Scary

WINE modified

“I’m sure you get loads of these types of emails,” Trevor says, sucking up, “but I am probably guessing most of them do not come from someone in my line of work (I’m a certified financial planner)… I am sure it can give you some material for your blog.”

So what is it that big-time advisors with a string of letters after their names worry about? Which offshore hedge fund to warehouse the two million they made this quarter? What model Porsche to lease this month? Not exactly.

“I’m looking for your opinion on whether or not my wife and I should keep the home we are in here in Edmonton (which we are looking to be out of in the next 5 years or so – location is not ideal for raising a family) or if we should sell it and rent (since I share the same views as your blog about the almost definite future).

“Our current situation: $130,000+ in RSP/TFSA/LIRA between the two of us (growth stock mutuals); bungalow built in 1982 – paid $350,000 (2013) and owe $260,000; no other debt. So, should I just shut up and hold on?”

Seems Trev puts on his pants one leg at a time like everybody else. Being an expert in a bond’s yield-to-maturity or fundamental analysis doesn’t mean you avoid being a nob when it comes to running your own life. So our advisor has $480,000 in assets, $260,000 in debt and $220,000 in net worth, assuming his house hasn’t gained in value over the past two years.

Safe bet. The market’s been losing traction for some time, and last month went firmly into reverse. The average sale price of single-family homes dropped almost 2% (to $436,948) – a huge dip for a single four-week period – while sales tumbled by 9.8% (also epic). The average number of days it takes to sell (among those places that did find a buyer) continues to rise, and now sits at 50.

Meanwhile oil sputters, closing out Friday at just over $42 US, the lowest point this year. (Twelve months ago a barrel was fetching $95.50.) There’s now good reason to believe crude will stay sub-$60 for a long time. Three years at least, says Moody’s. That should further hollow out the oil patch, with the kind of pain now being felt in Fort Mac drifting south.

So, Trevor, why wouldn’t you bail, since you don’t like the place anyway?

Besides, look what’s happening: the latest CREA numbers are scary. Resale housing activity has just fallen in half the country’s markets (including Deadmonton), which surprised a lot of analysts who thought the Bank of Canada’s July rate cut would send the house-horny into a new state of arousal. But not this pathetic blog. As stated long ago, there comes a time when interest rates can collapse to zero, and the market still stalls. Looks like we might be there.

This happens when home ownership reaches a point of saturation (above 70%, which includes most people who can stand up or pucker), when household debt sucks off most family income, and when folks start worrying if their job will be erased by a sliding economy. Hence, our two-city housing bubble, with YVR and the GTA burning hot while the rest of the country blows smoke.

Says Scotiabank’s alluring economist Adrienne Warren: “There is the potential for increasing uncertainty and downward pressure on consumer confidence and home prices if the global and Canadian economies are unable to generate increased traction, and unemployment begins to adjust higher.”

Speaking of scary, the country’s biggest new home-builder now openly worries that house lust has created massive risk. Mattamy Homes president says he frets over what will happen when interest rates inevitably rise, since people have deluded themselves into believing it cannot happen.

“The scary part is the home building industry has really responded to a consumer who now thinks of housing as how much does it cost per month, not how much does it cost in total,” he told BNN. “When you think about where interest rates are likely to go, we could suffer some real pressures as people struggle to afford these houses as interest rates rise.”

Okay, Trevor, let’s review.

You hate your house. Edmonton real estate’s in a funk. It’ll get worse. Oil is a mess. The jobs picture is growing darker. Toronto or Vancouver won’t save you. The Bank of Canada just fired a blank. And the industry’s bracing for a rate shock.

Why would you possibly want to hang on to your little bung with its mortgage, given all of that? If you can get out now, realize $90,000 in equity and add it to your investment portfolio instead of seeing it erode along with your houses value, well, duh?

By the way, if you need ace investment advice, you’ve come to the right place, baby. The people who read this blog know everything. Damn straight.

209 comments ↓

#1 VR on 08.14.15 at 6:33 pm

I wish we had some kind of a reform party running candidates in this upcoming election.

http://contentdm.ucalgary.ca/cdm4/doc_viewer.php?CISOROOT=/reform&CISOPTR=2278&CISOBOX=0

#2 TurnerNation on 08.14.15 at 6:34 pm

I just checked Seneca Casino web site Entertainment and saw “Meat Loaf” concert canceled.
Don’t think this blog was going to go.

#3 North Burnaby on 08.14.15 at 6:40 pm

Hi Garth, apparently it’s true that 70% of Vancouver homes over $3 million sold to Chinese buyers
http://www.vancitybuzz.com/2015/08/per-cent-of-vancouver-homes-over-3-million-chinese-buyers/

In a downturn, will detached homes go down faster than condos in Vancouver then?

Believe everything a real estate marketing company tells you? — Garth

#4 Apocalypse2015 on 08.14.15 at 6:44 pm

Sorry Trevor, it is already too late. The end days of this economy are already upon us as will be made very clear very soon. Buyers are dropping like flies in Alberta.

And TurnerNation, it’s not just Meat Loaf and Bobby Vinton who have cancelled concerts at Seneca…..read this:

http://globalnews.ca/news/2165744/nickelback-cancels-rest-of-tour/

What is left to live for?

Circling the drain……..

#5 Forzudo on 08.14.15 at 6:44 pm

The rise of Mexico: http://www.financialpost.com/m/wp/news/blog.html?b=business.financialpost.com/news/economy/this-chart-shows-that-canada-has-bigger-problems-than-just-oil-citi-strategist&pubdate=2015-08-14

#6 HappyJack on 08.14.15 at 6:46 pm

#1 VR

We did have a reform party, but they disbanded in 1993. Upon disbanding they said they had to as they were becoming credible.

https://en.wikipedia.org/wiki/Rhinoceros_Party_of_Canada_(1963%E2%80%9393)

Some of their promises:

http://www.macleans.ca/society/14-weird-platform-promises-from-the-now-defunct-rhinoceros-party/

Keep Smiling.

#7 Rainclouds on 08.14.15 at 6:47 pm

Am thinking the Trev-meister won’t be recruited to assist in the service of GT’S western customer base.

#8 City of Champions on 08.14.15 at 6:50 pm

Mattamy Homes is also saying this – “The company is also expanding into Alberta – a market, Carr says will ultimately be one of the strongest in Canada. Alberta’s real estate sector has been hit hard by the collapse in energy prices, but that is helping Mattamy gain a foothold in the province.”

http://www.bnn.ca/News/2015/8/13/Scary-interest-rate-environment-fuels-Canadas-housing-boom-homebuilder-warns.aspx

#9 Mark on 08.14.15 at 6:50 pm

“As stated long ago, there comes a time when interest rates can collapse to zero, and the market still stalls. Looks like we might be there.”

Indeed. I think everyone who vilified me a few months ago for suggesting that lower interest rates eventually collapse the prices of fixed income assets including RE (on account of oversupply and diminishing credit-worthiness) owes me an apology.

But then again, I probably won’t be able to read it as I am going to be away from the blog for the next few weeks, visiting all the provinces except NB and PEI.

See y’all in September :).

#10 tkid on 08.14.15 at 6:53 pm

Trev babe, sell IF you can find a buyer. But at least list the sucker.

#11 Apocalypse2015 on 08.14.15 at 7:07 pm

Forzudo #5 The rise of Mexico

Good link. Here’s a tv news story from June about auto manufacturing going to Mexico.

http://www.cbc.ca/news/business/carmakers-say-adios-to-canada-as-mexico-shifts-into-higher-gear-1.3108148

With the petro-dollar gaining no benefit against Mexican currency, and all these skilled jobs leaving Canada (thanks again, Magna!), the people here barely realize how totally screwed we are.

Expect major economic and real estate collapse in Oshawa, Whitby, Ajax and nearby. VERY SOON.

And forget about people who say Windsor/Essex county etc… will be a nice place to retire to. The coming total auto collapse there soon will make that city much more unappealing.

NAFTA, like most trade deals, is killing us slowly. John Turner was right on that one.

#12 Frustrated Kiwi on 08.14.15 at 7:08 pm

Trevor – do you tell your clients not to put money they’ll need in the next five years into stocks? Same deal here. You will need the home equity for a down payment on your next home within five years so don’t keep it in what is currently a high risk investment – your house. Sure housing may surprise and swing up but equally it may crater – locking you into a place you don’t like. Take the lower risk option and sell.

#13 Vundo on 08.14.15 at 7:08 pm

Suppose Trevor adored the neighborhood. Maybe throw in some long term optimism about the economy for good measure. Under what (reasonably realistic) conditions would Trevor want to hang on rather than trying to sell in a market that is showing signs of distress?

#14 prairie person on 08.14.15 at 7:09 pm

Just drove from Winnipeg to Victoria. Regina is astoundingly busy. It may be because of good crops in the area. Lots of half million dollar farm equipment in the fields. If low oil prices are taking a toll, it isn’t showing up yet in Regina. Swift Current motels were busy. Oil field crews coming in were taking up a lot of rooms. Calgary traffic was crazy. A lot of tourists in Revelstoke. People are still spending money. A lot of boys’ toys on the highway. I’ve made this trip every year since 1974 and I’ve never seen so many big rigs on the highway or so much hwy construction. They’re expanding, improving hwys through all three provinces. Massive projects. The Coqihalla was less busy but from Hope onward, heavy traffic both ways. Lots of tourists heading to the island at the ferry terminal. If there is a recession beginning, it is not obvious on Hwy 1. If the drought continues, there is going to be a lot of houses in the interior of BC that will be abandoned. The rivers we drove along and over are lower than I’ve ever seen and business/farming in BC depends on irrigation. The price of oil is having an impact but drought will do much more damage.

#15 mathemagic on 08.14.15 at 7:10 pm

#8 mathemagic on 08.13.15 at 6:36 pm

Which is the better exchange rate?

a) $0.75 CDN = $1.00 US
b) $1.00 CDN = $1.33 US

————-

The answer?
They are both the same exchange rate.

Thanks for playing.

#16 Andrew Woburn on 08.14.15 at 7:11 pm

#6 HappyJack on 08.14.15 at 6:46 pm
We did have a reform party, but they disbanded in 1993. Upon disbanding they said they had to as they were becoming credible.
=======================

They would have been forced out anyway. This is Canada and we do not tolerate absurdist humour, especially when applied to serious matters like politics.

Also Macleans missed their key campaign promise: they promised to bring back Ripple Rock.

I’m still waiting.

#17 Smartalox on 08.14.15 at 7:16 pm

In case you missed it, it looks like the Cancer that is mortgage fraud is beginning to spread:

http://www.theglobeandmail.com/report-on-business/equitable-group-combing-through-mortgage-loans-for-possible-fraud-link/article25968903/

Also, this article about Vancouver houses being bought up for ‘land assembly’ – the act of buying up several houses in the same block, in the hope of flipping the whole lot to a developer for low-rise, mixed use, or high-density row houses. Or until something more profitable comes along:

http://www.theglobeandmail.com/life/home-and-garden/real-estate/foreign-buyers-snatch-vancouver-land-with-no-immediate-plan-to-develop/article25973695/

My question is this: now that we know that the only stats that count with CREA and VREB are sales, what percentage of Vancouver’s rising sales rates and sales prices are for properties that won’t be occupied at any time soon?

What happens to supply and demand when these assembled properties turn into higher-density developments, increasing supply with 5 (or 10?) new homes per 1 home collected in the land assembly?

Under these conditions, anyone who buys a Vancouver SFH with plans to actually live in it, is buying at a time of shrinking supply (SFH being bought and held vacant, reducing the number remaining available for purchase), will be facing over supply (and depressed prices) in a few years, when higher density developments become available.

#18 tundra pete on 08.14.15 at 7:16 pm

Trev,
Put a reverse mortgage on the sucker. That way you will have downpayments for condos. I hear they are fetching 35% annually.

#19 David McDonald on 08.14.15 at 7:16 pm

Since no blog dog answered my question about CPP’s returns I hunted around and found the following:

http://business.financialpost.com/personal-finance/retirement/rrsp/cpp-is-not-money-for-nothing-why-you-shouldnt-rely-on-big-government-for-your-retirement

The author,Ted Rechteshaffen, concludes the returns are not horrible. Consequently negotiating an increased, mandatory contribution to the CPP to raise Ontario pensions might make sense but recreating the whole two billion dollar a year bureaucracy makes no sense at all.

#20 Smoking Man on 08.14.15 at 7:19 pm

#2 TurnerNation on 08.14.15 at 6:34 pm
I just checked Seneca Casino web site Entertainment and saw “Meat Loaf” concert canceled.
Don’t think this blog was going to go.
….
Who needs meatloaf when I’m here. Best free entertainment, especially when being carried to my room. Almost every time I visit.

#21 Jack Sault on 08.14.15 at 7:20 pm

Interest rates having been dropping from almost 10% since 1993 to 1994. Mortgage rates were around 10% too.

The majority of Canadians had and has debt, mortgages, lines of credit etc. and benefited by tens of thousands to hundreds of thousands dollars in interest savings.

Now that they got their wish her like no other time in history, they are starting to get worried about the eventual financial fallout of almost 20 years of 300%+ rise in Canadian housing prices that there has to be some give back.

Those that will get hit the hardest are those Canadians that bought in Canadian housing in the last 3 to 4 years.

All those poor savers, seniors and retirees that used to get 8%, 9%, 10% in government bonds and GIC’s are now getting peanuts for years, since 1996 when these rates started to drop rapidly, first 8%, then 7% then 6%, then 5%, then 4%, then 3.5% and not even that, at best 2.5%, 2.6% to 3.15% after March 2015.

The lowest interest rates in history and the real estate obsession and debt binge has just made most Canadians deep in debt, stuck all their net worth in not so liquid real estate and poorer in savings, investments, retirement income for those that did not believe in borrowing up to their eyeballs.

#22 Smoking Man on 08.14.15 at 7:27 pm

Love the pic Gartho.

You should see what happens when you do the tenth wine chased with JD

Let’s say the black swan hit. A chain reaction of bad bets and I went broke. Which is very posable by the way.

I live in Wynnetario. Bleeding heart bicycle riding whole food eating foolish liberals.

I can put on the sad puppy eyes, please help me. And they will.

Stupidly knows no bounds..

