Dogmatic

DOGMATIC modified

Poor little doomer lambs. They are so lost, dragging around their fleecy bags full of gold nuggets, Cottenelle, ammo and Chicken-of-the-Sea cans. Always expecting Armageddon, warning of economic collapse, too fearful to invest in anything they can’t lick or carry. Theirs is the dominion of fear.

Millions of people never recovered from 2008. Some lost money, of course, by foolishly selling into a storm of selling. But most just lost their faith. We don’t deal with reversals too well, especially when they involve money, and are always looking for things to blame. These days the dogmatic doomer lambs have a long list, including Boomers, capitalism, 1%ers, central banks, financial guys and, topping the list, America.

For as long as this pathetic blog has existed, born as it was out of the ashes of 2008, we’ve been told America is finished, its currency will be wallpaper, markets are rigged and the government’s lying to us. Countering that I have insisted the US economy would rebound and that you should own a piece of it. When the loonie was above par and houses in Phoenix were 70% off, I suggested buying a few. Then the advice was to ensure you had more invested in US and international assets than Canadian ones.

So where are we now?

This week the Fed surprised nobody by saying interest rates would not change this month. But they will soon – in September, economists still believe. In fact, a consensus suggests there could be two increases by the end of 2015 of a quarter point each. That will boost the Fed funds rate by a factor of four. (More detail on this tomorrow.)

The Bank of Canada will not immediately follow suit, but it’s inevitable this will occur in 2016. Nonetheless, the bond market will react, which means you have already seen the cheapest five-year mortgage rates of your life. This blog now reminds everybody there’s a negative correlation between rates and house prices. Make sure you tell your daughter.

The point is the US central bank would not dare raise rates if the American economy could not withstand the impact of tighter monetary policy. The Fed is doing this because (a) all that cheap money is no longer required to relight the nation and (b) it wants to ensure sustained growth without too much inflation. So, rates will move gently and inexorably higher over a year or two or three, and with each month that passes, the doomer lambs will look more and more extreme.

Here are five of the many reasons why.

Millions more people have jobs than in 2009, when the real estate-induced collapse decimated the American middle class. In 15 of the last 16 months more than 200,000 new positions have been created, including 280,000 in May. The jobless rate has gone from north of 10% to the mid-5% range. This is the lowest since the spring of 2008.

And look at what’s happened to claims for jobless benefits:

JOBLESS CLAIMS modified

‘But aren’t these all just McJobs?’, the doomer lambs cry. Sure, some are – just like in Canada where part-time jobs are the first choice of employers before they convert to full-time work. But the fact is, not only has the US economy thrown off three million new positions, but average hours worked have popped and so have wages.

Average pay climbed 4.2% in the first quarter from last year (twice the rate of growth here), which is the best advance since 2006.

AVERAGE WAGES modified

So what happens when millions more people are working, and they’re making more money? Simple. They spend more. That’s what a growing economy is all about – increases in income and expenditure, as opposed to the Canadian model, which is all about debt.

Look at car sales south of the border. This is the best in over a decade:

CAR SALES modified

Of course, the real test of faith in the future in a country which has a real estate collapse is the flow of money back into housing. American real estate prices have regained about half the ground lost in the debacle, which is a sustainable, reasonable advance. Now the home-building industry has just seen the best two-month numbers in seven years. In fact, April was the sweetest month since 1990, when most of today’s Millennials were in Huggies:

NEW HOME SALES modified

And this is not likely to stop anytime soon. Building permits have also shot higher, achieving the best level in eight years. This is a proxy for future development, construction, jobs and sales. And, yes, mortgage rates have already risen in the States in anticipation of the Fed’s inevitable move.

BUILDING PERMITS modified

By no stretch of the imagination is America the new Utopia. Far from it. But a wise investor will ensure they have at least 20% of the growth portion of their balanced portfolio exposed there, as opposed to 17% in Canada. Wise borrowers will anticipate higher rates in 2016 and beyond. Wise homeowners will understand the equity-building party is coming to an end. And dogmatic little doomers will just have to worry about climate change and the gene pool. Plus chemtrails.

Should be enough.

182 comments ↓

#1 Broke Dick on 06.18.15 at 4:21 pm

Sorry but this is much too early.

#2 Lee on 06.18.15 at 4:24 pm

Now you’re taunting and mocking.

#3 Middle Man on 06.18.15 at 4:24 pm

Garth I respect your views have read your blog along time but the current system is broken if so many are failing.

How does knocking the NDP and promoting the same old system allow your readers to think you aren’t just another fat cat winning from a system that has only the 1% best interest at heart.

If you really want to make a difference get back into politics.. you have been on the sideline for way to long..

#4 I NEED VICTORIA STATS!!` on 06.18.15 at 4:31 pm

Long shot here- but can someone please provide me with some stats on the local Victoria real estate market?

#5 Dean on 06.18.15 at 4:31 pm

Yabut,

I still have grave concerns regarding the following,

Will the Kardashians be OK after Bruce became Caitlyn?

Will the world stop revolving if Donald becomes president?

How is Bitcoin still a thing?

When will Toronto get a pro hockey team?

Even when FIFA cleans up its act I still won’t be able to name a soccer player.

If Garth retires from blogging where will all the doomer’s go?

#6 Randy on 06.18.15 at 4:35 pm

Nice picture of Bruce Jenner’s cats…

#7 Nemesis on 06.18.15 at 4:36 pm

#Meanwhile,BackInFortMac,Or… #”Two?”…

http://youtu.be/fJIjoE27F-Q

#8 Ponies Pilatus on 06.18.15 at 4:38 pm

Looks like most data is reaching post 08 levels again.
Also, it’s been almost 7 years now.
Irrational Exhuberance, anyone?

#9 JacqueShellacque on 06.18.15 at 4:40 pm

Garth, your advice is worth its weight in gold. I’m glad you don’t just give canned answers.

#10 heyde heyde high yo on 06.18.15 at 4:42 pm

when I read yesterdays post, I thought, Welcome to Bob Rae Land and let us not forget taxing the rich means anyone with a job!

#11 Godth on 06.18.15 at 4:43 pm

#2 Lee on 06.18.15 at 4:24 pm

What’s really funny is that he’s invoking ‘faith’ like any good con man. It’s one step away from the “Left Behind” crowd.

The Neoconservative ideology, and neoliberal economics, is a dead man walking but like any other dogmatic zombie they just keep on keeping on. Gorging on games they’ve created and now game for their own personal benefit. Greedy, selfish children that throw temper tantrums when they don’t get what they want. So let’s have war.

An Affirming Flame
http://thearchdruidreport.blogspot.ca/2015/06/an-affirming-flame.html
“Meanwhile, inside the baroque carapace of carriers, drones, and all the other high-tech claptrap of an obsolete way of war, the United States is a society in freefall, far worse off than Britain was during its comparatively mild 1930s downturn. Its leaders have forfeited the respect of a growing majority of its citizens; its economy has morphed into a Potemkin-village capitalism in which the manipulation of unpayable IOUs in absurd and rising amounts has all but replaced the actual production of goods and services; its infrastructure is so far fallen into decay that many US counties no longer pave their roads; most Americans these days think of their country’s political institutions as the enemy and its loudly proclaimed ideals as some kind of sick joke—and in both cases, not without reason. The national unity that made victory in two world wars and the Cold War possible went by the boards a long time ago, drowned in a tub by Tea Party conservatives who thought they were getting rid of government and limousine liberals who were going through the motions of sticking it to the Man.”

So, which of those charts qualifies as dead man-walking, dogmatic zombie, neocon ideology? Or are your shorts too tight today? — Garth

#12 Mister Obvious on 06.18.15 at 4:45 pm

#3 Middle Man

“If you really want to make a difference get back into politics.. “
——————————

I disagree.

While I would love to see Garth back in a federal government cabinet position, that ship has clearly sailed.

Look instead on the bright side. Many more Canadians will benefit with Garth remaining in his current role as sage financial guru, sardonic contemporary blogster and fearless spokesperson for the opposing viewpoint.

#13 canadianinportland on 06.18.15 at 4:55 pm

People talk of another bubble here in portland on account of prices rising sharply again. But, its not part time hair dressers buying their second home. Its professionals who were on the sidelines waiting for the economy to stabilize but are now competing agajnts each other before rates rise.

As well, there is a real fear of a California exodus to Oregon and them bringing their house prices. The economy can handle an influx but there is not nearly enough sipply to meet short term demand.

Consequently, there is a supply shortage and prices reflect that. There is no bubble, just hairdressers upset they are priced out.

#14 Godth on 06.18.15 at 5:06 pm

So, which of those charts qualifies as dead man-walking, dogmatic zombie, neocon ideology? Or are your shorts too tight today? — Garth

Every one of those charts has been, if not been actually outright refuted, opposed by a clarifying analyses by many, many people in your comments section using links. You just see what you want to see, same as everyone else. People call fantasy optimism these days.

I don’t wear shorts when I post.

Of course. It would slow your thinking. — Garth

#15 Gulf Breeze on 06.18.15 at 5:06 pm

Some economists are predicting rates will rise. Others are not. Janet Yellen, has just been quoted as saying a rate rise is dependent on how the economy is performing in September.

This gives her a great deal of latitude to act in any way she chooses, regardless of any past sentiments or apparent biases, come September.

The “depending on how the economy is performing,” trumps ALL other statements she has made. And it certainly lays asphalt over the yellow brick to higher rates that many economists are predicting.

No economist other than Yellen matters. And she has made it clear rates will rise. — Garth

#16 james on 06.18.15 at 5:17 pm

“American real estate prices have regained about half the ground lost in the debacle, which is a sustainable, reasonable advance. ”

Except it is regional. The Fed has warned about a housing bubble re-emerging in many key cities, including SF, San Diego, etc.

Double digit gains over the last 3 years do not bring ‘sustainable’ to mind.

In other areas, not much of a rise.

All real estate is local. — Garth

#17 james on 06.18.15 at 5:19 pm

#13 canadianinportland

There is a big supply issue in Seattle as well. Snohomish and King counties are at 1.6 months of inventory or something like that. Not much is going on the market, making it a bad time to buy.

Not sure why there is a supply crunch.

#18 Freedom First on 06.18.15 at 5:24 pm

Yes, the U.S. and much of the rest of the world has already gone through their housing crashes and financial $$$$$$hit$torms since the GFC. Things are looking up. For them, but not for Canadians, as Canadians learned nothing from the American, Japanese, European, et al, debt binging RE buying orgies, and did the exact same thing. This includes using their leveraging, Heloc-ing, of their RE to renovate and to buy their brand new KIA. Canadians have the same percentage of financial idiots as all the other countries who became infected with the house lusting virus.

#19 gut check on 06.18.15 at 5:27 pm

Yellen has been saying this since at least last August … she just wants to make sure the fundamentals stay strong and then she’ll raise rates.
Well according to all the data that Garth can find the fundamentals have only gotten stronger and stronger! (praises be!)

where have all the increases been?

it’s a snoozefest at this point. throw a dart.
actually it’s easier than that, even, but you have to be able to accept that we left Kansas a LONG time ago. Hell, we’ve even left Oz.

#20 Blobby on 06.18.15 at 5:32 pm

Well I didnt agree with anything you posted yesterday.

But that was a first.. You’re now allowed to go back to posting stuff like this :D

thanks

#21 allaboutdiversity on 06.18.15 at 5:32 pm

All real estate is local. — Garth

Until you start talking about Vancouver and Toronto versus the rest of Canada?

