Bad behaviour

BIKER KID modified

So, let’s review.

Last weekend the Greek people decisively voted down a deal with Europe. This weekend their government accepted the same deal. Hey, didn’t those guys invent democracy? In any case, it’s over. Like there was ever any question.

Last week the Chinese stock market was in flames. The government pulled out all the stops as it skidded to a bottom. This pathetic blog quoted a Goldman analyst saying a 27% rebound was possible over the next year – and was pummeled for it. The Shanghai market promptly gained 11% over the next two days. It’s over. Like that’s a surprise.

Days ago North American equities were blowing smoke. Thanks to the volatility mentioned above. DIY investors sweated for 48 hours, then threw in the towel. More proof people buy when things go up and run away screaming when they get cheap. Then the Dow added about 300 points, for a year/year return of 7.6%. The bear market meme was finished. Like it ever should have begun.

The doomer talk is old. It’s irrelevant. It’s wrong. The world is moving ahead. US interest rates will still rise this year. The split between Canada and the States will widen. European markets will likely hold onto double-digit gains. People hiding in GICs or gold will lose more. The two genuine risks facing most Canadians remain the same. Too much net worth in real estate; and running out of money.

If you’re not working steadily to mitigate those, you’ll regret it. Greece, China and the Dow Jones are mere distractions. Instead, the flashing yellow and red lights are coming out of housing markets, especially in Ontario and BC.

For example, an indeterminate yet swelling number of people are borrowing against their real estate equity with a HELOC that costs 3%, then lending the money to a homebuyer willing to pay 10%. It’s part of our subprime lending market, which is by all accounts the fastest growing segment of the real estate financing world. Privately-funded mortgages are being arranged by individual homeowners willing to take the risk, by mortgage brokers and through mortgage investment corporations.

Because the unwashed masses are utterly convinced real estate will go up forever, loans with interest rates four or five times higher than at the banks are common among those who have been turned down by traditional lenders. Rates start at around 7% and bloat to 15%, even for first mortgages, and it seems everyone is oblivious to the danger. When real estate prices correct and subprime buyers sink underwater, they’ll walk. The lender then takes over a property worth less than the money extended. Loses all round.

Meanwhile subprime borrowing for down payments is virtually mainstream, especially in 416 or YVR where it’s hard to find decent digs for under $1 million, when CMHC will not insure loans on seven-figure properties. So in order to cough up that 20% plus closing costs, mortgage brokers or private lenders are the destination of choice. In other words, if you thought only millionaires buy million-dollar houses, think again. This is a debt orgy.

Speaking of which (orgies), how about the latest flipping craze in nutso Vancouver?

Sotheby’s, high-pressure pumper of high-end houses, shocked a lot of people this week by admitting its role in grossly inflating luxury home values in Delusia. Not only do the company’s agents encourage bidding wars in the $3-million-plus category, but then they oversee winning buyers selling their contract assignments to even greater fools, willing to add another 20%.

Says Ross McCredie, CEO of Sotheby’s International Realty Canada: “The person who wins the bid says, ‘Listen, there are two other people here who desperately want that home and will pay $500,000 more. We’re seeing it more and more.”

By the way, he adds this. Make sure you write it down and stick it on the fridge door for your later amusement: “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.”

By every measure, the economy’s faltering. Growth has been negative each month this year. Oil ain’t recovering. The latest jobs numbers suck again. Corporate profits are weak. Incomes are stagnant. Debt is epidemic. Things are so bad the central bank is toying with the idea of a rate cut on Wednesday to stave off recession. Is this really the time for borrowing big, paying cheater rates or buying from a flipper to get a house at an historic high price? How can anyone seriously believe a shill like McCredie saying buy now, “or you’ll never get in”?

Well, lots do. I bet most of the people you know. Or are related to. Or married to.

This is the great risk within.

Greece? Phfft.

247 comments ↓

#1 calgaryPhantom on 07.10.15 at 6:11 pm

As always, you are right!

I was surprised how calm i was during the last few days, and strategically buying, as if i was shopping in a clearance section of a store.
Seems, i am not just wasting time daily reading your blog.

#2 omg the original on 07.10.15 at 6:12 pm

“The person who wins the bid says, ‘Listen, there are two other people here who desperately want that home and will pay $500,000 more. We’re seeing it more and more.”
———————————-

So I hope CRA takes note of these transactions and makes sure flippers are paying income tax on the net gain.

#3 Sheane Wallace on 07.10.15 at 6:16 pm

Yep, we are in much deeper doo doo than Greece, at least Greeks have no personal debt.

gold btw is doing relatively well.

#4 mitzerboy aka queencity kid on 07.10.15 at 6:18 pm

garth
great pic of u in your younger dayz

#5 sentry on 07.10.15 at 6:21 pm

The masses can pass off some of the blame to the media.The truth of the matter is,if fed nothing but slop and fluff for a decade or two,peope are generally to lazy or otherwise distracted to make an effort to find the other side of the story.There are always at least two sides from my experience.And givrn the constant mis-information about the market…….who owns the media in Canada?Try reading press from abroad(NOT FOX) and make up your own mind on many issues including the state of Canada.

#6 SubPrime OTT on 07.10.15 at 6:21 pm

The subprime market is alive and well. I know a Mortgage Agent in OTT who closed 2 mortgages last week – one to buy a house and one to finance the down payment to buy the first house. And yes, it was a “B” deal.

This is of course during a time when OTT house prices are dropping. A neighbour across the street finally sold his home and will be moving in 2 weeks. Had it listed for 10 months. After closing costs and realtor costs he will net less than he paid 3 years ago when he built he new. He told me he figures he will lose about $10K – I estimate closer to $45,000. And that is not including his mortgage payments and property tax.

But, he is off to his other new build that he also bought 3 years ago where things are different and the price has doubled in 3 years, according to him. Let’s hope he doesn’t try and sell that one and find out the reality.

#7 Sheane Wallace on 07.10.15 at 6:22 pm

I think there is law for financial terrorism, should not the prime minister, financial minister and the governor of BOC be hold accountable and subject to criminal investigation due to the excessive unreasonable CMHC guarantees their policies are providing?

I am immediately donating 1k , make them 2k for the cause. Any lawyer stepping forward?

#8 AEJ on 07.10.15 at 6:23 pm

Hey Garth – Did you see this wonderful bit of wisdom making the rounds today (please note the sarcasm).

http://www.huffingtonpost.ca/david-lester/financial-planning_b_7764310.html

“Money Hack” #5 is particularly cringe worth:

“5. Big Assets:

Get some assets. Money badonkadonk is what will make you rich. Try to buy a place or invest the money you save in rent. Take advantage of employer matching programs to save in or outside of your RRSP and build up assets when you are young. Start a part-time business on the side and try to sell it. Real estate, stocks and selling equity in a business are three ways to make some good change overtime. I love big assets and I cannot lie.”

The article reads like satire, however is sadly appears to be a serious article.

#9 Garden Maven on 07.10.15 at 6:25 pm

Poor kid in the pic: he’ll never outrun his heritage.

#10 Marco on 07.10.15 at 6:29 pm

“Delusia” (Vancouver)

Urban Dictionary: Noun: To be fascinated by or entranced by a shiny object (House?).

Lol

Good one Garth,

Cheers.

#11 diane on 07.10.15 at 6:34 pm

so, if you have cash and no debt, no real estate,where should one park their money

#12 omg the original on 07.10.15 at 6:35 pm

How can anyone seriously believe a shill like McCredie saying buy now, “or you’ll never get in”?
——–

Oh yes housing will revert to long-run norms but when and why we simply do not know.

The great Canadian RE bull market has defied all logic and rational expectations.

But it will revert…….just like…….

The equities markets of the 1990s where 15-20% annualized gains were the new normal. But then stock prices were basically in a trading zone around the 1990s high until a couple of years ago – in real dollar terms the S&P is about were it was in Decmeber 1999 are about . Big reversion to the mean.

Toronto and south western Ontario house prices of the late 1980s. Not as big of bubble as we have today but everyone was buying property and nothing possibly could go wrong. It took a long, slow reversion to get prices back to near normal by the end of the 1990s.

Vancouver prices in the late 1970s – Vancouver was the place to be and prices were rocketing – then came the BOC’s war on inflation and 18% interest rates. Many fortunes lost on Vancouver homes.

NASDAQ of the early 2000s – yikes – no need to say more.

Gold and silver of the early 1980s – double yikes.

Opec Crude Oil “Crisis” of the late 1970s – OPEC artificially pushed the price up, then market realities slayed oil in the mid 1980s. In real terms the oil price reverted back to pre oil crisis levels.

But RE market of Canada is soooo different.

#13 ShawnG in TO on 07.10.15 at 6:41 pm

Fear Uncertainty Doubt. It’s invented a long time ago to scare the ignorant, and it works.

So why are you listening to them?

To be fair tho, math is so hard, partially due to our failed education system. Also, there are other items on the priority list, such as paying the bills, or cheer in the billion dollar party in Toronto, paid by local, provincial, and federal tax payers.

think about this, who is responsible for your retirement? is it you or your real estate agent? then why aren’t you learning about it for yourself?

there is an agenda to keep you as a slave. what better way to keep you motivated than a million dollar debt on a 500k property, and the threat of taking everything you own away?

stocks fluctuate. it’s normal. it’s all emotional. it creates buying opportunities. have a diversified portfolio to lessen the bumps. real estate fluctuates too, just on a much longer time scale and with much more (borrowed) money. can you afford to buy at the wrong time?

#14 Victoria Real Estate Update on 07.10.15 at 6:43 pm

Canada’s housing bubble is much bigger than the 2006 US gasbag that imploded with spectacular results.

Some Canadian housing bulls still point to the US subprime situation (as the US bubble inflated) as proof of their claim that it’s different in Canada.

They are wrong.

As Garth has explained, subprime loans are also part of the fabric of the Canadian gasbag. We also have liar loans, etc.

Canada’s bubble has inflated for 15 years. The US bubble took 6 years to inflate.

Wolf Richter (Wall Steeet) knows all about the inflation and deflation of housing bubbles.

He wrote:

“Bubbles don’t land softly. They implode. It’s a brutal process. The longer bubbles are maintained, the more brutal their implosion.”

#15 Bby604 on 07.10.15 at 6:46 pm

Where’s the blood in the streets in Calgary and the so called “death watch” didn’t see to many worried faces out at the stampede. Oil tanks and the market with all the oil jobs is bouyant, this blog can’t catch a break,
If Calgary is fine with oil at 50 vancouver will be A ok. Buy the sfh detached in van and get on with ur life, best decision I ever made,

#16 Happy in Kelowna on 07.10.15 at 6:48 pm

#3 Sheane Wallace

You were kidding about gold? All I see is bad news for the last few years. Certainly the last year has been especially ugly.

#17 pinstripe on 07.10.15 at 6:50 pm

a lot of people do not know what is going on in the pinstripe area but a lot of money is moving into purchasing real estate. Off shore Money. CASH. agriculture land is selling at three and four times above asking price. the word is that a minimum of five thousand acres is on the block. no dickering.

as for Greece and the euro, the show is not over yet. the euro leaders will do anything to hang on to their job. harpo is doing the same. the alberta PC paraty is dead in alberta. some PC former, loser MLAs are planning to switch to the fed harpo team. Canada is going to be screwed.

#18 Ken on 07.10.15 at 6:54 pm

Fairly new here, Thanks Garth for your insight, knowledge and great sense of humor, you helped save my family from a lifetime of household debt and made sense of the things we didn’t exactly understand in housing. Hat’s Off to you for outright honesty.

#19 wallflower on 07.10.15 at 6:55 pm

YVR – how many in these inflated markets are wanted personnel?

http://www.canadianmanufacturing.com/manufacturing/u-s-increases-efforts-to-extradite-alleged-industrial-spy-from-canada-150916/?utm_source=CMO&utm_medium=email&utm_campaign=CMO-EN07092015

“The Canadian government is attempting to revoke Su’s permanent residency status but he is appealing the decision.”
(Maybe Su is one of the few mainlainders who actually wants to live in his Vancouver luxury home.)

#20 Jackie DiAngelis on 07.10.15 at 6:56 pm

We have GICs at Pace Credit Union at 3.01% in TFSA’s. We are not losing money.

Nor are you making it. Pace CU? seriously? — Garth

#21 CJBob on 07.10.15 at 6:57 pm

GT: “The doomer talk is old”.

About every other subject, but apparently about real estate it’s fine because eventually the market might go down. How many years has this warning been going on?

Pointing out risk and mitigating it is hardly doomerism. — Garth

#22 waiting on the westcoast on 07.10.15 at 7:08 pm

It’s funny… I took the Sotheby’s CEO quote to be that even he is incredulous at how people are behaving…

#23 Sheane Wallace on 07.10.15 at 7:13 pm

#15 Happy in Kelowna

Do you honestly believe that a crash shack in Toronto is worth 30 kg AU/2.5 tons Ag, such in Vancouver – 50 kg Au/4 tons Ag? And that is sustainable?

#24 Sheane Wallace on 07.10.15 at 7:13 pm

crack shack

#25 Mukadi on 07.10.15 at 7:14 pm

The sky is falling:

http://sputniknews.com/politics/20150711/1024481479.html

BRICS refused to fix EU’s financial mess.

#26 Jackie DiAngelis on 07.10.15 at 7:20 pm

Not making alot of money is not the worse thing in the world.

Someone who saves alot of money does not need to make alot of money.

#27 omg the original on 07.10.15 at 7:20 pm

#11 omg the original on 07.10.15 at 6:35 pm

But it will revert…….just like……
————————-

How could I have forgotten……two other grandaddies of reversions…..

The Japan stock market of the 1980s (not to mention Japanese real estate). The Japanese equities market is the poster child for capitulation.

And of course the US housing correction of the late 2000s – so big it seized-up the world economy. Almost nobody saw it coming – the best economic minds in then US saw “no problems” with the market, pre-crash. But US housing prices reverted to mid 1990s levels in many of the “hotter” regions. 6 years later some regions have recovered, other have not.

#28 Happy in Kelowna on 07.10.15 at 7:36 pm

#22 Sheanne Wallace

I see no relevance in the value of a house compared to its weight in gold. Who cares? Why not compare it to its weight in Big Macs? Gold is not doing well, so I was trying to figure out your comment that “gold btw is doing relatively well”.