Canadians is all I’m saying…

#23 Daisy Mae on 08.14.15 at 7:32 pm

“By the way, if you need ace investment advice, you’ve come to the right place, baby. The people who read this blog know everything. Damn straight.”

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

Priceless! So funny! LOL

#24 LLewelyn on 08.14.15 at 7:34 pm

One last comment on the current trial of Mike Duffy.

According to the Constitution of Canada Stephen Harper could not appoint Mike Duffy as a Senator representing Prince Edward Island unless he could be verified as an actual resident of the Province.

Initially Stephen Harper claimed that full time residency for Senate appointments was open to interpretation and was not a legal requirement. The other day he insisted that full time residency was a legal requirement and left the impression with Canadian voters that Mike Duffy had not disclosed that he actually lived in Ontario.

The position taken by Stephen Harper is patently absurd since it is well known that Mike Duffy wanted to be appointed as a Senator from Ontario and it was Stephen Harper who insisted that he represent PEI.

In order to support the legal status of Mike Duffy’s appointment under Canadian law there would have to be some kind of paper trail to support that he actually resided in PEI. The Senate requires all Senators to clearly identify where they reside before claiming expenses.

Mike Duffy was appointed in 2008 and his expense claims did not become an issue until the Auditor General began to investigate the legality of expenses being claimed by Senators in 2012.

Clearly the individuals responsible for approving Mike Duffy’s expenses between 2008 and 2012 relied on the fact that the Prime Minister had appointed him as a Senator from PEI and as a result was entitled to claim expenses. Questioning his expenses prior to 2012 would have exposed the legality of his appointment under the Canadian Constitution and might have exposed the Prime Minister to a legal challenge. Either you live in PEI or you don’t!! Ask the CRA for an opinion if you are not sure.

Am I the only one in Canada who feels that the whole fiasco started with Stephen Harper’s loose interpretation of Section 23 (5) of our Constitution and his decision to appoint a high profile Conservative who resided in Ontario as a Senator representing PEI.

In his usual sneaky way Stephen Harper has managed to deflect blame away from himself by convincing Canadians that Mike Duffy is a greedy thief that must be punished.

Are we really supposed to believe that the dozens of government employees responsible for enforcing the Financial Administration Act failed to notice that a Senator who had been living in Ontario for years was claiming expenses based on residency in PEI?

I must repeat the simple fact that Stephen Harper made the decision to appoint Mike Duffy as a Senator from PEI and I have a strong feeling that his expenses were approved by government officials as a way of supporting his claim to residency in PEI. The involvement of Nigel Wright clearly implicates Stephen Harper in the cover-up and no amount of huffing and puffing will convince me otherwise.

#25 Greg on 08.14.15 at 7:40 pm

Hi Smoking Man,

I just saw this 42 min interview from Aug 13 and thought you might like a link.

‘talks with global economist Harry Dent about the coming bubble and when it will burst.’
http://www.infowars.com/expert-weeks-till-global-collapse/

Harry’s best guess is there might be a trigger in a next couple weeks when we’ll see some bubbles deflation starting. He explains himself in detail in the interview, see link above.

I even thought Harry was going to flog a book or something at some point in his interview. But he’s giving it away for free it seems, if you pay for the shipping.
He seem to not be big on gold either.

Sounds like just more reasons to have a good mix of investments in more than one basket.

#26 Ret on 08.14.15 at 7:45 pm

I heard the BNN interview with Brad Carr from Mattamy Homes. I was impressed with his cost breakdown for a new home and his very balanced comments about the new home RE market.

#27 Retired Boomer - WI on 08.14.15 at 7:57 pm

“when interest rates rise…” Funny, where have I heard THAT tune before? Oh, yes it was a gal need Yellin, from the United Snakes I believe. Well, if one believes the most indebted nation in the history of the world is really going to voluntarily raise interest rates, without being forced to do it, you have a better grip on fiction than I do.

The yuan devalued, aren’t we next? Then Yellin could raise rates!

#28 My Life is a Pile of Shit on 08.14.15 at 7:57 pm

Garth’s month-over-month report: The average sale price of single-family homes dropped almost 2% (to $436,948) – a huge dip for a single four-week period – while sales tumbled by 9.8% [over June].

BCREA’s year-over-year report: Real Estate Sales across BC up 21% in July, Prices up 11% [over last July]. The national average sale price rose 8.9 per cent on a year-over-year basis in July. However, this is skewed upwards by high price growth in Greater Vancouver and Greater Toronto. Excluding those urban areas, it increased by 4.1 per cent. Source: REW.ca.

How do you reconcile those reports?

One is Edmonton, the other BC. Love your name.– Garth

#29 Leo Trollstoy on 08.14.15 at 7:58 pm

Harry Dent is such a clown.

Fantastic marketer tho.

#30 Smoking Man on 08.14.15 at 8:03 pm

#25 Greg on 08.14.15 at 7:40 pm
Hi Smoking Man,

I just saw this 42 min interview from Aug 13 and thought you might like a link.

‘talks with global economist Harry Dent about the coming bubble and when it will burst.’
http://www.infowars.com/expert-weeks-till-global-collapse/

Harry’s best guess is there might be a trigger in a next couple weeks when we’ll see some bubbles deflation starting. He explains himself in detail in the interview, see link above.

I even thought Harry was going to flog a book or something at some point in his interview. But he’s giving it away for free it seems, if you pay for the shipping.
He seem to not be big on gold either.

Sounds like just more reasons to have a good mix of investments in more than one basket.
…….

Ha, you have a drunkin Nectonite in your world every night.

Why the hell would you listen to a global economist when you have.

The one and only

Dr Smoking Man
Holding a PhD in Herdonomics…

#31 T5_INCOME on 08.14.15 at 8:17 pm

@15, Math Magic.

You got that backwards buddy.

#32 Charity on 08.14.15 at 8:27 pm

http://www.financialpost.com/m/wp/news/blog.html?b=business.financialpost.com/personal-finance/family-finance/buying-his-first-home-at-51-or-saving-for-retirement-its-a-tough-choice&pubdate=2015-08-14

So Garth
I think this advisor reads your blog the synopsis is to not buy you will have more money.
If only the sheeple would follow.

#33 palebird on 08.14.15 at 8:31 pm

#9 Mark,

How about that strong Canadian dollar Mark?? Were you not the one going on and on about the merits of the loonie a little while ago?

#34 Greg on 08.14.15 at 8:34 pm

#24 Dear LLewelyn,

I don’t give a sh_t what you think.

Regards,
Steve

#35 Investorz on 08.14.15 at 8:45 pm

David Prince on BNN tonight made this point:

China devaluing their money will reduce the flow of money going to buy Canada real-estate. Condos and houses.

On the TSX, you see cracks appear. I know a guy doing margin calls and he says there’s a lot of that happening because of more and more stocks on the TSX dropping 10% and more in a single day.

#36 Frank on 08.14.15 at 8:45 pm

Wait so if rates head to zero and a shitty economy pulls demand down and causes prices to fall doesn’t this look like the US circa 2009? Where, assuming you have cash, you should scoop up a couple properties in depressed areas and wait for the bounce back (this country is amazing and people will always want in, we’ll be back)?

#37 Tim on 08.14.15 at 8:48 pm

What could possibly cause housing to appreciate in Alberta in the next few years?

#38 Shawn on 08.14.15 at 8:48 pm

Oil Must be Incredibly Abundant

West Texas Intermediate Oil is currently U.S. $42.74 per Barrel.

A barrel of oil is defined as 42 U.S. gallon or about 159.0 liters. So, oil is currently about 27 U.S. cents per liter, at least when purchased in large quantities.

What other liquid besides water is priced that low?

Water from my tap has a consumption charge of 0.16 cents per liter and so it is TRULY cheap. And that’s because water is still massively abundant and cheap to clean up and deliver.

World oil Consumption is currently 93 million barrels per day. That seems like a lot. It’s 34 billion barrels per year. It’s 5.4 trillion liters per year. At current prices that is $1451 billion dollars per year or $1.4 trillion dollars per year.

At 34 billion barrels consumption per year there must be MASSIVE underground lakes of the stuff. Not, only that but there must be massive amounts of cheap-to-produce oil.

It gets sold for $42.74 per barrel and that is counting production costs (capital and operating costs) and counting any royalty fees collected by governments.

It seems remarkable indeed that this so-called scarce non-renewable resource can be sold for a paltry 27 U.S. cents per liter.

I could go on, but my thinking is that 27 cents is cheap and sane governments are not going to let it stay that cheap for very long.

For a little while oil could get much cheaper. But longer term I don’t think it makes a lot of sense for it to stay at 27 U.S. cents per liter.

People talk about excess supply. But the industry and governments have to think of the supply in terms of an underground inventory.

The supply of oil is ALWAYS many times larger than the daily or yearly demand because there is a huge inventory underground…

Most governments take a royalty for oil or they even own the oil companies.

Alberta tar sands oil is clearly much more expensive than much of the world’s oil. It is likely only competitive due to lower than typical royalties.

Norway collects larger royalties precisely because they have cheaper oil and their oil can bear that royalty burden.

In summary, oil is incredibly cheap which proves that it must be incredibly abundant but given that it is a finite resource it would be fool-hardy for any government to allow it to be sold off at too cheap a price in the long term.

I smell a new cartel or international agreements if OPEC cannot restore the traditional cartel.

I rather like Alberta’s prospects in the long term because cheap oil will not always be abundant. Problem is I don’t know if the long term is 3 years away or three decades or maybe 3 months.

Now may be the time for all smart men to come to the aid of their own financial futures by investing in oil while it is cheap.

#39 Here there on 08.14.15 at 8:55 pm

Re: #24 “One last comment on the current trial of Mike Duffy.”
Imaging that seeing the latest scandals of senators’ allegedly misbehaving. Some playing fast and loose with expenses claims. Other allegedly, masturbating on demand with a minor, etc. One could ask, who and why and how, this characters could be appointed. While the rest of the chamber members, apparently, playing the three monkey game. Many highly qualified, honest candidates, will think twice to join and give their expertise and talents. A shame, and a big lose to Canada.

#40 Sneaky Bugger on 08.14.15 at 9:12 pm

Blog Dogs Unite

Let us just make it easier on our esteemed host and put all our homes on sale – from coast to coast to coast – then be sure to sign up for a brand new website GarthRentals.ca

And yes all the proceeds of sale should be invested in “Diversified Portfolios”. 1/3 in this ETF, 1/3 in that ETF & 1/3 in other ETF. Kapish?

#41 Freedom First on 08.14.15 at 9:13 pm

Damn straight. The people who read this Blog do know everything. There is even some of us who actually follow the advice Garth gives us. However, for the ones who argue against a diversified balanced and liquid approach, and insist on following any one asset strategy, stupid is as stupid does.

#42 Tim on 08.14.15 at 9:18 pm

Re: LLweyan Duffy Scandal

This happened on Harper’s watch. He campaigned on Senate reform! He appointed crooks and he had to know about the payment to Duffy. However, sociopaths are good a lying with emotionless stares and straight faces…

#43 Vundo on 08.14.15 at 9:23 pm

#37 Tim: high oil prices. People now are saying that oil will never recover. People used to say that oil would never be cheap again. People have a habit of being wrong when making sweeping statements about how things will be forevermore.

#44 Mark on 08.14.15 at 9:36 pm

“It gets sold for $42.74 per barrel and that is counting production costs (capital and operating costs) and counting any royalty fees collected by governments. “

$42.74 is beneath the all in sustaining cost of producing oil and gas pretty much everywhere in the world. The price is only so low on account of over-investment in production. A period of low prices will attenuate new investment to such an extent that production will fall until a more appropriate equilibrium between supply and demand is reached.

Unfortunately for Alberta, most of the costs of the oil sands projects are front-loaded in terms of the massive processing, SAGD steam generators, and upgrading infrastructure involved. Which means that investment in the sector is likely to fall almost to zero for a considerable period.

In other words, severe deflation straight ahead for the Alberta, and likely the Canadian economy. Between the O&G sector, and the RE sector collapsing, that’s an awful hole left in GDP.

When I’m back from my vacation, the BoC will likely implement yet another interest rate cut, and might even put some form of QE on the table. Yes, I know, 2-3 years ago, I was laughed at for even suggesting the necessity of Canadian QE, but its actually being seriously talked about now by the so-called “professional economists”. Even (former BoC governor) David Dodge and (the Rt. Honourable) Paul Martin (Jr.) have been quoted in the media stating that it is insane that government policy is so tight towards stimulative investment at this point.

#45 Andrew Woburn on 08.14.15 at 9:54 pm

#21 Jack Sault on 08.14.15 at 7:20 pm
All those poor savers, seniors and retirees that used to get 8%, 9%, 10% in government bonds and GIC’s are now getting peanuts for years, since 1996 when these rates started to drop rapidly
============================

Nobody has ever got more than about 3% real interest on risk free government bonds. If the nominal rate was 10%, 7% was to compensate for the loss of spending power each year because of inflation. Worse, the whole 10% was taxable so not only did your investment shrink through inflation, you also wound up giving a bit more away to the government by paying tax on income that didn’t exist.

Compared to that, a face rate of 2-3% in a low interest environment is a deal.

#46 Cyclist on 08.14.15 at 9:57 pm

17 smartalox – from the article

“What people don’t appreciate is that the majority of developers buy property to develop right away. We don’t speculate on property. We only buy if we know what the development potential is. The land speculators are long-term holders of undeveloped land. We just don’t have enough capital to park money somewhere.”

Not the developers I know. many hold land for years, even decades, often bought in a downturn for development when the market rises.

Sounds like the local vancouver developers are getting out-gunned. Now they know how developers in smaller markets feel when “outsiders” come to town

#47 kommykim on 08.14.15 at 9:59 pm

RE: #9 Mark on 08.14.15 at 6:50 pm
Indeed. I think everyone who vilified me a few months ago for suggesting that lower interest rates eventually collapse the prices of fixed income assets including RE (on account of oversupply and diminishing credit-worthiness) owes me an apology.

I think that there is a greater chance of near ZIRP induced deflation than you getting an apology on this blog.

#48 Andrew Woburn on 08.14.15 at 10:04 pm

Everybody wants to open a restaurant but nobody wants to work in one. What happens when the Mexicans go home and the millennials won’t play?

