The big surprise

DRIVING modified

When a reporter asked Tom Mulcair what he thinks of the real estate market, he said this: “People could be in for a terrible surprise.”

When he was making it easier to get into housing debt, Steve Harper said this: “For most Canadians, the family home is their biggest asset and their most significant investment in their future financial security. It’s also the centre of their lives.”

So there ya go. The election so far. Having an epic mortgage is a giant risk. Or it might be security. You decide.

Residential real estate has emerged in the early days of the campaign as the only issue resonating with most people. The Conservatives know that. At the moment, they’re staking their futures on it. After just two weeks the strategy is abundantly clear.

First, the prime minister announced not only that the renovation tax credit would be coming back (an echo of the financial crisis), but that – if re-elected – he’ll make it permanent. So, bring on the caesarstone counters, apron sinks and bamboo floors and together we’ll build a great nation.

Second, the federal government will start counting how many foreign people buy houses. This is red meat to the anti-immigrant remnants of the Reform Party, the xenophobic #DontHave1Million house-lusty Millennials and everyone happy to blame someone else for their own economic shortcomings. Mostly it ignores the real reasons houses cost too much, which are Bank of Canada policies, lax lenders, fraudulent liar loans, subprime lending, CMHC regs, homeowner tax incentives (see below), governments that encourage debt and eunuch finance ministers.

Third, Mr. Harper increased the RRSP Home Buyer Plan grab by a massive 40%. Now a couple can withdraw $70,000 (instead of fifty) from their retirement plans, free of tax, for a down payment. It means the kids can borrow the full amount at 2.85% and put it in their RRSPs for 90 days. That yields a tax refund of about $25,000, used to pay down the loan. Then the seventy grand goes into a house purchase, with no repayment into the RRSPs for a couple of years and full repayment spread over a very long decade and a half.

So in this way, the taxpayers of Canada end up subsidizing the house purchase. The kids get $70,000 for only $45,000 and a house that could yield tax-free capital gains. Of course, they also get a giant mortgage and owe way more money, but what could possibly go wrong? Isn’t Mr. Mulcair just being a scary, bearded old socialist?

“There could be a bubble here,” he said late last week, “and we could be in for a terrible surprise.”

Now, is that any way to get elected?

But wait. Is the Big Dipper actually making some sense? The latest Canada Revenue Agency numbers are telling a scary tale about the sad state of homebuyer finances. Shockingly, half of the people who borrowed taxless, subsidized money from the retirement plans to buy a house have been unable to repay it. The CRA says of the 1.8 million involved, 885,700 didn’t make any recent repayment. Not only does that mean these missed amounts are added to taxable income (bummer) but it strongly suggests these couples are over their heads financially and never should have bought a house – which they likely couldn’t have afforded without the gift.

Meanwhile, as you know, overall debt has been pushed to historic levels by a bloating of mortgages – now at $1.2 trillion. Home loans are expanding at three times the rate of inflation and income growth. Mortgage rates are at record lows, and are destined to rise over the years to come, pushing monthly payments up with each renewal.

But if almost a million homeowners can’t repay one-fifteenth of a maximum of $50,000 every year, what mess lies ahead? And why would any responsible leader encourage more borrowing? More debt? More risk?

Rhetorical question. You know the answer.

HARPER

226 comments ↓

#1 Steerage Bilge on 08.16.15 at 12:12 pm

Of course the reason the lumbersexual is freaked is because he’s remortgaged his house 11 times!! – he knows in his gut that folks screw it up… so he wants and needs a big daddy.

#2 Gord In Vancouver on 08.16.15 at 12:17 pm

Fourth, changes to the CMHC rule which now allows 100% of rental income to count towards a mortgage application…

http://www.cbc.ca/news/canada/british-columbia/new-cmhc-rules-make-it-easier-for-some-homebuyers-to-include-rental-income-in-mortgage-application-1.3171813

#3 Mister Obvious on 08.16.15 at 12:17 pm

Oh… so that’s what that smell is…

Conservative desperation.

#4 the Jaguar on 08.16.15 at 12:19 pm

Because it’s the only thing keeping the wheezing Canadian economy going, that is why.
People who withdraw funds from the RRSP’s for downpayments could afford to make annual repayments if they would show some self restraint and stop plugging more money into their houses. Do they really need all those flat screens, expensive outdoor patio furniture, etc?

#5 Randy Randerson on 08.16.15 at 12:21 pm

Seriously, if the Cons are bad, and the NPD are equally incompetent, then all that’s left is the Liberal. Stuck between a rock and a hard place.

#6 ben on 08.16.15 at 12:25 pm

Garth – they are pumping housing with the RRSP. It’s just like the UK which put govt money into mortgages.

This will have a boost on prices as if you allow people to pay more prices go up.

