Over-stimulation

Down she goes: Worried BoC nips rates again

DOG BAR modified

Sigh. Yet another boring post on monetary policy? Apparently I don’t have a life. But as we approach Ground Zero (Wednesday at 10 am EDT, 7 am PDT, sometime next week in Labrador) this whole interest rate thing seems to be spiraling out of control.

Update, 10 am EDT July 15th: Bank of Canada defies critics and cuts key rate by a quarter point to just 0.5%

  • Dollar slumps to 77.4 cents within two minutes of announcement
  • 5-year government bonds slide 8%

Why does this announcement matter so much?

Politically, it’s pivotal. This is the last time the central bank can dick around with rates without seriously influencing the October 19th federal election. After this, the next Bank of Canada announcement is September 9th – right in the final weeks of an historic campaign. If the bank were to cut then it’d be a top-of-mind reminder the economy’s so weak we must sacrifice the dollar and give money away in order to rescue it. Adios, Mr. H. Not the glorious exit he planned.

Cutting now would arguably drop the cost of loans during the heat of summer, giving voters time to forget about it all, making everybody’s house go up a little while allowing the government two months to spin it away. The central bank would justify it as more ‘insurance’ against a threat that’s already arriving – a recession, complete with job loss and more income equality. And now that oil has tanked again (thanks, Iran), it’s looking like Canada’s subpar performance could be long-lasting.

But cheaper money has always resulted in more debt (which is the whole point of a rate cut – to increase borrowing and spending), and now even realtors are starting to freak. That’s right. When the boss of Royal LePage tells Ottawa not to cut rates because people are turning into loan-sucking carnivores, it’s worth paying attention.

“The country’s all-important real estate market does not need a rate cut,” says Phil Soper, in a rare epiphany. “I worry that stoking this engine further could move us from a perfectly manageable major market expansion into a more difficult correction, as price levels decouple from more household incomes.”

Soper says as far as real estate goes there’s no recession . In fact, YVR and 416 are borderline out-of-control, now that the banks’ mortgage war has delivered 2.4% five-year fixed-rate borrowings. A quarter-point heist tomorrow could conceivably, in a super-heated competitive environment, shove that almost to the 2% mark. That wuld make debt less expensive, but houses more costly – since there’s a negative correlation between mortgage rates and property prices. This is now the greatest risk facing middle-class families, forced to borrow epically and concentrate their wealth in a single asset.

The economists are all over on this one. BeeMo and RBC eggheads now say Governor Poloz & the Poodles will cut, joining Capital Economics’ David Madani..

“With residential mortgage rates likely to edge lower in the months ahead on a potential 25 basis point rate cut from the Bank of Canada tomorrow, we wouldn’t be surprised to see house prices edge dangerously higher in Toronto and Vancouver over the near-term,” Madani told clients on Tuesday. “With prices already completely out of whack with household incomes, however, this will only set up for an even larger day of reckoning over the longer-term.”

Scotiabank’s Derek Holt, however, says a cut would be a really bad idea for the economy. Despite crappy trade deficit numbers this week (non-energy exports cratered), he thinks goosing consumer debt with another rate slice will just make everything worse – turning this into even more of a condo economy, with an inevitable bad outcome. This would “risk delaying the rotation of growth sources away from the household sector and toward the investment and export sectors through over-stimulating consumption and housing and setting a low bar for hurdle rate targets.”

And because this pathetic blog is all about over-stimulation, consider this from bad-buy realtor and housing analyst Ross Kay: so far this year the average house price in BC is increasing 1% a month. “How was the staggering increase possible,” he asks?

Simple. Mortgage rates plopped a quarter of a point after the last Poodley move, allowing the average mortgage to rise by $17,000 with no increase in monthly costs, translating into a $34,000 house price increase since most move-up buyers have 50% equity. So, now everybody pays more. If the central bank does it encore tomorrow, up she goes again.

Finally, the Seriously, dude? award this week goes to the Bank of Commerce. It issued a media release just hours before the Bank of Canada bomb, claiming 93% of people “are unlikely to increase their borrowing if rates come down further.”

That was a thirsty underwear moment.

242 comments ↓

#1 TurnerNation on 07.14.15 at 5:40 pm

Today’s title should be: Undeniable. (Rate cut.)

At my local organic butcher their cheapest small box of homemade seasoned burgers jumped in price, 22 to $28.

#firstworldproblems

#2 ShawnG in TO on 07.14.15 at 5:44 pm

i thought it’s this week?

#3 ILoveCharts on 07.14.15 at 5:48 pm

Money cheaper than inflation – I want in. Is there anything I can get a mortgage on that might be safe? Maybe an acerage in Whitehorse?

#4 Godth on 07.14.15 at 5:52 pm

The time is at hand…and it grows short.
We Are All Greeks Now
http://www.truthdig.com/report/item/we_are_all_greeks_now_20150712

Maybe it really doesn’t matter after all.
http://www.counterpunch.org/2015/07/14/the-impending-ecosystem-collapse/

Good luck money junkies. Control doesn’t work in chaos. bwahahaha

We’re just not that smart…greedy – yes, self interested – yes, clever – yes , wise – NOOOO! Story telling apes talking nonsense. Have fun everybody!

#5 Mike S on 07.14.15 at 5:54 pm

“After this, the next Bank of Canada announcement is September 9th – right in the final weeks of an historic campaign. If the bank were to cut then it’d be a top-of-mind reminder the economy’s so weak we must sacrifice the dollar and give money away in order to rescue it. Adios, Mr. H. Not the glorious exit he planned.”

So cut tomorrow let the CAD shed some value and then wait for the Fed to increase rates in September, which will tank the CAD further?

Sure sounds like a great plan

#6 pinstripe on 07.14.15 at 5:55 pm

the talk at the coffee shop today was all about personal debt and any further rate cut.

the consensus was that harpo and his lapdogs are idiots, willing to do anything for political self interest first.

this fall everyone will be waiting one half hour early at the door for the opening of the advance polls, along with six pieces of id making sure that they will vote.

harpo can do whatever he wants. he is OUT.

#7 bdy sktrn on 07.14.15 at 5:58 pm

costco walnuts
was 18 now 25

#8 Mr. White on 07.14.15 at 5:58 pm

Am I nuts or is there no other way to grow and economy than with free money.

I cannot conceive of a way that this does not turn into more generalized inflation outside of the housing market. We are hiding all that dough in housing now, just as we hid all the money Bill Clinton and Jean Chretien printed in the Dot Com market. That worked out great too didn’t it?

#9 John on 07.14.15 at 6:02 pm

Well the poodle will bite tomorrow. IMF says things are too iffy out there and a US rate hike would be unwise… leaving status quo or cut. Good post, Garth. Back orders for new kitchens are so massive out in the west 905 even the kitchen planner shook his head and said that although he’d heard we’re going into a recession…. they’re swamped. So…. folks will fry all of their bridges until they’re left sniffing Bandit’s kibble. It’s just in the DNA I guess. Grasshoppers.

#10 Llewelyn on 07.14.15 at 6:06 pm

Just a point of clarification

The government of Greece (code for Greek citizens) owe quite a few folks quite a few Euros to wit.

Germany 56.0 billion
Greek bond holders 48.8 billion
France 42.0 billion
Italy 37.0 billion
Spain 25.0 billion
Other Euro countries 34.0 billion
IMF 32.0 billion
ECB 20.0 billion
Greek banks 15.3 billion
Other loans 10.5 billion
Foreign banks 2.4 billion

Total 323.0 billion

The Troika (EEC, ECB and IMF) co-ordinated the bailouts of 2010 and 2012 (a total of 246 billion Euros) but the IMF itself only ponied up 32 billion Euros. Countries like Spain and Italy only agreed to participate because the Troika assured them that the debt would be collected one way or another.

The forced liquidation of assets and imposed austerity was always on the table after 2010. It would appear that the cost of living beyond your means was the loss of sovereign powers. Difficult to see how this could ever end well without someone getting a haircut.

#11 Londoner on 07.14.15 at 6:20 pm

“The central bank would justify it as more ‘insurance’ against a threat that’s already arriving…”

Typically central banks set monetary policy in reaction to economic data, however Poloz seems to be going against tradition by using it as a means to provide “insurance” against economic events that are yet to occur. He’s clearly out of his element as governor of the BoC. However he’s been quite clear about his motives since last September when he stated that any output gap in GDP would have to be led by exports. This is why quite a few people expected a rate cut in Q1, 2015. This speaks volumes about his lack of experience and ability to be an effective central banker. Now don’t you guys wish Carney was still there to set things right?

#12 Oakville Owner on 07.14.15 at 6:20 pm

Timeline on all this may just work out perfect. Variable rate mortgage is up for renewal in November and looking forward to a 120 day rate hold on that historically low 5 year rate!

Any idea if banks will pass on the full 25bps this time if they do drop rates? The fact they didn’t last time and the thin spread between fixed/variable is pushing me towards fixed.

Looking forward to Sleep Country IPO on Thursday! $17 opening price. Going to stuff some fun money in the “mattress/IPO” and sleep easy knowing balance of portfolio is well diversified.

#13 Bagel Man on 07.14.15 at 6:20 pm

Will housing ever correct in Canada? Obviously NOT!

#14 ShawnG in TO on 07.14.15 at 6:23 pm

interpret this way:
rate cut – the Cons are desperate, pulling all stops
no rate cut – the Cons think they can win without resorting to this.

yup. it’s more political then monetary need.

#15 I'd rather be boating on 07.14.15 at 6:30 pm

We were lucky enough to buy our first house in YVR 14 years ago before this madness started. Comparing sales in our area, 1% month is about right. In those 14 years we have put about 350K into our house, if we sold today we would profit 350K (700K in equity). I’ve been calling for a correction for at least 5 years and am starting to believe it will never come. For us it has been a great investment, but unfortunately I don’t think the next generation will be as lucky.

#16 David McDonald on 07.14.15 at 6:31 pm

Garth, when you say poodles I assume you mean the officials at the BOC have lost all independence relative to the PMO. In that case any insanity is possible including lowering rates. In fact I am counting on it since I am heavily invested in U.S. Dollars.

One small irony of the Greek bailout package is the insistence by the Troika that the Greek ministry of statistics be independent of government interference. Sounds like a great idea; too bad we don’t have it in Canada.

#17 joe on 07.14.15 at 6:35 pm

Back when I used to commute on the West Coast, the Skytrain would break down occasionally and my fellow commuters would scramble and stampede over each other to wait in line for standing-room-only shuttle buses etc., I’d wander off and find the nearest coffee shop and sip on a latte and wait it out. After an hour or two I’d emerge to find the trains running again. Kinda like I’m waiting out the RE hordes now….

#18 MF on 07.14.15 at 6:35 pm

Again, I expect them to cut rates simply because it is the wrong thing to do and they are morons.

MF

#19 Washed Up Lawyer on 07.14.15 at 6:36 pm

Hah! The joys of home ownership.

A sewage backup at my Ponderosa back in Calgary because of the downpours over the last couple of days. The plumbers cannot find the outflow drain so they have to jackhammer up the laundry room floor as they figured out that is where it is buried by concrete by sending a camera down the toilet. $2200 bucks for that.

They think the sewage line from the house to the rear property line will have to be replaced and I doubt that the deterioration and failure of that is a peril covered by the home insurance policy. That’ll cost lotsa.

The basement rebuild will be covered by the home policy. A bright spot.

Be it ever so stinky, there is no place like home. A one “asset” strategy.

#20 takla on 07.14.15 at 6:37 pm

Hyperinflate the money supply and this is whatcha get….a debt orgy.Theres an easy fix but the central bankers have painted themselves into the perverbial corner,
Raise rates and the overpriced economy tanks.We are at emergency bank rates now and STILL loseing ground to recession.Hard to see a way out of this cluster-f-ck.

#21 Brunett43 on 07.14.15 at 6:38 pm

I’ll bet $100 on NO rate cut, but then again I could be wrong.
In the news today on HP good info-graphic on first time Canadian home buyers….
http://www.huffingtonpost.ca/2015/07/14/home-ownership-canada-infographic-ratehub_n_7794352.html

#22 Mike S on 07.14.15 at 6:39 pm

I really don’t understand why it would be politically beneficial to cut rates and tank the currency?