“The crippling problem restaurant-goers haven’t noticed but chefs are freaking out about”

PS – The same problem is happening in Victoria and likely across Canada.

http://www.washingtonpost.com/news/wonkblog/wp/2015/08/12/the-crippling-problem-people-who-eat-at-restaurants-havent-noticed-but-chefs-are-freaking-out-about/?tid=sm_fb

#49 young & foolish on 08.14.15 at 10:08 pm

Well, why would anybody own then ??? … let’s just turn the entire stock over to the REITs and jump in on those juicy 7% returns (I hear they are something you can really count on, even in a deflationary global economy)

#50 Steve French on 08.14.15 at 10:09 pm

Back to Norway….

http://www.theglobeandmail.com/report-on-business/international-business/european-business/norways-sovereign-wealth-fund/article25973060/

Norway chose to develop a diversified portfolio consisting of a US$1 trillion financial buffer.

Alberta chose truck balls.

Steve-O.

#51 Frank on 08.14.15 at 10:18 pm

What could possibly cause housing to appreciate in Alberta in the next few years?

Oil is important to the global energy needs and will probably be up within the decade as it’s never spent that long depressed before.

Look at everyone that says ‘no oil rebound for X years’ and ask if they predicted the current glut. The answer is likely no. Now I’m not calling for a rebound anytime soon but I’m not going to be surprised if we’re at $60 a barrel in two years and $80 in another 2 after that.

#52 Andrew Woburn on 08.14.15 at 10:20 pm

Yeah this is all cool and everything but how you gonna win elections with lightbulbs?

“Utility and power grid managers in the U.S. are learning that the best way to cut carbon emissions and improve efficiency is the easiest: Just change your lightbulbs.
The nation’s largest grid, serving more than 61 million customers from Washington to Chicago, is revising its demand forecasts after recognizing that better lighting has undercut its projections. Swapping all of Thomas Edison’s incandescent lightbulbs with lamps containing light emitting diodes, or LEDs, would save enough electricity to power 20 million American homes, according to the Energy Department.”

http://www.bloomberg.com/news/articles/2015-08-13/the-lowly-lightbulb-outshines-solar-and-wind-on-u-s-power-grids

#53 espressobob on 08.14.15 at 10:31 pm

What a great view it is to be a global investor.

Freedom from speculation! No more commodity or sector plays.

Thank gawd!

#54 Victoria Real Estate Trurh on 08.14.15 at 10:35 pm

“The centres recently added, Victoria, Hamilton and Moncton are assessed as low overall risk. None of the risk factors are detected in Victoria, while overheating is detected in Hamilton, and overbuilding in Moncton.”

http://northumberlandview.ca/index.php?module=news&type=user&func=display&sid=36104

#55 Shawn on 08.14.15 at 10:38 pm

Low Oil Price Leads to Stopping Oil Sands Investments?

Mark said:

Unfortunately for Alberta, most of the costs of the oil sands projects are front-loaded in terms of the massive processing, SAGD steam generators, and upgrading infrastructure involved. Which means that investment in the sector is likely to fall almost to zero for a considerable period.

****************************************
That sounds logical as far as investment in NEW oil sands development.

Existing oil sands plants would still likely run due to the up-front costs which Mark describes. And these require ongoing maintenance cap ex.

Oil Sands operations very near completion could also press on to completion.

So the question becomes how many jobs will be lost in Alberta if all NEW and early-stage oil sands operations are canceled?

It may not exactly be Armageddon?

The province will also be short royalties and all the oil companies will spend less on all labour and material prices could decline due to supply / demand.

But government spending will not de decreased much (they will borrow to spend) and most oil sands operations workers (direct and indirect) will still have jobs though the pay and overtime will likely be reduced. Armageddon?

Wide-spread deflation? I don’t think so.

House price deflation? I expect so.

Big slow down in house construction? Maybe. So far the building is continuing with only a mild slow-down. But could certainly be a delayed reaction.

#56 Mark on 08.14.15 at 10:39 pm

“Well, why would anybody own then ??? … let’s just turn the entire stock over to the REITs and jump in on those juicy 7% returns (I hear they are something you can really count on, even in a deflationary global economy)”

The problem with REITs is that they have very little in terms of GAAP-compliant earnings, and those ‘juicy 7% distributions’ are pre-tax on account of REITs being flow-through entities.

Eventually deflation will ravage REITs as well, especially as more buildings come to market, and the ability of tenants to pay the rents is diminished.

Take Garth’s advice for a balanced portfolio seriously. Its the best hope for making it through the storm.

#57 young & foolish on 08.14.15 at 10:44 pm

Will energy prices come back up? Of course they will.
(hope you didn’t sell your energy stocks in a panic)

#58 Shawn on 08.14.15 at 10:46 pm

How to Live on Bond Income

Andrew Woburn said:

Nobody has ever got more than about 3% real interest on risk free government bonds. If the nominal rate was 10%, 7% was to compensate for the loss of spending power each year because of inflation. Worse, the whole 10% was taxable so not only did your investment shrink through inflation, you also wound up giving a bit more away to the government by paying tax on income that didn’t exist.

Compared to that, a face rate of 2-3% in a low interest environment is a deal.

**************************************
Agreed at 10% with 7% inflation the pot of money was eroding automatically in terms of spending power. (Assuming the 10% interest was spent)

To get to the same place today, collect your 2 to 3% and then sell off 7% per year.

It may be the same mathematically in terms of purchasing power erosion of the portfolio but people have a HUGE mental block against spending the principal.

They preferred to old system where their purchasing power was eroded but they pretended it was not since all the nominal dollars were still there.

I guess we should all get REAL in our thinking. But most humans can’t do it.

#59 Shawn on 08.14.15 at 10:51 pm

Mark…

Enjoy your trip. But you will need to visit all the provinces and then some more to find this mythical deflation. Let us know when it shows up in the official figures.

The huge increase in prices of most of our imports due to the lower dollar is not going to help your search.

#60 young & foolish on 08.14.15 at 10:51 pm

The collapse of commodity prices suggests a multi-year over-investment in the sector …. another bubble popping.

It’s boom and bust all over ….

#61 Bottoms_Up on 08.14.15 at 10:52 pm

The worst gift.

The worst gift anyone can receive is a 5% downpayment.

5 years later, you’ve paid 20k in property taxes, 10k in repairs, dozens more K in mortgage interest, a chunk to cmhc, and to move you’re looking at another 20k.

I agree looking at total cost over the life of the mortgage is way more important than money mortgage payment.

#62 young & foolish on 08.14.15 at 10:55 pm

“What a great view it is to be a global investor.”

Yup, you’re one step ahead here …. not. The world’s economies are more and more interconnected. Maybe you can run for awhile, but you can’t hide.

#63 young & foolish on 08.14.15 at 11:02 pm

“Take Garth’s advice for a balanced portfolio seriously. Its the best hope for making it through the storm.”

I meant 7% balanced portfolio returns. BTW, we will never get through “the storm” in our lifetimes. It’s the new normal (continuous boom bust cycles) where free markets are continually manipulated and true value remains unknown.

#64 Low Marx for All on 08.14.15 at 11:03 pm

Garth,

Correct me if I’m wrong, but hasn’t the real estate bubble in Canada eliminated labour mobility, as the debt laden can no longer move to chase opportunities…..kind of like in China, where the great hordes need paperwork to relocate from one area to another, making them effectively immobile, but resulting in occasional stampedes whenever job rumours circulate in a given location

#65 Conservatives destroyed Canada on 08.14.15 at 11:04 pm

Apocalypse2015 on 08.14.15 at 7:07 pm
Forzudo #5 The rise of Mexico

Good link. Here’s a tv news story from June about auto manufacturing going to Mexico.

http://www.cbc.ca/news/business/carmakers-say-adios-to-canada-as-mexico-shifts-into-higher-gear-1.3108148

With the petro-dollar gaining no benefit against Mexican currency, and all these skilled jobs leaving Canada (thanks again, Magna!), the people here barely realize how totally screwed we are.

Expect major economic and real estate collapse in Oshawa, Whitby, Ajax and nearby. VERY SOON.

And forget about people who say Windsor/Essex county etc… will be a nice place to retire to. The coming total auto collapse there soon will make that city much more unappealing.

NAFTA, like most trade deals, is killing us slowly. John Turner was right on that one.
___;;_______________________________

The sell out evil monsters called conservatives don’t care about canada or canadians. The auto pack which simply stated you have to build one car for every car you sell in Canada. Benefits to Canada and Canadians are H U G E. Negatives were none. Thanks to evil cons signing free trade deals that do nothing to benefit Canadians other then a race to the bottom. Btw You think China , Japan or Korea is stupid or sell out monsters like the evil CONservative greed pig who all end up sitting on corporate boards . Look at Evil CONservative mike harras who sits on the Magna board. Lol I wonder why? CONservative hate 99% of the Canadian population. Cons care ONLY about the 1% and everyone here most likely isn’t the 1% except Garth and he was a real Canadian who cared about Canada and what’s best for Canadians. Look what Harper did to Garth for looking out for the best interests of all Canadians and not just the 1% and that is the real reason why Garth was kicked out.

#66 Chris on 08.14.15 at 11:06 pm

The Mattamy guy is right. People only look at monthly paymENT and don’t realize they are taking on a huge amount of debt for life. And to sweeten the deal, they usually get a five year loan for a 30 year term debt, and get to renew that loan every 5 years. Don’t people realize that exposes them to a huge amount of riSK? One of the way insurance compaNY hedge against risk is to match the maturity of assets with that of liabilities. Why doesn’t Canada allow its consumers to do that is beyond me. In the US, most popular mortgage is still 30 years fixed rate. And the mortgage is open meaning you can prepay any amount any time or even pay it all off whenever.

#67 BS on 08.14.15 at 11:06 pm

Norway chose to develop a diversified portfolio consisting of a US$1 trillion financial buffer.

Alberta chose truck balls.

Alberta choose to leave the money in people pockets. They were free to invest it or spend it as they saw fit. With low taxation you end up with your own financial buffer and freedom to use it.

With the government controlling the financial buffer a citizen may or may not benefit from it period but they will have paid dearly for it through taxation. The only certainty with the government controlling a financial buffer is most of it will be end up being wasted.

#68 ShawnG in TO on 08.14.15 at 11:06 pm

@ Tim #37

Stupid people. unfortunately, there is no shortage.

#69 IRent on 08.14.15 at 11:13 pm

Fellow readers -/ question on REIT. Lets consider a Hypothetical scenario. There is massive foreclosure of homes and the Real Estate companies end up scooping lots of such houses and then rent it out. Will REIT go up?

More salient, what meds are you on? — Garth

#70 Conservatives destroyed Canada on 08.14.15 at 11:18 pm

Andrew Woburn on 08.14.15 at 10:04 pm
Everybody wants to open a restaurant but nobody wants to work in one. What happens when the Mexicans go home and the millennials won’t play?

“The crippling problem restaurant-goers haven’t noticed but chefs are freaking out about”

PS – The same problem is happening in Victoria and likely across Canada.

http://www.washingtonpost.com/news/wonkblog/wp/2015/08/12/the-crippling-problem-people-who-eat-at-restaurants-havent-noticed-but-chefs-are-freaking-out-about/?tid=sm_fb

____________________________________

Media = CONservative propaganda and lies. There is no shortage of workers just shortage of pay. People still read and believe the lies from CON media? News flash for you …..people are begging to work for free. Yup that is the new CON scheme of internship. You work for free and get experience to put on your resume. I made up my resume and got the job. They called my contacts which were my friends . Smokingman is right with lie lie lie. He is a CON but that’s what they do best.

#71 Canada is humanity's hope on 08.14.15 at 11:24 pm

In case you are considering voting for the PC regime!

http://www.nytimes.com/2015/08/16/opinion/sunday/the-closing-of-the-canadian-mind.html?action=click&contentCollection=Middle%20East&module=MostPopularFB&version=Full&region=Marginalia&src=me&pgtype=article

#72 Bondgirl on 08.14.15 at 11:25 pm

I’m myself starting to wonder about the “Chinese factor”, to be honest. Today I was talking to a colleague (who is Chinese) and who lives in a rented house with his wife and two kids in North York. The house next door is for sale and yesterday there was a Chinese family from mainland China viewing it. My friend was outside so they started talking. This house is listed in the range of 2-2.25 million (my friend’s neighbour told him this). The family isn’t professionally educated, they are business folks (they own the types of small factories that make dollar store type junky products). They have migrated to Canada for the cleaner air and political stability (ie better quality of life), and plan to raise their kids in Canada. I know this is just one example and could mean nothing, but something is telling me that we should investigate the Chinese factor a bit more seriously. We need a fact-checking mission so we can lay this matter to rest, one way or the other.

http://blogs.vancouversun.com/2014/02/03/london-ready-to-restrict-foreign-ownership-will-vancouver/

My suspicion is that rich Chinese buyers have indeed been bidding up property in Vancouver (and maybe even Toronto) and what has followed is that house-hungry Canadians have jumped in, out of fear/greed/lust/whatever and have been willing to take on massive debt to own assets that their competitors (rich Chinese buyers) have been able to snap up for cash, not understanding that the fundamentals aren’t there.

So, now, what this means is that if house prices correct (which they actually already have in Chinese money, given the loonie’s recent slide), there are more Chinese buyers waiting in line to jump in. So this could keep prices “sticky” despite being at stratospheric levels.

I think if the above is true, this trend can only be stopped if Ottawa puts a limit on foreign ownership including higher taxes on foreign owners. If Canada puts limits on foreign ownership (which it should, I believe), it would be interesting to see what follows. But I think since our govt has no plan B for the economy, it is too afraid to do anything that could prick the housing bubble. So maybe Ottawa will drag its feet on that too. Politicians are after all experts at kicking the can down the road. Interesting how there is no official data on foreign ownership.

Also, if this is true, I wonder if racial tensions are set to rise over the coming years and decades, as working Canadians may begin feeling resentful of rich Chinese.

http://news.nationalpost.com/news/canada/vancouver-being-transformed-by-new-wave-of-brash-rich-asians-looking-for-safe-place-to-park-their-cash

BTW, even the house my friend is renting is owned by a guy from Mongolia and he bought it for CAD 300K cash (I don’t know when) and right now it’s worth roughly 1mm (market value). My friend is paying rent of 2k/mo. This kind of rent-price divergence could only be swallowed by people who have too much cash and are looking to stash it somewhere safe.