#22 michel leblond on 06.18.15 at 5:34 pm

Chinese buyers spent USD28.6 billions (not millions, billions) on U.S. homes in the 12 months to March. The average price paid by Chinese buyers for a U.S. home is USD 831,000

http://www.theglobeandmail.com/report-on-business/economy/housing/canadians-are-no-longer-the-no-1-foreign-buyers-of-us-homes/article25015007/

#23 NVD on 06.18.15 at 5:35 pm

I agree rates will rise and then continue to rise even in the face of a broader downturn in the US Economy. Capital will flow into the US and Equities will benefit as safety is sought in the US as things fall apart in other parts of the world – ie. Greek default (Spain, Portugal, Italy, Ireland??), China vs. Japan, Ukraine / Russia, Russia coming undone, etc. There will be public pressure for rates will have to rise to curb the exhuberance in the stock market. Canada will likely follow and increase as the US does since they are still our major trading partner and China will not replace that anytime soon. “Average” Real Estate in Canada and the US will suffer with owners sensitive to interest rates.

Don’t fight the Fed. Don’t get caught up in what you think should happen since they keep printing money and all that. Go with the trends and diversify as he says.

#24 None on 06.18.15 at 5:36 pm

“Poor little doomer lambs. They are so lost, dragging around their fleecy bags full of gold nuggets, Cottenelle, ammo and Chicken-of-the-Sea cans. Always expecting Armageddon, warning of economic collapse, too fearful to invest in anything they can’t lick or carry. Theirs is the dominion of fear.”

Garth: Kind of sounds like you’re talking about yourself in relation to an Alberta NDP government. Just sayin….

#25 Mark on 06.18.15 at 5:38 pm

“The Bank of Canada will not immediately follow suit, but it’s inevitable this will occur in 2016”

Inevitable? With RE prices and personal consumption arising from the RE bubble falling in Canada? How exactly does that work? Where does the demand in the Canadian economy come from to create the requisite inflationary pressures to force interest rates up? If anything, the severe consumer demand truncation that typically results from falling RE prices points to much lower policy rates in Canada.

#26 Retired Boomer - WI on 06.18.15 at 5:46 pm

Hmmm… kind of reminds me of a very old Carole King tune called “It might as well rain until September.”

Sure, the US economy is slowly regaining its footing, and maybe Yellin will raise rates 1/4 in September. My point is who gives a dam? For the average American the FED raising rates 1/4 or 1/2 or even a full point affects him little to none if he has no debt, a long term fixed mortgage, or a locked in car term.

It will NEXT time he borrows, if he borrows. I doubt a 1/4 point will much affect stocks either, or bonds as we have had 10 year notes bouncing that far in the last 6 months.

A 1/4 point – how does this affect Canadian buyers? A 1/2 point as well? They can’t be “SO STRAPPED” that a minor adjustment up means much of a thing. If it does, they are in bigger trouble than I can understand.

Sure, Garth I see the 1.5% upward moves, and damage but under a point, merely a rounding error I would guess.

#27 Victoria Real Eatate Update on 06.18.15 at 5:47 pm

The lower end of Victoria’s core area condo market continues to be a down market.

Below are several examples of core area condos that have been sitting on the market for some time, listed at below assessed value, which was last done July 1, 2014.

Since they’ve been sitting on the market lonely and unloved for as long as they have, it’s extremely likely that these condos will sell for less than list price.

This means that these condos will sell for less than last summer’s assessed value which indicates that prices have fallen since last summer.

With several examples of such condos, we can conclude that the direction of the bottom end of Victoria’s core area condo market is down.

The following core area condos are listed at up to 26% below their assessed values:

* 308 – 3460 Quadra St. (2 bed, 2 bath, minutes from downtown)
* 209 – 118 Croft St. (2 bed, 1 bath, blocks from the ocean and downtown)
* 403 – 3277 Glasgow Ave. (1 bed, 1 bath, minutes from downtown)
* 108 – 3215 Alder Ave. (1 bed, 1 bath, short drive to downtown)
* 307 – 1035 McClure St. (1 bed, 1 bath, blocks from downtown)
* (Several other similar listings are no longer on the market.)

Pointing out several examples of properties that are listed above assessed value means nothing. It does not indicate that prices are rising. In fact, you will often find this in a falling market.

Victoria’s core area condo market supports the SFH market. It’s only a matter of time before the weakness of the condo market spreads to the SFH market, where prices are already significantly lower than peak levels reached in 2010.

Canada currently has record-low, emergency level mortgage rates. We can safely say that rates will be rising and that will probably begin within months.

One of the most basic facts about any housing market is that when rates rise, prices fall.

The rate of Victoria’s price decline will speed up when rates begin to rise. There’s just no way around it.

If you’re a mortgage-holder who is currently struggling to make ends meet with today’s emergency mortgage rates, imagine how stressed you’ll be as rates rise steadily (probably 1% per year) over the next number of years.

Buying a property at near-peak prices and emergency rates is never a good idea. Instead of investigating and learning as much as you could, you probably limited your real estate education to what you were told by those who sell houses for a living.

Now look at what you are facing. Those who chose to rent and wait for lower prices will have no such worries.

#28 Mike T. on 06.18.15 at 5:54 pm

Look, I have no agenda and nothing to prove. This information is not secret. Call me whatever makes you feel special inside.

The sun is changing and life is evolving. The elites cannot stop this. But to mess it up they are going to try and cause maximum chaos during the changes.

Peace love and harmony.

In rapport we thrive.

#29 Babblemaster on 06.18.15 at 6:00 pm

“No economist other than Yellen matters. And she has made it clear rates will rise.” — Garth

——————————————————-

Garth, that’s not true. Yellen has just made it clear that she is thinking about raising rates if the conditions are ever right. Or, something like that. She’s been as clear as mud about that.

Believe whatever you wish. It won’t change a thing. — Garth

#30 Babblemaster on 06.18.15 at 6:04 pm

#25 Mark

If anything, the severe consumer demand truncation that typically results from falling RE prices points to much lower policy rates in Canada.

————————————————–

Exactly! I just don’t see where the pressure to raise rates will come from.

#31 yawbawdy on 06.18.15 at 6:08 pm

rent or buy?

http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html?_r=0&abt=0002&abg=1

#32 SWL1976 on 06.18.15 at 6:11 pm

Fancy charts say one thing.

Simple observation of the world around me says another.

The economic collapse is happening right now, some see it, some don’t.

The plan is to fleece us all. Ruling class, servant class that’s it. If you haven’t been fleeced yet you will be.

Thousands of years of history proves what happens to empires as they become overleveraged and delusional. Things are not different this time, actually they are. In the past at least the scattered remains had a healthy planet to carry on and rebuild.

Us doomers haven’t be right yet, but are you prepared for the day we are?

Our only hope at this point is to collectively acknowledge the real problem and work together to address it. However, by reading this comments section one will quickly come to the realization that that is about as far fetched as the middle class coming back

#33 Balanced Portfolio on 06.18.15 at 6:12 pm

For years we were certain that rates would rise
and they didn’t so holding fixed income (e.g. 40%) has been good.

But if you are so sure that rates will rise next year, would you recommending reducing your 40/60 split to something like 30/70?

No, not if you have the correct fixed income mix. Bonds dampen volatility and hedge against equity declines. — Garth

#34 Mark on 06.18.15 at 6:13 pm

“Sure, the US economy is slowly regaining its footing, and maybe Yellin will raise rates 1/4 in September. My point is who gives a dam? For the average American the FED raising rates 1/4 or 1/2 or even a full point affects him little to none if he has no debt, a long term fixed mortgage, or a locked in car term.”

The problem with interest rates rising is that its like a bomb going off in the US financial sector. Short-term funding costs rising against significantly devalued longer-term interest rate sensitive assets. It might not be a problem at a quarter point or a half-point, but just as the speculators front-ran the trend towards lower interest rates (thus creating a self-fulfilling prophecy), the moves higher will be front-run. Already we saw some of this recently, although I believe it will prove to be premature with the US economy slowing and not meaningfully recovering.

The average US citizen, the ones that really matter to the economy, is highly indebted. Whether car loans, student loans, or mortgages, debt is ubiquitous. Meanwhile the debt is owned by an increasingly narrow group of actors. Just as it took severe economic turbulence to mark the peak of the high rate environment, circa the early 1980s, or the low rate environment of the 1930s, it seems likely that a similarily momentus event will be required to mark the end of this era. There’s just been no trigger, no meaningful reform, no substantial liquidation of the excesses in the US financial sector. The higher rate, “happy times are here again” narrative just seems to have very little basis in reality.

#35 Rory on 06.18.15 at 6:22 pm

Garth,
You shuld be counting yourself as a doomer – on Canada. I believe the number of people employed in late 2007 in the US was 138 million, and now it is around 141 million. That does not seem very good considering the population has grown by a lot more than that.

Ah, remember the recession in the middle? The employment comeback has been more than adequate. — Garth

#36 salmon rear end arml on 06.18.15 at 6:23 pm

just once you have talk about the chief
l would like more . its history

#37 Randy Randerson on 06.18.15 at 6:28 pm

Let’s be honest here, no one has a crystal ball that will tell use when the Fed will raise rate. GT doesn’t know with 100% certainty, and neither are the doomers with their “shadow stats” or “food stamp stats”. The only person who has ANY clue is Janet Yellen.

For us regular Joe Blow, the best thing is to prepare for a rising rate environment, by diversifying our holdings to hold both US, Canada and international stocks/ETF’s.

#38 Randy Randerson on 06.18.15 at 6:30 pm

And also, welcome back Victoria RE Update. Don’t let a$$holes here tell you what you can and cannot do on GT’s blog, provided GT accepts your posts.

#39 ronh on 06.18.15 at 6:31 pm

Didn’t the Bernanke say no rate normalization in his lifetime? Sorry dont have link. I guess he will be leaving
us for planet QE in Sept.

#40 Will to power on 06.18.15 at 6:33 pm

“So what happens when millions more people are working, and they’re making more money? Simple. They spend more. ”

Kind of ironic that you don’t see a higher minimum wage as contributing to growth.

Not when it costs jobs, reduces profits and simply redistributes the same capital. — Garth

#41 Herf on 06.18.15 at 6:59 pm

“For as long as this pathetic blog has existed, born as it was out of the ashes of 2008 . . . ”

As I recall, this blog began in spring (April?) 2008 (right after Greater Fool, The Book came out. By the way, have you had any thoughts about producing a Greater Fool, The Movie? You could do a cameo, with a host of Amazon babes by your side) which seems to me, was before the ashes appeared (those came later in the year and/or in early 2009). If anything, your blog predicted some of the ashes that were yet to come.

#42 Smoking Man on 06.18.15 at 6:59 pm

Tylonal

Have I got a story for you. Later though I’m entrertaing some hotties. I’m the only old bastard here at the cromwell pool.

Yet I’ve got the youngest mind

#43 zedgt87 on 06.18.15 at 7:16 pm

Garth is a doomer himself, just on Canadian housing.

Anyone who is invested in markets though will ALWAYS tell you its different this time.

Garth is the classic example of this.

No garth, its not different this time in respect to the american economy and equities.

This speculative asset bubble blown by extreme monetary stimulus will end just the same as the last two, with a bloody explosion. Stating that doesn’t make you a doomer, unless your only referring to Canadian housing lol.

Of course equity markets will correct, but there will be no ‘bloody explosion.’ Investors with a balanced and globally-diversified portfolio will do just fine. I gather that does not include you. — Garth

#44 Squirrel meat on 06.18.15 at 7:17 pm

TAX
http://calgaryherald.com/news/politics/ndp-tables-tax-bill-against-opposition-protests

and

SPEND
http://www.calgaryherald.com/news/alberta-politics/announces+million+additional+dollars+health+education/11147491/story.html

#45 Ray Vasquez on 06.18.15 at 7:18 pm

Most people are so much in debt that when trouble comes, cut hours, job loss, contract work or part-time work from full time work, higher cost of living from essentials that are much more than 2% a year, water, gas, electricity, rent or mortgage payments, property taxes, gas, car payments, car insurance etc. that will be really felt not 50 to 125 basis points rise in mortgage, lending rates.

#46 Scott on 06.18.15 at 7:18 pm

Huh? With everything so awesome in the states why are interest rates still at near zero and the central banks is still flooding the “markets” with liquidity via repurchasing expired bonds in there portfolio. Least we forget there gigantic balance sheet.

