Greed. Fear. Repeat.

DOG HUG1

The poor Chinese. They’ve been pilloried on this blog for single-handedly making Vancouver houses (not to mention those in Unionville or Richmond Hill) unaffordable to the locals. And while there are no stats to prove it isn’t actually cheap rates and house lust doing the job, it’s just easy to blame the Asian dudes.

Some people think, therefore, that what’s going on with the Chinese markets these days will have a big impact on Canada. Here are some thoughts.

First, in case you didn’t hear, stock investors in that country are currently having a cow. China is giving us a great example of what classic greed and fear can do. It ain’t pretty, but it does provide a good reminder of what happens to any market where emotions supplant logic and people invest with their pants. Like, oh, houses in YVR.

In the past few years, wanting a more modern, market-oriented economy, Chinese authorities have encouraged people to invest in publicly traded corporations. So, about 90 million folks took up the offer, pouring trillions into equities. Markets soared. As they rose, investors did what they always do – get euphoric and pour more gas on the fire. If you remember the dot-com/Nortel experience of 1999, you know what I mean.

So, stocks shot skyward. The Shanghai index added about 80% between 2012 and 2015. Investors here who owned ETFs like the large-cap FXI saw the value rise by three-quarters – outstripping returns from any virtually all other corners of the world. This happened concurrently with a Chinese real estate boom that saw more trillions poured into speculative construction. As land prices romped higher and ghost cities emerged, authorities tried to dampen the excitement. That worked. The bubble’s now popping in a disorganized fashion.

Ditto the stock market. Greed squeezed prices higher, encouraging investors to borrow to buy more, and enticing companies to use their own shares as security for loans to load up on additional stock – putting more upward pressure on its price. Classic bubble behaviour. Kind of like borrowing against your house to give your daughter money for a Toronto condo down payment, which gooses the entire property market.

Well, the inevitable occurred. Prices peaked. Smart people started to take profits. The economy stuttered. Fear replaced greed. Suddenly everybody wanted out, and jammed the exits. Over the last month, since it peaked (June 12th), the Shanghai market has lost 32% of its value. The selling continued with another 6% drop on Tuesday – but something more sinister has been allowed to develop.

CHINA MARKET

In the past days about 1,500 companies have requested that transactions in their stock be halted – which represents close to half of all equities traded in China. That means most investors can’t get out. They’re unable to liquidate holdings to pay off margin debt now being called because stock values have dropped. That’s caused a spillover into other areas, like commodities markets, where selling is also epidemic as investors grab cash wherever they can. So, the price of oil, grain, copper and iron decline. Meanwhile those companies are in no hurry to trade again because many of them know the stock they pledged to buy more stock will crash, creating fat losses.

The Chinese authorities, who encouraged the speculative bubble, are swooping in. They cut interest rates. They suspended new initial public offerings. Yesterday they banned large shareholders or insiders owning more than 5% of a company from trading for at least six months. They’ve restricted short-selling, promised ‘ample liquidity’ and allowed all those trading halts. Every night for the last ten days, a new emergency rescue measure has been announced.

Now, should you worry? Does this have the potential for a contagion that will make Greece look like a pimple?

Chinese investors went for a romp, and must now deal with the hangover. Practices like a widescale trading halt are clumsy, dangerous and likely to end badly. China may end up with a massive public buy-up of shares in order to stabilize the market, while scaring off foreign investors with draconian controls. It’s a gong show. A casino. But Chinese markets are still largely self-contained. The direct global spill has been fairly contained. And the stock market of China does not equal the economy of China.

So why are markets here reacting? Because China’s massive economy has the potential to slow global growth and cut demand for the kind of stuff Canada sells – rocks and trees and oil. This won’t impact Europe of the US in a negative way (cheaper energy, for example, is a good thing) but it’s a different story here. Combined with our already-shrinking GDP and the condo economy we’ve built, it suggests fading profits and jobs. Not the stuff to support million-dollar beater houses in 416.

Never forget, as well, that China is only 50% urbanized – compared to 80% in North America. Bubbles are the norm there, and only recently have capital markets become more transparent. Stock prices inflate quickly, with valuations double what they are in the West. For investors, China equals risk. The Shanghai market has four times the volatility of the S&P.

Of course, China matters. But the scary stuff might be temporary. Goldman Sachs said Wednesday the  market will bounce back 27% in the next year, erasing all of these losses. Greed. Fear. Relief. Greed. Repeat.

No wonder they like Vancouver.

191 comments ↓

#1 Stan Mikkelsen on 07.08.15 at 5:25 pm

Goldman really said that? Interesting. I would probably disagree with them. I’ll bet Chinese stocks eventually fall 80-90% from where they are currently. This will spill over into Canadian equities, commodities and Canadian real estate. Vancouver detached homes will be fetching no more than $200,000 on average within a year (two at most).

#2 TurnerNation on 07.08.15 at 5:29 pm

Dunno, I’m seeing Dow support next at 16k.

#3 raisemyrent on 07.08.15 at 5:30 pm

people freaking out about greece, china. always ripe for some external fear/catastrophe/factor.
no one questions every day, common sense choices, like getting a mortgage and buying toys on sale.

also, isn’t it FXI for the large-cap ETF?

#4 ILoveCharts on 07.08.15 at 5:30 pm

“No wonder they like Vancouver.”

You heard it here first folks, Garth is acknowledging that Chinese investors like Vancouver housing because although it’s crazy, it’s relatively safe compared to the stock markets in China.

Craziness in China will drive YVR house prices even higher.

That’s more than doubtful. — Garth

#5 A Canadian Abroad on 07.08.15 at 5:33 pm

“Greed. Fear. Relief. Greed. Repeat.”

Sounds exactly like real estate and mortgage debt in Canada. Canadians (and the Gov’t) used to be smart about debt, now they are proving themselves dumb.

“May you live in interesting times”

#6 Mark on 07.08.15 at 5:42 pm

The Shanghai market was 5900+ back in 2007. It crashed then, without serious consequence, civil war, etc. Not sure why people would be overly concerned now.

If anything, because it didn’t even return to such extremities, it probably won’t crash as hard as it did then.

Although much is made of certain elites and their corporations using large amounts of credit to achieve their goals, there is still relatively little use of credit by commoners in China. It might seem hard to believe, but China is likely a far safer bet than the United States at this point which is likely to undergo decades of consumer-driven de-leveraging and austerity.

#7 T5_INCOME on 07.08.15 at 5:42 pm

…..Two days ago states Iran deal for oil declines, today;

“They’re unable to liquidate holdings to pay off margin debt now being called because stock values have dropped. That’s caused a spillover into other areas, like commodities markets, where selling is also epidemic as investors grab cash wherever they can. So, the price of oil, grain, copper and iron decline.”…..

#8 John Prine on 07.08.15 at 5:44 pm

So glad to have left Vancouver for the Island 3 years ago, such a changed city and not for the best.

#9 Hung M Kuen on 07.08.15 at 5:50 pm

First!!

#10 PeterfromCalgary on 07.08.15 at 5:51 pm

The US S&P 500 took a big hit today down 1.67% on China, and Greece concerns. Also trading shut down for hours today because of computer problems.

I am still not hitting the US sell button because of their good jobs picture, and diverse economy. However, I am a little nervous from all this summer chaos.

US stocks also fell on word the Fed is still planning a rate increase. As for being nervous, if you don’t need the money in the next few months, why care? — Garth

#11 zedgt87 on 07.08.15 at 5:52 pm

Lol

>That’s caused a spillover into other areas, like >commodities markets,

That is exactly what I said in your comment section just days ago, of course you told me I was wrong.

This margin call related selling does have the potential to spread. I can imagine some panicked, levered Chinese are contemplating selling their foreign real estate this very moment.

#12 waiting on the westcoast on 07.08.15 at 5:53 pm

Looks like the Greeks are learning that tantrums agent going to be enough at the big kids’ table.

Funny how we are all debating how to make enough money for affluence in our retirement. We are all doing so well in North America.

I am in Cambodia where the household income in rural communities is around $1-2 per day. Great persistence in sales at the markets. While many play for sympathy, there is definitely many people who are finding new ways to add value and increase the amount of compensation. Given what they have been through, the Khmer are an amazing people!

#13 Tim M on 07.08.15 at 5:53 pm

Guardian’s analysis reveals that hidden subsidies, direct grants and tax breaks to big business amount to £3,500 a year given by each UK household

The £93bn handshake: businesses pocket huge subsidies and tax breaks

http://www.theguardian.com/politics/2015/jul/07/corporate-welfare-a-93bn-handshake

#14 bdy sktrn on 07.08.15 at 5:54 pm

“they like Vancouver.”
—————–
Dr. G finally admits it!

#15 GeorgeSoonToBeRetired on 07.08.15 at 5:54 pm

The parallels in bubble formation are very real. Condos, cottages and SFH sales are changing in Ontario as we speak. Oil remains low but gas prices high and consumers are being squeezed by higher prices for many staples. So many friends are really tapped out just barely making mortgage payments now. It will only take relatively small economic shocks here now to tip this over.

#16 Dr.Dr. on 07.08.15 at 5:58 pm

Who new the Chinese had so much $$$$$$$. I thought they spent it all on houses in Vancouver…..

#17 they are still up on profit on 07.08.15 at 5:58 pm

You forgot to mention that if they bought the stock at the start of the year, they are still ahead.

#18 harden on 07.08.15 at 5:59 pm

Re: “no stats to prove it isn’t actually cheap rates and house lust”

Presume also no stats available to prove it isn’t actually foreign exchange rates and land lust?

#19 OttawaguyRenting Worried but not too worried still a worrier but look on the brightside on 07.08.15 at 6:04 pm

Madison Wisc – what $199 will get ya
http://www.starkhomes.com/homes/1751850-631_Hercules_Tr-Madison-WI-53718

Amazing. GD Amazing.

My wife and I want to retire to GA in 15-20. I love USA

#20 Apocalypse2015 on 07.08.15 at 6:07 pm

Sherry Cooper was just on CBC radio, sounding extremely concerned, talking about:

“….a potentially explosive decline…”

…..that seems to be staring us and our markets right in the face across Canada.

Its getting ugly. China will be pitying us, soon enough.

Sherry Cooper is now selling mortgages. Duh. — Garth

#21 Goldie on 07.08.15 at 6:12 pm

You already implied as much in your post but there is certainly a possibility of increased storage of Chinese wealth through investing, directly or through proxy, in (UK, Canada, USA, Australia, New Zealand) real estate as a result of capital fleeing the stock market and looking for a new place to sit.

Oh joy!

Actually capital is leaving Chinese stocks to cover margin loans. Sorry. — Garth

#22 robert james on 07.08.15 at 6:14 pm

They probably should have learned from the Dot Com show here in 2000,, apparently they didn`t.. Oh well,,greedy buggers usually get it in the end ( no pun intended ) as it were..

#23 WileE on 07.08.15 at 6:15 pm

HI Garth ,

I have a tax question for Garth or anyone else

qualified to answer. Off topic with todays blog post ,

but I’ll ask.

If I purchased a house in Jan. 2007, lived in it and

renovated it until the end of 2009 (3yrs). Then rented it

out from Jan.2010 to the end of 2012 (3yrs, all rents

claimed and taxes paid on a small profit annually).

Then moved back in from 2013 to present(3yrs almost).

I am now selling , closing date Jan. 2016…

SO, 3 yrs owner occupied (reno) , 3 yrs rental , and 3

yrs owner occupied again. If the capital gain is 150k

for 9 yrs of owning , How does the CRA calculate the

tax I owe. Hope I made it clear enough , and thank

you in advance to Garth or anyone else who can

enlighten me. I will investing the proceeds in an RRSP

to the max but I do not want that factored in.

