going forward.

#32 Godth on 05.15.15 at 8:58 pm

#26 sockeye sam on 05.15.15 at 8:21 pm

Then quit complaining and get back on the bus.

On to more serious matters…

Noam Chomsky: Media, NATO, ISIS, Free Trade Agreements & Humanity (2015 NEW)
https://www.youtube.com/watch?v=uv7EKQ6Rrrs

#33 carl on 05.15.15 at 8:59 pm

Garth, is it all just about keeping money. Is that all there is? Can’t we spend it to make us happy once in a while?

#34 Mark on 05.15.15 at 9:02 pm

“As I said many times already – high inflation, zero interest rate.”

Where does inflation come from with house prices falling, people losing their jobs, and the Canadian economy having an excess of capacity?

35 cents? Try more like $1.35, even with Canadian ZIRP and QE. Especially as the US dollar bubble starts rolling over in earnest, and Canadian consumer consumption is severely truncated by the “wealth effect” of housing appreciation accelerating in reverse.

#35 Made in BC on 05.15.15 at 9:07 pm

First, despite what you read in the steerage section of this blog, rates will be higher next year. The Fed moves this autumn.
+++++++++++++++++++++++++++++++++++++

We shall see. People have been saying “rates will rise” for several years now. I have my doubts.

#36 x-moose on 05.15.15 at 9:10 pm

The Fed moves this autumn.

Sure. Likely even sooner. Except in the opposite direction unleashing QE4. Then the USD will collapse. Then XAUUSD will get to infinity. At that point the only way to jolt the economy, would be via WW3 fought on whatever pretense.

#37 crowdedelevatorfartz on 05.15.15 at 9:12 pm

“despite what you read in the steerage section of this blog……”

Classic.

@#2 Irish Stew
“Canadian economy is slowly sinking.
Titanic is sinking and the lifeboats are full.

Cash is King”
++++++++++++++++++++++++++++++++++++

Drink some Guinness. You’ll think more clearly.

@#4 North Burnaby

“$3mil house today will be worth $5mil 5years from now….”
+++++++++++++++++++++++++++++++++++

Stop drinking Guinness, you’ll think more clearly

#38 Mister Obvious on 05.15.15 at 9:13 pm

#26 sockeye sam

Of course the other thing you could do is simply admit that you like your home and neighborhood and are therefore happy to go on living there as long as you please regardless of any speculative value the property may or may not have.

I could understand and respect that point of view. It’s tantamount to saying that if and when the time comes to move on, you will be perfectly happy to sell for whatever the market dictates without regret.

If that’s truly the case then let me be the first blog dog to wish you and your famly a happy, healthy life on the west side.

#39 Smoking Man on 05.15.15 at 9:15 pm

On the quest for the meaning of life. Why were we put here. To be torchered watching a shity blues band butcher a pink Floyd tune.

Need to change my life. Alarm rings at 5am..make my way to tax farm hung over as hell. Put my acting suit on, I’m the slave in this role, I play it well.

“What’s the problem master” I ask.

This &$#& shit f&%$# losing money…master says.

Remembering my acting lessons in drama class. I put on the face, the one that looks like its thinking and concerned. While thinking, this is better than going to an AA meeting. Then my mind drifts off, shit chapter 7 this line will work.

I tell the master I’ll investigate. While giving no shit, I quickly email myself the paragraph that will make chapter 7 rock. I get on the phone, I pretend to talk to some one.

I’m intence. Total alpha…I scream at the top of my lungs into the phone , wtf are you idiots doing.. &%$$

Everyone’s eyes on me.

A huh. OK….

Walk back to the master. Sir, they tell me you need to re boot your computer.

He puts on his alpha, bonus time is nearing. He’s letting his boss know subliminaly that if you burn me , this is what I’m capable of.

His boss who played this game chuckling inside.

Everything is fine after there boot..

I go home, wait two hours till 9 pm when I’m allowed a drink. I’m cut off after the second glass by lady Hitler.

Then I go outside for my smokes , find my stached JD.

Mikey of JD downed in one gulp.

Shower , bed…

Repeat the next day…..

Weekend hits….

I’m at a bar in a Senica Casino again..

Thinking about entertaining ways to please you dogs..

Something’s got to change..

#40 Rexx Rock on 05.15.15 at 9:17 pm

There is no need to lock in a mortgage for a long time.Japan’s central bank rate is 0.1%.Canada will follow in the next 2 years.Emergency rates for 6 years,give me break.Does anyone actually believe these bozo liars.Lock in for a 10 year fixed rate at 1.5% if your afraid in the next couple of years.Get used to a dying economy just like Japan.Vote the Libertarian party if you won’t hope and change.

#41 ANON on 05.15.15 at 9:21 pm

To all WW3 predictors out there, please, pretty please remember that a war is fought with….you guessed it… credit! Same as a bubble. You don’t believe me? Go for a small googlin’ time on keywords: war bonds.
This is also a system of promises based on kicking the other guys’ nuts in order to get whatever we collectively believe the other guys are depriving us of. So, first let’s get over the disappearance of the current promises, and see if we can gather enough promises afterwards to kick the Big One #3, shall we?

#42 craig on 05.15.15 at 9:21 pm

So should I invest in canadian banks? Lol

#43 Sheane Wallace on 05.15.15 at 9:27 pm

Mark,

You problem is that you think local in a global economy.

Nobody cares about your dollar, we print more of them and the world does not want them, since we are importing more and more goods and not producing much, the prices will keep going up.

I told you already, house prices can not go down or the hole house of cards comes down. They have to stay up.
Saying that a house in stupid Vancouver is worth 5 times in absolute value than a house in Frankfurt, the heart if the European Economy and the biggest continental exchange and financial hub is stupid.

To equalize, Ca dollar is going down big time. If you think every idiot in Vancouver can buy 5 houses in Frankfurt and this is sustainable, think twice.

#44 Sheane Wallace on 05.15.15 at 9:29 pm

#42 craig

run away from anything canadian maybe except Pizz Pizza

#45 Mark on 05.15.15 at 9:31 pm

“So should I invest in canadian banks? Lol”

Canadian banks should be a part of everyone’s (balanced) portfolio. The chief risk in the Canadian banks is that, in order to pay for the CMHC bailouts that are inevitable as housing prices continue to decline and defaults pile up — that the government either enacts a special tax on bank profits, and/or threatens to use legislation to somehow diminish the value of the CMHC guarantee.

Such threats, such tax, could cause an enormous amount of volatility to the value of Canadian bank’s equity, and cause a significant elevation in the bank’s cost of capital. However, the government needs to tread lightly because if they undertake policy measures too extreme, the banks will stop lending to the residential RE marketplace and RE values will collapse to all-cash valuations. The cold-war game theory term “mutually assured destruction” comes to mind.

If you look at the 1990s, most of the bank stocks quadrupled from 1990-2000 — the banks seizing the advantage of having money good mortgages on their books locked in at high rates, as well as a cyclical rotation towards stocks as investments away from housing. However, the watershed moment of that particular bull market in the banks was Finance Minister Paul Martin’s announcement that bank mergers would not be allowed.

#46 MikeEdmonton on 05.15.15 at 9:33 pm

I was self employed for 10 yrs: selling software and service to oil companies. I lost 50% of my clients and I am out of business (got full time job now).

Do you know who get my clients? A start up company that received 90000 in grants to develop same software

Government became active player. That is not how capitalism works, I guess.

#47 waiting on the westcoast on 05.15.15 at 9:36 pm

#3 NEVER GIVE UP on 05.15.15 at 6:39 pm
“I want to vent a little bit about 3rd world style corruption in CANADA and the Canadian sense of fairness and moral hazard.
{Snip}<Eliminate competition and give preferential treatment to the big operators.
How?
They used to charge a $150.00 charge per year for trucks to get access to pick up customers containers at the port.
Now the charge is $30,000.00 per year for 15 trucks minimum.
That’s how you beat up the little guys.
I am ashamed to be Canadian sometimes."

First – the container issue sucks.

Second – sounds like it would be smart to either acquire or merge a bunch of smaller trucking outfits to gain a competitive advantage.

#48 Mark on 05.15.15 at 9:39 pm

“I told you already, house prices can not go down or the hole house of cards comes down.”

House prices are coming down, and have come down many times in the past. The economy didn’t collapse. It simply reconfigured itself. You seem to be under some sort of belief that the government and/or central bankers can arbitrarily keep one asset class, housing, high. To the exclusion of other asset classes. This makes no logical sense.

Yes eventually the proper equilibrium between Frankfurt am Main and Vancouver housing will be re-established. But it will be price changes that cause this, not the Canadian dollar collapsing. Canada is a long-term net exporter. A bout of severe truncation of consumer demand brought upon by falling house prices will significantly curtail imports and improve exports. This is all CAD$ positive, as is debt repayment and a reversion to higher personal savings rates.

#49 BS on 05.15.15 at 9:43 pm

26:

Decided to sit tight for another 5 years at least on the little $3mil. lot on w. 19th in vancouver. No debts and it’s clear title so what the hell.