Compared to what? Oil companies? Sure. I’ll buy that comparison. That COS I bought early last year sure took a beating.

#29 S.Bby on 07.10.15 at 7:38 pm

Garth: I thought you were taller.

Than what? — Garth

#30 Leroy Washington on 07.10.15 at 7:47 pm

Canadians, especially Vancouverites (Vancouverians?) are stupid if they buy real estate instead of rent.

Leroy.

#31 Scumop on 07.10.15 at 7:47 pm

Low oil prices are not an issue to oil companies for sales within Canada.

Thanks to the miracle of vertical integration, the oil companies pay themselves $50, then sell gasoline at pre-crash prices, and in cahoots with TaxCo, rake in the difference.

Its a miracle!

#32 Hank on 07.10.15 at 7:51 pm

Hello Garth, I’m thinking of buying 400K condo in London, there would be no mortgage, are you saying to wait even though no mortgage to buy after pending housing market collapse

Where did I say there would be a ‘collapse’? — Garth

#33 Jackie DiAngelis on 07.10.15 at 7:53 pm

Here is a list of what we have after saving for the last 27 years.

Hubert Financial $85,000 RRSP GIC 2.95%.

Oaken Financial $80,000 GIC 3.15%.

HSBC Bank $78,000 GIC 2.92%.

Concentra Financial $86,000 GIC 2.92%.

Duca Financial C.U. $83,000 3.2% GIC.

Community Trust Company $85,000 3.00% GIC.

Tangerine Bank/ ING Bank $82,000 3.25% GIC.

Outlook Financial $95,000 3.25% GIC.

Duca Financial C.U. $85,000 3.2% LIRA GIC.

Comtech C.U. $75,000 3.00% GIC.

Contech C.U. $79,000 3.1% RRSP GIC.

ICICI Bank of Canada $85,000 3.00% RRSP GIC.

ICICI Bank of Canada $65,000 3.00% GIC.

State Bank of India Canada $97,000 2.85% GIC.

Equitable Life of Canada GIA $59,000 3.5% GIA.

Equitable Life of Canada 30 year term certain annuity $2,000 a month, 6.7% payout.

SunLife of Canada $86,000 2.9% GIC.

Bank of Nova Scotia $86,000 3.00% GIC.

Bank of Nova Scotia $83,000 3.00% RRSP GIC.

Bank of Nova Scotia $100,000 3.00% RRIF GIC.

Equitable Bank $66,000 2.85% GIC.

We are 56 years old and have $3,000 a month to save from our employment so we still have a many years to go.

We know a few friends that save $50,000 a year and quite content with putting it in GICs at 2.7% to 3.00%.

They don’t need the bother and hassle to invest it.

#34 Hank on 07.10.15 at 7:53 pm

i guess another way to put this, is it ok to buy in this climate if you have no mortgage or is it better to wait for lower prices

#35 wizard sleeves on 07.10.15 at 8:01 pm

Pretty sure we’ve been in recession for years if auto sales are removed. Everyone and their uncle has a new car these days.

#19 Give your head a shake

#36 Brian Ripley on 07.10.15 at 8:08 pm

Says Ross McCredie, CEO of Sotheby’s International Realty Canada: “The person who wins the bid says, ‘Listen, there are two other people here who desperately want that home and will pay $500,000 more. We’re seeing it more and more.”

And indeed we are…

My ‘how long will it take for an average Vancouver SF house to double in price’ chart:

http://www.chpc.biz/bull-horse-mountain.html#Double

…calculates that with the current rate of increase from the April 2008 high to June 2015, another doubling will occur MARCH 2019

With this kind of momentum, no wonder the bulls are giddy.

#37 Joseph R. on 07.10.15 at 8:09 pm

“Because the unwashed masses are utterly convinced real estate will go up forever, loans with interest rates four or five times higher than at the banks are common among those who have been turned down by traditional lenders”

If heavens exists, Hyman Minsky is looking down on us, with a facepalm.

#38 Joseph R. on 07.10.15 at 8:25 pm

Goldman Sachs can be sued by the Greek Government for helping it hide its sovereign debt:

http://www.independent.co.uk/news/world/europe/greek-debt-crisis-goldman-sachs-could-be-sued-for-helping-country-hide-debts-when-it-joined-euro-10381926.html

#39 Lee on 07.10.15 at 8:28 pm

Omg,

The CRA. Are you kidding?

#40 Vancouver flipping is on fire on 07.10.15 at 8:40 pm

For sale sign goes on and a day later…SOLD
What was is you said about delusional vancouver again, or where the interest rates are headed again……………….. ????????????
You just wait now until the next rate drop next week….
It will make this hot market now look like a kindergarten.

#41 devore on 07.10.15 at 8:40 pm

#3 Sheane Wallace

gold btw is doing relatively well.

Gold is doing nothing. A Euro country is collapsing, oil is cratering, Chinese markets are revolting, isn’t this the time for gold to shine?

#42 Cultural Marxism on 07.10.15 at 8:41 pm

Janice Fiamengo
This Female Canadian University professor
speaks out about cultural marxist/feminism
in all our universities…

https://www.youtube.com/watch?v=5I6aYl4XDpA

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

https://www.youtube.com/watch?v=VCk1MufPNj8

#43 ANON on 07.10.15 at 8:44 pm

Can’t have a textbook bubble blowing up without the bull trap, now, can you?

#44 West Coast on 07.10.15 at 8:49 pm

YVR highend condo market on flames again…..we all gotta get one (or two) before the rates go up…..

#45 Cultural Marxism on 07.10.15 at 8:54 pm

DELETED

#46 Cultural Marxism on 07.10.15 at 9:00 pm

DELETED

#47 april on 07.10.15 at 9:00 pm

#44 – your joking, right!

#48 Chinese Roulette on 07.10.15 at 9:04 pm

Shanghai market is such a joke. What a gong show… Watch these people go in overdrive to borrow massively now that they know that their puppeteers will NEVER let that RIGGED MARKET crash. Goldman is wrong on the 27%, it will be +270% soon….What a total farce. International investors should get the hell out of this place ASAP. Can’t win a game with rules that keep changing on a whiff at the flick of a switch….An economy built ENTIRELY on lies, massive leverage and fake numbers.

#49 april on 07.10.15 at 9:05 pm

#36 – In that case less and less people will be able to afford to buy – even the rich won’t be so foolish and down comes the house of cards. Maybe your a real estate troll wishing for higher and higher prices which will be your own demise.

#50 Nora Lenderby on 07.10.15 at 9:06 pm

#12 ShawnG in TO on 07.10.15 at 6:41 pm

A lot of sense in your post. With all due respect though, I don’t think you can fault the education system, failed or otherwise.

There are a lot of silly people around. They believe in practically anything you can name.

I’m also sorry to say that the public appears not to be able to rely on the “educated” elites who effectively rule the country. Same with corporate leaders.

It’s not like I’m expecting saintly behaviour. Just prudence and don’t leave a horrible mess for someone else to clean up.

Bad dogs!

#51 Cultural Marxism on 07.10.15 at 9:07 pm

the morallistic fallacy — the assumption that if something is morally objectionable, either on its face or in its possible misinterpretation or misuse, it cannot be factually correct.

#52 april on 07.10.15 at 9:08 pm

#29 – There stupid they heed lying realtors and the media.

#53 Smoking Man on 07.10.15 at 9:08 pm

Looks like I’ve slayed Mark.

Damn feeling bad about it.

#54 Freedom First on 07.10.15 at 9:09 pm

Yes. Always remain calm. Maintain nerves of steel. Greed, fear, and panic always leads to a person becoming useless, thus highly prone to degenerative thinking, causing an entering of the red zone to a spontaneous catastrophic financial obliteration.

#55 Cultural Marxism on 07.10.15 at 9:11 pm

Political Expediency — A sad reality that is a slow boil path to hell and often a slayer of truth and freedom

Perhaps you could join it? — Garth

#56 Gregor Samsa on 07.10.15 at 9:12 pm

Nigel Farage says it like it is on Greece and the Euro:

https://www.youtube.com/watch?v=94UcyJnRcGU

Tsipras chickened out. He’s hoping for another deal so he can retire to some private Greek island and let the next sucker deal with the inevitable (and much larger) problem in 2018. Make no mistake, Greece is not “fixed.”

#57 Gambling on 07.10.15 at 9:25 pm

China can drop anytime they allow the blocked companies that are half of market. Their IPO is toasted, now is a time for margin calls.
Greece wAs sold by tzipAris but the problems are not fixed. Next week will tell the direction in both these markets. Canada is in mild recession, housing is cratering even in tor and yvr, just look at condos and townhouses.
The only bright spot is USA which kind of deflated their housing bubble and are growing from the lesson learned. They just won the women workd cup in yvr over japan… Guess they have the world currency status…
Please rAise rates asap and see who is swimming naked

#58 Smoking Man on 07.10.15 at 9:29 pm

Talk about luck.

Canada about to be booted from TPP

http://www.cbc.ca/m/news/business/u-s-may-cut-canada-out-of-pacific-rim-trade-deal-sources-1.3147300

#59 Cultural Marxism on 07.10.15 at 9:31 pm

Political Expediency — A sad reality that is a slow boil path to hell and often a slayer of truth and freedom

Perhaps you could join it? — Garth

Hmm???

I am not feeling the love, but thanks for letting me bang my drum a bit here. It is not such a great job but somebody has to do it

#60 Andrew Woburn on 07.10.15 at 9:41 pm

#38 Joseph R. on 07.10.15 at 8:25 pm
Goldman Sachs can be sued by the Greek Government for helping it hide its sovereign debt:
============================

So vampire squid have vampire squid to bite them. But if you believe that senior people at the EU didn’t know exactly what Goldman was doing, I have a unicorn farm for sale.

Apart from the fact that he shouldn’t expect a good reference from Goldman, I would sincerely advise Mr. Jaber Jabbour to stay far away from nail guns, umbrellas and tall buildings.

#61 the small lebowski on 07.10.15 at 9:43 pm

Garth,

Please take this test to see if you are smarter than yourself….

http://www.marketwatch.com/story/are-you-as-smart-as-a-financial-adviser-test-yourself-2015-07-08?siteid=yhoof2

Opinion: Are you smarter than a financial adviser? Test yourself

#62 crazed and a little confused on 07.10.15 at 9:45 pm

this isn’t over . there will be a lot of volatility with china stock market and the Greece issue. CBC, NBC broadcast new on how Greece effects the euro and how the Chinese stock market affects Canada exports and business outlook

so the ride isn’t over. I stop loss and 2 and will reby a little later of course blue chip

#63 Goldie on 07.10.15 at 9:45 pm

A question for our forum oil experts (or whoever):

If we had more refinery business here in Canada, would our oil industry be doing better?

I ask because the price of gas is so high now relative to the price of oil. Someone must be making way more money.

What percentage of oil production goes to consumer gasoline?

#64 Gambling on 07.10.15 at 9:48 pm

People are wired to believe in growth, in elementary you first learn addition and then Substraction, after almost 15 years of uninterupted growth in house prices is hard for people to remember a crash. New canadians usuAlly don’t travel and Are too busy to work to read the news. At work they get bombarded with happy owners propaganda, nobody heard about housing crashing in usa, yeah some great financial crisis caused by we don’t know what. It takes time to get educated. A family member just got a house after he bought a condo in 2007 at the peak of condo crisis, has money and wants to invest 50k in silver, i mean the real metal. asked him about tfsa and how much he put in his kids resp so far… 0 great zero like in zerohedge :-)

#65 lee on 07.10.15 at 9:50 pm

Jack,

You’re full of it.

Nobody can get those gic rates.

#66 Bill Gable on 07.10.15 at 9:54 pm

Last European centric comment * as I try to find my jet lagged brain, between Rome and Vancouver*.
I have been rigged for ‘heavy weather’ for a while now and I am about to reef our main, in my portfolio.
Europe – *in this case Paris and Rome* all is not well. Everyone has leveraged themselves to their ear lobes. Debt is seen as cheap and rates will be cheap forever.
I had a Roman tell me I was mad that I thought Yellen would raise raises.
Greece – we have heard the song before. Italy? They love their Gelato – but the unemployment is staggering.
The time to stand around staring at your new iPhone have passed, pal – get in the game.

#67 lee on 07.10.15 at 9:54 pm

Sorry,

I meant Jackie you’re full of it. Nobody gets those GIC rates.

#68 BS on 07.10.15 at 9:55 pm

Gold is doing nothing. A Euro country is collapsing, oil is cratering, Chinese markets are revolting, isn’t this the time for gold to shine?

The irony of that comment. I would say in a climate where things are ‘collapsing, cratering and revolting’, doing nothing is shining.

#69 Mark on 07.10.15 at 9:57 pm

If we had more refinery business here in Canada, would our oil industry be doing better?

Yes and no. Canadian firms own refining capacity in the United States as it was cheaper to buy existing capacity to diversify their portfolios, than it was to build new capacity in Canada. The Canadian market, on the net, is fully supplied by Canadian refineries owned by Canadian corporations.

It might be better for the tax base if there was additional refining capacity in Canada. But if malinvestment by the O&G majors leads to a reduction in capital available for other investments (ie: upstream activity), then the overall tax base would shrink.

As it stands, there is no shortage of North American refining capacity with significant capacity improvements over the past few decades and relatively stagnant if declining end-user demand on account of improved energy efficiency. So any oil company that uses relatively scarce investment capital to invest in refining probably would be doing so to the detriment of the existing industry, to their shareholders, and to the government’s tax base.

Its a question that comes up, and there’s a lot of emotion around it, but most available evidence indicates that the free market has been making efficient decisions in allocating capital. I mean, you can buy retail gasoline for less than you can buy bottled water, even after all the taxes have been added! Isn’t that proof enough?

“Looks like I’ve slayed Mark.

Damn feeling bad about it.

No, I just have had a few better things to do over the past few weeks, and Garth’s posts haven’t really drawn up my passion enough into replying. The BoC’s announcement on the 15th, with or without the rate cut, should be interesting though.