#24 Marco on 07.08.15 at 6:15 pm

Thanks Garth,

This stumped me:

From the Post:

ottawa-needs-9-billion-fund-to-shield-it-from-full-blown-housing-crash-c-d-howe-warns

Is this the reason why?

From money sense:
Under Canadian law insurance companies can legally come after you to replace any lost funds due to the foreclosure of your home—it’s called subrogation, and it’s a well-used legal tactic where the insurance company will try and recoup some or all of its losses for a paid out claim.

Yikes,

Cheers.

#25 Brian Ripley on 07.08.15 at 6:21 pm

“Not the stuff to support million-dollar beater houses in 416.” Garth

Toronto housing data chart (to June 2015) http://www.chpc.biz/toronto-housing.html

Total residential sales volume remains at very bullish momentum levels of higher lows since the spring of 2013 and sales are still pushing into higher breakout highs. Average townhouse prices hit a new peak in June. Months of Inventory has plunged to one month and that is based on total listing supply not just listings added in the month.

The China memo no doubt will be included in all offers to buy housing in Canada’s hot metros next month.

#26 tkid on 07.08.15 at 6:21 pm

Dude, dude, duuuuuude, is this one of them there buying opportunities? If I have spare cash, is this a good time to buy US if I like, say IVV or SPY?

#27 Mike S on 07.08.15 at 6:23 pm

“And the stock market of China does not equal the economy of China.”

While this is true, the major problem in China is the massive RE bubble. Construction drives virtually all the growth in China in the recent years post 2008

“Never forget, as well, that China is only 50% urbanized – compared to 80% in North America”

This is not exact, urbanization has a different meaning in China, and some Canadian cities will be considered villages, thus not urban. This 50% urbanization metric is often used by China bulls to shows much more room to grow in the future. This is not the case however, and China is massively overbuilt as it is. Thus expect soft demand for commodities in the next several years regardless of their stock market performance

“Of course, China matters. But the scary stuff might be temporary. Goldman Sachs said Wednesday the market will bounce back 27% in the next year, erasing all of these losses”

Really, not 27.39%?

#28 Waterloo Resident on 07.08.15 at 6:25 pm

The fall in China’s stock market will only SLOWLY affect Canada, here’s how:
1 – China’s stock crash.
2 – Everyday people feel more poor in China, so they buy less stuff.
3 – Less internal demand results in less need for imported raw materials from Canada.
4 – Less demand for our stuff results in less profits for companies here, and our stock market then falls.

This whole process will take 1 to 2 years to come about so it won’t be immediate.

#29 randman on 07.08.15 at 6:29 pm

To all those who responded negatively to my comments about White Knights and Feminists …..I’m still waiting for an intelligent comment ….I’ll hang out here a little longer..but in the meantime you’ve proved my point!

#30 RayofLight on 07.08.15 at 6:35 pm

We visited Greece a few years ago. The impression we got was most of the Greeks were quite well off financially but the government was broke. Some bragged on how they were able to avoid taxes and with no real negative consequences . I could understand why the German ants are furious with the Greek grasshoppers. The more money given, (note -not loaned), to the Greeks , the bigger of a problem it will become for Europe. The Greeks want to have a standard of living similar to Europe, but with an economy that could barely sustain a 3rd world country. But Hey!, Greeks are different, They’re “ Special!”

#31 No Canada, No on 07.08.15 at 6:41 pm

Goldman Sachs will revise its dumb “outlook” up, when china investors © whack another 40% out its politburo-running so-called markets. They probably have a template already: “the market will bounce back 45% in the next year”.

I’m not sure whos dumber:
Chinese with it’s politburo running casino “markets” or Canadians with its RE pearls like “Executive Home On Quiet Cul De Sac In Prestigious Mississauga Road Neighbourhood”.

I think Canadians winning this time.

PS What happened to Greece? They smartly leveraged tzatziki exports to secure 50bln refinancing? Where the hell all the financial media, this is big f… deal!

#32 Fingerspitzengefühl on 07.08.15 at 6:42 pm

‘Gong Show’ — Coming Soon to A Stock Market Near You

#33 Patrick on 07.08.15 at 6:43 pm

Goldman Sachs said Wednesday the Chinese market will bounce back 27% in the next year, erasing all of these losses.

After the Goldman involvement and subsequent $550 million fine in the Paulson pump and short scam “Abacus 2007-AC1” , I think its safe to say their credibility is close to zero. They could very well be holding big long positions in Chinese markets.

http://www.reuters.com/…/us-goldmansachs-abacus-factbox-idUSTRE63F5CZ...

#34 TRT on 07.08.15 at 6:47 pm

Corporate media pumping NDP by citing polls, etc.

Don’t drink the koolaid. They are doing it to split the vote between NDP and Liberals….so Harper can win again.

Either vote liberal or conservative. And definitely not green (unless you drank).

#35 Macrath on 07.08.15 at 6:49 pm

Goldman Sachs said BTFD the market will bounce back 27%.
Same Ol’ Sell Side Crap from the vampire squid that cooked the books for Greece and rigged the commodities markets.

A largely self-contained gong show casino just like Wall Street and the FED.

#36 Michael James on 07.08.15 at 6:50 pm

I visited Shanghai, Beijing and Changsha in 2011 and 2012 and had a chance to talk to many Chinese students. When I asked about investing, almost universally, they said their families bought apartments to rent out because their value always went up. It seemed obvious then that China was headed for a real estate bubble. They seem to have added a stock market bubble too.

#37 Google is your friend! on 07.08.15 at 6:54 pm

#23 Wile – You should have looked this up in 2010:

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/rprtng-ncm/lns101-170/127/rsdnc/chngs/chngngll-eng.html

#38 Mark on 07.08.15 at 6:54 pm

“How does the CRA calculate the

tax I owe.

My understanding is that the CRA, if it came to a dispute in such instance, would simply issue an assessment for capital gains on the basis of the entire liquidation proceeds of the property. It would be up to you to justify your capital outlays (purchase price + renovation expenses), and any periods of exemption within the rules and jurisprudence of the tax system.

You might get away with calculating the appreciation on a straight-line basis and then pro-rating for the time that the property was exempt, per the rules, as a principal residence. They tend to be, as a rule, pretty reasonable when it comes to stuff like this, but they will throw the book at you if they think you’re trying to abuse the system valuations-wise.

“Under Canadian law insurance companies can legally come after you to replace any lost funds due to the foreclosure of your home—it’s called subrogation”

Absolutely. But bankruptcy, the practical consequence of defaulting on a CMHC insured mortgage, makes most of these claims only minimally worth pursuing. Similar to what happened in the USA, where there was little difference in mortgage finance stability on account of mortgages being “recourse” versus “non-recourse”.

#39 Mike S on 07.08.15 at 6:55 pm

“1 – China’s stock crash.
2 – Everyday people feel more poor in China, so they buy less stuff.
3 – Less internal demand results in less need for imported raw materials from Canada.
4 – Less demand for our stuff results in less profits for companies here, and our stock market then falls.

This whole process will take 1 to 2 years to come about so it won’t be immediate.”

Less demand for stuff (for instance iron ore) is already in place, as construction is slowing down. Even IF the construction just keeps the current rate, commodities still going to have less demand for years to come.

#40 Patrick on 07.08.15 at 6:59 pm

Re #33

Sorry, previous link posted not working. Try this one , a must read !

http://www.reuters.com/article/2010/04/16/us-goldmansachs-abacus-factbox-idUSTRE63F5CZ20100416

#41 Ben Ber on 07.08.15 at 6:59 pm

The idea that the U.S. Federal Reserve would still hike rates, pushing up the U.S. dollar, accelerating a greater decline in commodity prices, is viewed as highly unlikely.

By whom? — Garth

#42 RayofLight on 07.08.15 at 7:06 pm

#26 tkid:
Dude, dude, duuuuuude, is this one of them there buying opportunities? If I have spare cash, is this a good time to buy US if I like, say IVV or SPY?
——————————————————
I increased my positions in AVGO.N (following the “Internet of Everything” trend), in ANTM.N (following the Boomers & Healthcare demand trend) and LEA.N (following the Autos Recovery trend). I think I got them at a 5-10% discount to-day. I had sold Canadian equities last Friday and converted it to $US (following the belief the $CDN is going to .65$US trend )

#43 weedeater on 07.08.15 at 7:12 pm

Bailed on China in particular back in 2010 and individual stocks generally, except for a handful of dividend throwers, and have stuck mostly to index funds since. Investing in companies and a country that’s still communist is a losing proposition. The stock market is nothing like here and it’s delusional to trade on that premise.

#44 bigtown on 07.08.15 at 7:14 pm

Due to the PanAm traffic jam I had to substitute the McD’s DRIVE THRU for my a.m. dark blend as the STARBUCKS in the same strip mall did not have the necessary DRIVE THRU but I was rewarded with a taste equal to STARBUCKS blend for half the price of only $1.10 for a SENIOR….OK, SO IT’S only half the size of the senior size in the United States of low prices.

I was trying to get into the WINNERS at the Cloverdale Mall but due to all the PARKED CARS; DELIVERY TRUCKS AND TAXIS could not safely get out of the car to get into the entrance to the mall. Also could not clearly see where the entrance to the WINNERS was so if you CEOs of the retail world want to know why your wealthy boomer passes you up to the more civilized stops with parking where you won’t get killed before you pull out your credit card….now you know dorkman.

Anybody notice all that vacant retail space out in the GTA…there you go kids. It’s not kosher to speak English anymore. I called my insurance company to put in a claim and they sent the call to India…when you think of all the subsidies for college kids and the jobs go to Bangladash because they know how to say, “thank-you dear.”

#45 WileE on 07.08.15 at 7:17 pm

Thank you “Google it” and Mark,

I read your link , very helpful and I followed those rules so I think I will be ok , but I’ll make it clear to the CRA and honest about all of it. Sleep better.

And Mark, CRA has always been reasonable when asking questions and I am not trying anything fishy, thanks for the advice.

In the end my accountant will decide how to handle it and I will find out how much I owe in 2017, thank you

#46 Janice Patazaluea on 07.08.15 at 7:23 pm

To Marco #24

They can do a sneaky thing like the Ontario Liberals did with recent condo legislation. They will charge each condo owner $1 per month for condo disputes between condo owners and condo boards.

They can charge everyone with a mortgage say a one time $800 through CMHC.

I don’t know how many CMHC mortgages are in Canada there are but I would not be surprised there is millions.

If there is 10 million mortgages in Canada, this is 9.6 Billion collected.

#47 MSM-free Zone on 07.08.15 at 7:24 pm

“….Goldman Sachs said Wednesday the market will bounce back 27% in the next year, erasing all of these losses……”
_________________________

Goldman Sachs. Not exactly a bastion of trust and integrity.

https://www.sec.gov/news/press/2010/2010-59.htm

#48 Smoking Man on 07.08.15 at 7:24 pm

http://www.bloomberg.com/news/articles/2015-07-08/bank-of-montreal-joins-call-for-july-15-canada-interest-rate-cut
…….

Guess where all the laid off oil workers are heading , Chuck in the above calls.

Boom!! Long Branch at a Million next spring.

#49 Leo Trollstoy on 07.08.15 at 7:48 pm

Toronto housing data chart (to June 2015) http://www.chpc.biz/toronto-housing.html

Solid post. It agrees with the data showing that, despite the sales mix, prices of Toronto real estate continue to climb irresponsibly higher.

Who knows when this nightmare will end…

#50 27% on 07.08.15 at 7:49 pm

Goldman Sachs said Wednesday the market will bounce back 27% in the next year

=======

Hahaha…

#51 JSS on 07.08.15 at 7:50 pm

The question is not if interest rates will be cut next week. The real question is how much of the rate will be passed on from the banks to the consumers.