Just thinking out aloud here. In a normal market, these housing prices don’t make sense, and would never never have happened. But add in the “China-has-been-getting-very-rich-over-the-last-30-years-while-US-has-been-going-in-debt” story (this is a once in 4-5 centuries event) and suddenly there is no such thing as a local economy. It becomes a global economy, and the global super-rich can and will bid up property prices in cities they deem attractive. Enter Vancouver.

The plot thickens.

#73 Bondgirl on 08.14.15 at 11:42 pm

On the other hand, my entire reasoning above could be summed up as “but this time it’s different”…

The fundamentals don’t make sense. They just don’t. This is a debt-inflated asset bubble and the history of asset bubbles tells us that they always burst, but until they do, everybody swears that “this time it’s different” …

#74 nonplused on 08.14.15 at 11:43 pm

Well I doubt that I or any of the other responders know everything. Actually add us all up and we don’t know everything. And then it seems for every one thing a person knows correctly they also know two things that are wrong.

“It’s not what you don’t know that get’s you, it’s what you know that just isn’t so!”

The whole thing of how the human brain works is very interesting. It has obviously evolved to deal with the environment it had to in times past. So recently avoiding lions and pythons who would eat it. Forming small communities where trust was paramount. But those days are past.

In today’s world, it’s dog eat dog and blog eat blog.

Good luck out there. And remember every single creature out there is trying to be better at eating other creatures least they get eaten. It’s the way the world has worked for oh, more than 500 million years.

#75 bb on 08.14.15 at 11:46 pm

#48 Andrew Woburn on 08.14.15 at 10:04 pm

It wont be much of a problem here. Temps from the Philippines are waiting by tens if not hundreds of thousands. I dont know how the temps will be coming as the government tightened the rules lately.

#76 bb on 08.14.15 at 11:52 pm

#71 Bondgirl on 08.14.15 at 11:25 pm

They’re probably newcomers. Should be called “PR money” instead of “foreign money” or “ham”. But that’s just a few of those buyers who can buy cash.

#77 family beagle on 08.15.15 at 12:34 am

#71 Bondgirl on 08.14.15 at 11:25 pm
I’m myself starting to wonder about the “Chinese factor”

…..

I’ve often wondered about the ‘English Factor’ and all that baggage. (My ilk has been here since pre-confederation) Have you ‘Bond’ folks made reparations for the Heroin Wars yet? And the bill for the Dominion’s residential school program, do we forward that directly to Buckingham Palace, or will your representative in Ottawa be picking up the tab? And assigning us each a # strawman with title on our personnage, nice one. I get a kick out the English, they torture, break for tea and crumpets, and then piff paff they are back at it by before noon. All in the name of Civilization, ta ta. Until it’s not civil anymore.

The point is, Canada isn’t old enough to matter yet. The whole whack of ya’s is foreign invaders. We’ll revisit this in 400 years, Ms. Saxon Engle Norman Pict Roman Scot Britton. Wait until China figures out North American First Nations are linked genetically. Then it will be like, “My boyfriend’s back and you’re gonna be in trouble.”

Just kidding. I have a shnoz for hipocracy. Btw, I drank beer at the King’s Arms in Sloane Square. Even spent a night in the old barn. Oo7 didn’t show, alas.

#78 Rexx Rock on 08.15.15 at 12:35 am

DELETED (anti-immigrant)

#79 Bondgirl on 08.15.15 at 12:38 am

#75 bb

Yes, they are newcomers, likely under the Investor Immigrant Permanent Residency program (which I feel was staggeringly cheap – Ottawa seems to have sold Canadian Permanent Residency for practically nothing – the foreign “investor” just had to give the provincial govt a 0% interest 5-year loan, fully backed by our sovereign guarantee)

I believe roughly 5000 new Chinese came into BC every year since 2004 but there is no official data on their real estate related activities. Of course plenty of anecdotal evidence abounds.

http://www.richmond-news.com/news/immigrant-investor-data-withheld-1.1792208

I’m actually not sure that only a few of those buyers could buy for straight-up cash. My guess would actually be that all of them could. I could be totally wrong, but based on my understanding of the economic revolution that has been going on in China since the 80s (which was apparently kicked off in China with the slogan “rich is glorious”), the amount of cash in China right now is mind-boggling. I think this is an unfolding story that has not yet been properly told in the West.

Anyway, with the foreign investor program having been scrapped, I’m curious to see how the Vancouver housing market responds in the coming months.

#80 Hamcouver on 08.15.15 at 12:42 am

The high end is certainly skewing the “average SFH” price in YVR. The home we rent has just been put on the market for $7 million dollars….last sold 5 years ago for $3.8 million. Local Chinese are falling over themselves to see it. Insane. It is in a great area but would be considered a tear down here on a 12000 sq ft lot. The potential buyers live here and are likely permanent residents or perhaps new citizens like us.
We are weary of YVR real estate. Renting is fine but somewhat tricky with school age kids. There is a huge amount of tax evasion going on with rent being requested in cash- this is pervasive. We will say adios to YVR shortly. It has become a city only for the mega rich. Our $400K income is paltry by comparison. Quite depressing for the future of this beautiful city. Thank you for this blog which has given us great financial advice and has helped to preserve my sanity!

#81 kommykim on 08.15.15 at 12:50 am

RE: #67 BS on 08.14.15 at 11:06 pm
Alberta choose to leave the money in people pockets

And that’s where they failed, because the people pissed it all away again on RE and TBs (Truck Balls). Enforced saving through a wealth fund would have given AB the ability to apply stimulus to the provincial economy today through infrastructure rebuilding which is best done in a recession due to lower labour costs.

#82 Frank on 08.15.15 at 1:03 am

this is a once in 4-5 centuries event

In terms of economics and housing there’s not such thing as 500 year trends. 500 year to humanity is a LONG time. That’s pre-industrial revolution, early renaissance. Economic trends are not even comparable. You can compare society, war, the type of stuff that hasn’t changed in a long time but housing? You have no clue what you’re talking about.

#83 whitehorn on 08.15.15 at 1:21 am

#35 Investorz “On the TSX, you see cracks appear. I know a guy doing margin calls and he says there’s a lot of that happening because of more and more stocks on the TSX dropping 10% and more in a single day.” Yes, you expect that to happen to penny stocks but the blue chips now trade that on a daily basis i.e. TSX 60. Even the major banks are near their 52 week lows. In fact, the current index of around 14000-14500 traded at those levels prior to meltdown in 2008. Basically, zero growth in the Canadian Economy since that time.

#84 Mark on 08.15.15 at 1:26 am

“Fellow readers -/ question on REIT. Lets consider a Hypothetical scenario. There is massive foreclosure of homes and the Real Estate companies end up scooping lots of such houses and then rent it out. Will REIT go up?”

REITs don’t generally get involved with SFH. Hypothetically, some enterprising REIT upstarts will probably buy up and consolidate significant numbers of distressed units in high quality tower condo developments, throw out the Condo Boards, strip out non-core amenities, and eventually de-condoize entire buildings.

But I wouldn’t expect such an event to occur until after prices have fallen dramatically, and existing REITs, with their high cost bases and relatively weak existing capitalization will have suffered greatly if not fall into insolvency.

REITs have basically been mostly straight up since their inception coming out of the early 1990s real estate crash. But that didn’t stop real estate empires that were the predecessors of modern REITs, such as Olympia and York (O&Y), from going under.

#85 @bondgirl on 08.15.15 at 2:47 am

You have to diversify your reading of blogs and other info. Hundreds of thousands of people have become millionaires based on the ‘new’ information you are just discovering. Knowledge is power.

#86 David W2 on 08.15.15 at 2:52 am

I’m working full time in a decent job, about $75k per yr and can’t still seem to get ahead. Renting and saving but progress is slow.

I have a finance background. Any advice as to what professional gigs are out there I could puck up on evenings and weekends for some extra dough?

#87 Leo Trollstoy on 08.15.15 at 3:38 am

#71 Bondgirl on 08.14.15 at 11:25 pm

How did you determine that the home owners in your series of nonsensical anecdotes were foreigners? You have copies of their passports and birth certificates?

#88 Leo Trollstoy on 08.15.15 at 3:41 am

Months ago Mark was getting ridiculed for his opinions on gold, the CAD, Toronto real estate and deflation in Canada.

No change. Still wrong.

#89 Bob Santarossa on 08.15.15 at 3:58 am

#21 Jack Sault

Agree but as a retiree (60) you can invest in some boring mutuals that are diversified (such as from TD Bank in terms of bonds/equity, offshore/onshore) and earn about 3-7%/year.

A good portion of the dividend income is from Canadian Controlled Corps. which are not taxed as harshly as off-shore dividends. A little mucky when doing taxes but no unsurmountable.

Also, I have the Capital Gains Deduction still in hand and any stock capital gain I can still claim if I want under that deduction – and so should older Canadians be able to do as well (max. $150 K and forgot I had a portion of that still left from the 1980s still…yes, call me absent minded and I would agree with you).

So it is not as bad as people think for retirees, provided you do the research and of course, you have $0 debt and some money to invest.

I also have shorter term fixed income investments, since like Garth I believe interest rates are headed up and want to be able to take advantage of that when the time comes (I planned for mid next year).

#90 jane 24 on 08.15.15 at 4:02 am

I think the reason that some bloggers have noted a lot of folk vacationing out West is that they can’t afford to go anywhere else with the loonie this low.

Currently one Cdn dollar gets you 76 cents USA or 69 euro cents or 49 British pence. This closes the rest of the world off to most Canadians. They are left with a Mexican holiday or the next province. Staycations are a sign of economic weakness and not a sign of currency strength.

It will get worse. I personally believe that the loonie will crack 70 cents USA by the end of this year. There is no good news at all in the Canadian pipeline and too many Canadian cannot afford any interest rate rise at all either. Sooner rather than later, the rest of the world will notice this.

Black swans are gathering. Shame at 20 years of govt economic incompetence.

#91 Llewelyn on 08.15.15 at 7:11 am

Thanks to this blog I have used up all my free views of most mainstream media sources and have now become addicted to reading information from several different sources before forming my own opinion.

However I am not sure I want to subscribe to dozens of separate sites to support my addiction. Possible abuse of credit information definitely concerns me.

Is there a business model for something similar to cable TV where you could select the sources of information you would like access to and pay a single monthly fee based on the composition of the package.

If the cost was reasonable I would gladly sign on.

Surely the World Wide Web could be used to disseminate information at a reasonable cost as well as entertainment.

#92 Steve French on 08.15.15 at 7:16 am

#67 BS

wrong. the Norwegian sovereign wealth fund invests the money outside of Norway. thereby avoiding inflating their own currency. thereby avoiding Dutch Disease that undermines any potential for manufacturing.

there is a strong body of theory and logic to support their policies.

Alberta is still left with truck balls. and deficits.

#93 Incubus on 08.15.15 at 7:56 am

“There’s now good reason to believe crude will stay sub-$60 for a long time. Three years at least, says Moody’s. ”

This is a chicken game run by the Saudis.
And it cost them over 100 billions annually.

http://journal-neo.org/2015/08/08/us-s-saudi-oil-deal-from-win-win-to-mega-loose/

“The rout in commodities has ravaged Canada’s oil patch and its mining sector. For example, home sales in Calgary, the epicenter of the oil patch, have plunged 25% year-to-date. Canada is in one of the most magnificent housing bubbles the world as ever seen, and when it pops in Toronto or Vancouver, there will be fireworks. But not yet. ”

http://www.businessinsider.com/canadian-dollar-hits-an-11-year-low-2015-8#ixzz3isrzt3SA

#94 Ponzius Pilatus on 08.15.15 at 8:07 am

Mulcair is warning about RE bubble.
Could become an election issue.
I hope so.
http://www.bnn.ca/News/2015/8/14/NDP-leader-Mulcair-sees-serious-danger-in-Canadas-housing-market.aspx

#95 Nora Lenderby on 08.15.15 at 8:38 am

#88 jane 24 on 08.15.15 at 4:02 am

Black swans are gathering. Shame at 20 years of govt economic incompetence.

Agree with the incompetence, but perhaps not with the 20 years. (I actually thought Paul Martin wasn’t all that bad as a finance minister.) However, it is an incredibly difficult job, keeping the citizenry out of the casinos and drug dens. Our present govt seemed to give up on being helpful to the real economy a few years ago.

As for the black swans thing, I think that is a misunderstanding. The term was coined to mean “something that no-one could anticipate until it happened”, not “the inevitable consequences of people in large numbers behaving stupidly”.

And we often behave stupidly, especially in large numbers.

#96 Matt Gamon on 08.15.15 at 8:53 am

My friend’s daughter just bought a house with her boyfriend. She just graduated looking for a job, her boyfriend has been working for Magna for 2yrs, but making good money. Semi detached in the GTA, $525k with 5% down = half a million mortgage.
Property virgins?

#97 Julia on 08.15.15 at 9:00 am

#66 Chris
“The Mattamy guy is right. People only look at monthly paymENT and don’t realize they are taking on a huge amount of debt for life.”

On a smaller scale, it is the same for cars. That is what makes leases so popular. People can afford the payment. We don’t buy cars very often, we are only on our 2nd family car (every 7-9 years). We bought the last one through the APA so no haggling but when we bought the previous one, I went to the dealer by myself the first time (geez, a girl shopping for a car). The sales person was trying to sell me a payment. When I asked the actual price of the car and the interest rate used, he gave me a blank stare.

#98 Julia on 08.15.15 at 9:04 am

#71 Bondgirl

“They have migrated to Canada for the cleaner air and political stability (ie better quality of life), and plan to raise their kids in Canada.”

So they are successful business people moving here, who cares where they are from. Isn’t the boogeyman out west that money is being funnelled and parked here, from people not moving here and leaving houses empty?

#99 Julia on 08.15.15 at 9:07 am

Besides, if this “Chinese factor” is with people buying higher end homes, then they are not the driving factor behind the increase of entry level homes.

#100 Ray on 08.15.15 at 9:17 am

The wise folks at CMHC say Edmonton has almost no risk of a housing correction. http://www.edmontonjournal.com/touch/story.html?id=11291205

Of course they say the same thing about Vancouver.

#101 Tiger1960 on 08.15.15 at 10:09 am

With the current price of oil at around 42 dollars a barrel,does that price include the barrel:)tiger

#102 JimH on 08.15.15 at 10:50 am

#89 Llewelyn
“Thanks to this blog I have used up all my free views of most mainstream media sources and have now become addicted to reading information from several different sources before forming my own opinion.”
=================================
Sounds like a worthy quest. I know of no such ‘one size fits all’ service for all categories of information, but I can steer you onto some free sources of valuable information on economics and investing.