Medium-term this is of course a disaster.

Told you they would pull out more and more stops, doubling down over and over. Just like the UK.

UK also has recently started to blame foreign investors for price ramping and also Cameron has said he will have a fake crack-down on money laundering through London (which of course will not happen).

And the boomers+ will vote for it all. And there is your problem.

#7 mitzerboy aka queencity kid on 08.16.15 at 12:28 pm

harper is the only one of the choices that looks so fake to me.

this says a lot

#8 Ronaldo on 08.16.15 at 12:30 pm

I suspect the gov is aware of the seriousness of the situation with housing if the first time buyer disappears from the scene that they will bring about any measures to try and keep this charade going. No first time buyer, no move up buyers and end of game. We can’t be far off. Should be an interesting October.

#9 SJ on 08.16.15 at 12:36 pm

“…Of course the reason the lumbersexual is freaked is because he’s remortgaged his house 11 times!!…”

Does anyone have a reference to this? Garth mentioned it a few days ago; and I’d love to corroborate/validate the statement…

Start here. — Garth

#10 Unhinged Loon on 08.16.15 at 12:40 pm

Jeez Garth, sounds awfully like you and Thomas “Forthing Mad” Mulcair have some overlapping economic beliefs.

*Gasp*

#11 Victor V on 08.16.15 at 12:44 pm

Economists applaud promise to collect data on foreign investment in real estate

http://www.theglobeandmail.com/report-on-business/economy/housing/the-real-estate-beat/economists-applaud-promise-to-collect-data-on-foreign-investment-in-real-estate/article25979620

#12 Gulf Breeze on 08.16.15 at 12:45 pm

Nice article. Thanks Garth.

#13 Victor V on 08.16.15 at 12:46 pm

http://www.theglobeandmail.com/globe-debate/editorials/tory-promises-throw-caution-to-the-wind-in-overheated-housing-market/article25960597

When he was the finance minister, the late Mr. Flaherty fought to reduce Canadians’ risks by tightening the mortgage market. It’s disappointing that his caution and wisdom have been abandoned.

#14 NoName on 08.16.15 at 12:47 pm

Now that someone mention a uk, i present you London’s subterranean basement dwellers.

Millionaire Basement Wars Documentary 2015
https://www.youtube.com/watch?v=gjHo5BZM7V0

#15 Hump and Dump on 08.16.15 at 12:52 pm

Let the blind lead the blind straight into ….

CTV News found out Conservatives aimed to rewrite copyright law to let political parties grab any media content and use it for free in their ads. The impact, warned CTV’s Don Martin, “will be to cast a chill on ever broadcast appearance” by MPs, commentators and reporters, who “must now be aware their views could end up featured in a political attack ad.” By asserting “unlimited access to the airwaves for propaganda purposes,” Martin said, the Harper government “could be seen as flirting with fascism.”

http://thetyee.ca/Opinion/2015/08/10/Harper-Abuses-of-Power-Final/

You realize you article could be viewed as a “political attack ”

Wouldn’t that be a real surprise!

#16 Gulf Breeze on 08.16.15 at 12:53 pm

So, the NDP are the new party of fiscal restraint, apparently, while the Conservatives, are ready to extend social programmes to include home renovations. Wow. Upside down and backwards and typical Harper —

Neo-fascist government interference…who would have thought it would manifest in the hard steel of new kitchen appliances rather than tanks on the street?

#17 Rantanplan007 on 08.16.15 at 12:55 pm

Has anyone noticed the latest stats on the condo market in Calgary? It’s a disaster… Prices below the 2013 level, -14% y/y, volume of sales down 41%.

http://www.creb.com/Seller_Resources/Housing_Statistics/

Garthozorus, I think the Calgary condo market is done and will recover in 10-15 years.

#18 SWL1976 on 08.16.15 at 12:56 pm

I find it rather embarrassing listening to Harpo babble these days. It just feels awkward, like having a conversation with someone who has something on their face but they don’t know it and everyone else does, and all you can think is…

Should I tell them?

If people can’t yet see through this guy’s entire platform and track record they are either hiding in the closet scared, or just not looking and refuse to admit that we have indeed been played a fool.

I’m not saying any of the others are going to get us out of this mess, but not exacerbating the problem would be a refreshing change

I will exercise my democratic freedom and vote. However, I also know that I am only participating in a show to pacify the masses. We need real change and that real change is going to have to come from each and every one of us.

Hint – We do not need more gubernments to keep us ‘safe’ from the fabricated boogey man.

#19 Remorgaged on 08.16.15 at 12:56 pm

Look at the bright side.

He is utilizing his asset (companies do that all the time to expand) and he built up a track record of responsible borrower, he had to maintain repayment or good credit to remortgage again.

Without knowing his entire financial picture we just don’t know.