Last rate cut was 0.25%, of which most consumers received 0.15% (basically 60% of the 0.25% – the banks padded their profits with the other 40%!).

#52 nonplused on 07.08.15 at 7:55 pm

Classic bubble formation on that graph. I think I even see an Elliot (Idiot) 1-2-3-4-5 wave pattern on the way up which would suggest this is “1” of a 1-2-3 down. I don’t see the 2 yet so if there is a bounce fade it, “3” could be even more interesting than “1” has been so far.

#53 Dee on 07.08.15 at 7:55 pm

Was a little under in US exposure, and thus ended up buying VTI into the sell-off today. Felt so nice.

@29 randman: actually it’s about ethics in global economics

#54 eddy on 07.08.15 at 7:55 pm

@#1.
200k ln Van? Great, you”ll have extra cash to buy more xyprexin.
Try the automatic earth, they have an opening -StoneLeigh has returned to her home planet.

#55 gut check on 07.08.15 at 7:56 pm

Goldman Sachs. Seriously. You are going to rely on the word of GOLDMAN FREAKIN’ SACHS?

is this code or something? My God – you know they are the same thing as mafia kingpins, right? Everyone here knows about their protection racket don’t they? If not, see Greece as the latest exhibit of what trusting Goldman Sachs gets you.

Here: http://www.spiegel.de/international/europe/greek-debt-crisis-how-goldman-sachs-helped-greece-to-mask-its-true-debt-a-676634.html

#56 Chuchu on 07.08.15 at 7:57 pm

@WilE

Apparently you can submit the Election late, but there are penalties. But it may be worth it.

http://www.mnp.ca/en/media-centre/blog/2011/7/28/changing-your-principal-residence-into-a-rental-property

#57 nonplused on 07.08.15 at 7:59 pm

#17,

That’s not how margin trading typically works.

#58 Prairieboy43 on 07.08.15 at 8:02 pm

If you have time, cash. Buy Alberta Harleys. Starting to go cheap. HD fat boys < 10G. Sell in Ont.

#59 Drakor on 07.08.15 at 8:15 pm

#48 Smoking Man on 07.08.15 at 7:24 pm

http://www.bloomberg.com/news/articles/2015-07-08/bank-of-montreal-joins-call-for-july-15-canada-interest-rate-cut
…….

Guess where all the laid off oil workers are heading , Chuck in the above calls.

Boom!! Long Branch at a Million next spring.
———————–

They are headed to Halifax to build ships for Irving Shipbuilding.

#60 Jake Lipton on 07.08.15 at 8:22 pm

If you think cutting interest rates by the Bank of Canada is going to make much difference, then you are dillusional.

Every dog has its day and Canadian real estate is coming to an end.

Don’t be surprised that Poloz will be replaced in the coming months to years.

The U.S. already had a taste of what having 70%+ home ownership rates will end up like.

Enjoy it now while you can. Some comment about by a poster that Japan has an incredible standard of living.

He is dillusional too and has no idea what he talking about. This is not the current reality in Japan and their economy is in real trouble due to double bubbles, real estate and stock markets, deflation of wages, wealth, investments, sagging exports, demographics.

#61 the Jaguar on 07.08.15 at 8:26 pm

Jeepers. Hopefully the market decline in China won’t put a dent in resources for the average downpayment requirement on investor mortgages in Vancouver or the GTA. Those 2,000,000 dollar glam shacks that interest most buyers require a 700,000 downpayment.
Just chump change, I suppose.

#62 Marco on 07.08.15 at 8:28 pm

The mortgage holder forecloses, the bank sells the house CMHC (backed by taxpayers) gives the banks the difference.
CHMC gets money back from the 9billion fund, in case of bankruptcy and losses on foreclosures.
Too big to fail.
Insurance on insurance.

Cheers.

#63 Mister Obvious on 07.08.15 at 8:28 pm

#1 Stan Mikkelsen

“Vancouver detached homes will be fetching no more than $200,000 on average within a year (two at most).”
——————————-

Wow. That would mean you could pick up a Vancouver condo for the same price as dinner for two at the Keg.

#64 Shawn on 07.08.15 at 8:31 pm

You’re Both Wrong

Goldie on 07.08.15 at 6:12 pm

You already implied as much in your post but there is certainly a possibility of increased storage of Chinese wealth through investing, directly or through proxy, in (UK, Canada, USA, Australia, New Zealand) real estate as a result of capital fleeing the stock market and looking for a new place to sit.

Oh joy!

Actually capital is leaving Chinese stocks to cover margin loans. Sorry. — Garth

***************************************
True only to the extent that some shares were bought back by the companies.

For the most part every dollar leaving the Chinese or any other market is replaced by the buyer of the stocks that were sold.

When markets decline, the wealth (it never was money) disappears into thin air.

Similarly when markets rise wealth is created from thin air (hopefully to be justified buy future profits but for the moment created out of thin air).

It does not matter how many times people repeat such fallacies as “capital fleeing markets” or “stocks selling off”. The reality is still that stocks are almost always sold to another buyer. Selling always precisely equals buying (even if the company itself buys back the shares though that can be said to be money leaving the market as it money flowing out of the company.)

Capital goes into corporation via markets at IPOs and secondary share offerings comes out ONLY as dividends and buybacks.

When people bid up share prices or bid them down by trading with each other no net capital flows in or out of the companies much less the market itself.

Of course it is true that some investors were forced to remove their capital for what they could get to cover margin loans, but that capital was replaced by a buyer and none left the market in the net.

#65 Robert on 07.08.15 at 8:45 pm

Buy and hold strategy combined with buy the dips seems to be the answer from the Financial Community. IMO if your Broker or Wealth Advisor is telling you ” no worries ” I am afraid that is exactly why you should start worrying. The TSX is looking horrific as multiple support levels are broken and this time we could be facing a long term Bear Market that could last for years. Bear markets are powerful and have a habit of creating dead money for investors. Sorry Garth but I believe there are times when cash is king and I believe we are in one of those times. To hell with growth versus risk how about just plain old preservation of capital.

You pose an excellent example of why DIY investors fail. There is no indication of a market crash coming. A correction, perhaps. No bear. Get a grip. — Garth

#66 joblo on 07.08.15 at 8:47 pm

#19 Ottawa Guy long handle………

“Amazing. GD Amazing.”

Did you see prop tax over $4K for 1464 sq. ft. in Wisconson?
I’ll say Amazing

#67 MGTOW on 07.08.15 at 8:49 pm

Wow, the CHINA MELTDOWN is getting serious !

From: http://www.bloomberg.com/news/articles/2015-07-08/china-market-crash-spreads-from-stocks-to-the-price-of-pig-food

“Around 2:30 p.m. in Beijing, when the prices of almost all raw materials dropped to their daily limit, the trading floor at Beijing Ruigu Investment Co. went so quiet not even the sound of typing on a keyboard broke the silence, according to Wang Zhe, a trader at the commodity fund.
“Everyone staring at their screens was dumbfounded,” he said.”

#68 Retired Boomer - WI on 07.08.15 at 9:00 pm

#19 Ottawa Guy Renting….

I lived in Madison for 8 years (on the east side), just south of Cottage Grove Road near Hwy 51 Stoughton Rd.

Other than small under 1/2 acre lots, and $4500 a year taxes, it is quite a decent area.

Madison has under average unemployment, and pays above average salaries (what’s wrong with that?).

Frankly, moved from there to La Crosse county for lower taxes, lower land costs, built what we wanted, and I could work from home telecommuting to the office 4 times a year! Doesn’t get better than that deal!
*******

The markets had a Greek / China reaction today. Every market control China has tried has resulted in more chaos to their market. Guess we can see that 10% correction to shake out the weak hands soon. Market falls, it is wonderful, and expected! It will recover, it always does, right?

Greece may get a rational deal from the Troika who has been screwing them, knowing their debt levels are unpayable. Portugal, Spain, Italy, et al, are waiting in the wings… OR, will this lead to the break-up of that half-assed, ill conceived idea of a single currency? The Euro may get back to that .88 cents where it belongs….
Costly lesson there for poor planning, but so it goes.

#69 Joseph R. on 07.08.15 at 9:02 pm

Krugman talked about Canada’s success with austerity policies of the mid-90s (Canada rating was downgraded from Moody’s) :

“The answer was, easy money and a large currency depreciation. These offset the drag from austerity, allowing growth to continue.”

http://krugman.blogs.nytimes.com/2015/07/08/policy-lessons-from-the-eurodebacle/?module=BlogPost-Title&version=Blog%20Main&contentCollection=Opinion&action=Click&pgtype=Blogs&region=Body

If he is correct, then the next government, whichever colour it will be, will reintroduce the same policies as Paul Martin did: low Canadian dollars, transfer responsibilities to the provinces while the Federal government collects the tax money.

Looks like the interest rates aren’t going up anytime soon but you federal taxes are.

#70 april on 07.08.15 at 9:03 pm

#14 – … don’t think so…….

#71 Freedom First on 07.08.15 at 9:06 pm

Margin calls on frozen assets. Similar to a RE Foreclosure. Painful.

Leverage is dangerous, and only thinly disguised either fear or greed. And borrowing from the equity in your house, for any reason, including investing, which is also only a thinly disguised greed, is insane.

#72 paul on 07.08.15 at 9:07 pm

The Perfect Storm
To Many People In To Many Countries Living Beyond Our Means, With Borrowed Debt . Looks Like Its Time To pay Up , Serious Reality Check About To Take Place Im Thinking

#73 Nagraj on 07.08.15 at 9:12 pm

THE CONSOLING PAW

The centrepiece of today’s photo is the dog’s right front leg, Rembrandtesque lighting and all. This looks remarkably like a Dutch classic. There’s the mirror to comment on perspective, and the rug – brilliantly emphasized by the dog’s tail – to philosophize on commerce. Not to mention the wood furniture. Serious serious serious.

– so how come nobody’s crackin’ jokes about the 1929ish Chinese stock mkt and the hilariously stupid attempts by the Chinese Authorities to stop the slide? Worried ’bout sumpin, are we? Like maybe a comparably stupid idea like a $9B “fund” needed to HELP homeowners in Frozenbugsuckerland?

Come to think of it, THE CONSOLING PAW has a religious dimension in that the canine symbolizes faithfulness. Oh, gravitas! And the young lad is praying. (Maybe he can’t come up with the condo fee.)

#74 Andrew Woburn on 07.08.15 at 9:15 pm

Not sure why anybody thinks the Chinese market crash will cut their demand for global real estate. A chunk of the decline was simply the erasure of unrealized gains. The rest was a transfer of cash to the smart money from the pockets of factory workers and fruit vendors and they weren’t going to buy Canadian condos anyway.

The real cost is to the reputation of the Chinese government. I don’t see how this gong show will help in becoming a major reserve currency. And would you invest in a Shanghai listing now or any time soon?

It wasn’t Reagan that brought down the Soviet regime. It was the internal inconsistencies in a command economy. China is now showing us what “socialism with Chinese characteristics” looks like. What it doesn’t look like is a market.

#75 bdy sktrn on 07.08.15 at 9:22 pm

#73 Nagraj on 07.08.15 at 9:12 pm
THE CONSOLING PAW

The centrepiece of today’s photo is…
——————————

and i was sure it was the owner consoling the dog over the fact that Jellybean the cat was off the potential lunch menu.

#76 Smoking Man on 07.08.15 at 9:23 pm

In linkedin I joined the science fiction readers and writers group.

What a bunch of complete loser’s.

They all write like their still trying to get an A. They all use ten dollar words as if in a compitition with other writers. But they can’t tell a story and keep the reader interested. Writing is all about deep Character development and constant action, flow.