I first started trading equities and derivatives in the mid-90’s, when actionable intelligence was much harder to come by, and have since come to rely heavily on these (free) gems in no particular order:

http://www.briefing.com/
http://stockcharts.com/def/servlet/SC.scan
http://insidercow.com/
http://bigcharts.marketwatch.com/
http://stockcharts.com/freecharts/marketsummary.html
http://www.pragcap.com/
http://stockcharts.com/freecharts/candleglance.html?VXX,$COMPQ,$SPX,$RUT,$WTIC,$GOLD,$CRB,$USD,TLT,$NATGAS,$USHL5,$Silver|B
http://www.kitco.com/charts/livegold.html
http://www.muddywatersresearch.com/
http://money.cnn.com/data/fear-and-greed/
http://www.tradingeconomics.com/united-states/indicators
http://abnormalreturns.com/
http://www.bloomberg.com/
http://www.nasdaq.com/etfs
http://www.ritholtz.com/blog/
http://geofred.stlouisfed.org/
http://shortsqueeze.com/shortinterest/stock/SPY.htm
http://www.cefconnect.com/Screener/FundScreener.aspx
http://www.businessinsider.com/

#103 Unhinged Loon on 08.15.15 at 11:03 am

@BS #67

“Alberta choose to leave the money in people pockets. They were free to invest it or spend it as they saw fit. With low taxation you end up with your own financial buffer and freedom to use it.”

So essentially what you’re saying is that Alberta chose lifted pick-ups and those gaudy testicles on the trailer hitches.

Only delusional Libertarians believe that people know what’s good for them.

The majority of people are worthless slaves who crave leadership, guidance and authority.

#104 Ronaldo on 08.15.15 at 11:32 am

#99 Tiger1960 on 08.15.15 at 10:09 am

”With the current price of oil at around 42 dollars a barrel,does that price include the barrel:)tiger”I

I would suspect that the barrel is worth more than the contents at the moment. I wonder if barrels would be a good investment when the demand picks up. Might be able to pick them up cheap right now.

#105 Jack Sault on 08.15.15 at 11:34 am

If it is better to have these low interest rates, according to Andrew and Shawn’s comments on this blog, then why are so many warning us that they are too low right now.

You guys are contradicting yourself just like when interest rates were dropping and many people said that this is very bullish for a country’s economy.

Now, many are coming out warning about a Canadian housing bubble, bond market bubble and other messages and commentary in the business, economic community of do buy GIC’s, annuities, longer term bonds etc. with these low interest rates.

So, it is not better that we have these low interest rates and now you want me to say that the Canadians that got huge mortgages, lines of credit and other debts of coarse want it to stay this way because they are saving hundreds, thousands a month in interest that is coming from savers, fixed interest and fixed income investors.

Also, I would buy the financial post for years and when interest rates on GIC’s and government bonds in the 1990’s where in the 6%, 7%, 8%, 9%, 10% range, C.P.I, consumer price inflation was 2.5% to 3.75% range not 7%.

To Bob Santarossa, I understand what you are saying but I keep hearing that many say don’t equities and REIT’s are not a true replacement for retirement income from annuities, GIC’s, government bonds.

I remember in the 1990’s, there was a term used called GIC refugees as interest rates kept dropping they were moving there money into the stock market and stock market, equity type investments.

#106 Jack Sault on 08.15.15 at 11:36 am

Correction to my last comment above many in the business, economic community are saying do not buy GIC’s, annuities, annuities with these low interest rates.

#107 Ronaldo on 08.15.15 at 11:40 am

#94 Matt Gamon on 08.15.15 at 8:53 am

”My friend’s daughter just bought a house with her boyfriend. She just graduated looking for a job, her boyfriend has been working for Magna for 2yrs, but making good money. Semi detached in the GTA, $525k with 5% down = half a million mortgage.”

Yep, and in 5 years when the rates double and prices drop 50% she will be paying twice the (rent) and be underwater by a quarter million. Great idea.
Property virgins?

#108 Jack Sault on 08.15.15 at 11:42 am

Correction to my comment above, To Bob Santarossa, I understand what you are saying but I keep hearing that many say don’t use equities and REIT’s and other types of higher risk, higher volatility investments for a true or any replacement for retirement income from annuities, GIC’s, ,government bonds.

#109 Drill Baby Drill on 08.15.15 at 11:45 am

#38 Shawn

I like your thinking on oil futures. One big variable not included is a major wreck in the middle east, they are well past due for another one. Watch out for Russia stirring up the geo-politics in the region in order to take away attention from domestic unrest due to it’s crashing economy plus a need to put upward pressure on oil futures.

#110 JimH on 08.15.15 at 12:00 pm

#99 Tiger1960 on 08.15.15 at 10:09 am
“With the current price of oil at around 42 dollars a barrel,does that price include the barrel:)tiger”
==================================
LOL Tiger, it doesn’t include a great deal of stuff!
Many don’t realize that the “$42(US)/Bbl” price often quoted on this blog is the price for WTI (West Texas Intermediate) crude. North Sea Brent crude trades slightly higher.

Tar Sands Crude is a blend marketed as WCS (Western Canada Select) and trades at a price differential compared to WTI crude. This differential has varied wildly over the past couple of years, but generally has been $8-$20(US) less that WTI crude. Last week, the differential peaked at $22.75 lower.

This was lower than the 2008 differential when WTI sank to $32(US)/Bbl.

Tar sands producers are now under extreme pressure.

#111 Brian Ripley on 08.15.15 at 12:01 pm

…we could suffer some real pressures as people struggle to afford these houses… Mattamy Homes president.

Interest rate increases might be scary for those on the margin, but reduction in earnings is a superior market mover, and we are starting to see its appearance.

I mashed up this chart of the M/M plunge in full time employment in Canada overlaid on the drama going on in the FX markets… specifically China vs Canada:

http://www.chpc.biz/history-readings/workin-for-a-livin

China’s recent devaluing of its currency is far more globally dynamic than Canada devaluing because China’s employees produces a lot of finished stuff.

As seen this week even with a $42 barrel of oil, many local Canadian markets saw refined oil products (gasoline etal) rise because we don’t refine enough of our own product to service our own markets.

We depend on others, and this is a world of self interest.

On my 10 province employment earnings chart (2nd big chart from top of page) http://www.chpc.biz/earnings-employment.html

… it does appear that a rounding top is occurring. (2 month data lag)

#112 BUY MY VOTE on 08.15.15 at 12:06 pm

#3 North Burnaby on 08.14.15 at 6:40 pm
————————————————-
Like a drowning man digging his claws into the beach sand. These people are only happy they got their money out while there still is a chance. They care not if it was a good investment. They were facing a 100% loss and some jail time if their government caught them on the way out of their country.

#113 gut check on 08.15.15 at 12:07 pm

people are funny.

#114 TurnerNation on 08.15.15 at 12:20 pm

Less spending by consumers (at least they have houses – and shovelling $3000-6000/mo in costs at it?!).

http://business.financialpost.com/executive/leadership/aeroplan-operator-aimia-inc-takes-a-hit-from-slowing-canadian-economy-restructures-to-cut-costs

#115 Mf on 08.15.15 at 12:20 pm

JimH on 08.15.15 at 10:50 am

Awesome post! Thanks for all those links.

Mf

#116 Cyclist on 08.15.15 at 12:27 pm

90 Steve – I dont think 67 BS is wrong. He has simply explained the other option. If Norway chooses to invest oil royalties offshore, then norwegians must pay more via taxes for government services and benefits at home.

If the revenue went to pay for those, the citizens could
invest the taxes saved on their own. Offshore or truck nuts. The advantage BS sees is that you would be in personal control, rather than the government.

#117 Smoking man on 08.15.15 at 12:30 pm

He was known as sexual harassment panda

#118 JimH on 08.15.15 at 12:31 pm

#9 Mark
No one owes you an apology for anything.

Lower interest rates DO NOT in and of themselves “eventually collapse the prices” of fixed income assets (primarily bonds, CD’s etc.).

Prices of fixed income assets generally and historically have an inverse relationship to interest rates, and it is the fear and eventual certainty of future RISING interest rates that puts pressure on prices of fixed income assets.

You need to learn the difference between correlation and causation.

#119 Bondgirl on 08.15.15 at 12:37 pm

Immigration is a good thing, and skilled immigrants who contribute to the real economy are a clear asset to Canada. Also, nobody should be advocating shutting our borders to capital flows from the outside. But, we do need to execute our immigration policy more strategically, and we do need a careful study of the full impact of importing ultra-wealthy individuals from outside, and ask ourselves: is one of the unintended consequences that they help drive up local property values to the point that the local real estate becomes completely unhinged from the local economy?

I think foreign buying at the high-end of the market contributes to the overall housing bubble in several ways: direct reduction of finite housing stock (which is probably only a minor factor), but more significantly, it leads to the unchecked growth of an unscrupulous real estate industry as developers and agents smell “an opportunity of a life-time” to cash in on the new demand at the high end. They work to aggressively promote and market real estate in the media and create a “gold rush” effect (“ie “buy now or you’ll never get in”). And the average uninformed speculator follows suit (the herd mentality). People try to get on the “gravy train” at whatever price-point they can. So tiny shoe-box condos in Toronto get pricey along with everything else.

This is a fascinating book that details all of the big US real estate bubbles since it’s founding and ends with an entertaining story of the Florida real estate bubble of 1926.

http://www.amazon.com/Great-American-Land-Bubble-Land-Grabbing/dp/1578987784

Just because real-estate developers and other industry stakeholders have an obvious vested interest in hyping up the Chinese factor, that doesn’t mean there isn’t any basis at all in reality. Before dismissing the possibility that there have been harmful knock-on effects of foreign capital flows on the real estate market in places like BC and Toronto, let’s at least study it. People who are talking about this are not necessarily racist or xenophobic, nor are they trying to deflect attention away from the ugly truth that Canada’s real estate mania owes much to a dangerously misguided (and fundamentally corrupt) Canadian government policy of encouraging debt-financing to an extreme degree. We know that no matter how big the hype, if lending rules were tighter, the bubble would’ve been contained. But Ottawa has done the opposite, and so we now have an entire nation gone mad about owning property, no matter the cost. And not only that, the investor immigration program itself seems to be about broke provincial governments desperate to raise cash. So ironically, this entire mess (including the Chinese factor) is a result of our inability to live within our means. We know we’ve got to stop borrowing, both as individuals and as a nation, but we just can’t do it. Overcoming our addiction will involve too many hard decisions and too much pain on too many levels, and so I believe it will not happen.

This will end very badly.

#120 Godth on 08.15.15 at 12:39 pm

#107 Drill Baby Drill on 08.15.15 at 11:45 am

Russia is going to stir up the M.E.? Your western bias is hilarious (unless one actually lives in the M.E.).

Western wars have killed four million Muslims since 1990
http://www.voltairenet.org/article187299.html

http://www.economist.com/news/leaders/21649465-eus-policy-maritime-refugees-has-gone-disastrously-wrong-europes-boat-people

That light sweet crude has already been thoroughly shaken and stirred methinks.

#121 Cyclist on 08.15.15 at 12:40 pm

Just for a little comparison. The CPP reserve has
surpassed $0.25T and has about 76% invested
internationally.

http://www.cppib.com/en/home.html

#122 BS on 08.15.15 at 12:46 pm

Anyway, with the foreign investor program having been scrapped, I’m curious to see how the Vancouver housing market responds in the coming months.

The immigrant investor program was scrapped last year. There was no downturn in the Vancouver or Toronto market after it was scrapped. On the other hand interest rates were cut earlier this year along with mortgage rates and the Vancouver and Toronto markets took off. Does that not tell you the impact of foreign investors compared to interest rates and credit?

The fact Harper canceled the immigrant investor program tells you it had little impact on housing otherwise he wouldn’t have canceled it. After all Harper is making every attempt to inflate housing through loosening CMHC qualifications, cutting interest rates and giving tax breaks on renovations. If he thought investor immigrants were supporting housing prices he would have expanded the program, not cut it.

#123 DisgustMadeMePost on 08.15.15 at 12:54 pm

R E bubble an election topic?

Hmmm, if they keep talking like that, the rabble may start to notice. The fear just has to get started…

#124 BS on 08.15.15 at 12:54 pm

wrong. the Norwegian sovereign wealth fund invests the money outside of Norway. thereby avoiding inflating their own currency. thereby avoiding Dutch Disease that undermines any potential for manufacturing.

there is a strong body of theory and logic to support their policies.

Norway taxes citizens and local businesses and then invests the money outside Norway. Great for companies outside Norway, bad for citizens and companies in Norway.

Imagine if they let the citizens and businesses make their own choice on investing THEIR money. Norway might actually develop an industry other than oil. People would no longer be under the control of government. That would be terrible.

#125 JimH on 08.15.15 at 1:00 pm

#113 Mf
No problem! While I get a ton of good intelligence from my trading/brokerage site, I like to get second opinions as much as possible.
There is one subscription site that belongs to one of my old mentors, Brian Shannon, who is a very prudent and astute technical analyst; http://www.alphatrends.net
(he’s almost as good as Janet Yellen)

Todd Harrison over at Minyanville (http://www.minyanville.com/) is as sensible, prudent, long-suffering and genteel as that Garth Turner guy, and also freely gives out a ton of useful freebies. His “Buzz and Banter” is fun for active traders.

There is one caveat with using free websites, however.
They love to flood you with tracking and advertising cookies. I use Firefox as my browser and have set it up so any site wishing to plop down a cookie has to ask me first. I’ll let the site itself do this, but then I have blocks on all the other third-party tracking and ad sites.

I run MalwareBytes (https://www.malwarebytes.org/) daily, but it’s rare that any tracking/spyware gets through.

#126 BS on 08.15.15 at 1:03 pm

So essentially what you’re saying is that Alberta chose lifted pick-ups and those gaudy testicles on the trailer hitches.

Some people did. Those lifted trucks created local businesses and jobs for those that did the work. Those businesses and jobs then paid more taxes and spent their earnings locally again. On the other hand in Norway the government steals the money and invests it outside Norway creating jobs and businesses outside Norway.

Only delusional Libertarians believe that people know what’s good for them.