#70 Goldie on 07.10.15 at 9:59 pm

#25:

Sputnik news, formerly the Voice of Russia, is quite literally the official Russian propaganda foreign service. It has been in operation since soviet times. It used to be quite a nice service, showcasing the culture and natural beauty of Russia, but now , in the current climate, it spews forth anti-western and anti-EU propaganda on a consistent basis.

Take anything they write with an entire bottle of salt.

#71 bigtown on 07.10.15 at 10:00 pm

Shopping in Vaughan near Hwy 7 and the 27 in an area of chic hotels with rates near $150 per nite I noticed something very wrong. This whole neat corner for the upper middle class of Vaughan with nice eateries and a W hotel and Element hotel and Holiday Inn all beautiful and freshly built in the last 18 months next to a PAYDAY loan store. This was a cruel punch in a benign retail landscape expressing only security and niceness…MY WORD, who puts a shop for the financially challenged people at the end of their options in such a neighborhood of success. This is what the word dissonance means.

The media is playing MY BIG FAT GREEK EXIT like a reformed alcoholic on a week-end pass from rehab downplaying past benders and embracing the blackouts for good measure.

#72 Pat on 07.10.15 at 10:03 pm

Re #38

CEO Lloyd Blankfein said they are doing “God’s Work” at Goldman Sachs. Stand-up comedy at it’s finest !

#73 anotherstabbinginsaskatoon on 07.10.15 at 10:05 pm

The real problem is criminal gangs. And the newly un(der)employed smoking drain-o. Not good. Unless ones’ diversified portfolio involves extortion, prostitution, drug dealing. Canada is the next Jonestown for sure. Don’t buy a house here unless you’re in a criminal gang.The koolaids been tampered with. Think Apocalypse Now. In Canada. Never get out of the boat.

#74 Nagraj on 07.10.15 at 10:06 pm

GT: “By every measure, the [Canadian] economy’s faltering.”

Lots of food for thought in that paragraph, especially “Corporate profits are weak. Incomes are stagnant. Debt is epidemic.”

Throw in youth unemployment and Boomer penury.

What results from six months of zip GDP growth? For one thing, polls that indicate a historic political upset. How about another six months of zip GDP?

#75 Goldie on 07.10.15 at 10:07 pm

Thanks Mark.

So who’s making all of the money on retail gas sales since the price of gas (at least in Vancouver) is only 15 cents or so lower than it’s all time high, but with oil approaching one third of its price when we had record high gas prices?

Someone is making good money, even with oil low, assuming that consumer gasoline is a major segment of the oil market.

#76 Cultural Marxism on 07.10.15 at 10:08 pm

DELETED

#77 the small lebowski on 07.10.15 at 10:12 pm

#66 Bill Gable on 07.10.15 at 9:54 pm

I had a Roman tell me I was mad that I thought Yellen would raise raises.”

Hot tip, never get stock tips, or macro-policy advice from a guy in a toga, unless his name is Belushi

#78 Godth on 07.10.15 at 10:12 pm

#37 Joseph R. on 07.10.15 at 8:09 pm

Exactly. Just talk endlessly about a symptom but never address the far larger disease. Love ‘free markets’ until they need to be saved by the gov’t (the unwashed) and then love all the interventions that save the ‘elite’ from themselves.

…and Dizzy understood – What a Wonderful World

Too bad about the people, as he also understood.
https://www.youtube.com/watch?v=2nGKqH26xlg

#79 No Canada, No on 07.10.15 at 10:14 pm

“Greece” news appeared not be the news at all, although even Garth bought it :)

Negotiating deal for Greece is shown here: http://a.abcnews.com/images/Business/REX_weekend_at_bernies_kab_140129_16x9_992.jpg

It’s The Most Bubbleful Time Of The Canada
There’ll be parties for buying
Mortgages for toasted
And refinancing out in the snow
There’ll be scary realtor stories
And tales of the offers of
Real estates long, long ago

#80 Mark on 07.10.15 at 10:17 pm

“So who’s making all of the money on retail gas sales since the price of gas (at least in Vancouver) is only 15 cents or so lower than it’s all time high, but with oil approaching one third of its price when we had record high gas prices?

Someone is making good money, even with oil low, assuming that consumer gasoline is a major segment of the oil market.

The type of crude oil used by the Richmond refinery, and the Alberta refineries is known as “WCS”, which is basically tar-sands derived oil. It previously traded at a very large discount against the WTI benchmark, which meant that western Canadians, at $100/barrel oil, were enjoying unduly large discounts on refined products versus the rest of the world.

Today, that differential, between WCS and WTI, has been squeezed significantly. The Canadian dollar has also dropped about 25%. So actual refinery feedstock input prices being paid today aren’t all that different than were paid at $100/barrel.

Additionally, volumes have dropped along with the economy. Refineries themselves are not that expensive to run, but they have large fixed capital costs which still must be covered.

So to answer your question, no, there is not a windfall of profit being earned by the downstream O&G industry/refining sector on account of these lower oil prices. And the upstream is obviously under severe stress, for obvious reasons.

Some refiners may have hedging programs, but hedging is ultimately a zero sum game in the long run.

The only “windfall profit” being earned in the O&G industry is that “earned” by government, which gets to tax the snot out of the industry at almost all levels possible, without contributing a dime of capital to the cause.

#81 Leo Trollstoy on 07.10.15 at 10:21 pm

#33

Kudos for being diligent savers. I think many people can learn what is possible with a disciplined approach to saving.

Having said that, I think those who are comfortable taking part in Garth’s balanced approach over the last 27 years would have also experienced very good results. But that approach a solid form of emotional control and patience.

And having said all that, people like myself and a few others on this blog wouldn’t be able to do either. I’m a real estate opportunist and created a similar amount in 5 years as opposed to 27. And they throw off quite a bit more than 3% of invested capital.

Of course it was helpful that Florida offered entire buildings at pennies on the dollar. Ok maybe not pennies, but dimes and quarters on the dollar.

#82 family beagle on 07.10.15 at 10:21 pm

I like this ‘shadow banking’ term. It has a certain caché/allure. Perhaps I shall get cards printed, Me – Shadow Banker, and make high interest micro loans to friends desiress of finer things. However, I am not capitalized to any great degree. I have no savings and no job. In fact, my big plan today was to hump the neighbour kid’s basketball. Bring on the night.

#83 Washed Up Lawyer on 07.10.15 at 10:21 pm

Hello Rex:

First time caller. Big fan of Cross Country Checkup.

I just want to make one point. Nanaimo, Comox and Victoria receive less rain than Vancouver.

Why?

#84 Mark on 07.10.15 at 10:23 pm

“The type of crude oil used by the Richmond refinery”

My apologies, I meant the Burnaby refinery. The “Richmond Refinery” is in Richmond, California. Much closer to where I spend most of my time on the west coast.

#85 Cultural Marxism on 07.10.15 at 10:23 pm

Message received and understood and I totally understand. I just thought you are a real contrarian so I would give it a shot. Hopefully we are not on opposite side of this whole thing. All the best and thanks for your service to our great country. I will be on my way.

#86 Chaddywack on 07.10.15 at 10:24 pm

Still don’t own….guess I’m never getting in the Vancouver market :)

#87 John in Mtl on 07.10.15 at 10:28 pm

@ #58 Smoking Man on 07.10.15 at 9:29 pm

Talk about luck.

Canada about to be booted from TPP

http://www.cbc.ca/m/news/business/u-s-may-cut-canada-out-of-pacific-rim-trade-deal-sources-1.3147300

The TPP MUST NOT BE ALLOWED TO PASS in Canada. Who wants to lose more sovereignty to the oligarchs & the corps; and have decisions that affect our well-being, health, etc taken in secret courts ?

I’m very happy the US has plans to leave us behind :)

#88 Leo Trollstoy on 07.10.15 at 10:28 pm

Looks like I’ve slayed Mark.

Damn feeling bad about it.

It was difficult for Mark to keep posting when every prediction was wrong (YVR/YYZ RE prices, gold/miners, deflation/inflation, CAD/USD, BoC rates, mortgage rates, etc.) and all the information was questionable.

I think he was just a troubled guy.

#89 Leo Trollstoy on 07.10.15 at 10:34 pm

You were doing so well until you lumped me in with an Internet troll. — Garth

After Garth called Mark out as a troll (irony?) I think the only readers Mark has left are the newbies. Which is unfortunate since they are the most easily mislead by his incorrect posts.

#90 bullshitallergy on 07.10.15 at 10:35 pm

PHHHIT! indeed welcome to our version of Greece. The selfservative free lunch is over.

#91 Washed Up Lawyer on 07.10.15 at 10:49 pm

#63 Goldie on 07.10.15 at 9:45 pm
A question for our forum oil experts (or whoever):

If we had more refinery business here in Canada, would our oil industry be doing better?
*************************************

Rest assured that every oil company in the world has looked a refining in Alberta and has decided the economics do not work.

Residents of Fort McMurray wish that a Home Depot and Costco would open here so our lives would be swish and perfect.

You can bet your bottom dollar that both Home Depot and Costco have looked at the market and passed.

If only the government would partner up with them, we could buy a Weber BBQ here and refine high octane gas. Will never work.

Auto manufacturing plants are not located right beside the iron ore mine.

But, what the hell do I know.

#92 Godth on 07.10.15 at 11:00 pm

#83 Washed Up Lawyer on 07.10.15 at 10:21 pm

It’s a rain shadow on the south east side of Van. Isle. (relatively speaking). Then the clouds hit the coast mtns. on the mainland and they get another downpour in Vancouver. Pretty simple really, the west coast of the Island absorbs the big brunt and the rest just logically unfolds.

I’m not sure if you were being sarcastic or are simply geographically ignorant and being sincere but there it basically is. If you identify the farming on the E. side of the island (and the pop. centers)…well, the settlers weren’t stupid. Tofino gets something in the neighbourhood of 10 meters of rain a year, it was a logging and fishing village. Make sense? It does to me, Lake Cowichan gets about double the rainfall that Duncan gets and they’re about 20-25 minutes away from each other. I’ve lived in both. If you like 40 days of rain at a stretch that bounces off the pavement Lk. Cowichan may be for you! Property is relatively cheap and the lake is gorgeous 3-4 months of the year.

#93 sockeye sam on 07.10.15 at 11:01 pm

China is trying to get back $1.08 trillion of illegally removed money.

https://www.biv.com/article/2015/4/property-sales-spike-sparks-money-laundering-fears/

#94 Smoking Man on 07.10.15 at 11:02 pm

#88 Leo Trollstoy on 07.10.15 at 10:28 pm
Looks like I’ve slayed Mark.

Damn feeling bad about it.

It was difficult for Mark to keep posting when every prediction was wrong (YVR/YYZ RE prices, gold/miners, deflation/inflation, CAD/USD, BoC rates, mortgage rates, etc.) and all the information was questionable.

I think he was just a troubled guy.
……

I’m starting to like the bastard. He’s flawed, wrong, Boaring as hell. But he keeps coming back for more abuse. That’s an amazing quality.

Most would hide under a rock, come back with a new identity and try again..

Not Mark. No, he’s extreamly demented. I admire him.

He thinks he plays it safe, but in his own weirdo way he risks…

I like that.

#95 Ron Davidson on 07.10.15 at 11:07 pm

Lets recap. The US counterfeited/QE trillions of dollars to save their butts. The EU is counterfeiting now and I imagine all the money used to bail out Greece is also created digitally. China pours billions of dollars….probably digitally created…..to save their butts. Canada creates 100’s of billions of dollars digitally to create mortgages for the masses. This really has absolutely nothing to do with finance, economics or reality. It is pure and simple criminal activities to keep the party going. I am going to my laser printer after I finish my comments here and will be proud to announce in a couple days that I am the wealthiest man in history. I wonder how much paper and toner I will need? Never mind I will do an initial printing run to have enough to take to Staples. If the cops come to arrest me I will say I am not a counterfeiter but a highly educated Ivy League economics PHD who is practicing personal Quanitative Easing. Correct me if I am wrong but there are no laws against Quanitative Easing. Life is going to be so wonderful!!!!

#96 sockeye sam on 07.10.15 at 11:35 pm

Chinese flee stocks for offshore property (chart)

Excavators and the sound of crunching lumber. That’s the sound of money over here on Vancouver’s west side.
Every time another one comes down the mice and the rats hunt for a new home. My deck is covered with rat crap every morning and the dust is building up on the inside of my house. Just saying, not complaining, it’s the sound and smell of money. I really need to get into the demolition business. I need one machine and two large bin trucks.

http://www.visualcapitalist.com/trading-places-chinese-flee-stocks-for-offshore-property-chart/

#97 Retired Boomer - WI on 07.10.15 at 11:38 pm

Let’s re-cap shall we?

Re-cap in my world means taking that classic old shortwave, or mono record player from the 50’s dumping the leaky old electrolitics, wax caps, getting a few critical chassis readings, servicing the old turntables, and putting the dam thing back in service rather than the trash.

Funny, research outfits like Stansbury & Associates (whom I don’t know, but have read some of their prognostications predict a credit crisis this fall. Can’t ell if they’re a doomer site, or what?

I do see people unbelievably extended on credit. That won’t end well for them as individuals. I am frankly a bit worried about the country’s debt as well. (U.S.)

While locality things seem more normal than usual, weather has been decidedly untypical.

Still think what I am doing is relatively logical for a geezer in retirement. Your life is different, as it should be, you aren’t me. I respond to a different drummer. No wiser, and probably summer.

#98 gladiator on 07.10.15 at 11:38 pm

Garth,
respect you and your opinions. Nevertheless, I am 120% into SPXU, the ETF that is 300% the reverse of S&P 500 index performance.
I do not see anything good happening anytime soon, on the contrary, a big boo boo is coming. Call me a doomer. Whatever. I think of myself as a realist.
Time will tell.

#99 Interstellar Old Yeller on 07.10.15 at 11:50 pm

Yep, you called it, Garth. But you shared the reasons behind your calls to help reassure us. Thank you. :)

#100 K. R. Omagnon on 07.10.15 at 11:53 pm

#95 Ron Davidson on 07.10.15 at 11:07 pm
Lets recap. The US counterfeited/QE trillions of dollars to save their butts. The EU is counterfeiting now and I imagine all the money used to bail out Greece is also created digitally. China pours billions of dollars….probably digitally created…..to save their butts. Canada creates 100’s of billions of dollars digitally…..”