It may also be an indication that he did not use his political influence for personal gain.

#20 Rexx Rock on 08.16.15 at 12:59 pm

Interest only mortgages will be the norm for the future.Its already happening everywhere.Keeping up to the jones is ingrained in Canadian culture.I see people buying their first car for over $40,000.You might as well drive with a paper bag over your head if you drive a beater.

#21 Nick on 08.16.15 at 1:04 pm

This election is really heating up, and dare I say getting exciting. Ongoing CON corruption scandals are cascading into the headlines daily boosting NDP and Liberal favorability. Not quite sure what I would prefer, an NDP or Liberal minority. Either way, I feel like Canadian citizens are about to get their country back.

#22 Moses71 on 08.16.15 at 1:06 pm

Appears like SH-(sh#*head) is just as guilty (if not more) than the banks of mom and dad for Canada’s one asset strategy.
Willing to bet all his assets aren’t in a one ASSet strategy. His portfolio probably mirrors Garth’s.
Doesn’t walk it like he talks it=no integrity

#23 Bobby13 on 08.16.15 at 1:06 pm

The way this market is now engineered its no more than a insolvent gov / bank bail in. Not as obvious as looting ones account.

#24 Chris on 08.16.15 at 1:07 pm

If the housing market did/does weaken substantially, do you think any one of the three parties would try making mortgage interest deductible, like in the US?

That would be like the nuclear option to get the market breathing again.

Impossible. — Garth

#25 Republic_of_Western_Canada on 08.16.15 at 1:14 pm

The ‘government’ does not force house buying.

Greedy ignorant people do it all by themselves – there is no Order in Council enforcing bail-ins or negative interest rates on those who refuse to get stuck in a mortgage.

Furthermore, you should be happy that the foreigner count is finally tracked. Unless you’re afraid of the excessive sell-out to the chinese that everyone will finally discover…

#26 depends on 08.16.15 at 1:27 pm

If you bought a house in 2000 for 300K, interest rate around 5%, used all your allowable RRSP to apply against your mortgage – you probably did well.

Mortgage cleared, RRSP repayment could be covered from the savings of the lower interest rate from mid term.

#27 Mike T. on 08.16.15 at 1:28 pm

good post

to me, the big surprise is going to be when the man made rules lead everyone into accepting the BRICS lead new world order

it will be the plan that saves us from the criminals in the ‘West’

Illuminati Tribunals….2018….book it!

#28 Nora Lenderby on 08.16.15 at 1:34 pm

Not all the people who borrowed from their RRSPs and haven’t “paid it back” each year are in financial difficulties.

If you did this a couple of years before retirement and are now drawing down RRSPs, adding that small amount to the RRSP withdrawl automatically might not be particulaly efficient but it doesn’t necessarily mean there’s anything seriously wrong.

Unlikely scenario. — Garth

#29 Mr. Mulcair just being a scary, bearded old socialist on 08.16.15 at 1:37 pm

Start here. — Garth

—–

May 27, 2012 … is this a 3 years old story?

#30 Nora Lenderby on 08.16.15 at 1:42 pm

Interesting article about U.S. experience of forclosures:

“The authors’ findings imply that large numbers of prime borrowers who did not start out with extremely high LTVs (loan-to-value) still lost their homes to foreclosure. They conclude that the economic cycle was more important than initial buyer, housing and mortgage conditions in explaining the foreclosure crisis. These findings suggest that effective regulation is not just a matter of restricting certain exotic subprime contracts associated with extremely high default rates.”

http://www.nber.org/digest/aug15/w21261.html

#31 Lea on 08.16.15 at 1:43 pm

Thank you for finally explaining why real estate in Canada is so much more expensive than in the U.S. You have a smaller population and more land so I have been very confused about the price of real estate since we moved to Vancouver from Los Angeles.

Vancouver 2014 is a lot like Los Angeles 2006. The bubble mentality of having to buy into real estate before you are priced out of the market. Prices in my Los Angeles neighborhood are still below what they were at the peak of the bubble. I hope Canada has a soft landing, because it is terrible watching your neighbors lose their homes.

#32 Millenial on 08.16.15 at 1:44 pm

Hey Garth,

I’ve historically voted conservative federally. This year I’m trying to keep a very open mind, and I’m considering everything; no candidate is off the table for me.

I saw that interview on BNN with Mulcair. Yes, he expressed concerned about housing, but at the same time said CMHC has served Canadians well (and continues to this day). When asked if Canadian banks needed to have more skin in the game with these mortgages, he didn’t really answer the question.

Now I agree with you that the Harper’s RRSP Home Buyer Plan expansion is ridiculous. The whole thing really needs to be scrapped 100%; people should not be taking retirement money to buy overpriced housing.