My advantage is I wasn’t conditioned to tell a story this shit way. Thank you Dyslexia….

Look at this garbage…. Yet other highly educated writers thought it was good.
Zzzzzzzzzzzzzzz Puke…

“Gulbrand Manfredsen flinched as the door slammed shut behind him. The sterile white light of the hallway provided a perfect counterpoint to the moaning of the wind outside, audible even through the stout walls of the Cadre’s new headquarters, like the world itself were singing a lament for him. The echo of the door-slam preceded him down the hall from his new commander’s office like the hammering of nails into his career’s coffin.”

#77 watching China on 07.08.15 at 9:27 pm

Won’t the margin calls force some of the investors to offload properties held in places like Canada?

#78 observer on 07.08.15 at 9:34 pm

some see fear. I smell opportunity….

#79 TurnerNation on 07.08.15 at 9:40 pm

The Al-Bankquers have us in fear with chatter about a rate hike next week. The Unthinkable to holders of variable debt.

#80 cramar on 07.08.15 at 9:43 pm

We just spend two days visiting wife’s Greek relatives in Markham. Got to see first hand what is going on. We walked around in Rouge River area to get a feel of the local housing. Nice area for walking. Golf course. Large houses on tiny lots. Wife kept asking why people need/want such big houses? I was stunned at the cars parked in drives. Never seen so many Lexus SUVs concentrated in a single area before! Very few houses for sale. Ironically, the house next door to sister-in-law (SIL) is for sale, asking $700k—one of the cheaper ones. Owned by Chinese couple. Twenty couples in to view last Sunday. One of SIL’s friends just sold for $850k. SIL says most people moving in to Markham are Chinese and East Indians with money. Vast majority of people I saw walking or driving were oriental, but did see a group of East Indians and a few isolated Caucasians.

Much of the talk with relatives involved RE (as well as Greece). Some are actually involved in the RE industry. The Millennial generation of 20s something are buying condos (some with help from Bank of Mom/Dad). A couple for construction completion in 2017. One 50s niece put deposit in for 2018 completion and plans to downsize from her $1m SFH then. One nephew in Mississauga with a large 5BR house worth close to $2m (there are 3 in family), just bought a luxury cottage on a Muskoka island only accessible only by boat (which they also bought). Ironically he cannot stand bugs and critters. Figures it will be a good investment anyway. I’m interested in how this will play out.

The common denominator of all the relatives from Boomers to Millennials is the belief that the RE gravy train in the GTA will continue on into the future. Nobody remotely expressed any belief that house prices will do anything but continue to go up indefinitely.

Glad I am not a part of this deluded mentality.

#81 Drill Baby Drill on 07.08.15 at 9:45 pm

The China stock market will and is affecting the NYSE. Any company basing it’s future growth projections on expanding markets in China is currently caught in a downdraft.

#82 Smoking Man on 07.08.15 at 9:45 pm

#75 bdy sktrn on 07.08.15 at 9:22 pm
#73 Nagraj on 07.08.15 at 9:12 pm
THE CONSOLING PAW

The centrepiece of today’s photo is…
——————————

and i was sure it was the owner consoling the dog over the fact that Jellybean the cat was off the potential lunch menu.
…….

Let me take a shot at the caption.

DOG
” I know your upset, you must have seen the signs by now, the arrogance, the conceded walk, leaving the house for days at a time.

I’m sorry but you can’t hide what you are forever master. I know my choice will make me much less likeable but its something I was destend for.

I will finally realize a life long dream and be able to vacation in China without fear.

I’m getting the operation and I give no damn what anyone thinks. You must know I was always ment to be a cat.

#83 Drill Baby Drill on 07.08.15 at 9:52 pm

Quoting Goldman Sachs is not a good way to build credibility. G&S were the ones who assisted Greece with their application to enter the EU.

G&S employs a lot of smart people. The prediction quoted came from one of them. Please share your qualifications with us. — Garth

#84 boonerator on 07.08.15 at 10:01 pm

I am grateful to a blog dawg here who pointed out the Chinese stock market bubble and recommended a position in FXI, an ETF that shorts the Chinese market.
FXI is smoking.
Thanks dawg.

#85 Karma on 07.08.15 at 10:03 pm

#169 Mark on 07.08.15 at 3:01 pm
““A $2,000 credit balance with an 18% annual rate, with a minimum payment of $10 would take 370 months or just over 30 years to pay off.”

Really? At 18%, the interest alone on such an obligation is $360/year. How is paying $120/year going to actually ever pay such a loan off?”

Credit cards’ minimum payment is the greater of $10 or 3% of outstanding balance. So technically, $10 wouldn’t be allowed (i.e. would be in arrears) since 3% of $2,000 is $60 a month.

#86 boonerator on 07.08.15 at 10:04 pm

Well duh, make that YXI, not FXI

#87 Yuus bin Haad on 07.08.15 at 10:11 pm

Word is the Chinese are blaming their predicament on those hostile short-selling Vancouverites.

#88 Rural Revolution on 07.08.15 at 10:12 pm

This morning when I released the chickens from the coop, I noticed they didn’t immediately rush to the compost pile or the barn or any of their other usual haunts. In fact, they all stood stock-still under the awning by their chicken coop, utterly silent.

Their heads were cocked upward. I scanned the skies for a predator but didn’t see anything.

Aha. I was wrong, the chickens were right. Perched way atop a dead tree was a great blue heron. Not, I will add, the usual perch for a heron. No wonder the chickens were wary.

A heron is a carnivore, but its usual prey is fish, frogs, etc. It would certainly never attack a chicken — not so much because it wouldn’t mind a nice juicy little chick, but because its body is not suitable to a swoop-and-catch like a hawk or eagle.

In a few moments the heron flew away, and the chickens relaxed.

This short and seemingly trivial incident actually has some deeper meanings for people.

Modern humans living in modern society with modern conveniences have learned to ignore the internal red flags that all creatures possess by instinct. In the kill-or-be-killed crucible of nature, to ignore a potential threat may be the last thing an animal ever does.

Yet people will do it all the time. In fact, most modern Americans have cultivated an amazing ability to disregard warning signs, both internal and external. We still have the instincts, but we’re often too “civilized” to pay attention to them. But I figure instinct is there for a reason, and that reason might be very important.

This is some of the advice I gave Older Daughter as she prepared to leave the nest: to listen to that still, small voice inside you saying something is wrong. It may be saying something important. God gives us those little red flags now so we can avoid big problems later.

#89 Chaddywack on 07.08.15 at 10:12 pm

I wonder what the effect on China will be pumping all that money into the stock market. It has to have some effect either on the currency or something?

#90 Drill Baby Drill on 07.08.15 at 10:20 pm

G&S falsified Greece’s credit worthiness. Liar loans on a grander scale. The EU bought this load of tripe based on G&S recommendations. Please do not even try and state that G&S is credible.

Like you? — Garth

#91 TurnerNation on 07.08.15 at 10:20 pm

Gee. CBC teevee newz tonight had an almost predictive-programming story on potential economic costs to an EMP (electro magnetic pulse) strike on NE Usa.
What are they telling our minds. Why now.

#92 Leo Trollstoy on 07.08.15 at 10:21 pm

I love how societies always blame ‘foreigners’ for their problems. Sheeple are so predictable.

http://www.zerohedge.com/news/2015-07-08/chinese-media-blames-soros-hostile-foreigners-stock-bloodbath

#93 debtified on 07.08.15 at 10:23 pm

Awesome. Thank you, Garth.

Okay, let me see if I got this right…

1. Chinese markets issues are still largely self-contained. I agree.
2. Impact on rocks and trees and oil not bad for Europe and the US – bad for Canada. However, cheap energy is a good thing. I agree.

Garth, I have always understood that the move to liberalize the stock market was a way to entice the Chinese masses to deploy their enormous household savings into the economy to make up for the slow down in the industrial-based growth. That may have failed, increasing the risk for the second biggest economy in the world to go negative.

I have always thought that, if China goes down, it will take the rest of the world down with it. I am getting the impression that this does not concern you that much.

Lastly, and more importantly, I have given it some thought and I am now prepared to bid for Nancy’s email address. I think I have a pretty good shot. Is the bidding still open? ;)

#94 Leo Trollstoy on 07.08.15 at 10:24 pm

Won’t the margin calls force some of the investors to offload properties held in places like Canada?

It would if they actually owned an amount of RE of any significance.

They don’t.

So don’t hold your breath.

#95 TurnerNation on 07.08.15 at 10:25 pm

Was the NE huge power blackout ~10 years ago a dry run, did the Cascading theory hold water or sense vs gross sabotage? It never happened anywhere else.

#96 up tik on 07.08.15 at 10:28 pm

Ohho China market on uptick is it a good time sell Vancouver homes and pile into beaten down China markets. Thx Mr Xu

#97 mathman on 07.08.15 at 10:29 pm

When I was growing up in the 80’s, someone driving a mercedes or a BMW was generally quite wealthy. I grew up in a lower middle class area, so seeing these cars was rare. Today the only requirement is a heartbeat, and you can happily drive off the lot with a low end luxury car from any of the brands.

our problem is not just housing, it is auto debt, people buying $5000 tv’s, the list goes on and on. We are financing every aspect of our lives in a vain attempt to project success. The further we kick the can down the road, the more harsh the day of reckoning will be.

I have been trying to make the numbers work for the better part of 10 years, and still can’t understand what is keeping our house of cards standing in this country.

CMHC and low rates are the main culprit, parents are the other, the third is just that until rates rise folks can continue to hang on for dear life. Once rates do rise and the taps are turned off, a lot of folks will be SOL. This will have a profound impact on our economy. The wealth effect has extreme power in both directions, and when sentiment changes is will be ugly.

The second I as a responsible contributor to society get asked to bail out the majority who has been irresponsible I will be on the first plane out.

#98 Sideshow Rob on 07.08.15 at 10:30 pm

Several thoughts on this:

“Goldman Sachs said Wednesday the market will bounce back 27% in the next year, erasing all of these losses.” That tells me Goldman is stuck with it’s pants down long the shanghai. They are talking their book. Get out now. If you can.

Half the stocks on the Shanghai exchange are frozen. But the margin calls are coming in fast and furious. Guesswhat? They can’t raise money to cover those margin calls because they can’t sell. Morons. This is what happens when amateurs make the rules. They will create the biggest panic ever seen. Let us know how it works out for ya.

#99 WhoLikeShortShorts on 07.08.15 at 10:38 pm

Looks like the yellow peril has hit Japan now according to Aussie MSM:

First Sydney, now Tokyo: Chinese descend on Japan’s property market, pushing up prices

http://www.brisbanetimes.com.au/business/first-sydney-now-tokyo-chinese-descend-on-japans-property-market-pushing-up-prices-20150703-gi49qu.html

#100 anotherstabbinginsaskatoon on 07.08.15 at 10:42 pm

We are Gods.

#101 Show me the Money on 07.08.15 at 10:44 pm

Garth

What do you think will Canada cut rates again on Wednesday or anytime in the near future?

I hope not. It would be an error. — Garth

#102 Doug in London on 07.08.15 at 10:52 pm

Why all this worry about the Chinese stock market? it got WAY OVERVALUED and is coming back to within sight of normal with a good telescope. It’s just part of the cycle, like the cold front that went through Southern Ontario yesterday, bringing the hot sweltery temperatures down to more normal values today. Hey, the Chinese stock market is getting cheaper, those people who were out of the market can get in now! How can that be a bad thing?

#103 Shawn on 07.08.15 at 10:54 pm

SUPPORT LEVELS BROKEN – LMAO

the net.
.#65 Robert on 07.08.15 at 8:45 pm said:

… The TSX is looking horrific as multiple support levels are broken and this time we could be facing a long term Bear Market that could last for years.