Dude, everything is digital now, analog is so passé, get over it already wouldya!

#101 K. R. Omagnon on 07.10.15 at 11:56 pm

#92 Godth on 07.10.15 at 11:00 pm
#83 Washed Up Lawyer on 07.10.15 at 10:21 pm

It’s a rain shadow on the south east side of Van. Isle. (relatively speaking). Then the clouds hit the coast mtns. on the mainland and they get another downpour in Vancouver. Pretty simple really, the west coast of the Island absorbs the big brunt and the rest just logically unfolds..”

Rains like cats and dogs everywhere out there…ur just splitting hairs here. Seasonal affective disorder comes to mind!

#102 anotherstabbinginsaskatoon on 07.10.15 at 11:59 pm

If I ever see Mark Carney in Crackatoon boy I’ll be sure to shake his hand. Well done, Sir. Bury all of us for your investor buddies at Goldman. The New Despots have positioned themselves perfectly. Now, if only a crisis were to occur..hmmm…

#103 JSS on 07.11.15 at 12:06 am

Re. #94 Smoking Man on 07.10.15 at 11:02 pm

I too miss Mark.

Is he gone? Smoking Man and Trolstoy – you bastards slayed him.

#104 Don on 07.11.15 at 12:10 am

#92 Godth on 07.10.15 at 11:00 pm

Nicely put Godth.

In Vancouver, one can watch the rain pour sideways enough to get you soaked 15-20 seconds on an average day in the late fall and late Spring.

In Tofino, straight off the Pacific I have seen it rain relentlessly two summers ago in August (5 days of it). It comes down like a shower gets you soaked in 5-10 seconds. In the Winter the area deals with road washouts, undercuts etc.

#105 45north on 07.11.15 at 12:11 am

an indeterminate yet swelling number of people are borrowing against their real estate equity with a HELOC that costs 3%, then lending the money to a homebuyer willing to pay 10%.

Canadian banks are playing a game. They’ll call the HELOCs when they feel the heat around the corner.

Victoria Real Estate Update: Bubbles don’t land softly. They implode. It’s a brutal process. The longer bubbles are maintained, the more brutal their implosion

even if there is warning, what are you going to do? I mean if you had got a HELOC and then lent it out you really don’t have an option.

#106 Nagraj on 07.11.15 at 12:26 am

PENG LIYUAN

If you, dear reader, don’t know who PENG LIYUAN is, who her husband is, and what she does (I’ll clue you in on this though – she SINGS) then you, dear reader, are a provincial dork and have no business even whispering the word CHINA.
Let me urge you in the strongest possible terms – to google PENG LIYUAN and click on videos, to educate your parochial self.
You MUST know that Michelle Obama is stylistically as nought compared to PENG LIYUAN who is the most watched First Lady in the world today. Why? Because there are so many more PEOPLE in ASIA than where YOU live. See?

(PENG LIYUAN, besides being the world’s Numero Uno First Lady, is also President of the People’s Liberation Army Arts College, and her performances in uniform are breathtaking.)

Now, you’re probably new to the Chinese scale and harmonics and the Chinese singing voice. Patience. Years ago my wife and I attended a Chinese opera performed in Singapore. Oh my God! I titled it, “A Thousand Rubber Duckies Squeaking.” That was small-minded of me. Since then I have learned to appreciate Chinese music. And ballet: saw a local performance of “The White Haired Girl” (google that too).

South China Morning Post has reported that PENG LIYUAN’s husband has personally taken charge of doings on the Shanghai stock exchange. The Chinese stock mkt is the world’s second largest. We wish China all the best because PENG LIYUAN, too being putsched into exile or sent to a work camp is too horrible to contemplate.

[While yer at it, google the video of the kids classic LIANG ZHI LAOHU (R.U.S. Bonus). I learned it as Three Little Tigers . . . in Mandarin class.]

China matters.

#107 Aldo on 07.11.15 at 12:31 am

Where is Vancouver anyways?

#108 kommykim on 07.11.15 at 12:56 am

RE: #80 Mark on 07.10.15 at 10:17 pm
The only “windfall profit” being earned in the O&G industry is that “earned” by government, which gets to tax the snot out of the industry at almost all levels possible, without contributing a dime of capital to the cause.

Considering the fact that we the people, via our Government, provide the raw input materials for the O&G industry for a small royalty, industry is getting a deal. Plus it will be us, and our descendants, who will have to pay for all the environmental cleanup in the future once the companies have run away with their fistfuls of cash. Yea, so tax the snot out of them!

#109 Jeff B on 07.11.15 at 1:02 am

“Here is a list of what we have after saving for the last 27 years.
Hubert Financial $85,000 RRSP GIC 2.95%.
Oaken Financial $80,000 GIC 3.15%.
[ $1.5M later … ]
We know a few friends that save $50,000 a year and quite content with putting it in GICs at 2.7% to 3.00%. They don’t need the bother and hassle to invest it.”

Being po’ folk, I am not content with 3%. My self-directed LIRA, after considerable bother and hassle, made 48%/a in Q1, and 28%/a in Q2. Puny retirement funds like mine need lots and lots of quality time with their owners.

#110 Mike T. on 07.11.15 at 1:18 am

well the way I see it, the women’s World Cup (Vancouver, mostly) and the Pan-Am Games (Toronto) are presents from our dear elites. Thanks for following our plan to put you into insufferable debt. Enjoy these fun times Canada.

it’s fun to think about all the different countries and all the debt that tax payers are responsible for…almost like it was a big, coordinated plan

#111 waiting on the westcoast on 07.11.15 at 1:28 am

#53 Smoking Man on 07.10.15 at 9:08 pm
“Looks like I’ve slayed Mark.

Damn feeling bad about it.”

I just had a scary soylent green realization…

Smoking Man IS Mark…

#112 cynically on 07.11.15 at 1:35 am

To # 7 — this is Canada – too apathetic to go after the big boys in charge. Vote them out and you’ll get the same lack of responsibility from the ones who get in — after all this is Canada.

#113 Mark on 07.11.15 at 1:56 am

“It was difficult for Mark to keep posting when every prediction was wrong (YVR/YYZ RE prices, gold/miners, deflation/inflation, CAD/USD, BoC rates, mortgage rates, etc.) and all the information was questionable”

Prediction? More like statement of facts on YVR/YYZ RE Prices (declining for the past 2 years). And my record on predicting increasing deflation and consumer weakness is actually pretty good, compared to clowns like you who predict hyperinflation even though there’s huge amounts of adjustable rate consumer debt out there that still needs to be liquidated. Few others predicted that the BoC would be in for any rate cuts, nevermind the one executed in January or the additional ones imminent. So please, give it a rest for the sake of whatever little crediblity you have left.

I have no problems posting. I just have a life outside this blog. Something which you seem to be lacking, especially with all the ad hominem that’s become your raison d’être.

#114 observer on 07.11.15 at 1:59 am

Its an old game, pump the masses with debt and make them your slaves forever.

House owner
or
Debt Slave

Are you really free with a 1 million dollar debt, making 50,000 annual income?

#115 Spaccone on 07.11.15 at 2:23 am

#71 bigtown on 07.10.15 at 10:00 pm
Shopping in Vaughan near Hwy 7 and the 27 in an area of chic hotels with rates near $150 per nite I noticed something very wrong.

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

Question is who is filling up these hotels in virtually featureless sleepy bedroom suburbs??

#116 nonplused on 07.11.15 at 2:39 am

Well Garth, I think there is still an over-all problem with your premise.

If houses can be overvalued due to leverage, why can’t stocks?

The Chinese example is a great one, if you own 5% of a company there now you can’t sell anything for 6 months and who knows that could be 6 years they can change the dictate. No selling.

Even in Vancouver you can still sell your house if you want. So it’s more liquid than Chinese stocks.

Governments and Central Bankers always assume they can manipulate the economy and get “desired results”. But they don’t. Instead they replace one bubble with another.

Greece is interesting, not because a small country is going bankrupt, but because all countries are going bankrupt and they are doing it first. Some accounts say Alberta’s new NDP government is going to print a $10 billion deficit in 2016. How are the people of Alberta ever going to repay that???? They can’t and they won’t.

All government debt is repudiated through bankruptcy. Everyone who has read history knows that. All of your government bonds are worth zero long term. Hopefully the coupon is worth something in the interim.

#117 nonplused on 07.11.15 at 2:44 am

Oh and I forgot to mention “mark to market”. It’s great when the central bankers can manipulate prices higher, which they do. But having everyone agree that Apple is worth $5000 a share is not the same thing as it actually being worth that. One day it mean reverts. Why don’t we all just agree that Play Stations are worth $10,000 each going up by 8% per year??? It would work great until the day where we all realise we have more play stations than oil and guess what?? Crisis.

#118 John on 07.11.15 at 2:46 am

The growth model is over. The economy is wobbling. We need more people doing honest work again and be productive instead of pushing call and put buttons

#119 nonplused on 07.11.15 at 2:55 am

And further, ok this is too many responses, but the Chinese government is now threatening to throw “sellers” in jail. Ok how is this a free market? Now don’t get me wrong Garth I have been with you all along that there is a bubble in Canadian real-estate, but can you imagine being thrown in jail for trying to sell a house in YVR? Most of the Chinese miracle is an illusion and the illusion manufactures are responding as would be expected.

One thing I know from being a risk manager guy is that you can’t just say something is worth X because that’s what we think it should be worth. Just ask anyone in the oil industry in Calgary or now anyone involve in Chinese stocks. Sure they are worth something. But they aren’t worth anything you would say or hope.

#120 TRT on 07.11.15 at 2:58 am

sockeye sam:

Its a free for all. The world is corrupt. People playing by the rules are loosing big time.

#121 Leo Trollstoy on 07.11.15 at 2:58 am

I’m starting to like the bastard. He’s flawed, wrong, Boaring as hell. But he keeps coming back for more abuse. That’s an amazing

Very true. He’s one of the rare individuals who appears to embrace failure. That is amazing.

#122 Tony on 07.11.15 at 3:18 am

Re: #65 lee on 07.10.15 at 9:50 pm

Those are rates from past years. The question is will the provinces bail out the people with money invested when many of the credit unions and banks go bankrupt? Hubert would be the very first on that list. When the first credit union goes bankrupt there will be a run on all the credit unions and lesser known banks. My guess is the people with money at credit unions in British Columbia will get next to nothing.

#123 Sosuke Aizen on 07.11.15 at 3:18 am

“The lender then takes over a property worth less than the money extended. Loses all round [Losses all around?].”

MICs lend at a loan to value ratio of 65%. They can afford to absorb some price decline.

#124 earthboundmisfit on 07.11.15 at 5:10 am

The fact that there is a Stairway to Heaven and a Highway to Hell says a lot about anticipated traffic flow.

#125 Sebee on 07.11.15 at 6:32 am

I have to point something out Garth. Greece “saved” for various reasons with serious intervention. China stocks – wow, talk about intervention. Real Estate…while policies have goosed this, what makes anyone think same government intervention won’t be the order of the day when needed? Left to it’s own devices, RE does what we know it should. They will not allow that to happen…unless they wish to devalue the dollar more perhaps. It all has to go up up up, until boomers are gone.

#126 David McDonald on 07.11.15 at 6:45 am

I jumped back into the market last week close to the bottom after staying on the sideline since late March. Was it worth it? Well I got EWG at a good price but buying back what I sold in March didn’t net much except a tax liability.

I am pretty sure Garth’s algorithm which includes periodic rebalancing is the right way to go but I get so fearful I feel I have to react. However Garth’s way is a lot less stressful.

#127 R Kaputnic on 07.11.15 at 6:46 am

#71

You used the words “chic” and “Vaughan” in the same sentence?

Seriously?

#128 Jackie DiAngelis on 07.11.15 at 7:02 am

To Lee #67

Many of these GICs were purchased 7 months to 12 months ago and the rest were mostly purchased 18 months to 2 years ago.

Looking at my paperwork last night, GICs, GIAs, TCA 35% mature in just about 4 years, 20% mature in 4.5 to 5.5 years, 25% mature in 3 to 3.5 years and the remaining 20% mature in 13 years+.

About 75% are compound interest GICs/GIAs and 25% are interest paying yearly so this way income taxes are covered and more interest is earned.

GIC rates just 1 year ago to 18 months ago were in the 2.9% to 3.20% range for the more willing paying financial institutions.

Lee, you have to shop around which is much easier these days now. There are always GIC rate specials going on but just some financial institutions are more competitive than others.

When interest rates rise in coming years, I would not be surprised to see 3.5% to 3.75% GICs in 3.5 to 4 years.

I doubt we will see anytime soon, 4.25% to 5.00% GIC rates that were the norm like back in 2006, 2007, 2008 before all went downhill.

#129 Better Secure Than Sorry on 07.11.15 at 7:44 am

“Consider a home a forced savings account (you have to sell to unlock that equity). You are seeing in China how quickly psychology can turn. The real estate market in China has slowed down considerably so people were plowing money into the stock market where valuations were ridiculous. The market in China has lost close to $3 trillion in market cap recently. So much for prices only go up. And of course if this is more than a tiny trend and a real correction, some of the hot money from Asia may start slowing down as when the Nikkei imploded. The choice many face in high priced metros is this: deal with rental prices going up or buying a home with an inflated price and being locked in for 30 years. Interestingly enough, people are going with the renting option.”
http://www.doctorhousingbubble.com/renter-households-us-feudal-america-serf-renters-landlords-rental-markets-rates/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+DrHousingBubble-HowILearnedToLoveSocal+%28Dr.+Housing+Bubble+-+How+I+learned+to+Love+SoCal%29

#130 OttawaMike on 07.11.15 at 7:54 am

Fed is raising rates imminently. LOL.

http://www.economist.com/blogs/freeexchange/2015/07/federal-reserve

10 yr US treasury ETFs seem like a good bet.

