Math is hard

DOG SNOOZE modified

As oil slid into the $43-a-barrel range on Friday we learned 45,300 more public-sector workers were hired  in Alberta in the last year.  In Canada as a whole last month, 28,000 corporate employees were sent home. Because of all the new civil servants, net job creation was a slim six thousand and the jobless rate remained static.

Obviously this is no way to build an economy. In contrast, the US saw 215,000 new jobs created in a month. Plus 230,000 the month before. And two million in the year before that. So the Fed is on track for the first rate hike in a decade in the third week of September, while we limp. Remember what I told you about never betting against America?

In the past few weeks consider what Ottawa’s done:

  • First, the Bank of Canada cut its key interest rate for the second time in six months. That marker has now fallen by half in 2015 – all to lure people into more spending and bigger mortgages. It worked. Sales in Vancouver just surged 30%.
  • Second, Canada Mortgage and Housing made a landmark ruling – it will allow homeowners to count 100% of the rent they collect from their basement-dwellers as earned income (doubling the old limit). So they can borrow more. A lot more.
  • Third, the prime minister unveiled his first and premier election plank – the creation of a permanent home reno credit, encouraging people to borrow and spend on their houses.

Notice a pattern? As the commodity crisis deepens, Canada’s industrial base erodes and private sector employers are shedding workers. How do governments respond? By getting bigger, increasing taxes (most notably in Alberta and Ontario) and enticing consumers into greater debt. Does this sound sustainable to you?

Oh, and about the 300+ comments published on this pathetic blog yesterday: if this is any indication of what’s to come on October 19th, we have a hell of a lot more government and taxation in our future.

Like math, building an economy is hard. That’s probably why we don’t have governments doing much of it. The easier path is to bring in cheap money, free debt and tax incentives to bloat consumer spending. Easier still is to take money, in the form of increased taxation on corporations and higher-income earners. This helps explain Alberta’s 20% corporate tax increase plus a similar jump for those earning over $250,000, plus Ontario’s new top tax rate of 52%.

In contrast, Bill & Hillary Clinton just filed their tax returns – earning $20,000,000, and paying their fair share – 34%.

By the way, it looks like we should all expect more of this in the future as the national economy – and especially that of Alberta and Saskatchewan – takes a hit. The commodity collapse is widespread and unlikely to end soon. In fact, legendary bond-fund guru Bill Gross made headlines in the last twenty-four hours, warning the global economy “is dangerously close to deflationary growth.” A key index of commodity prices is now lower than in 2008 when Wall Street was buckling and the credit crisis spreading.

Says Gross: watch commodities. They tell the real story of an economy’s health, reflecting waves of supply and demand. So an oil glut, plunging copper prices or heartbreaking crop payments to farmers are leading indicators of all else. That means politicians who skim more revenue from a shrinking pie or seek growth built on household debt are pushing on a string. It won’t work.

But this blog is not just about moaning or gnashing. Think of it as an empowerment anthem for 14-year-old girls. But without Taylor Swift. Or the kids.

So, ensure your exposure to Canada is kept to a dull roar. As suggested repeatedly, two-thirds of the growth assets (at least) in your portfolio should be non-maple – US and international.

Second, shelter from taxation every single dollar that you can. Maximize TFSAs, for example. Starting in 2016 (unless Justin Trudeau wins) a couple will be able to invest over $100,000 in their accounts – enough to build a balanced and diversified portfolio within them.

Third, understand that the more money you make, the more you can plug into an RRSP and deduct from your taxable income – to a maximum of $24,000. This shelter is skewed to the wealthy, delivering a far greater benefit to high-income earners.

Fourth, wherever possible earn more money as an investor than as an employee. After all, if you collect $200,000 a year being a masseuse in Long Branch, you fork over half in taxes. But if you earn $200,000 in capital gains on your fat portfolio, you pay 50% less.

Remember, you can also split income with your squeeze and save tax with a spousal RRSP, or shelter tens of thousands by funding your adult kids’ TFSAs, or create a tax-free mortgage on your house with an investment HELOC. In that case not only can 100% of the interest be written off, but the earned cash flow is taxed at half the rate paid by those poor, seedy, little working people.

Or, you can give up on Canada, split south and run for president. Everybody else is.

258 comments ↓

#1 North Burnaby on 08.07.15 at 6:06 pm

TGIF!
Been saving a lot of money from my salary by living an extremely frugal life. Have more than enough to put down 20% for two 1-bedroom condos in Downtown Vancouver. I’m waiting for the crash just like you are Mr. Turner, the crash can’t come soon enough! I gotta put my money to work!

#2 Loonie Watcher on 08.07.15 at 6:07 pm

Who watched the GOP debate yesterday? Why can’t Canadian politicians be that entertaining. Every single one of them (including the 7 in the pre-debate debate) would make for a good President.

Loonie breaks through $0.70 by Labour Day. Mark it down.

#3 That guy on 08.07.15 at 6:08 pm

NDP for the win!

#4 Folsum on 08.07.15 at 6:08 pm

Why does canada have such garbage politicians, both currently in power and all those trying to get in?

Each party looks like they will sink the country into ground in some way, shape or form.

#5 Kilby on 08.07.15 at 6:12 pm

45,000 new public sector jobs in Alberta? I wonder how many of the 215,000 new jobs in the states were public sector?

#6 Republic_of_Western_Canada on 08.07.15 at 6:14 pm

Glad to see you’re coming around, GT. You’ll remember I had the deflationary trend identified way before Bill Gross announced it (and not just because I worked in the same town).

By the way, the proposed corp tax increase is 2%. Ten times less than what you make it out to be.

An increase from 10% to 12% is a 20% augmentation. Just like the phased-in Albertan increase on incomes over $250,000. — Garth

#7 Sionn on 08.07.15 at 6:25 pm

So increased revenues and more spending aren’t the solution according to you. Lower taxes and austerity clearly isn’t working either. I’m sure you are against deficits as well, just as icing on the cake. What is your solution then Garth? You sure love to dish it out. Enlighten us!

What austerity? And my taxes aren’t low. Are yours? — Garth

#8 That guy on 08.07.15 at 6:26 pm

Seeing that Alberta only has 27,000 public sector employees an increase of +45,000 truly is amazing.

It does seem like math is hard :/

There were 346,520 public servants in Alberta back in 2011. Source. — Garth

#9 james on 08.07.15 at 6:26 pm

“By the way, the proposed corp tax increase is 2%. Ten times less than what you make it out to be.

G: An increase from 10% to 12% is a 20% augmentation. ”

I did not expect to see empirical evidence of the ‘math is hard’ hypothesis so soon in the comment thread, but there you are. If this is the level of mathematical literacy, no wonder the average person doesn’t understand compound interest.

#10 betting games on 08.07.15 at 6:30 pm

Remember what I told you about never betting against America? – Garth

===

Keystone XL, anyone?

Mr Harper and his ministers are supposedly not willing to meet with their American counterparts?

#11 Shawn on 08.07.15 at 6:30 pm

Unbelievable!

on Friday we learned 45,300 more public-sector workers had been hired last month in Alberta.

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

That is truly unbelievable. As in I don’t believe it.

I don’t see it in the Stats Can release and even if it is there, it is obviously wrong. Or it reflects some weird seasonal thing though I believe the Stas Can numbers are already supposed to be statistically adjusted.

Whatever, it is clearly wrong to suggest the Alberta governments hired 45,300 new people (net of attrition too) last month. It is at best disingenuous, this has to be a mistake or there is more to it.

Nowhere did I say the Alberta government was responsible for all public sector hirings in the province. — Garth

#12 AisA on 08.07.15 at 6:34 pm

Can’t wait to buy a house….in Moncton.

#13 You've Got To Be Kidding ... on 08.07.15 at 6:38 pm

45,300 public service jobs created in Alberta last month ? You’ve Got To Be Kidding ! Just what exactly do these 45,300 “workers” do ? What changed from June to July in Alberta that requires the hiring of FORTY FIVE THOUSAND THREE HUNDRED public service employees ? Holy Sheeeeiiiiiiittttt ! Did Harper lend Notley his play book from a few years ago ?

Surely this is a TYPO ?

From 348,700 public sector workers to 394,000. — Garth

#14 Mark on 08.07.15 at 6:38 pm

Hopefully people heed Garth’s implicit advice, lighten up on the over-investment/over-ownership of houses, and rebalance their portfolio more towards investment that actually helps to sustainably grow the economy.

Canadian business has been labouring against a high cost of capital environment for most of the past few decades with the minor exception of the late 1990s. The underperformance of Canada’s labour market is a testament to such.

There can be great rewards to those who recognize the need for capital in sectors of the economy that lack access to such, and invest accordingly. A good chunk of the Canadian economy has a market capitalization of a mere fraction of the replacement cost of its assets. Some assets, such as the precious metals miners, are at generational lows.

Canadian investors have a pivotal decision to make at this point. Believe the increasingly discredited claims of RE stability by the various RE vendors with a vested interest in propping up a dying bubble (did anyone see that delusional BMO economist on the Amanda Lang show last night???). Or recognize that there is life beyond RE, and many out-of-favour assets are cheap on account of the RE bubble.

“You’ll remember I had the deflationary trend identified way before Bill Gross announced it “

Of course, consumer debt excesses are almost never resolved by inflation. An excess in debt also means an excess in savings as debt is always someone else’s asset. In the long run, the debtor usually ends up as slave to the lender/saver, or so the Bible/Koran/etc., tells us.

#15 betting games on 08.07.15 at 6:39 pm

“create a tax-free mortgage on your house with an investment HELOC. In that case not only can 100% of the interest be written off, but the earned cash flow is taxed at half the rate…”

—-

Wow… are you referring to the discredited Smith manouvre?

No. — Garth

#16 Kilroy on 08.07.15 at 6:40 pm

Garth…what do you think that it would take between now and September that would prevent the Fed from raising rates? I saw that initially only 52% of analysts polled predicted a rate increase in September and after jobs report it spiked to 75%? However, there was some concern raised that the job growth has been focused more in the service economy (bartenders, waiters etc) and shrinkage in the manufacturing sector? This may also explain the lack of growth in wages?

#17 Bob Santarossa on 08.07.15 at 6:40 pm

Speaking about Math today’s Jobs report a joke or science fiction – take your pick, it looks like StatCan hired CREA to write the Jobs report for them:

July Jobs increase = 6,600

July “Self-employed” workers increase = 41,000

Which means we lost 34,400 jobs in July which is dismal.

I am sure we all know that “self-employed” means I lost my full time job or I am in an out placement agency looking for a job but realy, I am a consultant pulling EI.

In July, the number of full-time positions fell by 17,300 and the number of employees actually fell an estimated 33,900.

If so, we will see a substantial EI increase in the next couple of months or sooner in the newly minted self-employed.

How’s that Math grab you Garth?

#18 TFSA on 08.07.15 at 6:41 pm

Garth, you said “Starting in 2015 (unless Justin Trudeau wins) a couple will be able to invest over $100,000 in their accounts – enough to build a balanced and diversified portfolio within them.” Don’t you mean 2016 ? Currently 41k per spouse from 2009 – 2015 , next year (2016) 51k per spouse if the Grits aren’t elected.

Yes, 2016. — Garth

#19 Shawn on 08.07.15 at 6:45 pm

Nowhere did I say the Alberta government was responsible for all public sector hirings in the province. — Garth

Nor did I, I said Alberta governments (plural) by which I mean all the public sector in Alberta.

Show your source. I maintain the number (45,300 new public sector hirings in Alberta last month) is preposterous on its face and obviously wrong.

If I am wrong I will apologise and ban myself from posting a word here until September.

There are more than 350,000 public sector workers in Alberta (Source). Check the latest labour survey. (Source) — Garth

#20 Mister Obvious on 08.07.15 at 6:47 pm

“… wherever possible earn more money as an investor than as an employee.”
————————

Absolutely. I have done exactly that for nearly ten years. The Canadian investor is taxed more favorably than the wage earner. That’s part of the benefit one enjoys for having the nerve to take a capital risk.

As I recall, few tears were shed for the average investor while capital losses mounted up during the GFC. My capital shrank significantly and I don’t recall receiving any cards of sympathy.

Even so, when I find myself ruminating in the wee hours, I sometimes envision angry crowds with torches and pitchforks gathering in the street.

#21 That guy on 08.07.15 at 6:47 pm

I get it – the feds hire a bunch of public sector employees in Alberta (which you fail to point) out so you can pad your NDP-is-evil point of view.

Classy. You should have been a realtor.

Only 10% are federal employees. Most are health workers, local government employees or school board hires. Use your brain. — Garth

#22 BigBlockPower on 08.07.15 at 6:49 pm

Laying off people again…. next week.

Have been working on the drilling side of the oil industry for 20 years at home and abroad with no gaps.

This is the worst I have seen.

#23 math is not hard on 08.07.15 at 6:50 pm

Math is not hard.

Getting rid of their ideological garbage while in the position of governing is the impossible task for our weak politicians.

#24 QED on 08.07.15 at 6:51 pm

Garth vs Republic_of_Western_Canada

I think you are both correct.

Going from 10% to 12% is an absolute increase of 2% and a relative increase of 20%. We use the relative increase all the time in scientific studies when we want to make the results look more dramatic.

And accurate as to relative impact. — Garth

#25 You've Got To Be Kidding ... on 08.07.15 at 6:53 pm

“As oil slid into the $43-a-barrel range on Friday we learned 45,300 more public-sector workers had been hired last month in Alberta.”

“Nowhere did I say the Alberta government was responsible for all public sector hirings in the province. — Garth”

innuendo – “a statement which indirectly suggests that someone has done something immoral, improper, etc.

Gosh Darn ….. Notley doesn’t have Stephen Harpers play book…. Mr. Turner has it. C’mon Garth you are miles above such bull shit !!

The statement is 100% correct as written. Deal with it. — Garth

#26 Nagraj on 08.07.15 at 6:55 pm

Some astute blogdog in the last batch of comments mentioned EDWARD BERNAYS.

Who just happens to be the inventor of herdonomics. (And of, among other things, broadly speaking, the origin of fluoridated water, believe it or not.) (And he is the source of the term banana republic.) The granddaddy of advertising and of manipulating public opinion.
The Wikipedia entry for EDWARD BERNAYS gives you a pretty good idea of what this guy did.

EDWARD BERNAYS’ work and incredible success is utterly frightening.

In the late 1990’s I read a biography of EDWARD BERNAYS – if you want to lose all faith in the wisdom of collective behaviour . . .

Sigmund Freud was his uncle.
Bernays was capable of creating demand for products – and capable of considerable political influence.
(Conspiracy theorists would do well to check this guy out first.)

If our GRACIOUS HOST means to sway public opinion, get his message out, may he be well advised to consider Bernays’ techniques.

#27 rk usa on 08.07.15 at 6:58 pm

re: In the past few weeks consider what Ottawa’s done

all these housing related incentives

Canada is truly a housing superpower!

#28 LTL_FTC on 08.07.15 at 6:58 pm

#8 james on 08.07.15 at 6:26 pm

Forget that. The average person doesn’t even understand the concept of “the average person”.

#29 Alph on 08.07.15 at 7:00 pm

there is no way the NDP in Alberta hired that many people since coming to office. The ‘public service’ must include teachers, police, nurses, and even the Alberta Treasury Branch bank staff to make those numbers high. There are less than 30,000 ‘Government” workers.

There are more than 350,000 public sector workers in Alberta. This is getting tedious. — Garth

#30 Red Deer Rob on 08.07.15 at 7:09 pm

I was laid off in the spring and have only just recently found another job. If it wasn’t for the fact I’m debt free and live simply I’d probably have wallowed in depression. I sinceraly hope my fellow Albertan’s can survive this downturn as well.

And @ #1 North Burnaby, Garth has not advocated a crash is coming. We go over this every week.

#31 Paul on 08.07.15 at 7:09 pm

#6 Republic_of_Western_Canada on 08.07.15 at 6:14 pm

Glad to see you’re coming around, GT. You’ll remember I had the deflationary trend identified way before Bill Gross announced it (and not just because I worked in the same town).

By the way, the proposed corp tax increase is 2%. Ten times less than what you make it out to be.

An increase from 10% to 12% is a 20% augmentation. Just like the phased-in Albertan increase on incomes over $250,000. — Garth
———————————————————-10 times lol. Let me list your house

#32 kommykim on 08.07.15 at 7:13 pm

Maybe a bit of history in regards to the tax rates in Alberta would help calm Garth’s gloom and doom about the “20%” corporate tax increase:
http://www.finance.alberta.ca/publications/tax_rebates/rates/hist1.html

#33 Math Really Is Hard on 08.07.15 at 7:18 pm

Sigh… So many people seem to fail to grasp basic mathematics.

It’s simple guys.

(12-10)/10=0.2=20%

Please see this page on percent change if you missed this class in elementary.

http://www.mathgoodies.com/lessons/percent/change.html

#34 Nosty, etc. on 08.07.15 at 7:22 pm

#252 Smoking Man on 08.07.15 at 11:30 am — “My call: Next President of the USA . . . Donald Trump…… He has a great connection to the UCC.”
— and —
#335 John on 08.07.15 at 4:15 pm — “There’s really not a lot of difference between fascism and communism. In both cases, the government takes total control over everything.”

Trump is not PC (“Bankers are total killers”, which separates him from the other brought-off poliiticos), speaks plainly and tells it like it is, not whitewashing the crud presently in power.

Then again, if he upsets the establishment (TPTB or the elite, who run the show), he may be pushing up the daisies sooner than expected.

#316 OXI in GREECE !! on 08.07.15 at 3:12 pm — “More McJobs in ‘Murica’ with young’ins serving up Monsanto burgers to obese people.

Whoops! Which (I guess) would lead to this — Adios good jobs Ohdearwotapitynottooworrynevermind. People’s tastes are changing, just as the times are.