Report back in a year when prices are weakening. My bet is once prices are down 15% you will panic and list the property. The problem is you will list at what your house could have sold for last month, which by the time you list it will be too late to sell at that price. Tough to sell in a declining market. You will chase the market down trying to get last months price. Like your dad you will regret it your decision for the rest of your life. Just for a different reason.

#50 Shawn on 05.15.15 at 9:46 pm

If interest rates are rising…

Then clearly it is best to lock in for a longish term.

It’s good for the borrower. Sounds like it is neutral for the bank if they fund long mortgages with long deposits.

The calculation of the interest rate differential penalty has not been demonstrated. IRDs are a big problem when rates fall and should not be a big problem if rates rise.

#51 Sheane Wallace on 05.15.15 at 9:46 pm

#48 Mark

You of course realize that THERE IS NO ECONOMY WITHOUT HOUSING, do you?

It drives directly or indirectly most of the economic activity – lending/mortgages, insurance, renovations, drives spending by banks, insurance companies and their employees,….

When was the government on the hook for 60 % of GDP in mortgage insurance? When he had such peak debt in such open world?

We are done, caput, finished without housing and with these debt levels, CA is toast.

#52 sockeye sam on 05.15.15 at 9:50 pm

Oh Godth! I must be on the wrong blog. I thought I read on the heading real estate topics. Perf. I never did like posting anyways. Back to reading only. Have a good one Godth and keep up the documentary attachments.

#53 Shawn on 05.15.15 at 9:52 pm

Find a way to offer 25 year fixed rate but open mortgages in Canada and be a national hero

The reason that Canada and CMHC cannot offer fixed rate but open 25 year mortgages (like the U.S. does) by flowing the interest rate risk through to investors through securitization has never been disclosed. No, it’s not the Bank Act which makes mortgages open after five years, I want them open always but the rate fixed for the full term just like in the States. In other words the borrower has the option to stay with the fixed rate for the full 25 years or to refinance to a lower rate anytime. Just like in the States. They do it in the U.S. by securitizing mortgages and passing the interest rate risk to investors. It works like a charm.

This system in no way caused the mortgage crisis that was caused by giving mortgages to dead beats. And it was caused by idiots at the credit rating agencies who did not see when poor credits were in the mortgage pools.

They (the U.S) still do the 30 year fixed rate open mortgages and they work just fine.

Whoever brings this to Canada right now so all can lock in will be a national hero if rates rise.

#54 Sheane Wallace on 05.15.15 at 9:53 pm

#48 Mark

Let me recap your idiotic statements:
1. Hosing crashes and there is no impact to economy. Banks are OK, budget handles it, no problemo.

2. Imports decline but Ca dollar goes up and somehow this stimulates the export (of what?) in open economy, we expect to compete with thirld world countries in cost of labour with a srong dollar?

Are you really that insane or just pretending?

#55 Shawn on 05.15.15 at 9:59 pm

Sheane Wallace on 05.15.15 at 9:46 pm
#48 Mark

You of course realize that THERE IS NO ECONOMY WITHOUT HOUSING, do you?

***********************************
Well, shelter is one of the three basics of life. (The others being food and clothing) A house gives shelter and also security.

Most of us spend 50% of the day at home or more and sometimes 100%.

Perhaps that is why housing does and should constitute a great deal of the economy. We value houses greatly and they are expensive to manufacture and finance. Is that a problem?

Don’t hold your breath waiting for the end of the economy Sheane.

#56 Smoking Man on 05.15.15 at 10:04 pm

The fade, going for a normal frame of mind to the other side. God damn JD

What will I type. Smokey’s best shit ever , Aug 1st 2015. Or perhaps sooner , depends how much this self made zillionaire drinks tonight.

You tin foilers will love it.

#57 45north on 05.15.15 at 10:06 pm

sockeye sam: Decided to sit tight for another 5 years at least on the little $3mil. lot

BS: My bet is once prices are down 15% you will panic and list the property.

my bet too

#58 Mark on 05.15.15 at 10:06 pm

“You of course realize that THERE IS NO ECONOMY WITHOUT HOUSING, do you?”

Of course there’s an economy without significant investment in housing. The 1990s was a perfect example. And you know what? Unemployment was at levels we can only dream of today. Even total idiots who didn’t even graduate high school were able to get computer web-page-writing jobs in the late 1990s.

I am well aware of just how pervasive housing is in the contemporary economy, which is why the deflation is likely to be especially severe. But debt repayment, consumer demand truncation, and job loss is not indicative of conditions that lead to strong inflation and currency destruction.

They (the U.S) still do the 30 year fixed rate open mortgages and they work just fine.

I’d have to disagree. There is no indigenous marketplace for the 30-year fixed open mortgages. The only reason they exist is because entities such as Freddie Mac/Fannie Mae guarantee them, and banks are willing to take the risk of transforming shorter-term deposits into long-term investment.

What do you think happens to the US banking sector, Fannie/Freddie, etc., when the long-end of the curve eventually blows out due to inflation and/or the perception of future rate hikes? Kaboom!

The Canadian system, which features rapid recognition and liquidation of inadequately capitalized mortgages, minimal to no maturity transformation performed by the banking system, and vesting the risk of borrowing properly with the borrowers, is far more stable in comparison to the mess that exists in the US.

Whoever brings this to Canada right now so all can lock in will be a national hero if rates rise.

I’m all in favour of free markets, and little government regulation, but the last thing I think Canadians should want is a US-style banking system, where banks speculate on future interest rates in the ordinary course of business, and the government is heavily involved (its bad enough that the CMHC exists in Canada!). If Canadians want to protect themselves against renewal interest rate risk on residential mortgages, the best way to do so is simply not to borrow as much! For those with strong convictions that long-term rates are going to rise, there are a plethora of hedges, futures, swaps and options available to Canadians where such bets can be placed.

#59 Godth on 05.15.15 at 10:09 pm

#52 sockeye sam on 05.15.15 at 9:50 pm

So you can’t read either. The heading of this blog reads :
Garth Turner on Economics, Real Estate, Money, and the road ahead.

If you can separate economics and money from politics, environment, etc. then you best enlighten me.

You’re the greater fool in reverse. Don’t worry though, you’re in the majority. Misery loves company so keep on complaining to whomever will listen to your “first world problems”. It’s the cult of the self after all; Vanity.

#60 Sheane Wallace on 05.15.15 at 10:10 pm

https://www.youtube.com/watch?v=Ta0gDfGb9u0

There is lady who’s sure all that glitter is ….

#61 Mark on 05.15.15 at 10:18 pm

“IRDs are a big problem when rates fall and should not be a big problem if rates rise.”

The problem that is likely to appear in a rising rate environment, whenever it occurs, is that the banks basically give the borrowers no lee-way before they initiate proceedings or exercise interest rate escalation clauses in the mortgage loan contracts.

Over the past decade, the atmosphere was pretty laissez faire. In a rising rate environment, well, even the most minor of technical defaults could be enough to trigger action on the part of the lender to recover its funds so as to facilitate re-lending the funds at a higher rate. Some mortgage contracts written right now even give the lender the right to raise the applicable interest rate dramatically without having to initiate proceedings. Additionally, the banks have made it known recently that they’re fully willing to tinker with the “Prime” rate to achieve their own internal objectives, rather than always defer to the BoC’s changes.

#62 Bottoms_Up on 05.15.15 at 10:23 pm

#35 omg the original on 05.14.15 at 7:34 pm
——————————————————-
Because there are some foreigners that are buying Canadian real estate for the sake of accessing our health care system, yet choose to live, elsewhere, don’t they have to be able to prove that they lived in Canada for a certain length of time to retain access to that healthcare? What are those rules, and how easy would it be to circumvent these rules (ie, to show you lived in Canada for 6 months when in fact you didn’t)?

If this anti-newcomer, hate-immigrant theme continues here I am shuttering this blog. I will not provide a vehicle for knuckle-dragging xenophobes. — Garth
————————————————————–
Whoa whoa whoa Garth (and fellow bloggers), I asked a few simple questions, and qualified this with ‘some’ in the first line.

You guys are too funny. I’m just curious about how robust our checks are.

I am the first to stand up for immigration, the extraordinary benefits of our melting pot society, and acceptance of all.

#63 Hawk on 05.15.15 at 10:28 pm

#43 Shawn

Don’t disagree about overpriced Vancouver, but thinking that Frankfurt is 1/5 the price isn’t realistic. The average price for a decent house is 525,000 euros according to the site below.

I have a friend in Feudenheim whose house is worth about 1.2 million euros and its a big house of 5 bedrooms, but then again Feudenheim is not exactly the heart of a major city.

Houses in major urban centers in the world are not cheap period.

http://www.howtogermany.com/pages/housebuying.html

#64 Sheane Wallace on 05.15.15 at 10:33 pm

#55 Shawn

So the germans don’t live in houses but on the street, don’t they? And the French?