So condo prices will go up a little more, but there is a risk to drive costs up in a noticeable way, wouldn’t the sheeple be upset about it?

#23 JSS on 07.14.15 at 6:44 pm

If BoC cuts interest rates by 25 basis points, then how much will the banks pass to the consumer? 10 basis points?

#24 OttawaMike on 07.14.15 at 6:46 pm

Where’s Mark?

Said no one, ever.

#25 NextYear on 07.14.15 at 6:48 pm

Canadian are over indebted like never before, Real estate is on Fire and they want to lower the rate… what a bunch of clowns!!!!

And then when shit hit the fan their excuse will be that nobody could have seen it coming. Bravo!!!

#26 Smoking Man on 07.14.15 at 6:49 pm

5 Mike S on 07.14.15 at 5:54 pm
“After this, the next Bank of Canada announcement is September 9th – right in the final weeks of an historic campaign. If the bank were to cut then it’d be a top-of-mind reminder the economy’s so weak we must sacrifice the dollar and give money away in order to rescue it. Adios, Mr. H. Not the glorious exit he planned.”

So cut tomorrow let the CAD shed some value and then wait for the Fed to increase rates in September, which will tank the CAD further?

Sure sounds like a great plan
…..

Stop slulking when your wishfull bias stares into the face of ugly reality.

Back a few weeks ago when USDCAD was at about 1.22 I told you bastards to go 50 contracts long USDCAD.

How many listend. I mean ive only been right a zillon times on this shit here. Yellow pages and Bombardia ok not so good.

Back in Jan i called the BOC rate cut, and said the next one will be in the summer..and yellen wont spike this year. One out of 3 so far..

Never bet against a man, a Smoking Man who has the Only Phd in Herdonomics in the universe.

#27 Smoking Man on 07.14.15 at 6:58 pm

Finally found a key board app that likes my style.
If you type from a smart phone, this is the way to go.

Look no typos.

SwiftKey

#28 LH on 07.14.15 at 7:21 pm

All of my seven SFHs have floaters. Bring it on poodles!
Amount of interest savings that will actually be spent in the real economy: zero. What, are you crazy?

Saving and investing = winning
Spending = losing

Simple P&L folks

Thankfully the herd doesn’t understand so the rate cut will deliver real stimulus.

#29 Interstellar Old Yeller on 07.14.15 at 7:23 pm

A rate cut means I’ll have to endure even more house-horny talk at the office. Don’t do it, Poloz!

#30 Karma on 07.14.15 at 7:30 pm

#25 Frank on 07.13.15 at 6:16 pm
“With an investment portfolio there are no insurance or maintenance costs, no property tax, no 5% commission to sell, no utilities or mortgage payments. Plus it delivers income, can easily be rebalanced to adjust to current conditions and within a shelter delivers tax-free gains. You’re right. No comparison. — Garth

You’re missing out on rent. Housing is a basic need. Rents in major cities have risen faster than inflation over the same time period. Not sure what the overall number is but it helps the ‘own a house side’.”
———————————————-

You’re right on a couple things: 1) “Housing is a basic need” and 2) “Rents in major cities have risen faster than inflation over the same time period”.

But you’re neglecting a couple things:
1) Housing construction has outpaced demand for occupation in Toronto’s Downtown and even more so in the suburbs. Ottawa and Montreal’s imbalances are even worse! Halifax has been on a huge building binge too, which I fear may be tipped over into even higher vacancy rates (3.4% as for CMHC’s Fall Report). So when supply is higher than demand currently, “Housing as a basic need” is not super relevant. Eventually, demand will catch up though.

2) Rents have risen faster than inflation in condo markets of most cities. But the building booms have certainly levelled off that growth rate. This year, it’s doubtful that Downtown Toronto will see more than 2% rental growth. In CityPlace alone, the rents for 1 beds are between 2.5% and 5% below last year. Calgary and Edmonton have gone marginally negative YTD in some buildings. Mind you, they’ve done spectacularly well over the past 5 years, so it was inevitable that growth slows.

#31 Lisa Moretti on 07.14.15 at 7:30 pm

The Bank of Canada is playing a dangerous game because most Canadians do not have 77% equity in their homes, condos etc.

Cutting interest rates will be a big mistake in my opinion. We personally wish our house was worth much less say $500,000 to $550,000 but were back to 4.5%, 5 year mortgage rates and 3.5% GIC rates, 4.0% to 4.5% government bond rates.

We have $150,000 left on our mortgage. We bought our house 5 years ago for $450,000 in Toronto and now is worth about $650,000.

We never thought that mortgage rates would be so low but we already paid $300,000 of principal in 5 years.

We were aggressive in paying the allowed extra 10% prepayment of principal each year plus our regular mortgage payment.

We now have a 3 year 2.4% fixed rate closed mortgage and the house will be paid off in 3 years.

We have no other debts so our net worth looks just fine now and much better in 3 years.

We started 24 months ago really pushing our savings into RRSP’s, TFSA’s, non-registered accounts with us having $180,000 now of which $120,000 was new money.

My husband just changed jobs 2 years ago and has a LIRA of $120,000 transferred as pension laws apply.

I don’t know why people think that their personal residential real estate will make them rich. It is an asset that needs alot of money and upkeep but it is not an investment.

#32 Shawn on 07.14.15 at 7:33 pm

Greece

The prime Minister there was insisting there be some haircut on the debt. Is any of this new lending non-repayable?

Did Greece get absolutely nothing better than the deal that they rejected a couple weeks ago? The one the referendum also turned down. If so I am stunned. And so is Greece.

If they wanted to pay debts by selling off assets they could have done that on their own a while back?

#33 Sheane Wallace on 07.14.15 at 7:38 pm

Garth, awesome post.
—————————-
#26 Smoking Man

I did.
————————–
#21 Brunett43
There will be rate cut. The doo doo is much deeper and smellier then expected.
————————–
CAD going down big time.

If the people are stupid enough to leave their affairs to the lapdog at BOC and Mr H they deserve what they get,

#34 Smoking Man on 07.14.15 at 7:44 pm

#28 LH on 07.14.15 at 7:21 pm
All of my seven SFHs have floaters. Bring it on poodles!
Amount of interest savings that will actually be spent in the real economy: zero. What, are you crazy?

Saving and investing = winning
Spending = losing

Simple P&L folks

Thankfully the herd doesn’t understand so the rate cut will deliver real stimulus
…..
Not exactly true my Apprentice grasshopper.
Spending =losing.

Let’s take the subliminal message from Nosty.

That beauty sounds like he don’t have alot of time left.

I beilive spending will work out fine for him.. Even better if he takes a loan for it.

When my mom passed away in Oct had alot of Bill collectors calling me, I faxed the death certificate.

That was it.. See ya

#35 NoOneOfConsequence on 07.14.15 at 7:46 pm

Ok – so what if in an epiphany…they add back on .25% ?Consequently cooling the market, letting some air out of the gas bag, pushing our dollar up?

Do we vote for Harper again?

#36 AK on 07.14.15 at 7:46 pm

“When the boss of Royal LePage tells Ottawa not to cut rates because people are turning into loan-sucking carnivores, it’s worth paying attention.”
——————————————————————-

Well, the real boss of Royal LePage is Brookfield Asset Management. I am sure that they have a great interest in the situation as well.

#37 prairie person on 07.14.15 at 7:48 pm

I’m with you Garth re the train coming down the track full speed and ready to derail. However, the building in which I rent at the beach has been put up for sale. There’s an offer on it and I’ve been told that if the sale goes through, I’ll probably be reno-evicted. It’s been nice. Turn the key, walk in. Turn the key, walk out. Pay the rent. Simple. But rentals are so few and so expensive that replacing this apt. will be impossible. Sigh. It was nice while it lasted but, no, I’m not going to buy a cottage. Recreation properties are the first to lose value in a downturn.

#38 Andrew Woburn on 07.14.15 at 7:50 pm

Greece is part of the European bank deposit insurance program which covers up to 100,000 euros except there wont be any Euro-wide coverage until 2016. Each country still provides its own insurance fund. The Greek fund was last estimated at 3bn as against 130bn in remaining deposits, but that was before the Syriza gang went looking for the spare change behind the couch cushions.

The Financial Times has reported that Greece might have to give bank depositors a haircut of 30% on balances of over 8,000 euros. If so that would be far worse than anything that happened in Cyprus. If the EU leaders have a shred of common sense left, they won’t let this happen but who knows at this point? Given the wide spread terror aroused by the mere threat of haircuts for small depositors on Cyprus, a massive haircut in Greece could easily provoke bank runs in other southern European countries. Even if the Greeks eventually get all their cash back, the delays and stress they endure will still badly frighten depositors in other debt-ridden countries.

One possible longer term result could be a demand for a digital successor to the old post office bank. Many countries have had banks run by their government mail services. Montana still has a state bank. They took deposits and invested them in government securities. Of course they didn’t pay much interest but you didn’t wake up one morning to find out that some 28 year old bank trader with a big idea had blown a hole in your life savings.

Post offices worked because they already had branches everywhere. Today online banking is a proven concept and branch offices aren’t needed. If I were in Spain today, I would rather have my household cash in a financial institution that couldn’t lose it on bad real estate loans even if I had to pay higher monthly fees. If all you want to do is park money and pay bills there’s no longer any reason you should be a hostage to banksters or politicians taking risks with your money for their benefit.

#39 Mark on 07.14.15 at 7:50 pm

If these ‘economists’ think that houses are still appreciating in Canada, then they really should find a different line of work, or at least bother to look at the data instead of accepting the CREA/CMHC’s claims at face value.

Still don’t see why the BoC carrying out policy action in good faith based on the data has anything to do with politics. The Canadian data is pretty clear on the need for a rate cut. The US retail sales data released today is pretty unequivocal on the fact that the US economy is not in a sustainable expansion mode and may actually be teetering on contraction.

My promise, not to post here for a week, applies if the BoC fails to cut the policy target by 25bp tomorrow.

#40 amazon girl on 07.14.15 at 7:51 pm

Amazon girl @ Smoking Man yesterday #114
YES,we secretly want you….with your charming and rotten smile…but…
I agree about Mark with his alfa mind ,the young man
who keeps GARTH on his toes…
We are the amazons and we can…
Never bet against a man, a Smoking Man…
a Mark… or Garth

#41 the Jaguar on 07.14.15 at 7:51 pm

#19 – washed up lawyer.

Hate to scare you, but if your Ponderosa is in certain areas of the city (late 1950’s-1960’s NW) you might have a type of sewer line that was literally constructed out of tar paper. Thought to be sound during those years, but slowly deteriorates over time. You’ll find out when they send the camera down as it flattens out. You will have to replace it all the way to the city line. Anywhere from 8-15 thousand and you’ll need to re-landscape as they have to dig down 10 feet or so..
If your plummer is clever and has good ears he should be able to tap a hammer on the concrete to find the outflow drain. It will have a different sound from the area that surrounds it.
Poloz won’t drop the rate. He has to be tired of listening to everybody’s criticism of him all the time. He may not be articulate, but he isn’t stupid and he knows he cannot be blamed for the current economic mess. And deep in his heart he knows Canadians have no self control and will only bury themselves deeper in debt like gamblers betting their last dollar in a desperate move to win it all back.

#42 Smoking Man on 07.14.15 at 7:53 pm

#32 Shawn on 07.14.15 at 7:33 pm
Greece

The prime Minister there was insisting there be some haircut on the debt. Is any of this new lending non-repayable?

Did Greece get absolutely nothing better than the deal that they rejected a couple weeks ago? The one the referendum also turned down. If so I am stunned. And so is Greece.

If they wanted to pay debts by selling off assets they could have done that on their own a while back?
….

Dude you know Nectonites can read minds. I told you yesterday, the entire show was to make the German herd happy they are crushing the lazy. And a warning to France and Italy. Greece got a great deal and a massive hair cut, un publicized , but was sold as a punch in the face.