#35 espressobob on 08.07.15 at 7:25 pm

It wasn’t long ago many were pounding the oil drum known as XEG, calling a bottom and found themselves wrong.

Garth said “underweight” Canada, he was right.

That sounds like a good “short” position.

http://www.blackrock.com/ca/individual/en/products/239839/ishares-sptsx-capped-energy-index-etf

fidget to get to XEG, by the way, if you pull up a ten year chart you may not like what you find.

#36 VICTORIA TEA PARTY on 08.07.15 at 7:27 pm

ECONOMIC TROLLS

#6 Republic_of_Western_Canada

What’s with those Albertans who can’t do basic arithmetic anyway?

Are they some or all of those 45,300 who’ve been hired into a newly-swollen Alberta civil service, a unionized gong show if there ever will be? Bought and paid for; cash in your brains for loot. That’ll work. Check your economic history. It won’t.

Would it be too adroit for me to opine that Ms. Notley is “buying” votes, after a fashion, for the federal NDP during this election campaign by “hinting” to those recent hirelings to vote for Mulcair, without actually persuading them, in fact!?

She’ll send that bill to all of those “rich” and “undeserving” Albertans, I’ll bet.

They won’t mind forking out more to help the NDP win federally will they? Yeah, they will and there will be local blowback at some point. This is a new low in class warfare.

MEANWHILE, OUT THERE IN THE REAL WORLD, A MORE OMINOUS BLOWBACK CRANKS UP…IT’S A BEAST.

With oil heading into the 30s, and maybe lower, I have no doubt, there is something NDPers everywhere should know about, now.

Continuously collapsing commodity prices, as Bill Gross says, is “deflationary.” He used the phrase “deflationary growth.”

Translated into English, he is saying the world economy is approaching an economic depression.

So Dr. Copper, all base metals, coal, natty gas, oil and are ringing the economic alarm bells. Who’s listening? Right now just a few investor crazies, standing nervously on the side lines, looking for an ever-shrinking supply of safe money havens to stash their loot.

REMEMBER THIS AGAIN: the words deflation and depression are interchangeable, when talking about our economic situation.

Inspite of their hubris, greed, and cloying for power, all of the Notleys and Mulcairs of the known universe have zero control over this world-class depression beast. It controls THEM!

It has been running rampant through the EM countries (emerging markets) for quite a while, now, and the rest of us are feeling this terrifying creature’s hot breath on the backs of our necks.

Careful, there you arithmetically-challenged socialists. You’re short-changing yourselves!

#37 Fred on 08.07.15 at 7:30 pm

Can’t believe you mention the criminal cartel of Bill and Hillary a decent light- Like THEY pay taxes. Ask Barry Seal and the other 100 + close associates of the Clinton’s who had ‘accidents’ after Gary Web broke the story of ‘Dark Alliance’- FACT. How about Bill and the ‘energizer bunny’- FACT. BTW Hillary likes carpet-FACT.

#38 MSM-Free Zone on 08.07.15 at 7:30 pm

#23 QED on 08.07.15 at 6:51 pm
“….We use the relative increase all the time in scientific studies when we want to make the results look more dramatic……”
_________________________

I’m guessing the bloggers have a right to be a little critical this evening.

When the [email protected] offers a 0.45% bonus on top of a regular 0.70% GIC, she doesn’t say, “Good news, wrinklies, today I’m offering you a 64% bonus on your GIC, should you sign up today.”

Not cool.

#39 FormerSaskie on 08.07.15 at 7:32 pm

I suspect that many of the Alberta hires were firefighters brought in to fight the forest fires, so they are temporary hires.

#40 Brent Wagner on 08.07.15 at 7:36 pm

There is a Freeze on hiring more public sector workers @ least with Alberta Govt. So I call BS. to your comment. Yur just trying to make a point with the new Govt and its too early too tell. As far as the Federal Govt is concerned its looking like Justin Trudeau has the Best ideas bout trying too reduce the huge division between the rich and the middle class. Thank goodness as it si plain too see that Harper is following in Bushes footsteps cept he is clearly behing the times.

#41 Joblo on 08.07.15 at 7:36 pm

My preferred are getting murdered

#42 Nora Lenderby on 08.07.15 at 7:42 pm

#327 LP on 08.07.15 at 3:41 pm
#320 OttawaMike on 08.07.15 at 3:15 pm
I think you have mistaken communism for fascism. Or else you’ve confused Russia with Germany.

Naughty boy! That was a Godwin troll if ever I saw one…

#43 Shawn on 08.07.15 at 7:44 pm

And He Won’t Back Down…

There are more than 350,000 public sector workers in Alberta (Source). Check the latest labour survey. (Source) — Garth

*****************************************
Garth you said:

“on Friday we learned 45,300 more public-sector workers had been hired last month in Alberta. At the same time 5,600 people in the private sector lost their jobs.”

and you cling to this.

You have indicated that there are more than 350,000 public sector workers in Alberta.

okay, but a 13% increase in one month which has apparently not made the news is preposterous on its face.

According to Stats Canada, Alberta lost 4,300 jobs in July.

Your figures would seem to imply a gain of 39,700.

You apparently made a mistake. Own it.

The increase is an annual one from July 14 to July 15, and is correct in that context. — Garth

#44 TheManwhoStaresatSheeple on 08.07.15 at 7:49 pm

Regarding the 43,500 new public servants – it is me who did post this info in the previous blog entry (post #246 @ 08.07.15 at 11:09 am) and apparently Garth did not pay much attention that this increase was for the whole year – July 2015 compared to July 2014

Comparing monthly data from the Labor force survey is kind of meninges and prone to big errors.
The month-to-month figures are too volatile to get much of a read on things and one should use at least a moving average of the last three months.
This is especially true for the public sector employment in the summer months (June,July, August) as many of the public sector employment especially this in the educational sector take their very long vacations and “fall” thru the crack in the Labor Force Survey – with the numbers for the public servants significantly lower than compared to the rest of the year.

These are the reported numbers for the “public sector employment” at large in Alberta according to the latest available data as of today, Aug.7,2015

July 2014 – 348,700
Dec. 2014 – 378,700
Feb. 2015 – 390,600
Mar. 2015 – 403,200
Apr. 2015 – 404,000
May 2015 – 408,500
June 2015 – 419,000
July 2015 – 394,000

Data taken from CANSIM table 282-0011
http://www5.statcan.gc.ca/cansim/a26?id=2820011

In addition the increases (July 2015 over July 2014) appear to be:

utilities – from 12,300 to 17,800 now
construction – from 3,000 to 5,900 now
education – from 85,600 to 96,500 now
health care – from 122,300 to 131,900 now
public administration – from 94,900 to 99,600 now

#45 crowdedelevatorfartz on 08.07.15 at 7:50 pm

@#1 North Burnaby
“Been saving a lot of money from my salary by living an extremely frugal life.Have more than enough to put down 20% for two 1-bedroom condos in Downtown Vancouver……”
+++++++++++++++++++++++++++++++++++
Bwahahahahahaaha and I thought I excelled at flatulence.
Watsa matta N.B.? No good deals in north Burnaby no mo?
Buy at Brentwood when they finally finish digging that hole.
P.S. Sleeman draft beer is on sale at the Willingdon liquor store today if you REALLY wanna prove your “frugal”……..

#46 OMG too funny on 08.07.15 at 7:52 pm

I love the hubris of people here denying Garth’s math. He is right. Corporate taxpayers will have to pay 20% more *than their previous tax liability*, assuming the same income.

Your interpreting his words to mean they will pay 20% *of their income* in taxes, which is not what he’s saying.

#47 Balmuto on 08.07.15 at 7:53 pm

#13 Mark
““You’ll remember I had the deflationary trend identified way before Bill Gross announced it “

You do deserve some credit for harping on about the deflation threat. It’s becoming increasingly clear that central banks are failing, despite their best efforts, to induce any meaningful inflation. They may even be creating deflation. However, you continue to draw the wrong conclusions from a correct premise. Global deflation is not profoundly CAD positive, it’s profoundly CAD negative. Just as it’s profoundly AUD, NZD and BRL negative, just to name a few commodity-linked currencies that are in the exact same boat as ours. As for gold, maybe if there was significant deflation (in the order of 5-10%) it could be gold-positive but I can’t think of a worse environment for gold than Japanese-style “deflation” where the CPI meanders between -1% and 1%. That’s the definition of price stability and the exact opposite of the crisis in fiat that you gold bugs are hoping for.

#48 Shawn on 08.07.15 at 7:53 pm

WORKING Canadians Actually Saving More Than Ever

Financial Post today annihilated the often quoted figures about the savings rate being way down. The usual quoted figure is net of retirement withdrawals.

http://business.financialpost.com/personal-finance/retirement/cpp-should-be-expanded-but-not-the-way-everyones-talking-about

It’s awful when the data does not actually fit one’s thesis.

Luckily I don’t have a thesis except for spreading the truth and the light on certain preposterous figures and claims when I see them.

#49 Waterloo Resident on 08.07.15 at 7:58 pm

If Bill Gross is correct about the world entering a nasty Bear market cause by global deflation, then we are royally screwed, because the world has used up all of their ammunition for fighting recessions by dropping interest rates, as rates are already at or near zero all around the world.

You know, looking back at things in 10 years time, this just might be the start of a Global DEPRESSION of epic proportions. I hope I’m wrong, but the commodities market says it definitely is the start of a global economic depression.

And you all know what happens to real estate prices in a depression don’t you?

#50 crowdedelevatorfartz on 08.07.15 at 7:59 pm

Ladies and gentlemen
Garths statement
“45,300 more public-sector workers had been hired last month in Alberta ”

This could be police, firemen, nurses, dogcatchers, etc.etc.etc.
But we’re missing the point….

Alberta’s NDP should be saving NOT spending due to the slowdown in the oil industry.

Hmmmm, what would I do if I owned an exploration company in Alberta and had my company profits taxed 20% more and my income tax increased?
Shut down? Move? Both?

Alberta’s NDP……harbinger of things to come?

#51 eddy on 08.07.15 at 8:01 pm

Government is just a collection agency for central banks.
Their main job is to borrow and spend money they dont have on stuff no one asked for. And create more government, that no one wants.
There is no left, no right, just one side.

#52 Scumop on 08.07.15 at 8:06 pm

Percentages do not tell you anything, just create impressions. It takes concrete numbers to see concrete results.

So going from 10% to 12% is +20%. Hmmmm, so easy it hurts.

You have a business, and one of its costs (amongst labor, office supplies, materials) is TAXES..

Your enterprise makes a million after those other expenses…

One year, you are paying $100,000 in taxes.
Next year you are paying $120,000 in taxes.

An increase in the cost of the taxes of… 20 f/n percent. Math class be damned. This is count on yer fingers simple arithmetic.

— Courtesy of your helpful token member of the working poor.

#53 Steerage-where math is not hard. on 08.07.15 at 8:08 pm

Going up, but not 45,300 in one month.

Table 282-0089 1, 5, 7
Labour force survey estimates (LFS), employment by class of worker and sex, seasonally adjusted and unadjusted
monthly (persons x 1,000)

Alberta Public Sector Employees

March-398.3
April-400.4
May-396.2
June-406.7
July-409.1

The 45,000 public service employment increase in Alberta is for the last 12 months. I have amended my post to reflect this. — Garth

#54 Mister Obvious on 08.07.15 at 8:15 pm

#37 MSM-Free Zone

“When the [email protected] offers a 0.45% bonus on top of a regular 0.70% GIC, she doesn’t say, “Good news, wrinklies, today I’m offering you a 64% bonus on your GIC, should you sign up today.”

Not cool.”
———————————-

You’re right. Not cool. Because that statement would be incorrect. But if she’d said: “we’re offering a 64% bonus on the interest rate on your GIC today”… well…. Perfectly cool.

Now we’re back to where we started. A change in a rate is another rate. They are both unit-less numbers that express different things. It’s up to the educated individual to interpret them sensibly.

Math can’t help what it is. You have to pay attention. That’s why I have stressed the importance of this in elementary education.

I sense that Garth is very close to saying ‘knock it off’. Ergo, I’m done with this.

#55 Steve French on 08.07.15 at 8:15 pm

“45,300 more public-sector workers were hired in Alberta in the last year.”

Sorry, I flat out do not believe this number.

#56 Suede on 08.07.15 at 8:16 pm

You can push on a rope if it’s frozen

#themoreyouknow

#57 Steerage-where math is not hard. on 08.07.15 at 8:16 pm

#52 Steerage-where math is not hard. on 08.07.15 at 8:08 pm

Going up, but not 45,300 in one month.

Table 282-0089 1, 5, 7
Labour force survey estimates (LFS), employment by class of worker and sex, seasonally adjusted and unadjusted
monthly (persons x 1,000)

Alberta Public Sector Employees

March-398.3
April-400.4
May-396.2
June-406.7
July-409.1

The 45,000 public service employment increase in Alberta is for the last 12 months. I have amended my post to reflect this. — Garth

—————————–
Thank-you. Your steerage section is pretty sharp. Now I can have a beer.

#58 Mark on 08.07.15 at 8:18 pm

“Global deflation is not profoundly CAD positive, it’s profoundly CAD negative.”

I strongly disagree with this. Deflation implies that producers are over-producing relative to consumption. In order to extricate an economy from deflation, production needs to be slowed in the countries that over-produce (the chronic net exporters, of which, Canada is one!).

A falling CAD$ stimulates additional production in Canada by suppressing the price of labour (a key input in production), and increasing export prices to domestic producers.

This is exactly the opposite of what is desirable in the process of rebalancing between producers and consumers.

In the 1930s “Great Depression”, the US dollar surged because the US was the quintessential producer and net exporter at the time, with the USD$ redeemable into gold or a whole smorgasbord of consumer goods. The global economy was trying its hardest to reduce US production by appreciating the US currency.

Today, US dollars can’t be redeemed into much. Not into gold (US gold reserves would only facilitate this at a dramatically greater than current price), and not into production as the US produces far less than it consumes domestically.

Therefore, its my argument that in a global deflation, the global economy will attenuate excess output from the net producer nations by way of currency appreciation. Intuitively this makes sense as history is replete with examples of producers and creditors ending up in a better position over the long run than consumers and debtors.

#59 Investorz on 08.07.15 at 8:18 pm

Few stocks are doing well on our canadian stock exchange. Many that do well get revenue in US$.

– Bus maker NewFlyer (ticker = NFI)
– Waste Management (ticker = BIN)
– WSP engineering (ticker = WSP)
– Healthcare company Concordia (ticker = CXR)
– Realestate company Tricon (ticker = TCN)

Otherwise, it’s a bad show. This week:
– SNC Lavalin down 8%
– Stantec engineering down 10%
– Crescent Point and many other oils back to a year low
– Same for 90% of our financials

The next 2 weeks should get interesting on the TSX.

#60 Smoking Man on 08.07.15 at 8:20 pm

Brilliant post Gartho….

Again, teacher teach you to obey, work and pay tax.

Smoking Man teaches.. Fk em all, be the boss, hire tax farm slaves to make you money, own assets.
……..

I entend a short story writing contest against PhD supper schooled morons… I’m going to lose because same people are judging me. But I don’t care..

This was mine… The theme was vice, and a business card… It had to be science fiction…

Here’s mine.
…………

The bastards are after me again.

There’s a noise at the door. The drones overhead have been silent for ten minutes. The only place for refuge for taken earthlings is in red light district motels on Nectonite, the bio scanners are not active here, gureenteed protection for the political and business class.

I’ve been on the run for 20 years since my abduction from earth.

I have no idea how I’m going to get back to my family. But I need to keep trying, these prostitutes are paid to keep secrets and are good at it. They’ve even given me flight manuals and lessons in flying. I just need to get my hands on a wholesome ship of sorts.

I look out the window, it’s clear, It’s time to make a move, I pay my lady shut up money and open the door.

You can tell by her facial expressions she’s a bit insulted, thinks I don’t find her attractive and says, “Don’t you like me handsome, I’m not complaining or anything like that but we haven’t done it yet.”

I pay absolutely no attention to her, why would I. A hooker is a hooker on any planet.

I hear the faint noise of a business card hit the ground as I open the door. I pick it up.

Christ, even these alien freaks are into a God of some kind. The card says Come to our church to find the light, become one of our brothers and sisters, you’re new community awaits you with open arms.

You would think that an advance civilization like the Nectonites who’s advanced technology can take them a billion light year distance in one earth day would be far beyond the exploitation of the stupid.

Well if I’m going to get my hands on a space ship, I need to start going to this church, it’s probably my best bet, find that church, find that God, find that good good man that gives me the keys to his ship

Hallelujah….. Brothers, I can do this.

#61 NotleyNotToBlame on 08.07.15 at 8:30 pm

Considering TheManwhoStaresatSheeple did the fine courtesy of presenting the Alberta public employment data of Alberta in its proper context:

July 2014 – 348,700
Dec. 2014 – 378,700
Feb. 2015 – 390,600
Mar. 2015 – 403,200
Apr. 2015 – 404,000
May 2015 – 408,500
June 2015 – 419,000
July 2015 – 394,000

And, considering Rachel Notley took power in May of this year. You can make the case that she is responsible for shrinking the public service.

If anything, you should probably be grovelling at the feet of Notley for saving Alberta from the hiring scourge of the PCs.

#62 liquidincalgary on 08.07.15 at 8:32 pm

If I am wrong I will apologise and ban myself from posting a word here until September.

There are more than 350,000 public sector workers in Alberta (Source). Check the latest labour survey. (Source) — Garth

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

only one month ban?

buh bye Shawn

#63 Mark on 08.07.15 at 8:34 pm

“And you all know what happens to real estate prices in a depression don’t you?”

They collapse because nobody wants to lend money even at very low policy rates. Spreads are enormous, and implied interest rates to retail borrowers are very high.