The majority of people are worthless slaves who crave leadership, guidance and authority.

If you do not have the ability to make your own decisions then I feel bad for you. Please do not paint everyone with the same brush. We all do not need a nanny controlling everything we do in our adult lives.

#127 Chris in Nanimo on 08.15.15 at 2:01 pm

#52 Andrew Woburn

Or cities could just turn off all street lighting overnight, e.g. After midnight. But they won’t because people are scared of the dark. Some Cities have already done this to save money, and seen interesting side effects, e.g. Crime actually dropped in those darkened areas.

And being a star gazer i could actually see the night sky without having to drive 200km to get dark skies.

#128 Gulf Breeze on 08.15.15 at 2:20 pm

Bond Girl,

I would also like to see not only tighter controls on foreign ownership, but more transparency. Some of the money coming from offshore is being laundered through real estate here and in Australia, etc…I have a problem with foreign nationals being allowed to buy their way into a country, without being properly vetted.

It is bad enough that a tsunami of money is causing asset bubbles, but money from proceeds of crime? Horrible.

‘All real estate is local’ is the myth some people live by. However the Chinese govts own efforts to repatriate stolen funds, sunk into tangible assets, from officials who have fled to the U.S., Canada and other safe havens, paints a different picture.

#129 Keith in Calgary on 08.15.15 at 2:21 pm

Has Japan normalized interest rates yet ???

It´s only been 25 years or so………LOL.

Ain´t gonna happen folks……not over here……not over there. We´re all zombies now.

I just wish that I could vote for Donald Trump.

#130 kommykim on 08.15.15 at 2:24 pm

RE: #124 BS on 08.15.15 at 1:03 pm
We all do not need a nanny controlling everything we do in our adult lives.

Maybe not ALL, but the majority do need a benign overseer. Garth has been ranting about this for years. People don’t save for retirement. They gorge themselves on debt and are one pay cheque away from fiscal evisceration.

#131 Godth on 08.15.15 at 2:46 pm

#127 Keith in Calgary on 08.15.15 at 2:21 pm
“I just wish that I could vote for Donald Trump.”

Many people are awaiting the arrival of a charismatic despot in the USA. Don’t worry it will happen in time, it’s the natural consequence of the trajectory we’re on.

Corn-pone fascism will set the world to rights.

#132 Ponzius Pilatus on 08.15.15 at 3:01 pm

#97 Julia on 08.15.15 at 9:07 am
Besides, if this “Chinese factor” is with people buying higher end homes, then they are not the driving factor behind the increase of entry level homes.
———————
What you are saying is that if the price of steaks goes up, the price of ground beef will stay the same.
Interesting.
Got any charts for that?

#133 Ponzius Pilatus on 08.15.15 at 3:14 pm

A few posts ago, there was a discussion about the pros and cons of the Internet.
I’m just reading:
The Internet is NOT the answer!
By: Andrew Keen.
Interesting read.

#134 Joe2.0 on 08.15.15 at 3:37 pm

Harper says he’s beginning an enquiry into foreign monies entering the Canadian housing markets “because they are becoming unaffordable” to locals.
Wonder how that’s going to be spun, the money will continue to flow but will be taxed and back taxed is my guess.
Nothing’s going to change.

#135 BS on 08.15.15 at 3:43 pm

Maybe not ALL, but the majority do need a benign overseer. Garth has been ranting about this for years. People don’t save for retirement. They gorge themselves on debt and are one pay cheque away from fiscal evisceration.

I get the theory, but it practice it doesn’t work. Governments have proven they are more irresponsible with money than even those in society that live pay cheque to pay cheque. The government wastes much of the money it collects through taxes. The more it collects the more it wastes. Sure it can appear to work for a limited time when you have massive easily extracted oil with a small population base like Norway. Norway’s happiness will be short lived now oil prices have tanked with no other major industries.

Look at how socialism worked out for Greece. It appeared to work good for a while but it was all a mirage. With socialism people figure out there is little incentive to work hard or look after themselves. Less people working and more people taking a free ride. Why go to work when you can sit on the beach and get all the same benefits? The government in Greece blew the peoples retirement funds and all the people expecting the government to look after them in retirement now realize they have nothing. Those government pensions evaporated. The average person in Greece will retire with far less than even the poorest of the poor in Canada. It didn’t look that way 10 years ago. Norway will end up in the same boat. They are only one election away from a new government blowing the whole fund on election promises over a few years. Governments only care about getting elected. When governments spend money or promise to spend money they get elected by those same people who live pay cheque to pay cheque. With low oil prices Norway could be broke in 5 to 10 years and the people will be screwed. They will have no money saved because the government took it all through taxation, and then blew it.

At least people in Canada can save with our reasonable tax rates and put the savings in tax sheltered accounts knowing their money will not disappear regardless of what the economy in Canada does or who is running the government. If people choose not to save then they live a modest life in retirement. Nobody is starving in the streets. This system provides incentive to work hard and invest which is proven to be better for everyone. In the end if people don’t save for retirement they will just live on less. I have no problem with that. People make the choice.

#136 DRILL BABY DRILL on 08.15.15 at 3:51 pm

Sustained lowering of oil prices is very destabilizing on the economies that are producers of it. Especially vulnerable are the middle east and north and west African producers. There will be blood.

#137 Julia on 08.15.15 at 3:57 pm

#130 Ponzius Pilatus
#97 Julia on 08.15.15 at 9:07 am
Besides, if this “Chinese factor” is with people buying higher end homes, then they are not the driving factor behind the increase of entry level homes.
———————
What you are saying is that if the price of steaks goes up, the price of ground beef will stay the same.
Interesting.
Got any charts for that?

**************
No, you are completely misreading or understanding. I am not saying that entry level homes are not increasing in price. I am saying that if the “Chinese factor” is for higher end homes then something else is driving up the prices in entry level homes.

#138 Jack Fitzsimmons on 08.15.15 at 4:16 pm

To BS #133

I have a solution for alot of these debt junkies and real estate junkies, since they like putting everything in their primary residence, since CMHC charges 2.4% to 3.6% for every 5 year period for most mortgage holders so charge a similar amount that will be paid as retirement income paid over 25 years and put in an RRSP+ annual tax deduction, RRSP refund.

For example, a $500,000 mortgage at say 3.6% total charged over 5 year period, by the time they pay off the mortgage in 25 years, assuming a modest 4.5% rate of return a 30 year old couple or single person owning that home mortgage free would have about $375,000 by ages 67.

This would payout about $2,000 a month which is worth about $900 a month in retirement years dollars they would get this until ages 92 and if they both pass away before the 25 years, the remaining balance would be paid monthly as well to their beneficiaries until the 25 years are fully paid.

The only problem I can see with this is the builders, real estate agents, real estate lawyers, mortgage brokers, mortgage companies, finance companies, lenders, banks etc. will cry this making housing less affordable.

However, when housing prices go up and they make more commission, mortgage interest, fees, more profits then it is okay that it is less affordable for their benefit and reasons.

#139 TRT on 08.15.15 at 4:28 pm

@Julia post 97

‘Besides, if this “Chinese factor” is with people buying higher end homes, then they are not the driving factor behind the increase of entry level homes.’

———————————-

Think a little more. Think about math and then you will know how the 2 are related. Where do you think the high end sellers move to?

#140 SWL1976 on 08.15.15 at 4:31 pm

#127 Keith in Calgary

“I just wish that I could vote for Donald Trump.”

129 Godth

Many people are awaiting the arrival of a charismatic despot in the USA. Don’t worry it will happen in time, it’s the natural consequence of the trajectory we’re on.

Corn-pone fascism will set the world to rights.

Trump is nothing more than a circus act. Hillary is the real snake in the grass

It doesn’t matter who the public votes for; recounts will do wonders…

Remember Bush Jr circa 2000

#141 Julia on 08.15.15 at 4:53 pm

#137 TRT
@Julia post 97

‘Besides, if this “Chinese factor” is with people buying higher end homes, then they are not the driving factor behind the increase of entry level homes.’

———————————-

Think a little more. Think about math and then you will know how the 2 are related. Where do you think the high end sellers move to?

**************
So you are saying the high end sellers are “Chinese”? I am not. I am responding to the comment that money from China is being brought in to buy high end property.
If the high end property sellers are moving into entry level homes, it’s not money from China.

#142 Godth on 08.15.15 at 5:00 pm

#138 SWL1976 on 08.15.15 at 4:31 pm

Dear leader hasn’t arrived in this election, but the next? The next will be after the next big downturn and the people will be primed for easy answers, even more than now – hunger doesn’t think.

https://www.youtube.com/watch?v=iA41ggsdeXE

#143 Julia on 08.15.15 at 5:03 pm

Again, I am not denying there is not a link from this perceived “Chinese factor” in the price of housing. I don’t personally believe that it is the main factor, I think we are doing this to ourselves.
But some believe that money from China is coming into the country to buy high end homes and at the same price ruining it for everybody else. So called “locals” are benefitting from this windfall and moving somewhere else , and if they choose to spend that money on overpriced entry level homes then these “locals” are doing it to themselves and contributing to the insane prices.

I am tired of hearing that it’s “money from China” creating this insanity. It’s not.

#144 Millmech on 08.15.15 at 5:13 pm

It’s correct most people only look at the monthly payment.Take your monthly payment and times it by 360,then add to that what your down payment is(double it 3 times for lost opportunity costs) and you get a good idea what the true cost of housing is.Went through this with a cousin of mine today,was astounded at what the total cost of a house was over a thirty year time period versus renting at this price.

#145 Lorne on 08.15.15 at 5:23 pm

#133 BS
“Look at how socialism worked out for Greece. It appeared to work good for a while but it was all a mirage. With socialism people figure out there is little incentive to work hard or look after themselves. Less people working and more people taking a free ride. Why go to work when you can sit on the beach and get all the same benefits? The government in Greece blew the peoples retirement funds and all the people expecting the government to look after them in retirement now realize they have nothing. ”
……..
Funny how many people believe the left wing was in power in Greece and this was the cause of their economic problems when, in fact:

“In Greece, it took a very left-wing government to cut public spending, slash the size of the public service and reduce a government debt load that had begun to rise fast under conservatives a decade earlier. “We must all adapt ourselves to this new situation,” Prime Minister Alexis Tsipras told the members of his far-left Syriza coalition as he successfully persuaded them to vote in a second round of reforms this week.”

Interesting article about how the left has actually acted more responsibly than the right:

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

#146 Bondgirl on 08.15.15 at 5:23 pm

I’d guess Harper scrapped the investor immigration program because it was politically a ticking time bomb, as the hoped-for gains were not realized. Turns out, for eg, that these wealthy “investors” were turning out to curiously not have much income as declared on their tax forms. So tax revenues were much lower than projected. But even though the old program has been scrapped (with Ottawa being sued by foreign investors who couldn’t get in), a new one is in place (although much less “investor-friendly” than the old one, hence no bites). And I believe the separate one in Quebec is still in place?

Gulf Breeze, I concur. The whole program is seriously misguided. What we need are highly educated and finely skilled immigrants who can help Canada compete in an increasingly cut-throat “winner takes all” global economy. Inviting in the global super-rich (without proper vetting of their sources of funds or any precondition even for language requirements, let alone for starting viable businesses that benefit Canada) is like adding gasoline to the fire of an already sick consumption-crazy culture of Keeping up with the Jones (which has morphed into Keeping up with the Kardashians, and which will soon morph into Keeping up with the Wongs).

#147 Harper Worst PM ever on 08.15.15 at 5:24 pm

Joe2.0 on 08.15.15 at 3:37 pm
Harper says he’s beginning an enquiry into foreign monies entering the Canadian housing markets “because they are becoming unaffordable” to locals.
Wonder how that’s going to be spun, the money will continue to flow but will be taxed and back taxed is my guess.
Nothing’s going to change.
____________________________________

LOL Harper only now you are going to look into it during election time. You had 10 years to do something and did nothing as usual. HARPER you are FINISHED. Enjoy your last days as PM cause you are getting kicked out of office. Useless to everyone except the 1%.

#148 Nosty, etc. on 08.15.15 at 5:33 pm

#138 SWL1976 on 08.15.15 at 4:31 pm — “Trump is nothing more than a circus act. Hillary is the real snake in the grass”

And now the ‘just-in-time’ method works perfectly!

CSIS – ISIS What’s the diff?

#149 Andrew Woburn on 08.15.15 at 5:33 pm

#103 Jack Sault on 08.15.15 at 11:34 am
If it is better to have these low interest rates, according to Andrew and Shawn’s comments on this blog, then why are so many warning us that they are too low right now.
========================

One reason for the warnings about abnormally low rates is they erode business discipline and lead to poor and wasteful investments. If you borrow a million for a business project at 6%, you’d better be sure it’s going to pay back a reasonable profit over and above the $60K annual interest. If you’re wrong and the project gets into trouble, you are going to run out of cash fast so choose your project carefully. If you are paying 2% or less, you can juggle for a long time before you fall over.

We are now carrying a lot of zombie companies who would be dead in a normal market. They eat up resources and manpower which could be better employed.

Another problem with today’s rates is they let financiers borrow almost for free to “invest” in derivatives, third world debt and foreign exchange flutters instead of building productive companies. One risk in increasing the federal reserve rate is that these ventures will be unwound. Although that sounds good, in the short run, a lot of bank debt will be repaid. This will shrink the money supply and contribute to the deflation that worries central banks.

#150 TCContrarian on 08.15.15 at 5:59 pm

Well, I think I may have timed the market (aka ‘bubble’), perfectly! Just closed on a sale of my YVR home. I will be renting for a while…but that’s a-OK.
I contrast to Trevor though, I actually liked my home and the location – I just don’t like debt!
Going to buying lots of gold, and gold-leveraged products (like the ETF XGD), along with a whole bunch of energy stocks (that are currently paying nice dividends!)
Sell high (RE), buy LOW (gold)…repeat!

#151 Ronaldo on 08.15.15 at 6:39 pm

#145 Harper Worst PM ever on 08.15.15 at 5:24 pm

Joe2.0 on 08.15.15 at 3:37 pm

”Enjoy your last days as PM cause you are getting kicked out of office. Useless to everyone except the 1%.”

I sincerely hope that you and others like you will back up your words with a vote otherwise it will be a total waste of key strokes.