I wish everyone in Canadian can see the car sales commercial on TV here. Here’s just one: https://www.youtube.com/watch?v=23jhNNs4Lk8

Their on every Chanel in every state. No credit, no job, bankruptcy, no problem. Just sign here and get a car. No money down.

Yea Garth is just super awesome down here.

#47 Nemesis on 06.18.15 at 7:18 pm

#TheIrony… #TheIrony…

[Reuters] – Wall Street Journal to cut jobs, close bureaus

…”Dow Jones, which has about 5,000 employees worldwide, will close bureaus in Prague and Helsinki and cut jobs in bureaus in Europe and Asia, Gerard Baker, editor-in-chief of Dow Jones and the WSJ, said in a staff memo seen by Reuters on Thursday…

Revenue from News Corp’s news and information business, which accounts for about 65 percent of overall revenue, declined 9 percent to $1.35 billion in the latest quarter.

The company, controlled by Rupert Murdoch, has been diversifying into other areas, most notably digital real estate services.”…

http://www.reuters.com/article/2015/06/18/us-news-corp-redundancies-idUSKBN0OY2CF20150618?irpc=932

#48 Vancouver Troy on 06.18.15 at 7:24 pm

Middle Man

I am tired of people complaining that “the system” only supports the 1%.

I grew up poor, with a grade 12 education. I made the decision to read every book on finance I could carry from the library. I worked hard and invested in stocks and real estate.

Now I’m financially stable. How is that possible in your rigged system?

#49 Raging Ranter on 06.18.15 at 7:25 pm

#4, that was freakin’ funny. Thanks for the laugh.

#50 PM on 06.18.15 at 7:28 pm

However, by reading this comments section one will quickly come to the realization that that is about as far fetched as the middle class coming back

The problem with you doom and gloom bozos is that you think some mysterious 1% conspiracy eroded the middle class when in fact it’s still there, it’s just moved. If you got out once in awhile you’d see that the middle class is growing in BRIC countries.

Technology makes this an markets increasingly global and has allowed wealth to shift. Sure, Canada and the US has lost sweet manufactoring jobs that were the backbone of the middle class 30 years ago but in the mean time India and China have pulled 100’s of millions of people out of rural poverty and into the middle class.

Sure, by our standards factory life in China seems like hell on earth but when life previously resembled medieval peasantry including double digit infant mortality rates and dying of typhus because the nearest doctor is 2 days away then it’s not so bad.

So there is not Illuminati puppeterring the fate of the world. We’re just evolving as a global society. Unfortunately that means the high point of western dominance may be behind us. Doesn’t mean that life is bad, even with a decreasing middle class life is still better these days than before. This global production means you can now get stuff cheaper than ever which is helpful in the face of declining wages. Now if you think that people in other countries aren’t as deserving as Canadians that’s your right, just don’t be surprised when you get called a close-minded bigot.

#51 zedgt87 on 06.18.15 at 7:29 pm

“Of course equity markets will correct, but there will be no ‘bloody explosion.’ Investors with a balanced and globally-diversified portfolio will do just fine. I gather that does not include you. — Garth”

So long as you recognize we are both speculating, you’ve proven why the balanced portfolio rocks. You say its different this time, I say its not. Matters not when diversified though.

It’s not different. It’s the same. A diversified portfolio took a modest hit in 2008-9 and recovered quickly. Investors who ignored the dip lost nothing. There is no 2008 rerun coming. — Garth

#52 Leo Trollstoy on 06.18.15 at 7:40 pm

Thank god I bought multiplex properties in Fl during the U.S. Bust when the CAD was at parity with the USD. What were you suckers doing? Hiding under your pillows?

My arm is sore from patting myself on the back and carrying all these U.S. Dollars.

#53 Gulf Breeze on 06.18.15 at 7:40 pm

#40 Will to Power,

People on low incomes aren’t savers. Every cent they make goes right back into the productive economy. Redistribution of income, in this way (raising minimum wage) curbs excessive flows of wealth into stagnant pools of malinvestment. Money has to trickle down in sufficient quantities, before it can trickle back up. Capitalism, by it’s very nature, has features of a Ponzi scheme. Though the wealthy would have you believe that the pyramid is inverted and they are supporting the masses balanced on their tiny pinnacle, the opposite is true.

Ponzis require ongoing fresh recruits into the bottom tier, through living wages, if they are to remain functional.

Money should be circulating through the economy like blood through the circulatory system, not stagnating in bonds or propping up the Potemkin villages of the Dow, Nascrack, or S and P.

“Stagnant pools of malinvestment”? Like the money small business guy scratch out of their retail ventures, or the profits companies use to finance expansion and jobs? Like that? — Garth

#54 james on 06.18.15 at 7:42 pm

#40 Will to power

“So what happens when millions more people are working, and they’re making more money? Simple. They spend more. ”

Kind of ironic that you don’t see a higher minimum wage as contributing to growth.

Not when it costs jobs, reduces profits and simply redistributes the same capital. — Garth
————————————————————

Why so stubborn, Garth?

If the same capital is “simply redistributed” to more (i.e. lower income) pockets that actually spend it in the economy, not hoard it away in specialized investments or under the mattress, that really does mean MORE capital is moving through the economy and the velocity of money is on the upswing.

Odd that you don’t grasp that.

As many pointed out yesterday, trickle down has no more credibility. Money to the lower earners is more powerful than the same amount of dollars given to the rich.

The research has been well done, the data is in.

What a losing argument to engage in. I believe higher wages come out of the hide of the people creating jobs, who will create fewer of them, with no overall social or economic benefit. You think it’s a Robin Hoodesque leveling of the playing field between the 1% and the rest. History is not on your side. — Garth

#55 Llewelyn on 06.18.15 at 7:42 pm

All that is missing from press releases being issued by the Federal Reserve these days is Bernie Madoff’s letterhead.

Getting an audience to focus on the good news you circulate while your member banks line their pockets is quite a trick .

You do realize the Federal Reserve is composed of twelve groups banks making billions drumming up business for their products? I wouldn’t commit to buy a bicycle on information circulated by banks.

No doubt hundreds of thousands of jobs are being created but the labour participation rate in the United States has fallen from 65.7% in 2009 to an all time low of 62.7 % in 2015. Expressed in simple terms a lower percentage of the labour force available to work in 2015 are actually participating in the American economy. There are demographic reasons for this decline but few experts are bothering to relate this statistic to the claims of economic growth being proclaimed by the Federal Reserve. .

The Federal Reserve tells potential customers of products being sold by their member banks that hundreds of thousands of jobs are being created each month, that the unemployment rate is falling and that the economy is getting stronger.

What they fail to mention is that the number of Americans receiving a subsidy to obtain food under the Supplemental Nutrition Assistance Program (The old Food Stamps Program) increased from 27,500,00 American citizens receiving $36.6 billion in benefits in 2008 to 42,000,000 citizens receiving $72 billion in benefits in 2015. This represents a 12.3% annual increase over the past seven years. What are the reasons behind this statistic?

Just like any illusionist the Federal Reserve gets the audience looking in one direction while the con is played.

The Dow Jones average, an unemployment rate created by leaving out many citizens who have given up looking for work and the number of jobs being created each month are not true indicators economic growth.

Potential investors need to look behind the curtain before jumping in.

#56 raisemyrent on 06.18.15 at 7:43 pm

funny, it just came to me that the only success stories you hear about real estate on the comments are people who by luck, not skill, bought before the bubble and sold at a high (usually to buy some more, thus negating it all). if real estate were such a safe bet, you’d be flooded with specific examples. all realtors are ever able to quote is how properties sell for more than asking.

can’t argue with a stock that’s gone up. but you never see a complete analysis of real estate profits (total interest paid considered, taxes, opp costs, etc.). most people that ‘made money’ speak in relatively vague/incomplete terms and are even subconsciously hesitant to draw the numbers out.
I guess that in a certain way, I still can’t get over how people make such big financial decisions based on intangible concepts and very little analysis.

#57 something on 06.18.15 at 7:50 pm

Garth, I don’t understand one thing. Why Janet Yellen still needs to see more improvement to increase the interest rate. How much jobless claims has to drop to make her happy? I think we are at the lowest level in decades. Could you please tell your opinion at what point(conditions) would be safe to increase rates? I just can’t imagine what would it be.

#58 Gulf Breeze on 06.18.15 at 7:53 pm

Middle Man,

How is that possible in your rigged system? Govt bailouts, Tarp programs, insanely low interest rates, a war based economy in U.S. where countries are bombed back to the Stone Age if they are, ‘out of compliance?’

Those who slap themselves on the back to hard, have to be wary of dislocating shoulders while being slapped upside the head by macro economics.

#59 Lobster Man on 06.18.15 at 7:53 pm

America is truly in recovery mode……highest birth rate in seven years:
http://www.inquisitr.com/2180345/u-s-birth-rate-report-shows-american-women-are-having-more-babies/

#60 Gulf Breeze on 06.18.15 at 7:58 pm

Garth, you forgot to qualify my post with that other old canard, “guys toiling away on the next new tech thing, in their garage.” What about them?

The truth is, most people work for large corporations and the money they make likely goes back to same. Costco is a great example. They pay their employees 45,000.00. Not sure if this is an average or a minimum. Nevertheless, where do you think those grateful, and understandably anti-union employees spend most of THEIR money?

#61 will to power on 06.18.15 at 8:03 pm

“What a losing argument to engage in. I believe higher wages come out of the hide of the people creating jobs, who will create fewer of them, with no overall social or economic benefit. You think it’s a Robin Hoodesque leveling of the playing field between the 1% and the rest. History is not on your side. — Garth”

The curious thing about history is that it (giving more to the bottom group via higher pay) hasn’t really been tried on a large scale. The only thing to come close is alberta paying oil truck drivers etc.. six figures.

So not having been tried before, one is able to present a bias view of history.

#62 Karma on 06.18.15 at 8:07 pm

#19 gut check on 06.18.15 at 5:27 pm
“Yellen has been saying this since at least last August … she just wants to make sure the fundamentals stay strong and then she’ll raise rates.
Well according to all the data that Garth can find the fundamentals have only gotten stronger and stronger! (praises be!)

where have all the increases been?

it’s a snoozefest at this point. throw a dart.
actually it’s easier than that, even, but you have to be able to accept that we left Kansas a LONG time ago. Hell, we’ve even left Oz.”

Wrong. “Forward guidance” was only dropped in April. Hence, trying to compare pre-April to post-April statements is not comparable, and perilous.

#63 Nemesis on 06.18.15 at 8:14 pm

“History is not on your side.” — Garth

#OhReally?…

“Ford’s Five-Dollar Day – On January 5, 1914, Henry Ford and his vice president James Couzens stunned the world when they revealed that Ford Motor Company would double its workers’ wages to five dollars a day. The announcement generated glowing newspaper headlines and editorials around the world. The notion of a wealthy industrialist sharing profits with workers on such a scale was unprecedented.”…

https://youtu.be/Vcr3YQK0eEY

https://www.thehenryford.org/exhibits/pic/2014/14_jan.asp

#64 Gulf Breeze on 06.18.15 at 8:15 pm

Will to Power,

Paying the bottom tier of the Ponzi more actually has been done. Ford started paying his employees enough to buy the cars they were making. It illustrates the point perfectly. Trickle down and then back up kept him in business and initiated the greatest levelling of wealth ever seen.

#65 Obvious Truth on 06.18.15 at 8:18 pm

Hasn’t the bond market already raised rates?

Is grandma yellen just following suit?

Don’t understand all debate about this.

Is anybody watching interest rate sensitive sectors and growth?

To me it looks like the collective is speaking. Just follow the money. It’s the only opinion that matters when it’s about making money.

#66 Hot Albertan Money on 06.18.15 at 8:22 pm

Nonetheless, the bond market will react, which means you have already seen the cheapest five-year mortgage rates of your life.