#131 gut check on 07.11.15 at 8:19 am

#118 John on 07.11.15 at 2:46 am
The growth model is over. The economy is wobbling. We need more people doing honest work again and be productive instead of pushing call and put buttons

____________________

It’s happening. Slowly, painfully, but it’s happening.
I’m just trying to find my position in it – at 44 with a health issue that has slowed me down from my formerly non-stop self I’m kind of just getting my feet under me again.

BUT.. at least there are those of us who see it, and that is the most important thing. Every single creation in the history of the universe originates with imagination & vision. I can be completely disabled and still my imagination (and yours) can be the power plant to the world we want to see.

/corny idealistic (but true) prognostication

#132 Smoking Man on 07.11.15 at 8:47 am

Going to try writing something, using a completely new method for inspiration today.

The tools, a boat, an IPad the nude beach at Toronto island.

I’m going to try writing a short story, completely naked with other completely naked people all around me.

I have no idea what the story will be about. Lake Ontario is still freezing , I’m hoping my wife’s giggling isn’t to distracting after a swim.

Do I hunker down to write, or stand proudly on the bow as my thumbs race a Million miles per hour to get this done.

I’ll be out there alright, not sure if I’ll be saying, loving every minute of it.

Should be interesting.

#133 Bottoms_Up on 07.11.15 at 9:49 am

#39 Lee on 07.10.15 at 8:28 pm
—————————————
Sounds like we need an audit of the CRA. How is it they can cause havoc in the lives of people on EI or wrapping up a small estate, yet allow flippers and slumlords off the hook? Something doesnt add up.

#134 Llewelyn on 07.11.15 at 9:53 am

In 1999 Greece wanted to join the European Economic Community but when the powers of the day looked into their financial statements they were not impressed and membership was denied.

Then the creative geniuses at Goldman Sachs dusted of their “Swaps are Us” playbook and showed Greece how to hide a big chunk of their actual debt through currency conversion at cherry picked historical rates. Viola billions of debt instantly disappeared from the balance sheet, Goldman Sachs earned a nice fat duplicity bonus and Greece was able to join the EEC under false pretences.

Sadly all those debt chickens came home to roost and the Greek government could not scrounge up enough revenue to meet their debt obligations to their banks. Folks at the EEC, European Central Bank and the IMF, affectionately referred to as the Troika, realized that the collapse of a European bank would erode investor confidence and offered the Greek government $110 billion to keep up appearances. The condition for this loan was the tightening of more belts.

Apparently the $110 billion finger in the dike was too small and the Troika had to provide an additional $130 billion in loans to the Greek government in 2011. More belt tightening was insisted upon.

By 2014 the burden of all this debt and the lack of economic growth due to all those tight belts took its toll on the citizens of Greece who, contrary to reports from the mainstream media in North America, were not lying around in the sun drinking wine and collecting money for nothing. They elected a government who promised to loosen their belts so that they could breathe and to tell the Troika to revisit the generosity shown to German citizens after WW II.

Here we are in July 2015 sighing with relief that Greece has found a way to remain in the EEC and to repay their debts. Whether this current version of pass the hot potato will be any more successful that past versions remains to be seen. One thing I know for sure is that the ordinary citizens of Greece will be asked to pay the bill when it eventually comes due.

Why should Canadians care about Greece? Well for one reason it offers a glimpse of what happens to a country decides to use debt to keep up appearances and keeps adding more debt to service past debts.

Newsflash folks all governments in Canada are headed down path that will result in a substantial correction in the standard of living of future generations if changes are not made.

Let me repeat one cautionary tidbit!! Over 60% of all jobs created in Canada over the past year were in the health and education sectors of our economy and were supported by additional debt.

Just because we can borrow money to keep up appearances does not mean that we should!!!

Enough said.

#135 Squirrel meat on 07.11.15 at 10:16 am

#106 Nagraj on 07.11.15 at 12:26 am

PENG LIYUAN

If you, dear reader, don’t know who PENG LIYUAN is, who her husband is, and what she does (I’ll clue you in on this though – she SINGS) then you, dear reader, are a provincial dork and have no business even whispering the word CHINA.
Let me urge you in the strongest possible terms – to google PENG LIYUAN and click on videos, to educate your parochial self.
You MUST know that Michelle Obama is stylistically as nought compared to PENG LIYUAN who is the most watched First Lady in the world today. Why? Because there are so many more PEOPLE in ASIA than where YOU live. See?

(PENG LIYUAN, besides being the world’s Numero Uno First Lady, is also President of the People’s Liberation Army Arts College, and her performances in uniform are breathtaking.)

Now, you’re probably new to the Chinese scale and harmonics and the Chinese singing voice. Patience. Years ago my wife and I attended a Chinese opera performed in Singapore. Oh my God! I titled it, “A Thousand Rubber Duckies Squeaking.” That was small-minded of me. Since then I have learned to appreciate Chinese music. And ballet: saw a local performance of “The White Haired Girl” (google that too).

South China Morning Post has reported that PENG LIYUAN’s husband has personally taken charge of doings on the Shanghai stock exchange. The Chinese stock mkt is the world’s second largest. We wish China all the best because PENG LIYUAN, too being putsched into exile or sent to a work camp is too horrible to contemplate.

[While yer at it, google the video of the kids classic LIANG ZHI LAOHU (R.U.S. Bonus). I learned it as Three Little Tigers . . . in Mandarin class.]

China matters.
—————————————–
Well she is better than Harpo…..

#136 Investorz on 07.11.15 at 10:55 am

The thing that’s annoying is that if Greece, a corruption paradise of 11M people freaked out people into selling companies on the TSX, I imagine when our housing takes a turn, our stocks will pull-back a lot more. I guess we’ll have cash ready to add to our positions and collect a 6% dividend on CIBC and National.

Until then, add to ZUB US banks ETF. See the chart. It’s good.

#137 Ole Doberman on 07.11.15 at 11:29 am

Looks like the cycle for real estate is about to turn down hard:

http://www.armstrongeconomics.com/archives/34811

Garth was right all along – but 8 years off the mark…..

Wrong country, dude. — Garth

#138 Drill Baby Drill on 07.11.15 at 11:33 am

“winning buyers selling their contract assignments to even greater fools”

I thought I heard of everything concerning sleazy realturds but I must admit this brings them to a new base level for sure.

#139 pinstripe on 07.11.15 at 11:55 am

Now that the Greece Policy Makers are in agreement with the euro dictators and made a 180 degree switch on the wishes of the greek voters, the point is made very clear at the degree of corruption in all levels of government. now there are many more questions and no one to provide any answers.

What we do know for sure is that ALL Politicians in all levels of government are LIARS. ALL Politicians can be bought out anytime. ALL Politicians look after their own self interest first. At athis point, democracy is almost DEAD. The military and police force is designed to protect the politicians and turn against the people.

I wonder where harpo fits in all of this?

Why are so many young Canadians in the military fighting for Freedom and Democracy?

Leadership is not following the uninformed over a cliff. The Greek government is doing the logical thing in the best interests of its people. — Garth

#140 pinstripe on 07.11.15 at 12:06 pm

138 Drill Baby Drill on 07.11.15 at 11:33 am
“winning buyers selling their contract assignments to even greater fools”

I thought I heard of everything concerning sleazy realturds but I must admit this brings them to a new base level for sure.

————————————————————-

in the global economy that type of business practice is encouraged as being financially creative. Money is the only indicator of POWER.

There is nothing to gain whatsoever to educate the uneducated.

#141 ANON on 07.11.15 at 12:07 pm

#106 Nagraj on 07.11.15 at 12:26 am
[Art critique; superhero style] :)
#135 Squirrel meat on 07.11.15 at 10:16 am
Well she is better than Harpo…..

But it’s the lazy guy who gets the immortal glory. :)

#142 Trevie on 07.11.15 at 12:21 pm

“Leadership is not following the uninformed over a cliff. The Greek government is doing the logical thing in the best interests of its people. — Garth”
———————————————-

Garth do you see Greece ever leaving the Euro?

#143 Bob Santarossa on 07.11.15 at 12:21 pm

It is not over yet with Greece and China.

It never will be. But it’s no crisis. — Garth

#144 pinstripe on 07.11.15 at 12:23 pm

Leadership is not following the uninformed over a cliff. The Greek government is doing the logical thing in the best interests of its people. — Garth

—————————————————————-
The LOGIC is flawed. The Leader of the Greek government is a LIAR. He did not walk his talk. Why did he waste taxpayer money to have a vote by the people on this issue? Why didn’t the Leader be open, honest and transparent presenting ALL of the FACTS to the people? Why did the Leader allow the greek system to fail totally in order to implement change presented by the dictators of the euro? Why are the policy makers in all levels of government so concerned in protecting their own jobs by wasting so much money? How much tax do the euro leader policy makers pay on their salary?

#145 triplenet on 07.11.15 at 12:37 pm

#92
Really…..
Tofino receives 10 metres of rainfall per year.
That’s almost 33 feet. – just so you know.

Actual rainfall is closer to 100 inches per year.
I kept it simple for you. Sans metric.

#146 Frank on 07.11.15 at 12:41 pm

Then the Dow added about 300 points, for a year/year return of 7.6%

I hate statistics. Sure this is true but most people look at yearly gains. Last year was kind. This year hasn’t been great to anyone in the market. That undermines the boo houses yay market narrative. Sure its risky to buy a house but its not like a balanced portfolio has done anything lately.

#147 Godth on 07.11.15 at 12:55 pm

Leadership is not following the uninformed over a cliff. The Greek government is doing the logical thing in the best interests of its people. — Garth

Why Europe Needs to Offer Greece Debt Relief
http://www.newyorker.com/business/currency/why-europe-needs-to-offer-greece-debt-relief

Prof.Steve Keen on Greek debt
https://www.youtube.com/watch?v=oFRVycXqAuc

If your informed opinion is that violence is the solution don’t be surprised when it leads to….more violence, in the streets or worse – war.

Abstract games shouldn’t trump real people. Next up – Spain, Portugal, Italy, France, etc., etc., etc.

Iceland is doing well.

#148 BS on 07.11.15 at 1:09 pm

Every time another one comes down the mice and the rats hunt for a new home. My deck is covered with rat crap every morning and the dust is building up on the inside of my house. Just saying, not complaining, it’s the sound and smell of money.

It is the sound and smell of money for those who cashed out and left. For those still living in the area it is just the smell of rat crap and sound of continuous construction noise. Must be nice.

#149 Blacksheep on 07.11.15 at 1:22 pm

“Greek government is doing the logical thing in the best interests of its people. — Garth”
—————————————————–
I have to call bull shit.

What is in the best interest of the Greek citizens, would have been a full blown bankruptcy, wiping the 350 billion in debt away and starting over by regaining sovereign control via the Drachma. China or Russia would have gladly, temporally floated them to avoid blood in the streets.

Does the Greek government need to ‘revise’ it’s taxation and pension practices, of course, but three years from now, Greeks would be much happier than the path now imposed.

Don’t kid yourself, “doing the logical thing” is in the best interest of Germany, European economic stability and global stock markets, not the Greek people.

I’m happy nobody asked you, or cares. — Garth

#150 Marco on 07.11.15 at 1:35 pm

@OttawaMike

http://www.cnbc.com/2015/06/01/rate-hike-needed-to-pop-bubbles-robert-shiller.html

“If I was asked to testify before them (the Fed) I might reconsider, but there is a tendency for central banks to ignore speculative bubbles until it’s too late,” Shiller said, talking about the need for higher interest rates.

“It may already be too late. Stock markets in the U.S. are quite high and prices in the real estate market are getting high.”

Seems the BoC is doing the exact opposite.

Cheers.

#151 Swingin Dick Malone on 07.11.15 at 1:48 pm

Hey G…..instead of reading the market tea leaves from a collection of press clippings…here’s a good site that provides the actual factual charts, graphs and commentary.

http://timingthemarkets.com/

Follow the charts friend…not the media. Advising should be based on facts…not faction.

Be careful putting all your faith in technical analysis. It is but one tool investors should employ. — Garth

#152 Shawn Allen on 07.11.15 at 1:53 pm

Online Commenting – A great place to practice a lack of manners and a lack of human decency and to do so in a cowardly way (anonymously)

Isn’t the world of anonymous online posting great? It’s a place where we can insult others with impunity. Where empathy can be forgotten. Where personal attacks add to the entertainment value.

But I am wondering if practicing being mean-spirited is a good thing. If some people start to talk in real life the way they write anonymously online, they will be in trouble.

Constantly insulting others and telling them how wrong or stupid they are does not win friends and influence people in the real world.

So fellow blog dogs, just be careful what attitudes and habits you are ingraining into yourself if you are one of those who is mean-spirited online.

And have I been guilty of this at times? Of course yes at times. Let he without sin cast the first stone. So I am not casting stones but just suggesting that some people should think about what they are practicing and how it might affect their own attitudes and how people view them in real life.

#153 Retired Boomer - WI on 07.11.15 at 1:58 pm

Another review.

Greece takes the bait. They could NOT meet the payments the Troika had set up after the last bail-out. Their economy has gone down since, unemployment has increased.

Gee, is not the definition of ‘insanity’ doing the same thing over and over again, and expecting different results?

Seems to me after several bailouts this idea is not working out. What would make the lenders, or the borrowers think “this time it is different?”
Seems the borrowers ‘knew’ Greece would not be able to make the payments the FIRST time around, but may have just been ‘playing’ Greece to see what assets they could wryest from the state at fire sale prices (including their islands). Definition of a “fraud loan” in my thin book.

Canada homeowners are taking a HELOC at 3% to lend the proceeds to home buyers without sufficient capital as a down payment, secured by a 2nd mortgage i would guess at 10%??? This is a sub-prime loan, and a precarious position to me if I had to ‘borrow’ the money in the first place.

What are those homeowners thinking, and why didn’t Greece get some principal relief on their loan balances?

Just asking…

#154 Seinfeld Episode on 07.11.15 at 2:27 pm

#132
SM,
This better be original.
The stories about nothing and shrinkage have already been written.

#155 TurnerNation on 07.11.15 at 3:00 pm

Anyone still inside today? Perfect weather in TDot.

As mentioned by me the Toronto housing bubble will not turn flaccid until finally “Gartho” goes for that beer with Smoking Man @ SouthSide Johnny’s.

Anything else is conjecture, posturism and innuendo.