It’s all about herd dynamics..

#43 Karma on 07.14.15 at 7:56 pm

#32 Greg on 07.13.15 at 6:26 pm
“Bagel at tim’s was $1.29 this morning. Was 99 cents not long ago. Not representative of prices in general but there sure seems like lots of examples of 20-30% price inflation out there.”

How many years was it at 99 cents? Can’t forget about all the years of no change when looking at inflation.

#44 Sheane Wallace on 07.14.15 at 7:56 pm

#32 Shawn

Greece will pay nothing back, it is a charade to hold spain and italy at bay.

#45 ben on 07.14.15 at 7:56 pm

Mr White – no you are not mad. “Growth” is defined by GDP. GDP is defined by the quantity/velocity of money. Most “new” money is lent against land. GDP is inflation adjusted but land inflation is not incorporated in any real sense into inflation figures.

Hence you have devaluation as more money is issued and we are told we have “growth” via GDP yet not inflation even as all our pay packets shrink due to rent.

5 minute explanation of the law of rent:
https://www.youtube.com/watch?v=7HZANYxnkWk&app=desktop

#46 Smoking Man on 07.14.15 at 7:59 pm

#24 OttawaMike on 07.14.15 at 6:46 pm
Where’s Mark?

Said no one, ever.
…….

He’s been banished, let’s pray he don’t have serial killer in him…

I’m not so sure. What a wack job..

I know, I know. It takes a wack job to know one.
No need for the insult.

#47 Suede on 07.14.15 at 8:01 pm

Are you getting it?

Really getting it?

Armageddon it
-Def Leppard

Ps. usdcad trade working out quite nicely so far!

#48 VB on 07.14.15 at 8:03 pm

If rates take a knock
Your Reits might just rock
The dollar will dip
and we’ll all be in deep Sh__ !

Seriously, I hope they don’t screw this up.

#49 nnso on 07.14.15 at 8:07 pm

#19 Washed Up Lawyer
The plumbers cannot find the outflow drain so they have to jackhammer up the laundry room floor as they figured out that is where it is buried by concrete by sending a camera down the toilet. $2200 bucks for that.
Is that including Colonoscopy?

#50 Smoking Man on 07.14.15 at 8:17 pm

#40 amazon girl on 07.14.15 at 7:51 pm
Amazon girl @ Smoking Man yesterday #114
YES,we secretly want you….with your charming and rotten smile…but…
I agree about Mark with his alfa mind ,the young man
who keeps GARTH on his toes…
We are the amazons and we can…
Never bet against a man, a Smoking Man…
a Mark… or Garth
….
Ok so I’m drinking a bit tonight, too many posts. But I’m going to score on a two big number move at 10am

Im happy.

But let’s be clear, Fool yourself all you want. It’s not a rotten smile, it’s rotten teeth. A French kiss nightmare. Characteristics of all long term smokers.

I’ve got one tooth that’s only hanging in fused with plack It’s lose, I know in the not so distant future it’s going to go missing when I bite into a burger. I’ll probably swallow it.. And won’t notice till some one tells me..

Should have gone full time rather than self employment. You know a dental plan and all…

On second thought, I got zillions, so I’m missing a few teeth.. I want for nothing.. Other that you pricks to buy my book and say…

Shit. Dyslexics can write..

Ok some goals are not attainable, but he’ll it’s fun trying.

That’s what life is all about..

So when we French kissing Amazon girl….

#51 Marco Polo on 07.14.15 at 8:21 pm

Garth,

For a few years now, I’ve been observing this low-speed train wreck of Canadian housing. I forsee an “asset trap” in coming years, as Canadian and US interest rates diverge. Several scenarios come to mind, I am reminded of George Soros’ exploit against the British pound, where the Bank of England was forced to rapidly raise interest rates to defend the pound. A far-fetched dream is a situation where regional interests also divulge, perhaps interest rates need to go a certain way to protect resource jobs in Quebec and maintain confederation, and severely damage home prices in Toronto and Vancouver in doing so. A Trudeau PM calling the shots. I know the outcome.

#52 ANON on 07.14.15 at 8:26 pm

#8 Mr. White on 07.14.15 at 5:58 pm
Am I nuts or is there no other way to grow and economy than with free money.

Pretty perplexing, isn’t it? No, you are not nuts, and money is not free. :)
If money was free, it would have been worthless.
Think of it this way:
Money is token for promises, nothing more, nothing less.
Then it becomes a lot less mind-bending.

#53 Spectacle on 07.14.15 at 8:27 pm

Washed Up Lawyer on 07.14.15 at 6:36 pm
Hah! The joys of home ownership.

A sewage backup at my Ponderosa back in Calgary …because of the downpours…..The plumbers cannot find the outflow drain so they have to jackhammer up the laundry room floor as they figured out that is where it is buried…..

They think the sewage line from the house to the rear property line will have to be replaced ……. That’ll cost lotsa…”
————
Washed up: Can I suggest you find or rent a simple beacon sender unit. You can see within 10 inches, and 5 feet below the surface exactly where pipes go. I have this done all the time. Trace it. Amazing accuracy. Ground Penetrating radar is cheap now, hand held units for rent too. No guessing, no thinking: find the “G” spot every time. Save you massive money, and it’s why we’re here….
Regards,
Ps: sells it…..

#54 Godth on 07.14.15 at 8:27 pm

#37 prairie person on 07.14.15 at 7:48 pm

So find a new beach; preferably nude – why not? Life is short, you sound old. Go to the beach old man – looking without touching (who knows?) is better than no looking, no touching. One out of two ain’t bad.

Enjoy.

#55 Sheane Wallace on 07.14.15 at 8:27 pm

#51 Marco Polo

Keep in mind, what we see today (the decline of CAD) is while these people are still pumping the bubble. And the economy is tanking with all that loose monetary policy.

Imagine when we start addressing the issues.

Man, that guy H is pretty capable. When he is done with us there would be very little left.

#56 Marco on 07.14.15 at 8:32 pm

@Londoner

BOE interest rates have stayed at .5% ever since Carney crossed the pond. He could have raised rates to tame the real estate there but heck real estate is one of the big drivers in Western economies.
England is well set up for a real estate correction as well as us.
In other news says Royal Lepage on a further rate cut:

“I worry that stoking this engine further could move us from a perfectly manageable major market expansion into a more difficult correction, as price levels decouple from more household incomes,” Soper said in the report.

Pretty sure that train already left the station.

Cheers.

#57 MSM-Free Zone on 07.14.15 at 8:39 pm

Now that the Big Six and REALTURD®’s have finally come on board with Garth’s way of thinking, you just know they have admitted to killing the goose that has laid all their golden eggs.

Funny how Harper is fearmongering on a meltdown from Iran, when he has his own self-induced meltdown bubbling for him right here at home.

#58 Freedom First on 07.14.15 at 8:41 pm

Maybe 93% of the people who have debt are maxed out and can’t borrow any more. Except of course from the payday loans type places that are everywhere nowadays.

Many Canadians are in for a world of hurt. And for some, it has already began. I live in Alberta right now, the 4th Province I have lived in, and I am seeing people who are sweating bullets right now.

#59 amazon girl on 07.14.15 at 8:42 pm

Amazon girl @ Smoking Man #50
I laughed so much that I can’t be a amazon tonight..
I don’t known if I am going to post this,on my wall
or buy that book after all…
I am calling it a night.Ps..Smoking Man you can dream
about that French Kiss

#60 Greg on 07.14.15 at 8:45 pm

Funniest thing I’ve seen in awhile: http://www.theglobeandmail.com//report-on-business/economy/interest-rates/canadians-unlikely-to-borrow-more-if-bank-of-canada-cuts-rate-cibc-poll/article25497704/?cmpid=rss1&click=sf_globe

#61 Retired Boomer - WI on 07.14.15 at 8:46 pm

I know, I know little to nothing. No PHD in herdonomics, or political acuteness, or defining sophistry. I DO know I do NOT like DEBT. I have acted in accordance with what I know!

I will look at tomorrow’s announcement when it is made.

Then I will carefully consider my holding of various debt instruments. Are they indeed, what they have been advertised? Should one who abhors debt rather hold this value in a cash equivalent, or deployed elsewhere?

DEBT seems to have re-defined of late as the new wealth, which if anything, is not true.

Time for that long good think on what matters, and what is superfluous to one’s well being.

I hope Canada’s leaders do what IS right, not expedient.

#62 Sheane Wallace on 07.14.15 at 8:53 pm

#61 Retired Boomer – WI

deployed elsewhere. It is a large world.

#63 Smoking Man on 07.14.15 at 9:06 pm

#59 amazon girl on 07.14.15 at 8:42 pm
Amazon girl @ Smoking Man #50
I laughed so much that I can’t be a amazon tonight..
I don’t known if I am going to post this,on my wall
or buy that book after all…
I am calling it a night.Ps..Smoking Man you can dream
about that French Kiss

God damn skillful chics, the good ones always leave you with, I think I got a shot.

Lucky for you toots, the second character introduced in my book in chapter one died a while ago.

For you night, night fantasy… Perhaps mouth to fedora resuscitation can awake the bastard.

http://dyslexicsmokingman.blogspot.ca/2015/05/no-more-post-till-i-finished-book.html

#64 Andrew Woburn on 07.14.15 at 9:08 pm

File under “Be careful what you wish for”.

“Saudi Arabia borrows $4B as oil price reality hits home”

http://www.cnbc.com/2015/07/12/financial-times-saudi-arabia-borrows-4bn-as-oil-price-reality-hits-home.html

#65 Shane Ricard on 07.14.15 at 9:09 pm

Here in Florida the housing prices are crashing mainly because guys are staying single!

#66 ALBERTASTROPHE on 07.14.15 at 9:14 pm

The rollercoaster in Alberta is heading back downhill and picking up speed.

The just announced Iran deal will be devastating for oil production for years to come starting in 2016. It may be a big part of the final death of the oilsands.

http://www.cbc.ca/news/business/iran-nuclear-deal-likely-to-pull-down-oil-prices-long-term-1.3151070

Sorry, fellow Albertans. Things are about to get much worse, and soon.

#67 bdy sktrn on 07.14.15 at 9:22 pm

sm go get your teeth fixed.

they can give you a smile worth a long branch 2 storey.

#68 ben on 07.14.15 at 9:29 pm

Good to see some Carney rage on here. The guy is bad news. He takes the easy options then he leaves.

#69 Republic_of_Western_Canada on 07.14.15 at 9:29 pm

#11 Londoner on 07.14.15 at 6:20 pm

“The central bank would justify it as more ‘insurance’ against a threat that’s already arriving…”

Typically central banks set monetary policy in reaction to economic data, however Poloz seems to be going against tradition by using it as a means to provide “insurance” against economic events that are yet to occur. […]
Now don’t you guys wish Carney was still there to set things right?

No and nope.

It’s already here.

I take it you haven’t heard of the shellacking being endured by the oil sands industry caused by the religious spat between mid-east denizens?

As far as the nimrods vacuuming up personal debt go, they can ‘just say no’.

#70 bigtown on 07.14.15 at 9:34 pm

My Word I got out of the GTA for some fresh air and it was as good as a four hour flight to Cuba…I mean the fresh air. You always see on CBC what a first class city Toronto is…could be but if you get out to Trenton or Belleville and breath. Your kids will thank you for fresh air. Truly it is unbelievable how fresh the air is outside of Toronto. Really I see the benefit of fresh air and low rent as the two main ingredients in retirement.

#71 Smoking Man on 07.14.15 at 9:34 pm

#67 bdy sktrn on 07.14.15 at 9:22 pm
sm go get your teeth fixed.

they can give you a smile worth a long branch 2 storey.
……

God works in mysterious ways.. He couldn’t give it all to me, he had to give you a shot…

So I’m letting them go.. The teeth. Ladies, who wants to get a gumming…

So drunk, night night.

#72 Godth on 07.14.15 at 9:38 pm

#61 Retired Boomer – WI on 07.14.15 at 8:46 pm

Good stuff old man, I don’t mean any disrespect by that at all (see how boring qualifying everything becomes, but we live in a world of lawyers).