The houses were made the economy, we have nothing else left.

So the tale of PHDs stocking up at at Staples and working at the No Frills meat departament is the future of our kids in an open world.

Whether we like it or not.

#65 Jerry Mander on 05.15.15 at 10:34 pm

Garth

The solution to the Vancouver and lower mainland land shortage is quite simple. Build a causeway to Sunshine Coast and too the islands, open up all national/provincial parks to private real estate development, and re-negotiate native land rights to 50% of current levels…problem solved….next!

#66 Jerry Mander on 05.15.15 at 10:35 pm

by islands…I meant Vancouver Island….

#67 Sheane Wallace on 05.15.15 at 10:37 pm

#63 Hawk

Nope. Been there recently, these are not correct prices. Maybe they fish for rich canadians to buy their properties? Munich is expensive but is the city of the very rich, the cars on the streets are nothing else then Mercedes last model for 100 k Euro+

Berlin is very cheap.

#68 Squirrel meat on 05.15.15 at 10:40 pm

#39 Smoking Man on 05.15.15 at 9:15 pm

On the quest for the meaning of life. Why were we put here. To be torchered watching a shity blues band butcher a pink Floyd tune.

Need to change my life. Alarm rings at 5am..make my way to tax farm hung over as hell. Put my acting suit on, I’m the slave in this role, I play it well.

“What’s the problem master” I ask.

This &$#& shit f&%$# losing money…master says.

Remembering my acting lessons in drama class. I put on the face, the one that looks like its thinking and concerned. While thinking, this is better than going to an AA meeting. Then my mind drifts off, shit chapter 7 this line will work.

I tell the master I’ll investigate. While giving no shit, I quickly email myself the paragraph that will make chapter 7 rock. I get on the phone, I pretend to talk to some one.

I’m intence. Total alpha…I scream at the top of my lungs into the phone , wtf are you idiots doing.. &%$$

Everyone’s eyes on me.

A huh. OK….

Walk back to the master. Sir, they tell me you need to re boot your computer.

He puts on his alpha, bonus time is nearing. He’s letting his boss know subliminaly that if you burn me , this is what I’m capable of.

His boss who played this game chuckling inside.

Everything is fine after there boot..

I go home, wait two hours till 9 pm when I’m allowed a drink. I’m cut off after the second glass by lady Hitler.

Then I go outside for my smokes , find my stached JD.

Mikey of JD downed in one gulp.

Shower , bed…

Repeat the next day…..

Weekend hits….

I’m at a bar in a Senica Casino again..

Thinking about entertaining ways to please you dogs..

Something’s got to change.
—————————————-
Bebe Jeesus. Bebe Jeesus will set you free.

#69 Sheane Wallace on 05.15.15 at 10:43 pm

And when you find me a house in Germany maid out of wood call me.

People built with masonry and stone, buildings are built to last for centuries. I have never met a German who built a home to last only for a single lifetime. At certainly they don’t spend 17 k yearly in repairs or live in basements.

But we play hockey…

#70 Sheane Wallace on 05.15.15 at 10:46 pm

as for the condo fees and the glass condoes…..

#71 sockeye sam on 05.15.15 at 10:49 pm

Godth, That’s it get it all out have a nice little cry and blame all of us on here for your problems. It’s called blogging in a respectful manner. Try to be nice. I’m reading your posts without a sarcastic reply. Stop torturing yourself then if you don’t like the people on this blog. Go onto a basket weaving site.

#72 Waterloo Resident on 05.15.15 at 10:53 pm

Hey, the Chinese real estate bubble is popping and popping badly, and now Millions of new Chinese graduates won’t be able to find jobs this year, added to the few hundred thousand grads from last year who are stil searching for jobs without success. Here, listen to it all here:

“New Graduates Seek Jobs in Slowing Chinese Economy”

https://www.youtube.com/watch?v=LTWZ0mSEFLE

If their economy slows down too much (like it has now) then companies cannot grow fast enough to build up equity to pay off their interest on their debt and they begin to default in mass numbers about 18 months later. So get ready, in about a year, maybe 2 at the most, Millions and millions of Chinese companies will be defaulting on their debts.

NOW THAT is going to be something amazing to watch, it is going to make the Lehman bank collapse look like child’s play by comparison. We are talking about a financial mess at least 100 times worse that what sent the world into the great recession.

#73 Hickster on 05.15.15 at 11:05 pm

The bond market and the bank of Canada rate are different things. Yes the price of fixed rate will rise soon with the U.S. bond market, but no the BOC will not soon raise the prime rate by any meaningful amount. They know the housing problem it will create, and no government will want to wear that. Furthermore the very conditions that raising the rate would create, are exactly what puts downward pressure in rates. When nobody has money because of their declining and expensive home, the construction sector fades along with many jobs. Nobody having money means business pulls back because less customers. BOC then needs to lower rates to encourage people to build, expand etc again.

No chance we get higher BOC rate anytime in the near to intermediate future.

#74 Shawn on 05.15.15 at 11:08 pm

They (the U.S) still do the 30 year fixed rate open mortgages and they work just fine.

I’d have to disagree. There is no indigenous marketplace for the 30-year fixed open mortgages. The only reason they exist is because entities such as Freddie Mac/Fannie Mae guarantee them, and banks are willing to take the risk of transforming shorter-term deposits into long-term investment.

***************************************
I should not bother responding to a man who appears to live to disagree. but…

CMHC and Fannie / Freddie both guarantee the lender against defaults so the two countries are the same there.

A huge difference in the U.S. is that the Fannie Freddie guaranteed mortgages have fixed rates for up to 30 years and yet are OPEN.

Banks cannot and mostly do not take the interest rate risk associated with that. Instead the loans are securitized and sold to investors who accept the interest rate risk. Fannie / Freddie do not take the interest rate risk. That is my understanding.

The Banks did not take much of that risk either. If they had they would have been broke long before 2008 as millions were refinancing to much lower rates year after year for many years prior to 2008.

No indigenous market for 30 year fixed rate open mortgages? It’s the mortgage-backed securities market and it’s HUGE. Banks, which are highly leveraged cannot take this risk. Non-leveraged fixed income investors can take the risk.

Why do you insist on arguing every second point made on this Board whether you know anything about it or not?

I am looking for a solution here to let home owners in Canada get access to long-term fixed rate OPEN mortgages like Americans.

The fact that our banking system has been strong will be cold comfort if rates rise a lot. In that case CMHC could face big defaults and many Canadians will lose their homes. If we can find a way to adopt the U.S system then homeowners will not need to default even if rates rise a lot and some investors will simply be locked into low rates (a bother but not a fatal situation).

Lead, Follow or Get out of the Way, I am looking for a hero here not a blocker.

#75 Waterloo Resident on 05.15.15 at 11:10 pm

“A look inside China’s ghost cities” May 15, 2015 CNN Money:

https://www.youtube.com/watch?v=pymVyiB4G8g

now look at that short video and tell me there is nothing wrong with the Chinese economy right now?

A virtual copy of Manhattan, 99.8% empty. Zero people.

#76 NextYear on 05.15.15 at 11:29 pm

They will never raise rate… It’s all a bluff game. They are just talking about rasing rates at the moment and all the economic data coming our is terrible. Everything is “the worst since lehman” so can you imagine what happen if they do raise them. If they wanted to raise rate they would have done it already… They cannot raise rate.

The fed knows rasing rates would prick all the bubble they have worked so jard to inflate. We will have had recession, the recovery and the new recession with rates at zero. The entire cycle with rate at zero… This is where we are at now.

The end of QE is as thight as it is going to get… Soon will be time to ease again and They will start QE4… It will be BIgger than 1-2-3 combined

#77 Christopher Lackey on 05.15.15 at 11:35 pm

@72 Waterloo Resident

I think your 100x Lehman claims re: China are somewhat hyperbolic. China has been corrupt, autocratic, and because of this, impossible to value for years now. Humanity is going through an experiment mixing a one party authoritarian state with rampant speculation and loose monetary policy. But the shadow banking sector, the great wall of printed trillions, the empty brand new cities (not to mention several fly by night north american stock market listings of china based companies) have existed for years now and financial armageddon just has not happened. China is too big to fail. They have the most gold, the most USD$, and if you go anywhere in the third world they are building infrastructure and buying up hard assets like crazy. Yes there is a tech bubble 12 new chinese tech billionaires have been minted in 2015 but have you looked at the Netflix (18x book value, 137x earnings) chart lately?

#78 [email protected] on 05.15.15 at 11:42 pm

#69 Sheane Wallace on 05.15.15 at 10:43 pm
And when you find me a house in Germany maid out of wood call me.

People built with masonry and stone, buildings are built to last for centuries. I have never met a German who built a home to last only for a single lifetime. At certainly they don’t spend 17 k yearly in repairs or live in basements.