In the US in the 1930s, the type of mortgage that experienced the greatest incidence of default was called a “balloon mortgage”. Basically identical to the 5-year non-fully amortizing term mortgages we have today in Canada, which require a balloon payment at the end of the term. Balloon mortgages in the 1930s US proved to be so economically toxic that the Fannie Mae/Freddie Mac GSE’s were conjured up to facilitate a market in true 30-year term mortgage financing. Owing to the public’s traumatic experience with the 1930s, “Balloon” products mostly disappeared from the US market for the next 50-60 years.

Deflation and high/hyperinflation actually look very similar and are both characterized by a reduction in the willingness of creditors to lend, rising risk premia, and falling real asset prices. Neither are scenarios that happen very often (every 30-40 years typically), but the precious metals have historically served as very good hedges against such (and otherwise suck most of the rest of the time as investments!).

#64 ideomath on 08.07.15 at 8:36 pm

The math was loaded with implied ideology.

#65 Chris on 08.07.15 at 8:40 pm

CaNada has an ever increasing public sector and shrinking private sector. That is really dangerous. And guess where the union growth had been. Yeah, all in the public sector. So as a tax payer in Canada, we are about as screwed as … It is a certainty that the share you fork over to the government would be increasing in future years. So please don’t vote NDP to accelerate that process. But since conservatives have completely failed, I will give my vote to the Liberals.

#66 Solitario on 08.07.15 at 8:41 pm

Scary comments.
I’ve seen it coming.
One of my friends – declared conservative – got a fat contract from McGuinty’s government…One of those 6-months contracts that keep dragging on for 6 years… All of a sudden the people he used to call “goddam’ communists” became “very smart, educated and cultured”…the conservative candidate who promised to reduce the government’s size became ” that Nazi”…
This country is circling the toilet bowl…we’re The Greece with Oil…and suddenly the oil isn’t worth what it used to be…
What to do, Mr. Turner ? What to do ?

#67 Questions on 08.07.15 at 8:42 pm

1. Why are easy solutions bad?
2. Do you think the clintons made only $20M?

#68 Brigade on 08.07.15 at 8:44 pm

Why do I get the feeling some union/NDP member got a-hold of your blog and send a tweet out to flood your comments Garth….

#69 Mark on 08.07.15 at 8:48 pm

“WORKING Canadians Actually Saving More Than Ever

Financial Post today annihilated the often quoted figures about the savings rate being way down. The usual quoted figure is net of retirement withdrawals.

Annihilated is perhaps too strong of a word. Much of the pension fund growth, and even Canadians’ net worth growth over the past 10-15 years has been on account of either fixed income or housing gains. They are explicably linked as a bubble in fixed income (mortgages) effectively has propped up a bubble in housing. Correlation is very strong, as we know that every dollar lent by a bank must be a fixed income asset in the hands of an investor (banks cannot print their own money!).

So the fate of housing and fixed income is likely to be similar. Are Canadians really wealthier, or was their existing “wealth” merely inflated by a decrease to the applicable discount rate used for valuing fixed income and RE assets? Will the inevitable loss of value of fixed income and RE be eventually reflected in some other asset class with broad ownership by Canadians? Or will the RE/fixed income bubble and its deflation effectively be a wealth re-distribution device in favour of the relatively few Canadians that own inversely correlated assets?

I think a better measure of Canadians’ retirement preparedness and savings is to use the income (or cyclically smoothed net earnings in the case of equities) given off by their investments. And if you use that measure, things don’t appear to be very positive for Canadian retirement savings. Sure, pension assets have doubled as a ratio of income since 1990, but long-term interest rates have more than halved.

#70 gut check on 08.07.15 at 8:49 pm

Oh boy. math is hard, huh? Which is why it is manipulative in the extreme to characterize the 2 percentage points as 20% (even though it is – note I didn’t say it was WRONG, but it *is* manipulative)

Also the public sector workers thing… could it be that the entire province has a large number of summer student programs – perhaps subsidized, short term work placements … tree planting, summer camps, engineers, geology students.. etc ?? Again, you knew people would react the way the poster at #12 did.

Seriously.. do you and Frank Luntz hang out? Skype, maybe?

#71 Smoking Man on 08.07.15 at 8:52 pm

Test where is my post

#72 espressobob on 08.07.15 at 8:54 pm

#40 Joblo

My preferred are getting murdered.
……………………………………………………………..

So our mine! This isn’t a buying opportunity?

“Averaging in” over time might be a better strategy than “worry” in the short term.

What’s wrong with all that tax efficient yield?

#73 Retired Boomer - WI on 08.07.15 at 8:59 pm

N O T E :

Due to the extreme contagion of “MATH” NO discussion of

the merits, or the lack there of, in tonight’s main topic will

be forthcoming.

Vaccination for “MATH” is available with a fluoride chaser.

Republican debate was… interesting, but only from the point nothing of importance was discussed. Wedge issues
and typical ‘softball’ questions were in evidence. Trump was quite animated, and most entertaining. Am I inclined to vote for any of these contenders based on what I heard? NOT! NOT voting Hillary either.

So, we will need to find the Best Flake. Much like you guys.

#74 rainclouds on 08.07.15 at 9:04 pm

Was sequestered at ICBC head office doing contract work for telecom during the end of Glen Clark’s NDP regime. The hiring was like a conveyer belt, line ups out the door.

15 Years later, Clark is CEO of Pattison Group. When asked “what would he tell his old NDP friends”?
” Learn more about how business operates”

Jimmy obviously saw potential in the socialist. The socialist became a capitalist, not the other way around…………….instructive.

#75 Smoking Man on 08.07.15 at 9:05 pm

Garth the massues in long branch, and I must emphasize Girth, not Garth is all that what counts, they only take cash…

I’ve tried writing checks only to be laughed at.. Even by the lady who trims my hedge.

2 day bender, I should find a job fast…

No self control..

#76 senta on 08.07.15 at 9:09 pm

Oil has to recover – in 12 months we have $60 and in 3 years $100. Look at the boom is F-150 trucks – demand will catch up. I am buying oil stock and options right left and centre. Bill Gross is an ass – he should stick to bonds.

#77 Marco on 08.07.15 at 9:10 pm

Thanks Garth,

Percentage of Public sector jobs vs private sector job creation between 2003 and 2013:

http://www.fraserinstitute.org/research-news/news/news-releases/Growth-in-government-employment-outpacing-private-sector,-especially-in-Ontario/

Is it any wonder besides the obvious slowdown in commodity exports and sinking oil prices that Canada’s economy is in a recession.

Vote for the candidate who has the best plan to help the Private sector.

Just my Canadian two cents.

Cheers.

#78 filthydirtyrenter on 08.07.15 at 9:12 pm

Funny that the NDP are the modern day reds under our beds and dragged out to frighten people into voting for that creepy incumbent. It looks like every layer of “conservative” government has been out NDPing the NDP . Is our next prime minister the ultimate “greater fool “?

#79 not 1st on 08.07.15 at 9:16 pm

To all the people who voted NDP in Alberta and to all the people thinking of voting them in the fed election…..remember, you wanted this.

#80 Mohegan Sun on 08.07.15 at 9:23 pm

#70 Smoking Man on 08.07.15 at 8:52 pm

Test where is my post

———
The only logical explanation is it having been intercepted by Nectonites and instantly deleted.

#81 DDM on 08.07.15 at 9:24 pm

“Maximize TFSAs, for example. Starting in 2016 (unless Justin Trudeau wins) a couple will be able to invest over $100,000 in their accounts”

Has Mulcair backed off the repeal of the TFSA increase in his latest platform? Seem to recall that the NDP did not support it when PCs announced it this spring…

#82 Randy Randerson on 08.07.15 at 9:25 pm

People are still getting their panties in a bunch from the “20% corporate tax increase” from yesterday? Jeez how stupid can some people be here.

If your tax in 2014 is $10, and in 2015 it’s $12, will you go around town praising the government has only increased tax by 2%? Or will you be shitting yourself because you’re so angry that the government is taking 20% more than your last year’s tax?

Get real people, it doesn’t hurt when the government isn’t taxing you more. Just wait till there isn’t any corporations left to tax, then you’re next.

#83 lee on 08.07.15 at 9:31 pm

Have you always been able to include condo rental income for the purposes of calculating the mortgage you can get insured on the condo? If so, would the rent rule change be neutral regarding condos?

Not what I reported. — Garth

#84 drydock on 08.07.15 at 9:39 pm

#233 Nora Lenderby on 08.07.15 at 9:42 am

#214 drydock on 08.07.15 at 3:27 am
110 Nora Lenderby on 08.06.15 at 9:00 pm

“Neither a borrower nor a lender be;
For loan oft loses both itself and friend”

Well that makes several persons of culture and learning (at least you and Nagraj, anyway).

Unfortunately my alter ego is named after the Mortgage Loan Consultant for these guys:
http://www.cartalk.com/content/staff-credits
…………………………………………………………………..

Alack! what poverty my Muse brings forth,
That having such a scope to show her pride,
The argument all bare is of more worth
Than when it hath my added praise beside!
O! blame me not, if I no more can write!
Look in your glass, and there appears a face
That over-goes my blunt invention quite,
Dulling my lines, and doing me disgrace.
Were it not sinful then, striving to mend,
To mar the subject that before was well?
For to no other pass my verses tend
Than of your graces and your gifts to tell;
And more, much more, than in my verse can sit,
Your own glass shows you when you look in it.

#85 kommykim on 08.07.15 at 9:42 pm

We could also say that corporate taxes under the NDP in 2015 are 22.6% LOWER than the corporate taxes were under the Ralph Klein government of 2000 and be 100% correct.

#86 Boots from Van on 08.07.15 at 9:42 pm

I live and rent in Vancouver. I have a very well managed and globally diversified seven figure portfolio I worked very hard to build, taking a lot of risk for and paying a LOT of tax in the process.

I also have no debt which I worked even harder to avoid by never spending money I didn’t already earn – no matter what the lure to spend.

Knowing this in private gives me much more satisfaction than an external display of debt financed goods to keep up with the Jones. My entire family lives like this and we’re truly happy in our freedom, but I digress…

My job pays me very well in the mid six figures running a company I have taken over and refocused from Canada to a global market and grew by 45% year on year.

Every increase in cost (tax, payroll etc.) will translate in moving more of that cost out of Canada to lower cost jurisdictions (India, Lat Am, Eastern Europe). Those of you who understand EBITDA and net profit will understand why controlling op ex is critical, and how EBITDA is a function of top line revenues and operational costs. Hit my top line (revenues) then I have to thin opex (mostly salaries) to keep the same ebitda. Add tax and other costs, before my bottom line, then even more pressure on op ex, meaning less local employment…

My position is entirely portable too (remember I rent), so if I have to pay more taxes, I up sticks and move south by 50 miles and pay no income tax.

The only way out of this mess is to let the markets do their thing, stop borrowing, deregulate so the risk to the employee is balanced by the increase of opportunity. Go to the Silicon Valley and you will see how employers compete for talent…

The change will come to Canada, the choice for government is simply to enable it in an orderly way or to ignore it and have it happen painfully.

If we collectively did not borrow and let the country go into a recession when it had to (and the savings rate was higher) would have left us collectively in a better place to absorb it than when it WILL happen to a deeply indebted population with razor thin margins of tolerance for income disruption.

Will be painful, long and deep the longer we mask it with intervention.

My $0.02 worth, but I will not be here to watch it – just don’t have the heart to do that. I’m no better than the next person, but I’d like to think I should not be in a position where I think leaving is a better option than staying and many of a similar profile who I know feel the same.

But hey, many people here may well think my leaving is better :-)

#87 Transplant on 08.07.15 at 9:48 pm

#69 gut check

Oh boy. math is hard, huh? Which is why it is manipulative in the extreme to characterize the 2 percentage points as 20% (even though it is – note I didn’t say it was WRONG, but it *is* manipulative)

If you have a mortgage rate that increases by 1% you’ll notice that your payments will increase by more than 1%. If your mortgage company tells you it’s “only” a 1% increase I hope you don’t accuse it of being “manipulative”.
I assume when Garth used the 20% figure he might have thought his readers had a modicum of understanding how arithmetic terms are generally used.

And #23 QED, what branch of science would that be-real estate alchemy?

#88 Confused millenial on 08.07.15 at 9:58 pm

So wait a second… Garth is saying that corporate tax raises = bad and grows government, but putting money into RRSP and TFSA = good and doesn’t grow government… Am I the only one who’s seeing the onset of schizophrenia here?
Also Garth keeps repeating his mantra about September rate hike like he did his older mantra about June rate hike. Garth what if you’re wrong again?

RRSPs and TFSAs are not investments. They are tax shelters into which investments are placed. As for a rate hike, nobody fingered June. An autumn increase has always been the expectation, and it continues. I regret, but deeply understand, your confusion. — Garth

#89 Lee Bow on 08.07.15 at 9:58 pm

Seems, next year there will be some lessons to be learned.

#90 Here there on 08.07.15 at 10:02 pm

Some Albertans seems confused like a dog in a bowling alley. Apparently, as they were voting Conservative governments since 1971 till 2015, but all the time they thought that were voting NDP. That’s why now they are in deep caca. It has nothing to do that, since then, the oil was taken and they got in return, the classical “Italian salute” for it.

#91 Smoking Man on 08.07.15 at 10:02 pm

At my usall seat at stir…. My short skirt waitress knows the big tip is in the house.

It’s magic how I got here… Not because of the abuse of alcohol. Hell I can do that with eyes shut.

It’s the chapped heels, been walking around with flip flops for a week since retirement..

Cracked and bleeding heel balls..

Hey Kathleen Wynne,

Should have warning labels on flip flops.. YOU can get more revenue for you unless civil servants by fining Walmart for selling this shit with out a warning sign of sorts.

Time to switch from pino to Jack, instant pain releaf…

#92 gut check on 08.07.15 at 10:03 pm

@ Retired Boomer – WI

You want to discuss the main topic (which does happen to be math, BTW).. but I will play along.

the main topic is the math of avoiding tax in Canada and moving investments out of here, too.

what the government can’t accomplish (destroying our economy) the investor class can!

I’m not saying we shouldn’t protect ourselves, but maybe we could be spared the hypocritical hyperbole based on manipulative mentionings of naughty numbers and party platforms.

#93 espressobob on 08.07.15 at 10:10 pm

#75 senta

Speculation will be the death of your portfolio! Keep wishing and ignore a diversified global stance.

You know better?

#94 Nora Lenderby on 08.07.15 at 10:12 pm

#79 Mohegan Sun on 08.07.15 at 9:23 pm
#70 Smoking Man on 08.07.15 at 8:52 pm

Test where is my post
———
The only logical explanation is it having been intercepted by Nectonites and instantly deleted.

Oh…and there was me thinking it was “Death, where is thy sting?” just not quite in those words exactly.

I hope his phone is OK. There are some nasty bugs about.

#95 OwlEyes on 08.07.15 at 10:14 pm

What about this absentee Vancouver mansion-owner story. 150 or more of these properties, sitting empty? Just waiting for the right time in China, Russia or Ukraine to sell? http://www.theglobeandmail.com/life/home-and-garden/real-estate/groups-of-friends-are-renting-vacant-mansions-invancouver/article25859467/

Why? Are you buying? — Garth

#96 Grim Tax Reaper on 08.07.15 at 10:14 pm

With the spiking unemployment and bubble real estate prices, the government will have to seek alternative ways to pay for its budget deficits….expect a huge spike in property taxes…..the giant mortgage debt of these “wealthy” land barons is about to become a huge tax liability….it was all a trap!

#97 Wandering on 08.07.15 at 10:16 pm

#39. There’s no hiring freeze on Alberta government’s hiring. Check out the number of open jobs here with AB government:

http://wowjobs.ca/BrowseResults.aspx?q=%22government+of+alberta%22&l=&s=r

#98 Mark on 08.07.15 at 10:27 pm

Thankfully I moved about 70 percent of my locked in RRSP to u.s. dollars about 5 months ago. Indeed, I’ve been slowly moving things over to us for about a year now.

Unfortunately, a lot of it is sitting in US dollar cash. When I had money in Canadian, I used advice from this site to get ETFs. But I don’t really know what ETFs are good in US dollars.

Keeping the 60/40 advice from Garth, can anyone suggest US dollar ETFs?

#99 Solitario on 08.07.15 at 10:28 pm

Great post Mr. Boots from Van.
I’m almost in the same situation…7 figure portfolio, worked 3400hours/year for the last 15 years to achieve it…paid a lot of taxes in the process…no gimmicks…always fair and square, as they come out of Turbo Tax. Unfortunately I don’t rent, I own the house I live in…I don’t own a business but I’m well paid- low 6 figures- as the manager of the local outfit of a large multinational corporation. I plan to stay put- for awhile at least- and minimize the taxes by retiring soon. I thought I’d keep working at least 10 more years, but the election of a leftist government would bring my retirement much closer…I’ve seen this movie before and it doesn’t end well… a leftist governments’ answer to the collapse of the tax base is even more tax…until there’s nothing left to tax…not much left to sell either…and then all hell breaks loose…

#100 John in Mtl on 08.07.15 at 10:36 pm

#95 Grim Tax Reaper on 08.07.15 at 10:14 pm

With the spiking unemployment and bubble real estate prices, the government will have to seek alternative ways to pay for its budget deficits….expect a huge spike in property taxes….

Municipal governments manage the property taxes, not the federal or provincial gov’t!

#101 OttawaMike on 08.07.15 at 10:46 pm

Not bad Smokey:
Try
http://www.postcardshorts.com/

Same concept short story submissions. So far I have not succeeded in having mine accepted.

#102 Boombust on 08.07.15 at 10:54 pm

Blah, blah blah…I’m STILL voting for the NDP.

So there!

#103 Steve French on 08.07.15 at 10:56 pm

https://lareviewofbooks.org/essay/why-your-rent-is-so-high-and-your-pay-is-so-low-tom-streithorst/

“Why Your Rent Is So High and Your Pay Is So Low”

by Tom Streithorst

#104 Leo Trollstoy on 08.07.15 at 10:57 pm

The next federal government (hopefully NDP) will preside over the destruction of the Canadian economy. Inevitable. And then they will be voted out and their reputation will be in ruins for the next generation.