********************************
“Support Levels” are a figment of the imagination of those who practice the voodoo-like art of technical analysis (which is neither technical nor is it real analysis).

And if support levels were real they would presumably not be broken.

Stop thinking of stocks as squiggles on a screen and instead think of them as shares of real companies with real earnings. In other words forget “technical analysis” and focus on valuation and fundamental analysis.

#104 Smoking Man on 07.08.15 at 10:59 pm

#92 Show me the Money on 07.08.15 at 10:44 pm
Garth

What do you think will Canada cut rates again on Wednesday or anytime in the near future?

I hope not. It would be an error. — Garth
……

Garth , where did prozak work before… Who are is buddies he’s tight with…

An election year. Neocons or communist, lesser of two evils.

As I’ve preached here for years , trade balance , and labour pool drive rates.

Can’t remember the exact countries at moment, but we’ve had cuts, currency wars.

Hope all you want… Dude.

Thing is, he got his balls busted in Jan, he might hold of till the next one, just to show he’s got nuts.

Naw

He’s cutting..who’s long USDCAD

#105 anotherstabbinginsaskatoon on 07.08.15 at 11:00 pm

So begins the Collapse of The Great Chinese Housing Bubble.

#106 Sheane Wallace on 07.08.15 at 11:01 pm

FXI has P/E of 11, compare that to European and US P/E of 17 + and Canadian R/E P/E of 35 +.
The russian ETF has P/E of 6 and dividend of 4.7 %+

Bubble in China?
I don’t think so.
There is something else going on, most likely financial warfare and intended aggressive short-selling. Time will tell.

Of course BOC will cut interest rates. They will cut again after that to 0.5 %. As I said the loonie (the name stands for itself) is toast. Loo at the trade deficit widening.

#107 Sheane Wallace on 07.08.15 at 11:03 pm

Smoking Man:

He’s cutting..who’s long USDCAD
———————-
I am. CAD going down big time. Mark, put on the diaper.

#108 Has anyone seen this? on 07.08.15 at 11:05 pm

http://www.globalresearch.ca/goldman-sachs-doesnt-have-clean-hands-in-greece-crisis/5459498

#109 Cici on 07.08.15 at 11:05 pm

#4 ILoveCharts and #14 bdy sktrn

Puh-lease, what part of sarcasm do you boyz not get? Pull yourselves together, because GT was only being facetious!

#110 Sheane Wallace on 07.08.15 at 11:09 pm

BTW, The BRICS bank was lunched today. Coincidence with the ‘crash’ in the chinese market?

Emerging markets will be very strong buy pretty soon, as well as junior miner. huge discounts, great future. Opportunity for 4-5 times increase in the next 10 years.

#111 A good SciFi Writer on 07.08.15 at 11:09 pm

Ref #76 Smoking Man’s lament

Two good SciFi writers (and that is not an oxymoron) are John Scalzi and Robert Sawyer. Both write creative, imaginative stories with wonderful, natural dialogue. Scalzi’s Old Man’s War is extremely inventive and Sawyer’s Neanderthal trilogy was brilliantly realized. These two writers make it look easy.

And lest we forget our esteemed blog host, he too writes in a very easy-to-read, accessible style that is a treat to read (not that he sugar-coats anything).

As always Herr Schmauchen, you must read other writers to become a better writer yourself. Try a little Thomas Mann sometime.

#112 Sheane Wallace on 07.08.15 at 11:09 pm

launched

#113 TJ on 07.08.15 at 11:15 pm

Garth, liked your post very much, but would echo the statements of the blog dogs on Goldman Sachs. They are definitely not a trustworthy source and are very likely putting out such statements for their own self-interest…perhaps trying to reassure clients that are currently getting smoked in the meltdown?

The Shanghai market just jumped 5%. — Garth

#114 Helena Cranz on 07.08.15 at 11:18 pm

#151 gut check on 07.08.15 at 1:19 pm
@ #142 BlackDog on 07.08.15 at 12:38 pm

Why is misogyny OK, but racism is not?
__________________________________

It’s a mystery, isn’t it?
I have watched the respect women slowly began to carve out for themselves devolve in the past ten years to the point where women are just meat – talked about as if we’re not even in the room. Devalued for everything but the utility of our sex appeal or cooking skills…”

Don’t forget many of the best chefs in the world are men, so you may need to tweak your incorrect and equally sexist political statement here….

#115 Ferdielite on 07.08.15 at 11:19 pm

#147 NEVER GIVE UP on 07.08.15 at 12:57 pm
Im starting to like this Leroy Washington, in a sick and twisted sort of way…..”
I wanna put this guy in the cage with the guy from the I am a Canadian beer commercial…https://www.youtube.com/watch?v=BRI-A3vakVg

let them duke it out in a winner take all brawl fest. Garth is ref….game on lads!

#116 Ferdielite on 07.08.15 at 11:20 pm

#93 Mark on 07.08.15 at 12:59 am
“Isn’t japan in a deep recession, some say some type of depression, economic malaise since 1990?”

If you’re a useless banker type, then there aren’t good returns to be had in Japan. But the average Japanese citizen enjoys a phenomenal standard of living ….”

I think many Japanese might take issue with your definition of phenomenal….

#117 45north on 07.08.15 at 11:20 pm

Over the kitchen table I hear there is a flight of capital from China to Vancouver.

I think Andrew Woburn has it right: Not sure why anybody thinks the Chinese market crash will cut their demand for global real estate. I mean it is possible that somebody in China will sell his Vancouver property to meet a margin call in China but so far the Vancouver property looks a lot safer than Chinese stocks. If anything the flight of capital will accelerate.

Ottawa Guy: Joblo: Did you see prop tax over $4K for 1464 sq. ft. in Wisconson? yeah I did. $4K taxes is a lot.

Mike S: Of course, China matters. But the scary stuff might be temporary. Goldman Sachs said Wednesday the market will bounce back 27% in the next year, erasing all of these losses”

Really, not 27.39%?

your point of course is that 27% presents the illusion of precision. Nobody knows. ( add emphatic expression )

Ben Ber: The idea that the U.S. Federal Reserve would still hike rates, pushing up the U.S. dollar, accelerating a greater decline in commodity prices, is viewed as highly unlikely.

if the the US Fed hiked rates, capital flight into the US would be biblical. It’s going to.

#118 Shawn on 07.08.15 at 11:25 pm

BRICS bank launched. It will be “lunched” later?

Who owns it? It’s not likely that Brazil, Russia, India and China opened a bank together so what is this BRICs bank that you speak of Sheane?

#119 Germnita on 07.08.15 at 11:25 pm

“Investors here who owned ETFs like the large-cap FXI saw the value rise by three-quarters – outstripping returns from any virtually all other corners of the world.—Garth”

Garth, not to be pecksniffian, but the world is no longer flat….so there are no real corners to speak of…..

#120 Shawn on 07.08.15 at 11:29 pm

My Mistake

Okay so the BRICs countries did together launch a “development bank”

Yes, sounds sure to be lunched.

#121 Germnita on 07.08.15 at 11:33 pm

#76 Smoking Man on 07.08.15 at 9:23 pm
In linkedin I joined the science fiction readers and writers group.

What a bunch of complete loser’s.

They all write like their still trying to get an A. They all use ten dollar words as if in a compitition with other writers…”

Would love to see your own self-assessment of the monetary value of your words….in dollarettes please!

#122 CD on 07.08.15 at 11:36 pm

The SSE Composite Index more than tripled from oct 06 to oct 07 (from the 1700s to 5600s). Then the following year (till oct 08) the market crashed (went to the 2000s). It looks like the same pattern as before

#123 Germnita on 07.08.15 at 11:40 pm

“You pose an excellent example of why DIY investors fail. There is no indication of a market crash coming. A correction, perhaps. No bear. Get a grip. — Garth”

Garth, why do you care if a bear market exists….with a balanced portfolio, things should be okay, right?

Bears take everything down. But balanced portfolios fall less and recover faster. You’re right. Investors with this portfolio can usually snooze through scary times. — Garth

#124 I Hate Garth on 07.08.15 at 11:43 pm

NYSE- “glitch” – sure. Just like gold and silver going down during all of this commotion. ‘Flash Boys’ (PPT) are doing an amazing job of keeping this afloat. The problem is- there is more currency to be made on the downside and more real tangible items to confiscate for the monoploy money they create. That is WHY it will go down hard here. All when they are ready to pull the pin and go short. BYE BYE Mr. diversified. The time for warning is done and the ignorance has made me very jaded. You poor mothers are going to get it good- especially you Garth!

Thursday morning – Dow is up 200 points and Shanghai jumped 5%. How’d that short work out for you overnight? — Garth

#125 IKnow on 07.08.15 at 11:48 pm

Garth, about this Chinese dude thing, may I repeat myself… here goes, rich Chinese from China is NOT the cause of YVR value explosion. BUT their presence is THE CATALYST that entices local ethnic Chinese to buy, for fear that Hong Kong type valuation will soon be defining Vancouver! Local ethnic Chinese is the epicentre of the value explosion, I know the mindset ’cause I’m one of them. Other Vancouverites then drink from the same fountain.

#126 devore on 07.08.15 at 11:56 pm

#4 ILoveCharts

Craziness in China will drive YVR house prices even higher.

You guys have to make up your minds. Is China crashing or China booming good for Vancouver RE?

#127 Unhinged Loon on 07.08.15 at 11:58 pm

As the Chinese economy matures, so do their stock markets. A sell-off and adjustment is normal and quite welcome, I’d be worried if they managed to double their indexes every 2 years…

Chinese growth will taper as their economy becomes saturated, and will eventually join the mature economies with 0-3% growth in the next few years.

#128 Mark on 07.09.15 at 12:00 am

“Won’t the margin calls force some of the investors to offload properties held in places like Canada?

It would if they actually owned an amount of RE of any significance.

True Trollstoy. However, given the tone of blaming the “Chinese” for the bubble’s inflation, I wouldn’t put it past the same folks to also blame them for the housing bubble’s accelerating deflation. Which reveals yet again the disgusting nature of a certain few in the RE industry desperate to blame everyone but themselves and the CMHC for the overvaluation.

#129 Carpe Diem on 07.09.15 at 12:05 am

AS per Douglas Adams ….

Don’t Panic!!!

42 is the answer.

For me, that’s 42 days of vacation this summer … it sure gets you sane again…

It’s nice to not be an employee.

You can always tell your client, you are

“offline for 2 months and won’t renew the contract extension. But if you need someone with this and that knowledge. Go to market.”

That’s when the market can win or I do.

The process take 2 months.

42. That’s the answer!

#130 Ed on 07.09.15 at 12:07 am

RE China’s Connection to Canadian RE Bubble
Bubbles are fundamentally a crisis looking for a trigger. Just like the run-up, the trigger does not have to be logical–just emotional. It is highly conceivable that a fear of (fictitious) Chinese money leaving the Canadian RE market might be a strong enough emotional trigger (along with lowering of oil, coal, and other rock prices) and the fantastic housing bubble in Canada begins the long ride down. This is not a prediction, but it is a possibility just as wildly illogical as the RE and resource bubble has been. Mr. Spock would be confirmed that human emotion is an ineffective way of driving investment.

#131 Astro on 07.09.15 at 12:32 am

Just wanted to confirm something if anyone cares to double check this – I went to the cmhc website to look up the condo completions/unsold/unoccupied and supply numbers

Supply looks like it’s down yoy, but the completions/unsold/unoccupied looks like about 300% up from last year. That doesn’t look right. I remember a chart a week ago from Ben Rabidoux that showed this number spiking almost as high as early 90s peak. This trend looks to be continuing higher but supply seems steady. Absorption looks higher than last year but not 3 times as much.