But what are Mulcair’s specific plans to deal with the housing problem in this country? He may not want to expand the Home Buyer Plan, but what is he actively proposing? I haven’t heard anything!

#33 Shawn on 08.16.15 at 2:02 pm

Of All the Silly Notions…

One of the silliest is that interest rates won’t rise because the governments can’t afford it with their huge debts.

Well, they certainly could not afford it in 1980 but it still happened.

I will repeat my simple explanation based on supply and demand of money. (Blacksheep – sorry if this makes your head explode)

Interest rates rose in the 1970’s as the big wave of baby boomers were all borrowing at once and there were not many old people with savings to borrow from. Contrary to myth, a lot of pension plans were just getting starting, there were not huge pots of pension plan money available to be loaned out. Government pension plans were paid out of general revenue, with no pot of money. With high demand for loans and few pots of savings, interest rates were driven high by simple supply and demand.

Now today we have hoards of old people and boomers with large RRSP and TFSA and RESP and other savings accounts all of which is invested in part in bank GICs or bank preferred shares or bank debt and available to be loaned out. On top of that the pension funds (even if under funded) are brimming with many billions of dollars available to be loaned out. Even government pension plans now have large pots of money rather being funded from general revenue.

Also today the number of new home buyers is smaller (certainly as a percent of the population if not in actual numbers) than it was in the baby boomer fueled
1970’s era.

With vastly more savings available and with fewer borrowers as a percent of the population supply and demand dictates that interest rates must be low today.

Given the low rates it is affordable to borrow more and so fewer borrowers can sop up the vast savings of the old and of pension funds as they take out huge mortgages.

Governments also dipped in and borrowed more.

So THAT is why rates are low. If and when the supply and demand for money dictates raise to rise then they will and the fact that some borrowers (like government) can’t afford it will be sad but there will nothing they can do about it.

And when will the supply of savings be smaller compared to the demand for loans. No time soon if the population keeps aging and the economy is growing only slowly.

As many have said, even when the FED raises the short-term rates the bond rates for anything past one year may remain low based on simple supply and demand. Not because the borrowers can’t afford more but because a massive amount of saved money is available to be loaned out.

#34 Lea on 08.16.15 at 2:03 pm

Nora, your article was the case in our neighborhood in Los Angeles. The assumption that real estate prices will continue to rise makes people assume too much debt. If your house does not appreciate and you want to refinance your ARM loan, you might not be approved and will have to sell at a loss. Not to mention using your HELOC as a piggy bank to buy cars, tvs, and such.

#35 Herf on 08.16.15 at 2:09 pm

#13 Victor V

“When he was the finance minister, the late Mr. Flaherty fought to reduce Canadians’ risks by tightening the mortgage market. It’s disappointing that his caution and wisdom have been abandoned.”

Hmmm. Here’s a conspiratorial thought. Could F’s premature death from a “natural” heart attack been helped along by those opposed to his stance on lax mortgage lending, or who had an economic and/or political interest in the outcome of the current election campaign? Hmmm.

#36 Freedom First on 08.16.15 at 2:12 pm

Like the former Premier said to the sheep, look in the mirror. Speaking of Alberta, the 4th Province I have lived in and currently reside, I haven’t given my ear to the ground update for awhile. Keep in mind, my first update informing everyone of the massive layoffs happening in Alberta before they hit the msm, and for which I was called a liar by people in the comment section of this blog, because if it was true they would have heard of the layoffs by now.

Well, Surprise, I can’t even tell you how many people are now renovating and getting their houses ready to sell in Alberta. This is big. And some of the renovators are on EI, used to make 6 figures plus in oil and gas, and are already hurting. I hear their incomes they were making, and wonder why they are already hurting. But then I look at the mortgages, the big shiny new trucks with nutz, trips to Mexico, and motorcycles. Imagine though, Mexico instead of Hawaii, and a motorcycle instead of a Harley. Sad thing is, I’ve seen it before, and it was very profitable. I only buy deals. No exception.

#37 Chris on 08.16.15 at 2:14 pm

Harper has no shame. Now he is blaming the foreigners for pushing up prices. Now who extended the mortgage term to an astonishing 40 years?

#38 Shawn on 08.16.15 at 2:16 pm

One Man’s Debt is Another Man’s Savings.

Supply and Demand dictates that Savings = Debt at all times. The price of borrowing or reward for saving is the interest rate and constantly adjusts to insure that Savings equal Debt.

One cannot logically be in favor of more savings and be against more debt at the same time.

Both Savings and DEBT both rise and reach new records every few years as the economy grows. So “record debt” is hardly news, it’s inevitable.

Also we continue to evolve more and more to a world where more and more tasks involve a money exchange. It’s called specialization of a labour and is a wonderful thing and it means that more and more of human activity involves money. The financialization of the world economy continues apace. In such a world both savings and debt as a percentage of GDP keep rising.