It’s poetry.

#105 Lyrics Guy on 08.07.15 at 10:58 pm

Moving Pictures said it well…

Well, there’s a little boy waitin’ at the counter of a corner shop
He’s been waitin’ down there, waitin’ half the day
They never ever seem to have the time
He gets pushed around
Knocked to the ground

He gets to his feet and he says
“What About me? It isn’t fair
I’ve had enough now, I want my share
Can’t you see? I wanna live
But you just take more than you give”

Well, there’s a pretty girl servin’ at the counter of a corner shop
She’s been waitin’ back there, waitin’ for her dream
And dreams walk in and out, they never stop
Well, she’s not too proud to cry out loud

She runs to the street and she screams
“What about me? It isn’t fair
I’ve had enough now, I want my share
Can’t you see? I wanna live
But you just take more than you give”
(More than you give)

Take a step back and see the little people
There’s nothin’ there
But the words that make the big people big
So listen, as they whisper, “What about me?”

Now, we’re standin’ on the corner of a world gone home
Nobody’s changed, nobody’s been saved
And I’m feelin’ cold and alone
I guess I’m lucky, I smile a lot
But sometimes I wish for more than I’ve got

What about me? It isn’t fair
I’ve had enough now, I want my share
Can’t you see? I wanna live
But you just take more, what about me?

It isn’t fair, I’ve had enough now, I want my share
Can’t you see? I wanna live
But you just take more, you just take more
You just take more than you give

What about me?
What about me?
What about me?

#106 Leo Trollstoy on 08.07.15 at 11:04 pm

You’ll remember I had the deflationary trend identified way before Bill Gross announced it.

I think the key difference is that Bill Gross actually makes money off his opinions.

#107 Randy Randerson on 08.07.15 at 11:05 pm

I’d move to US if I could, but couldn’t because:

1) I’d have to jump through shitload of hoops to get my professional license recognized.

2) Mother lives in Vancouver.

3) Complete freedom to work whenever I want (ie. making low 6 figures working just 150 days a year.)

I guess it’s sort of a golden handcuffs. On the bright side I’ll be paid in a slowly depreciating Canukstan Pesos.

#108 Blobby on 08.07.15 at 11:05 pm

“we have a hell of a lot more government and taxation in our future.”

Well someone is going to have to start paying off all of Harpers deficits…

#109 dosouth on 08.07.15 at 11:09 pm

As oil slides we continue to get ‘hosed’ by the big corporations bilking millions a day out of the economy by keeping fuel prices artificially (criminally) high….

#110 Cloudy on 08.07.15 at 11:20 pm

Hi Garth,

It would be very appreciated if you could do a blog post on buying ETFs with US exposure that are listed on the TSE vs buying ETFs listed on US exchanges. For instance, all the ETFs I have purchased are listed on the TSE and purchased in the lowly Canadian Dollar. I’m doing my best to follow your prescribed breakdown of a balanced portfolio. Just to name a few, some of the southern exposure ETFs I have are: XPF, XHD, XHY, XUS and a few others.

Am I better off purchasing US ETFs in USD on US exchanges? I have read that there are potential [in the future] tax implications for Canadian earning profits on US traded securities…as in the US will likely request a piece of the action. Lots of the TSE listed foreign exposure ETFs also have CDN hedged and unhedged tickers. Which would you recommend (especially with the dollar already being quite low). Depending on the efficacy of the hedge, I would assume hedged is the smart way to go, because you should realize close to the net value of the increase with out playing the forex game.

I’m feeling a little lost. As the saying goes “just enough knowledge to be dangerous”. I’m university educated, and mostly in finance/economics, but it was a long time ago, and I ended up going a different career route.

As always, many thanks. I’m trying to be prudent for my future, but I have a feeling that prudence will get heavily taxed down the road to pay for the people I see spending every penny they earn (and then some).

I look forward to your posts on the election and implications of which way the vote goes. I get the drift you are a Conservative (although maybe not a Harper) supporter, with maybe a bit of a Libertarian lean. I’m very polar based on the individual issue and I don’t know if I can vote for any of the parties and not have a nagging guilty conscience. I have a feeling they are all going to focus on keeping the housing party rocking. I can only keep the wife at bay in a rental dump for so long.

#111 Balmuto on 08.07.15 at 11:27 pm

#58 Mark
“The global economy was trying its hardest to reduce US production by appreciating the US currency.”

Interesting theory, but the “global economy” is hardly more than an abstraction, not a sentient being to which you can ascribe any motivation whatsoever, much less a conspiracy to drive up the value of the USD.

“Therefore, its my argument that in a global deflation, the global economy will attenuate excess output from the net producer nations by way of currency appreciation. ”

How’s that working out for ya?

#112 kommykim on 08.07.15 at 11:28 pm

RE: #87 Transplant on 08.07.15 at 9:48 pm
I assume when Garth used the 20% figure he might have thought his readers had a modicum of understanding how arithmetic terms are generally used.

The 20% “increase” is misleading because it doesn’t factor in the 15% FEDERAL tax rate. ie: The tax rate for an Alberta corporation went from 25% (15% fed 10% prov) to 27% (15% fed 12% prov) which is an 8% increase and NOT a 20% increase.
The small business tax rate remains the same under the NDP.

I said the AB tax increased 20%. It did. — Garth

#113 Mark on 08.07.15 at 11:43 pm

“With the spiking unemployment and bubble real estate prices, the government will have to seek alternative ways to pay for its budget deficits….expect a huge spike in property taxes….”

So true. As the RE bubble continues its deflation, tax receipts are certain to fall a well. So a future government of whatever party will need to adopt some policies with the view of increasing business valuations to create a capital gains tax stream.

They’ll also want to have increased valuations in order to increase employment. You might even find the NDP attacking the housing market, attacking the banks, and attacking the CMHC, to cause a diversion of capital away from the housing sector towards non-FIRE businesses which can actually expand employment.

So I wouldn’t automatically expect a future NDP government to be anti-investor, anti-big business. After all, a good chunk of the NDP’s base of private sector financial support is unionized employees of large corporations. Supporting large business will also be necessary for the NDP to achieve some of its big-ticket policy goals, particularly in private sector infrastructure revitalization (ie: telecom, railways, etc. — union-heavy sectors that have major long-term infrastructure investment deficits).

The next federal government (hopefully NDP) will preside over the destruction of the Canadian economy. Inevitable. And then they will be voted out and their reputation will be in ruins for the next generation.

Wow, such a doom and gloomer. And a Canada-hater to boot.

#114 Dave on 08.07.15 at 11:44 pm

“Mr Harper, you are the only PM in the history of Canada that when someone asks you about the recession under your watch, you reply: which one?” LOL leave it to the Cons to drive this country into tatters

#115 Marco Polo on 08.07.15 at 11:52 pm

All the ingredients have been around for a housing correction for awhile. I thought this was going to be a train wreck. Instead, this is looking more like a ship collision. As if two sailing ships left from opposite coasts, and ran into each other in open sea. “Noone could see it coming”.

Hee in Grande Prairie, AB, home sales have picked up, although it took all summer to sell homes in the mid 300’s. Buyers just accept that “that’s the price”. Even though oil here us kept on ice, many projects put on hold, several layoffs, and more to come.

Home prices are probably up 60% here in a decade, far outside inflation.

#116 DON on 08.07.15 at 11:57 pm

#104 Leo Trollstoy on 08.07.15 at 10:57 pm

The next federal government (hopefully NDP) will preside over the destruction of the Canadian economy. Inevitable. And then they will be voted out and their reputation will be in ruins for the next generation.

It’s poetry

**********************************
LOL – did you just arrive on earth. The economy is already destroyed and right after a boom. You have to be a political troll. Trying to sway the vote. Subtle bullying tactics blame those who aren’t in power not the ones that are. Harper uses the same tactics. It is comical and might work at the end of the first term but by the second people are well aware of your personality. I can’t wait till the “Hide in the closet” political board game comes out

#117 DON on 08.08.15 at 12:01 am

#77 Marco on 08.07.15 at 9:10 pm

Vote for the candidate who has the best plan to help the Private sector.

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

We did that already and yikes…it didn’t work. I guess they lied…

#118 Property Accountant on 08.08.15 at 12:49 am

Hi Garth and everyone,

I just came back from 12 player soccer game in Mississauga, ON we do it every Friday and go for a beer after. Today I found out that almost everybody wants to buy a house, build a house or invest in a house , real estate never goes down etc. I did not mention to them that me and my wife rent 2 bed apartment for 1200$ incl. utilities, have 400K in liquid investments, TFSA’s maxed out, drive 12 year old car and save 3-4K / month religiously to invest it. Together we make just over 100K / year.

This year our portfolio is taking a hit because most of our assets were invested in Canadian stocks, however we slowly are fixing it now by divesting. Also oil patch hurt quite a lot, but still 2K – 2.5K from dividends is coming in every month. almost my wife’s salary. Something to be happy about.

I get second thoughts about our financial future and I come to this blog to reassure myself that EVERYONE is wrong and I (and Garth) am right. Will real estate prices ever stop going up? Why would they, If cost of money is 2.3% for residential mortgage, with 5% down with a chance to drop another 0.25% and insanely low commodity pries keep inflation even lower. Government wants to weaken CAD to increase competitiveness of Canadian exports that should ignite manufacturing and economy as a whole. That may work unless import-driven inflation appears. This one will be heavily curbed because we have China now, unlike ever before.

In essence economic scenario looks like this : CAD down to 0.60$, residential real estate will keep on breaking records in prices until some equilibrium establishes over 1.5M or so (where there wont be enough first time buyers to churn out down payments) and commercial real estate (in general) will suffer decline in prices as consumption gets replaced by mortgage payments. In general , because rental buildings and good plaza’s may still prosper. And in commercial you can’t get CMHC mortgage. What do you think about it? Let me know.

#119 Lorne on 08.08.15 at 12:51 am

#32 kommykim on 08.07.15 at 7:13 pm
Maybe a bit of history in regards to the tax rates in Alberta would help calm Garth’s gloom and doom about the “20%” corporate tax increase:
http://www.finance.alberta.ca/publications/tax_rebates/rates/hist1.html
……

Great table which clarifies things nicely!

#120 Nagraj on 08.08.15 at 1:12 am

for #84 DRYDOCK and #105 LYRICS GUY (edited for brevity)

“I love to climb an apple tree
Though apples green are bad for me
And I’ll be sick as I can be
It’s foolish but it’s fun

If it should ever come to pass
That I inherit wealth
I’ll eat and drink and drink and eat
Until I wreck my health

When thunderstorms put folks to rout
And no-one dares to venture out
That’s when I love to slosh about
It’s foolish but it’s fun

The grass is green, the sky is blue
The cows go moo, the cuckoos coo
I want to be a cuckoo too
It’s cuckoo but it’s fun”

Now yas kin all git back to arguin’ bout 2% and 20% and countin’ cowboys in Alberta.

#121 Lucky on 08.08.15 at 1:20 am

A couple of decent reads at the couchpotatoe on the subject of “TSE listed foreign exposure ETFs also have CDN hedged and unhedged tickers”.

http://canadiancouchpotato.com/2014/03/06/why-currency-hedging-doesnt-work-in-canada/

and

http://canadiancouchpotato.com/2015/02/04/stepping-back-from-the-hedge/

#122 Leo Trollstoy on 08.08.15 at 1:22 am

Thankfully I moved about 70 percent of my locked in RRSP to u.s. dollars about 5 months ago. Indeed, I’ve been slowly moving things over to us for about a year now.

Lol!

5 months ago Mark was talking about the CAD$ going to the moon. Now that he’s been proven throughly wrong, he now says he’s been moving stuff to US$.

Lol!

7 year unemployed Clown.

#123 Heidi - Long Branch Spa Attendant on 08.08.15 at 1:53 am

#91 Smoking Man

Yoov must put ze cold-pressed coconut oil slathereen ze nastee feets, then sleeping in ze socks each nite, ya. Feetz weel be thanking yooz in few dayz, eetz gross but eet works.

Vee mees you at ze “spa”, 3 dayz ees too long Ya!

#124 My Life is a Pile of Shit on 08.08.15 at 1:55 am

“…the earned cash flow is taxed at half the rate paid by those poor, seedy, little working people.”

Who are “those poor, seedy, little working people,” Garth? The ones who take away your garbage, or the ones who bag your groceries?

The humourless ones. — Garth

#125 Keith on 08.08.15 at 2:26 am

The tax increase is properly described as a rollback of tax cuts that were unaffordable, unsustainable, and didn’t work. Should have consulted the Norwegians.

#126 Mike T. on 08.08.15 at 2:54 am

no one can or will solve their problems by electing politicians

do it yourself

the best part is that you can start right now instead of waiting until October, then 4 more years until ultimately you are disappointed again

voting in an election is a trick to give your power away, and you are going to give it to those people? math is not our first problem…

#127 jane 24 on 08.08.15 at 3:39 am

Quite amazing how many readers comment first and then read the other comments later!!

I don’t see why Garth should have to answer the same queries a zillion times in the same daily blog. You are lucky that patience is one of his many virtues.

#128 devore on 08.08.15 at 3:52 am

#153 gut check

So I guess CNRL *could* raise prices instead of laying people off.. but then I guess they CAN’T raise prices, because there is no demand.

That’s right. When crude price is $x, what happens when a company or two say “we’ll sell at $x+1”? Probably not much when there is a glut of supply vs slacking demand. And without pipelines, the market for Alberta crude is not very diversified.

If there is no demand then I guess they just have to take the sh!t-kicking that is coming to them, since that’s how business works.

That’s right. If you can’t pass on increased costs to the buyer, you find efficiencies, such as shutting down non-performing operations. That means lay offs. If you cannot, eventually you run out of capital, fold up shop, and find something else to do.

Or do I not even business, bro?

I don’t know. What’s your point even? You just repeated what I wrote.

Regarding your other question, no, cost of production does not actually set prices. The price is always what someone is willing to pay, which during times of low demand may very well be below the cost of production. Normally it is higher, because that’s how a business makes money, otherwise they stop producing it. And I don’t see how you cannot reconcile my two previous posts. Maybe you should spell it out in crayon?

#129 Freedom First on 08.08.15 at 4:01 am

I, like other people I know, have traveled from one side of the globe to the other, and many places in between. I am in a position I could be an ex-pat whenever I want. However, that being said, for now, my home base will remain Canada, as I prefer living here, even though I may spend a few months at a time in another country.

That being said, Canadians seem to believe that just because the Government here is intent on keeping the Canadian housing market from deflating and busting the financial ball$ of Canadians, it will not work. Didn’t work in the U.S., didn’t work in Europe, didn’t work in Japan, and won’t work here. THE END.

#130 Joe the Whop on 08.08.15 at 4:40 am

Ciao Garth. Any chance you can go into more detail about the difference in the SM and your version of a tax free mortgage?
Thanks again for all the FREE info you post here daily….nevermind these weird sniffing fetish idiots posting comments.

#131 LowRent of Arabia on 08.08.15 at 6:00 am

Sitting in the sandbox over here, more mosques blowing up each week and not allowed to vote. Fine.

But I have noticed a distinct turn in sentiment of the commenters on this blog.

Attacking GT over anything said against the hiring of public service employees, anything negative about the dippers.

The blog is still financial but the comments section is all boring dogmatic Canadian politics.

#132 nobody on 08.08.15 at 6:03 am

Good one, Garth. For the first time in a long time you show your true colors. In your world a 34% rate of taxation on $20M income is just and right and earning more from investment income than wages while gettiing taxed 50% less is also how it should be. Damn the “poor, seedy working people”.

If Piketty is correct in his thesis re the inequality resulting from greater returns from capital than labour, then your narrow perspective here towards the self-interest of the wealthy only accelerates that inequality and the damage it will eventually bring to all nations, including Canada.

If your views are indicative of the poilitcians that rule this country, please let’s bring in some people who care for more than just the wealthy and the corps.

#133 BillyBob on 08.08.15 at 7:27 am

Nagraj on 08.07.15 at 6:55 pm
Some astute blogdog in the last batch of comments mentioned EDWARD BERNAYS.

Who just happens to be the inventor of herdonomics. (And of, among other things, broadly speaking, the origin of fluoridated water, believe it or not.) (And he is the source of the term banana republic.) The granddaddy of advertising and of manipulating public opinion.
The Wikipedia entry for EDWARD BERNAYS gives you a pretty good idea of what this guy did.

EDWARD BERNAYS’ work and incredible success is utterly frightening.

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

If you haven’t already seen it, you would probably thoroughly enjoy the 4-part BBC Series “The Century of the Self”.

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

Brilliant stuff, and more “BBC-thoughtful” than “tin-foil-hat nutters”. (Not that there’s anything wrong with those, either, Smoking Man!)

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

Shawn on 08.07.15 at 7:53 pm

Luckily I don’t have a thesis except for spreading the truth and the light on certain preposterous figures and claims when I see them.

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

Oh barf. Such grandiosity is a bore. Someone claiming a monopoly on truth is the signal to immediately tune out.

Just got back from a layover in Dhaka, of all places. Company puts us up at the Westin, which I would describe as an island of opulence surrounded by a sea of desperate poverty. Kind of makes quibbling over investments seem a tad…trivial. Still, got to do the best with what you have!

#134 raider on 08.08.15 at 8:22 am

Garth,
for the shrinking Canadian exposure, what’s your take on REITs these days. Are they still on sale, or does it look like a falling knife?

For example, Dream Office (formerly Dundee) as well as Cominar cut the distribution this month. Clearly indicating that they’re in survival mode (?). At the same time trading below their portfolio value.