But we play hockey…
———
Cool story bro….. What about all the chalets and Bavarian cabins. Lol idiot

#79 Landless Larry on 05.15.15 at 11:54 pm

Garth

Isn’t Canadian property ownership just another form of condo strata style ownership……

The government owns the land and you only buy/sell the right to use it, subject to you forever paying increasing but unpredictable property taxes (ie strata/monthly fees) and whatever else the feds decide you owe, maybe special assessments in the future????….in fact once they have you trapped, you basically have to do whatever they say….

#80 Mark on 05.16.15 at 12:00 am

“[U.S.] Banks cannot and mostly do not take the interest rate risk associated with that.”

The facts speak differently:

http://www.uni-konstanz.de/FuF/wiwi/franke/frankehome/09%20ifmmfoe%20seminar/Seminar_MT_Kohler_Haufl.pdf

I’d refer you to page 34 in particular. Huge amount of maturity transformation in the US banks/banking system. And its not like those mortgages just magically went away with the 2008 financial collapse.

Long end of the curve blows out, the US banking sector is destroyed once more. And this time around, there’s no bailout possible.

As for spreading the risk, well, as the 2008 incident taught us, it doesn’t really work as well as advertised. As destroying the investor base in the loans means that it thus becomes impossible to create new loans.

The Canadian system destroys the borrowers for taking on excess interest rate sensitivity in their loans through excess leverage. Which spreads the risk more broadly and protects the intermediaries and loan investors from interest rate risk.

Yes, its true, a system in which 30-year term loans existed might allow borrowers to borrow more over longer terms with confidence. But is that really good for the economy?

we can find a way to adopt the U.S system then homeowners will not need to default even if rates rise a lot and some investors will simply be locked into low rates (a bother but not a fatal situation).

Well anything that purports to protect over-leveraged home owners from the true consequences of their irresponsibility can’t possibly be a good thing for the economy. Default is a natural part of the overall credit cycle.

Besides, we know that, in the US, at the end of a mania, most people don’t even take the long-term fixed rates, but go for the teaser adjustable rates. So why would the most vulnerable population in Canada take a higher-interest-rate long-term loan? Why would behaviour be different if such a product were available? I’m not advocating against such loans being legal in Canada, but I’m not convinced that repealing those sections of the Canada Interest Act would actually accomplish anything.

#81 Mark on 05.16.15 at 12:03 am

“The solution to the Vancouver and lower mainland land shortage is quite simple.”

What lower mainland/Vancouver land shortage? Ever looked at a map?

#82 Godth on 05.16.15 at 12:33 am

#71 sockeye sam on 05.15.15 at 10:49 pm

lol, you were the one crying to Garth about your big problems. We live in a world of trouble, yours doesn’t even register.

Have fun driving around in circles for the sake of greed. hahaha.

Ding, thanks for the ride driver.

#83 NEVER GIVE UP on 05.16.15 at 12:44 am

#11 Heisenberg on 05.15.15 at 7:12 pm
@ #3 NEVER GIVE UP

The CBSA doesn’t usually do inspections of random containers. With a 3% inspection rate, they focus on the ones that are suspicious or are associated with suspicious parties.
If you’ve been inspected several times, it’s for good reason.
—————————————————————-
I have been importing since 1985. I have imported no less than 600 times in that period. Not always full containers. I have never been charged with any crime in my life. Not even a bag of weed! I do not fit the profile of a criminal in any sense of the word. I travel freely with no unusual frequency of inspections.

#84 NEVER GIVE UP on 05.16.15 at 12:53 am

#27 Joe Schmoe on 05.15.15 at 8:30 pm
#3

Get a better broker and use more specific tariff codes for your imported goods.

There is much trade action against China globally and it is spilling over as circumvention into other emerging Asian countries.

What you are bringing in may be subject goods so watched closely.

You can get pre-determination letters from the CBSA if you explain what you are doing/bringing in, and the company you are buying from have a “clean record” or willing to subject to CBSA audit protocols.

I think the CITT may outline some of this process.
————————————————————
I bring in Steel Shelving and Ladies Hair Accessories from China. Dollar store stuff. Pretty benign.
I use a broker ever since they started charging for inspection. Prior to that I used to clear all my goods myself. It was a day faster and $80 cheaper.
Also the Tarriff codes are correct. Over the years I have had 2 audits for tarriff codes. They corrected me a few times and agreed other times. They refunded me money for over paying on the corrections! Never have I tried to cheat the system. It is too important to me. It is my livelihood. I don’t want to be the bad guy in their system.

#85 NEVER GIVE UP on 05.16.15 at 12:57 am

#28 Cici on 05.15.15 at 8:33 pm
#3 NEVER GIVE UP

I feel for you, that’s a friggin’ joke. Why did they send the container back to the shipping company. That shouldn’t even be legal.

Pathetic…you would think that in a slowly sinking economy they’d be doing everything they can to HELP small business…after all, if all the little guys stop bailing out the ship, the whole sucker goes down.
——————————————————-
My take is that the culture of our Governments are hostile to small business.

The system is gamed in favour of large operators.
Small business is the big driver of employment but Governments don’t realize this or can’t get something favourable back from a lot of small operators.

It is easy to get brown bags of money from the big guys. Just like Brian Mulroney and friends.

#86 Kreditanstalt on 05.16.15 at 1:12 am

“I’m pretty certain the bond market knows more than the geniuses posting here.”

Well, at some point reality (and gravity) has to assert itself…whether or not it follows the desired path. Even if those saying it are not popular.

This Ponzi is, by its very nature, dysfunctional. Central banks, whose mandate is to rig markets and prices, are boxed in whether it is popular, reasonable, expected ot not.

#87 NEVER GIVE UP on 05.16.15 at 1:17 am

#11 Heisenberg on 05.15.15 at 7:12 pm

The CBSA doesn’t usually do inspections of random containers. With a 3% inspection rate

Actually after calling the CBSA Supervisor who is quite open and friendly, He says my inspections are random. However he hinted that there is a group of “trusted” importers “READ big importers like Canadian tire, Loblaws” that seldom are inspected. So that leaves all the little guys to be abused at a much higher rate that averages out to 3%.

Anyway how can it cost $2500 to open a container and empty it and fill it up again.
I spend no more than $350 on labor to empty my containers.
And the CBSA says the charge is all to the independent operator that does the labour. None of this charge is CBSA inspection charges.
Why can’t I pay the CBSA $1000.00 to send a couple of officers to my warehouse to inspect the unload so I don’t incur damages to my goods?
Unload reload and unload again in one week? Sounds silly.

#88 Kilby on 05.16.15 at 2:25 am

#33 carl on 05.15.15 at 8:59 pm
Garth, is it all just about keeping money. Is that all there is? Can’t we spend it to make us happy once in a while?
+++++++++++++++++++++++++++++++++++++
One of the most sensible posts here in years, money is nothing without happiness, Deepak Chopra wrote a book about wealth conciseness years ago. Makes sense now after years of more, more more. One needs a life beyond talking and worrying about wealth all our waking hours. Saving is important but so is living.

#89 A Yank in BC on 05.16.15 at 2:26 am

#66 Jerry Mander on 05.15.15 at 10:35 pm

“by islands…I meant Vancouver Island….”

Sorry Jerry.. ain’t gonna happen. The well-documented engineering challenges that would have to be overcome to build such a causeway are enormous and would be extremely costly to solve, if it’s even possible to solve them. It’s also estimated that the toll charged to cross would be prohibitively expensive as well, probably on the order of several hundred dollars for a passenger car.. one-way.

#90 Don Derc on 05.16.15 at 2:42 am

1) The bank has reinforced this with some candy. It’s introduced a four-year, fixed, locked-in mortgage with an intro rate of just 1.99% for the first nine months. Hmmm. Now why would the bank do that? Why do all the banks want people to lock up their mortgages even when rates are destined to rise starting next year?

Answer: Because of the “intro rate”. Who cares how long you lock up – the contract says the rate will change (higher) after 9 months. Same behavior as the yanks in 2007 with the NINJA loans. Math test – $200,000 mtge at 1.99% vs $200K at 3% (after 9 months). What are the 2 monthly payments for each scenario? Are Cdns that tapped that they can’t afford the mortgage after 9 months and a new (assumed) rate increase? Yikes!

2) …pay the three month penalty, refinance with the bigger discount and get the mortgage back down again. Long-term variable always wins.”

Answer: Don’t! Lock in for 5 years. China, the EU are all at the bottom. A slow economic recovery spells a slow death for highly leveraged home owners (as rates will dutifully climb). It’s a pyrrhic victory for the lending CORPORATIONS. What does the gov’t have against the middle class anyways?

We have pooped the bed in predicting the economic catastrophes specifically, but are certainly on the mark in the generalization department of the deterioration of real estate for the average home owner. I think even the landlords are feeling the heat. Batten down the financial hatches people. I hope we are all doing well this Christmas. Why do I get the feeling that the people who should be reading this blog don’t?