#156 salonist on 07.11.15 at 3:26 pm

#121
what a loser

#157 Godth on 07.11.15 at 3:39 pm

#145 triplenet on 07.11.15 at 12:37 pm

I stand corrected thanks. Tofino is around 3.2 metres per year or around 10 feet of precip.

#158 salonist on 07.11.15 at 3:49 pm

10 Traits of Losers: Are you One?

http://www.dumblittleman.com/2008/08/10-traits-of-losers-are-you-one.html

#159 Debtfree on 07.11.15 at 3:54 pm

Garth you have a lot in common with Caesar Millan . He also uses calm assertive energy to make an unruly dog behave .

#160 James on 07.11.15 at 4:13 pm

blog dogs, how much does Chipotle Mexican Grill chicken Burrito cost in Toronto ? here in US, it costs $6.5

#161 Blacksheep on 07.11.15 at 4:15 pm

“I’m happy nobody asked you, or cares. — Garth”
————————————————–
I can think of 11 million people that care a great deal and who’s lives will be generationally impacted buy what will soon prove to be, a very big mistake.

Never mind the fact, it’s not what the people voted for.

I noticed you did not contradict the content, of my comment?

The “your happy” comment speaks volumes Garth.

What about considering, what best for ‘them’, not what’s best for ‘you’.

Man this blog is really going down hill.

The Greek government is finally mustering the leadership it abandoned in a needless, grandstanding, expensive, divisive referendum on a question most people never understood. This is the correct action, finally. Too bad for anarchists like you. — Garth

#162 Has anyone seen this? on 07.11.15 at 4:19 pm

http://www.standard.co.uk/lifestyle/london-life/will-whatsapp-be-banned-10380332.html

#163 pinstripe on 07.11.15 at 5:08 pm

The euro policy makers are the root cause to the problems in Greece.

the access to FREE Money encouraged the greek policy makers to do what the euro policy makers wanted Greece to do. no more and no less.

the euro policies are not to help Greece but to help the banks (bailout). kicking gthe can down the road is expanding the consequence.

on a global scene, Greece is the tip of the spear.

the total global debt is getting out of control.

my dad and grandpa shared this with me from the depression years: anyone with cash will be able to have more cash in these tough times.

#164 kommykim on 07.11.15 at 5:08 pm

RE: #126 David McDonald on 07.11.15 at 6:45 am
I am pretty sure Garth’s algorithm which includes periodic rebalancing is the right way to go but I get so fearful I feel I have to react. However Garth’s way is a lot less stressful.

So satisfy your need to react by re-balancing your GT style portfolio when markets dip.

#165 Blacksheep on 07.11.15 at 5:15 pm

“The Greek government is finally mustering the leadership it abandoned in a needless, grandstanding, expensive, divisive referendum on a question most people never understood – Garth”
———————————————–
I read the clear and straight forward language of the referendum document, via the link you provided. I don’t believe it was over the head of the average Greeks IQ.

This is yet another example of a government, treating it’s citizenry like children.

If I was Greek, I would want decide my own fate, not some forked tongue politician.

If that belief makes me an ‘Anarchist’, I wear the label proudly.

I think its a good idea to review some of Thomas Jefferson’s writings now and then to be reminded what the words, liberty and freedom really represent, not this pretend democracy we currently ‘enjoy’.

Thanks for more than a single line response.

#166 espressobob on 07.11.15 at 5:47 pm

#48
#68
#98

This is why you can’t make profit as DIY investors. Emotional and un-educated! Pity. Consider a pro. Much easier.

#167 Washed Up Lawyer on 07.11.15 at 5:53 pm

On the eve of the final day of the Calgary Stupede, could I offer the best verse of the best country and western song ever:

“Well I was drunk the day my mom got out of prison

And I went to pick her up in the rain

But before I could get to the station in the pick-up truck

She got runned over by a damned old train”

(Steve Goodman – You Don’t Ever Call Me By My Name)

#168 saskatoon on 07.11.15 at 6:03 pm

the madness continues:

http://realtor.ca/Residential/Single-Family/15903180/21-ORLEY-AVE-Toronto-Ontario-M4C2B8-Woodbine-Lumsden#v=d

#169 Washed Up Lawyer on 07.11.15 at 6:06 pm

Sorry, forgot the link to the perfect country and western song. For those interested:

https://www.youtube.com/watch?v=OQw3NUkHK_c

Maudlin sentimentality. That’s how I roll.

#170 espressobob on 07.11.15 at 6:19 pm

I find myself in error with #68

Apologies, my oversight.

#171 Waterloo Resident on 07.11.15 at 6:29 pm

My message to the EU is that for most countries with a debt over 100% of GDP, their debt is just not payable. There is no way to pay back that amount of debt without a ‘haircut’ on the debt. In order to make debt repayment feasible there should be a 1% haircut for every 10% of GDP the debt is over 100% GDP. Greece’s debt level is 185% of GDP, so that’s 85% over 100%, so there should be a ‘haircut’ on the debt of around 8.5% . And this should apply to ALL countries within the Euro zone, not just Greece. This way is fair and is logical.

Of course, have you ever met a BANKSTER who was fair and logical?

Now about Canada’s housing bubble:
– I know that if immigration was at very low levels, then our housing truly would be in a massive bubble, but if we are letting in 350,000 people each year and it will soon increase to 550,000 new immigrants each year, won’t these half-million new Canadians need to live ‘SOMEWHERE’ ?? Even in a massive depression, we would still need at least 250,000 new places to live each and every year ( 2 people per dwelling ).

– Now here’s the problem that Garth talks about: If interest rates rise 3% over the next 2 years, half of all the people who bought over the past 4 years won’t be able to afford their payments upon renewal.

So there you go; about 300,000 Canadians will be trying to sell their homes as they come up for renewal, just as 550,000 new Canadians are trying to buy 250,000 new houses for themselves; just about equals out doesn’t it. So I guess there won’t be any big crash in prices if new house construction STOPS for the next 5 years, but new house construction KEEPS BOOMING, so that is what just might create a glut of new houses, and that is what just might push house prices down 10% over the next 5 years.

Its strange how each year house prices rise 7% to 12%, yet when they fall they only fall 7% to 12% over 5 to 10 years. Maybe that’s why so many people are loading up on debt; its because they see that there is a huge chance of making a killing and very little chance of losing their shirts?

Still, its too much risk for me, I don’t want to risk that. I’ll keep renting and sleep better at night.

A few days ago I told everyone that it was time to jump back into stocks. For 2 days afterwards stocks see-sawed up and down without direction, but finally on Friday they started rising up again, and should continue to rise for at least another 2 weeks. I would sell everything in about 2 to 4 weeks because the transport index is still crashing so the trend is still for the markets to drift slowly downwards.

(Here’s the transport index over 5 years):
http://stockcharts.com/h-sc/ui?s=$TRAN&p=D&yr=5&mn=0&dy=0&id=p95696037966

(now compare that to the Dow Jones over 5 years):
http://stockcharts.com/h-sc/ui?s=$INDU&p=D&yr=5&mn=0&dy=0&id=p95696037966

See what I mean by a huge divergence between those two since around the end of march ?

Immigration is roughly 250,000 per year, or 0.8% of the population – a number which has not increased in almost a decade and to which no changes are proposed. Stop exaggerating. Without immigration our population, and economy, would be in long-term decline. — Garth

#172 sockeye sam on 07.11.15 at 6:37 pm

Copper the next gold? 160 lbs. per electric car.Sounds interesting. I wonder if their’s a copper E.T.F? Makes sense I guess the world will always need copper.

#173 Yitzhak Rabin on 07.11.15 at 6:45 pm

Finland just scuttled any potential deal, Germany also won’t allow more money to be thrown down the financial black hole of Greece.

Latest number is 100 billion Euros for a third bailout, with 25% of it going from the EU taxpayers to Greek banks. Won’t happen. Let’s see if Italy, Spain and Portugal can stomach the losses on money they lent to Greece from previous bailouts and if the EBC itself needs a “capital raise”.

The snowball has been pushed uphill for too many years. I guess it’s not a crisis until stocks go down, then we will get QE 4.

#174 LL on 07.11.15 at 6:51 pm

#20 – Jackie DiAngelis on 07.10.15 at 6:56 pm

We have GICs at Pace Credit Union at 3.01% in TFSA’s. We are not losing money.

Nor are you making it. Pace CU? seriously? — Garth

……….At least it’s safe!

It’s interesting how many times people must be reminded the big risk is running out of money, not losing it. — Garth

#175 LL on 07.11.15 at 6:54 pm

#26 – Jackie DiAngelis on 07.10.15 at 7:20 pm

Someone who saves a lot of money does not need to make a lot of money.

………..Good one!

#176 Smoking Man on 07.11.15 at 7:34 pm

Grove Marmalade at Southside Johnny’s tonight.

I chickend out on the boat today..

Ill try again tomorrow, birthday suit for the birthday boy…

#177 Jon on 07.11.15 at 7:48 pm

#33 Jackie, holy crap, do you worry about deposit insurance much? All gics below 100k spread across obscure institutions. Sounds like more risk than a balanced portfolio. How’s the deposit insurance working out for the Greeks?

#178 Keith in Calgary on 07.11.15 at 7:51 pm

*****Best picture ever !!!*****

#179 Mister Obvious on 07.11.15 at 7:53 pm

#161 Blacksheep

“Man this blog is really going down hill.”
———————————-

I disagree. This blog is as good as ever, and still free.

Of course, many of the comments are not worth the effort but it’s been that way from the start.

So many may be safely skipped. Even this one.

#180 Gary Thompson on 07.11.15 at 8:03 pm

To Tony #122

So Tony agrees that deposit insurance should not cover within reason depositors, $100,000 for DICO, Ontario, CDIC $100,000 for Canadian banks, trust companies.

So Tony is in favor of bail-ins. It is basically stealing depositors money.

The only people getting bailed out are those that get more from the government than they contribute.

Then you wonder why they keep pushing cashless transactions. It is so they can be like Tony and let them do what they want.

As for Tony, whatever investments, savings, insurance, pensions and property, real estate that he has, see how he likes it if when they take a big chunk of it.

#181 maxx on 07.11.15 at 8:03 pm

#24 Sheane Wallace on 07.10.15 at 7:13 pm

crack shack

Crash was OK too…………that’s all you’d want to do in such dumps.

#182 maxx on 07.11.15 at 8:27 pm

#26 Jackie DiAngelis on 07.10.15 at 7:20 pm

Not making alot of money is not the worse thing in the world.

Someone who saves alot of money does not need to make alot of money.

Agree.
You could be, say, close to or at retirement, and have zero intention of not sleeping at night. Knowing that you’ve possibly got more than enough for X number of lifetimes, why plow it into the “market”? The same one intervened upon by government, or which suddenly halts due to “technical glitches”.
If you make enough to save a lot, why on earth would you not carry on piling it up at a faster rate than you’ll ever need it.
People often take (stupid) risks thinking what? That they’ll live for 300 more years? That junior needs to inherit 4 million? That the guy across the street may be making more than he is? That there will be a sudden emergency requirement for a fleet of Lamborghini?

Garth, you really need to address those who have already made it and have no desire whatsoever to risk vaporizing their wealth later in life. With good jobs becoming increasingly scarce and more difficult to hold onto, precious money is harder to make and even harder to keep.

There is a huge opportunity for an additional business line here. Care to diversify?

Go Jackie.

#183 Don Kalamata on 07.11.15 at 8:30 pm

To Godth #147

Really, Iceland is doing well. How come they are paying relatively higher current bond yields, 2 year 6.6%, 5 year 6.95%, 10 year, 6.91%.

Compare that to Finland which is close by, 5 year 0.30%, 10 year 1.09%, 15 year 1.59%.

There is always an after cost when you don’t pay your debts.

#184 maxx on 07.11.15 at 8:33 pm

#33 Jackie DiAngelis on 07.10.15 at 7:53 pm

Here is a list of what we have after saving for the last 27 years.

Heh, heh. Looks like I blogged presciently too soon.

Booyah Jackie!!! Well done.

#185 rampant inflation on 07.11.15 at 8:35 pm

If you all want to know what is going to happen in the markets next, go to elliottwave.com, grab Prechters latest newsletter, and do THE EXACT OPPOSITE!!

#186 Mark on 07.11.15 at 8:43 pm

” I know that if immigration was at very low levels, then our housing truly would be in a massive bubble, but if we are letting in 350,000 people each year and it will soon increase to 550,000 new immigrants each year, won’t these half-million new Canadians need to live ‘SOMEWHERE’ ?? Even in a massive depression, we would still need at least 250,000 new places to live each and every year ( 2 people per dwelling ). “

Yes, they will have to live somewhere. But the housing has proven to be more than capable of meeting the demand. Hence, falling prices, even though interest rates are low (and perhaps will drift even lower).

Housing is just like any other good, once supply exceeds demand, prices fall no matter what sort of financing offers or freebies are attached. The thing about housing is that there is a considerable amount of capital required to deploy new housing, so there can be a considerable lag between the demand for new supply, and the delivery of new supply. Likewise, on the tail end of a housing bubble, as we are experiencing today, it becomes very hard to turn off new supply, even as prices continue to fall. This is why there is such a vested interest by the developers and the RE industry to distort the nature of true demand in Canada, including, but not limited to, providing manipulative commentary in the media of the stats (ie: neglecting the significant changes to the sales mix), and the xenophobic slant we’ve seen where significant price changes, good and/or bad, are blamed on a specific ethnic group without evidence.

#187 Mark on 07.11.15 at 8:46 pm

“So fellow blog dogs, just be careful what attitudes and habits you are ingraining into yourself if you are one of those who is mean-spirited online.”

Kind of sad, isn’t it, that people would resort to personal attacks without any shreds of evidence whatsoever. Rather than focussing on the issues at hand.

Its been my experience that when posters start doing that, its because their position is logically indefensible.

#188 maxx on 07.11.15 at 8:46 pm

#65 lee on 07.10.15 at 9:50 pm

Jack,

You’re full of it.

Nobody can get those gic rates.

Not now. But you could a few years ago.
Solution: The more rates drop, the more you save.

#189 Overconfident on 07.11.15 at 8:54 pm

“Greece? Phfft.”