I’ve never liked debt either. I’d rather be poor and free than in debt and trapped.

#73 gut check on 07.14.15 at 9:40 pm

This is what’s going to happen:

BoC will cut at least the .25 but maybe, just maybe go for broke with the .5.
The banks will benefit and hoard more cash, but they won’t pass anything on to consumers.

Why would the banks NEED to pass it on to consumers? They don’t! The F.I.R.E sector will still reap the rewards, though, because people have the attention span of gnats.

CBC will give its 500x daily verbatim news update and people will hear over and over that the crazy Bank of Canada just LOWERED THE PRIME LENDING RATE TO HISTORIC LOWS! This alone will be enough to get people out to open houses & have sellers stick to their outrageous asking prices. By the time they get to the bank they’ll already be so committed to and in lust with the house of their dreams it won’t matter.

the old bait and switch, writ large.

#74 Republic_of_Western_Canada on 07.14.15 at 9:42 pm

#66 ALBERTASTROPHE on 07.14.15 at 9:14 pm
[…]
The just announced Iran deal will be devastating for oil production for years to come starting in 2016. It may be a big part of the final death of the oilsands.

Sensationalize much?

“The agreement is not synonymous with the immediate opening [of] the country’s oil floodgates,”

Further the oilsands have been around for many millions of years. They’re not going anywhere.

And big infrastructure already exists for extraction. It’s just maintaining ongoing operations for the next half century.

#75 Nora Lenderby on 07.14.15 at 9:45 pm

#183 OttawaMike on 07.14.15 at 12:21 pm
Nora,
I was down at the Upper Canada yacht club. Got a smoking deal on a Dinghy. I looked for you but couldn’t find you. I had Ninjas with me.

Our boat is “under repair” in the IMS yard in Iroquois. (It can’t possibly be kept at a tasteful marina like Chrysler Park :-)

I hope your dinghy brings you joy. If you sail out of Chrysler Park, the current means you can tack for hours and still be able to get back in 10 mins!

#76 White Crock BC on 07.14.15 at 9:49 pm

I wonder if some still think a lower CAD will help exports..

What do we export anyway? Oh, I bought some crackers at the Trader Joe’s in WA and noticed “Product of Canada” stamped on the box… so there’s that at least…

Not that I want to see it but…

Lower CAD would hit cross border shoppers big time. (started already)
Might encourage tourism.
Folks who bought homes in FL and AZ years ago could sell at a big profit, convert to CADs (bigger profit) and bring that money home..

Probably nickel and dime stuff.

#77 Leo Trollsoy on 07.14.15 at 9:56 pm

Here in Florida the housing prices are crashing mainly because guys are staying single!

Might be true in Tallahassee or Orlando, but prices in Naples and Miami have recovered.

#78 Republic_of_Western_Canada on 07.14.15 at 9:59 pm

#43 Karma on 07.14.15 at 7:56 pm

#32 Greg on 07.13.15 at 6:26 pm
“Bagel at tim’s was $1.29 this morning. Was 99 cents not long ago. Not representative of prices in general but there sure seems like lots of examples of 20-30% price inflation out there.”

That’s your first mistake. Making an expensive commute just to pay for doughnuts and colored sugar water every morning.

Just buy several loaves of good bread from Safeway (or make your own) and put them into the freezer for gradual consumption. And make your own coffee – which will inevitably be a lot better anyway.

#79 Leo Trollsoy on 07.14.15 at 10:02 pm

What’s the call on the CAD after the BoC cuts tomorrow? Already priced in or more to go?

#80 anotherstabbinginsaskatoon on 07.14.15 at 10:12 pm

Everyone has the answer to this problem. Buy more houses for if not we will all be sucked into the abyss. Our collective experience would be rendered meaningless. The young are right. Intelligence is wasted on the old. The Chi in the air is strong. I like how the bong makes me cough.

#81 DON on 07.14.15 at 10:13 pm

#34 Smoking Man on 07.14.15 at 7:44 pm

Let’s take the subliminal message from Nosty.

That beauty sounds like he don’t have alot of time left.

I beilive spending will work out fine for him.. Even better if he takes a loan for it.

When my mom passed away in Oct had alot of Bill collectors calling me, I faxed the death certificate.

That was it.. See ya
****************

Yup! the middle finger on the way out. Nice (had the same experience with my father’s estate).

Nosty: I hope he sticks around long enough to transfer that wisdom. A blog highlight!

#82 Sheane Wallace on 07.14.15 at 10:18 pm

BTW with the shrinking currency taxation on ‘appreciation’ of assets becomes outrageous as government deems that the value of your assets increases.

So tomorrow with the CAD down due to BOC folly and my assets ‘magically’ appreciate, the government will ask me to share the ‘appreciation’.

#83 LL on 07.14.15 at 10:28 pm

#13 – Bagel Man on 07.14.15 at 6:20 pm
Will housing ever correct in Canada? Obviously NOT!

How do you want a market corrected when they do everything to add fuel on the fire (by cutting IR)?
They want that the show must go on…

#84 LL on 07.14.15 at 10:33 pm

# 25 – NextYear on 07.14.15 at 6:48 pm

Canadian are over indebted like never before, Real estate is on Fire and they want to lower the rate… what a bunch of clowns!!!!

And then when shit hit the fan their excuse will be that nobody could have seen it coming. Bravo!!!

They know what they do…it’s all about to keep the RE market alive (there is anymore economy).

They just play the game…and it’s called “double talk”!

#85 Nora Lenderby on 07.14.15 at 10:45 pm

#183 OttawaMike on 07.14.15 at 12:21 pm

Blimey! I hope you got the dink out of there in time. A tornado went through the marina last night and flattened a lot of trees. Some boats and docks lost.

#86 anotherstabbinginsaskatoon on 07.14.15 at 10:48 pm

It’s so nice to see full patch HA out with their families. They’ve provided so much to our community. Like carrion-foul. The stench of Poloz’ dying patient draws more than flies.

#87 Obvious Truth on 07.14.15 at 10:52 pm

Poloz can’t solve anything. He’s simply responding.

Yeild curve was still inverted to 3 years last I checked.

So he cuts. Housing is dangerous with or without a cut. So is the economy. The horses left long ago.

Is home capital Canada’s countrywide. Canary in the coal mine? Don’t know the short position but it seemed like the stock was always squeezing the shorts. Until now.

#88 Doug in London on 07.14.15 at 10:58 pm

Last decade there was a TV show about investing, where Derek Holt would make the odd guest appearance. At that time he seemed like a sensible voice of reason, and given what he said that is obviously still true.

On the subject of interest rates, while they are low shouldn’t you take advantage of the situation by paying down your debts while it’s easy to do so rather than taking on more debt?

#89 Victor V on 07.14.15 at 11:03 pm

Trump hotel investors lose legal fight to rescind deals: Donald Trump is absolved of any personal responsibility in sales of condo-hotel suites that continue to lose money

http://www.thestar.com/business/real_estate/2015/07/14/trump-hotel-investors-lose-legal-fight-to-rescind-deals.html

Mitchell Wine, the lawyer for some 22 investors, just two of whom were cited in the ruling as they are test cases for all the others, said his clients were “obviously disappointed” and will consider an appeal.

The investors, some of whom borrowed from their aged parents for down payments, had been seeking damages of $200,000 to $1 million, based on the costs of their hotel suites and the mounting, monthly losses.

#90 M on 07.14.15 at 11:17 pm

as I said Gartho baby.. manana 0.5 drop. then start counting 6 months. Jan-Mar 2016 is tha pa da boom housing with black hole in the ground.
Depreciation to 80% will be seen in some places considering the debt leveraging. Lots of opportunities in that crash

#91 ben on 07.14.15 at 11:22 pm

At the start of today CAD dropped then later rallied, I suspect on expectations/fears they might cut:

https://ca.finance.yahoo.com/q/bc?s=CADUSD=X&t=5d&l=on&z=l&q=l&c=

Then dismissed on the rally. I think the markets are not expecting a cut. Which means if they cut CAD goes a good bit lower.

Anyways if CAD goes down below 0.65 there will be lots of boomers out there who will not see wage rises feed through to mop up living cost rises as they are retired.

Oh dear. So what then? Raise rates they cry! But the housing boomers! It’s gonna go down. Drop rates they cry! But the food boomers.

Sorry dudes, can’t square that circle. I’m thinking you are just going to have to be very poor. Have a good day.

#92 ben on 07.14.15 at 11:26 pm

Victor V – heartwarming. Must be tough being a judge. All you want to do is kick both sides in the nuts but you have to choose. I don’t know how they do it.

#93 Carpe Diem on 07.14.15 at 11:26 pm

Wife is set to move out of this rental acreage and back in town where kids can bike to school and friends homes, PT work and a bus when they get older.

There is this house. Perfect location with repairs required. She wants it.

Rule of 90 = OK.
Debt level = 1 year(s) income.
Repairs required = .25 year(s) income.

Seems like a reasonable situation.

I love my wife and she’s been renting for 5 years and questions me and Garth.

She-I gave you 5 years and still waiting for this correction!!
ME- The correction is not important. Don’t you like where you live and our saving/investments are double 5 years ago?
She-That’s not the point.
Me-What is?
She-I want this home for the long term and it’s fits all those Garth rules and that’s that. Plus lock in for 7 or 10 years with low interests rates will make you happy.
Me-OK. You need to get a good deal.
She Smiles – Deal.

We went to visit the place with the selling agent. Told the lady, lots of repairs, ask how long on the market and how many times, etc, etc.

My wife then called another realtor.

No B-S call. I would have loved to have heard it!

Some of her statements:

– I know Realtors don’t like low balling. Let me know, I’ll find someone else.
– Provincial Assessment? Seriously? ?They look at a neighborhood and come up with an average. One street way you have way big homes … this house is modest and needs repair and it’s worth $X dollars and not a cent more.
– The home evaluation might bring forward more issues and that price might go down!
– So are you going to represent us or should I find someone else?
– We have a long term rental in a nice home and acreage. We like it here and for less than a house. So I don’t want to waste anyone’s time but can drop cash on this home and get a signed contract.
– minus 25% off the price.

My wife thinks she scared the first Realtor away.

#94 Kaptin Kelowna on 07.14.15 at 11:32 pm

Kelowna had a good month according to this agent.

https://www.youtube.com/watch?v=qTXSC6-aIgA

#95 Young Buck on 07.14.15 at 11:33 pm

As a wannabe first time home buyer sometimes I get frustrated by the current monetary policy which is leading my cohorts to dump their futures into massive mortgages on overvalued properties.

But then I think – really it isn’t the BoC’s fault that Canadians are choosing to misuse low interest rates by investing in a product with a value that is inversely correlated to rates. They should be taking advantage of low rates to make real tangible investments in the future. These are probably the lowest OSAP rates of all time, just saying.

#96 barnz0rz on 07.15.15 at 12:06 am

Harper did say that we wouldn’t recognize Canada when he was done with it….. He’s right.

#97 Gandalf on 07.15.15 at 12:12 am

Keep an eye on the Canary in the Coal Mine…

Home Capital Group (HCG)…the stock crapped out this week and is way off it’s highs…this is a proxy for the over leveraged middle class chump!

The stock is telling me the game has already been over for a while now…

Does anyone remember Countrywide Financial in U.S. hey day? Just do a little homework and there are many similarities!

The coal dust is about to ignite! lol

#98 Joe2.0 on 07.15.15 at 12:21 am

The banks are going to do everything possible to enrol/enslave as many as possible.
They drop rates enslaveing as many sheeple as possible and then raise rates.
Unsubstainable debt everywhere.
Canada will be as hooped as the EU one day.
Globalists coming to a neighbourhood near you.
Real soon.