#91 Ralph Cramdown on 05.16.15 at 4:04 am

I’m not one of those people who say rates won’t be raised because governments can’t afford it. I believe that there’s some members of the Fed who want to raise soon, or even last year. But the Fed chair has been pretty clear about it being data driven. Data has been iffy for a few months now, with bulls offering more excuses (weather, again! port strike!) than conviction. Restaurant and bar spending is up. Is that the bulls, or the bears?

European QE does not operate in a vacuum, and will hold down US bond rates. Japan, too, is easing, as is the State That Must Not Be Named — though, given its capital controls, that effect on global treasuries is a bit tougher to predict.

Locally, the theory that Canadian manufacturing will pick up the slack from the oil patch took another big hit this week. The beatings will continue until morale improves.

#92 Ralph Cramdown on 05.16.15 at 4:09 am

Blue chip, sir, or red chip?

https://www.frbatlanta.org/cqer/researchcq/gdpnow.cfm

#93 Julia on 05.16.15 at 7:14 am

#12 Shawn
Not sure I understand your question. What i can say is that the IRD calculation has been a concern for many as the calculation has been a “trade secret” for banks. No clear calculation available – I think there are some talks of more disclosure.
That said, my understanding is that if you have 1 year left on your 5 year term, your contracted or posted rate at the time (whichever is higher) is used against the rate for the remaining term (1 year in this example) if that same loan was booked for 1 year at the time you break.

Anyone want to correct my understanding?
#13 Kyle
“I thought most of the large banks will offer mortgage ‘porting’ transfers on those 5 year-fixed where they blend the two mortgages rates based on an average of the current home and the new home interest rates. Or is there a penalty hidden in there somewhere?”

Blended rate factor in the penalty.

#94 Monsieur Bouvier on 05.16.15 at 7:34 am

Another great post Mr. Turner! Right on about IRD penalty fee issue. I’d say « it’s another murky grey war zone in which the Bank cooks up the formula, makes up the rules, and has all the weapons». In practice, it’s completely and utterly unfair to clients. Here’s an interesting paper about this IRD issue and what we could, collectively, do about it:
http://www.fciq.ca/pdf/Memoires/penalt_f.pdf

#95 Brandon on 05.16.15 at 7:50 am

Do you think it’s possible for the inflation target to increase to 3 or 4% to prevent the need to increase rates?

That is not the reason for a broader inflation range (and it is not a ‘target’). — Garth

#96 Investorz on 05.16.15 at 8:19 am

“First-time homebuyers usually pack up and move after three years.”

That’s a good point.

“And I’m pretty certain the bond market knows more than the geniuses posting here.”

The 10-year yield fell from 2.28 to 2.14, at the end of the week. If the bond market might know more, but it certainly seems unsure. The next 6 months will be revealing.

#97 Sheane Wallace on 05.16.15 at 9:21 am

#78 [email protected]

Never tell a Canadian, including me, the truth, can’t handle it.

#98 crowdedelevatorfartz on 05.16.15 at 9:53 am

@#89 A Yank in BC

“The well-documented engineering challenges that would have to be overcome to build such a causeway are enormous and would be extremely costly to solve, if it’s even possible to solve them. It’s also estimated that the toll charged to cross would be prohibitively expensive as well, probably on the order of several hundred dollars for a passenger car.. one-way…..”

Re building a bridge to Vancouver Island
++++++++++++++++++++++++++++++++++++

Thats what they said about a permanent bridge to PEI for almost 100 years.
Then, a private company built the 14 km bridge in less than 2 years( ahead of schedule) and under budget( $200 million less).
The bridge toll is less than the ferry that only runs for 6 months(due to ice) per year (and is heavily subsidized by the govt).

The 1st time I drove across the Confedration Bridge I realized “Wow”, 15 minutes to get to the island instead of lineups, 1.5 hour ferry ride, ferry breakdowns, 2 sailing waits……this is awesome!”

The bridge to Van Isle CAN be built. Once you deal with the environmentalists and the BC Ferries workers Unions.

The engineering know how is there. The political will to take on the NIMBY’s ……..not so much. A nice long peak tourist season strike by the ferry workers would do it.

As for cost to travel over the bridge…. Its $150 per car for a single occupant round trip. A Priority Boarding costs double that. Ask a trucker what THEY pay….aprox $750 for a round trip….

They should build a bridge and build it now.

#99 Doug in London on 05.16.15 at 10:34 am

The steerage section of this blog, you say? That’s funny, it’s the quote of the day!

@carl, post #33:
Yes, absolutely, you can spend your money once in a while if it brings you happiness. Many of us, myself included, do so. What you need to do is spend it wisely, saving and investing some of it, and not blowing it foolishly on something like a house you really can’t afford.

#100 souvereigninternational on 05.16.15 at 10:46 am

“When your bank offers to protect you, run.”

I won’t feel protected Until they Can offer 30 year unlocked at 3.69% :

http://www.usatoday.com/story/money/personalfinance/2015/02/12/mortgage-rates/23318829/

Unless one has enough liquidity to pay off the loan in full at the end of 5 or 10 years it is like playing russian roulette. Lost your job – screwed, credit rating down – screwed, mortgage rates up -screwed, property value down – screwed. You signed below, sorry, said [email protected]

My point is all Canadian mortgages are adjustable. These during GFC in US would be considered subprime. It’s a subprime country with big HELOC (to be called in soon) to boot. No jingle mail for you Canadians either, just bankruptcy, they got you by the….

#101 james on 05.16.15 at 11:00 am

Isn’t it great that Harper and his gang of lapdogs have “abolished” the long gun registry?

Of course now we find out they have ensured that ghost copies of it exist everywhere.

How else to have the Bill C51 police state Harper has so many moist dreams about?

This is how you are being played with, conservatives.

Harper manipulates you into thinking big government is bad.

And secretly,quietly is ensuring that your private details are his to use any time, any way he wants.

http://www.cbc.ca/radio/popup/audio/player.html?autoPlay=true&clipIds=2667286537

Don’t think about voting for those other “scary” parties!

All Hail Our Great Leader!!!

#102 Rainclouds on 05.16.15 at 11:22 am

#89 Yank

Incorrect from a technical perspective.

Its very doable, IF you ignore the arrogant but miniscule governing body (Island “trust”) on the effected Gulf Islands.

http://www.canada.com/victoriatimescolonist/news/story.html?id=af4b487c-f019-44c3-bde8-6958c7866833

#103 sockeye sam on 05.16.15 at 11:25 am

I love foreign ownership in Vancouver.Bring it on! A petition came around my house yesterday. My neighbors are protesting one house being built on two lots, and all the tear downs of old heritage homes on the west side of Vancouver. I didn’t sign it. We’ll just sit back and watch all this CASH roll in for the next five years. I’m loving it! One good thing that could come out of all these empty houses , no more traffic and no line ups at the stores because everyone will be out of town.
DING DING ,next stop Monte Carlo.

#104 Kris on 05.16.15 at 11:29 am

Besides, rates will rise slowly, gradually and smoothly lest the economy be wounded..
——————————————-

Hmmm, very interesting.

Is this the same Garth who stated countless times that there would be no soft landing? Or heck, that “the govt does not set rates”?

Also noteworthy – For weeks/months, this blog was predicting rate increases by late 2015. Now we’re told “.. the Bank of Canada starts to tighten in mid-2016”. Notice how quietly time-frames get pushed out.

Anybody who sits around waiting for rate increases, or for the indebted to feel a shock.. Beware, you may be in for a shock, as the indebted are coddled for another 10years, and the much-awaited housing correction never actually pans out.

#105 roial1 on 05.16.15 at 11:39 am

#66 Jerry Mander on 05.15.15 at 10:35 pm

by islands…I meant Vancouver Island….
——————————————————-
Oh GOD!

Now I must become a “terrorist” and do some bridge or causeway blowing up.

YOU MAINLANDERS KEEP OUT!

I’ll have the ferries sunk too.

#106 Ronaldo on 05.16.15 at 11:39 am

#98 crowdedelevatorfartz on 05.16.15 at 9:53 am

Re: Bridge to Vancouver Island

They havn’t been able to agree on a solution for the Lions Gate Bridge over the last 40 years and still struggling with getting traffic over that short span with the same 3 lanes. I would think that that would be a much higher priority than the link to Vancouver Island which at the moment is underutilized.

“They”, should do a lot of things but that takes money and that is something that has to come from “US”, the tax payers. I look at the fast ferry flop and the millions wasted on that endeavour. I shudder to think what the cost of a bridge to Vancouver Island would end up costing. The current system works just fine and is extremely efficient in my opinion. I have used it many many times.

#107 roial1 on 05.16.15 at 11:48 am

#78 [email protected] on 05.15.15 at 11:42 pm

Cool story bro….. What about all the chalets and Bavarian cabins. Lol idiot
——————————————————–

I strongly suggest that you go over and look at those “wooden cabins”.

You will find that they are so well built that they too last for not years but hundreds of years.
Switzerland is covered in them as is Austria. I have been there and know it well.