Yeah…about that Garth. I wouldn’t be so sure.

http://www.nytimes.com/2015/07/12/business/greece-debt-plan-at-next-crucial-stage-as-finance-ministers-meet.html?smprod=nytcore-iphone&smid=nytcore-iphone-sha

It’s over, no matter what the outcome. Markets will move on. — Garth

#190 Don Kalamata on 07.11.15 at 9:01 pm

To #187 Maxx

Most of these pay 2.5% to 2.7% and a few 3.0%.

No, I would not just save more. I would spend less. If things get really bad, moving to Brazil looks good as the Canadian dollar is much strong against the Brazil Real.

How does 12.6% 10 year bind rates sound and sunny, hot climate in Rio.

#191 Don Kalamata on 07.11.15 at 9:02 pm

12.6% 10 year bond rates in sunny, hot RIO!!!!!

#192 Godth on 07.11.15 at 9:12 pm

#182 Don Kalamata on 07.11.15 at 8:30 pm

Of course Iceland isn’t everybody’s favourite place to invest. The did the right thing for their people and told the big boy swindlers to shove it. It looks like they’re economy is growing again to me. We’re not hearing about them in the news constantly either.
http://country.eiu.com/iceland

I don’t know how or why you’re comparing Iceland to Finland, why not compare them to the Swiss or Mexicans?
http://www.wsj.com/articles/switzerland-first-with-10-year-bond-at-negative-yield-1428489209

I think the Icelanders knew they were giving up on cheap money when they did what they did. They’re free to make their own choices though, and apparently they learned their lesson about the allure of cheap money ponzies and decided on the short term pain rather than long term masochism.

#193 Keith in Calgary on 07.11.15 at 9:15 pm

#190 Don Kalamata……..

12.6% 10 year bond rates in sunny, hot RIO!!!!!

I was heavily invested in Brasilian bonds since 2004………between trading currencies thanks to a very flexible Real and combined with the 10-13% annual bond returns (and low tax rate down there) it was been the best move I ever made.

I am all cash now………because Brasil is screwed. 10 years of communism under Lula, and now Dilma, have destroyed the country. The fact that China won’t be buying much iron ore and oil, amongst other exports from Brasil, means the final nail has been driven in the coffin.

#194 Mark on 07.11.15 at 9:38 pm

“How does 12.6% 10 year bind rates sound and sunny, hot climate in Rio.”

Brazillian rates are only 12.6% because the expectation is that their currency is going to depreciate at a similar rate against other currencies.

This is a classic mistake that many people make, thinking that merely chasing the highest interest rate will net them the highest return. Or that high rates imply currency strength. Sure, if high rates destroy malinvestment, then currencies eventually strengthen. But otherwise, a high interest rate is a very bad thing.

#195 Mark on 07.11.15 at 9:46 pm

“Nobody can get those gic rates.”

Have to disagree here. I know of a small-town CU in Western Canada that pays 3.6% to borrowers, with another 0.5% at the end of the year typically as ‘equity’. They obviously can’t earn that in residential mortgages, but they certainly can in farmland mortgages, and small business lending.

The question, as Garth often asks, is just how safe is it? The Credit Unions claim that “all deposits are insured”, but by whom? The Credit Unions’ own insurance consortium, not the CDIC/FDIC. Which protects against malfeasance at an individual member credit union, but not against systemic economic issues.

Having said that, the one-asset strategy used by that poster is dangerous and irresponsible. And leaves a significant amount of return on the table historically speaking.

#196 lee on 07.11.15 at 10:00 pm

Nobody has answered my question I have posed a few times this week: are tear down rebuilds included inthe 14.2 per cent YOY price increase in TO for June? It’s funny how agents pipe up when you hit a nerve? Does Garth know the answer? The boards don’t seem to care to make this public? I am not sure what is so confidential about a house being torn down and resold in plain view. At some Pont the competition bureau needs to look more closely at this disparity. It is fooling a lot of people and the boards are too gutless to shed light on it.

#197 Herb on 07.11.15 at 10:12 pm

Greece? Phfft?

http://www.cbc.ca/player/News/Politics/ID/2671415122/

Yup. Greece is old. Markets will absorb whatever outcome emerges. — Garth

#198 BlackDog on 07.11.15 at 10:14 pm

@BlackSheep #161

“Greek government is doing the logical thing in the best interests of its people. — Garth”
—————————————————–
I have to call bull shit.

What is in the best interest of the Greek citizens, would have been a full blown bankruptcy, wiping the 350 billion in debt away and starting over by regaining sovereign control via the Drachma. China or Russia would have gladly, temporally floated them to avoid blood in the streets.

Does the Greek government need to ‘revise’ it’s taxation and pension practices, of course, but three years from now, Greeks would be much happier than the path now imposed.

Don’t kid yourself, “doing the logical thing” is in the best interest of Germany, European economic stability and global stock markets, not the Greek people.
——————————————————
I’m happy nobody asked you, or cares. — Garth
———————————————————–
I care BlackSheep.

#199 BlackDog on 07.11.15 at 10:17 pm

@BlackSheep #165 re: “I think its a good idea to review some of Thomas Jefferson’s writings now and then to be reminded what the words, liberty and freedom really represent, not this pretend democracy we currently ‘enjoy’.”

Seriously, most people don’t care. They really don’t. As long as their portfolios last at least until they die, it’s all good.

#200 Buy$10landinAB on 07.11.15 at 11:03 pm

this alone should crash calgary and fort mac RE to crash.

http://www.ctvnews.ca/canada/want-land-alberta-town-offers-lots-for-10-1.2464452

#201 Smoking Man on 07.11.15 at 11:15 pm

When do you know you’ve made it?

5000 sq ft house, 10million , a Ferrari. No dogs. Your still a dog, a servent, a bitch boy.

On your LinkedIn profile, if you see a button that says , connect. Your loser.

Now if that button says, Follow.. You’ve made it.

What does one need to do to get a follow button. Is it a vote by other delegates who have a follow button.

I don’t know. Can it be purchased..

Gartho you know people, fill us in. Wait..

Garth only has two connections.. Boy you’ve pissed of alot of people..

I want a follow button.. I’m tired if the rif raft in my world.

The connect button tells you. You’re nothing..

I don’t do LinkedIn. — Garth

#202 Bottoms_Up on 07.11.15 at 11:15 pm

Great pic, gotta be tough to peak at 3 months old.

Garth, you got over 200 comments, for the summer time thats got to be close to a record.

#203 Smoking Man on 07.11.15 at 11:46 pm

#201 Smoking Man on 07.11.15 at 11:15 pm
When do you know you’ve made it?

5000 sq ft house, 10million , a Ferrari. No dogs. Your still a dog, a servent, a bitch boy.

On your LinkedIn profile, if you see a button that says , connect. Your loser.

Now if that button says, Follow.. You’ve made it.

What does one need to do to get a follow button. Is it a vote by other delegates who have a follow button.

I don’t know. Can it be purchased..

Gartho you know people, fill us in. Wait..

Garth only has two connections.. Boy you’ve pissed of alot of people..

I want a follow button.. I’m tired if the rif raft in my world.

The connect button tells you. You’re nothing..

I don’t do LinkedIn. — Garth
……

I don’t blame you garth… You deserve a follow button..but like all of us low life scum…you too get a shitty connect button. How insulting.

Who do those pricks think they are….we all deserve a follow button..

Let’s face it.. The follow button people are no better that us.. I’m pissed.

I’m calling for a revolution..off with their heads.

#204 Rick Stephenson on 07.11.15 at 11:57 pm

I’ve noticed that as interest rates on bonds and GIC’s have fallen over the years, so did dividend yields and other yield paying investments.

Doesn’t that mean that if we get Japan like interest rates that dividend yields will be low too like 2.00% to 2.5%?

It seems that it is all going that way.

#205 coinage man on 07.12.15 at 12:10 am

#194 Mark on 07.11.15 at 9:38 pm
“How does 12.6% 10 year bind rates sound and sunny, hot climate in Rio.”

Brazillian rates are only 12.6% because the expectation is that their currency is going to depreciate at a similar rate against other currencies.

This is a classic mistake that many people make, thinking that merely chasing the highest interest rate will net them the highest return. Or that high rates imply currency strength. Sure, if high rates destroy malinvestment, then currencies eventually strengthen. But otherwise, a high interest rate is a very bad thing.”

Not necessarily…if there is a large domestic production base for most common consumer goods (food, clothing, etc) such as in Brazil, without having to rely on imports , then it can be good…

#206 spud in da bud on 07.12.15 at 12:24 am

#139 pinstripe on 07.11.15 at 11:55 am
…..
Leadership is not following the uninformed over a cliff. The Greek government is doing the logical thing in the best interests of its people. — Garth”

Garth, that is the politician in you speaking. The view from the great unwashed peanut gallery is that the government officials and politicians are acting in their own self-interest so that they can be re-elected and keep their own souvlaki gravy train chugging down the tracks….come to think of it, aren’t politicos the same everywhere???

#207 One eyed man on 07.12.15 at 12:55 am

Garth,

Here is why the Greece crisis will never end,

The Island of the Blind: The audacious scam that epitomized Greece’s ‘mentality that rules are made to be broken’

Matthew Fisher, National Post 07.10.2015 |

ZAKYNTHOS, Greece — The Venetians who ruled this island paradise for centuries called it the Flower of the East. Much more recently some Greeks have called it “to nisi ton tiflon,” or “the Island of the Blind.”

This island in the Ionian Sea is famous for its sublime beaches and sparkling turquoise waters. It is also where one of the most brazen scams to plunder Greece’s beleaguered treasury took place.

In a notorious scheme that may provide guidance to eurocrats trying to figure out whether this country deserves another big bailout this Sunday, as many as 700 people of the island’s 35,000 residents falsely claimed that they were blind. They were rewarded with more than 350 euros ($477) a month in compensation.

A leading local politician and an ophthalmologist were said to be the ringleaders, although in a lovely twist the medical documents that some of the “blind” provided to the authorities to get their money had been signed by a urologist.

The scheme, which operated for years, was finally shut down in 2011 after one of the “blind” was said to have been caught driving his Porsche. …..

#208 kommykim on 07.12.15 at 1:04 am

RE: #203 Smoking Man on 07.11.15 at 11:46 pm
Who do those pricks think they are….we all deserve a follow button..

Why would you want to join LinkedIn anyway? You’re no job hunting tax farm slave. You are Smoking Man!

#209 kommykim on 07.12.15 at 1:06 am

RE: #205 coinage man on 07.12.15 at 12:10 am

The other thing that sets their bond interest rate is the risk of sovereign default.

#210 AisA on 07.12.15 at 1:30 am

#24 Sheane Wallace on 07.10.15 at 7:13 pm

Actually, I believe it was more apt to refer to them as crash shacks.

#211 bdy sktrn on 07.12.15 at 1:42 am

SM this is a bit technical, on the web and all, but here it is…

“Any company with a LinkedIn Company Page can add a Follow button to their website, making it easy to grow their LinkedIn Company Page follower base. When members click the Follow button, they’ll automatically follow that company on LinkedIn.

Companies can engage with members from their Company Page and through company updates. Company updates will appear on followers’ LinkedIn homepages.

You can build a Company Follow button using our developer resources.”
——————–
(linked in is for the ‘slaves’ anyway, isn’t it? Gt don’t need it. small bussiness don’t either. but it seems essential for corp work=obedience)

#212 bdy sktrn on 07.12.15 at 1:59 am

ok i just signed up at linked in for the first time, my imaginary real estate investment company looks damn legit instantly and i now have a follow button.

4 min and im a slooow typist.

it’s not twitter though so i don’t think it matters

#213 Blacksheep on 07.12.15 at 2:44 am

BlackDog #199,

“Seriously, most people don’t care. They really don’t. As long as their portfolios last at least until they die, it’s all good.”
—————————————————
“If a nation expects to be ignorant and free, in a state of civilization, it expects what never was and never will be.” – Thomas Jefferson

#214 bdy sktrn on 07.12.15 at 3:06 am

here’s one for the renters – i spent much of today and yesterday caught up in a shitstorm of plumbing madness. Luckily, after crossing the shitwall into eye of the storm, we finally got a break and sailed out the other side without incident. (final cost about 2.2k)

think 100+yr old abused sewer, 3 houses into shared outflow line, all buried under concrete, record setting blockages, cracked pipes and stuck power augers. Jackhammers and pools of raw sewage in the holes. Almost had to smash out a 3rd hole.

20 bux for some draino turned into 100+/hr then into a 1k bill for day1 and it seemed to be getting worse by the hour.
On day 2 they sent 2 bigger, stronger, more experienced faster men (sorry its still a mans job – serena williams could just carry these guy’s tools) and the dreaded ‘pumper truck’ (200\hr) They worked like mad men in the WORST conditions you could imagine and thru a massive physical effort, combined with a lot of smarts, and 80k worth of tools they did what looked impossible.
Made friends with the lead guy and tipped the 2 guys 50each, he shaved close to a grand off the bill as he was awesome and felt bad about the way the job went.
(they showed up short of all the needed tools)

those guys should make double.

the renter wins today but i’m ok with that

it’s also the first time in 20 years i had to call in someone to fix something i couldn’t which has kept avg mtce/repair costs to under 1k/yr or 0.1% over 20 yrs on a tired old shack.

#215 bdy sktrn on 07.12.15 at 3:26 am

#196 lee on 07.11.15 at 10:00 pm
Nobody has answered my question I have posed a few times this week: are tear down rebuilds included inthe 14.2 per cent YOY price increase in TO for June?
————————–
avg or median price calcs – i can’t see how they would not be.
HPI numbers supposed to correct for this type of thing i would expect.

but i see it working entirely the other way – all teardowns become duplex around here , they sell 2 850k places on a 1m teardown site.

#216 Mike T. on 07.12.15 at 3:43 am

you know how we are not supposed to follow the markets day to day…don’t follow Greece day to day

they’re going to the BRICS development bank

hopium has proven to be an imaginary element of the periodic table

#217 Mark on 07.12.15 at 4:08 am

(and low tax rate down there) it was been the best move I ever made.