Is there a simple way of understanding how Bonds affect Fixed Rate Mortgages? Can someone “explain it to me like I’m 5”? (to borrow a Reddit term)?

My fiver is up for renewal in June, 2016 so I’m trying to figure out where we’ll be in a year

Thanks

#67 espressobob on 06.18.15 at 8:22 pm

#55 Lieweln

Bernie baby? Investors can quickly ignore that white noise and move on. That’s what a globally diversified portfolio is about.

Be aware!

#68 Gulf Breeze on 06.18.15 at 8:23 pm

#52 Leo Trollstoy,

Good for you. I did the same in Arizona, same timing. But pride goeth before a fall. How’s that flood insurance working out?

I have to be concerned about CAP water maintaining Tucson. I limited purchase there for climate reasons. I am still waiting to see what the next year brings before I commit one more cent to renovating the place I bought.

How did you finance your purchase?

#69 Snowboid on 06.18.15 at 8:26 pm

In the meantime, real estate isn’t all that’s heating up in Phoenix – how about record heat – 46C today.

It appears many Phoenix area seniors are facing financial crisis – appears they used up their savings during the recession and RE crash – then took out home equity as cash to keep living.

Sounds like the old reverse mortgages caught up the them.

http://www.azfamily.com/story/29347156/growing-number-of-arizona-seniors-overwhelmed-by-housing-debt

They should have been following this blog and the wise professors’ advice!

#70 Keith on 06.18.15 at 8:31 pm

Higher wages for people in lower income brackets will be spent largely in the local economy where it will have the maximum economic benefit for the larger society. It will go into local wages, local taxes and businesses with the highest economic multiplier.

For businesses that have to pay, the local consumer spending will be higher. They will have a diminished share of a larger economic pie. Dollars will be shifted from a position of low velocity (owners and profits) to high velocity (workers taxed and spending in the local economy). Given the dismal economic consequences of giving free money to businesses and the 1%, and the amazing economic consequences of the pro labour social programs post WW2, it’s worth a shot.

#71 ANON on 06.18.15 at 8:32 pm

We’re about to witness a loss of faith and a panic to grab hold what’s left of the promises deemed worthy. For more info on this subject, please refer in the coming days to … Greece.
US is far from that, as it holds some of the worthy promises. If you have excess, it makes sense to throw it around, it may stick somewhere. Otherwise it might not stick anywhere. It probably sucks to hold a lot of wealth (promises) in times like these, but times like these are as inevitable as the ones which allowed the accumulation of promises. It is the way the world works.

#72 Andrew Woburn on 06.18.15 at 8:38 pm

“This may be a surprise to all US environmentalists but Canada is still building pipelines into the US and they will keep “Tar Sands” oil flowing for years to come.

Don’t rush to blame TransCanada (NYSE:TRP) for the explosion of pipelines being built in the US.

The culprit is Warren Buffett! … No, just kidding.

That would be funny if true, though, as he has made a killing on his BNSF rail purchase which moves about half of the Bakken oil.

The real culprit is Enbridge (NYSE:ENB) Enbridge played it smart and drew minimal attention to its buildup of pipeline capacity running from Canada to the US Midwest and down to the Gulf Coast. Resource companies take note of their strategy-it worked.

Instead of building a megaproject like TransCanada’s Keystone XL, Enbridge opted for smaller projects that served the same purpose.”

http://seekingalpha.com/article/3262325-oil-wars-canada-vs-u-s?ifp=0

#73 Gulf Breeze on 06.18.15 at 8:38 pm

I hand it to Garth to allow so many dissenting opinions on his blog. I don’t agree with many of his opinions but respect him for keeping this a free speech zone. I hope everybody reading these last few days appreciates it as much as I do.

The best forums I have frequented, the ones who do the best and attract the most viewers, follow the same free speech model. How many of us could would do the same on our own blogs. A round of applause for him, please!

Thanks Garth

#74 will to power on 06.18.15 at 8:39 pm

“Ford started paying his employees enough to buy the cars they were making. It illustrates the point perfectly. Trickle down and then back up kept him in business and initiated the greatest levelling of wealth ever seen.”

What you’re talking about is no longer about economics, instead it’s all about psychology. The ford workers could have saved/invested their money instead of buying more crap.

#75 Linda on 06.18.15 at 8:46 pm

Regarding Boomers – eventually even the most die hard Boomer is going to retire (or just die). Consider that in Canada there are 9 million Boomers, of which some 1.5 to 2 million have already retired. The remaining Boomers will all them be 65 plus by 2031 – a mere 16 years from now. Going to be a LOT of job vacancies in Canada; ditto the good old USA. Gen Y, Gen X & the Millennials (plus any other group of younger than Boomer) will presumably be in demand. Don’t know if they will want to be, but none the less. Going to be a very different world sooner than we think – 2015 is half over so only 15.5 years to go before the youngest Boomers still alive achieve age 65.

#76 Sheane Wallace on 06.18.15 at 8:47 pm

#9 JacqueShellacque on 06.18.15 at 4:40 pm
Garth, your advice is worth its weight in gold. I’m glad you don’t just give canned answers.
——————–

According to Garth gold is useless rock.
So the advice can’t be golden as that would imply useless.

Gold is useless tradition as Ben Bernanke said.

#77 Bottoms_Up on 06.18.15 at 8:50 pm

Vancouver Troy on 06.18.15 at 7:24 pm
————————————————
It’s possible in an age of unrestricted growth and inflation and sprinkle in a bit of luck. Try living that life in today’s environment.

#78 Ottawa on 06.18.15 at 9:02 pm

“Stagnant pools of malinvestment”? Like the money small business guy scratch out of their retail ventures, or the profits companies use to finance expansion and jobs? Like that? — Garth
Sure, except the $200 billion that Canadian companies “invested” in Luxembourg and other low tax jurisdiction just last year are not circulating in the economy creating jobs.

Link? — Garth

#79 Bottoms_Up on 06.18.15 at 9:09 pm

History is not on your side. — Garth
——————————————-
Garth are you saying keeping a subpar minimum wage is in some way beneficial to more humans than paying a reasonable wage? Raising the minimum will help students and seniors, two groups that could desperately use the extra dough.

#80 West Coast on 06.18.15 at 9:14 pm

http://news.nationalpost.com/full-comment/bruce-yaccato-youd-have-to-be-crazy-to-buy-real-estate
…..even the national post is starting to realize Garth is correct……
Can you imagine how many elderly boomers in the City of Vancouver (now that they’re all on pensions) are thinking about selling their SFH….enough with those stairs…all that yard work…leaky roofs and pipes …..not to mention the threat of Japanese knotweed eating up their investment….
http://www.macleans.ca/society/science/the-plant-thats-eating-b-c/

#81 Ottawa on 06.18.15 at 9:19 pm

“Link?”

Stock, not flow but same idea:

http://www.pressprogress.ca/en/post/corporate-canadas-cash-tax-havens-explodes-199-billion-under-stephen-harper

http://www.huffingtonpost.ca/2015/05/16/corporate-tax-havens-canada_n_7293410.html

#82 Gulf Breeze on 06.18.15 at 9:20 pm

#74 Will to Power

I’m not sure what your point is. Sure the Ford employees could have invested but that wasn’t part of the blue collar mentality. Not then and, to a certain degree, not now either. But as far as buying more crap? Crap was expensive back then — clothes included. But necessities like food, housing, cars (goes without saying) relatively cheap as percentage of income.

#83 Leo Trollstoy on 06.18.15 at 9:20 pm

Raising the minimum wage is a poor solution to a difficult problem.

Warren Buffett’s solution isn’t perfect but it’s better than the ideas of all the posters here.

http://www.aei.org/publication/warren-buffett-explains-simply-and-clearly-why-a-15-minimum-wage-is-bad-for-workers/

#84 Andrew Woburn on 06.18.15 at 9:22 pm

43 Bby604 on 06.16.15 at 8:20 pm
Wtf are they gona do in nanaimo ? Basket weaving ?
====================

Judging from comments posted here from time to time, people seem to think Nanaimo is solely populated by snaggle-toothed, unemployed sawmill workers begging for loonies in their dirty baseball caps. Maybe it was 20 years ago.

Of course a lot of people think there is no real economy in Vancouver either, perhaps because they think BC still depends on forestry.

In Nanaimo today population and employment are up. This is from the city economic development website, so caution is advised, but the overall picture is positive.

“In the last five years Nanaimo has undergone a major transformation, with strong growth in most sectors of the economy. Growth in part is driven by population increase; in the last census Nanaimo acquired 5,692 net new citizens, this represents a 7.8% increase since the previous census.

Nanaimo has a diversified economy of more than 5400 businesses. Some of Nanaimo’s largest sectors by business license holders include construction, retail, government & education, knowledge-based companies, tourism, arts & culture, professional, scientific and technical sectors. Nanaimo’s central location has helped the city develop as an important retail, service, and transportation centre for central and northern Vancouver Island. Nanaimo serves a trade area of over 350,000 people.”

However before you rush over with a job application, be aware that the population is nearly 20% retirees, not far behind Victoria.

#85 TRT on 06.18.15 at 9:26 pm

Do you think the Conservatives will get rid of their racist immigration policy that favours China at the expense of India ? Siblings should be allowed to immigrate and this change has to be reversed. This change does not affect China as the vast majority don’t have siblings because of the one child policy.

#86 Sosuke Aizen on 06.18.15 at 9:29 pm

The Fed is only maintaining the pretense of a rate hike. Central banks will learn, to their dismay, that once they go ZIRP, they can’t go back.

#87 Nemesis on 06.18.15 at 9:30 pm

#Techtopus,Or… #HowTheWorldReallyWorks… #OldTricksForNewJobCreatorsDogz… #InThePostPostIndustrial… #’NewNormal’DigitalEconomy…

[PandoDaily] – A Tale Of Two Silicon Valleys: Wage theft, billionaires, and the rest of us

…”Get caught red-handed by the Department of Justice stealing an estimated $3 billion dollars in wages from tens of thousands of employees — and your “punishment” is an agreement with the DOJ “that does not constitute admission by the Defendants that the law has been violated or of any issue of fact or law.” And, no fine. Let me repeat that: $3 billion in stolen wages; no admission of guilt, no fine.”…

http://pando.com/2014/10/15/a-tale-of-two-silicon-valleys-wage-theft-billionaires-and-the-rest-of-us/

http://pando.com/2014/12/02/new-court-filing-shows-stunning-new-evidence-of-wage-fixing-by-major-hollywood-animation-studios/

#88 Paul on 06.18.15 at 9:33 pm

#79
I am a partner in a restaurant.The last time the minimum wage was rised we needed to increase the number of tables for the wait staff from 4 to 6 and lay off a third of the employees just to keep the doors open.
Businesses operate on a thin line.

#89 Timmy on 06.18.15 at 9:34 pm

Re#27 Victoria Real Estate Update
Thanks for the informative posts. I hope to move to Vic soon and am watching the housing market, waiting for it to tank…

#90 Timmy on 06.18.15 at 9:36 pm

““So what happens when millions more people are working, and they’re making more money? Simple. They spend more. ”

Are you referring to the legions of people with causal, temporary gigs at Best Buy, London Drugs, Coffee shops, other retail? You know, the ones who make minimum wage?

#91 Andrew Woburn on 06.18.15 at 9:41 pm

Some of you will have noticed that the integrated oil companies have been doing OK with declining oil prices because cheaper crude mean more profit on their refining operations. The Saudis and other Middle Eastern producers also know this is a good way to hedge against long term low crude prices.