Again, “record debt” is not news but is an inevitable consequence of “record savings” and the financialization of the world. And it’s a wonderful thing.

#39 Victoria Real Estate Update on 08.16.15 at 2:21 pm

# 31 Lea

Interest rates were suddenly slashed from near-normal to emergency levels as US house prices were falling in 2009.

This move dramatically reduced the amount that prices corrected in the US.

It’s obvious and inevitable that Canada’s housing market will go through a deep price correction. Some Canadian markets are already in correction mode.

There are two main reasons why Canada’s price decline could be significantly deeper than what the world saw happen in the US:

1. Canada’s housing bubble is much bigger than the 2006 US bubble. The bigger the bubble, the bigger the price correction.

2. Interest rates will be moving higher (1% per year) as prices fall in Canada.

The price rebound that the US experienced was a direct result of interest rates being slashed to emergency levels in 2009.

Overall, the circumstances that created the environment for the strong price rebound that took place in the US will not be the same in Canada as Canadian prices fall. There will be no US-style price rebound in Canada.

#40 Van real on 08.16.15 at 2:24 pm

Garth. Can you explain if interest rates are the prime cause of real estate prices increasing then why is it only occurring in Toronto and Vancouver and only for single family homes. If off shore buyers are having no impact, shouldn’t housing be rising in every city for every type of property?

Foreign sales are 2-5% of total transactions. Figure it out. — Garth

#41 Van real on 08.16.15 at 2:26 pm

#33 Shawn. Best explanation for interest rates I’ve heard yet. It makes so much sense. Thank you

#42 Julia on 08.16.15 at 2:29 pm

#37 Chris
“Harper has no shame. Now he is blaming the foreigners for pushing up prices. Now who extended the mortgage term to an astonishing 40 years?”

*******************
I am not so sure he is blaming the foreigners or if it is a desperate attempt to buy votes from the younger generation and the #Don’tHaveAMillion movement and the like?

Anyone know what the voter turn out for that target group usually is?

#43 saskatoon on 08.16.15 at 2:30 pm

#207 Gulf Breeze

i am sorry to hear about your husband’s illness.

that being said, you must realize that your previous post is emotionally-driven.

in other words, there is no argument there.

additionally, you seem to have things reversed:

government “health care” services are NOT free.

the “thugs” are not the government people showing up to save someone’s life…but are rather those initiating governmental force to steal money from strangers–and “giving” that money to you.

you must understand that it requires FORCE for you to get “free services”–paid for by money stolen indirectly from strangers.

#44 Ponzius Pilatus on 08.16.15 at 2:53 pm

#38 Shawn
Again, “record debt” is not news but is an inevitable consequence of “record savings” and the financialization of the world. And it’s a wonderful thing.
——————
So you’re saying that debt is a “wonderful thing”.
And I thought it was love.
Anyway, this I the same as the realtor telling his clients that mortgage debt is a “beautiful thing” because house prices can only up.
Ergo, liabilities become assets.

#45 Van real on 08.16.15 at 2:54 pm

#31 Lea. Canada actually has a very small amount of land compared to the U.S., because most of our land is uninhabitable. The lower mainland of BC and southern Ontario is where 90% of our population want to live. That is why Toronto and Vancouver are expensive. SoCal is a vast area that has lots of land available for development

#46 Freedom First on 08.16.15 at 2:59 pm

# 38 Shawn

That was satire, right Shawn?

#47 saskatoon on 08.16.15 at 3:00 pm

#38 Shawn

this may be the case today.

but it doesn’t HAVE to be this way, and it is certainly not a good or sustainable phenomenon, as you suggest.

today, money is “created” based on the issuance of debt.

government (i.e., bank of canada) has the capacity to issue debt-free money–like many other, very prosperous places have done historically.

but (for a variety of reasons) it doesn’t do this.

let’s say i spend my afternoon catching three fish…and my friend buys said fish for five dollars.

my friend now owns my three fish, and i own his five dollars.

no debt has been created here, and i have five dollars in savings.

there is only an issue (like you suggest) if the MONEY ITSELF is created through debt incursion…

#48 Entrepreneur on 08.16.15 at 3:02 pm

When watching reporters/news one has to stand back and ask questions about what/who was said and not said. Also, everyone has a bias opinion (their favourite party) so their words will have a slight slant to persuade. Have you noticed that Liberal Leader Justin Trudeau does not mention BC Christy Clark.

As for Tom Mulcair remortgaging his home 11x since 1980, so what, what kind of crime is that? That is over a 45 year period. Lets look at the dirt of BC Liberal Christy Clark, google “Christy Clark Discloses Zero Assets” and another from Macleans on “her poll numbers are sinking and missteps are piling up.”