#135 David McDonald on 08.08.15 at 8:31 am

I doubt most Canadians outside Alberta perceive our economic malaise. True our standard of living and house prices have fallen by a quarter as measured in U.S. dollars but most are unaffected.

I recall the 60 cent Northern Peso in the Mulroney years. It wasn’t really a liability like the failure of Lake Meech. In fact the introduction of the GST and free trade, measures designed to improve the economy, hurt much more.

Harper has rightly judged that denial of our problems is a winning policy. The Canadian electorate won’t connect the dots until after the election.

Better check your history. — Garth

#136 raider on 08.08.15 at 8:55 am

Ignore my last comment about cutting the distribution. I mixed up my tables (CUF.UN vs D.UN)… I guess I just made Garths case about math is hard.

#137 Mike on 08.08.15 at 9:08 am

Most people who read this blog probably have no idea who Bill Gross is, he is a famous bond trader. He makes money from “trading.” So is he shorting commodities now? If you are going to quote him, you should let your readers know that he was fired from job this past year. Wonder why they would do that to a guy who made them nothing but money?

Tell us about your CV, Mike. — Garth

#138 JO on 08.08.15 at 10:03 am

the stupidity of so many will get them what they deserve
I cannot believe the level of economic and financial stupidity in this country. Governments are reacting the same way they have for centuries. They are the most corrupt and illogical entities out there. You ain’t seen nothing yet. Of course they are going to raise all taxes and add more govt workers during an economic calamity. Just wait: you are already hearing the calls for more taxes on people who as a group already pay the bulk of them
Nations get the governments they deserve. Unfortunately for the minority who pays most of the tax dollars ( this DOES NOT include public sector workers as they do not add to the tax base) will continue to be villafied by the ever growing army of government zombies.

We have no choice but to crash and burn. We will do it as all nations have over the centuries. Much of the economics being ” taught” is propaganda and false.

And Garth I completely disagree with maxing out TFSA and RSP. If the NDP wins I will be Cashing everything out sooner than I expected. History shows that governments always confiscate all of these vehicles . Do NOT trust them. The odds are very good they will target these accounts within the next 5 years. They are corrupt
JO

#139 Comment nr 138 on 08.08.15 at 10:14 am

is dangerously close to deflationary growth

Garth I’ve been living in Europe since 1999 and we live in a low inflation low growth world. I do all the shopping and have a price book in my head and I can tell you food prices for the most part have been flat, while the price of other stuff electronics furniture etc has been the same or getting cheaper. (love the cheap oil gas is now down to a 1.40 a liter)

My family always complains about inflation in Canada and my reaction is always What the heck is inflation

#140 Comment nr 138 on 08.08.15 at 10:20 am

BTW for those weeping over their porfolio remember you buy low sell high, so remember to rebalance take you profits from non Canada ETFs and move them into Canada but always mantianing your ratio – me 25% in Bonds Canada US and the World

buy low sell high

#141 crowdedelevatorfartz on 08.08.15 at 10:29 am

@#124 My life is a pile of merde.

The humourless ones. — Garth
++++++++++++++++++++++++++++++++++++

Did you get that joke? It WAS pretty funny…..

#142 BlackDog on 08.08.15 at 10:48 am

Math is particularly hard, when you don’t have all the numbers.

“Is there really a problem with foreign investment in Canadian housing? A research paper out of the University of Alberta is calling for more information on foreign investment in Canadian housing and raises the spectre that money laundering may be part of the residential real estate market.”

http://business.financialpost.com/personal-finance/mortgages-real-estate/more-data-needed-on-chinese-investment-in-canadas-real-estate-paper-says

#143 jas on 08.08.15 at 10:55 am

Garth:
Reading the comments here and then seeing that you have to repeatedly clarify the same point to the readers gives me a feeling that the people here are not much more enlightened than the most ignorant nation of the USA about their politicians and the lies that they tell.
Why doesn’t any govt manage it’s finances like a responsible household? Perhaps because it’s not their own money.

#144 Doug in London on 08.08.15 at 11:00 am

@Mister Obvious, post #20:
My capital also shrank significantly during this GFC but, instead of checking the mailbox for sympathy cards, I was too busy scooping up equity funds while they were ON SALE.

@senta, post #60:
I have no idea how long this bear market for oil will go on for or how cheap it will get but, like yourself, also believe it will recover. As I’ve said many times before, the world still runs largely on oil and will continue to do so for many years to come. In the short run, you’ll look like a fool buying ETFs like XEG-T and USO-NY, but in the long run will look like a genius.

#145 LL on 08.08.15 at 11:00 am

•First, the Bank of Canada cut its key interest rate for the second time in six months. That marker has now fallen by half in 2015 – all to lure people into more spending and bigger mortgages. It worked. Sales in Vancouver just surged 30%.
•Second, Canada Mortgage and Housing made a landmark ruling – it will allow homeowners to count 100% of the rent they collect from their basement-dwellers as earned income (doubling the old limit). So they can borrow more. A lot more.
•Third, the prime minister unveiled his first and premier election plank – the creation of a permanent home reno credit, encouraging people to borrow and spend on their houses.

And we hear all the time: “Oh….Canadian doesn’t have any saving”!!!!

#146 Harbour on 08.08.15 at 11:02 am

Alberta recession will strike early 2016

http://www.edmontonsun.com/2015/08/07/hicks-on-biz-alberta-recession-will-strike-early-2016

#147 Milla on 08.08.15 at 11:03 am

Math is very straight forward science. It does not recognise games. This is a sample how accounfants turn it upside down and a getting upset when manipulation are not understandable. According to accontans number 2% magically transfered into 20%. Maybe we have troubles in economy due to such mathematicians? :))When we deal wiith % one must spesify the value this percenf is taken of. Where is acuracy of using numbers? Finnaly been Engeneer for 30 years I got logic of accountants :))

#148 LL on 08.08.15 at 11:06 am

….”Starting in 2016 (unless Justin Trudeau wins)”…

J. Trudeau will not win, …impossible….

I am sure it will be Thomas Mulcair.
To my point of view he will not do better then Harper.

#149 Grantmi on 08.08.15 at 11:14 am

#135 David McDonald on 08.08.15 at 8:31 am
I doubt most Canadians outside Alberta perceive our economic malaise. True our standard of living and house prices have fallen by a quarter as measured in U.S. dollars but most are unaffected.

I recall the 60 cent Northern Peso in the Mulroney years. It wasn’t really a liability like the failure of Lake Meech. In fact the introduction of the GST and free trade, measures designed to improve the economy, hurt much more

Better check your history. — Garth

Yea. Try LIBERLS…. 2002. $61.98 buck

#150 butthurt on 08.08.15 at 11:33 am

@ #137

Tell us about your CV, Mike. — Garth
. . .

What does his CV have anything to do with the point he made? Never understood why you keep deflecting from valid questions that don’t stroke your way.

Also, if the HELOC isn’t considered a form of Smith Maneuver, then please enlighten us and explain what it is and how it differs? Thanks

I will accept the validity of comments made by a guy with the rep of Bill Gross over those of an anonymous Internet troll. But, you can make your own judgment. As for the SM, it is largely a mutual fund-based ponzi scheme. No credible advisor would suggest it — Garth

#151 El Gartho Magnifico on 08.08.15 at 11:46 am

> Tell us about your CV, Mike. — Garth

I’m disappointed that you think so lowly of your readers that you would use an ad hominem like that. That’s to say nothing of the hostility you show this dude for giving your words the privilege of being read and bothering to write a few words of his own in response.

If you’re looking for an echo-chamber Garth, Harper’s Conservative party is that way –>

I thought you were better than that.

That was funny. — Garth

#152 CV on 08.08.15 at 12:07 pm

The Smith manoeuvre has nothing to do with mutual funds. You can use stocks, ETF.

Yup. And still a ponzi. — Garth

#153 Sharpie on 08.08.15 at 12:12 pm

It wasn’t very long ago folks thought that low oil prices would improve the economy..

And today they finally can admit the economy drives oil prices and not the other way around, duh.

#154 Turtle on 08.08.15 at 12:14 pm

#104 Leo Trollstoy

The next federal government (hopefully NDP) will preside over the destruction of the Canadian economy. Inevitable. And then they will be voted out and their reputation will be in ruins for the next generation.

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

Would it be easier for Harper just to go away, resign and such. Why do Americans change their president after 2 terms and we have to be stuck with one until he smells really bad?

Give me a choice already!

#155 Sharpie on 08.08.15 at 12:18 pm

I will accept the validity of comments made by a guy with the rep of Bill Gross over those of an anonymous Internet troll. But, you can make your own judgment. As for the SM, it is largely a mutual fund-based ponzi scheme. No credible advisor would suggest it — Garth

And, you accept and post comments by the gold men with Sachs so enough said.

You should know everything then decide. — Garth

#156 Ken Nash on 08.08.15 at 12:23 pm

I am truly confused:

– Low or High Dollar

A low dollar benefits manufacturing exports which benefits the country. Especially millennials who need work.

A low interest rate decreases the value of the cdn dollar so this is good for Canada?

– Low interest rates increase the value of real estate. Which is bad

The best would be low interest rate and realistic credit criteria for a mortgage. Simple stuff 25% down and income to support and lower the cost of housing?

– Low corporate taxes don’t always make companies more competitive.

If dividends are increased to keep shareholders content at the expense of the company remaining efficient

– High corporate taxes encourage companies to invest in new equipment or pay higher taxes. Granted at the expense of shareholders ?

I believe individual shareholders are worthy and deserving. I don’t believe public sector pension fund shareholders are benefitting society. This doesn’t make the funds bad just doing what they do to maximize the benefit to their 50 year old, world traveling retirees.

Wouldn’t higher corporate taxes be a way to benefit more of the economy with certainty?

Lastly, as a loyal follower of this blog and watching the leaders debate. I believe only those men with beards are trustworthy with the Canadian economy.

#157 Herb on 08.08.15 at 12:36 pm

Garth, here is a challenge for you: point out the errors in fact or logic of this link, or forget your mantra about the “tax and spend” NDP.

http://www.theglobeandmail.com/globe-debate/want-to-cut-public-debt-bring-in-the-leftists/article25663385/

#158 Mike on 08.08.15 at 12:38 pm

“Tell us about your CV, Mike. — Garth”

I think I would describe it the same way as you would describe your blog “…pathetic.”

Why are you calling me an “internet troll?” I don’t even know what that is. I submit my email address and read your blog on a regular basis. I find some of your “free” information useful and valid but your commodity references, I find, a little unhinged, so I comment on it. I thought we are having discussion here.

#159 Mister Obvious on 08.08.15 at 12:49 pm

#144 Doug in London
@Mister Obvious, post #20:

“My capital also shrank significantly during this GFC but, instead of checking the mailbox for sympathy cards, I was too busy scooping up equity funds while they were ON SALE.”
——————————

Good for you. I merely followed the advice of my advisors and resisted the urge to sell into a falling market. I stayed the course and within about 18 months or so my investments had fully recovered.

There have been many good years since then. My average long term annual gains are quite consistent with what Garth claims is entirely do-able.

Those who sold in a panic never really recovered. I know some of them well. They are the ones who are now comfortable only in residential real estate which, of course, always goes up.

My original point was that people willing to take a capital risk are encouraged to do so by the current tax system. That’s because they help feed the economy that provides jobs for non-risk takers.

I don’t see too much wrong with that.

#160 Mike T. on 08.08.15 at 12:54 pm

for folks that like fun photoshops

I present the 2015 Toronto Blue Jays

http://andrewstoeten.com/wp-content/uploads/2015/08/jaystonyc11.jpg

#161 CV on 08.08.15 at 12:58 pm

#150 butthurt

Also, if the HELOC isn’t considered a form of Smith Maneuver, then please enlighten us and explain what it is and how it differs? Thanks

As for the SM, it is largely a mutual fund-based ponzi scheme. No credible advisor would suggest it — Garth

#152 CV

The Smith manoeuvre has nothing to do with mutual funds. You can use stocks, ETF.

Yup. And still a ponzi. — Garth

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

OK, so it is clarified now that the SM is not “largely mutual fund-based” – in fact, it does not have to do anything with mutual funds.

How is it “ponzi scheme”?

How is you recommendation of “create a tax-free mortgage on your house with an investment HELOC. In that case not only can 100% of the interest be written off, but the earned cash flow is taxed at half the rate paid by those poor, seedy, little working people” different from the Smith manouvre?

Because nobody should rely on distributions to meet debt obligations. — Garth

#162 Lorne on 08.08.15 at 12:59 pm

#125 Keith on 08.08.15 at 2:26 am
The tax increase is properly described as a rollback of tax cuts that were unaffordable, unsustainable, and didn’t work. Should have consulted the Norwegians.
……
So true!! Alberta went form 15.5% Corporate tax rate in 2001, to 12.5% in 2003, 10% in 2007, and now back to 12%.

#163 Let's do the Ponzi on 08.08.15 at 1:12 pm

Garth,
The serfs are getting rebellious.
Time to put down the hammer.

#164 BillyBob on 08.08.15 at 1:15 pm

Mike on 08.08.15 at 12:38 pm
“Tell us about your CV, Mike. — Garth”

I think I would describe it the same way as you would describe your blog “…pathetic.”

Why are you calling me an “internet troll?” I don’t even know what that is. I submit my email address and read your blog on a regular basis. I find some of your “free” information useful and valid but your commodity references, I find, a little unhinged, so I comment on it. I thought we are having discussion here.

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

Reasonable discussions don’t usually involve using terms like “unhinged” to describe them, so don’t even try to play the wounded victim. You’re the one that took a shot at Bill Gross from the anonymous sidelines, it’s perfectly reasonable to ask what qualifies your opinion. You can dish it out, etc…

Speaking of trolls, what’s with all the aggressive rude comments lately? Nothing wrong with disagreeing with something posted but how about a little respect and civility for the blog host? If someone invites you into their home, do you immediately shit on their carpet?

Not that Mr. T isn’t quite capable of cooly eviscerating the wannabes, but it does detract from the generally classy tone of the place. ;-)

#165 Terry on 08.08.15 at 1:18 pm

Wow!!! Was just reading comments for the past few days. There are a lot of angry, confused and desperate people out there. Canada is showing wider and deeper cracks from all across this land as I fear we are imploding from within. You’re very correct in saying Garth that “this will not end well”.

#166 Mark on 08.08.15 at 1:22 pm

“High corporate taxes encourage companies to invest in new equipment or pay higher taxes. Granted at the expense of shareholders ?”

Basically, yes, I’d have to agree. The dividend tax credit provides for integration between personal and corporate income taxes, so higher corporate taxes result in a reduction in personal income tax in the hands of the beneficial owners of the business, and amount to a zero change in net after-tax shareholder returns. Shareholders did just fine in the higher corporate tax environments of the past. In the contemporary environment, large-cap Canadian corporations appear to be significantly under-leveraged relative to the value of their long-term asset base, so raising corporate taxes might encourage many of them to ramp up balance sheet leverage (after all, interest payments are deductible expenses, and additional balance sheet leverage would increase earnings!).

Yes RRSPs/TFSAs/non-taxable investment/pension funds might be hurt by higher corporate tax rates because they aren’t eligible for the dividend tax credit. But these entities would, in an environment with additional corporate balance sheet leverage, benefit through the availability of a better quality selection of higher interest rate corporate bonds in the marketplace.

“True our standard of living and house prices have fallen by a quarter as measured in U.S. dollars but most are unaffected. “

Actually it would seem that a good chunk of Canadians are cutting back their spending, on account of the deflating housing and O&G sectors. Thus leading to demand that has fallen so much that inflation is not a factor despite the 25% loss in currency. Additionally, the CAD$ hasn’t dropped much against other world currencies (Euro, AUD$, etc.). The story is largely an exceedingly strong USD$, not a weak CAD$.

[Trollstoy] You have to be a political troll.

This “Trollstoy” poster makes things up as he goes, and seems to be mostly here to direct unwanted, completely untruthful, and disrespectful comments towards me and a handful of others. I’d simply ask that he ceases and desists, although its plainly obvious that with his Canada-hating comments, he has a serious credibility problem.

#167 nobody on 08.08.15 at 1:35 pm

#159 Mister Obvious on 08.08.15 at 12:49 pm

My original point was that people willing to take a capital risk are encouraged to do so by the current tax system. That’s because they help feed the economy that provides jobs for non-risk takers.

I don’t see too much wrong with that.
________________________________

Really? Prove it. Show us how buying and selling shares in the zero sum casino commonly referred to as the stock market actually creates jobs.

I would suggest just the opposite, in fact. Pressure on quarterly valuation and keeping up with analysts’ expectations more often than not leads to job cuts.

Sure sounds like just another version of the trickle down BS in order to justify paying less taxes than the working stiffs.

#168 Ponzi or bust on 08.08.15 at 1:38 pm

With all due respect, but when was the last time we had a bearded PM?

#169 Nagraj on 08.08.15 at 1:58 pm

Wouldn’t it have been interesting to have had GT as debate moderator. As I recall, “housing bubble” and “depreciating currency” didn’t come up, “clarity clause” got a lot of play …

Remember “Dire Straits” re Mulroney? Again as I recall, there was a town hall meeting style event with Mulroney, and an old lady got up and said – Mr. Prime Minister, we’re living off baloney sandwiches –

WHAT A DISGUSTINGLY LAME DEBATE. Three of the candidates put crazy glue on the bottom of their shoes, Harper on the other hand seemed to be following directions not to look stiff, so he ambles to the side of his lectern, kinda lolligags and grins patronizingly at Mulcair.

The THRUST of the debate was to not paint a grim picture of Canada’s economic future, the global collapse of commodity prices … consumer debt and unemployment were treated mostly parenthetically; Trudeau’s middle class mantra and Mulcair’s wealth gap mantras do not speak to the prospects of further GDP decline.

The debate succeeded in maintaining the illusion that Canada is an essentially prosperous country whose economic difficulties are manageable via Ottawa policy.
In that sense it was establishmentarian propaganda.