#108 roial1 on 05.16.15 at 11:59 am

#89 A Yank in BC on 05.16.15 at 2:26 am

It’s also estimated that the toll charged to cross would be prohibitively expensive as well, probably on the order of several hundred dollars for a passenger car.. one-way.
—————————————————————–

Thts not a problem IF you do it like P.E.I.

They let you go on to their island for free.

You pay to get off. LOL

#109 Mister Obvious on 05.16.15 at 12:00 pm

#98 crowdedelevatorfartz

Below is a link to a rather comprehensive BC government website detailing the feasibility of a ‘fixed link’ from the mainland to Vancouver Island.

The engineering challenges are many times greater than those faced by the builders of the Confederation Bridge across the rather shallow Northumberland Straight (not to denigrate that fantastic accomplishment)

The engineering would have to be on the same scale as “The Chunnel’ between England and France which joins two sovereign nations and cost 9 billion pounds.

It may be fun to think about but it ain’t gonna happen in our lifetimes and it wont be blocked by environmentalists and unions but good old fashion geography, physics and economics.

http://tinyurl.com/8gpgd

#110 Made in BC on 05.16.15 at 12:17 pm

I guess this video of the govt “allowing” banks to be in charge of Canadian money (which is against the law) and lending Canada back its OWN MONEY at interest must be a conspiracy theory. Seems to be a lot of those going around these days. All these facts and figures. Hundreds and hundreds of them…..all phoney and untrue I guess:

https://youtu.be/JuP2hH0Kpro

#111 Made in BC on 05.16.15 at 12:20 pm

Re building a bridge to Vancouver Island
++++++++++++++++++++++++++++++++++++

Thats what they said about a permanent bridge to PEI for almost 100 years.
Then, a private company built the 14 km bridge in less than 2 years( ahead of schedule) and under budget( $200 million less).
The bridge toll is less than the ferry that only runs for 6 months(due to ice) per year (and is heavily subsidized by the govt).
++++++++++++++++++++++++++++++++++++

If they tried to build a “Union Built” bridge to Vancouver Island in the province of Bring Cash – it would cost 37 billion dollars, be 4 years late and cost $200 each way to cross. Made in BC…..

#112 Buddha on 05.16.15 at 12:21 pm

Fixed link you say?

http://www.th.gov.bc.ca/publications/reports_and_studies/fixed_link/fixed_link.htm

Don’t hold yer breath…..

#113 Shawn on 05.16.15 at 12:53 pm

Interest Rate Differential Penalty

It gets smaller as posted rates at the time of break fee rise. So the notion that you should not lock in long term because the posted rate is expected to rise later and cause a higher interest rate differential is backwards.

As posted above:

#93 Julia on 05.16.15 at 7:14 am

#12 Shawn

Not sure I understand your question. What i can say is that the IRD calculation has been a concern for many as the calculation has been a “trade secret” for banks. No clear calculation available – I think there are some talks of more disclosure.

That said, my understanding is that if you have 1 year left on your 5 year term, your contracted or posted rate at the time (whichever is higher) is used against the rate for the remaining term (1 year in this example) if that same loan was booked for 1 year at the time you break.

*****************************************
Julia’s understanding sounds correct. The penalty is calculated based on Initial contracted or posted rate (say five year and apparently the higher of the two) minus the rate today for the term remaining (say one year).

So the higher future rates go, the lower the interest rate differential. But a minimum three months interest applies.

Because the one year rate is almost always way lower than the five year rate you will face a stiff interest rate differential even if rates are flat.

The playing of games with using the higher of the initial posted or actual mortgage rate seems unfair and adds mightily to the penalty in some cases.

Often there is no penalty if you can buy a new house and take a mortgage with the same bank.

If you plan to sell it is probably a bad idea to lock in.

If you are fairly sure that you will not be selling and if you expect rates to rise and especially if the budget is tight then you ought to lock in for probably five years. (The ten year is often too expensive but lately there have been some good deals, a couple of years ago the 10 year was several percentage points higher than the five).

The four year with the nine month into rate of 1.99% also had a specific contracted rate around 2.7% (or was it lower) for the remainder of the term if I am not mistaken. I believe is was a good deal for borrowers.

#114 Karma on 05.16.15 at 1:08 pm

Worth a read

http://business.financialpost.com/investing/look-beyond-retail-sales-for-whats-really-happening-with-the-u-s-economy

#115 Shawn on 05.16.15 at 1:12 pm

Solve the Problem!

#80 Mark on 05.16.15 at 12:00 am
“[U.S.] Banks cannot and mostly do not take the interest rate risk associated with that.”

The facts speak differently:

http://www.uni-konstanz.de/FuF/wiwi/franke/frankehome/09%20ifmmfoe%20seminar/Seminar_MT_Kohler_Haufl.pdf

I’d refer you to page 34 in particular. Huge amount of maturity transformation in the US banks/banking system. And its not like those mortgages just magically went away with the 2008 financial collapse.

************************************
Mark, link did not work. U.S. banks manage interest rate risk and do so in large part by selling off the 35 year fixed but open mortgages. If you don’t think so, maybe sell their shares short.

Can we focus on the problem of how Canadians can access 25 year fixed but open mortgages? This is good for consumers. This would be a god-send if it turns out rates rise. The open part will be unimportant if rates rise but the fixed for 25 years would be a life saver.

The Americans still offer this even after the financial crisis.

Who will be a hero here? Head of CMHC? Finance minister? The big banks?

Go ahead, solve the problem.

#116 NEVER GIVE UP on 05.16.15 at 1:19 pm

#83 NEVER GIVE UP on 05.16.15 at 12:44 am
I have been importing since 1985. I have imported no less than 600 times in that period.
—————————————————–
Sorry I erred on my estimate, More like 200 importations.

#117 Patti B on 05.16.15 at 1:24 pm

Bwahahahhahahahahaha!

“And I’m pretty certain the bond market knows more than the geniuses posting here. ”

I read in the FP this morn that bond traders have lost a half trillion recently because they ‘didn’t see the collapse coming”.

The ‘geniuses here’….have at least as good a track record as the ‘geniuses there’.

#118 mitzerboy aka queencity kid on 05.16.15 at 1:40 pm

happy Victoria day weekend
party on
blogdogs

#119 Nagraj on 05.16.15 at 2:13 pm

“Never smile at a crocodile

#120 kommykim on 05.16.15 at 2:14 pm

RE: #112 Buddha on 05.16.15 at 12:21 pm
Fixed link you say?
http://www.th.gov.bc.ca/publications/reports_and_studies/fixed_link/fixed_link.htm
Don’t hold yer breath…..

I live on an island because I WANT to live on an island. Those people who want quicker access to the mainland can move to the mainland and take their development pressure with them.

#121 kommykim on 05.16.15 at 2:24 pm

RE:First-time homebuyers usually pack up and move after three years

Even in a rising market, it would be cheaper to rent after paying all the taxes, commissions, lawyers fees, etc, if you move after only 3 years.

#122 Shawn on 05.16.15 at 2:28 pm

Banking Conspiracy theory

Made in BC on 05.16.15 at 12:17 pm

I guess this video of the govt “allowing” banks to be in charge of Canadian money (which is against the law) and lending Canada back its OWN MONEY at interest must be a conspiracy theory.

****************************************
Correct, anti-banking material is a conspiracy theory put forward by nutbars and people who just don’t have a clue about naming and money. Often they are well meaning. Always, they will be destructive to your financial and mental health if you listen to them.

Run screaming away from such material. I mean seriously you mention that the banking system is against the law.

Yes the banks lend some Canadians the savings of other Canadians and charge a mark-up on the interest. Yes the banking system creates money because the same dollar can be lent out again because it gets redeposited. Yes it is all good. It is intellectually interesting. To learn about it you have to go to credible sources.

Meanwhile, maybe buy some bank shares. Don’t have money to do so. No problem, if you have assets and income go get a very low cost loan from the bank and buy its shares. You will likely make money over a period of years. How sweet is that?

#123 Shawn on 05.16.15 at 2:28 pm

oops

don’t have a clue about BANKING and money.

#124 Retired Boomer - WI on 05.16.15 at 2:36 pm

#32 Godth

Great attachment. Even Chomsky says the proposed TPP is mainly protectionism, NOT free trade. That is why my RANT on free trade. Works great if all sides are on the level, if not…well, not so much.

Enjoyed the discussion. RB

#125 Retired Boomer - WI on 05.16.15 at 2:42 pm

Do you trust your Banks?

Do you trust your governments?

Do you trust your neighbors?

No, don’t have my interests in mind. Bank

Yes-No, I do local town, but as we off the home spot, NOT.

Yes, we are all in the same boat (vary by size & age).

back to basics, today

#126 Mark on 05.16.15 at 2:49 pm

“Go ahead, solve the problem.”

I’m a bank shareholder and someone who actually wants to see the housing market collapse so I can buy a house or two cheaply. In cash.

So I don’t see the current mortgage finance system, and the inevitable crash of it, as a ‘problem’.