The controlled manipulation has got to go.

#49 Zero Chance? on 08.16.15 at 3:04 pm

Zero Hedge reports NEGATIVE interest rates are coming to Canada. Canada Rate cut just before USA rate hike Sep 17?

http://www.zerohedge.com/news/2015-08-15/crisis-spreading-china-australia-brazil-canada-sweden

#50 Freedom First on 08.16.15 at 3:07 pm

#29 Mr M…………….

Being 3 years old has nothing to do with the message about M’s financial management. God gave you a brain, try using it.

#51 Bob Santarossa on 08.16.15 at 3:19 pm

#33 Shawn

Boomers do not have hoards of money in RRSPs, TFSAs etc.

Search for the StatCan and MoneySense wealth surveys and you will find about 60% of the wealth is in their home equity and not in investments such as RRSPs etc.

Compare Net Worth to Real Estate and the how much Real Estate represents of Assets.

40% to 50% of that wealth will get wiped out if the bubble bursts (real estate losses based on prior high job loss recessions in Canada).

#31 Lea provides an example of what happened in the US and can happen in Canada.

#52 Gulf Breeze on 08.16.15 at 3:21 pm

#15. Hump and Dump,

“Flirting with fascism”?? Harper surely has flirted with fascism while being married to Big Oil. But now that oil is no longer his biggest asset??

He’s a randy widower, who has lost his appeal. Flirtation will yield to full on frontal fascism, in a frenzied love riot that could play out in the next election cycle.

Don’t discount that Harper and his backers rig the next election, in a bigger way than robo-calling, like they did the last time. I don’t trust the neo-cons, nor the neo-liberals, like Trudeau.

#53 Gulf Breeze on 08.16.15 at 3:25 pm

Saskatoon,
My post about Big Mother, last post following Garth’s previous article wasn’t emotionally driven. It was carefully thought out.

You have actually reinforced the point I was making by your response here.

#54 Victoria Real Estate Update on 08.16.15 at 3:28 pm

Since the US housing meltdown took place, Canadian realtors and housing bulls have attempted to come up with reasons why a US-style housing bust can’t happen in Canada.

The main and most common reason: it was US subprime house loans that resulted in the US housing bust and Canada’s lenders are conservative and prudent and there is no subprime mortgage market in Canada.

We all know that there is a subprime market in Canada. In fact, it is experiencing rapid growth.

The unbiased, nonprofit and private American economic research organization, The National Bureau of Economic Research, studied the US housing bust. It concluded the following:

* “The economic cycle (US economic downturn) was more important than the initial buyer… in explaining the foreclosure crisis.”

* “The (US) crisis began in the subprime mortgage sector, but twice as many prime (strong) borrowers as subprime (weak) borrowers lost their homes over the full sample period.”

Rising house prices boost the economy in a big way.

Falling house prices squash the economy in a big way.

The US housing meltdown wasn’t all about subprime borrowers.

In the US, falling house prices (beginning in 2006) resulted in a major economic downturn (starting in 2008). The economic downturn pushed house prices down. At first, the weakest mortgage holders (subprime) lost their homes. Soon after that, the strongest group of borrowers (prime) also began to lose their homes. By the end, twice as many prime borrowers as subprime borrowers lost their homes in the US.

It’s no secret that Canada’s exploding subprime market has been fueled, in part, by liar loans – the same thing that helped fuel the US subprime market.

It isn’t different in Canada. The Canadian housing market will go through a deep, multi-year price correction.

#55 confused on 08.16.15 at 3:42 pm

Garth, you’re writing in the present tense about the home buyer’s plan limit being 35k. Did Harper enact that change or is it an election promise ? I can’t find anything that indicates the amount has been increased.

#56 NDP man on 08.16.15 at 3:45 pm

“There could be a bubble here,” he said late last week, “and we could be in for a terrible surprise.”

Now, is that any way to get elected?”
____________________________________
Muclair is a CON wolf in NDP clothing. Many realtors here pretend they are voters who are going to vote NDP. The fact is no one will vote NDP in great numbers. Liberals are the only opposition to the CONs which is why they have attack ads running 24/7 against Trudeau and this has already been going on for months. It’s not bad when you go on facebook EVERYONE hates and I mean HATES Harper. Harper is finished with his slim chance of winning is only if the voters throw away their vote to NDP. I am NDP and going to vote Liberals. No way I throw away my vote on that CON wolf in NDP clothing.

#57 Shawn on 08.16.15 at 3:46 pm

Our Savings and Their Debt…

To explain or ramble on a bit further…

In a time before money people lived off the land and were self sufficient alone or in small groups.