“Meanwhile, though it’s no secret that the Saudis are an integral part of global crude production, what they are less known for and are soon to change is their refinery business. That will become the next arrow in the quiver for the Kingdom. While they have always been the largest refiners in OPEC, they more recently have become serious players on the world stage. The Saudis have increased their refining capacity by 40% over the past decade. Furthermore, at a group level, Saudi Arabia, Kuwait, UAE, Qatar, Bahrain and Oman will raise their combined refining capacity by 17% this year.”

http://seekingalpha.com/insight/alternative-investing/article/3267175-saudi-to-turn-their-back-on-the-u-s

#92 SWL1976 on 06.18.15 at 9:42 pm

#50 PM – While missing my main point, you reinforced the point I made about this comments section.

No mind I have thick skin.

Now what part of ‘no middle class’ did you not understand? The problem we face has no borders, this is a global problem with a global agenda. Perhaps you missed, or are just unaware of the point of the bilderberg meetings?

Here’s a hint. They’re setting global policy in secret behind closed doors. There is indeed a ruling class puppetteering the fate of the world. Take your blinders off, it’s easy to see if you look.

Too bad most of us in the western world who have the freedom and choice to make a difference, either fail to see the obvious, or are too consumed with real estate, sports, celeb gossip, or the latest widget we can get cheaper (thanks to globalization you say) to bother. A better life does not consist of getting things cheaper either my friend. Exploiting countries or people less then we used to does not make things right, nor is it the road to global prosperity.

To be part of the solution you have to not be part of the problem

#93 Investorz on 06.18.15 at 9:43 pm

Notice how REITS went up since Yellen spoke. The market thinks rates will remain lower than expected. I added to RIOCAN yesterday. 5.6% yield.

“Bonds dampen volatility and hedge against equity declines”

It’s true, but readers should understand that it’s only a “damper”. Bond prices have gone up along with equity prices, to the point that yields are at historical lows. Bond prices could go down quickly, shaking up the market and moving equity prices down. in 2008, bond prices were much lower so it was a “good place to hide”.

Time will tell. Place your bets. Let’s meet again in 12 months.

#94 Hawk on 06.18.15 at 9:47 pm

Although this article is a few years old, it puts things well in perspective. Globally, we are all the 1%

=================================

http://www.dailymail.co.uk/news/article-2082385/We-1–You-need-34k-income-global-elite–half-worlds-richest-live-U-S.html

#95 SWL1976 on 06.18.15 at 10:02 pm

#73 Gulf Breeze

I’ll second that. Thanks Garth

#96 Smoking Man on 06.18.15 at 10:05 pm

OK dogs its like this, ET is real. NSA is real.

On my way to Area 51today not to be mistaken for bill C51.

On the trip I have a black SUV follow me, then vanish , then follow me.. Vanish following over and over.

Guess they read this blog.

I end up in an a small town called Rachel. Ufo themed road house. We order some food. I’m asking where can I go take a photo of the sign that says area 51 trespassers can be shot.

Right then and there , 20 air force dudes walk in. My waitress clams up. They all sit down reading the menus.

The odd thing is. Absolutely no talking amongst them. The oldest of the lot, well he’s not breaking eye contact with me.

I buy a tee shirt after lunch. She gives me a weird look, like run .

So I did. My wife fell asleep on hwy 93, I’m driving a cherry red rag top Camero . I look up, no planes, mirror no Black SUV. No cars 10 miles ahead or behind.

Got it up to 140 miles per hour, what a rush, the gas peddle had another 50%..

Picks are here http://www.dyslexicsmokingman.blogspot.com.

#97 chapter 9 on 06.18.15 at 10:11 pm

One has to only look at the data from Stats. Canada on minimum wage for Alberta for 2014. Last year 50% of min.wage workers lived with mom and dad and were aged between 15 and 24 and went to school. The rest of the min. wage workers have a working spouse which bumps up total house hold income. Only 1.5% were single parents with small children. One can only imagine the number of existing programs available to assist this segment of the population.

#98 Mr. White on 06.18.15 at 10:17 pm

What of labour participation rates in both Canada and the U.S. what effect does this have on ‘real’ unemployment rates. Please enlighten me.

#99 As Is Old Man on 06.18.15 at 10:19 pm

re: Henry Ford

Have you heard of P.R.? 100 years later and old Henry is still hoodwinking the masses. Crafty old bugger.

#100 GARTH VADER on 06.18.15 at 10:25 pm

POLOZ…IT IS YOUR DESTINY…”

#101 Debtfree on 06.18.15 at 10:25 pm

Seems a bit of an ironic twist . Steve , when he got his butt in the drivers seat , he said , the party is over . Who was he talking about ?

#102 whitehorn on 06.18.15 at 10:39 pm

#123 Living Wages for all “One of the great benefits of higher minimum wages for Canadians is that it should help gut the preposterous fraud in the Temporary Foreign Worker programs. ” I agree totally, the wage increase to $15 from $10 will most likely “kibosh” the TFW program. Talking to many people, plus experience at job sites throughout Alberta (Fort Mac, Peace Country, Banff, Cities) with teenage kids, is hard to compete with TFW’s for jobs. Not racist at all, but a 25-35 year old from a third world country will out perform a 18 year with little job experience. Ideal for any company employing TFW. The sad reality a majority of the money earned gets send home, whereas a poor Canadian performing worker would spend in his own country, including spins off from his employer, boosting the overall economy. This was an important issue, which accounted for many votes in my opinion, PC’s lost to the NDP’s. Jim Prentice was very strong TFW.

#103 Jerry McFadden on 06.18.15 at 10:41 pm

The most destructive myth in recent history is the one that ensures the sheeple that ‘real estate will always go up’.

Another myth is that ‘there is no inflation’. Nobody who buys food…from lusty meatarians to wimpy veg will tell you that food prices have stabilized or gone down. Just the opposite the price of food in Canada has more than doubled in the past five years.

Auto story. I was looking at JEEP products in Texas which started at $19,9995 for the Wrangler type no frills kiddy machine. I saw the same JEEP in a Chrysler dealership in Richmond BC at $35,000.

Canadians are so getting ripped off. I could buy a mansion in Dallas for $350,000 and a really nice average house on a wide lot for $85000.

#104 Saskie on 06.18.15 at 10:49 pm

“The point is the US central bank would not dare raise rates if the American economy could not withstand the impact of tighter monetary policy.”

Exactly! Why didn’t they raise rates in June, and why will they find another excuse not to raise in September…

#105 My2cent on 06.18.15 at 10:59 pm

#61 will to power
Obviously you never owned or operated a business or a small business in particular.
In my experience as a business owner, as minimum wage goes up we either hired less people or have set the standard higher to justify for the increase in labour cost.
Real losers are the inexperenced and young. My 2cents

#106 Mark on 06.18.15 at 11:10 pm

“Is there a simple way of understanding how Bonds affect Fixed Rate Mortgages? Can someone “explain it to me like I’m 5″? (to borrow a Reddit term)?”

In a nutshell, your retail mortgage costs you:

Benchmark Rate + Risk Premium = Retail Mortgage Rate

The “Benchmark Rate” is what the particular term of bond that corresponds to your mortgage and its duration trades in the financial markets.

The “Risk Premium” is the amount demanded by a lender to compensate them for the incremental risk of making a loan to you. This also includes a component for the fees of underwriting the loan.

At any given time in the market, either the Risk Premium or the Benchmark Rate can change at the whims of the market.

In a nutshell, either the market for benchmark bonds can go up or down, and so can the risk premium. Either can be equally damaging to the borrower, and can create the dreaded “higher interest rates”.

Garth’s narrative is that the “benchmark bonds” will likely see higher rates in the not-so-distant future. My narrative is that such bonds will remain at similar (if not lower) yields, but it will be the risk premium that expands.

Why do I believe risk premiums will expand? Poor consumer credit-worthiness. People simply have borrowed way too much relative to their capacity to service the debt, especially in a falling house price environment, and hence, are not the pristine credit risks they were when ratios were far less stretched.

I hope this answers your question without getting too convoluted. There’s a lot more to mortgages than just bond market “interest rates” unless you’re talking about mortgage bonds (ie: MBS) specifically.

Variable-rate mortgages are linked to the prime rate. Fixed-rate mortgage costs are tied to the cost of funds raised by lenders in the bond market. There is virtually no risk premium attached by mainstream lenders who are principal-protected by CMHC. Fixed-rate mortgages are set to rise more quickly that VRMs, for obvious reasons. — Garth

#107 H on 06.18.15 at 11:13 pm

Garth,

Its been 9 years. NINE, since the fed lowered rates.

In the past 5 years, how many headlines (economists) said rates are going to rise. How many have said, just you wait till China demands money back. Or how many times the bond market will skyrocket.

Too many. And as the wrong predictions mount, so do the even more wrong predictions.

Here is the bottom line. There is NO playbook. When rates in parts of the world went negative, the formulas went out the window. Right now there is a global currency war. Garth you can blog and pretend it aint so, but why don’t you put up the USDX graph? Or USD to Euro. Or even the Yen?

You cant because it will show the truth, the Fed cant do anything as if they do the USD will skyrocket, and squash the nascent growth occurring now.

#108 Carpe Diem on 06.18.15 at 11:15 pm

#54 james

I have a small company and can hire 3 kids in/out of school for the summer and pay them min wage.
Increase this $4.75 per hour and then I can hire 2.
Great experience for them and on their resumes.

You think small business owners are rich. Screw you. We work 150% that affects our family life and health so we can grow our companies and hire SMART people into awesome jobs when they graduate.

I have twin nephews.
99th percentile.
One searches and get a summer job researching DNA.
The other, artsier one goes and works for a student painting company.
Same wage.

The DNA dude love his work and doesn’t CARE about his wage.

The Art-Dude … First day on the job, is alone at a site on a ladder thinking this is an unsafe condition. Employer comes back, he communicates his thoughts and is told to fuck off and work. He quits.

I’m tempted to hire my nephew for the summer. Why not help him this summer with a meaningful job somewhat close to his direction of work?

Win/win.

Current Min wage, I can hire him and he will like his work and it will be awesome on his resume.

You know, the 95% sure don’t get it.

Idiots just like NDPers in general.

#109 young & foolish on 06.18.15 at 11:24 pm

“Victoria Real Eatate Update”

No offence guy, but you’ve logging the decline of Victoria RE prices now for so long, you would think prices would be in the gutter and people walking away by now.

#110 Gas 1.34 Liter on 06.18.15 at 11:25 pm

Well things are just peachy gas hit 1.34.9 for premium and 1.22 for regular so where’s the so-called savings??? When oil was over a hundred we had these prices and now it’s half and we still do… Go figure… No wonder they say BC means bring cash!!!

#111 gerford t on 06.18.15 at 11:41 pm

Lots of negative comments on here about Nanaimo and mid Vancouver island recently. I thought the Oceanside area (Parksville/Qualicum) was supposed to be some sort of global paradise….is it just the Oceanside name that sounds good, or is it totally unliveable for anyone that is not retired?

#112 gerford t on 06.18.15 at 11:52 pm

Garth

After the coming financial apocalypse, I recommend reissuing the Canuck currency with your picture on it, rather than non-Canadians….the loonie will be renamed….wait for it….”the greater fool”

#113 meslippery on 06.18.15 at 11:55 pm

The thing about stats is if I am unemployed and my benefits run out before I find a job, The unemployment rate just went down.Really ? You can use them numbers if you want. Means little.

#114 Smoking Man on 06.19.15 at 12:20 am

There are no smoking rooms at the cromwell, so I’ve made frequent trips down the elevator, sitting in a seat where I’m on a first name basis with security.

The most gorgeous female I’ve ever seen approaching.. Now the desert drys you out.. Not to mention the affects of an AC on your nostrils.

She goes knuckles deep.. An epic nose pick then a finger fling across to the crap table, she don’t care, she’s hot and nose it. .. Bahaha.

Did I really just see this, am I having another drinking hallucination. Well it inspired me. On the elevator back up, I do the same, looking directly at the elevator camera.

Came up short.. A dud…nothing to fling.

No ones perfect.