If you want the honest truth from me — I personally believe that people should be renters and savers until they’re in their late 30s/early 40s. In a normal house price/normal interest rate environment/normal job market, most, after 15 years in the workforce, could accumulate the bulk majority of the purchase price of a house in savings, requiring, at best, only a very modest mortgage.

Government policy should be to discourage credit beyond relatively minimal amounts for consumer consumption, such as on residential real estate. Credit should be largely for business purposes only.

#127 Leo Trollstoy on 05.16.15 at 3:59 pm

I read in the FP this morn that bond traders have lost a half trillion recently because they ‘didn’t see the collapse coming”.

This post confirms Garth’s statement.

Bond traders does not equal bond market.

Try again.

#128 Fluorine on 05.16.15 at 4:04 pm

Not sure if this has been posted yet. Stopped reading about 100 in after the BoC rate arguments turned ugly…

Derelict Vancouver house listed at $1.4m. ‘Unlivable’, with greasy Realtor all over it.

http://www.ctvnews.ca/video?clipId=615293

#129 Nagraj on 05.16.15 at 4:07 pm

Holiday Interlude
“What Victorina Day Means To Me”

Queen Victorina was a little old lady with a round head who was Queen of Britain and the English Isles. (Which are named Guernsey and Jersey, after famous cows. The colours of these cows are the adopted national colour of Canada (a Dominon), beige.)
Many Canadians still miss Queen Victorina because she had everything under control. She would never permit a colonial PM like Harper to sit AS HE HAS! within reach of her personal representative during a Throne Speech. He is supposed to stand, roped off with the Commoners, at the back of the room. Even noblesse oblige has its limits, no more Polaner All Fruit for him! (Which understates Off with his head!)
Queen Victorina and her husband Albert (a skinny nonentity) invented the Xmas Tree.
Many years ago I had occasion to spend the night in an Upper Canada house in which Queen Victorina spent the night. I went upstairs, looked at the various four posters and picked the magnificent one. It was cold in that big house. The ghost of Queen Victorina showed up, laughed and laughed and laughed. (Good thing I’m also an Anglophile. A Habsburg Francis would have pitched me outer winder.)
Once at the pizza parlor two black construction guys from Minnesota asked me for Canadian change. One of ’em said, “What’s with the old lady on your money?” I said, “That’s the Queen of England.” He was gittin mad cuz he thought I was pullin’ his leg. Luckily the pizza guy explained it all. Sort of.
The construction guy also didn’t get why he got more dollars than he gave me. His conclusion: “You people are weird.”

#130 Buddha on 05.16.15 at 5:11 pm

Hi Kim,

I agree!
4th gen. BC’er myself… born on V. I.

Back to sleep.

#131 David Lee on 05.16.15 at 6:25 pm

Finally!

I found something based on data (actual DATA!!) that shows the price growth in Vancouver is based on the high end.

http://research.cibcwm.com/economic_public/download/if_2014-0908.pdf

Note “Chart 7 – Growth in Average House Prices in Vancouver” and the note below: “CIBC calculations based on CREA’s unpublished tabulations”.

Maybe old news to some and maybe you can quibble about the report being written in Sept 2014 or that the high end starts at $1.1M, but it clearly backs up what Mark has been saying about the “sales mix”.

Leo Trollstoy, do you have something to say to Mark?

#132 Ronaldo on 05.16.15 at 6:29 pm

#81 Mark on 05.16.15 at 12:03 am

”What lower mainland/Vancouver land shortage? Ever looked at a map?”

Another thing, just look skyward. No shortage.

Vancouver’s West End where I once lived has a population density of 56,548 per square mile, almost exactly the same as Paris, France with a much larger land area. Nope, no shortage of space in the lower mainland.

#133 Entrepreneur on 05.16.15 at 8:55 pm

I give up, no point mentioning small business. As #46 Mike Edmonton said about grants by the government that outsourced his business. What is that all about?

What is the point anymore? Do not go into small business as what is the point since the government wants to be meddling. What, to improve their figures and show what great leaders they are & get elected at again? Is that what it has come down to, get elected again?

What about the people, about their livelihood, don’t they count anymore? I guess not!!!!!!!!

#134 Smoking Man on 05.16.15 at 9:12 pm

Spontaneous creativity.

The ant walked over my toe, depression of some kind.

It was lost, did everything its programming told it to do.

It had no fear or worrying about a big foot crushing it. It was ready for the next stage.

He had big needy eyes , a microscopy tear.

I said to it.. What’s bugging you dude.

It said , I can’t measure up, I’m not worthy.

I said. Time for you to take a class in bullshit and alpha male menship.

It didn’t understand.

Magnifying glass time.

#135 JimmyJoe on 05.16.15 at 9:24 pm

Sir, interest rates will not go up!! To do so will crash the economy. The US is actually in recession, 2 quarters of negative growth so how the hell can they raise interest rates??

Were rates to increase in Canada, housing prices would plunge and we’d be in a depresion worse than 1929…

You know that central bankers can’t increase rates…why do you keep on with this?

Truth be known, and I’m sure you are aware, when the economy in the US gets really crappy the next while what will actually happen is QE4 ..

(guess this post will be deleted!)

The US is not in recession and GDP was positive in the last two quarters. A clear majority of economists believe the Fed will move this autumn. — Garth

#136 Randy Randerson on 05.16.15 at 9:37 pm

#131 David Lee on 05.16.15 at 6:25 pm

Interesting, it actually supports what Mark has been saying along. Now why didn’t Mark every post up this link to prove his point, and not to mention shut realturds up.

#137 hohoho on 05.16.15 at 9:39 pm

> … there is a group of “trusted” importers “READ big importers like Canadian tire, Loblaws” that seldom are inspected.

it’s all about risk management, it certainly make more sense to me that Canadian Tire and Loblaws have much lowest risk than small/individual importers.

> … I spend no more than $350 on labor to empty my containers.
And the CBSA says the charge is all to the independent operator that does the labour.

Why don’t you bid on their next contract? sounds to me like you’ll make a ton of dough and won’t ever have to import dollar store stuff again …

#138 Obvious Truth on 05.16.15 at 9:51 pm

Sounds like the new Canada means work for the government, be a good corporate lap dog, buy houses or trade stocks.

Ideas, and those who want to take risks to make them reality are not needed.

Results of this apparent policy are starting to show up in the data. It’s why the boc will be powerless. Change will have to come with hard policy decisions.

#139 What about the people on 05.16.15 at 9:53 pm

#133 Entrepreneur

I give up, no point mentioning small business. As #46 Mike Edmonton said about grants by the government that outsourced his business. What is that all about?

What is the point anymore? Do not go into small business as what is the point since the government wants to be meddling. What, to improve their figures and show what great leaders they are & get elected at again? Is that what it has come down to, get elected again?

What about the people, about their livelihood, don’t they count anymore? I guess not!!!!!!!!

——–

Everybody is on his/her own. Everybody is responsible for his/her livelihood alone.

Businesses (big and small) or governments (big or small) are not in the business of taking care of the livelihood of employees or citizens.

#140 Obvious Truth on 05.16.15 at 9:55 pm

Canada v Russia tomorrow. something to look forward to. Will harpo fly in and drop the puck and maybe the gloves with vlad.

#141 itshere on 05.16.15 at 10:04 pm

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

#142 45north on 05.16.15 at 10:26 pm

Mark: The Canadian system, which features rapid recognition and liquidation of inadequately capitalized mortgages, minimal to no maturity transformation performed by the banking system, and vesting the risk of borrowing properly with the borrowers, is far more stable in comparison to the mess that exists in the US.

Whoever brings this to Canada right now so all can lock in will be a national hero if rates rise.

I’m all in favour of free markets, and little government regulation, but the last thing I think Canadians should want is a US-style banking system, where banks speculate on future interest rates in the ordinary course of business, and the government is heavily involved (its bad enough that the CMHC exists in Canada!). If Canadians want to protect themselves against renewal interest rate risk on residential mortgages, the best way to do so is simply not to borrow as much!

lucid
http://www.merriam-webster.com/dictionary/lucid

#143 Smoking Man on 05.16.15 at 10:38 pm

33 years married to a raving phycopath , today is our university..

My kids often ask me why.

I say , low boredom tolerance.

They need to google it.

#144 Smoking Man on 05.16.15 at 10:49 pm

When you give no shit if its head or tails..is the day when you become a man

#145 JimmyJoe on 05.16.15 at 11:27 pm

“The US is not in recession and GDP was positive in the last two quarters. A clear majority of economists believe the Fed will move this autumn. — Garth”

If you believe the bogus numbers from the US then they are not yet in recession..But, you know the employment, manufacturing, retail sales etc numbers are BS..

Furthermore.a clear majority of economists have been saying the same as you for the past 5 years… that interest rates would be going up the next quarter…and on and on..

They will not go up. Qe 4 will happen first…likely late this year or early next..about the time US and Canada goe into official recession..