Anyone have any insights? Thanks in advance

#132 Jin on 07.09.15 at 12:32 am

Doesn’t matter what happens in any market…

Keep calm and keep investing in 0’s and 1’s on some computer screen.

#133 Retired Boomer - WI on 07.09.15 at 12:37 am

What’s that smell?………

My olfactory orifice sniffs a tightening of credit conditions, soon.
What does this do to the U.S.? Or- maybe it was just a ripe Banker looking for a different job?

Hmmm…. interesting times, indeed!

#134 Suede on 07.09.15 at 12:38 am

Rate cut

Whacha gonna do, brother…When Polozomania cuts the prime rate under you.

Hit my music!

Man oh man this country is heading down a dangerous path.

How much can a $5k FOREX bet net me at 200:1 leverage long USDCAD if the loonie tanks another 10 cents after a rate cut and NDP election?

Now, how to make money in USD…

#135 JohnL on 07.09.15 at 12:51 am

Seems the futres market is thinking Mar2016 for first FOMC cut……..

https://pbs.twimg.com/media/CJaYmQpWoAA84h6.png:large

#136 Joe2.0 on 07.09.15 at 1:30 am

Harry Dent mentioned today the vast amount of money that has left China and is being laundered into RE, and he mentioned Vancouver.

#137 BillyBob on 07.09.15 at 2:09 am

Rural Revolution on 07.08.15 at 10:12 pm

Modern humans living in modern society with modern conveniences have learned to ignore the internal red flags that all creatures possess by instinct. In the kill-or-be-killed crucible of nature, to ignore a potential threat may be the last thing an animal ever does.

Yet people will do it all the time. In fact, most modern Americans have cultivated an amazing ability to disregard warning signs, both internal and external. We still have the instincts, but we’re often too “civilized” to pay attention to them. But I figure instinct is there for a reason, and that reason might be very important.

This is some of the advice I gave Older Daughter as she prepared to leave the nest: to listen to that still, small voice inside you saying something is wrong. It may be saying something important. God gives us those little red flags now so we can avoid big problems later.

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

This is an interesting topic to me, because it is something that in my field as an airline pilot, we dissect and analyze. Several times over my career I have had the vague, uneasy feeling that something “just wasn’t quite right”. Many accidents have happened because pilots have overridden this instinct and continued on, without resolving some ambiguity or another. This phenomena has other fancy names such as “fuzzy logic” or “cognitive dissonance”, but in the end it comes down to having some trust in your own instincts. This comes with experience. There is no place for denial in a flight deck. It certainly seems to be the way many people live their lives though.

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

Smoking Man on 07.08.15 at 7:24 pm

http://www.bloomberg.com/news/articles/2015-07-08/bank-of-montreal-joins-call-for-july-15-canada-interest-rate-cut
…….
Guess where all the laid off oil workers are heading , Chuck in the above calls.
Boom!! Long Branch at a Million next spring.

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

Boom! And CAD goes for a dump. I hope you’re right. AED is pegged to USD….

#138 Leo Trollstoy on 07.09.15 at 2:16 am

Naw

He’s cutting..who’s long USDCAD

To the bone!

#139 cynically on 07.09.15 at 3:08 am

@94 Leo Trollstoy

So you don’t think the Chinese actually own an amount of RE of any significance. Proof please?
None of us really know how significant the figure is but many think it is pretty high but certainly not high enough to bail out their stockmarket I will agree.

#140 Justin on 07.09.15 at 3:24 am

Hi Garth,

Thanks for all your helpful comments. I think I am completely on board with you about the risks of the Vancouver market. But curious to know what you think about Vancouver suburbs such as Burke Mountain, Delta, Maple Ridge, Langley. Given current Vancouver prices, aren’t we going to see more and more every day families spreading out to these suburbs? Wouldn’t that bolster prices in these areas?

#141 Investorz on 07.09.15 at 6:51 am

Shanghai is another one of those places where people inflated condo prices. A good chunk of the real-estate gains has gone into their casino stock market. Punish their excess by buying $FXP. It shorts their market.

Actually I don’t recommend that, but enjoy looking at ASHR or FXP over the next month, there should be more ridiculous moves :)

#142 Vangrrl on 07.09.15 at 6:59 am

Just when you think Canadians can’t possibly get more stupid….
http://www.cbc.ca/news/business/shadow-mortgage-lending-on-the-rise-as-house-prices-soar-1.3144317

#143 jess on 07.09.15 at 7:25 am

U.S. experienced in the 1930s, as explained at the time by President Franklin D. Roosevelt:

“…our basic trouble was not an insufficiency of capital. It was an insufficient distribution of buying power coupled with an over-sufficient speculation in production. While wages rose in many of our industries, they did not as a whole rise proportionately to the reward to capital, and at the same time the purchasing power of other great groups of our population was permitted to shrink. We accumulated such a superabundance of capital that our great bankers were vying with each other, some of them employing questionable methods, in their efforts to lend this capital at home and abroad. I believe that we are at the threshold of a fundamental change in our popular economic thought, that in the future we are going to think less about the producer and more about the consumer. Do what we may have to do to inject life into our ailing economic order, we cannot make it endure for long unless we can bring about a wiser, more equitable distribution of the national income.”

=======================
…” A whole bunch of CEOs of EU banks (primarily German and French), solely on their own initiative, made enormous bad loans, mostly to private Greek banks that cater primarily to the wealthy.

These loans from foreign EU banks to Greek banks rarely took the form of insured deposits. (When we make a deposit in a bank we are making a loan to the bank.) Instead, the CEOs overwhelmingly chose to make uninsured and unsecured loans to Greek banks and companies. The CEOs made this decision for the reason they invariably make this decision – the quest to be made wealthier through higher yield. The riskier and the larger the loans they made to the Greek banks and companies, the higher interest rate the foreign EU banks charged, the higher the (fictional) “profits” they reported, and the higher the compensation the CEOs and officers of the foreign EU banks received.

I emphasize a critical point here that most banking “experts” ignore. It is common for the CEOs of the lenders to agree to lending terms in which the interest rate on the loan is higher than the banks’ typical yield on a loan – and for that “spread” still to be grotesquely inadequate relative to the true risks of making the loan. The resultant paradox is that the worse the underwriting (and underwriting is the first foundation of prudent, honest banking), the higher the (fictional) nominal yield, the higher the (falsely) reported profits, and the greater the bonuses to the elite bankers in the near term – and the greater the true losses that will only be recognized in the longer term. “…read more @

By William K. Black
http://neweconomicperspectives.org/

jamie dimon annual to shareholders
page 26
http://www.scribd.com/doc/88143909/Annual-Report-Letter
VI. THE MORTgAgE bUSINESS – THE gOOD, THE bADAND THE UgLY

#144 Llewelyn on 07.09.15 at 8:37 am

Citizens of Greece relied on debt to improve their standard of living. Those rascals!!!

Lucky citizens of Canada or Ontario behaved themselves and lived within their means. Right!!

Come on boys and girls lets acknowledge that we are fortunate enough to live in a great big country that was blessed with lots of natural resources to sell. Even with all of our considerable blessings our economy was not able to maintain our current standard of living without billions upon billions of dollars of debt that will eventually have to be repaid.

The theory is that economic growth will generate the revenue required to service well over $2.0 trillion in total debt and unfunded liabilities. It’s a great theory but unless I am missing something a key component of this theory is economic growth.

Every month that the Canadian economy fails to expand and every billion dollars added to our cumulative debt by desperate governments move us closer to the crisis currently facing the citizens of Greece. You can only live beyond your means for so long before the music stops..

After the majority of our non-renewable resources have been liquidated and a major portion of our manufacturing sector has relocated to countries with lower wages where will the revenues required to service our debt come from. In 2014 over 75% of Government of Canada revenue was generated by personal incomes taxes, consumer taxes or compulsory payroll deductions. Not much chance of squeezing much more out of this cash cow

As I mentioned in an earlier contribution to this blog over 60% of all jobs created in Canada over the past year were in the health care and education sectors of our economy, sectors that rely on transfers from our government. Our declining productivity is being observed by our creditors and at some point the cost of servicing our debt will increase. Maybe not in the next five years but you can only kick the can down the road for so long before something hits the fan.

Debt is addictive and like most addictions has a very unhappy ending. Surely the time has come to recognize that we are addicted and should consider treatment.

#145 neo on 07.09.15 at 8:46 am

The Shanghai market just jumped 5%. — Garth

You are really going to go there Garth? The Chinese government said they would imprison anyone who shorts this market on top of banning large investors from selling AND putting a halt on trading of half their stocks and you can back with a 5% jump like that means anything and this is some free market move of significance. Anyway, they just need to step away and let this get back to 2,000 – 2,500 like the market wants. They are just making matters worse.

You suck and blow very well. — Garth

#146 NewWorldParty.org on 07.09.15 at 8:54 am

The Chinese government created their bubbles. Now, they are trying to mitigate the bursting.

Similarly, the Canadian government created its housing bubble. When it bursts, the government will be trying to mitigate it.

Governments should do everything they can to prevent bubbles. Instead, the Canadian government did everything it can to create it.

http://www.newworldparty.org/2011/04/housing-most-manipulated-market-in.html

#147 Karma on 07.09.15 at 9:13 am

Garth, a subscribers only article on the G&M about Calgary Stampede’s numbers….

“Calgary Stampede: Poor economy gauge but a good economic respite

It’s a media tradition: Reporting on the level of hootin’ and hollerin’ at the Calgary Stampede as a barometer of the city’s and province’s overall economic health.

Interviews with street vendors, tallies of corporate parties, auction results for the right to plaster company logos on the tarps of the chuckwagons – they go hand in hand each July with oil prices, real-estate data and GDP in the quest to pinpoint the state of the economy.
Of course, it’s not scientific, as there are numerous reasons why the turnstiles at Stampede Park spin quickly or slowly, not all related to the health of the oil patch. Vendors, for instance, may be hawking western-themed trinkets that simply fail to suit folks’ fancy. Or it could be rainy. A weak Canadian dollar may drive up foreign tourist numbers.

But there are valid observations. With crude at half the price of a year ago, some companies have cancelled or scaled back events, saying that it sends a bad message to shareholders to be spending their money on costly hoedowns when they’ve spent the last six months chopping budgets on operations and laying off staff.

I’m making a call, though: that this year’s Stampede is a darned poor gauge of the health of the energy sector and Alberta. That’s because economic conditions are worse than the tenor of party suggests. Thanks, oil.

Since hitting a recent peak of $61.43 (U.S.) a barrel last month, U.S. benchmark crude has skidded almost 15 per cent, settling at $52.33 on Tuesday, and many signs suggest the ground is giving way again. Oil has shed $4.60 this week alone.

The trouble stems from far away. Unknown economic damage from the Greek debt crisis and turmoil in China’s stock market, despite efforts by the government to prop it up, suggest an already over-supplied oil world may be headed into a period of even weaker demand.

Oil supplies, meanwhile, appear to be growing, as some members of the Organization of the Petroleum Exporting Countries pump record volumes., U.S. shale-oil output remains resilient and Canada’s oil sands production increases. Iran could be set to resume crude exports for the first time since sanctions were imposed in 2012 if the country and a group of world powers agree on a deal to limit its nuclear program.

Canadian energy stocks have fallen well below levels of March, when crude sank into the low $40s per barrel, and analysts and investment bankers have predicted a feeding frenzy of takeovers in the coming months as weaker producers succumb to the effects of dwindling cash flow and unmanageably high debt levels.

Alberta and Canada are feeling the impact. The province’s new NDP government is preparing a fall budget that will include a deficit that finance minister Joe Ceci has pegged at around $5-billion. A further energy-industry slowdown could worsen that.