#170 Suede on 08.08.15 at 2:12 pm

Bla bla bla..
NDP, Conservatives.

How do we make money for ourselves if Muclair wins? Other than long USDCAD

That’s all that we should really be asking.

#171 Balmuto on 08.08.15 at 2:12 pm

“Additionally, the CAD$ hasn’t dropped much against other world currencies (Euro, AUD$, etc.). ”

Not true. It’s done poorly against the Pound, the Swiss Franc, the Hong Kong Dollar and the Chinese Yuan, just to name a few. Bloomberg has a screen that shows a basket of major currencies and their historical performance against USD. The CAD is one of the worst performers over the past year.

#172 Mister Obvious on 08.08.15 at 2:29 pm

#167 nobody

“Sure sounds like just another version of the trickle down BS in order to justify paying less taxes than the working stiffs.”
———————————

I was a working stiff for the best part of 40 years. I paid buckets of payroll tax in that time. The jobs I worked at were supplied by companies created through private capital investment.

They weren’t always such great jobs but I took home a paycheck every two weeks and for years without ever considering much how it all came about.

I became a saver. Why? Because I knew nobody ‘owed me a job’ and I could be (and often was) let go on short notice. As I grew older the nature of the system I was born into became apparent, as did the working of systems in other far less functional countries.

I decided it was better to get with the program than to bitch about it until I was a tired old man. (Former communist block countries are already filled with tired, bitchy old men.)

About 20 years ago it dawned on me that saving was not enough. I had to invest. You can treat the stock market like a casino if you wish. But personally, I’d rather just go to the casino.

Investing is not ‘playing the stock market’. Man, do you do you read this blog at all, or just comment? For years Garth has explained the difference between gambling and investment.

It’s a question of risk management. The working stiff hates risk. He wants someone else to take it. The investor manages risk. That’s a job in itself. It requires focus, dedication, and a clear head.

When finally I got past my young, angry blow-hard stage I was able to see these things more clearly. Maybe there’s hope for you too.

#173 kommykim on 08.08.15 at 2:33 pm

RE:I said the AB tax increased 20%. It did. — Garth

So why did you mix two different ways of measuring taxes in the same sentence? When mentioning Alberta you only include the Provincial portion of the tax when calculating the increase, but when mentioning Ontario you include both the Federal AND provincial tax rates:

This helps explain Alberta’s 20% corporate tax increase plus a similar jump for those earning over $250,000, plus Ontario’s new top tax rate of 52%.

BTW, is the 52% even correct? Isn’t it a total of 49.53% for anything over $220K in Ontario?
http://www.taxtips.ca/taxrates/on.htm

I’m not arguing that you were wrong about the 20% increase. I am arguing that the way your sentence was written puts a spin on the numbers which bolsters your anti NDP stance.

Actually my comment was anti-tax. I care not who does it. — Garth

#174 Mark on 08.08.15 at 2:43 pm

“Really? Prove it. Show us how buying and selling shares in the zero sum casino commonly referred to as the stock market actually creates jobs.”

Equity is the basis for private sector job creation, as debt financing cannot be obtained without equity. And all businesses require capitalization in some form or another to create jobs.

The stock market is most certainly not a ‘zero sum casino’. It is a mechanism in which owners of shares can achieve an orderly and liquid valuation for their shares based on a willing pool of buyers. The liquidity thus provided lowers the cost of capital to issuers who list their shares for trading as investors are willing to pay more for liquid investments than illiquid investments.

Price discovery also facilitates the relatively efficient allocation of capital within the economy. Without prices, people wouldn’t have a clear picture of what is in demand, and what isn’t.

Incongruences between the real world and individual stocks that make up the “stock market” aren’t usually all that significant. People who try to trade perceived imbalances usually do not create value, as witnessed by the majority of active mutual fund managers (and certainly retail investors) failing to outperform the broad stock market indices.

“Why do Americans change their president after 2 terms and we have to be stuck with one until he smells really bad? “

Because of that little thing called the 22nd Amendment to the US Constitution.

Because nobody should rely on distributions to meet debt obligations. — Garth

Still doesn’t make the SM a “Ponzi” scheme. Ponzi schemes are schemes in which there is no productive economic activity involved (or the economic activity is disproportionately small relative to the amount invested), just a bunch of money changing hands from new investors to pay off old investors. Arguably when a person makes investments with the SM, they are generally purchasing the debt or equity obligations of productive entities, so by definition, there’s nothing “Ponzi” about the SM.

The real issue with the SM is suitability and risk tolerance. Its replete with minefields for the professional advisor who wants to keep his reputation and his advisory license. Its also been the subject of many abuses by less-than-savoury operators in the advisory profession.

#175 TurnerNation on 08.08.15 at 3:01 pm

200th?

Viva capitalism. I’ve been using Uber maybe 1x weekly for one year. Time are changing.

Even for short downtown hops costing ~$6 I’ve always had a driver pick this up and come by asap.

They need to find this taxi driver(s) – using Dispatch or GPS records, and all cabs have cctv cameras – fine them and then the family sues taxi company for negligence.

http://www.thestar.com/news/gta/2015/08/07/cabbies-refusal-outside-muzik-left-young-woman-in-line-of-fire.html

http://www.thestar.com/news/gta/2015/08/07/rejected-fares-a-major-complaint-for-taxi-passengers.html

#176 Shawn on 08.08.15 at 3:13 pm

The Bearded Prime Minister

#168 Ponzi or bust on 08.08.15 at 1:38 pm said:

With all due respect, but when was the last time we had a bearded PM?

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

Pierre Elliot Trudeau was sporting a grey Beard when he was not PM during the brief Joe Clark administration. That government fell when John Crosbie tabled a budget with an 18 cents gasoline tax increase (per gallon).

Trudeau was then asked to stay on as leader (or maybe it was return as leader) for the (I believe 1979) snap election. I don’t recall but I suspect he lost the Beard before getting back into office. He then soon imposed a surprise 25 cents per gallon tax increase.

(Lesson never ever run an election on the promise of a tax increase on the people even if you intend to impose one)

That is the closest to a Bearded PM that I recall.

Alexander Mackenzie and Mackenzie Bowell. Of course. — Garth

#177 Notley on 08.08.15 at 3:27 pm

RE: #87 Transplant on 08.07.15 at 9:48 pm
I assume when Garth used the 20% figure he might have thought his readers had a modicum of understanding how arithmetic terms are generally used.

The 20% “increase” is misleading because it doesn’t factor in the 15% FEDERAL tax rate. ie: The tax rate for an Alberta corporation went from 25% (15% fed 10% prov) to 27% (15% fed 12% prov) which is an 8% increase and NOT a 20% increase.
The small business tax rate remains the same under the NDP.

I said the AB tax increased 20%. It did. — Garth

——————————————————————

Garth, the Conservative chamber is that way—–>

How much funding do you get from the Conservatives for this blog anyways? Why attack the NDP in Alberta and Liberals in Ontario?

Don’t know much about my history do you, kid? — Garth

#178 Cyclist on 08.08.15 at 3:31 pm

Re: the Smith manouver. I had to re-research what the mechanics of the SM are. If implemented as per the 3 sources I checked, you are actually investing regularly with newly-borrowed money via a re-advanceable HELOC.

In the end you have no mortgage, but an investment loan equaling the mortgages initial principal. It would seem you assume two risks – one of lower RE prices, the other of falling investment values.

Now if you have an existing portfolio of which an amount equal to your mortgage can be liquidated with
little tax consequence, you could then re-borrow to purchase those investments back, making the interest tax deductible, but then continuing to pay down the debt.

Garth – could you confirm/embellish? Thanks.

You are correct. — Garth

#179 janet Plum on 08.08.15 at 3:39 pm

DELETED (anti-immigrant)

#180 BS on 08.08.15 at 3:59 pm

#125 Keith on 08.08.15 at 2:26 am
The tax increase is properly described as a rollback of tax cuts that were unaffordable, unsustainable, and didn’t work. Should have consulted the Norwegians.
……
So true!! Alberta went form 15.5% Corporate tax rate in 2001, to 12.5% in 2003, 10% in 2007, and now back to 12%.

The tax cuts didn’t work?

Below is what happened after corporate taxes were cut. Lets see how things go over the next 4 years under the NDP while tax rates increase.

Between 2004 and 2014, Alberta’s exports of commodities rose 91%, reaching $121 billion in 2014.

Alberta has had a rapidly growing manufacturing base. Between 2004 and 2014, manufacturing sales grew by 49% to $79 billion.

500,000 new jobs were created between 2004 and 2014.
Alberta’s average unemployment rate in 2014 was the second lowest in Canada at 4.7%.

In 2013, investment per capita was $27,617 in Alberta, more than double the Canadian average of $11,342 per capita.

http://albertacanada.com/business/overview/economic-results.aspx

#181 Transplant on 08.08.15 at 4:07 pm

#147 Milla
When we deal wiith % one must spesify the value this percenf is taken of.

Garth indicated that 20% is the increase in Alberta’s corporate tax rate, so whatever was paid in corporate tax previously is increasing by 20%. What could be more specific than that?

#173 kommykim

Why do you keep bringing up oranges when the subject is apples?

Garth, perhaps you should update your photo to show how flattened your forehead has become.

#182 Mark on 08.08.15 at 4:13 pm

“In the end you have no mortgage, but an investment loan equaling the mortgages initial principal. It would seem you assume two risks – one of lower RE prices, the other of falling investment values.”

Not only that, but there is the risk that the investments may fail to produce a return that in excess of the cost of financing. Or stated another way, a meaningful equity risk premium, on an after-tax basis, may not arise.

This certainly has been the case over the past 7 years (the TSX has only returned dividends and has actually suffered a minor capital loss). And has been generally the case since 1980, that the equity risk premium has been negligible in Canada.

Where the SM (or leveraged investing in general) works very well is when there is a strongly positive equity risk premium.

The equity risk premium over the very long term is historically in the 3-6% range. It has been roughly 0% for the past 30-35 years in Canada. The concept of mean reversion tells us that periods of below average performance are followed by periods of above average performance. So perhaps an equity risk premium will emerge in the Canadian markets. The odds certainly are in favour of it, especially with deflation necessitating low policy interest rates for the considerable future.

However, like everything in investing, timing is difficult, and aggressive leveraged investment programs don’t leave a lot of margin for error. Which is why the concept rightly has plenty of scorn heaped upon it by the risk-averse and anyone who has legal responsibility for investment advice.

#183 enjc on 08.08.15 at 4:19 pm

Can someone explain to me why an etf of preferreds (CPD) are trading lower then any other time except 2008?

Because of the Bank of Canada rate cuts. But enjoy the opportunity. All this will likely change. — Garth

#184 VanCity D-man on 08.08.15 at 4:39 pm

Hey Garth, who knew that talking about a 2% increase in corporate taxes in Alberta (from 10%) would generate so many posts in the past 2 days? Damn, there are a lot of stupid people out there that need a math lesson. 10% to 12% is a 20% increase. To businesses, that’s significant. The NDP should have considered staggering the implementation, say .5% in 6 months, then another .5% in 6 months, etc. Or 2% over 2 years. To the morons out there, how would you like to pay a 20% tax inrease in personal income tax? Yeah, thought so. Nuff said!

#185 TurnerNation on 08.08.15 at 5:02 pm

Let’s check the ole balanced port. What rout.

Since July 1, 2015 2.8%
For the past 1 year 16.3%
For the past 3 years * 8.8%
For the past 5 years * 6.3%
Since October 17, 2008 * 7.0%
* Annual compound rate of return

Tag this:

Chancellor Rebalancer.
Treasury Blondes.
Don’t Fight the Fed.
Where mouth is, money.

#186 Mark on 08.08.15 at 5:08 pm

“Below is what happened after corporate taxes were cut.”

Between 2004 and 2014, Alberta’s exports of commodities rose 91%, reaching $121 billion in 2014.

Not too impressive given that oil prices doubled between 2004 and 2014.

Lets see how things go over the next 4 years under the NDP while tax rates increase.

I don’t like the NDP either, but it would not be proper to blame them for a reduction in investment caused by a global energy sector slowdown and falling prices.

Correlation does not always mean causality.

#187 Gulf Breeze on 08.08.15 at 5:21 pm

#158 JO

The govt confiscate rrsps and tfsa? I don’t think so. Confiscation is usually stealthy and accomplished through inflating the purchasing power of the currency away. Direct theft? Hmmm…nope. Even good natured Canadians can build guillotines.

I have gold bullion in a bank vault. I don’t know how many times people have told me it WILL be confiscated. That’s just stupid.

Lord, I don’t think that the most corrupt regimes on the planet go right into your safe deposit box. The worst Canada could do to gold would be to get behind a digital currency that would eventually make gold completely irrelevant. Could happen. The pro-gold crowd figures a digital currency MUST be backed by gold. I’m not so sure…(of anything anymore, btw). Lol

#188 Gulf Breeze on 08.08.15 at 5:28 pm

To whoever made comment about Mulcair being a conservative in NDP clothing:

So ummmm… What’s not to like. If he is a traditional Tory, fiscal conservative, putting his finger to the wind and running on an NDP platform, that seems to be almost ideal. He will encourage his party to be pragmatic and compassionate at the same time. He won’t scare the s**t out of the business community — but hopefully remind them that when times are tough the wealthy HAVE to pay more tax.

And hopefully he will lift all gag orders on govt employees, scientists, environmentalists, etc…

#189 Holy Crap Wheres The Tylenol on 08.08.15 at 5:39 pm

Or, you can give up on Canada, split south and run for president. Everybody else is.
————————————
Unfortunately Garth as the way it is written in the United States rather confusing political system you have to be a natural born American. You must be born on American soil or two American parents while abroad in order to be elected as a president! Spent most of my youth living in the United States grew up as an American fought in the United States Air Force paid my taxes went to university but could not be elected president. Why? One simple reason I was born 21 American parent and one Canadian parent in Canada! Back in the late 60s a lot of us in university had political aspirations. Many of my friends went on to become mayor’s and or State politicians. It was in everybody’s blood at the time to do something to make changes to make a difference. Unfortunately I couldn’t do anything any United States if I wanted to become president. All the better, my family wasn’t that Rich I had to make my own money. Also I’m too damn politically incorrect! Just can’t lie call a spade a spade!

So go be Gov of Cali. — Garth

#190 Nemesis on 08.08.15 at 5:42 pm

“Or, you can give up on Canada, split south and run for president.” – ElGarto

#TheFurtherSouthYouGo… #TheMoreFunItIs… #BeingElPresidentePorVidas… #NoElectionsEither.

https://youtu.be/W–legHCbVo

#191 kommykim on 08.08.15 at 5:45 pm

RE: #181 Transplant on 08.08.15 at 4:07 pm
#173 kommykim
Why do you keep bringing up oranges when the subject is apples?

The subject is neither apples nor oranges but how much the working man gets to benefit from the “fruits” of his own labour.

#192 Retired Boomer - WI on 08.08.15 at 5:56 pm

Garth,

I do appreciate your ‘anti-tax’ stance. I would be interested in knowing your idea of a fair taxation amount to operate the levels of government the citizens seem to demand?

That “taxation” would be all inclusive on earned income, whether from earnings, royalties, interest, or investment returns upon sale?

Property, sales taxes, estate taxes would be a separate discussion as they deal with ownership of RE, and consumption and are administered at the local or provincial levels.

Know that is a complicated question – maybe a post in the future on taxation cause & effects might be more fitting.

#193 nobody on 08.08.15 at 6:01 pm

#172 Mister Obvious on 08.08.15 at 2:29 pm

When finally I got past my young, angry blow-hard stage I was able to see these things more clearly. Maybe there’s hope for you too.
____________________________________

Mister Obvious,

As interesting as your personal history is, nothing in your reply provided any proof for your assertion about investors creating jobs and, thus, deserving a tax break.

and Mark,

As many posters continue to note, you are full of it. Your economics 101 textbook gibberish reply is, well, just gibbrish. Trading stocks IS always a zero sum game between market participants. The exception is when one buys directly from the issuer either via an IPO or any other offering where the issuer actually gets the money. The only jobs created in the buying and selling of equities or ETFs between market participants is limited to the finanacial sector dealing with such products.

Even hardcore socialists understand the need for robust capital markets wherein corporate valuations are established, allowing companies to finance expansion and job-creation or die a usually-deserved slow death. Learn something about corporate finance. You’re embarrassing yourself. — Garth

#194 Linda on 08.08.15 at 6:44 pm

Here’s a refreshingly sober and thoughtful article about the housing bubble, from someone who lives near those slanty semis on Shaw Street in Toronto that Garth spoke of last week.

Some favourite quotes:

“We are all frogs in the real estate pot, slowly boiling in our own madness. ”

|”…..it is the dream of property owners that the ladder only ever goes in one direction. If they can get their feet on the lowest rung, that is.”

“Lots of people think that buying real estate in a precarious economy is a mug’s game, that there are better ways to use your money, such as setting fire to it under a bridge.”

“Yet, for reasons of heart more than head, as a culture we’re invested in the idea of a single-family home, ridiculous though it may be. Pretty soon we may rethink this ideal, as our continental European cousins have, and free up a rental market, or become better savers, or invest in a stronger pension system, or learn to cherish the idea of multigenerational living (this is my own dream; don’t tell my children). For the moment, though, we’re stuck with some haves and a growing number of have-nots, who are watching their dreams sink into the ground.”

Hits the nail right on the head.

http://www.theglobeandmail.com/globe-debate/will-this-circle-be-unbroken-rising-house-prices-sinking-dreams/article25889749/

#195 Victor V on 08.08.15 at 6:47 pm

http://www.theglobeandmail.com/globe-debate/will-this-circle-be-unbroken-rising-house-prices-sinking-dreams/article25889749

Around the corner from where I live, a couple of houses are sinking. A subterranean creek runs underneath them, and gravity is unforgiving. They are attached to each other, and have fallen inward at the shared wall like a soufflé taken too soon from the oven. In the neighbourhood, they’re known as “the crooked houses,” though my kids prefer “the crazy houses.”