Yeah, sure. — Garth

#146 waiting on the westcoast on 05.16.15 at 11:28 pm

#88 Kilby on 05.16.15 at 2:25 am

One of the most sensible posts here in years, money is nothing without happiness, Deepak Chopra wrote a book about wealth conciseness years ago. Makes sense now after years of more, more more. One needs a life beyond talking and worrying about wealth all our waking hours. Saving is important but so is living.

~~~~~~~~~~~~~~~~~~~~~~~~

While I agree that our consumer oriented society is far too obsessed with “things” driven by some great advertising, just remember that DC is selling something too…

He makes a lot of money telling us to let go of those things and we can do that by buying his book, going to his speaking events, and even doing Yoga in his branded studios. Really – quite a smart guy!

#147 BlackDog on 05.16.15 at 11:34 pm

Bottom Feed. This I must be. Now they are taking on the whole US government. Fools. They call themselves Canadian, but reality is they have something to prove in the land of the free. And because I challenge them, as a Canadian, I am bottom feeder.

You are going to delete this aren’t you GT?

#148 BlackDog on 05.16.15 at 11:48 pm

Ostracization sucks. That is all I have to say… brings back crappy childhood memories…people suck, but we are all the same.

#149 BlackDog on 05.16.15 at 11:56 pm

Smokie? Thank god for JD man. Never lets you down…never not a friend.

#150 Sheane Wallace on 05.16.15 at 11:58 pm

BOC will cut.

US will raise with 0.10-0.25 (remember these numbers…) within a year and stay there for a while.

There won’t be QE4 for another year, but it is coming,

#151 waiting on the westcoast on 05.17.15 at 1:23 am

#145 JimmyJoe on 05.16.15 at 11:27 pm
“If you believe the bogus numbers from the US then they are not yet in recession..But, you know the employment, manufacturing, retail sales etc numbers are BS..

(Snip)

Furthermore.a clear majority of economists have been saying the same as you for the past 5 years… that interest rates would be going up the next quarter…and on and on..”

While I cannot predict a recession, I can tell you that my businesses which are operating in 4 different states on both coasts are growing at 20%+ for the past two years after some pretty stagnant ones.

I realize that there are mixed messages from the stats but my businesses are up and my employees are pushing for more $$$. They wouldn’t feel that confident if they were as worried a as you sound.

#152 NEVER GIVE UP on 05.17.15 at 2:48 am

#137 hohoho on 05.16.15 at 9:39 pm

> … there is a group of “trusted” importers “READ big importers like Canadian tire, Loblaws” that seldom are inspected.

it’s all about risk management, it certainly make more sense to me that Canadian Tire and Loblaws have much lowest risk than small/individual importers.

And the CBSA says the charge is all to the independent operator that does the labour.

Why don’t you bid on their next contract? sounds to me like you’ll make a ton of dough and won’t ever have to import dollar store stuff again …
————————————————————–
And join the gang of thieves just because they stole from me?

I am getting older now and I have to live with myself and my decisions. I didn’t take the easy way and I have suffered financially for it. But I am happy with the way I have lived.

I would not take pride in ripping off small businessmen even with government approval.

Whenever someone gets a contract from government that keeps out competitors you make a lot more money but you are stealing from others.

There is no other word for it.

#153 TRT on 05.17.15 at 3:27 am

@smokingman

What about red or black?

#154 Karma on 05.17.15 at 11:11 am

This is applicable on so many levels of the comments posted on this “pathetic blog”. Absolute must read:

“How Politics Makes Us Stupid”

http://www.vox.com/2014/4/6/5556462/brain-dead-how-politics-makes-us-stupid

#155 waiting on the westcoast on 05.17.15 at 12:21 pm

#154 Karma on 05.17.15 at 11:11 am
“This is applicable on so many levels of the comments posted on this “pathetic blog”. Absolute must read:

“How Politics Makes Us Stupid”

http://www.vox.com/2014/4/6/5556462/brain-dead-how-politics-makes-us-stupid

Wow – loved this article. As you point out, we all do it to some degree. We need to rationalize our own choices.

I like to think of Vancouver’s housing market as the same experience as the first Internet gold rush. Buffett didn’t buy because he could not see the value and was mocked. The Internet herd was making vast sums of wealth for a while. Then, the economy shifted and those people were considered poor judges of businesses and Buffett was revered for his prudence.

In a way, they are both correct. One is more of a momentum trader and the other is more of a value investor. Both can make money and follow different rules but are not often correct at the same time.

Thanks for sharing…

#156 westcanguy on 05.17.15 at 12:37 pm

103 sockeye sam on 05.16.15 at 11:25 am

“DING DING ,next stop Monte Carlo.”

______________________________________________

They too, will tire quickly of your Paul Harvey stories.

#157 Vancouver looking on 05.17.15 at 1:34 pm

Just sold my house and looking in Vancouver. Maybe they are lying to me but I have been to three new developments, at each one, over 65 percent sold. The comment from sales person was many people are buying two or three and renting to their kids, these units are not cheap, $700,000. I wonder were the money comes from.
I do not have the answers but 40,000 people a year move to BC so they have to live somewhere!
I will rent for a year and see what happens
Hopefully next year I can afford a place, but I personally think I will never get back into the housing market.
Looking for a sugar momma

#158 Flippin' Vancouver on 05.17.15 at 1:38 pm

http://www.vancouversun.com/business/real+estate+market+spurs+flurry+flipping+West+Vancouver/11060089/story.html?google_editors_picks=true

“…The Real Estate Board of Greater Vancouver reports that a typical detached home in West Vancouver sold for $2.23 million in April 2015 — up almost 11 per cent in six months and up almost 50 per cent over five years. …”

#159 eddy on 05.17.15 at 2:19 pm

Bottom feeding will have to wait for a buyers market
Ask grandpa what that is

#160 crowdedelevatorfartz on 05.17.15 at 2:53 pm

@#106, 108,109,111

Yeah, the NIMBY activists would be out in droves to protest as per usual. When has that ever stopped a politician with a grand idea (LNG, BC Hydro Dam, etc.).

As for the 30 year old study saying its not feasable. Tell that to an Engineer.
And the cost…. Private sector would build it….PPP’s seem to be all the rage theses days.

As for it being built by the govt and 4 years overdue, and billions over budget……Like Translink? I couldnt agree more…

However it would be built by the private sector with union labour. Non strike clause/penaties., etc.
A contract is a contract.
Build it for the agreed price in the agreed time or be sued.

#161 Chasicakes on 05.17.15 at 4:46 pm

So everyone here in Van believes that the lack of data on foreign ownership means that it is higher than the government wants them to know, as opposed to the number is actually inconsequential and if the truth came out it might correct prices here in Vancouver. SIGH

http://www.vancitybuzz.com/2015/05/province-no-plans-to-collect-data-on-foreign-real-estate-investment-bc/

#162 Entrepreneur on 05.17.15 at 4:48 pm

#139 What about the people…read #46 Mike Edmonton whose self-employed business competition was funded by a government grant. How is that suppose to give small business a fighting chance?

Government in power should be neutral. Leave capitalism to the people but only with rules & regulations by government (to protect the people & environment not for their self-interest). As if that is going to happen, dream on.

The way we are going the cycle of recessions will just continue & progressing worse. When you have a recession that means the system is not on the right path. Simple addition and subtraction. I guess the government must be using a calculator and not looking at the whole picture.

With government intrusion into small business, it drives away the spirit. As anyone with a small business knows the endless hours, money, paperwork and commitment. The spirit is killed by government issuing grants with the same business style. Might as well go work at a big box store.

Just ask #46 Mike Edmonton if will ever start another small business in the near future. I bet his energy level is way down.

#163 devore on 05.17.15 at 7:26 pm

#75 Waterloo Resident

“A look inside China’s ghost cities” May 15, 2015 CNN Money:

https://www.youtube.com/watch?v=pymVyiB4G8g

now look at that short video and tell me there is nothing wrong with the Chinese economy right now?

There are big problems with EVERY economy right now, China included. They’ve expended massive amounts of capital, energy, materials and labor hastily building up infrastructure and real estate. That in itself is not problematic.

A virtual copy of Manhattan, 99.8% empty. Zero people.

Zero people, today. Every year, 10s of millions of people move into large cities in China. In 4, 5, 6 years, these “ghost cities” will have people and businesses in them, as has happened to many such sites already.

#164 Lotus YVR on 05.17.15 at 8:16 pm

Wake Up..Bloggers!

#165 Rexx Rock on 05.18.15 at 12:24 am

# 3 Never give Up.
The CBSA does this to justify their job and make tons of money for the goverment.In time it will be 50% or more.When countries go broke the goverment have to find more ways to steal from the people their governing.Mafia style goverment is part of Canada’s culture.You ain’t seen nothing yet,HST will be over 20% in many provinces in the next few years.

#166 straight six on 05.19.15 at 10:20 am

Blame HG, advertising, reality TV.. and the human condition.
If it’s indeed the hungry years we miss (as songwriters have reminded us) then real happiness must be driving an old car, getting to know your mate.. and being debt free!

housewives of vancouver: hahahahhahahaha
nexxxt.