#152 Ponzius Pilatus on 08.15.15 at 6:39 pm

Some observations from the ground here in Richmond.
While the overall inventory of SFHs is still low, more and more of the luxury houses are coming on the market and sitting much longer than usual.
Also, tear downs that would be snapped up in a minute are now languishing.
Should be an interesting fall. Get it… FALL.

#153 Ponzius Pilatus on 08.15.15 at 6:46 pm

Julia,
Assume for a minute that the Chinese would buy up all the steaks in Richmond and Vancouver West, don’t you think that the price of steaks and ground beef would go up at the same time.
My educated guess is that % wise the ground beef would get more expensive.
Just go and ask your local butcher what he thinks.

#154 Ronaldo on 08.15.15 at 6:50 pm

#141 Julia on 08.15.15 at 5:03 pm

”I am tired of hearing that it’s “money from China” creating this insanity. It’s not.”

Either way, when this bubble does burst, those holding the last piece of paper will be the greater fools. We will have a return of 2008, just have patience, sit back, have a cool one, and watch it all come to pass. In my 50 years of investing in real estate and the markets I’ve seen more ups and downs than my granddaughter on her trampoline.

#155 TurnerNation on 08.15.15 at 6:53 pm

A look at Northerns Leftist Ontariowe. I predict rural services will be shut down, people herded into city slums and barrios. See: getting people off their land.

———————-

“”Here’s something new to me, though: welfare administrators in Toronto will buy bus tickets for people on social assistance so they can move to Elliot”

https://nowtoronto.com/news/the-changing-face-of-poverty-in-northern-ontario/

– It’s an hour before the hockey banquet the Whitefish River First Nation band council has organized for the community’s children. And Chief Shining Turtle is telling me about the challenges faced by those on social assistance on First Nations reserves.

(My comment: where’s all our tax money for Indian Affairs going ? six-figure band salaries?)

– The good news is that band councils can receive funding from the Canada Mortgage and Housing Corporation to build housing and rent it to members of the community at a reasonable cost.

– There are two gold mines in the Wawa area: Wesdome and Island Gold Mine and Mill, owned by Richmont Mines.

I thought a gold mine would be, well, a gold mine for a town like Wawa. But it’s not. Wawa has the highest per capita food bank use in the country.

Mayor Ron Rody says the town receives no benefits from the mine; in fact, house prices and rents are going up because of the influx of workers from out of town.”

#156 TRT on 08.15.15 at 6:54 pm

Julia said “I am tired of hearing that it’s “money from China” creating this insanity. It’s not.”

How are you tired? This is an objective conversation. Deal with it.

If you understood simple logic, you would understand. It goes like this: foreign money buys most desirable places in Vancouver (all nationalities), the seller pockets the proceeds and moves a little further away and buys with 50% of the proceeds and pockets the other 50%. And so on.

Vancouver is a closed system. Population has been increasing for a century.

Are you still tired?

#157 BS on 08.15.15 at 6:57 pm

In Greece, it took a very left-wing government to cut public spending, slash the size of the public service and reduce a government debt load

Greece has been run by left wing governments for decades. The current really left wing government in Greece only did what the right wing German government forced them to do. When left wingers go bankrupt they have no choice but to stop spending and cut.

#158 Joe2.0 on 08.15.15 at 7:00 pm

Chinese aren’t just buying higher end.
That’s a fable.
They buy what they can afford.

#159 kommykim on 08.15.15 at 7:23 pm

RE:#133 BS on 08.15.15 at 3:43 pm
Look at how socialism worked out for Greece.

Google Konstantinos Alexandrou Karamanlis and you’ll know all you need to know about the failure of Greece. The tax cuts didn’t pay for themselves.

You see, smart business people realize the need for taxes. Taxes pay for the educated workforce, infrastructure, highway system, water supply, food safety, etc that supports their business and allows it to thrive. Only a fool wants a every man for himself anarchy based society. Working together is just much more efficient.

#160 saskatoon on 08.15.15 at 7:24 pm

#143 Lorne

you (like many others on this blog) have been duped…ideologically boxed in.

only the fool thinks in left vs. right terms.

the real underlying issue at hand is freedom vs. tyranny.

#161 JimH on 08.15.15 at 7:28 pm

#127 Keith in Calgary
“I just wish that I could vote for Donald Trump.”
==============================
I can vote for Donald Trump…
but…
I…
won’t…

¯\_(ツ)_/¯

#162 TurnerNation on 08.15.15 at 7:48 pm

Nosty: now the home all seeing eye! As long as I needed use my brain.

https://www.youtube.com/watch?v=3N1Q8oFpX1Y

“Jibo: The World’s First Social Robot for the Home”

#163 jess on 08.15.15 at 8:04 pm

tit for tat ?
chapter 11 and future profits

Rosia Montana gold mine uses the gold cyanidation technique
Canadian mining company using a Jersey ‘subsidiary’ to sue Romania for halting toxic gold mine, and warns that such cases will balloon under the proposed TransAtlantic Trade and Investment Partnership.
http://www.mining.com/thousands-of-romanians-protest-gold-mine-39028/chin

Youth Sue US Government for Imperiling Their Future Through Inaction on Climate
21 young people in the United States are taking action to try and save the planet from an environmental implosion. They know their future depends on it.

On August 12 – International Youth Day – Our Children’s Trust and the Earth Guardians filed a lawsuit in the US District Court in Oregon on behalf of these youth. The suit, according to a news release issued jointly by Our Children’s Trust and Earth Guardians, charges “that, in causing climate change, the federal government has violated the youngest generation’s constitutional rights to life, liberty, property, and has failed to protect essential public trust resources.”
http://www.truth-out.org/buzzflash/commentary/children-sue-the-federal-government-to-save-earth-for-their-future

memories
Tuesday, 15 February, 2000, 15:15 GMT
Death of a river
The poisoning of the river Tisza has been called the worst environmental disaster since the Chernobyl nuclear leak in 1986.
===========================
Environmentalists Sue EPA Over Dead Zone in Gulf of Mexico
By Dahr Jamail, Truthout | Report

#164 Andrew Woburn on 08.15.15 at 8:26 pm

#122 BS on 08.15.15 at 12:54 pm
Norway taxes citizens and local businesses and then invests the money outside Norway. Great for companies outside Norway, bad for citizens and companies in Norway.

Imagine if they let the citizens and businesses make their own choice on investing THEIR money. Norway might actually develop an industry other than oil.

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

There are only 5 million people in Norway. They already have trouble keeping their exchange rate down to a dull roar. If the government let all that excess cash into their economy, Norwegians wouldn’t be able to export competitively at all.

They are holding the cash for the time the oil runs out. Sort of like the Heritage Fund. They may have to dip into it a little if oil stays in a slump. In the mean time, they have entrepreneurs. It’s a different world.

“In Norway start-ups-say ja to socialism”

http://www.inc.com/magazine/20110201/in-norway-start-ups-say-ja-to-socialism.html

#165 jess on 08.15.15 at 8:34 pm

https://www.census.gov/foreign-trade/balance/c5700.html
============================
How Much It Costs to Make a Hoodie?
Mr. Winthrop and his team visit Carolina Cotton Works and Parkdale whenever they want, check on quality and toss ideas around with the managers. And, he says, the cost is less than in India.
http://www.nytimes.com/2013/09/20/business/us-textile-factories-return.html?pagewanted=all&_r=0

…. because machines have replaced humans at almost every point in the production process.

Take Parkdale: The mill here produces 2.5 million pounds of yarn a week with about 140 workers. In 1980, that production level would have required more than 2,000 people.

Chinese textile manufacturers found a cheap new place for outsourcing: the US
Jenni Avins
August 04, 2015
http://qz.com/470358/chinese-textile-manufacturers-found-a-cheap-new-place-for-outsourcing-the-us/

#166 Steve French on 08.15.15 at 8:38 pm

BS:

well the proof between Alberta and Norway will be in the pudding.

Let’s see where those 2 economies are in the next 5 years.

Of course Alberta will just blame Ontario as things go south.

#167 Julia on 08.15.15 at 9:04 pm

#152 Ronaldo

#141 Julia on 08.15.15 at 5:03 pm

”I am tired of hearing that it’s “money from China” creating this insanity. It’s not.”

Either way, when this bubble does burst, those holding the last piece of paper will be the greater fools. We will have a return of 2008, just have patience, sit back, have a cool one, and watch it all come to pass. In my 50 years of investing in real estate and the markets I’ve seen more ups and downs than my granddaughter on her trampoline.

***************
Hey, I will not be watching it pass. I am an insolvency professional. These will be crazy busy times for me. In fact, it already started in the last 8 months or so.

#168 Steerage Bilge on 08.15.15 at 9:07 pm

#158 saskatoon on 08.15.15 at 7:24 pm

#143 Lorne

you (like many others on this blog) have been duped…ideologically boxed in.

only the fool thinks in left vs. right terms.

the real underlying issue at hand is freedom vs. tyranny.

—————-
How’s life in the bunker going this evening?

You and the stabbing chap from Saskatoon make it sound so charming.

#169 Shawn on 08.15.15 at 9:09 pm

KommyKim at 157 said:

You see, smart business people realize the need for taxes. Taxes pay for the educated workforce, infrastructure, highway system, water supply, food safety, etc that supports their business and allows it to thrive. Only a fool wants a every man for himself anarchy based society. Working together is just much more efficient.

**************************************
Well said, and worth repeating.

Absolutely true. We benefit hugely from a production and legal system that very much includes government doing vital functions and we benefit from certain things that can only be paid for collectively via taxes. I very much doubt that there is any prosperous nation today that has an absence of tax (well maybe one or two Arab oil emerates?) and CERTAINLY there is none with an absence of government.

One thing I notice about most really successful business people is that they are almost always very positive people who speak highly of others and don’t spend much time complaining about taxes and government.

#170 Julia on 08.15.15 at 9:13 pm

#154 TRT
“If you understood simple logic, you would understand. It goes like this: foreign money buys most desirable places in Vancouver (all nationalities), the seller pockets the proceeds and moves a little further away and buys with 50% of the proceeds and pockets the other 50%. And so on.”

Simple logic? You are agreeing with me. Maybe foreign money comes in or not but someone is buying the high end homes, the local sellers cash out. Bottom line is, whether or not there is foreign money, someone local is selling and buying again contributing to increasing prices. Lets stop blaming foreign money, we are doing it to ourselves.

#171 Lobster Man on 08.15.15 at 9:19 pm

Here is the latest on “the Arbutus Corridor”, a prime residential area in the Vancouver west side. Recent property purchasers in that area were reported to have been tearing their hair out after reading the following “letter” from CP Rail:
http://www.theglobeandmail.com/news/british-columbia/arbutus-corridor-cp-rail-feels-your-pain-a-little-bit/article25978213/

#172 Nagraj on 08.15.15 at 9:33 pm

Yo! Gartho baby!
Yas got suckered by that ALLURING ADRIENNE! She aint that ALLURING.
Get a load a what she said BEFORE she said what you wrote she said. She said lower rates would be grrrreat for RE!
What’s so ALLURING about having to explain to her that A) this is it already (like we’re here, we’ve arrived) and that B) blanks is all they got left to fire at the BoC.

Of course what Adeline says and what Adeline thinks when added up might be subject to CANADA WILL WIN THIS WAR self-censorship infecting the predictions community. So what comes out is maybe this then again maybe that.

from this moment on
you for me dear
only two for tea dear

from this happy day
no more blue songs
only whoop-de-do songs

That’s the Cole Porter version of the CREA anthem, and a favourite at apres-TSX parties. 140% Canadian home ownership rate comin’ up. Two chickens in every pot and two cars in every garage in both yer houses!

#173 Nora Lenderby on 08.15.15 at 9:56 pm

#144 Bondgirl on 08.15.15 at 5:23 pm
…Inviting in the global super-rich (without proper vetting of their sources of funds or any precondition even for language requirements, let alone for starting viable businesses that benefit Canada) is like adding gasoline to the fire of an already sick consumption-crazy culture of Keeping up with the Jones (which has morphed into Keeping up with the Kardashians, and which will soon morph into Keeping up with the Wongs).

Crikey!

#174 Nora Lenderby on 08.15.15 at 9:58 pm

Try again…
#144 Bondgirl on 08.15.15 at 5:23 pm
…Inviting in the global super-rich (without proper vetting of their sources of funds or any precondition even for language requirements, let alone for starting viable businesses that benefit Canada) is like adding gasoline to the fire of an already sick consumption-crazy culture of Keeping up with the Jones (which has morphed into Keeping up with the Kardashians, and which will soon morph into Keeping up with the Wongs).

Crikey! And they say that Satire is dead!

#175 saskatoon on 08.15.15 at 10:03 pm

#157 kommykim

1. i know that this may come as a shock to you: but people can work together without taxes.

2. governmental initiation of force is not “working together”.

3. people can be “educated” without government.

thank-you again for demonstrating my ongoing point and foolishly providing further evidence:

your type is the most dangerous (and illogical) of people.

#176 BS on 08.15.15 at 10:05 pm

If you understood simple logic, you would understand. It goes like this: foreign money buys most desirable places in Vancouver (all nationalities), the seller pockets the proceeds and moves a little further away and buys with 50% of the proceeds and pockets the other 50%. And so on.

Under that scenario mortgage debt would be decreasing and savings rates would be increasing. The opposite is happening across Canada including Vancouver. Simple logic shows your hypothesis could not be happening.

#177 BS on 08.15.15 at 10:19 pm

You see, smart business people realize the need for taxes. Taxes pay for the educated workforce, infrastructure, highway system, water supply, food safety, etc that supports their business and allows it to thrive. Only a fool wants a every man for himself anarchy based society. Working together is just much more efficient.

I get it. It is increase government and taxation or we have anarchy?

Last time I checked we have all the things you listed. How did that happen without implementation of your socialist views? On the other hand we have Cuba which implemented your ideology decades ago. How is their educated workforce, infrastructure, highway system, water supply, food safety going?

#178 Julia on 08.15.15 at 10:29 pm

#151 Ponzius Pilatus
ulia,
“Assume for a minute that the Chinese would buy up all the steaks in Richmond and Vancouver West, don’t you think that the price of steaks and ground beef would go up at the same time.
My educated guess is that % wise the ground beef would get more expensive.
Just go and ask your local butcher what he thinks.”