“Saving” might have meant storing potatoes in the cellar. Not very efficient as the potatoes could rot or be stolen and also the family with no potatoes might starve to death even while others had excess potatoes in the cellar. (You might share potatoes in your own village put not with a starving neighbouring village)

In a financial world savings are in terms of money and the money is loaned out. The family or country with no potatoes borrows from those with excess.

Savings and debt are really how the world today shares excess with those in need.

Fortunately, those who need a house or car or even groceries can usually borrow. In effect they are borrowing from savers. Unfortunately they need to repay the amount later.

It’s not a perfect system but this financial system facilitates and is absolutely necessary for the economy.

While you personally may be a saver and avoid debt, it is simply not possible for everyone to do so.

In effect surplus (a good thing) is available and therefore is loaned out and becomes debt.

Debt and savings are two sides of the same coin.

There will never be surplus without someone wanting to borrow that surplus. Be it potatoes or “money”.

As the economy grows, so grows surplus and so grows debt. It will always be so.

#58 CMHC and Mortgage broker fraud on 08.16.15 at 3:52 pm

You want to see the cause of the bubble? OPEN up the mortgages that CMHC is insuring and see how many are mortgage frauds? Many people got mortgages they should never have qualified for and everyone in Canada knows it. Never mind your election ploy Mr harper. You are going to lose and in a bad way. Canadians all hate you except the 1%.

#59 Getting old on 08.16.15 at 3:56 pm

And why would any responsible leader encourage more borrowing? More debt?

Garth: what has any responsible leader done in the past? Or exactly what would you have him do on an election year? I guess he should tell all the sky is falling, that would be great for the country. Get real Garth, you have been in politics, have you not?

#60 Garth fan on 08.16.15 at 4:03 pm

Harper’s economic record is saving us from recession since 2008. He didn’t save us because we DIDN’T HAVE a recession. Our banks weren’t failing, no big companies were laying off, except the auto companies for a very short time. Harper the CONSERVATIVE stepped on government intervention pedal and spent our money in bloating real estate (among other things) with his tax breaks, and then spending our money again to brag about the “action plan”, when a FISCAL CONSERVATIVE would have done otherwise. It is no wonder that conservatives are quitting on him left and right.
Now Harper is still bloating the spending and never mentioning the huge debt HE has run up. We are supposed to have a cabinet system, but he has weakened it and parliament with the omnibus bills among a ton of other things. I don’t know who I will vote for, but my vote will be for the other party that is leading in my area, to get rid of this guy. As a senior who rents, he has done nothing for me, except waste money trying to bribe people to vote for him. Thank goodness people are beginning to see through him. He might have had good people, but they weren’t allowed to speak up (along with scientists)

#61 OXI in GREECE !! on 08.16.15 at 4:03 pm

#24 Chris on 08.16.15 at 1:07 pm
If the housing market did/does weaken substantially, do you think any one of the three parties would try making mortgage interest deductible, like in the US?

That would be like the nuclear option to get the market breathing again.

Impossible. — Garth
<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<

In CANADA? The highest taxed and lowest service country in the G-20? HAHAHAHAHAHAHAHAHAAHAHAHAHA

Thanks for the good laugh……

#62 Retired Boomer - WI on 08.16.15 at 4:07 pm

DEBT, debt…debt. They say the solution is more DEBT by borrowing from your savings…

Got to wonder where the idiot that thought that one must have worked? Oh, government, I thought so. The govt with the never shrinking debts and deficits? Where a loon was worth a yankee buck but not about 3/4 of a buck?

This is where you get your financial smarts? You are debating the rationale of replacing Stephen Harper with one who has now more debt than he started with -for whatever reason. Personally, I would check the competition, and your own record. If your record sucks like that you should vote for him -you deserve each other!

I’ll just go back to watching our own clown car full of wanna-be presidents. Between them all, you could not find the competence to staff a well run fast food joint…

#63 OXI in GREECE !! on 08.16.15 at 4:07 pm

#40 Van real on 08.16.15 at 2:24 pm
Garth. Can you explain if interest rates are the prime cause of real estate prices increasing then why is it only occurring in Toronto and Vancouver and only for single family homes. If off shore buyers are having no impact, shouldn’t housing be rising in every city for every type of property?

Foreign sales are 2-5% of total transactions. Figure it out. — Garth

<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<

Technically "no one knows" as there are no stats kept. But most of us in Vancouver think is much higher when you take into account – your friends cousin a Canadian – owning 1% of the house and his friends dad in another country owning the other 99%. Happens everyday here.

#64 Retired Boomer - WI on 08.16.15 at 4:16 pm

Freedom First

Wait until the EI runs out, while time on market numbers have expanded, and foreclosures are underway!

THEN you will see magnificent buys! Just before that, trucks, Nutz, motorcycles (including the Harley’s), will be going at fire sale prices. Nothing gets exciting until the sheeple are near their last freebie, then they get motivated.