With the national economy more enmeshed in crude markets than ever, some economists believe that data in the coming weeks will show that Canada slumped back into recession in the first half of this year.

But wait – cowboy-hat-festooned people are everywhere in Calgary and the downtown outdoor bar patios are full each day. On cue, carousing is going well into the night. A glance at the grandstand during Saturday’s rodeo action showed a packed house, just before a late-afternoon hailstorm sent everyone scurrying for cover.

Attendance at the Stampede grounds is down, but not by much. In the first four days, 463,000 people had visited, compared with 489,000 last year, when oil was in the $100 neck of the woods. The five-year attendance average is 477,000.

Indeed, Calgary’s annual party has been through much worse, and as recently as two years ago when the Elbow River swallowed up the site during the province’s floods, just two weeks before opening day.

It may not be the most accurate economic barometer, but the Stampede is a pretty good 10-day respite from economic worries.

Calgary’s Black Spruce Merchant Capital is going ahead with its annual Stampede party this week, and its invitation urges defiance in the face of low oil prices: “When life hands you lemons, break out the tequila and salt.””

#148 Toronto_CA on 07.09.15 at 9:25 am

IMF just downgraded our 2015 growth projection once again, now to 1.5% growth of GDP. If Q2 was a recession as predicted by many, I think that looks optimistic for 2015.

Good article in the G&M today talking about how divorced from reality the housing market is in the GTA/GVA.

#149 Smoking Man on 07.09.15 at 9:49 am

#121 Germnita on 07.08.15 at 11:33 pm
#76 Smoking Man on 07.08.15 at 9:23 pm
In linkedin I joined the science fiction readers and writers group.

What a bunch of complete loser’s.

They all write like their still trying to get an A. They all use ten dollar words as if in a compitition with other writers…”

Would love to see your own self-assessment of the monetary value of your words….in dollarettes please!
……..

I’ve been Reading more of their garbadge. It’s like they are working toward a Conrad Black after life.

I have a hew word for it.. Vocabyoupuke.

This is how you write. The technical errors can be fixed by any schooled monkey.

http://dyslexicsmokingman.blogspot.ca/2015/01/meet-blithe-barrington.html

My first recollection of the start of my life.

http://dyslexicsmokingman.blogspot.ca/2014/03/you-dogs-what-to-know-why-im-so-screwed.html

#150 Bottoms_Up on 07.09.15 at 9:57 am

So the Shanghai index is now at the same level as it was way way WAY back in March (which in itself was at a high for the year).

I agree with Garth, a news story of limited value.

#151 Bottoms_Up on 07.09.15 at 9:59 am

#139 Justin on 07.09.15 at 3:24 am
——————————————-
People might actually move to the suburbs if you could get there by car….

#152 Holy Crap Wheres The Tylenol on 07.09.15 at 10:01 am

The Chinese authorities, who encouraged the speculative bubble, are swooping in. They cut interest rates. They suspended new initial public offerings. Yesterday they banned large shareholders or insiders owning more than 5% of a company from trading for at least six months. They’ve restricted short-selling, promised ‘ample liquidity’ and allowed all those trading halts. Every night for the last ten days, a new emergency rescue measure has been announced.
____________________________________________
What happened to the nice Communist 5 year plan? Isn’t capitalism wonderful Beijing? Welcome to the world of free enterprise. Now get back on the horse and ride the dam thing all the way!

#153 Centurion on 07.09.15 at 10:31 am

Another article about our dear friend, Eveline Xia:

http://www.theglobeandmail.com/news/british-columbia/soaring-vancouver-home-prices-spur-anger-toward-foreign-buyers/article25384862/

#154 Mike on 07.09.15 at 10:32 am

http://www.msn.com/en-ca/money/topstories/china-stock-market-crisis-could-lead-to-more-real-estate-investment-in-bc/ar-AAcJuQR

Interesting to see how China plays out. There’s definitely 2 predictions on what will happen…

1) They don’t invest in local RE and stock markets anymore, so some invest abroad and Vancouver RE soars even higher
2)Because they just lost their shirts in their own local markets (many of it on margin), they now have to liquidate other investments (Ie. the homes they own in Vancouver) to cover their loses back in China.

Who knows? I know this is very tin-foil-hat-esq, but it sure seems like the Chinese gov’t and elite/uber-risk (ie… top gov’t officials) got out of the stock market right before it crashed, making them richer. Meanwhile, they’ve been telling their citizens to dump everything they can into the market, which they did, and now are losing their shirts, making them poor again. Poor means easier to control (assuming they don’t rise up and revolt).

#155 S.Bby on 07.09.15 at 10:33 am

http://www.news1130.com/2015/07/09/luxury-housing-demand-in-vancouver-prompts-increase-in-flipping/

“It’s a lack of supply in specific neighborhoods,” McCredie said. “There’s a genuine fear in the market that you either need to stay in the market or you need to get into the market or you’ll never get in.”

Bubble psychology at play.

#156 Dan Goode on 07.09.15 at 11:11 am

“Residents also have questions about the source of Chinese money being invested in Vancouver property, a concern that came to the fore last year when a prominent developer in the city, Michael Ching Mo Yeung, was named as one of the top 100 fugitives wanted by China as part of ‘Operation Skynet’.

The campaign is part of President Xi Jinping’s pursuit of suspected corrupt officials who have fled overseas.

In the wake of news about Ching, there have been calls for greater scrutiny of foreign buyers and tougher enforcement of anti-money laundering standards.”

From the Vancouver Sun

#157 Casual Observer on 07.09.15 at 11:12 am

#143 Smoking Man on 07.09.15 at 9:49 am

#121 Germnita on 07.08.15 at 11:33 pm
#76 Smoking Man on 07.08.15 at 9:23 pm
In linkedin I joined the science fiction readers and writers group.

What a bunch of complete loser’s.

They all write like their still trying to get an A. They all use ten dollar words as if in a compitition with other writers…”

Would love to see your own self-assessment of the monetary value of your words….in dollarettes please!
……..
I’ve been Reading more of their garbadge. It’s like they are working toward a Conrad Black after life.
I have a hew word for it.. Vocabyoupuke.
This is how you write. The technical errors can be fixed by any schooled monkey.

http://dyslexicsmokingman.blogspot.ca/2015/01/meet-blithe-barrington.html

My first recollection of the start of my life.

http://dyslexicsmokingman.blogspot.ca/2014/03/you-dogs-what-to-know-why-im-so-screwed.html
__________________________________________

As a casual observer I just had to see how your mess started out. Now we know your all fiction, even your own life story. Your story about the Hot Wheel Batmobile car wont hold water. Just last week you said your birthday was July 5th and you turned 56. So you were five in 1964. You said when you were five you had the Hot Wheels Batmobile in your pocket. The Batman show started in Jan of 1966, Hot Wheels didn’t show up until 1968 and the Batmobile wasn’t a Hot Wheel until 2007. Nice BS keep up the deluge of non-truths.
Just to let you know we are not all Sheeple here some of us are actually educated, intelligent and have iron clad memories.

#158 Bottoms_Up on 07.09.15 at 11:15 am

#88 Rural Revolution on 07.08.15 at 10:12 pm
———————————————————
Any instinct that a human has developed for survival has developed over tens of thousands of years. This means that any subtle cues we may have likely relate to things such as weather, nearby predators etc.

We wouldn’t have ‘subtle internal cues’ for things such as stock market behaviour. We do translate fear and greed to it perhaps, but to suggest we have subtle cues is outlandish.

#159 SWL1976 on 07.09.15 at 11:22 am

#144 Llewelyn

Debt is addictive and like most addictions has a very unhappy ending. Surely the time has come to recognize that we are addicted and should consider treatment.

True our leaders have set us up for an epic fail. It’s tough to blame the sheep though as most of the herd just follows and puts very little thought into the world around them. Oblivious to the fact of how we are being fleeced and to the magnitude of the problems.

Ignorance is bliss… Or is it?

This won’t end well, and sadly it’s all by design. If you can’t see who the real crooks by now, you are either simply not looking, or still in denial about the reality of the situation.

Perhaps if our elected ‘leaders’ sold our water for fair market value, rather then give it away to massive corporations who feel that water is not even a basic human right would help to ease our debt burden. However, that is simply not the case

I know this household has banned any Nestle products, as it is the very least I can do, and I feel it’s the right thing to do

#160 Blogbitch on 07.09.15 at 11:26 am

And the stereotypes get more media attention: http://www.reuters.com/article/2015/07/09/canada-china-housing-idUSL1N0Z812N20150709

#161 Doug in london on 07.09.15 at 11:32 am

Shanghai stock market crash? What crash? I was hoping to scoop up some FXI but it’s gone back up in price! This “crash” looks to me like another tempest in a tiny teapot inside a doll house.

#162 SWL1976 on 07.09.15 at 11:34 am

If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered…I believe that banking institutions are more dangerous to our liberties than standing armies… The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.

Thomas Jefferson

#163 NoName on 07.09.15 at 11:56 am

China’s central commie comity ‘free” market intervention ytd (that I know of)

#Intervention
noun: the action or process of intervening:

January – raised minimum amount for margin trading
April – crackdown on WMPs (MBS-s and CDO-s comes to my mind )
June 12 – new tightening of margin rules
June 29 – central commie comity awols pension funds to invest in stock (I hope they went short here, instead of long)
July 1 – lowers a trading fees 30%
July 2 – allows small investors to buy on a margin
July 5 – central commie comity buy some stocks
July 8 – mandate companies to buy back shares to prop prices
July 9 – now companies can pick any price for its shares, be that as it may (just thinking about year end bonus makes me salivate)

side note
#ShutUpAndTakeMyMoney
http://www.bloomberg.com/news/articles/2015-03-31/china-s-big-stock-market-rally-is-being-fueled-by-high-school-dropouts

#164 Investorz on 07.09.15 at 12:01 pm

Chinese stock market up 18% today.
Now that’s funny.

#165 Jane Goodall on 07.09.15 at 12:06 pm

I’ve got a solution for many people: stay single! Marriage laws in especially Ontario are rigged against men.

#166 Marco on 07.09.15 at 12:11 pm

Party like its 1929:

“And the subsequent self-reinforcing collapse has been driven by China’s indebted investors being forced to sell shares to meet their debts.”

http://www.bbc.com/news/business-33440565

#167 fancy_pants on 07.09.15 at 12:27 pm

Toronto and Vancouver are bargains
https://ca.news.yahoo.com/blogs/dailybrew/vancouver-and-toronto-a-bargain-compared-to-other-210419862.html

It defies common sense but common sense has not been a trustworthy friend for some time now.
sorry to all the tinfoil hat sideline renters, the last half decade has not been nice to you.

I want the say the next 5 will be better, but geez, I have become a skeptic the last while… it just goes on and on and on

Another rate drop coupled with a lower dollar may just fuel it up again in the fall

#168 Shawn on 07.09.15 at 12:33 pm

Why Oil Prices are low

It makes no sense that OPEC willingly allowed oil prices to fall 50% just to gain a few percentage points of market share while losing over 40% in revenue.

In reality the OPEC cartel apparently fell apart. Members cheated on quotas for years and then Saudi Arabia apparently finally got tired of being the only country to really curtail volume to keep the price up.

OPEC no longer even has any quotas for members. That alone tells you the Cartel has fallen apart.

http://www.cnbc.com/id/102668399

Saudi Arabia likely allowed the price to fall to cause great pain to the other members so that they would smarten up and agree to new quotas and stick to them.

Oil pries will rise if and when the OPEC Cartel regains its strength and cohesion.

Otherwise we may see these lower oil prices for quite some time.

But not to worry much $52 U.S. oil is about $66 Canadian and that really is not such a low oil price. It’s far higher than the prices of the early 2000’s.