They’re on sale for $688,000 each. The absurd thing is when a neighbour told me the price, it didn’t even seem that ridiculous. We are all frogs in the real estate pot, slowly boiling in our own madness. The average price for a semi-detached house in Toronto is $716,000, and people are willing to pay, even if the house in question looks like the Titanic after its unfortunate date with an iceberg.

#196 miketheengineer on 08.08.15 at 6:51 pm

Garth et al:

2008/2009 is back!

This chart speaks for it all…tight up your belt and get set for another bumpy ride.

http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/08/20150808_china_Exports.jpg

#197 Sheane Wallace on 08.08.15 at 6:54 pm

#118 Property Accountant

Correct. BOC and the cons will destroy the CAD. The real decline of the CAD has not started yet.
The idiots want only to:
1. Support their rich friends in big oil in Alberta
2. Allow their rich friends at the banks to make money with no risk (CMHC).

And on top of it we have provincial governments with greedy unions and huge debts, teachers making twice the salaries of their US counterparts, municipal governments getting used to high property taxes.

And on top that capital miss-allocation due to real estate subsidies and handouts (permanent tax reno, non-taxed capital gains in principal residences etc.).

It is clearly an intentional government screw-up that will impoverish many and destroy the middle class.

In Canada it is already inflationary depression and everything would start to make sense at CAD in the 0.35-0.40 USD range. Perfect sense. So we will get there.

Everyone on fixed income would be obliterated, everyone with savings in CAD peso/CA bonds will lose their shirts.

Food at the stores? It will cost 2-2.5 times more then now.

Mark is totally wrong on deflation, he is assuming a closed economy. While we have trade deficit that is growing they will devalue in false hope that this will boost exports (Poloz still acts as he is the boss of the Export Canada, not governor of BOC which is criminal).
through cheap labour.

Soon the idiots will learn that cheap labour alone is not sufficient (to compete with India and Mexico in wages)
and to be competitive one needs capital investments (see the Germans). I see no reason why we should be richer then Mexico in long run with this idiotic policies. Just look at Harpo – arrogant, incompetent bully in charge of the country. You think he cares about you or your kids?

At the same time it seems that the provincial governments or future cons alternatives are or could be actually much worse.

Would Canada become the synonym of frozen hell? We will see but judging by the last cool winters we are getting there.

The wishful thinking that everyone wants to live here is pathetic. Once we lose the ‘free’ government health care (6 k for orthodontist this year) we will become totally unattractive as destination for the world’s rich.

As for houses they will cost nothing in real terms without well paid jobs. 1.5 millions in coupons? Who cares, it could be 100 and nobody will.

House owners have had the opportunity of a life time to cash in their lottery tickets at CAD at 0.94-0.97 and move their money in stable currencies or invest outside_of_canada, there is still some opportunity but the time to move in is now, in 5 years house prices in real (non-nominal canadian peso) terms could be .40-.45 % of the current valuation.

As for savers? Demand your interest rates or move your money elsewhere. There is no way CAD decline of 20-25 % in less than a year is not causing inflation, demand the real prize of your money and send Poloz to jail. Or, adding insult to injury, lose your shirt staying in cash in CAD or CAA GICs.

This county’s economy is done. Brought to you by you know who.

#198 Mike on 08.08.15 at 6:58 pm

#164 Billy Bob

Mike on 08.08.15 at 12:38 pm
“Tell us about your CV, Mike. — Garth”

….

Quoi? Wounded??

I apologize for forgetting for not taking off my shoes while entering Garth’s home. Next time I will I know better.

OK, nuf said.

#199 Daisy Mae on 08.08.15 at 7:00 pm

#135: “Harper has rightly judged that denial of our problems is a winning policy. The Canadian electorate won’t connect the dots until after the election.”

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

Wrong again. But then, when isn’t he?

#200 BS on 08.08.15 at 7:06 pm

Not too impressive given that oil prices doubled between 2004 and 2014.

Oil prices in 2004 were at $40 per barrel pretty close to where it is today. The NDP has a similar starting point.

I don’t like the NDP either, but it would not be proper to blame them for a reduction in investment caused by a global energy sector slowdown and falling prices.

I think there were a few ups and downs over that 10 year period. Remember 2008? Makes todays slow down look like a hick up. During that time the government in power made investment more attractive not less attractive like the NDP is doing today.

#201 BS on 08.08.15 at 7:12 pm

The subject is neither apples nor oranges but how much the working man gets to benefit from the “fruits” of his own labour.

The smart working man focuses his attention on how to generate and keep more fruit.

The foolish working man tries to vote in a government that promises to steel another working mans fruit to give to him. In the end there is less fruit for everyone.

#202 Daisy Mae on 08.08.15 at 7:14 pm

#164: “Speaking of trolls, what’s with all the aggressive rude comments lately? Nothing wrong with disagreeing with something posted but how about a little respect and civility for the blog host? If someone invites you into their home, do you immediately shit on their carpet?

Not that Mr. T isn’t quite capable of cooly eviscerating the wannabes, but it does detract from the generally classy tone of the place. ;-)”

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

Couldn’t have said it better. We need to show a little respect.

#203 Mark on 08.08.15 at 7:28 pm

“As many posters continue to note, you are full of it. Your economics 101 textbook gibberish reply is, well, just gibbrish. Trading stocks IS always a zero sum game between market participants.”

Garth put you in your (well-deserved) place. But I’ll just add that the existence of the stock market, and trading provides a very valuable function in society in the capital raising process. Even if a firm does not trade on the stock market, the reference valuations established through the public and open trading of stocks and other assetse provides benchmarks against which most other business and asset valuations can be tested.

If we took the advice of your ilk and closed the stock market down on account of the markets not being anything but a zero sum game as you allege, then there would be a vast information vacuum. Investors would lack a lot of valuable information. Passive investors wouldn’t be able to throw their money into index funds and achieve a good return. Detractors from management wouldn’t have a benchmark against which underperformance could be criticized, or outperformance rewarded.

So please, next time you (or a few of the other posters) are tempted to open your mouths and call my posts jibberish or otherwise, please give it some thought and apply some discretion.

#204 Victor V on 08.08.15 at 7:57 pm

https://ca.finance.yahoo.com/news/wall-street-now-thinks-fed-hike-september-2015s-195158804–sector.html

NEW YORK (Reuters) – Top Wall Street banks still expect the Federal Reserve to raise interest rates in September, but a growing number now believe the central bank is likely to only hike once this year, a Reuters poll found on Friday.

Thirteen of 19 primary dealers, or the banks that deal directly with the Fed, polled said they expect the Fed to raise rates by September but just nine now believe the Fed will hike rates twice in 2015, compared with 15 of 20 in the July Reuters poll.

#205 kothar on 08.08.15 at 8:12 pm

I am surprised that everyone gangs up on Mark for his calls, yet leaves this Shean Wallace character and The American alone due to their calls, the complete opposite of Mark!

#206 Shawn on 08.08.15 at 8:24 pm

Zero Sum Game? Sort of, but there is more to it.

Trading stocks is indeed a zero sum game although also a necessary and vital part of the capital markets for price discovery and to help illuminate which companies deserve more capital and which do not. In stock trading no money flows to the actual corporation but just between owners, hence it is a zero sum game (and negative after trading costs).

Buying stocks from a company in an IPO or secondary offering or even a DRIP is where the money actually goes to the company. The company uses the money to make investments and to try to make a profit from customers and then usually sends a part of the profit to the owners as dividends. For investors this is very much a positive sum game as money flows from customers to investor owners.

Almost no one would invest in IPOs and secondary offerings if not for the zero-sum trading market, so that is vital as well.

Another way to think of it is that buying and holding the index will be a positive sum game for you over time while active trading may be a profit or a loss for you but is a zero sum game in total. But it’s great fun trying to beat the market. Afterall, you ARE smarter than the average market participant, right?

#207 gut check on 08.08.15 at 8:24 pm

#197 Sheane Wallace
great post

#208 LLewelyn on 08.08.15 at 8:49 pm

Based on comments posted on this blog over the past two days I would anticipate the following headline this September;

“Janet Yellen raises the Federal Bank rate by 200%!! What was she thinking”

I am sincerely concerned about how many Canadians are firmly convinced that increasing the Provincial corporate tax rate in Alberta by 2.0% will increase total corporate taxes by 20% and threaten their very survival.

Increasing the combined corporate tax rate in Alberta from 25% to 27% will increase the total corporate tax paid by 8.0% and will reduce corporate profits by 2.67%.

What this means a large company required to pay $10,000,000 in corporate taxes at 27% will still realize a profit of $27.0 million.

The net impact on profits from of that ‘unreasonable’ 2.0% increase in the Provincial tax rate would be $740,000 or 2.67% of total profits.

I would suggest that contributors to this blog take a peak at the compensation being paid to many corporate executives and ask whether a 2.67% reduction in corporate profits is really the act of a naive or irresponsible government.

I fully understand the capitalist mindset but trying to portray a modest reduction in corporate profits to cover essential government services as myopic stupidity seems just a bit over the top.

#209 Steve French on 08.08.15 at 8:51 pm

http://www.wsj.com/articles/australia-orders-more-foreign-homeowners-to-sell-1439024595?mod=e2tw

“Australia Orders More Foreign Homeowners to Sell”

Treasurer Joe Hockey vows to boost penalties as investigators probe 462 possible breaches by foreign home buyers

SYDNEY—Several foreign owners of residential property across Australia have been ordered to sell as the government intensifies its crackdown on the abuse of homeownership laws by buyers from China and elsewhere.

Treasurer Joe Hockey said foreign investors have been ordered to sell six properties in the cities of Sydney, Brisbane and Perth. The homes are valued between 152,000 and 1.86 million Australian dollars (US$112,768 and US$1.38 million).

The orders could be the tip of the iceberg, with Mr. Hockey revealing probes have unearthed 462 possible breaches of foreign homeownership rules after the government ramped up its spending on enforcement in its May budget. The number of cases being investigated has more than doubled since the last estimate was given in June.

The treasurer said he expects more divestment orders will be announced soon, and promised to increase penalties for those who break the rules.

(continued…)

#210 Paul on 08.08.15 at 9:21 pm

#197 Sheane Wallace on 08.08.15 at 6:54 pm

So what you are saying is a still have a shot of buying a house??

#211 Paul on 08.08.15 at 9:28 pm

#189 Holy Crap Wheres The Tylenol

I could have been a contender. LOL

#212 Smoking Man on 08.08.15 at 9:58 pm

Ufos galore tonight at Sauble Beach..

Orange plasma, all over the sky…. Got one on video, a bit to hammered to post to YouTube..

Figure it out in morning..

#213 Smoking Man on 08.08.15 at 10:18 pm

Ok I should win the short stories fiction contest. These guys are losers..

Here is the guy in the lead…. Seriously… My farts are dying of boardom.. Reading this crap.

I can’t compete with the schooled.

Here comes boardom…….

………

The Earth Fleet dropped out of FTL and prepared to enter the Alpha Centauri system. Five battle cruisers armed to the teeth were there to take a police action against the Centauri marauders who had been terrorizing the colonies.

“You won’t be seeing live action on this mission,” Sargent Detmers told his marine unit. “The plan is to locate their home base with the sensors and destroy them from space.”

“Why aren’t we engaging them, Sir?”

“These are bad aliens. Telepathic. On Zed Four, they made all the colonists kill each other. On Zed Seven, they made them all commit suicide. On Zed Ten, they made them all jump off a cliff. We best stay as far from them as possible.”

“Can they affect us up here?”

“No way. Our ships have special plating that blocks telepathic waves,” explained Detmers as the fleet flew into the sun.

* * *

“How the hell can five ships fly like lemmings into a sun?” shouted Admiral Morris at his staffers. “Tell me all you know about these marauders.”

“We don’t know much. They’re believed to be insectoids with off the charts psi abilities,” said Dr. Beales. “Our telepaths have been unable to communicate with them, but all sensed extreme hatred, wrath.

“What is their range? Obviously it extends to space and can penetrate our shielding.”

“Theoretically infinite.”

“I need options men.”

“We could send in remote-controlled robot forces,” suggested Captain Brown.

“That’s true. But there’s the risk of the human operators being compromised,” said Dr. Beales.

“Then we really have no defense. And if we pull out our colonists and admit defeat this easily, what’s to stop them from coming here? No, we have to end this now. With nukes if that’s what it takes.”

“But the colonists–”

“…knew the risks going in.”

“There is another option,” suggested Dr. Beales. “Biological telepathic beings cannot control a mechanical brain. A force of robot soldiers wouldn’t be susceptible to marauder mind control.”

“Robot soldiers have proven to be a good tool in the field, but they’re limited. Programming only goes so far.”

“We’ve actually had the solution available to us for years. Something we’ve avoided implementing. That is giving robots free will, intuition, sentience, everything they need to make the snap decisions required in combat.

“Something we’ve avoided for good reason. You’re talking about creating a new race of super beings capable of becoming thousands of times more intelligent than us. In the end, the cure may be more dangerous than the disease. What’s to stop them from turning on us?”

“We have a plan in place to ensure that doesn’t happen.”

* * *

The robot ship arrived undetected in the Alpha Centauri system and carried out their orders with machine-like precision. The marauders were caught completely by surprise when missiles crashed into their home base. Robot forces landed and hunted down the surviving pockets of marauders. There were just four robot casualties. The mission was a complete success.

* * *

Robot Marine XT17p slowly clawed its way along the ground. It took a week to dig out from underneath an avalanche caused by a fierce firefight. Both its legs were crushed along with its emitter card. It was on the planet alone.

After several days, it came across the burnt out remains of one of its fellow soldiers. The robot salvaged the parts needed and repaired its legs. Eventually, XT17p reached the bombed out shell of the marauder home base and began making repairs. It restored the power grid and attempted to reconnect with the Earth Force network, however, its log-in algorithm was no longer active.

Through a radio transmission, XT17p learned that all its fellow robot marines were destroyed in an unexplained explosion during their ship’s return trip to Earth.

It was now the one remaining sentient robot in the known universe. Alone on a planet with all the time in the world to learn, develop, evolve and become the super being mankind feared.

#214 Sheane Wallace on 08.08.15 at 10:22 pm

#205 kothar

when the facts speak my friend, even the gods are silent.

#215 Mark on 08.08.15 at 10:32 pm

Mark is totally wrong on deflation, he is assuming a closed economy. While we have trade deficit that is growing they will devalue in false hope that this will boost exports

Lets not have facts get in the way of the truth. Canadian exports have surged as of late in response to the devaluation. The trade deficit is not growing. In fact, it is shrinking quite rapidly, as Canada is able to export a greater surplus of production no longer in demand at home on account of the declining Canadian consumer economy and growing output.

http://www.theglobeandmail.com/report-on-business/economy/canadian-exports-rebound-in-june-with-biggest-gain-since-2006/article25843374/

Additionally, with the cyclicality present in Canada’s energy exports, having a trade deficit isn’t automatically a disaster. Its not a problem to have a trade deficit if the goods imported are capital goods, as opposed to consumable consumer goods. The construction boom in Canada’s oilsands and residential housing marketplaces has driven imports in capital goods.

Additionally, if you study the specific trade balances Canada has over the past number of years at StatsCan, you will see that Canada has very favourable positive balances with the United States and the UK.

http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/gblec02a-eng.htm

Oddly enough, its been the USD$ and the UK pound that have been very strong against the CAD$. Which makes little sense, as currencies against which Canada runs a surplus should weaken over time against the CAD$.

#216 45north on 08.08.15 at 10:52 pm

BillyBob: from your link:

Where once the political process was about engaging people’s rational, conscious minds, as well as facilitating their needs as a society, the documentary shows how by employing the tactics of psychoanalysis, politicians appeal to irrational, primitive impulses that have little apparent bearing on issues outside of the narrow self-interest of a consumer population.

there is an increasing contrast between engaging people’s rational, conscious minds and the appeal to irrational, primitive impulses.

BillyBob: here’s your cousin Ricky Bobby :

http://www.imdb.com/title/tt0415306/?ref_=nm_flmg_act_52

Nagraj: The debate succeeded in maintaining the illusion that Canada is an essentially prosperous country whose economic difficulties are manageable via Ottawa policy.

and I guess the illusion will comfort us for as long as it can

#217 Leo Trollstoy on 08.08.15 at 11:02 pm

#206

Great post Shawn.

#218 Leo Trollstoy on 08.08.15 at 11:04 pm

#197 Sheane Wallace on 08.08.15 at 6:54 pm

Well thought out. Great post.

#219 Leo Trollstoy on 08.08.15 at 11:09 pm

Correlation does not always mean causality.

True.

But when the Canadian economy collapses under the watch of the NDP, Canadians won’t care about this distinction.

#220 TRT on 08.08.15 at 11:16 pm

@sheaneWallace Post 197

Done. Already out of CDN $.

Coming problem: friend is a specialist in a field that faces a shortage. He is in Year 5 of residency. No way he says he will stay here if our dollar dives any further. He was offered $30,000/month by a local health authority. Now he says forget about it. Going to greener pastures in the states where he says he can command $400,000 USD to start ($520,000 CDN)

#221 w-endwarrior on 08.08.15 at 11:35 pm

Garth,

Any chance of your writing an extra blog during the week and have it posted on Sundays, so that blog addicts can get their weekend fix…or else run a Greaterfool greatest hits series where past best blogs and comments are highlighted….

I will post Sunday afternoon. Amuse yourself until then. — Garth

#222 w-endwarrior on 08.08.15 at 11:44 pm

“#147 Milla on 08.08.15 at 11:03 am
Math is very straight forward science. It does not recognise games…”

Doubleplus ungood, game theory is actually a branch of mathematics, and mathematics in considered separate from science….