******************
Sure prices would go up. But the locals do not have to keep eating any form of beef, they could go for chicken instead or better yet become vegetarians.
But locals don’t want to. They want to keep up with the beef eaters because they’re afraid that if they stop buying beef, they will not be able to buy it again because they think prices will keep rising. So they charge their credit cards to buy it, keeping up demand and contributing to the shortage and prices.

Why don’t you ask your butcher what will happen to his beef prices when people choose to become vegetarians instead?

#179 Drill Baby Drill on 08.15.15 at 10:52 pm

#164 Steve French
Ontario has more of a deficit than all of the provinces and the federal gov’t combined. But you are right Alta will blame the Ontario have not government.

My question is when Alta becomes a hoave not province which province steps up now? Let’s see, Ont.? no, Quebec ? no, Nfld? no, Sask ?no, BC yeah right!

#180 Ronaldo on 08.15.15 at 11:21 pm

#165 Julia –

”Hey, I will not be watching it pass. I am an insolvency professional. These will be crazy busy times for me. In fact, it already started in the last 8 months or so.”

Well, it sounds to me like your as close to the action as anyone and would have a front row seat to this circus act. Enjoy your posts, keep em’ coming.

#181 OXI in GREECE !! on 08.15.15 at 11:57 pm

One thing I notice about most really successful business people is that they are almost always very positive people who speak highly of others and don’t spend much time complaining about taxes and government.
<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<

that's because really successful business people….don't pay taxes. So why would they complain?

#182 kommykim on 08.16.15 at 12:40 am

RE: #175 BS on 08.15.15 at 10:19 pm
Last time I checked we have all the things you listed. How did that happen without implementation of your socialist views?

Which of MY “socialist views” are you afraid of that haven’t been implemented yet?

#183 Gulf Breeze on 08.16.15 at 1:06 am

#176 Julia,

So what you are saying is you support inflation indexes that use substitutions. These statistical models are considered pretty disingenuous and misleading. They are meant to create an impression of ongoing abundance while inflation eats away at standard of living.

Eating soy is NOT the same as eating beef. Besides the end result of everyone converting to soy would be increased soy prices.

What would you consider an apt substitution for shelter; a cardboard box? Why didn’t people, years ago, opt out of the stupid game of trying to buy a house or condo and get themselves cardboard boxes and sleep on storm grates? Or they could live in converted school buses or tents or rent dog sleds travel to the North Pole and live in igloos.

What gives with all of these whiners!

#184 kommykim on 08.16.15 at 1:17 am

RE: #155 BS on 08.15.15 at 6:57 pm
Greece only did what the right wing German government forced them to do.

The German right wing is flying further left than Canada’s NDP.

#185 kommykim on 08.16.15 at 1:30 am

RE:On the other hand we have Cuba which implemented your ideology decades ago. How is their educated workforce, infrastructure, highway system, water supply, food safety going?

Cuba’s problems have more to do with the US trade embargo than anything else.

#186 anotherstabbinginsaskatoon on 08.16.15 at 2:35 am

The Japanese are on to something. Corium in our water table. Harper would like that, him and his endtime aryan death squad buddies. The cartels seemed to have taken a interest in the prairies. Oh wait, no they were invited here by local business owners to carry out a Bilderberg plot to make drugs and crime the only functioning economy in the developed world. I’ll never listen to the fab four again. John deserved to get popped. Him and his mongolian throat singing mistress. Too many crimes to fathom.

#187 davikk on 08.16.15 at 6:57 am

World’s Most Hated Major Currency Hits 11-Year Low, Traders Are Uniformly Betting Against It, A Great Contrarian Sign. But Wait….

http://investmentwatchblog.com/worlds-most-hated-major-currency-hits-11-year-low-traders-are-uniformly-betting-against-it-a-great-contrarian-sign-but-wait/

#188 Jack Sault on 08.16.15 at 7:38 am

To Andrew Woburn #147

So you just made my point about why these interest rates are too low today and that the deep drop in interest rates over the last 19 years or so is not a good thing and has created a debt monster, irresponsible risk taking elevating to new highs and retirees, seniors losing alot of money for nothing. It did not help the economy in the last 19 years and longer term looks no different.

So it was not just because inflation was higher but it was not 7% as I checked it out in the 1990’s, it was in the range of 2.5% to 3.75% when GIC rates, government bonds were 6% to almost 10%.

So it was also for keeping speculation in real estate at bay and other areas of the economy in risk taking check so it would not get out of hand with excessively borrowed money which meant alot of financial morons could not take advantage of cheap money and create the mess today.

This means that with inflation at around 1.5% to 2.0% and speculation rampant, interest rates should be at least 4.5% to 5% at the very least for GIC’s and government bonds and annual annuity payouts 25 to 30 years, term certain and other guaranteed amounts should be around 6.25% to 6.75%.

I never seen such deep drop in interest rates which in Canada seem to not be over and a higher possibly the Bank of Canada using their abilities to create money and buy Canada bonds to push down interest rates that will lower GIC rates, government bond rates, yields in coming months as a good solution but just more gasoline on the fire.

#189 Julia on 08.16.15 at 7:48 am

#181 Gulf Breeze

So buy now or live in a cardboard box?

#190 Smoking Man on 08.16.15 at 8:15 am

It’s getting harder and harder for Nectonites to discreetly save the world with all these damn camera’s everywhere.

https://www.youtube.com/watch?v=vA_67l_5P2s

#191 Divi Dan on 08.16.15 at 8:43 am

With preferred shares as a group down about 14% this year, the theory goes that as interest rates rise, so will the value of preferred shares.

But there’s a growing chorus of economists who think that rate increases now may only be one and done. If this hypothetical one time rate rise occurs, how might the value of preferred shares react?

What ‘growing chorus’ is that? — Garth

#192 saskatoon on 08.16.15 at 9:29 am

#179 OXI in GREECE !!
#183 kommykim
#167 Shawn
#128 kommykim

notice how the unhinged mind misleads, misdirects, rationalizes, avoids answering questions directly, alters definitions etc..

#179 is an obvious lie. successful business people pay the lion’s share.

#183 avoids answering the question posed directly, and instead misdirects and hyper-rationalizes.

#167 is unable to differentiate between causation and correlation.

#128 advocates a “benign overseer” to control and dominate the masses.

notice how the word “benign” is innocently inserted beside the word “overseer”?

for the unhinged mind, this is ALL it takes to mitigate the force such an overseer would necessarily have to initiate.

for the sane, there is logically no such thing as a “benign” overseer.

overall, the big government boot lickers have limited “argumentative” resources: propaganda, obfuscation, misleading use of diction, and snark…oh! don’t forget the snark!

otherwise (if they used logic) they would have to admit to themselves their true nature:

they love initiating violence; they love control, domination, and manipulation.

this failure to recognize reality, and engage it through the human capacity to reason, is what makes them the most dangerous of all people.

#193 Herb on 08.16.15 at 9:57 am

A non-ideological challenge to all parties –

http://www.thestar.com/opinion/commentary/2015/08/16/the-economic-conversation-we-need-to-have.html

#194 Herb on 08.16.15 at 10:15 am

Kommikim and Shawn,

of course everyone understands the need for taxes. It’s just that everyone wants them levied from someone else.

#195 GarthisMyopic on 08.16.15 at 10:30 am

Lots of what Garth says makes sense, balanced portfolio, do not tie up all of your net worth in housing but to suggest that interest rates are going to normalize in the next two to three years is irresponsible. Look around you Garth…we have a much bigger risk of deflation than inflation? US GDP is a juggernaut at 2.5% annualized, and with $18 trillion + of debt the economy cannot sustain a rate increase. Plus, with China devaluing the Yuan that is a clear signal that the global economy is sputtering. I would be willing to bet that the Fed doesn’t even increase rates in September? I would be willing to bet your house that we see QE4 before we see 5% interest rates. Wanna take that bet Garth? It would be nice to see you step up and defend how you possibly think that the US economy can support a steady trajectory of increased rates with growth so slow and debt so high?

#196 Ponzius Pilates on 08.16.15 at 10:47 am

“growing chorus” Lol
Almost spilled my Ersatzkaffee over my breakfast.

#197 Jane Stafford on 08.16.15 at 10:49 am

To Herb #192

No what people that are informed about income taxes in particular because they pay alot of it is why many social benefits and programs are completely tax free.

Why is C.P.P, OAS, C.P.P. disability, E.I. sick benefits, E.I., taxed and workers compensation, WSIB or workers compensation depending where you live in Canada, GIS, social assistance, welfare not taxed?

Also, why is my dental benefits, medical benefits and other workplace benefits taxed and government paid dental benefits, medical care, other social benefits covered and paid for those that are not working not taxed?

They should be both taxed as income because they are receiving it. It is bad enough that workers, retirees and others that saved, invested their money pay income taxes, some less and some more but we have to pay for their taxes too.

This goes for corporations, companies that are not paying any or very little taxes too plus getting subsidies too. I hate corporate welfare too.

#198 TurnerNation on 08.16.15 at 11:20 am

A look into the future.

As Bob Dylan (real name Robert Allen Zimmerman) sang, they’ll stone you when you’re young and able…they’ll stone you just like they said they would.
But hey it’s just entertainment right.

1. Pharma solution:

Kids, bused by bus lines to schools – both owned by for-profit corps. – are managed using legal drugs and bogus science.

Adults – stressed at work, pass time using legal drugs and online addictions (social media, pr0n). Paid for by insurance companies.

Seniors – living in homes owned by REITs, staffed by min-wagers – drugged into a managable stupor.

2. Low wages.

USA factory and warehouse wages are in $12-15 range. Halved by the GFC – that was its point.
Here in Kanada our provincial leaders clearly telegraphed a $15 minimum wage. Soon, to be the only wage. (See above.)

Everyone and everything will be owned by public companies paying nice dividends. From cradle to grave for the Capital Class. (Are you?)

#199 Edward on 08.16.15 at 11:26 am

What ‘growing chorus’ is that? — Garth
——————–
http://www.cnbc.com/2015/08/15/time-for-a-fed-rate-hike-not-so-fast-commentary.html

One columnist. Funny. — Garth

#200 kommykim on 08.16.15 at 11:51 am

RE: #190 saskatoon on 08.16.15 at 9:29 am
notice how the unhinged mind misleads, misdirects, rationalizes, avoids answering questions directly, alters definitions etc..

Yes, I’ve noticed that you do that.

#201 Ronaldo on 08.16.15 at 12:03 pm

#195 Jane Stafford on 08.16.15 at 10:49 am
To Herb #192

”Why is C.P.P, OAS, C.P.P. disability, E.I. sick benefits, E.I., taxed and workers compensation, WSIB or workers compensation depending where you live in Canada, GIS, social assistance, welfare not taxed?”

You had better thank your lucky stars that you are not one of those people who have to rely on GIS or social assistance/welfare for your income.

#202 SM the MAN on 08.16.15 at 12:10 pm

What ‘growing chorus’ is that? — Garth
………………………………
Isn’t Smoking Man in the Choir?

#203 kommykim on 08.16.15 at 12:12 pm

RE: #195 Jane Stafford on 08.16.15 at 10:49 am
Why is C.P.P, OAS, C.P.P. disability, E.I. sick benefits, E.I., taxed and workers compensation, WSIB or workers compensation depending where you live in Canada, GIS, social assistance, welfare not taxed?

Because it is money paid by the government. The amounts paid are based on what the government thinks the recipient needs. If it was taxed, the government would have to raise the payouts just so it could collect the same amount of money back.

I’m sure “saskatoon” would agree that this would be unhinged violence, control, domination, and manipulation.

#204 kommykim on 08.16.15 at 12:22 pm

RE: #195 Jane Stafford on 08.16.15 at 10:49 am

Oops! Misread your question.

#205 Gulf Breeze on 08.16.15 at 12:24 pm

#189 Julia

Buy now or live in a cardboard box?

Extrapolating from the substitutions, you propose, this is an exaggerated but apt proposal. If people had quit buying homes in To and Van over the last decade and rented, only, where do you think rents would be?

Eventually pressure on the upper end filter down to the bottom.

You chose the law of substitutes, not me.

#206 Gulf Breeze on 08.16.15 at 12:28 pm

Garth is Myopic,

What I like about Garth though, is he allows differing points of view on his blog, without throwing hissy fits.

I agree with you. Rates are going nowhere. Not in the States and not here. Yellen is trying to blow the froth off of asset bubbles with ongoing threats of higher interest rates. But yup…not in a deflationary global environment where everyone is trying to outcompete everybody else on price.

#207 Gulf Breeze on 08.16.15 at 12:40 pm

Saskatoon,

It was horrifying! Jack booted government thugs broke down our door, hauled my husband away and detained him in a Stalinist looking structure. Then, they hooked him up to machines and cut him open.

They made up this bullshit story about him calling 911 with heart attack symptoms and that they were taking him to a ‘hospital’. They told me he was hooked up to an IV not some torture device. Yeah right. What’s the difference?

When Big Mother nanny state, insists on hauling you away in an ambulance, to save your life, we know there is no worse attack on our rights and freedoms. Because governments can’t EVER do the right thing..

So what if they saved his life and he got 5 more precious years? So what if he gladly let them take him away to save his life.

We all know that life isn’t worth living under the umbrella protections of ‘Big Mother!’ Oh the humanity!!

#208 johnk on 08.16.15 at 3:20 pm

Norway has high tax rates. That’s how they pay for the day-to-day operations of the state. The oil and gas revenues are invested virtually 100%, no Ralph Bucks for myopic rubes.
Norway is not a single industry state. Huge fishing industry, significant mining and one of the world’s largest shipping industries, a world-scale business invisible to most Canadians that generates plenty of money.
Norsk Hydro generates the country’s power and earns significant sums from consulting, design and management of offshore hydroelectric projects

#209 Jane Stafford on 08.17.15 at 9:27 am

To Ronaldo #201

So I am lucky that I have to go to work 40 hours to 45 hours a week and pay $15,000 a year in income taxes, C.P.P., E.I., Ontario health tax.

I have to pay for my own medical care and medicine, dental care, eyeglasses and everything else in my life and every year pay more and more for services get delisted and taken away for the workers and others like retirees and seniors that were responsible being debt free, saved, invested their money.

The point is, everyone should pay some income taxes on their income because we are all living in Canada, we use services and we are all Canadians.

Gee, this society is lucky that we are sheep and keep paying and paying and paying but actually think will we get more help from government. This is not true for the majority of Canadians.