#99 Nosty, etc. on 07.15.15 at 12:26 am

#32 Shawn on 07.14.15 at 7:33 pm, #42 Smoking Man on 07.14.15 at 7:53 pm, #44 Sheane Wallace on 07.14.15 at 7:56 pm and #81 DON on 07.14.15 at 10:13 pm — “Greece will pay nothing back, it is a charade to hold spain and italy at bay.” + “Greece — Did Greece get absolutely nothing better than the deal that they rejected a couple weeks ago?” + “. . . the entire show was to make the German herd happy they are crushing the lazy.”

Remember Jim Morrison singing “. . . the future’s uncertain, and the end is always near”? Everything runs it’s course, so IMF war, NATO scared but Germany wins! Hmmmm . . . Don’t ferget those pesky Russkies.

I humbly suggest collecting the various nutbars together — IMF, WTO, NATO, KFC, ISIS, ISIL, Mossad, al CIAda and others — toss them all into the CERN Hadron Collider and, via HAARP, shoot them beyond Pluto. Plus all the debt and banking moguls.

#100 HEDGE CAD on 07.15.15 at 12:29 am

Just bought 4 per con homes in markham. with a 48hr grace period.
if theres a cut tomorrow i keep them, if not no thanks.
win win situation .

#101 Gwen Wanna Cracka on 07.15.15 at 12:35 am

Hilarious. Pain on pain….Sheeple are buying dumpy homes with money they don’t have and can’t afford and then have to borrow more to renovate with money they don’t have and can’t afford.

http://business.financialpost.com/personal-finance/mortgages-real-estate/canadians-spending-more-on-fixing-homes-than-buying-new-ones-as-renovations-top-68-billion

Never mind waiting for retirement to eat cat food…these people are already licking the wax off the floor.

#102 Leo Trollstoy on 07.15.15 at 1:03 am

Trump hotel investors lose legal fight to rescind deals

Not surprising.

Don’t know why the buyers thought that they had a chance.

Live and learn.

Hopefully they’re not idiotic enough to keep burning money on an appeal.

#103 Nagraj on 07.15.15 at 2:33 am

The drop in the stock price of Home Capital Group (about 25%) is fascinating.

Wolf Richter suggests – let me summarize it this way – that investment’s Canadian public voices were caught off guard. [Wolf Richter, 16/7/2015: Largest “Alternative” Mortgage Lender in Canada Plunges, Denies “Systemic Problem” in Housing Market]

If I’m reading Richter right, those short sellers counting on the great Canadian housing bubble popping sooner than later – and popping Home Capital first – have been richly rewarded.

Garth has repeatedly said that he’s not calling for a COLLAPSE in Canadian house prices – maybe the time has come to qualify that call, BoC monetary policy notwithstanding.

#104 Property Manager on 07.15.15 at 2:37 am

Mark Carney works for the Bank of England
Poloz works for Stephen Harper
whose only achievement has been
to continue getting elected.

If the rate goes down
Shame on Harper

#105 TRT on 07.15.15 at 3:21 am

@Leo Trollsay

Loonie has priced in no change in rates.

If bank cuts (which it won’t), then loonie would go to the 76.90 range…and I would make a killing. lol

#106 Londoner on 07.15.15 at 5:39 am

#56 Marco

Unfortunately it’s not that easy at the BoE. The governor (Carney) is only 1 of 9 members of the MPC, who control monetary policy decisions. If he wanted to raise rates he would need to convince the majority of other members to vote with him. This is in contrast to the BoC where the governor does not need to win any votes to set policy.

Carney is also a member of the FPC and has noted the risks of a UK housing bubble in his prior financial stability reports. But once again he’s only 1 of 10 voting members. So you can’t blame him for all actions (or lack of) taken by the BoE.

Let’s not forget that he’s also the only G7 central banker to have raised interest rates since the GFC.

#107 Londoner on 07.15.15 at 5:52 am

#69 Republic_of_Western_Canada

The BoC knew the commodities super-cycle was coming to an end well before the rate cut in Jan. Cutting interest rates to protect against a drop in energy exports is not the right solution. But I’m glad you think it is because you’ll be the one living with Poloz’s decisions. Cheers!

#108 Crocoham Dundee on 07.15.15 at 6:01 am

Ham is doubling down on Aussie real estate due to the Chinese stocks tanking…..look out for a tsunami of Ham real estate investment into Hogtown and Yvr….

http://www.smh.com.au/business/markets/chinese-stock-market-australian-property-brokers-cash-in-on-turmoil-20150714-gicfk0.html

Chinese developers last month snapped up most of the 15 sites in and around Melbourne sold by CBRE Group – five times the property broker’s usual monthly tally. The bulk of the deals were sealed after the Shanghai Composite Index started tumbling.

#109 Justin A Nick on 07.15.15 at 6:16 am

#71 Smoking Man on 07.14.15 at 9:34 pm

who wants to get a gumming… ”

Nice user name!

#110 Steve French on 07.15.15 at 6:24 am

DELETED

#111 davikk on 07.15.15 at 7:18 am

Largest “Alternative” Mortgage Lender in Canada Plunges, Denies “Systemic Problem” in Housing Market

http://investmentwatchblog.com/largest-alternative-mortgage-lender-in-canada-plunges-denies-systemic-problem-in-housing-market/

#112 ben on 07.15.15 at 7:38 am

Londoner – hilarious – you think that committee of 9 is an actual free vote? He appoints members. Next you’ll be telling me the BoE is free from political control!

ps I wish we had full democratic control of the BoE – it’s nuts this has been removed from the democratic process

pps Carney is one nasty piece of work

#113 Yuus bin Haad on 07.15.15 at 8:10 am

Frank covered all of this in The Poodle Lecture – timeless and prescient.

#114 Almontage on 07.15.15 at 8:49 am

A couple of blog posts back I mentioned my former neighbor in Georgetown who was selling after 46 years.
I mentioned a 5.5 % return (neglecting inflation) and Garth worked it out to 1% with inflation taken into account. I agree with him that it is a paltry return.
Such is the situation if you don’t own a place in downtown Vancouver or Toronto. Always has been. It’s a place to live and raise your kids.

#115 TurnerNation on 07.15.15 at 8:55 am

M. Jagger sang: and all the cops are criminals. Pleased to meet you hope you guessed my name.

B. Dylan…they’ll stone you when you’re young and able. They’ll stone you just like they said they would.

Total corporate and IMF takeover and occupation coming. Country by country.

In the gold plates/ Sympathy for the Weevil dept:

http://www.nationalpost.com/m/wp/news/blog.html?b=news.nationalpost.com/news/canada/ex-police-officer-who-wrote-mocking-email-about-paid-suspension-says-hes-a-scapegoat&pubdate=2015-07-15

#116 Herb on 07.15.15 at 8:55 am

#93 Carpe Diem,

your wife is entirely correct. The only problem is that she will have to enjoy Carp for another three-to-five years before sellers and realtors will take an offer of 25% off current listing seriously.

Exuberant expectations are sticky in the Ottawa market.

#117 Smoking Man on 07.15.15 at 8:57 am

The Mfg sales MoM dismal, if it wasn’t for aerospace the overall number would be brutal.

110% certain of a cut…

Seems USDCAD agrees. Why wait till 10 it’s going to happen.

#118 aizlynne on 07.15.15 at 8:59 am

Again, you need to be reminded that interest rates CANNOT go up without serious repercussions to the economy. 7 years of zero interest rates have put the Feds into a box they cannot get out of easily.

#119 Llewelyn on 07.15.15 at 9:08 am

Would it be too much to ask the Bank of Canada website to provide Canadian citizens with a rational explanation of what might be achieved if the overnight rate was reduced by .25% or by .50%.

The chatter floating around is that there is rational connection between lower interest rates and a job creation and expansion of Canadian GDP. History has not been kind to this perception. All monetary policy could influence over the long term was interest rates.

Before the Bank of Canada and the Government of Canada tune into all this the short sighted chatter they might try to explain why reducing the overnight rate from 3.75% in 2008 to the current rate of 0.75% failed to stimulate economic growth. Blaming it on the decline in oil prices only highlighted a perceived weakness in our commodity-based economy and failed to offer solutions.

Not to be too pessimistic but other than a rapid escalation of house prices and mortgage lending I didn’t see any noticeable evidence that monetary or fiscal policies have stimulated the Canadian economy over the past five years.

I get the feeling that after tinkering with short sighted fiscal policies focussed on deficit spending, without any significant improvement in the economy, the Government of Canada has passed the potato to the Bank of Canada.

Who better to blame when the housing market finally corrects and credit begins to tighten.

There is a powerful odour of mendacity emanating from Ottawa and it should not be allowed to distort a reality that will affect all Canadian citizens.

#120 This Just In on 07.15.15 at 9:09 am

The US will not be raising rates this year. See you in 2016. Until then, we’ll be playing with Japanese monetary policy North of the border.

http://www.wsj.com/articles/white-house-cuts-growth-forecast-for-2015-2016-1436907567?mod=pls_whats_news_us_business_f

http://seekingalpha.com/news/2629135-white-house-cuts-growth-figures?ifp=0

#121 Londoner on 07.15.15 at 9:16 am

#112 ben

There are 9 members of the MPC: the Bank’s Governor, the two Deputy Governors, the Chief Economist, the Executive Director for Market Operations and four external members appointed by the Chancellor of the Exchequer.

#122 Smoking Man on 07.15.15 at 9:18 am

#105 TRT on 07.15.15 at 3:21 am
@Leo Trollsay

Loonie has priced in no change in rates.

If bank cuts (which it won’t), then loonie would go to the 76.90 range…and I would make a killing. lol
…….

Ouch to you… 1.2797

#123 Holy Crap Wheres The Tylenol on 07.15.15 at 9:21 am

#99 Nosty, etc. on 07.15.15 at 12:26 am

#32 Shawn on 07.14.15 at 7:33 pm, #42 Smoking Man on 07.14.15 at 7:53 pm, #44 Sheane Wallace on 07.14.15 at 7:56 pm and #81 DON on 07.14.15 at 10:13 pm — “Greece will pay nothing back, it is a charade to hold spain and italy at bay.” + “Greece — Did Greece get absolutely nothing better than the deal that they rejected a couple weeks ago?” + “. . . the entire show was to make the German herd happy they are crushing the lazy.”

Remember Jim Morrison singing “. . . the future’s uncertain, and the end is always near”? Everything runs it’s course, so IMF war, NATO scared but Germany wins! Hmmmm . . . Don’t ferget those pesky Russkies.

I humbly suggest collecting the various nutbars together — IMF, WTO, NATO, KFC, ISIS, ISIL, Mossad, al CIAda and others — toss them all into the CERN Hadron Collider and, via HAARP, shoot them beyond Pluto. Plus all the debt and banking moguls.
____________________________________________
Hell no don’t shoot them to Pluto. We may need Pluto one day for its resources. Pack them all up and put them on an Island just off the coast of Antarctica and video them via drones. What a mealy mash up that would be. Sell the video rights to Survivor Antarctica!

#124 Holy Crap Wheres The Tylenol on 07.15.15 at 9:30 am

#114 Almontage on 07.15.15 at 8:49 am

A couple of blog posts back I mentioned my former neighbor in Georgetown who was selling after 46 years.
I mentioned a 5.5 % return (neglecting inflation) and Garth worked it out to 1% with inflation taken into account. I agree with him that it is a paltry return.
Such is the situation if you don’t own a place in downtown Vancouver or Toronto. Always has been. It’s a place to live and raise your kids.
_____________________________________________
I disagree with living and raising your kids in the city. Children need space and that is one thing that is a premium in the city core. Even in the nether regions large park space for children to explore and play sports is rare. You are correct, you will make a better return on your investment in the city rather than say Georgetown. I have a brother who owns a home there but his home has gone up on average 8% since 2008. I would surmise your former neighbors home would have been in the Delrex area and not a large home but a modest 1960’s home. they have not appreciated as much as the new homes.

#125 Rational Optimist on 07.15.15 at 9:43 am

41 the Jaguar on 07.14.15 at 7:51 pm

“And deep in his heart [Poloz] knows Canadians have no self control and will only bury themselves deeper in debt like gamblers betting their last dollar in a desperate move to win it all back.”

He knows that…but does he care?