#115 Ronaldo on 06.19.15 at 12:35 am

#75 Linda

”The remaining Boomers will all them be 65 plus by 2031 – a mere 16 years from now. Going to be a LOT of job vacancies in Canada; ditto the good old USA. Gen Y, Gen X & the Millennials (plus any other group of younger than Boomer) will presumably be in demand.”

I suspect that a lot of the jobs currently occupied by the old boomers will become redundant as the boomers fade into the sunset so I don’t see a great number of jobs being created by their exit.

#116 Tamsen on 06.19.15 at 12:36 am

“Every one of those charts has been, if not been actually outright refuted, opposed by a clarifying analyses by many, many people in your comments section using links. You just see what you want to see, same as everyone else. People call fantasy optimism these days.”

aka optimistic bias

https://en.wikipedia.org/wiki/Optimism_bias

#117 Former Walmart Greeter on 06.19.15 at 12:40 am

#78 Ottawa on 06.18.15 at 9:02 pm
“Stagnant pools of malinvestment”? Like the money small business guy scratch out of their retail ventures, or the profits companies use to finance expansion and jobs? Like that? — Garth
Sure, except the $200 billion that Canadian companies “invested” in Luxembourg and other low tax jurisdiction just last year are not circulating in the economy creating jobs.

Link? — Garth
————–
http://m.thenation.com/blog/191209-1-billion-thats-how-much-walmart-avoids-paying-taxes-each-year-through-loopholes

#118 Nagraj on 06.19.15 at 12:50 am

MARIE ANTOINETTE may or may not actually have said, “Let them eat cake.”

Those of us who were there – heard different things. According to Lafayette she said, “Why don’t they just catch some frogs and fry their legs?”
Robespierre heard “Let them eat Kibbles.”
I think I may have heard “Well why didn’t they just buy some houses in Phoenix when they were 70% off with the Loonie above par?”
The Marquis de Polozia remarked, “They should’ve worked for free for a year!”
L’Archeveque de Prentice, ever mindful of souls, asked for an oversized mirror . . .
And evil old Evremonde of Ottawa just ran off, screaming “Terrorists! Terrorists!” and his ratty wig fell off.

Sometime later, Louis asked Calonne for some charts to prove to the malcontents that things wasn’t so bad. Calonne provided the charts, then he phoned the nearest monastery to ask if he could store 1,000 bottles of wine in their cellar. [They said yes.] He then got into his carriage and fled Paris to England. [Never did get to enjoy his wine.]

Which brings us to the Swedish Count Fersen. [Who did NOT have an affair with Marie Antoinette. At the time she was actually gray haired and quite a prudish woman.] [Her hair did NOT suddenly “turn white” because of Varennes – but it was so hot in the carriage back to Paris she took her wig off and since almost nobody’d seen her sans perruque it was wrongly concluded that the Schreck of Varennes turned her hair white.] Aren’t you glad I’m telling you all this?

Well, when tall and handsome Fersen was back in Sweden, he stopped off at a Tim Horton’s take-out window, got into an argument with the staff, they pulled him off his high horse and beat him to death.

Moral: DON’T annoy minimum wage workers.

#119 Hh on 06.19.15 at 1:46 am

Only one data point needed YoY consumers ex autos: decelerating since 2010 – That is why fed is waiting. Late cycle.
PMI US and global decelerating

Lower for longer.

#120 Love my Kia on 06.19.15 at 1:54 am

It’s not different. It’s the same. A diversified portfolio took a modest hit in 2008-9 and recovered quickly. Investors who ignored the dip lost nothing. There is no 2008 rerun coming. — Garth
——————-
Since someone here mentioned ‘Greater Fool, The Movie’, have you considered doing a ‘best of Greater Fool’ in the days leading up to these big financial events? I am a fan of nostalgia.

#121 Spectacle on 06.19.15 at 3:04 am

Regarding :

#78 Ottawa on 06.18.15 at 9:02 pm
“Stagnant pools of malinvestment”? Like the money small business guy scratch out of their retail ventures, or the profits companies use to finance expansion and jobs? Like that? — Garth
Sure, except the $200 billion that Canadian companies “invested” in Luxembourg and other low tax jurisdiction just last year are not circulating in the economy creating jobs.

Link? — Garth
———————–
Sort of like this blog dogs,

http://www.huffingtonpost.ca/2015/05/16/corporate-tax-havens-canada_n_7293410.html

And in addition there can be a return on investment, with calculable risk.

Other venues , such as Turkish holdings provide more complicated arrangements. But, the really, really big/bad boys play there ( ahem, US gov, Putin et al ).

Have fun finding your own link (Sybel Edmonds is a solid start)

And kudos on the free speech from me Mr Turner.

#122 Gggkk on 06.19.15 at 4:15 am

Quote

The Fed has cut its growth forecast by ~40% in the past six months, yet officials still expect two rate hikes in 2015.

This won’t end well.

#123 Scott on 06.19.15 at 6:06 am

Cherry picking statistics does not not valid argument nake.

If things are so great why is a .25% interest rate hike such a hard thing to do by the US central bank? So much for escape velocity, right?

No Garth what you post and what the other grifters in the financial confidence game what to drum beat is getting the herd in from the fields to the slaughter.

At some point these overvalued assets need to be sold to a greater fool. Keep trying Garth cause most of the sheep still haven’t got wool to fleece. Maybe they will before the ponzi scheme collapses, maybe they never will.

#124 maxx on 06.19.15 at 8:02 am

“The Bank of Canada will not immediately follow suit, but it’s inevitable this will occur in 2016.”

No matter.
Raising is no longer an issue in our household and will only be a bonus when the BOC is forced to do it.
We have spent the past 10 years honing our spending habits to near-flatline levels whilst increasing quality of life in tandem.
We have become expert at 70-90% off of everything from food to paper shredders (bought one in perfect nick yesterday for $4.00- no tax).
We are saving more than ever (RSP, TFSA are all maxed out) traveling more and will only spend in the retail economy again once rates rise.
So the BOC can take its sweet time. It matters not a whit to us. :-)
It’s just extra gravy, and the savings skills acquired during this “ultra-low” policy environment remain in place as useful, always profitable and available as required.

#125 crowdedelevatorfartz on 06.19.15 at 8:24 am

@#118 Nagraj
“Moral: DON’T annoy minimum wage workers”
++++++++++++++++++++++++++++++++++++

Shouldnt that read:
Dont annoy minimum wage temporary foreign workers?

#126 Hot Albertan Money on 06.19.15 at 8:44 am

@ Mark #106…thanks

#127 TurnerNation on 06.19.15 at 9:02 am

SWL I was approached on the street by a group looking to end vote splitting and oust H’s crew.
I listened and it came to me. I said it’s all a global agenda now.

To myself, These changes, daily social media outrages, staged events against our community beliefs (they showed us only a single photo of that Moncton commando guy. Made for Tv). Push to alter our Dna and gender using programming and industrial chemicals.

#128 Nagraj on 06.19.15 at 9:03 am

SPEAKING OF PRUDISH WOMEN, you wanna know that at the court of Tsar Nicky II really really low decolletage was in style. Right to the nipples, my God.

Well, the new Tsarina, who hailed from noplace in uptight Deutschland (but Nicky loved her) immediately let it be known she wouldn’t have any more of this over the top peekaboo stuff. So naturally the Russians hated her right off the bat.

Not only was Tsarina Alexandra Feodorovna a deeply religious prude, she was also really mean. When the McDonald’s workers went on strike in St.Petersburg she implored Nicky to “use the whip” on them.

Oddly enough, Alexandra ended up unjustly accused of just about every sexual crime in the book (like Marie Antoinette), of having orgies with Rasputin and her daughters!

How is all this relevant you ask? I’ll tell you.
Sooner or later widely hated gov’ts end up with their top people smeared with charges of sexual misconduct.
No matter how pure they really are.
It’s bound to happen to Harper’s inner circle – and maybe even to Harper hisself even if he is nuthin to look at. Keep an eye out for CBC sexual improprieties reportage.

DON’T mess with McDonald’s workers, they’ll get you one way or another.

#129 Herb on 06.19.15 at 9:15 am

Garth, I’m fair disappointed in the “Dogmatic (Thursday)” post you promised.

I thought you were going to show us socialist mongrels the error of our ways, and how the Great God Marketplace would lead us all to doggy heaven IF we only let him carry on without undue labour expense or taxation. Instead we get statistical tables that show us where are and have been, but not what lies ahead. The rise could continue, or there could be another crevasse dead ahead. Statistics don’t reveal the future, only the past, and economics still amounts to reading entrails after the event.

“Dogma” has nothing to do with dogs. It could be a “doctrine authoritatively laid down” (hardly the case here), or (my favourite dictionary definition) “an arrogant expression of opinion” (SOED). And as long as we get by on “theory and jargon”, let’s consider an example of such, with Rick Salutin pointing out “some reality to test it against.” Of course he is a socialist writing in a socialist rag, but I look forward to the capitalist dogs in this kennel sinking their teeth into him. It doesn’t seem to matter where the factories or workshops are located, as long as the profits wind up in the same bank accounts.

http://www.thestar.com/opinion/commentary/2015/06/18/us-strikes-a-long-overdue-blow-to-free-trade-salutin.html

#130 JimH on 06.19.15 at 9:20 am

#106 Mark on 06.18.15 at 11:10 pm
“Is there a simple way of understanding how Bonds affect Fixed Rate Mortgages? Can someone “explain it to me like I’m 5″? (to borrow a Reddit term)?”
==========================
Mark, your response to the question above is dead wrong!
You made a feeble stab at “explaining” how variable rate mortgages move when the question concerned the relationship between bonds and FIXED RATE mortgages. (see above and re-read carefully)

1. Fixed Rate Mortgages are determined by yields in the bond market more than any other single factor.
2. The Prime Rate does not DIRECTLY drive rates on Fixed Rate Mortgages.
3. This link is appropriate and straight forward:

http://www.canadianbusiness.com/blogs-and-comment/how-are-mortgage-rates-determined/

As Hawking correctly observed, Mark, ignorance is not the greatest enemy of knowledge and understanding; the real enemy is the illusion of knowlege.

You my friend, are dripping with it.

#131 Rational Optimist on 06.19.15 at 9:53 am

64 Gulf Breeze on 06.18.15 at 8:15 pm

“Ford started paying his employees enough to buy the cars they were making. It illustrates the point perfectly.”

Ford in particular (being the nasty ignorant bigot he was) could not have cared less whether his employees could afford to eat, let alone a car. He was forced to pay them more because he was suffering from huge turnover. That’s all. To attract talent, and retain it, he had to pay. It wasn’t a welfare program, or charity.

He was not a nice individual, nor generally a smart one: http://www.ozy.com/flashback/the-astonishing-ignorance-of-henry-ford/31368

#132 Ret on 06.19.15 at 10:01 am

So I think that I’ve got it about the minimum wage thingy. If a Canadian has to pay fourteen cents more for his take out coffee everyday to help increase the lot in life of a donut and coffee slave, Canada will be facing financial ruin. As a Canadian, I am embarrassed by the insensitivity of my fellow Canadians on this issue.

A 1973 summer in the oven room at Windsor Wafer in Hamilton, long since closed, gave me a new perspective on how poorly minimum wage workers were treated.

Hot (120+F), unsafe machinery, 16-17 year old teenagers repeatedly lifting 100 lb bags of sugar and flour, 10 hour shifts. Lots of older, immigrant, uneducated, low income workers trapped, just struggling to get by. It was something out of the Industrial Revolution.

The Wynne government debated the minimum wage thingy for weeks but eventually did raise it to $11. Better than nothing, but not equal %-wise to the raises that she and Dalton have given themselves and cabinet over the years. That’s why we keep re-electing them!

Meanwhile over at McMaster, this should bring joy to the, “let them eat cake” crowd.

http://www.hamiltonnews.com/opinion-story/5607306-pay-inequity-at-mcmaster/

Well at least you now know better why tuition is $8500 a year at McMaster.