You are aware that you have to declare and pay tax as a Canadian on income in Brazil, right? So not sure how a ‘low tax rate’ helps you, unless you’ve cut all your ties to Canada.

The Canadian tax system heavily penalizes investing in high coupon interest rate investments, as opposed to taking one’s returns in currency appreciation or capital gains on discount instruments.

#218 neo on 07.12.15 at 6:36 am

“Last weekend the Greek people decisively voted down a deal with Europe. This weekend their government accepted the same deal. Hey, didn’t those guys invent democracy? In any case, it’s over. Like there was ever any question.”

Looks like you spoke to soon Garth. As per usual, you may still be correct…just belatedly so.

#219 maxx on 07.12.15 at 6:36 am

#100 K. R. Omagnon on 07.10.15 at 11:53 pm

Excellent moniker! :-D

#220 Sebee on 07.12.15 at 6:39 am

#132 Smoking Man

Don’t forget to put lotion on your bits and pieces or shield it with your ipad at least while you type. Is it an iPad mini?

#221 Hanna Montaine on 07.12.15 at 6:59 am

I am putting $15,000 a year in my RRSP and maxing that out and taking the $5,500 an income tax refund and putting it in my TFSA each year.

I am 22 years old and by the time I am 50, I calculated that I will have $1,000,000. This seems very achievable as I have no debts and manage a building for my uncle and have my shelter paid for life.

#222 lee on 07.12.15 at 7:39 am

#206,

I haven’t seen one duplex built in Toronto in 10 years. Every tear down I see turns into a big house with a really nice brick facade that sells for 150-200 per cent more. If two houses sell and one is tear down the average increase in price goes from 5 percent to 80 percent or more. Even at five houses it’s 35 percent or so. There should be two indexes: one for tear downs and one for everything else. This is the industry’s big little secret.

#223 maxx on 07.12.15 at 8:09 am

#190 Don Kalamata on 07.11.15 at 9:01 pm

“To #187 Maxx

Most of these pay 2.5% to 2.7% and a few 3.0%.

No, I would not just save more. I would spend less. If things get really bad, moving to Brazil looks good as the Canadian dollar is much strong against the Brazil Real.

How does 12.6% 10 year bind rates sound and sunny, hot climate in Rio.”

Been to Rio- pretty, but safe? Not so much. I prefer Moorea.
As for spending less- absolutely agree, what I’ve been practicing since the age of 15 when I got my first job. I blog about spending less ad infinitum, as saving more and spending less go hand-in-hand. There is no need to pay retail on most everything, you just need to learn where to look.

#224 Bottoms_Up on 07.12.15 at 8:43 am

#221 Hanna Montaine on 07.12.15 at 6:59 am
—————————————————
You might be doing yourself a disservice, RRSPs really only benefit those that earn high wages now and will take lower income in retirement. If thats not you, you will end up paying more in taxes. And as been detailed here before, the value of your RRSP is 60% yours and 40% the governments.

#225 maxx on 07.12.15 at 9:59 am

#221 Hanna Montaine on 07.12.15 at 6:59 am

I am putting $15,000 a year in my RRSP and maxing that out and taking the $5,500 an income tax refund and putting it in my TFSA each year.

You and others like you are a very large part of the solution to the world’s fiscal problems. The planning, determination and execution required become a simple habit before long.
Bravo, very well done.

#226 Nora Lenderby on 07.12.15 at 10:48 am

A possible consequence of all the fuss about the Euro and Greece is that Britain’s upcoming referendum on staying in the EU become difficult to win. (Popular resentment being stirred up on all sides makes it hard to get calm decisions.)

The EU is the “project” that was created to stop yet another war in Europe.

#227 Nora Lenderby on 07.12.15 at 10:51 am

#115 Spaccone on 07.11.15 at 2:23 am
#71 bigtown on 07.10.15 at 10:00 pm
Shopping in Vaughan near Hwy 7 and the 27 in an area of chic hotels with rates near $150 per nite I noticed something very wrong.
======================
Question is who is filling up these hotels in virtually featureless sleepy bedroom suburbs??

Adulterers, obviously.

No-one has the time or money to leave town for a bit o’ fancy footwork anymore.

#228 Nora Lenderby on 07.12.15 at 10:54 am

#199 BlackDog on 07.11.15 at 10:17 pm

Seriously, most people don’t care. They really don’t. As long as their portfolios last at least until they die, it’s all good.

As you probably know, most people don’t have portfolios.

#229 joblo on 07.12.15 at 11:01 am

#107 Aldo

“Where is Vancouver anyways?”

What is a Pan Am game?

#230 Nora Lenderby on 07.12.15 at 11:02 am

#207 One eyed man on 07.12.15 at 12:55 am
Garth,
Here is why the Greece crisis will never end,

(unproven assertion, followed by)

…facile, perhaps amusing story about a conspiracy to rip off a few millions in disablity payments…

This could be Ontario or Florida or anywhere. I’m just pointing out that human behaviour is fairly predictable.

It could easily be a story about the medical profession – “Doctors are ripping off the State!”

#231 Republic_of_Western_Canada on 07.12.15 at 11:14 am

#200 Buy$10landinAB

Better have a couple big freezers, veg garden, and a small car with little diesel engine. Because it will otherwise bankrupt you driving around to buy stuff & get entertained.

It’s got a post office to bring in internet purchases & a general store for the basics. Not sure about hi-speed internet.

It’s still nice and white though. And the deer and goose hunting has tremendous potential.

#232 Republic_of_Western_Canada on 07.12.15 at 11:18 am

It’s interesting how many times people must be reminded the big risk is running out of money, not losing it. — Garth

What’s the difference?

Losses are temporary. Poverty endures. — Garth

#233 django on 07.12.15 at 11:35 am

#95
you would need a “royal charter” in order to do all this

#234 jess on 07.12.15 at 11:50 am

20 Jackie DiAngelis on 07.10.15 at 6:56 pm
time value of money
http://ci.columbia.edu/ci/premba_test/c0332/s5/s5_4.html
=================================
31 Scumop on 07.10.15 at 7:47 pm
“Thanks to the miracle of vertical integration”
… base erosion ,profit shifting ,hybrid mismatches
http://www.oecd.org/ctp/beps-frequentlyaskedquestions.htm
http://www.oecd.org/tax/beps.htm
response to bad behaviour?
http://www.oecd.org/tax/transparency/theglobalforumreleasesnewcomplianceratingsontaxtransparency.htm
china is compliant
http://www.oecd.org/tax/transparency/GFratings.pdf

#235 jess on 07.12.15 at 11:51 am

http://www.irs.gov/uac/Examples-of-General-Fraud-Investigations-Fiscal-Year-2014

DBSI Founders and Others Sentenced for Roles in Investment Fraud Scheme

…”According to trial evidence, DBSI was founded in 1979 and sold a range of security investments, including bonds, notes, and Tenant-in-Common interests (TIC investments) in both improved and unimproved real estate. Until DBSI’s bankruptcy in November 2008, the defendants represented to investors that DBSI was a highly profitable company with a net worth in excess of $105 million, and that it operated a successful business model that minimized risk to its investors and paid fixed returns as high as of 9.5%. However, DBSI’s various businesses were almost entirely unprofitable and dependent on new investor funds in order to continue operations. The defendants were responsible for losses of more than $100 million and there were more than 250 victims of the fraud

#236 georgeous george on 07.12.15 at 11:59 am

‘Dung of the Devil”

http://news.nationalpost.com/news/world/dung-of-the-devil-pope-francis-denounces-capitalism-greed-and-the-pursuit-of-money

Garth…this sites preoccupation with ‘the dung of the devil’ is why you and I will never go to a heaven where climate change has been been mastered, the lambs lie with the lions and western self loathing has us all hanging upside down by our heels for liberals and green blob advocates of holy environmental causes to urinate in our mouths throughout eternity.

I guess we need to enjoy the moment, then. — Garth

#237 maxx on 07.12.15 at 12:53 pm

#234 jess on 07.12.15 at 11:50 am

20 Jackie DiAngelis on 07.10.15 at 6:56 pm
time value of money
http://ci.columbia.edu/ci/premba_test/c0332/s5/s5_4.html

We get it…..and if rates are ultra low, it can get ugly. Like now.
But – what if you’ve saved beautifully, like Jackie, in the region of 2MM and counting- fast. Even at 2% a year you get income (before tax) of 40K.
Maybe you have another 45 years to live.
Indexed pensions will kick in as well.
And maybe there’s a portable, low or no overhead family business tucked in there as well.
Streams continue to TFSAs and possibly still RSPs depending on tax.
Add to that mix a kick-a$$ methodology for shopping on the cheap and you’re laughing.
So, that formula make work for many, but not all need employ it.
There are many who have worked like mad, saved like today WOULD come and they’ll do what now? Hand the family fortune off to risk? I think not.
Time for quality sleep, travel, recreation and most of all, fun.
Formulae provide useful insight and are tools for building wealth, but one size does not all lives fit.
People like Jackie have bought their way out of risk. Some just don’t want to entertain the possibility of ’87, ’01 and ’08 at this point in their lives.
With all due respect to Garth and other excellent advisors, people like Jackie trust their vision because they can afford to.

#238 sockeye sam on 07.12.15 at 1:00 pm

http://dunbardemolitions.blogspot.ca/search/label/West%2030th%20Avenue%203622

#239 My Wife Loves Garth on 07.12.15 at 1:08 pm

#33 Jackie
I trust you keep track of all the annual T5 interest forms.

#240 Retired Boomer - WI on 07.12.15 at 1:37 pm

#236 Georgeous George

Money is MOST understood. It is ‘amoral’ like a brick. I can use bricks for good (building something), or evil if I throw one throw your window.

The current times require us to prepare for our own old age, as government t sponsored programs will hardly cover more than a bare minimum existence.

This has been the ‘reality’ for the past quarter of a century now, has it not? As a member of the Boomers, who took heed early to this I may be better prepared than some. My area did not experience rapid real estate growth like TO and VCR…. we are more like Windsor. No nest egg in a house to cash out, but then no excess costs to buy 20 years ago either.

The Pope’s ‘political’ speech seems a bit off putting.

A healthy respect for what money is, what it can do, and what it can NOT do, would have been much more helpful from the Pope.

Yes, even Capitalism has its excesses, put as far as ‘isms’ go Capital ‘ism’ seems to me, better than the others….

By the way I am NOT head of any religous organization , named in numerous lawsuits over alleged sexual abuses.
One might need to consider the validity of his criticisms…

Cheers

#241 Retired Boomer - WI on 07.12.15 at 1:38 pm

dam… should read: money is mot mis-understood…

#242 Keith in Calgary on 07.12.15 at 1:40 pm

#205 Coinage Man

Not necessarily…if there is a large domestic production base for most common consumer goods (food, clothing, etc) such as in Brazil, without having to rely on imports , then it can be good…

This would be true, if it wasn’t for the fact that consumer credit (a new thing in Brasil in the last two decades) is totally out of control, default rates are over the top, interest rates are stratospheric and everyone is maxed out. Restaurants there are empty, stores are empty, etc, etc……..every weekend on Fantastico (a 60 minutes type TV show) or the national news there are economic indicators of the trouble or programs about how Brasilians can reduce debt. My previous comments about the government play out like this……they almost tripled the minimum wage……..they give free money to the poor every month (Bolsa Familia) and you can buy underwear on credit over 10 payments on your credit card at 28% due monthly or it compounds. Poor people in Brasil are uneducated like everywhere else, but the wealth effect brought about by their government created an economic disaster as a result.

The 280 million people there are not consuming, because they can barely afford to eat.

#243 johnyk on 07.12.15 at 1:51 pm

If people are salivating over 12% Brazilian bonds and the like just remember you are buying them with dollars but getting back reals or whatever.
You don’t want to earn in one currency while paying your bills in another one. Its a recipe for getting bit in the ass and only works if you are prepared to live in Brazil. BTW, Rio and SP are as expensive or more than Canada unless you live in a packing crate. And Brazil offers a high degree of personal safety, doesn’t it?

#244 Sheane Wallace on 07.12.15 at 2:10 pm

To all these concerned with Brazil: It is an economy with huge potential, resources and future. Their planes are much better, no wonder Bombardier is dying.
Their ETF took large correction – from 70-es to around 32 and is huge, huge buy.

If we talk about housing let’s talk about Spain. Outside of the city centres of Barcelona and Madrid everything is very cheap. And Spain is a very safe country, with beautiful weather, you won’t get brain freeze there. And the house are made of bricks, not fo wooden particles and nobody lives in basements. Gorgeous nature and environment.

Even Greece, Canadian retirees can live like kings in Greece, buy apartment if needed (40-80 k max), no maintenance, everything is very cheap.

#245 Keith in Calgary on 07.12.15 at 2:10 pm

#243 Johnyk……

If people are salivating over 12% Brazilian bonds and the like just remember you are buying them with dollars but getting back reals or whatever.
You don’t want to earn in one currency while paying your bills in another one. Its a recipe for getting bit in the ass and only works if you are prepared to live in Brazil. BTW, Rio and SP are as expensive or more than Canada unless you live in a packing crate. And Brazil offers a high degree of personal safety, doesn’t it?

————————-

Got any proof as to your erroneous comments ? Have you ever played the forex markets for over a decade trading Reals, Francs, Euros and USD ? Where do you live in Brasil, or for that matter, how many times have you been there ? Explain to me why you think a city of 15 million people is unsafe ?

All of your comments are totally incorrect. Plenty of educated Canadians have become expats in the most unusual of places, enjoying a life those of you trapped in Soviet Kanuckistan can only dram of during your staycation in Balzac.

#246 Jackie DiAngelis on 07.12.15 at 2:14 pm

If us having $2.6 million by retirement in 2025-2026 and an income of our TCA, C.P.P, OAS, husband’s pension, interest totaling $120,000 a year will make us run out of money then it will be very difficult to impossible for others.

By the way, I know others that are conservative like us and have long term care protection and life insurance policies.

We have a $600,000 combined amount of this 70%/30% split. Our house is paid off for years now and no debts. No CHIP for us.

#247 John Prine on 07.12.15 at 2:27 pm

Greater Victoria Real Estate June 2010 and June 2015.

Sales closed June 2010—–943

Sales closed June 2015—–1037