#126 Karma on 07.15.15 at 9:54 am

Greece’s Voldemort speaks about his resignation and the Greek deal.

http://www.newstatesman.com/world-affairs/2015/07/exclusive-yanis-varoufakis-opens-about-his-five-month-battle-save-greece

#127 Herb on 07.15.15 at 10:00 am

#119 Llewelyn,

that’s the trouble with you lefties, you want government of the people, by the people, for the people, instead of government of the people, by the politicians, for the corporations.

#128 Smoking Man on 07.15.15 at 10:00 am

Boom $$$$$$$

#129 gladiator on 07.15.15 at 10:00 am

0.5%, ladies and gentlemen.

O.M.G.

#130 TRT on 07.15.15 at 10:02 am

Told you.

We are going to zero. We will let the currency devalue.

#131 Grantmi on 07.15.15 at 10:03 am

Holy Crap…..

We are pretty much fracked!!!

#132 pbrasseur on 07.15.15 at 10:04 am

Didn’t think they’d do it, what a shame!

I knew I lived in a corrupted province,

Now I know the same is true for the country.

#133 BoC and Harper are idiots on 07.15.15 at 10:05 am

Canada is just a ponzi scheme. What a stupid country. Harper just finished Canada off. What a Moron. Harper and BOC should be arrested and jailed immediately for financial crimes against Canada

#134 BoC and Harper are idiots on 07.15.15 at 10:08 am

Canada economy is a house of cards. Economy in the tank and Harper has got to go. The BOC has made us all poorer. [email protected]&$k you BoC.

#135 TRT on 07.15.15 at 10:08 am

There was a leak. Cons helping their friends?

Look at the dollar a few minutes before the release. Someone knew.

Corrupt.

#136 Mr. Monday Night on 07.15.15 at 10:09 am

Wow, just wow. The dollar is going to get pulverized.

#137 Bottoms_Up on 07.15.15 at 10:10 am

Who’s your daddy Poloz, WHO’S YOUR DADDY????

#138 Bob on 07.15.15 at 10:10 am

The majority on this site were calling for no cut. HaHa. People expressing what they hoped for and not reality. Money in the bank.

#139 Marco on 07.15.15 at 10:10 am

@Londoner

http://www.canadianbusiness.com/business-strategy/does-mark-carney-know-what-hes-doing/

“Madani with Capital Economics is firmly predicting a hard landing, given how far the market has been allowed to overshoot. “When all the dust settles five or 10 years from now, I think we will look back on this and realize rates were too low for too long,” he says. Carney had room to tighten past 1% back in 2010, according to Madani. That may have reduced some, certainly not all, of the exuberance for debt and real estate.”

Cheers.

#140 BoC and Harper are idiots on 07.15.15 at 10:11 am

Harper has got to go. He has no idea on how to run a lemonade stand let alone a country. BoC in the pocket of HARPER. I might have to leave Canada for a better life.

#141 earlybird on 07.15.15 at 10:12 am

pushing on a string….way to go BOC..

#142 BoC and Harper are idiots on 07.15.15 at 10:12 am

This will do nothing for exports as manufacturing is gone. Harper has destroyed Canada

#143 Rational Optimist on 07.15.15 at 10:14 am

I think that the Greater Fool Prognosticator of the Week Award should go to MF, who yesterday morning predicted:

“ I think they cut simply because it is the wrong thing to do and I think they are idiots.”

That turned out to be a completely accurate prediction. Impeccable logic.

#144 AB on 07.15.15 at 10:15 am

As a new graduate in Toronto, I pretty much feel like home ownership will always be out of reach for me at this point. Continuing to rent and putting my money into investments/TFSA and waiting to see if home prices ever decrease, but at this point it feels like they never will.

#145 not me on 07.15.15 at 10:17 am

awesome. let them run this country to the ground with all the idiots on board. it seems no one wants to wake up till it’s too late. and too late it is.
i may start digging for my old country passport lol how ironic would that be …

#146 TRT on 07.15.15 at 10:17 am

#105 TRT on 07.15.15 at 3:21 am
@Leo Trollsay

Loonie has priced in no change in rates.

If bank cuts (which it won’t), then loonie would go to the 76.90 range…and I would make a killing. lol
…….

Ouch to you… [email protected] man

———-

Still made a bundle. Will go into Euros after the first U.S. Rate cut (which will be followed by a long pause).

#147 LOL Canada on 07.15.15 at 10:17 am

Great News if you do not own the CAD. Terrible if you were planning on travelling.
What happens next?
House prices continue going up in Tor and Van.
House prices stay flat or go down elsewhere.
Housing boom in these 2 cities which will lead to an even bigger housing bust when it happens.
The higher it goes up, the further it has to fall when it falls.

#148 Nabatts on 07.15.15 at 10:20 am

Rates are going down before they go up. No recovery! Keep dreaming.

#149 Anti_Mark on 07.15.15 at 10:22 am

Ah shit now we have to listen to Mark for the rest of the week. Damn! Stupid move. Lets just kill our dollar. At least XRE has gone up a bit. TD bank says only a 10 point cut in mortgages once again taking extra profits.

#150 The American on 07.15.15 at 10:22 am

Good morning, everyone!

BOC cuts benchmark interest rate to 0.5%. That makes two time, yes TWO, this year the rate has lowered. What’s this spell? Well, it’s not pretty. ‘Nuff said:
http://www.cbc.ca/news/business/bank-of-canada-cuts-benchmark-interest-rate-to-0-5-1.3152673

#151 Leroy Washington on 07.15.15 at 10:22 am

What have I been trying to explain to you people all these months? Canadians are stupid when it comes to financial matters.

God bless the U.S.A.!

#152 lala on 07.15.15 at 10:23 am

lala told you kiddos, so easy to make money when your government is your partner. Hopefully goes 0 in few months and everything blows apart, lala have a plan for it too. You gotta play with 2 gates.

#153 MSM-Free Zone on 07.15.15 at 10:23 am

This has Harper’s and the PMO office’s fingerprints all over it.

So much for openness, transparency, and democracy.

#154 Leo Trollstoy on 07.15.15 at 10:24 am

Well today was interesting.

#155 hamish42 on 07.15.15 at 10:24 am

Unbelievable, I did not price in that much stupidity, I did move a chunk of cash from CAD to USD and GBP, but clearly not enough.
The problem now for Canada is capital outflows, who wants to hold CAD assets now????

#156 Leo Trollstoy on 07.15.15 at 10:24 am

CAD continues to follow the Canadian economy into the toilet. As I predicted.

#157 Harper on 07.15.15 at 10:25 am

Sorry Guys, I had to cut.

By now you must know that I control Poloz.

And now for the next trick.

My corporate media buddies are pumping the NDP. Make sure to split the NDP and Liberal for for me.

#158 The American on 07.15.15 at 10:26 am

And for those confused by USD/CAD conversions, I will make it simple for you. $1 USD now buys $1.278 CAD. $1 CAD now buys only $0.782 USD.

As far as Americans are concerned, Canada real estate has already taken a 25% dive, if that’s how you want to look at it. Before it’s all said and done, when you couple the real prices declining in Canada with the USD/CAD conversion, I suspect Americans will experience well over a 50% price decline in Canadian real estate prices. I mean, hell, we’re already over half way there! As most know already, the CAD will fall further against the USD and the RE prices in Canada will fall as well.

#159 AB Boxster on 07.15.15 at 10:26 am

As I said in a past post…

The powers that be will not let this housing bubble die if they can possibly help it.
Regardless of the effects on savers or the price of goods from elsewhere.
Remember this when you are making your choice at the ballot.

#160 gut check on 07.15.15 at 10:26 am

well there it is. they went for broke.

USD CAD at 1.29 right this minute.

#161 Dup on 07.15.15 at 10:26 am

http://www.bankofcanada.ca/2015/07/fad-press-release-2015-07-15/

#162 Bob on 07.15.15 at 10:26 am

People blaming Harper? You guys realise that the whole world is using the same policy? Everyone is cutting rates. You really think the Liberals and heaven forbid NDP would do anything differently?

#163 Sheane Wallace on 07.15.15 at 10:27 am

And the idiot cuts.

CAD getting trashed.

Surprise.. NOT.

Sheane is correct again.

#164 Leo Trollstoy on 07.15.15 at 10:28 am

My US rentals are now more valuable. Love it. And I just started jacking up rents by ~8% in the last year. Time to take a vacation. I’m thinking Stockholm this time…

#165 ben on 07.15.15 at 10:29 am

ok i’m not all in CAD but what I have here I’m getting out of. It’s not much but I want it away from Poloz.

Truly you guys are fools.

#166 Mf on 07.15.15 at 10:32 am

Lol

These morons are so predictable.

Hopefully this will hasten the destruction of the RE market here in the GTA like the head of Royal Bank said lmao.

What a bunch of fools.

Mf

#167 charles on 07.15.15 at 10:33 am

Just checked. Ounce of silver still weighs exactly the same.

#168 Realtor007 on 07.15.15 at 10:34 am

Just as predicted, rates down and will be down for a very very long time. DOL hits $80, life is good.

#169 bye buy bi by Harper on 07.15.15 at 10:37 am

Dumb move Mr H rest assured I’m voting you out.

#170 Leo Trollstoy on 07.15.15 at 10:38 am

Loonie is falling and I’m like…

http://www.getzestapp.com/gif/4adb050e

#171 Smoking Man on 07.15.15 at 10:40 am

Brain drain 2.0

#172 Dup on 07.15.15 at 10:42 am

Harper is not fully at fault. We as a population are to blame for adding to the housing frenzy without thinking of the future and the big picture ahead. You want to blame someone blame yourselves for listening to the RE agents…

#173 bdy sktrn on 07.15.15 at 10:42 am

todays move sends vancouver shacks up 100-200k in a heartbeat

#174 Mike T. on 07.15.15 at 10:43 am

I hope the BRICS bank switch works for Greece

Canada just signed up too

This is what the BRICS bank is for:

‘provide assistance to other countries suffering from the economic volatility in the wake of the United States’ exit from its expansionary monetary policy’

we are one of those ‘other countries’

#175 Jeff in Moose Jaw on 07.15.15 at 10:47 am

Oh Canada!

drinking a timmys – eating a doughnut – smirking at this era in time. funny! can’t bs these days we can see what’s going on.

#176 ben on 07.15.15 at 10:48 am

Canada is *huge*. It’s fertile. Your population is tiny.

Yet you are trying to drive your economy by pulling forward demand through debt on the promise of economic rent extraction using land.

This could not be more stupid. What a waste.

#177 fancy_pants on 07.15.15 at 10:48 am

no kidding.

bonus for the likelihood of scoring an even lower fixed rate with the new home build Oct/Nov closing. this is hilarious. I’m all in with the ‘house’. The house always wins.

I finally flipped the bird to waiting to move “up”. lock in for five years, enough time to pay most of the mortgage off.

I’m sorry to all the sideliners. I don’t make the rules, but will play the game.

nuts.

#178 Daisy Mae on 07.15.15 at 10:48 am

#157: “Make sure to split the NDP and Liberal for me.”

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

The NDP are already preparing for a win, and receiving advice as to how to make a smooth transition.

#179 TRT on 07.15.15 at 10:49 am

Here’s what’s I store for Canada over the next 5 years.

1. Professional Brain drain (credit smoking man) – U.S. citizens will leave along with Canadian health professionals.

2. feeding frenzy for detached houses in Vancouver and Toronto.

3. Rates will be low for a long time. They would have to rise by 100% to get to 1%.

4. Inflation. We import almost everything.

5. Immigration will remain high as well as foreign worker intake because we have a ‘skills shortage’.

#180 bdy sktrn on 07.15.15 at 10:51 am

http://www.telegraph.co.uk/news/science/11733369/Earth-heading-for-mini-ice-age-within-15-years.html

#181 what bubble? on 07.15.15 at 10:56 am

We should be more precise with terminology: it was not a ”rate cut”, it was “ more stimulus” for economy.
Those stimulus probably will stimulate something, more posts on this blog, for example, but not the economy. So far we’ve seen negative correlation between rate cuts and economic growth.
It is different here… this time.