#133 Julia on 06.19.15 at 10:16 am

“#88 Paul
#79
I am a partner in a restaurant.The last time the minimum wage was rised we needed to increase the number of tables for the wait staff from 4 to 6 and lay off a third of the employees just to keep the doors open.
Businesses operate on a thin line.”

Exactly. Unless I am missing something, it is very simplistic to say to just raise the minimum wage it will be redistributed in the economy anyway so everyone wins. Who seriously thinks that companies will just absorb the increase out of the goodness of their heart? For social good? Companies that can pass on the increase to the customers will and those that can’t will find other “efficiencies” to compensate.

#134 Rational Optimist on 06.19.15 at 10:31 am

82 Gulf Breeze on 06.18.15 at 9:20 pm

“Crap was expensive back then — clothes included. But necessities like food, housing, cars (goes without saying) relatively cheap as percentage of income.”

You’re right about crap being expensive in the past, but so were necessities. We spend less on food than ever before: http://www.aei.org/publication/spending-on-food-reaches-a-new-historical-low-and-its-nothing-at-all-like-the-great-depression/

Things are good.

#135 Leo Trollstoy on 06.19.15 at 10:32 am

#106 Mark

I knew Mark was ignorant, but that post was a new low.

What a clown!

Hahahaha

#136 calgary on 06.19.15 at 10:55 am

still no luck here in Calgary buying a move in ready house at a reasonable price.
got outbid 4th time. i of course wont match lofty valuations.
interesting price history on these houses. this last one went from 160k in 1992 to 420k in 2009 to 520k now. so 100k in 5 years when wages have risen maybe 15k and inflation has been 2%.
my agent is almost done with me :p since i never join bidding wars.
looks like no house for me for a year or more.

#137 Leo Trollstoy on 06.19.15 at 10:57 am

#106 Mark

This is what I was talking about when I said that Mark provides misinformation to new posters/investors. It’s a disservice to people who come here genuinely seeking financial knowledge. It’s completely unethical and fraudulent.

#138 Balmuto on 06.19.15 at 11:02 am

Canada’s May CPI numbers are out, inflation rising at a faster clip here in than in the US:

Headline CPI MOM: 0.6% (vs. 0.4% US)
Core CPI MOM: 0.4% (vs. 0.1% US)
Headline CPI YOY: 0.9% (vs. 0.0% US)
Core CPI YOY: 2.2% (vs. 1.7% US)

So what does Poloz do?

#139 nemesis on 06.19.15 at 11:02 am

#Nanaimo… #FamousForWayMoreThan… #ChocolateConfections,Dude… #JustAskTheCityFathers…

“A federally-licenced medical marijuana producer in Nanaimo, B.C., is contributing so much to the local economy that city council has approved a proposal to roughly quintuple the size of the facility.”

http://www.cbc.ca/news/canada/british-columbia/tilray-medical-marijuana-producer-brings-in-big-bucks-for-nanaimo-1.3024714

http://www.investnanaimo.com/cms/wpattachments/wpID124atID114.pdf

#NouveauNanaimoBars

http://www.theweedblog.com/how-to-make-nanaimo-bars-with-marijuana/

#140 Timing is Everything on 06.19.15 at 11:13 am

Link? — Garth

Just google it.

Oh, alright…

http://tinyurl.com/o9gccab
http://tinyurl.com/nn8hn4s
http://tinyurl.com/obnt25x

Illuminating Shady Places…

http://www.financialsecrecyindex.com/
———————————
http://tinyurl.com/otveeug

The assertion was $200 billion from Canadian corporations had been transferred to Luxembourg. That appears to be false. Even if true, so what? Canada does not have currency controls, and these are after-tax revenues. — Garth

#141 pwn3d on 06.19.15 at 11:43 am

Risk premium, lol. It’s called profit taking. The banks kept .1 of the last .25 drop to pad their bottom line. Had any of the big banks broken ranks and dropped the full .25 the rest would have done the same. No different in the fixed market, competition and need for new customers drives prices lower. Especially with no Flaherty around to artificially inflate rates.

I called the banner spring market and am calling the same for the fall. I would advise to get a fixed rate hold before the September Fed announcement so you can shop around with the best rate. Lowest I see right now is 2.33 which is a great 5 year rate.

#142 Panhead on 06.19.15 at 11:55 am

#125 crowdedelevatorfartz on 06.19.15 at 8:24 am
@#118 Nagraj
“Moral: DON’T annoy minimum wage workers”
++++++++++++++++++++++++++++++++++++

Shouldnt that read:
Dont annoy minimum wage temporary foreign workers?
++++++++++++++++++++++++++++++++++++

Or … Don’t annoy the Timigrants …

#143 Mark on 06.19.15 at 12:03 pm

“Mark, your response to the question above is dead wrong!”

There’s nothing wrong with my response at all. It is simply pointing out that there are two components to mortgage rates — that of the risk-free cost of money, and a risk premia tacked on top of such. Both of which chane with the market, with the cost of risk-free money being tied to inflation expectations and somewhat to future expectations of policy rates, while risk premia is a function of credit-worthiness, the cost of equity capital at the lender, etc.

Not sure why you are taking a confrontational approach. The model applies to fixed income just as much as it applies to variable.

#144 Mark on 06.19.15 at 12:10 pm

“There is virtually no risk premium attached by mainstream lenders who are principal-protected by CMHC. Fixed-rate mortgages are set to rise more quickly that VRMs, for obvious reasons. —”

Of course, but over time, as an increasing chunk of the market no longer falls under CMHC, risk premia will rise. Additionally the CMHC itself may be in danger of being viewed as a risk entity, especially if the government threatens to erode the value of the existing guarantee in any way shape or form. Rising cost of equity capital for the banking sector can alter the amount of risk premia the banking system systemically demands to hold debt. Additionally, change to the risk weights of mortgage debt by the OSFI or by the banking systems’ own prudence can likewise accomplish the same.

In other words, it shouldn’t be taken for granted that mortgages are going to be cheap, even if policy rates remain low. Risk premia applicable to individual types of debt is cyclical over the long term. Residential lending has been very much in favour for the past decade — it could very easily go very much out of favour in the future as houses go into increasingly severe states of oversupply and performance drops.

#145 Millmech on 06.19.15 at 12:20 pm

Loving the boomers retiring,just picked up a job in kelowna for more money and better benifits than my union job.So easy to get as the last three tradesmen retired last week,had no one to work in their plant despite advertising for the last year.The plant down the road is also short skilled guys,hope the millenials keep getting those graduate degrees keeps my value going up.By the way they are paying all moving expenses and accomadations for 6months.

#146 TurnerNation on 06.19.15 at 12:21 pm

Say what happened to the flurry of news stories about local Kanadians rushing to join “Isis”? Staged or what? Must be an election year. I know it’s real it was in the news! Al Q we hardly knew ya. Millage marked.

#147 NEAD SOME ENTERTAINENT on 06.19.15 at 12:29 pm

It’s a long shot but wonder if theirs any struggling alcoholiks suffering from Dunning-Kruger that can ramble on some uninteresting stuff and shower the forum with uninteresting and unsolicited commintary and stories. Thanks in advanse

#148 bdy sktrn on 06.19.15 at 12:31 pm

breaking – james moore to leave the cons.

another one bites the dust.

#149 Holy Crap Wheres The Tylenol on 06.19.15 at 12:35 pm

#96 Smoking Man on 06.18.15 at 10:05 pm
OK dogs its like this, ET is real. NSA is real.
On my way to Area 51today not to be mistaken for bill C51.
On the trip I have a black SUV follow me, then vanish , then follow me.. Vanish following over and over.
Guess they read this blog.
I end up in an a small town called Rachel. Ufo themed road house. We order some food. I’m asking where can I go take a photo of the sign that says area 51 trespassers can be shot.
Right then and there , 20 air force dudes walk in. My waitress clams up. They all sit down reading the menus.
The odd thing is. Absolutely no talking amongst them. The oldest of the lot, well he’s not breaking eye contact with me.
I buy a tee shirt after lunch. She gives me a weird look, like run .
So I did. My wife fell asleep on hwy 93, I’m driving a cherry red rag top Camero . I look up, no planes, mirror no Black SUV. No cars 10 miles ahead or behind.
Got it up to 140 miles per hour, what a rush, the gas peddle had another 50%..
Picks are here http://www.dyslexicsmokingman.blogspot.com.
____________________________________________
Smoking Man, they already have read your tag if you get within 1 mile of the security zone. They run your tag, if its a rental they have already figured out who you are unless your registered under an alias.
The signs are at the end of Groom Lake Road. Been there, done that about twenty years ago. Drove from LA to Salt Lake City with a buddy, did several stops on the way, he wanted to see A51. I told him there nothing to see.
http://www.where-is-area-51.com/area-51-security.html

#150 Polozified on 06.19.15 at 12:58 pm

#106 Mark

LOL, oh Mark…

#151 Karma on 06.19.15 at 1:17 pm

Mr. Rosenberg on inflationary pressures in the US economy:

http://www.theglobeandmail.com/report-on-business/economy/labour-will-be-the-next-sector-to-see-inflation/article25030346/

#152 Timing is Everything on 06.19.15 at 1:51 pm

The assertion was $200 billion from Canadian corporations had been transferred to Luxembourg. That appears to be false. — Garth

Well, ya. Looks like Luxembourg is just the ‘prime destination’.

“Luxembourg has been a prime destination for Canadians looking for a tax haven…Luxembourg is just the tip of the iceberg.”

“The practice hurts both federal and provincial economies. It also undermines public confidence in our tax system.”

http://www.taxfairness.ca/en/blog/corporate-canadas-199-billion-secret

Rubbish opinion. These are net corporate revenues and the companies are free to move them wherever they wish, including to a less-taxed jurisdiction. The fix? Keep rates competitive here. Tell Rachel when you see her. — Garth

#153 Leo Trollstoy on 06.19.15 at 1:55 pm

#144 Mark

When you find yourself in a hole. Stop digging.

#154 gladiator on 06.19.15 at 1:56 pm

@ Leo Trollstoy:

I am very happy for you and your investment down in Florida.

Question: how do you report that income to CRA and how will you report the cap gains when you have to sell? What forms do you fill and all.

Just interested.

#155 Nemesis on 06.19.15 at 2:04 pm

#TransferPricing,Or… #TreasureIslands!… #ATimelyPrimer… #ForTheDogmaticWillfullyIgnorant…

[Guardian] – Follow the money: inside the world’s tax havens

…”There are many tricks used to shift money offshore, and a pinstriped army of accountants and lawyers to help people do it. The commonest technique is one called transfer pricing, employed by pretty much every multinational.”…

http://www.greaterfool.ca/2015/06/18/dogmatic/

#SupplementaryReading…

[ICIJ] – Big 4 Audit Firms Play Big Role in Offshore Murk

http://www.icij.org/project/luxembourg-leaks/big-4-audit-firms-play-big-role-offshore-murk

#156 Nemesis on 06.19.15 at 2:04 pm

#Erratum

http://www.theguardian.com/business/2015/jun/19/tax-havens-money-cayman-islands-jersey-offshore-accounts

#157 Mister Obvious on 06.19.15 at 2:17 pm

#138 Balmuto

So what does Poloz do?
—————————-

Whistle past the graveyard?

#158 Bottoms_Up on 06.19.15 at 2:20 pm

#146 TurnerNation on 06.19.15 at 12:21 pm
——————————————————–
ISIS is Al Q. They just can’t admit that in the Western media or else people would ask questions. Like, I thought we had Al Q beat?

#159 Wetcoast on 06.19.15 at 2:31 pm

Interviewed on CTV Christy Clark said this:

For those who think real estate in Lower Mainland is expensive due to foreign buyers dumping cash – HAM, Christy Clark has a suggestion for you: “move to Fort St John.”