Do not write off Alberta just yet.

#169 S.Bby on 07.09.15 at 12:39 pm

#157 Casual:
I had a hot wheels batmobile in the 1960s. Modeled after the original George Barris car. It shot little rockets out of the rocket tubes and had a plastic “flame” that moved in and out of the jet exhaust. I wish I still had it.

#170 Marco on 07.09.15 at 12:42 pm

Just a thought: If they drop rates, the dollar goes to 70, and price inflation takes off, especially in T.O. and Van,
I suspect more Union strikes for higher pay.
Another inconvenience.

Cheers.

#171 raisemyrent on 07.09.15 at 12:46 pm

the thing with Smoking Man’s war on education has 2 potential flaws:
– isn’t most of the ‘programming’ you speak of imparted mostly by grade 10-12? my university teachers for the most part could’ve taught an empty room just as well and it was up to you to get through. don’t you have grade 10-12? I generally assume you call yourself uneducated because you stopped at grade 10-12 but that would mean that you were there for most of the programming and stopped before the part that actually takes effort and skills they don’t teach (plus money).
– you boast that you saw the truth despite your teachers but ignore that others might have as well, despite their teachers (however many more they might have had)… so just as not everyone who is uneducated is a fool, not everyone who is educated is a mindless drone.

I’d say a lot more of the onus is on parents, and that affects how children take on the world.

#172 TurnerNation on 07.09.15 at 1:02 pm

CPD yield getting fatter. Will finish off Tfsa room when it is around 13.50

#173 Broke Dick on 07.09.15 at 1:36 pm

#157 Casual Observer on 07.09.15 at 11:12 am
#143 Smoking Man on 07.09.15 at 9:49 am

As a casual observer I just had to see how your mess started out. Now we know your all fiction, even your own life story. Your story about the Hot Wheel Batmobile car wont hold water. Just last week you said your birthday was July 5th and you turned 56. So you were five in 1964. You said when you were five you had the Hot Wheels Batmobile in your pocket. The Batman show started in Jan of 1966, Hot Wheels didn’t show up until 1968 and the Batmobile wasn’t a Hot Wheel until 2007. Nice BS keep up the deluge of non-truths.
Just to let you know we are not all Sheeple here some of us are actually educated, intelligent and have iron clad memories.
__________________________________________

Dinky cars released Batmobile in Oct 1966.

http://www.dinkysite.com/#/corgi-267/4524312349

I liked them a lot more than Hot Wheels at the time.
We used to get them at the corner store and they had a separate display stand and they came in boxes and the doors opened and closed and the were made of metal not plastic and they were really, really cool.
Ah memories.
But you’re right the numbers don’t add up.

#174 bdy sktrn on 07.09.15 at 1:44 pm

An expert in Sino-Canadian economic relations says the current stock market crash in China will drive more investments into Canada, including B.C.’s red-hot real estate market.
————————–
604 to the moon baby! so says the ‘expert’

#175 Doug in London on 07.09.15 at 1:50 pm

@Marco, post #166:
That’s so ass backwards! Shouldn’t you run up margin debt buying stocks (or other assets) when they are on sale like they are now, then selling them off when the markets go up, paying off the margin debt, and pocketing the profits?

#176 Has anyone seen this? on 07.09.15 at 2:05 pm

http://www.thestar.com/news/canada/2015/07/08/ottawa-censors-majority-of-access-to-information-requests.html

(Your govt hard at work – censoring everything and anything)

#177 Mf on 07.09.15 at 2:44 pm

#172 TurnerNation

I’m down hundreds of dollars since May in CPD. I know Garth says buy for yield but even at 5% yield my losses are not covered all year at this rate.

Almost begs the question what’s the point?

MF

The point is a 5.23% yield and the dividend tax credit. Rate reset preferreds will rise with bond yields. You are being irrational. — Garth

#178 Obvious Truth on 07.09.15 at 2:58 pm

#110 Sheane Wallace on 07.08.15 at 11:09 pm

BTW, The BRICS bank was lunched today. Coincidence with the ‘crash’ in the chinese market?

Emerging markets will be very strong buy pretty soon, as well as junior miner. huge discounts, great future. Opportunity for 4-5 times increase in the next 10 years.

—————————————

Lately you start to wonder if the winds of geopolitical power and economic influence are really changing. Are more countries hedging their bets outside of the US and Europe? Do they feel that these places are managing their affairs wrongly? Where will growth and wealth creation be found?

The BRICS have grown imensly in size and influence. Media reports of their troubles are clearly over exaggerated to make us feel superior.

Russia and China collapse are regularly trumpeted but the surpluses and growth keep powering ahead. Seems these economies are now sufficiently diversified and have trading alternatives.

The Russians actually had the stones to raise rates when their currency tanked. Brazil the same. India ditto. And tge economies adjust and power on. As for China Wall Street would kill for that rally. And then they would pound the dip. But it’s not good when it happens in China.

Certainly makes you wonder.

#179 Macrath on 07.09.15 at 3:14 pm

#172 TurnerNation

CPD,This preferred basket case is on its way to its 2008 low. Something that wasn`t supposed to happen again in our lifetimes . Glad I bailed out while there was still a profit to be had.

http://tinyurl.com/q3zl5ss

Why would you bail on an asset paying you 5.23% and delivering it in a tax-efficient manner, with the dividend tax credit? Preferred values will rise steadily with bond yields, and meanwhile the income is great. Another classic DIY mistake. — Garth

#180 Smoking Man on 07.09.15 at 3:20 pm

#173 Broke Dick on 07.09.15 at 1:36 pm
#157 Casual Observer on 07.09.15 at 11:12 am
#143 Smoking Man on 07.09.15 at 9:49 am

As a casual observer I just had to see how your mess started out. Now we know your all fiction, even your own life story. Your story about the Hot Wheel Batmobile car wont hold water. Just last week you said your birthday was July 5th and you turned 56. So you were five in 1964. You said when you were five you had the Hot Wheels Batmobile in your pocket. The Batman show started in Jan of 1966, Hot Wheels didn’t show up until 1968 and the Batmobile wasn’t a Hot Wheel until 2007. Nice BS keep up the deluge of non-truths.
Just to let you know we are not all Sheeple here some of us are actually educated, intelligent and have iron clad memories.
__________________________________________

Dinky cars released Batmobile in Oct 1966.

http://www.dinkysite.com/#/corgi-267/4524312349

I liked them a lot more than Hot Wheels at the time.
We used to get them at the corner store and they had a separate display stand and they came in boxes and the doors opened and closed and the were made of metal not plastic and they were really, really cool.
Ah memories.
But you’re right the numbers don’t add up…..
……..

It was metal , and when the wheels turned , red flame would come out of the he back. The doors opened.

That was the car, and right it wasent hot wheels..it was a dinky Mr Broke Dick

#181 bdy sktrn on 07.09.15 at 3:32 pm

the 604 is for the first time i can remember starting to get low on water.

this is supposed to be ariz and cali’s problem.

we are down to 210 billion litres.
if we only used it for drinking and flushing it would last hundreds of years.
even at stage 4 you can still water your tomatoes.
gold lawns are in.

unlike the american SW , we won’t have to wait long for a refill. before the fed raises rates we will be overflowing millions of gallons.

#182 Marco on 07.09.15 at 3:38 pm

@Doug in London UK or Ontario

Should have said they partied like it was 1929:

They did exactly what you said.

“The 150% rise over a year in the Shanghai Composite Index to its mid-June peak was largely driven by investors borrowing to buy shares, or margin trading in the jargon, just as happened in the US during the
Roaring Twenties.”

As well they opened it up to foreign investors who probably took a licking too, how much don’t know.

Wouldn’t buy now though with the Company stock frozen, especially with investors still owing on their margin debt. Who knows where this is headed.

Cheers

#183 Capt. Obvious on 07.09.15 at 3:41 pm

I find it interesting that Vanguard has switched to a target index for their emerging markets index ETF that includes Chinese company shares . Obviously they see exposure to Chinese equities as important in representing that sector.

#184 Herb on 07.09.15 at 3:42 pm

$165 Jane Goodall,

does that recommendation come from you, or one of your apes?

#185 espressobob on 07.09.15 at 4:05 pm

The Shanghai index has also provided investors with the opportunity to take some profit. Maintaining a core position is prudent since no-one knows the future.

Downside allows investors to load up on cheaper prices. It’s a contrarian view.

#186 Casual Oberver on 07.09.15 at 4:11 pm

#180 Smoking Man on 07.09.15 at 3:20 pm
#173 Broke Dick on 07.09.15 at 1:36 pm
#157 Casual Observer on 07.09.15 at 11:12 am
#143 Smoking Man on 07.09.15 at 9:49 am

As a casual observer I just had to see how your mess started out. Now we know your all fiction, even your own life story. Your story about the Hot Wheel Batmobile car wont hold water. Just last week you said your birthday was July 5th and you turned 56. So you were five in 1964. You said when you were five you had the Hot Wheels Batmobile in your pocket. The Batman show started in Jan of 1966, Hot Wheels didn’t show up until 1968 and the Batmobile wasn’t a Hot Wheel until 2007. Nice BS keep up the deluge of non-truths.
Just to let you know we are not all Sheeple here some of us are actually educated, intelligent and have iron clad memories.
__________________________________________

Dinky cars released Batmobile in Oct 1966.

http://www.dinkysite.com/#/corgi-267/4524312349

I liked them a lot more than Hot Wheels at the time.
We used to get them at the corner store and they had a separate display stand and they came in boxes and the doors opened and closed and the were made of metal not plastic and they were really, really cool.
Ah memories.
But you’re right the numbers don’t add up…..
………………………………………..

It was metal , and when the wheels turned , red flame would come out of the he back. The doors opened.

That was the car, and right it wasent hot wheels..it was a dinky Mr Broke Dick
____________________________________________
Well now we have an answer for the Batmobile however it still doesn’t add up? Batmobile 1966, Smoking Guy five at 1964? So whats in your pocket?
https://www.youtube.com/watch?v=zQuK23p4uqE

#187 Dean on 07.09.15 at 4:27 pm

$165 Jane Goodall,

does that recommendation come from you, or one of your apes?

Chimps actually, and most would offer better investment advice than 90% of the the comments section.

#188 TurnerNation on 07.09.15 at 4:29 pm

This is a bike and dog weblog.

Video of Dog driving a motorbike.

Uber you’ve met your match.

http://www.thanhniennews.com/society/vietnam-man-faces-fine-for-letting-dog-drive-motorbike-47275.html

#189 Mike on 07.09.15 at 4:41 pm

Another article discussing whether the recent Chinese stock market crash will pump US housing or if they’ll flee from it… http://finance.yahoo.com/news/chinese-buyers-flee-flood-us-151248367.html

#190 lee on 07.09.15 at 4:58 pm

Has anybody seen the ridiculous prices in Hamilton and Burlington?

Nobody has answered my question: Does the 14.2% increase in the price of houses in Toronto YOY include tear downs that have been rebuilt and resold? My rudimentary math skills tell me that if they are included, they could pump up the number by as much as 75% so the real number may be closer to 4% YOY (not to mention the effect of substantial renos). Still healthy, but not 14.2%. I think the 14.2% is scaring a lot of people silly.

Shouldn’t the boards disclose this number?

Anyone?

#191 Macrath on 07.09.15 at 5:04 pm

Another classic DIY mistake. — Garth
—————————————
Constant depreciation is not my cup of tea.
You would have been catching a falling knife since late 2012 the 5% would not have even have covered your losses. Besides I found a better investment an already depreciated 5.7 liter Vortec Campervan for those retiree fishing trips.
As far as CPD rising with interest rates I`ll believe it when I see it !