#182 Herb on 07.15.15 at 10:57 am

#143 Rational Optimist,

I disagree. They didn’t cut rates because they are idiots. They cut because they are calculators of political expediency.

The silver lining is that voters will feel the unintended consequences of the cut by 19 October, and realize that we have a Harper Government but no Government of Canada.

#183 Jay on 07.15.15 at 10:58 am

Cut again.

Ironically, helps me out because my equities are traded in US dollars. Thanks, Bank of Canada!

#184 chapter 9 on 07.15.15 at 10:58 am

Canadians are $1.85 trillion in debt, it appears the BOC has their own debt target in mind for the great unwashed. Is it $2.5 trillion, $3 trillion??? Nothing happens by accident!!

#185 bill on 07.15.15 at 10:58 am

‘mornin Garth!
Thanks for the tip to buy American….
working out well this day.

#186 White Crock BC on 07.15.15 at 10:59 am

A sad day for Canada on so many levels.

We are in trouble and this rate cut will likely make things worse, not better.

There is no light at then end of the tunnel.

Not sure who gets my vote this fall but I know who won’t be getting it.

#187 quebec economist on 07.15.15 at 11:02 am

1. one reason the dollar is so low is because the world is increasingly relying on the USD for transaction since the Euro and Chinese are unstable. Therefore the loonie is not necessarily diving but the USD climbing. Obviously some fluctuation is caused by our lagging economy, but our models would suggest that the increase demand in USD is the bigger (by far) factor.

2. People will borrow more, they will be screwed.

cheers

#188 Khristine van Lincoln on 07.15.15 at 11:03 am

I am starting to get pretty scared. Please don’t judge me, but I bought my house in a decent neighborhood in a Vancouver suburb in recent months. The asking price was $1.65 mm. I ended up paying $1.815 mm. Although I got a standard mortgage, I borrowed a big chunk of the down payment. Including the costs to furnish the place, I am now $1.78 mm in debt. Yes, interest rates going might be good, I suppose, in some respects, as $175,000 of my debt is on high-interest credit cards (and hopefully today’s news will result in those rates coming down a bit), but if Canada is headed into a recession, I am worried about losing my job. My salary is $52,500 per year, and that alone hardly covered my interest payments. I was counting on some big raises over the next few years, but with a recession, I will be lucky to keep my income steady.

Advice?

Thank you! Khris.

#189 Doug in London on 07.15.15 at 11:05 am

@Bob, post #162
Yes, the whole world is using this policy, especially the United States (the largest economy in the world) where interest rates are on the upward trend. Why upward? To control inflation, in other words when prices go up. Say, wouldn’t that contain Canada’s runaway house prices? Do the Americans know something we don’t?

#190 45north on 07.15.15 at 11:07 am

Update, 10 am EDT July 15th: Bank of Canada defies critics and cuts key rate by a quarter point to just 0.5%

Dollar slumps to 77.4 cents within two minutes of announcement
5-year government bonds slide 8%

“dollar slumps to 77.4¢ within two minutes”

so much for principled leadership!

this is the signal to sell real estate

#191 bill on 07.15.15 at 11:08 am

#123 Holy Crap Wheres The Tylenol on 07.15.15 at 9:21 am
rarely do I disagree with you ,however on this occasion I feel I have a better plan…
the canadian north,one of the worlds largest mosquito/black-fly hatcheries known to man is the ideal spot to deposit the various entities that were mentioned.
antarctic -like cold for extended periods and then the warmer weather when the aforementioned tiny parasites ,in their uncountable millions, would then feast on the bigger parasites.

#192 Mark on 07.15.15 at 11:08 am

Good to see the BoC did the right thing in recognition of how poor the economy has been performing, and the gaping wide output gap. And cut the policy rate.

The truly unfortunate thing is that they didn’t do this 2 meetings ago (or even earlier) when things were showing a significant deterioration. False optimism I guess.

Of course, this cut won’t help RE, just like cuts in Japan and the US didn’t help RE once it was past the peak. Credit-worthiness, again, has been raised as a concern as the chartered banks are only passing on a small amount of this policy rate cut to borrowers. Most retail borrowers won’t see any change to the cost of their credit. The mortgage brokers and random newspaper “personal finance” columnists who were running around last year claiming rates were on the verge of going up now have egg on their faces.

The question now is will the economy turn around, or will the BoC cut all the way to zero, and start a QE program. Since housing isn’t yet much of a deflationary force (price declines have been minor at best over the past 2 years), as pricing rolls downhill at an increasing rate, people should pretty much count on ZIRP/QE and even NIRP being part of the Canadian landscape.

#193 bdy sktrn on 07.15.15 at 11:08 am

But let me emphasize again that these are projections based on the anticipated path of the economy, not statements of intent to raise rates at any particular time.
– j yellen , today.

More importantly she said rates are expected to rise in 2015. And they will. More pain for our dollar. — Garth

#194 Daisy Mae on 07.15.15 at 11:10 am

Harper won last time with a whopping 38% ‘majority’.

QUOTE: “Vote splitting is an electoral effect in which the distribution of votes among multiple similar candidates reduces the chance of winning for any of the similar candidates, and increases the chance of winning for a dissimilar candidate.”

#195 Herb on 07.15.15 at 11:11 am

If you open this link to the CBC Business News and look at the headlines of the first three stories, you have our current Canada in a nutshell – loonie drops, house prices rise, and marketers say not to worry about debt.

http://www.cbc.ca/news/business

#196 Sheane Wallace on 07.15.15 at 11:11 am

Keep in mind, this is the second cut in 6 months this year, there is no much room to go further down as we are at 0.5 %.
The economy is contracting while credit is overblown and there is simply no more room to grow it/the credit.

The low rates are part of the issue, the other much bigger part is the government guarantees through CMHC, without it no bank will lend in the current conditions.

Any attempt to deleverage will kill the economy.

We are not reaching a bottom, instead we continue to dig deeper.

#197 ben on 07.15.15 at 11:12 am

Khristine – thanks I feel better already. I think that’s a fake post tho $52k and 1.5mm?

#198 Sheane Wallace on 07.15.15 at 11:14 am

#180 bdy sktrn

Last 3 winters have been particularly cool, as well the last 2 summers.

The glass condos in downtown To would prove to be excellent idea in the light of the coming global cooling.

#199 Mister Obvious on 07.15.15 at 11:15 am

#187 Khristine van Lincoln

Here’s here’s the scary thing Khristine…

You could be for real.

#200 Waterloo Resident on 07.15.15 at 11:15 am

Here, read this, its coming to Canada soon:

http://www.bloombergview.com/quicktake/negative-interest-rates

#201 Cato the Elder on 07.15.15 at 11:19 am

Idiots. That’s all there is to say. After thousands of years of failed monetary policy to examine, we still can’t make the right – albeit difficult – decisions.

All the rate cut will do is mean Canadians have to pay higher prices FOR EVERYTHING. Yes, even our ‘exports’ will be hurt by this. Why? Exporters need to PURCHASE raw materials with CANADIAN DOLLARS, which are now worth less on the international markets.

Our weak-willed, spineless politicians intent on destroying the middle class to benefit banks, and the voters who vote for them, are, again, idiots.

#202 Balmuto on 07.15.15 at 11:19 am

Low commodity prices are what’s hurting Canada right now. Looser credit won’t solve this. It’s a desperation move.

#203 what bubble? on 07.15.15 at 11:20 am

At least Harper’s economy is consistent.

Bank of Canada cuts interest rate, lowers economic outlook: http://www.thestar.com/business/2015/07/15/bank-of-canada-cuts-interest-rate.html

House prices rise despite sales slowdown, says CREA:
http://www.thestar.com/business/2015/07/15/house-prices-rise-despite-sales-slowdown-says-crea.html

#204 Loosers! on 07.15.15 at 11:23 am

These cuts just make Canadians look like even bigger loosers and the thing is it’s not just look… Canadians are!!! I just am greatful I get paid in US dollars! the problem is when this implodes we will all pay CMHC!!! Canada is set on course to a big fat FAIL now it’s even worse!!! I always say I’m not great at accounting but good grief even I couldn’t screw up like that lol!

#205 observer on 07.15.15 at 11:27 am

http://www.680news.com/2015/07/15/canadian-dollar-down-ahead-of-trading-on-north-american-stock-markets/

Like I’ve been saying all along, its about getting and staying in power. The fool whom got back into the canuck buck when it was over 91 cent recently can now say they lost about 4% in a flash.

That is not only the good new, the IRAN deal yesterday can guarantee low oil price for the prolong future.

While the Canadian economy is going down like a squealing pig, jobs are being lost, and yet I can guarantee more house debt on its way.

Note a quarter point on 5 percent interest rate is tiny
but a .25 % on .75% 30%, that mean the house “HORN DOGS” can now afford a 30% increase in house prices.

This is going to get interesting, especially when interest rates reverse in the coming years

#206 bdy sktrn on 07.15.15 at 11:28 am

Bond king Jeff Gundlach sees a Federal Reserve that wants to raise interest rates this year but can’t.

That’s because the U.S. central bank again has badly overestimated U.S. economic growth, a mistake that will keep the Fed near zero throughout 2015.

“Every year it’s the same thing: It’s the triumph of hope over experience, just like a second marriage,”

http://www.cnbc.com/2015/07/15/gundlach-at-delivering-alpha-feds-not-hiking.html

#207 Llewelyn on 07.15.15 at 11:30 am

We have no choice but to hope that the additional dollars added to companies listed on the TSX composite immediately after overnight rate was cut by .25% will be invested to expand the Canadian economy.

I couldn’t help but observe that the majority of extra money received by Canadian companies as the overnight rate was cut from 3.85% in 2008 to 0.75% in 2015 was recorded on corporate balance sheets as profit and distributed to shareholders as additional dividends.

I’m sure this pleased Canadians with investment portfolios but it certainly did not result in expansion of the Canadian economy as the chatter prior to the cuts predicted.

My suggestion is to dangle some form of carrot in front of our corporations that might actually encourage them to invest in long term growth. Cutting corporate tax rates to increase net profits did not seem to work so I would suggest a carrot tied to performance measures such as increased production, additional jobs, exports, contribution to GDP etc.

How about a competition asking Canadian citizens to recommend ways to improve our economy. The boys and girls in Ottawa earning over $200,000 a year seem to have come up empty lately and might benefit from some fresh ideas.

#208 TRT on 07.15.15 at 11:33 am

Garth, Lets have an early post today..

It’s coming. — Garth

#209 TurnerNation on 07.15.15 at 11:37 am

Congrats all Long Branch owners of sht bungs are millionaires now.

#210 Lisa White on 07.15.15 at 11:38 am

Canadian mid term to long term bond yields are dropping too today.

Canada 10 and 30 year are 1.61% and 2.30%. This is why I don’t understand why I keep hearing that interest rates are going up when bond yields are falling. It is not true.

These 10, 30 year bond yields are alot since I can remember 10, 11 years ago when they were in the 4%+ range.

The Bank of Canada is influencing bond yields and pushing them down. This is what they want for fixed rate mortgages too and it seems to be working as they wish.

#211 Republic_of_Western_Canada on 07.15.15 at 11:38 am

Hallelujah! I say Hallelujah!

Finally we get some positive action going. Now the second step should be to yank CMHC coverage out from underneath irresponsible housing owners/speculators.

And migrate it over to a small business loan insurance program. (Outside of southern Ontario and the Lower Mainland of course, to minimize mafia and chinese speculators taking advantage of it).

#212 Irent on 07.15.15 at 11:41 am

So its politics above economy..

#213 Lisa White on 07.15.15 at 11:43 am

I meant to say that 10, 30 bond yields are down alot since 10, 11 years ago when they were in the 4%+ range.

Actually, as I was typing Canada 10 year bond yields are now lower at 1.60%.

#214 LL on 07.15.15 at 11:44 am

..”More importantly she said rates are expected to rise in 2015. And they will. More pain for our dollar”… — Garth

……..Why this time it will be true?