#223 jane 24 on 08.08.15 at 11:45 pm

I am also a bit stunned at the anger and general rudeness of this comments section.

According to Garth’s previous research stats on his blog audience we are the one percenters, financially literate, well invested and older. If there is this much anger among us the general Canadian population must be seething at their situations and govts.

It will be a rough Aug and Sept and voters will throw that baby out of the pram along with all the toys. Expect a NDP new govt and bad times, along with a fast sinking dollar.

#224 old gringo on 08.08.15 at 11:56 pm

This is what’s happening every quarter of the year in Mexico.Not sure if this includes the recent two new mega tire plants planned by Michelin Tire and Pirelli Tire.The writing for CDN is on the wall.

May 20 Foreign direct investment (FDI) in Mexico rose to $7.57 billion in the first quarter of the year according to preliminary figures, boosted by U.S. telecoms giant AT&T’s purchase of Iusacell, the economy ministry said on Wednesday.

#225 JSS on 08.09.15 at 12:12 am

In 2006, Conservatives announced a tax on income trusts. Such an NDP move. But hey, this is acceptable by the right wing nutters on this blog.

http://www.cbc.ca/news/business/flaherty-imposes-new-tax-on-income-trusts-1.573751

#226 cynically on 08.09.15 at 2:40 am

To #189 – I’ve got good news for you if you really want to run for the US presidency. You don’t have to have both parents American-born, only one of them. I’m surprised you don’t remember the great outcry from many Republicans at the time when Obama first ran for the presidency. Only his mother had been native-born but he still ran and became president. A second case is that of Senator Ted Cruz of Texas who presently is running for the Republican nomination for president and only his mother was born in the States. So it seems only one parent must have been born in the home-country so you can still give it a try if you have a zillion bucks or backers with such a sum but i would advise against it.

#227 Blobby on 08.09.15 at 4:36 am

We seem to have PLENTY of money, for ads promoting Harper, ads dissing Trudeau… We have plenty of money to offer oil companies socialist handouts… We have plenty of money for wars… We have money to give people hand outs to buy their votes… We have money to give rich people tax cuts…

But offer the sick/elderly or poor money.. And suddenly.. THAT will DOOM the economy!

#228 Kreditanstalt on 08.09.15 at 6:17 am

You’re behind the economic times.

The problem for most people is not “sheltering” income, it’s getting any of it at all.

#229 nobody on 08.09.15 at 7:39 am

Even hardcore socialists understand the need for robust capital markets wherein corporate valuations are established, allowing companies to finance expansion and job-creation or die a usually-deserved slow death. Learn something about corporate finance. You’re embarrassing yourself. — Garth
_______________________________________

My original post to Mister Obvious challenged his assertion that profits from retail investing, presumably in ETFs as you advise, contributed to job creation and, therefore, deserved a 50% tax break comnpared to income from wages. Whatever my opinion may be of the stockmarket and trading, neither you nor anyone else responding to my post has shown a thread of evidence that such a tax break is justified.

That’s easy. Risk. When you sell your labour, earn interest on a GIC or collect rent, risk is lower and the tax rate reflects this. When you invest in financial assets, such as equities, risk is higher and taxes are adjusted lower as a result. If that were not the case, few would invest. Markets and companies would be under-capitalized. The economy, and jobs, would reflect this. In any case, moan all you want. It cannot and will not change. — Garth

#230 Llewelyn on 08.09.15 at 8:34 am

I find it curious that MSM have decided to focus the attention of the general public on the monthly jobs report in the USA without offering any meaningful context for the number of jobs being created.

We were told that 215,000 non-farm jobs were created in the USA in July as if this number was a positive indicator of economic growth. It might be worth noting that a country whose population increases by 2,200,000 persons per year, or 185,000 per month, responds to demographic demand by creating new employment opportunities.

Over the past 12 months the American economy created an average of 246,000 new jobs each month so the creation of 215,000 new jobs in July is well below average.

The number of Americans entering the labour force in the USA increased by 69,000 persons in July 2015 while the number of employed within the total labour force increased by 101,000 persons. This would indicate that the status if 32,000 Americans changed from unemployed to employed in the month of July. A positive sign but is hardly worth shouting from the rooftops.

I noted that 193,000 of the 210,000 new jobs created in the private sector of the American economy were classified as service providing while only 17,000 jobs were classified as goods producing.

retail trade 36,000 new jobs
food services 29,000 new jobs
health care 28,000 new jobs.

I also noted that the number of Americans who gained their income through self-employment in the service providing sectors increased by 96,000 in July. Self-employment is the fastest growing component of the American economy.

One interesting point of comparison with Canada is that only 2.3% of the new jobs created in the USA in July 2015 were classified as government jobs. It would appear that the growing debt of all levels of government in the USA is having an impact.

My concern is that our twitter-based world has become based on media bytes structured to gain our attention and reinforce the position of the sender not to provide useful or even truthful information.

The MSM trumpets the profits being made by multi-national corporations but ignores that the average wage the non-supervisory labour force in the USA increased by only 1.8% over the past year. When the MSM mentions a possible increase in the minimum wage it refers to the impact on corporate profits not on benefits to the labour force.

Money, money, money!!! I for one would like a little more balance in the way our news is being presented.

#231 Nora Lenderby on 08.09.15 at 9:24 am

#168 Ponzi or bust on 08.08.15 at 1:38 pm said:
With all due respect, but when was the last time we had a bearded PM?

Er…all of them? Apart from Kim Campbell, that is.

(And don’t any of you silly boys suggest that she too has a beard. Just a few whiskers, as with all us older ladies :-)

#232 Nora Lenderby on 08.09.15 at 9:26 am

#208 LLewelyn on 08.08.15 at 8:49 pm
Based on comments posted on this blog over the past two days I would anticipate the following headline this September;
“Janet Yellen raises the Federal Bank rate by 200%!! What was she thinking”

Wonderful! I did laugh-out-loud…what a fine wit!

#233 Sheane Wallace on 08.09.15 at 9:28 am

#215 Mark

Construction is not a productive and stimulating exports sector. As for the investments in oil sands I would not be surprised with oil around 50 USD around 2020. They have to kill the loonie to maintain these investments profitable. Who do you think the dear leader will choose – you and you savings in CAD or his buddies in big oil?

You look at direct trades between countries, not overall balance of trade for each country.

Expectations on directions of trade deficits and status of currencies (e.g. world reserve currency CAD is not) matter.

With the bust of commodities CAD is going down big time

We have hidden deficits due to CHMC guarantees and excessive credit growth that are strongly inflationary, we are blowing much bigger bubble than the US in 2006
and if we don’t compensate with QE later we will be dead with the most severe depression you have ever seen, so compensate we will to maintain nominal assets values at the expense of the CAD being destroyed.

CAD rates goes down, USD is expected to go up (we will see when) but at least is not going down.

Loonie is a toast.

#234 enjc on 08.09.15 at 9:28 am

Hi Garth,

Thanks for the reply! I’ve taken advantage of the opportunity in CPD but wanted to make sure I wasn’t missing something.

#235 Nora Lenderby on 08.09.15 at 9:44 am

#223 jane 24 on 08.08.15 at 11:45 pm
I am also a bit stunned at the anger and general rudeness of this comments section.

This blog is great for the range of readers that are attracted by the prospect of learning about personal and public finances and getting the full benefit of the humour and experience of the Hon. Mr. T. (who’s price is above that of rubies). He is to be celebrated for his tolerance and kindness.

However, you only have to read comments on articles any of our Great National Newspapers websites to find even worse examples of wretched behaviour.

The Internet does this. People who would be perfectly happy to chat politely together in the flesh, spend hours, boiling with rage, metaphorically stabbing each other about the price of lettuce.

If you’d give a thought to a homeless person in the gutter, feel a bit of sympathy for the sad and lonely on the Internet.

#236 gut check on 08.09.15 at 9:48 am

#219 Leo Trollstoy on 08.08.15 at 11:09 pm
Correlation does not always mean causality.

True.

But when the Canadian economy collapses under the watch of the NDP, Canadians won’t care about this distinction.
***********************************

You’ve gotten a jump on the rest of Canadians, I guess, huh? Eagerly blaming the Boogeyman of the Future for what has already happened as of now.

#237 gut check on 08.09.15 at 9:50 am

#227 Blobby –
exactly.

hypocrites abound.

#238 Washed Up Lawyer on 08.09.15 at 9:57 am

There are is a good number of first rate commenters that offer their input on this blog. There should be a “Steerage Plus” section and Llewelyn would have his seat upgraded.

In Vancouver this weekend. I had forgotten what a beautiful place this is.

#239 jess on 08.09.15 at 10:00 am

push me pull me

Mapping Displaced People Around the World
Explore MapMaker Interactive’s layers on refugees, asylum-seekers, and IDPs

Forcibly displaced people are one of the world’s most disadvantaged groups. Whether they are forced to leave home due to widespread violence, political repression, ethnic persecution, or natural disaster, meeting needs as basic as clean water is a constant struggle for many of these people. Today, there are almost 44 million forcibly displaced people in the world. Of these, 15.4 million are refugees, 27.5 million are internally displaced persons (IDP’s), and 800,000 are asylum-seekers hoping to achieve refugee status. In addition to displaced people, there are up to 12 million stateless persons worldwide who do not have citizenship in any nation-state. Despite the fact that few countries have reliable methods for documenting stateless people, awareness of their presence and the difficulties they face is on the rise. As of 2010, 65 countries reported statistics on stateless people, up from just 30 in 2004. …”

http://education.nationalgeographic.com/maps/mapping-displaced-people-around-the-world/

#240 Cry Baby on 08.09.15 at 10:02 am

Kothar people leave The American alone because his calls are actually correct. He is a brash American who calls it as he sees it and that’s why you may not care for him. But right is right is right. Look at his history and his calls and to see where he’s been wrong. Also provides links to his commentary. He isn’t all for Canada but do you blame him? I don’t like him but I follow his comments.

#241 Cry Baby on 08.09.15 at 10:04 am

Kothar you have to admit that Mark is a blabbering moron who doesn’t provide facts to his statements.

#242 TurnerNation on 08.09.15 at 10:07 am

Billy bob teeth:

https://www.billybobproducts.com/store.php/categories/billy-bob-teeth

#243 saskatoon on 08.09.15 at 10:24 am

#230 Nora Lenderby

you are an argument against democracy.

#244 Steerage Bilge on 08.09.15 at 10:28 am

#234 Nora Lenderby on 08.09.15 at 9:44 am

#223 jane 24 on 08.08.15 at 11:45 pm
I am also a bit stunned at the anger and general rudeness of this comments section.

This blog is great for the range of readers that are attracted by the prospect of learning about personal and public finances and getting the full benefit of the humour and experience of the Hon. Mr. T. (who’s price is above that of rubies). He is to be celebrated for his tolerance and kindness.

However, you only have to read comments on articles any of our Great National Newspapers websites to find even worse examples of wretched behaviour.

The Internet does this. People who would be perfectly happy to chat politely together in the flesh, spend hours, boiling with rage, metaphorically stabbing each other about the price of lettuce.

If you’d give a thought to a homeless person in the gutter, feel a bit of sympathy for the sad and lonely on the Internet.
——————————————–
Yup. This pathetic blog is really quite civil compared to most internet haunts. There are so many housing articles appearing of late and the comments sections are crazy. Lots of great humour here, initiated of course by the host.

#245 jess on 08.09.15 at 10:54 am

math after death = more regulators to enforce the self reporting

Federal officials had some rough news yesterday for disgraced former Peanut Corporation of America owner Stewart Parnell, who’s really come to regret telling workers back in 2007 to “shit, just ship” peanut butter he knew had salmonella. They’re going to recommend Parnell’s sentence as life in prison — a first for a food-safety crime.’

http://www.grubstreet.com/2015/07/peanut-exec-salmonella-prison.html

#246 inflation on 08.09.15 at 11:00 am

#223 jane 24

According to Garth’s previous research stats on his blog audience we are the one percenters, financially literate, well invested and older.

—–

The horror of inflation.

#247 arguments on 08.09.15 at 11:35 am

#243 saskatoon on 08.09.15 at 10:24 am

#230 Nora Lenderby

you are an argument against democracy.

====

You are not very classy, are you?

By the way the debate about democracy in this country has been settled, Constitution Act, 1982.

#248 pinstripe on 08.09.15 at 11:46 am

the commentary on this blog about tax is a valid point. tax makes a direct attack on cash flow.

where I live the political leakage is about tax, specifically about a big corp promising growth, jobs, and all the nice warm and fuzzy things they present at the dog and pony shows. the matter of the fact now is that this same corp has requested to not pay property tax because of oil price dropping. the same thing is happening where speculators purchasing land in the area are demanding to not pay property tax because they cannot develp and then sell this property at higher prices.

it is alsobeing exposed that tax collection has been a weak point in the past with the alberta pc policies and a lot has been written off.

now many Albertans are glad that Rachel is taking a most positive approach by enforcing the tax policies and even increasing them a tad for previous non payment.

it is amazing how much news comes available at the local coffee sop.

#249 ronh on 08.09.15 at 12:26 pm

Yesterday I wandering thru a used book store, where I came upon After The Crash by Garth Turner. Original price was 21.95 ( in 2009 dollars). Got it for 8 ( 2015 dollars). Hey deflation. Good book, advice still holds.

#250 risk dogmas on 08.09.15 at 1:02 pm

#229

That’s easy. Risk. When you sell your labour, earn interest on a GIC or collect rent, risk is lower and the tax rate reflects this. When you invest in financial assets, such as equities, risk is higher and taxes are adjusted lower as a result. If that were not the case, few would invest. Markets and companies would be under-capitalized. The economy, and jobs, would reflect this. — Garth

These are artificially defined risk levels – and changes in economy, society requires to review them from time to time, looking at the specifics.

Let’s see:
a) Yes, when investing in GIC you have lower risk

b) When you rent, you had to invest first.

Investment in rental property – as you point out in this blog – is probably as risky, as any other financial investment can be.
In fact, you have been saying in this blog that investing in a balanced ETF portfolio is less risky, financially more rewarding than investing in rental property.

Why is this higher risk not reflected in lower tax?

c) Sell your labour today is not what it used to be.

I) It requires way more investment than in the past.
Both in terms of time (B.A., M.A., PhD.) and money (highly increased tuition fees in general, exponential increase in certain fields, e.g. medicine, law).

II) It is way more risky investment than in the past: the economy is changing at a never before experienced speed.

Nobody can guarantee that the jobs in demand at the beginning of the long and costly education will be still there at the time of graduation.

The risk involved in investing any path for selling labour has increase substantially in the past decade.

To the point, that investing in stocks like Canadian banks (huge weight in TSX) is probably less risky than investing in a career path.

#251 Bondgirl on 08.09.15 at 1:04 pm

Great video. Great comparison of the precarious state of our housing sector to the east coast fisheries collapse of the 90s.
https://www.youtube.com/watch?v=_0uMbCkRQk8

#252 Small_Town_Steve on 08.09.15 at 1:19 pm

#208 LLewelyn on 08.08.15 at 8:49 pm
Essential government services???

The only essential government services are:
Protection if it’s citizens from fraud, coersion,initiation of force and theft…
We need police
We need the courts
We need a military
Any other service offered is inefficient andddd mostly non voluntary.
When the people who produce products and services need permission to do so from those that produce nothing, that society is doomed.
Come this election it’s going to be a little more doomed…

#253 Chris in Nanimo on 08.09.15 at 1:27 pm

Arguing with strangers on the interwebs is a supreme waste of time. I stopped doing it long ago.

And just for a laugh i actually read the Cash payday store flyer that was in my mail the other day. They charge 600% APR…….Bargin! Maybe we ought to put them in charge of the BoC.

#254 waiting on the westcoast on 08.09.15 at 2:20 pm

#215 Mark on 08.08.15 at 10:32 pm
“Lets not have facts get in the way of the truth. Canadian exports have surged as of late in response to the devaluation. The trade deficit is not growing. In fact, it is shrinking quite rapidly, as Canada is able to export a greater surplus of production no longer in demand at home on account of the declining Canadian consumer economy and growing output.

http://www.theglobeandmail.com/report-on-business/economy/canadian-exports-rebound-in-june-with-biggest-gain-since-2006/article25843374/

Yes – let’s not. Read the whole article… One month does not a trend make…

#255 BS on 08.09.15 at 2:44 pm

To the point, that investing in stocks like Canadian banks (huge weight in TSX) is probably less risky than investing in a career path.

Great, follow your own advice then. You have a choice to invest your time and money where you want.

Why are so many people begging for the government to tax them more? Wouldn’t you rather keep your money and do with it what you please rather than have the government of the day choose where it goes?

#256 Essential government services on 08.09.15 at 2:48 pm

#252 Small_Town_Steve

#208 LLewelyn on 08.08.15 at 8:49 pm
Essential government services???

=====

Welcome to the 21st century, the age of megacities… global economies … your ideology needs upgrade.

#257 Digdug on 08.09.15 at 4:33 pm

Red Deer Rob: And @ #1 North Burnaby, Garth has not advocated a crash is coming. We go over this every week.

Yes. Please ignore fact he wrote a book called “After the Crash” is now infallible again.

That book was titled regarding the 2008 stock market crash. — Garth

#258 brett on 08.10.15 at 12:16 pm

Yesterday, in Calgary, we took a stroll along 17th Ave, aka red mile. We have not done that for several months. 14th street to 1st street.

What changes did we see? Closed or vacant stores w/for lease signs. At least three restaurants/bars that we closed up. Of those that we open, only the two we very busy. The rest no so much and several were empty. We went into a few retails stores. Empty…except for the one that had a big moving sale.
Finally, sidewalk traffic was non existent. It was a warm sunny afternoon.

Huge change from when we lived in the area two years ago. Still 32 homes for sale in our basket. Virtually the same ones as three months ago. Some have changed real estate agents, a few minor price drops. Clearly it is not working for them.