Asked if

#160 old gringo on 06.19.15 at 2:47 pm

Chinese buyers have surpassed Canadian snowbirds as the dominant foreign buyers of homes in the U.S., according to the National Association of Realtors.

Purchasers from China made up 16% of international buyers who bought primarily single-family homes and condominiums in the 12-month period that ended in March, according to the survey by the National Association of Realtors. That was up from 12% in 2013. Canadians made up 14% of international buyers, down sharply from 23% in the 2013 survey. In third place were Indians, who made up 8% of foreign buyers in the recent period, up slightly from 2013.

For many years, Canadians seeking warmer weather—mainly in the American Sunbelt—were the biggest foreign buyers of U.S. homes, which were often purchased as vacation or retirement properties. But Canadian sales have declined recently, in part due to the weak Canadian currency, which raises the cost of dollar-denominated products. Meanwhile, Chinese purchases have picked up

#161 Spiltbongwater on 06.19.15 at 2:56 pm

#158 Bottoms_Up on 06.19.15 at 2:20 pm

The U.S. government has financed ISIS as a reason for them to continue military action in the Iraq/Syria. It is all part of the script of the higher contoling powers to reduce the worlds population to 500,000,000 people worldwide. It is why there is no real climate change policy as they know when the worlds population is reduced to 8% of current levels the planat will thrive once again.

Beyond stupid. — Garth

#162 Godth on 06.19.15 at 2:58 pm

Rubbish opinion. These are net corporate revenues and the companies are free to move them wherever they wish, including to a less-taxed jurisdiction. The fix? Keep rates competitive here. Tell Rachel when you see her. — Garth

Every ideology wants to have it’s cake and eat it too. This is so schizophrenic I really don’t know how to deconstruct it.

The Corps. want access to our resources and labour but find our tax laws inconvenient so should be free to skip those obligations? Revoke their charters then. Oh right, that would imply we’re a sovereign country still.

Why bother? The gamers are going to game the system until it’s game over. Unfettered capitalism destroys itself in a big bang of corruption.

#163 45north on 06.19.15 at 3:32 pm

Middle Man: If you really want to make a difference get back into politics.. you have been on the sideline for way too long

I think Garth is making a difference where he is. Here’s an article that shows the how politicians are made impotent by the necessity of catering to everybody.

That sen­ti­ment has peo­ple point­ing fin­gers and look­ing for politi­cians to get in­volved.

And 70 per cent of re­spon­dents want gov­ern­ment to step in, largely with the aim of help­ing first-time buyers. But don’t mess with the prices of our own homes, say many home­own­ers.

http://www.pressreader.com/canada/ottawa-citizen/20150618/281891591910126/TextView

government as tooth fairy

#164 45north on 06.19.15 at 3:34 pm

it was somewhat difficult to get the text for my previous post. Despite having a subscription to the Ottawa Citizen, Press Reader wanted to charge me $0.99 to copy the text.

#165 Woe Canada on 06.19.15 at 3:35 pm

Mike Duffy is the Canadian ‘every man’.

http://news.nationalpost.com/full-comment/kelly-mcparland-the-mike-duffy-as-schlub-theory-was-he-just-too-clueless-to-survive-on-a-senate-salary

Civil service pay and pensions, no savings, brainless gluttony…’because everyone does it’. What a sap he is…or does he represent the zietgiest of the Canadian entitled civil service elite?

#166 Julia on 06.19.15 at 3:35 pm

#160 old gringo

“Purchasers from China made up 16% of international buyers who bought primarily single-family homes and condominiums in the 12-month period that ended in March, according to the survey by the National Association of Realtors.”

16% of internal buyers. What does that represent in comparison with all buyers?

#167 Calgary Rip Off on 06.19.15 at 3:55 pm

#48 Vancouver Troy <<<This guy has his head on straight. If you cant get the formal education to give you permission to learn, do it yourself minus the formality. There is so much free information today. Do yourself a favour find something that interests you and make your hobby learning. The brain works on associations so you are building strength, similar to building a skyscraper except it is your mind that is being built. And with the internet today the limiting factor is your effort and the ability of the mind to synthesize the information. Realize that the only difference between you and "smart" people is the belief system of what you can do. In other words, act now as if you are where you want to be.

#84 Andrew Woburn

If you are happy in Nanaimo, fine. People not from the island may see the area as village people. People in Nanaimo are constantly looking other their shoulder. I lived there 2003-2007. Description? It sucks. But the scenery is beautiful. Yes, if you like rain. The scary thing is if you try to get a job, good luck. Think either government or start your own business. Most businesses only hire local people. During job interviews you have 30 seconds to make your impact, after that, the door closes. The job market in Nanaimo is brutal. I recommend against going there unless you are retired or have job in hand. That whole area is scary. I succeeded in getting out of that hellhole. I still am in disbelief at the jobs and the attitudes of apologetic workers for simple lame menial labour jobs. If you dont believe this, try getting to know the owner of VI Fitness or Northridge Fitness in Nanaimo. One guy likely has Hells Angels money laundering capability and the second is a smooth talking slimy businesswoman.

#136 calgary on 06.19.15 at 10:55 am

Yes, Calgary sucks for rentals and mortgage ownership. I was waiting for a "crash" for many years and it didnt happen, so considering that the rental was the same as the mortgage, got the mortgage. Got a bunch of RSPs also, as I consider the place to live, not an investment. I would rather deal with the bank than some guy who just timed it right and got several properties back in mid 90's and because of it lives off of that. I am not subsidizing his income, no thanks. Given that there are no rental controls, if you will be working here the next 30 years, it may make sense to just get the mortgage. If you have the down payment and the payments make sense and if and when the interest rates rise you will requalify, maybe make sense to get a place. Personal variables are more important than predictions by "experts" though.

#168 Kilby on 06.19.15 at 3:58 pm

#148 bdy sktrn on 06.19.15 at 12:31 pm
breaking – james moore to leave the cons.

another one bites the dust.
_____________________________________________
Can you imagine what all those years of listening to Stephen Harper would do to your sense of self worth? i imagine a few more will jump ship this summer.

#169 Leo Trollstoy on 06.19.15 at 4:04 pm

Question: how do you report that income to CRA and how will you report the cap gains when you have to sell? What forms do you fill and all.

Speak with your cross-border accounting firm when you’re ready to sell. That’s what I would do.

#170 devore on 06.19.15 at 4:15 pm

#105 My2cent

Yup, the threshold for when you hire a helper for your business, or an additional worker, gets higher as min wage goes up. Most small businesses run small margins and small volumes, it’s a very big decision to get more people, and you’ll probably expect more from them if you’re paying more. Higher min wage also kneecaps youth, teenage and elderly employment, such as for summer jobs, seasonal jobs and just general part time work.

#171 Leo Trollstoy on 06.19.15 at 4:17 pm

Question: how do you report that income to CRA and how will you report the cap gains when you have to sell? What forms do you fill and all.

Speak with your cross-border accounting firm, get your ITIN and file your 1040 every year like everybody else.

Speak with them again when you’re ready to sell. That’s what I would do.

Easy money.

#172 Leo Trollstoy on 06.19.15 at 4:19 pm

Question: how do you report that income to CRA and how will you report the cap gains when you have to sell? What forms do you fill and all.

Speak with your cross-border accounting firm, get your ITIN and file your 1040NR every year like everybody else.

Speak with them again when you’re ready to sell.

Profit $$$

Easy peezy.

#173 raisemyrent on 06.19.15 at 4:23 pm

another co-worker getting real estatey herein Vancouver. single, about 28 well-educated. she is looking for a 1-bedroom.
didn’t even bother saying anything.
heard on the radio that some people from HK will come here to come up with possible fixes for our housing market. wouldn’t that imply that the one in HK is not an issue? there is no comparison. probably sponsored by real turds. everyone thinks we live in HK/NY/London/Paris. It’s nice, but you need to get out more.
paradigms. there’s a word for you Smoking Man.

#174 Doomer Lamb on 06.19.15 at 4:27 pm

– I expect the FED to raise rates by 400, 500, 600 or even perhaps 700 basispoints. And that will be preceded by a rising LONG term US rates.
– The FED FOLLOWS the markets !!!!
– Rising rates are EXTREMELY DEFLATIONARY !!!! But that’s a concept A LOT OF people, including one G. Turner, fail to grasp.

#175 young & foolish on 06.19.15 at 4:40 pm

#162 Godth … “The gamers are going to game the system until it’s game over.”

Forget it buddy, this is a blog about things as they are (not about questioning the system … for that, sign up for a Political Philosophy class). We don’t accept any reality except that which is in plain sight. There are no illuminati, no gamers, no fixers, and no unicorns.

#176 4 AM Sunrise on 06.19.15 at 4:53 pm

#56 raisemyrent on 06.18.15 at 7:43 pm

I guess that in a certain way, I still can’t get over how people make such big financial decisions based on intangible concepts and very little analysis.

I figure most Boomers didn’t do much analysis before buying their first homes in the 60’s and 70’s, so they never taught their children to do so. It was never part of our culture. Everything was simpler and there weren’t so many ways to screw up unless you really wanted to.

#177 cramar on 06.19.15 at 4:54 pm

Interesting article about U.S. RE defaults. Just goes to show that if the equivalent to 2008-9 happens in Canada, it will not fix itself for a long time.

Why The Housing Market Collapse Is Set To Resume

http://www.talkmarkets.com/content/us-markets/why-the-housing-market-collapse-is-set-to-resume?post=66663

#178 Squirrel meat on 06.19.15 at 5:26 pm

Your old political blog is a hoot…. great stuff. Fun times!

#179 Retired Boomer - WI on 06.19.15 at 5:50 pm

#162 Godth

What you say is QUITE true. The trade pact TPP has numerous protections, and provisions in it, that if passed, would NOT be good for the average American.

Granted, the ‘average’ American may well be below average these days, based solely on my never very humble opinion.

Karl Marx (or Groucho Marx) I keep confusing the two, even stated a capitalist will sell you the rope to hang him with… Unregulated capitalism is a disaster!

When we compete with other nations, much like any manufacturer competes with another manufacturer, the consumer -who might be a corporation seeking to site a plant in your country- obviously asks the question first on any consumers lips: HOW MUCH?

Where does the new facility go? If it is to extract resources, it goes where the resources a rem if it is to assembly autos it goes where cost is lowest relative to the market it serves. Autos Mexico to device north america, and canada. Electronics, where labor is cheapest.
Medical care, not the US. We shop external countries these days.

How long this continues…the merry go round.. who knows?

#180 PM on 06.19.15 at 6:01 pm

The Corps. want access to our resources and labour but find our tax laws inconvenient so should be free to skip those obligations

Who isn’t paying their tax bill here? Name one company with proof please.

#181 Nagraj on 06.20.15 at 12:54 pm

Popular explanation for Delusia house prices:

Chinese dudes (and doodees): 64%
Rich FORNERS: 44%
“Everybody wants to live here”: 38%
Absentee owners: 35%
Cheap money (the correct answer): 21%

– – – – – – – – – – – – – – – – – – – – – – – – – – – –

Rumours are either substantiated or proven false. Obviously ca 80% prefer to have turned false rumour into credo.

Will this preference end at Vancouver house prices, or will it show up re some other issue?

Stupid rumours have a history of popping up like weeds in societies that are deeply troubled. Worse, opportunistic governance caters to popular delusions.

About ten days ago the Australian RBA gov Glenn Stevens called house prices in Sydney “crazy”. The Poloz version . . . “remain elevated”. Hey! Yer not crazy! Yer just – elevated.

#182 Westcdn on 06.20.15 at 8:57 pm

I can bite, bark, growl or lick your butt. Depends how you treat me.
I see Rachel is hiring David Dodge. I see a huge debt in Albertan’s future. Could be bad – let’s see what he decides. It seems that he thinks Alberta should borrow to prosperity. I have no idea why economists think they are smart but I hope the province survives. I post before seeing other comments. I love paying taxes (sarc). I truly want less government.