#215 Leo Trollstoy on 07.15.15 at 11:46 am

It’s coming. — Garth

Don’t rush it. We want a extra heaping pile of juicy moist goodness today.

#216 Holy Crap Wheres The Tylenol on 07.15.15 at 11:47 am

Thanks BOC. Now we can expect some more records to be broken for July, Aug and Sep, all the way baby.

http://www.advisor.ca/news/economic/june-home-resales-hit-record-186819

#217 cramar on 07.15.15 at 11:48 am

#188 Khristine van Lincoln on 07.15.15 at 11:03 am

I am starting to get pretty scared. Please don’t judge me…

————-

$1.78 mm in debt with $175k credit card debt on a salary of $52,500??!!

WHAT!! Hey, I don’t want to kick a lady when she is down, but you don’t need advice. You need a miracle! You are terminal and have months to live! You need major surgery NOW!!!

To Garth: You are right! You could NEVER make this up. Nobody would believe you!

#218 Holy Crap Wheres The Tylenol on 07.15.15 at 11:51 am

#191 bill on 07.15.15 at 11:08 am

#123 Holy Crap Wheres The Tylenol on 07.15.15 at 9:21 am
rarely do I disagree with you ,however on this occasion I feel I have a better plan…
the canadian north,one of the worlds largest mosquito/black-fly hatcheries known to man is the ideal spot to deposit the various entities that were mentioned.
antarctic -like cold for extended periods and then the warmer weather when the aforementioned tiny parasites ,in their uncountable millions, would then feast on the bigger parasites.
___________________________________________
Well I just didn’t want to have such polluted garbage within our own borders. But I is also a good spot, agreed!

#219 Leo Trollstoy on 07.15.15 at 11:51 am

Canada is an impotent export country with a tanking economy that’s taking it’s dollar down with it.

This has all been foretold. If you didn’t listen to Garth to add U.S. exposure, you’re hooped.

Good luck to all

#220 Kilby on 07.15.15 at 11:52 am

A lot of references here to “loosers” The English language is becoming a loser on this blog……

#221 fancy_pants on 07.15.15 at 11:53 am

#188 Khristine van Lincoln on 07.15.15 at 11:03 am

what can possibly go wrong? otherwise, hopefully they legalize prostitution and you have something worth selling.

#222 Alberta Ed on 07.15.15 at 11:54 am

Brilliant rate cut! Now I don’t know who to vote against.

#223 bdy sktrn on 07.15.15 at 11:54 am

WASHINGTON (AP) — Federal Reserve Chair Janet Yellen sees a number of encouraging signs that the economy is reviving after a brutal winter and says if the improvements stay on track, the Fed will likely start raising interest rates later this year.

Delivering the Fed’s mid-year economic outlook to Congress, Yellen said Wednesday the importance of the first rate hike should not be over-emphasized because interest rates are likely to remain at very low levels “for quite some time after the first increase.”
————————-
“if*** the improvements stay on track, the Fed will likely*** start raising interest rates later this year.”
– 2 hedges in one sentence!

“quite some time” – perhaps a long enough time to see oil climb out of the ditch and the loonie back on stronger footing?

#224 cramar on 07.15.15 at 12:01 pm

@ 188 Kristine

This is from my wife. Woman to woman.

“You have “STUPID” written all over your body!”

Sorry.

#225 Sheane Wallace on 07.15.15 at 12:04 pm

0.7729 Down 0.0123(1.57%)

dropping like a stone baby.

Is anyone measuring how much wealth has Poloz stolen from the savers due to his idiotic policies? 22 % + drop and counting probably translates to over 200 billion CAD in savings/deposit.

Good job, Poloz! Keep it up.

#226 Holy Crap Wheres The Tylenol on 07.15.15 at 12:12 pm

#190 45north on 07.15.15 at 11:07 am
Update, 10 am EDT July 15th: Bank of Canada defies critics and cuts key rate by a quarter point to just 0.5%
Dollar slumps to 77.4 cents within two minutes of announcement
5-year government bonds slide 8%
“dollar slumps to 77.4¢ within two minutes”
so much for principled leadership!
this is the signal to sell real estate
__________________________________________
My company has put two key pieces of equipment on hold since last December due to the rising dollar. Each production piece was just under $850 K, this Canadian dollar slide is killing our manufacturing capabilities. We are considering leasing the equipment however at the end of a minimum 2 year lease we will have invested a ton of money and own nothing. The payback on our equipment is five years. We are already dead with a 0.85 dollar, thanks BOC. Idiots………………….

#227 FitBitKid on 07.15.15 at 12:13 pm

More importantly she said rates are expected to rise in 2015. And they will. More pain for our dollar. — Garth

You also had the opinion that BOC won’t lower rate.
Yellen will not raise rate this year. Its a currency war out there. US can’t be raising, when everyone is lowering.

She said it two hours ago. Deal with it. — Garth

#228 Moses71 on 07.15.15 at 12:15 pm

…waiting for you to break it down (for us), Garth!
You’re a godsend

#229 FitBitKid on 07.15.15 at 12:21 pm

She said it two hours ago. Deal with it. — Garth

It’s always in the fine print, not in the headlines.
She said rate will rise , BUT ONLY IF THE ECONOMY EVOLVES AS EXPECTED…. ha ha What a jargon ?, SHE HAS AN OUT.

#230 ben on 07.15.15 at 12:21 pm

Holy Crap Wheres The Tyleno

well you might be making goods but you aren’t making new money. Borrowing to buy land prints new money. Can you make something from nothing? If not you can’t beat the banks.

#231 Mark on 07.15.15 at 12:32 pm

“I couldn’t help but observe that the majority of extra money received by Canadian companies as the overnight rate was cut from 3.85% in 2008 to 0.75% in 2015 was recorded on corporate balance sheets as profit and distributed to shareholders as additional dividends.”

Profits are barely back to 2007/2008 levels for the TSX-listed firms, and that was before the recent O&G price crash (which is certain to truncate profitability in the O&G sector significantly in the next few years until cost adjustments fully filter through!). Basically the past 7-8 years have been a sort of “lost (almost) decade” for corporate profits. The only positive thing that can be said for stock investors is that the cost of financing their positions (or opportunity costs in cash) have been extremely low to make up for the relative lack of growth.

On that note, using Interactive Brokers instead of the other brokerages for margin financing just got another 15bp more attractive today relatively speaking. On account of the fact that IB indexes its lending to the Bank of Canada policy target, while most retail brokerages in Canada use the bank-administered “Prime”.

#232 FrozenNorth on 07.15.15 at 12:35 pm

@ FitbitKid
It’s always in the fine print, not in the headlines.
She said rate will rise , BUT ONLY IF THE ECONOMY EVOLVES AS EXPECTED…. ha ha What a jargon ?, SHE HAS AN OUT. – FitBitKid

The FED statements are never concrete, there is always “an out”. In FED speak that is as concrete a timeline that you are ever going to see.

#233 Kira on 07.15.15 at 12:50 pm

Khris (#188)

You need to sit down with a credit counsellor or financial advisor *now*. The decisions you make now will affect the rest of your life.

The reality is that you have crushing debt. There is no hope of paying it off on your salary. You urgently need to become financially literate. Hope isn’t a plan.

You asked for advice. Here it is:

Sell the house. Negotiate a reduced commission from the real estate agent you dealt with. It will cost you to get out – maybe everything you have and more. The alternative is worse.

Get control of your feelings. Learn how to set up spreadsheets if you don’t know this already and crunch some numbers. Include interest costs, taxes, utilities and maintenance/repairs. Use those to make decisions. You may owe $1.8 million but it will cost you a multiple of that because of the interest.

You were sold on a dream – perhaps of independence, entertaining friends, decorating and the fun of having your own place. Maybe you even thought that you might make money selling the house someday at a higher price.

The reality is likely to be very different – the strain of multiple housemates, a second job, no extras like holidays or meals out, not being able to afford children in the future and the real possibility of bankruptcy. There is a very good chance that the price of your house will drop significantly in the next 5 years, so you won’t be able to sell without hundreds of thousands of additional savings to pay off the bank.

Review the archives of this blog and seek out other resources in the public library or personal finance section of a book store. Learn something every day.

Please seek out help. You won’t find the help you need in the comments section of a blog. Once you sort things out, write back and let Garth know how things worked out.

#234 FitBitKid on 07.15.15 at 12:54 pm

@FrozenNorth
Yes, there is always an out. But she shouldn’t be posturing one way or the other. For all we know , she might reduce the rates come September. Main thing they care about is Inflation/Deflation which is controlled be economy. Inflation is around 2% and going down and GDP growth is around 2% from the expected 5% for 2015, so rising rates doesn’t make sense. Its all posturing for the stock/bond markets.

#235 SWL1976 on 07.15.15 at 12:59 pm

#115 TurnerNation

M. Jagger sang: and all the cops are criminals. Pleased to meet you hope you guessed my name.

B. Dylan…they’ll stone you when you’re young and able. They’ll stone you just like they said they would.

Total corporate and IMF takeover and occupation coming. Country by country.

Let’s keep the lyrical theme going here with some very relevant ones from Muse…

The paranoia is in bloom, the P-R
Transmissions will resume
They’ll try to push drugs
Keep us all dumbed down and hope that
We will never see the truth around

Another promise, another scene,
Another package lie to keep us trapped in greed
With all the green belts wrapped around our minds
And endless red tape to keep the truth confined

The cat is coming out of the bag folks and the machine is freaking out, but don’t kid yourself they are well prepared

Still think Jade helm is just a harmless drill for the safety of the American people that shouldn’t concern us?

#236 willworkforpickles on 07.15.15 at 12:59 pm

….That day of reckoning comes to Canada Spring 2016. -the beginning of the greatest real estate crash in Canadian history…

#237 Shawn on 07.15.15 at 1:05 pm

Show Me The Money

Llewelyn on 07.15.15 at 11:30 am said:

We have no choice but to hope that the additional dollars added to companies listed on the TSX composite immediately after overnight rate was cut by .25% will be invested to expand the Canadian economy.

***************************************
Do you refer to the fact that the TSX stocks rose in price on average?

You do realize that not a dime was added to the balance sheets or bank accounts of TSV companies as their stocks rose today?

Can you explain how any “additional dollars added to the TSX composite” will be sprung free and invested? Consider that any share sold must be purchased by someone else.

You do realize that no new dollars are created when stocks rose today? What happens is that the value of stocks as measured in dollars rises but no new cash dollars are added to any bank account as a result?

#238 Shawn on 07.15.15 at 1:06 pm

Congratulations to Mark

You got that call on a rate cut right and you made that call early and often.

I assume apologies and congratulations from those who bashed you on that call will be forthcoming.

#239 maxx on 07.15.15 at 1:41 pm

#20 takla on 07.14.15 at 6:37 pm

“Raise rates and the overpriced economy tanks.We are at emergency bank rates now and STILL loseing ground to recession.Hard to see a way out of this cluster-f-ck.”

Raise by 10 bps per quarter. Fail safe. Gives all the indebted fools time to adjust gradually.
Anyhow, the more they mess with savers and the responsible, the more they’ll gut it out and save more. :-)

#240 Molly Craighead on 07.15.15 at 4:08 pm

I have an employee of mine that has made it a life’s mission to be cheap as hell.

He was surprised how much he had saved since 2008. It is $185,000.

He is pissed off as hell because he remembers when his family was paying 13.75% mortgage rates in the 1980’s.

Now he is only getting 2.25% in U.S. CD’s. It looks like Canada is going worse than the U.S.

#241 Doug in London on 07.15.15 at 10:37 pm

@Molly Craighead, post #240:
I can see why he’s so pissed off, but why doesn’t he fight back by buying stocks, REITs or ETFs that pay a much better rate of return? Better yet, why didn’t he buy such investments during those many, many, many, many times, including last week, when they were on sale?

#242 Squirrel meat on 07.15.15 at 11:51 pm

#235 SWL1976 on 07.15.15 at 12:59 pm

Still think Jade helm is just a harmless drill for the safety of the American people that shouldn’t concern us?
—————————–
Yes, of course.