Seen this movie before, and it will be playing more cities in the near future!

Throw in a devaluation, or two, and you will know about it, right AFTER it happens! Always so much fun to see people squirm, just before they lose everything! Entertaining… yet so unnecessary… and so predictable too…

#65 knock knock knocking on 08.16.15 at 4:18 pm

#43 saskatoon

the “thugs” are not the government people showing up to save someone’s life…but are rather those initiating governmental force to steal money from strangers–and “giving” that money to you.

you must understand that it requires FORCE for you to get “free services”–paid for by money stolen indirectly from strangers.

===

Hey Ayn Rand, nice to see you resurrected.

Is there money on the other side?

#66 Shawn on 08.16.15 at 4:21 pm

Saskatoon, can you enlighten us on what it is you do for a living and explain how your entire gross income should be yours (with noting deducted for tax) and why you owe this world nothing?

Explain how you add value to this world.

Explain also why you continue to live in this country that keeps stealing from you.

Just want to know a bit about who we are stealing from.

#67 Ridiculous internet rate explanation on 08.16.15 at 4:27 pm

#33 This interest rate explanation is total non-sense. If you would care to study elementary monetary policy theory, you would know that interest rates are determined completely differently. For one, an important determinant is the rate of inflation. Another one is the interest rate policies of trade partners. Third are concerns about capital flight and foreign investment issues. Then the trade balance trend factors in. The list goes on. What is not in there is domestic consumer demand and supply for residential loans. Please do not misinform people here. Or perhaps you are doing this deliberately because you are a realtor?

#68 Gulf Breeze on 08.16.15 at 4:42 pm

#33 Shawn,

Thanks for explaining the ‘have to’ dynamics of a central Canadian bank rate rise. I get confused about this issue and have wanted to know more about it.

#69 Nagraj on 08.16.15 at 4:50 pm

Mulcair: people could be in for a terrible surprise.
GT: what mess lies ahead?

Mother Angelica: I hear that some of you don’t believe in hell. I hope some of you like a surprise. Because you’re gonna be surprised. Big time. And you’ll stay surprised. For a long, long, long time.

Canada’s magnificently insane housing bubble and incomprehensibly stupid household debt bubble already guarantee political extremism and social unrest. (Does anybody really believe third quarter GDP will come in positive?)
Abandon ship. Every man for himself. Sauve qui peut (that’s the same thing in French, eh).

What’s with the gentle COULD be in for a SURPRISE – Dick&Jane homeowner is gonna be f—–‘ freakin’ out, shell shocked, mad as hell. What’s with the innocuous MESS ahead as if a roll of paper towels could manage it – try ECONOMIC DISASTER.

It must be heartbreaking for smart and responsible people with strong roots in this country, and who love this country, to contemplate the worst – a currency crisis, a jobs crisis and a default crisis all at the same time.

#70 No Debt on 08.16.15 at 4:51 pm

“Mostly it ignores the real reasons houses cost too much,”

Garth, you forgot to mention the most culpable of the bunch – Stupid people who don’t just sip the kool-aid, but rather jump right into the punch bowl.

#71 my house is my friend on 08.16.15 at 4:56 pm

Shawn on 08.16.15 at 2:02 pm

Of All the Silly Notions…

One of the silliest is that interest rates won’t rise because the governments can’t afford it with their huge debts.
……………………………………………………………………
Sorry but what you say is no longer true. The world has changed. No longer do banks need savers to lend out money. Interest rates are the price of money and money is being digitally increased by the trillions by the central banks. Increase supply and you reduce price (interest rates). The central banks lend out of thin air, money at .0025% and the recipients buy government bonds at 2%. This makes sure that there is ample supply of bonds to keep interest rates low. Plus you have over $200 trillion in off balance sheet derivatives. 3/4 of these derivatives are interest rate swaps, which are used to move rates wherever wanted.The financial sector used to be around 4% of the economy. It is now around 30%. A large chunk out of the economy that is essentially a wealth transfer from the middle class to the 1%.

#72 loves entertainment on 08.16.15 at 4:58 pm

#58 Retired Boomer – WI

Always so much fun to see people squirm, just before they lose everything! Entertaining…

Never thought of it this way… maybe you are right…

Let me know when your own squirming starts, list some of our precious items here, maybe others can join the fun, we will let you know how good entertainer you were.

#73 Andrew Woburn on 08.16.15 at 5:01 pm

eunuch finance ministers?
==================

You mean, No Dong Owe?

#74 Brian Ripley on 08.16.15 at 5:03 pm

“…it strongly suggests these couples are over their heads…” Garth

My chart of earnings in Canada and 10 provinces (2nd big chart from top of page) http://www.chpc.biz/earnings-employment.html

…shows a possible slowdown in earnings. Only in AB, NFLD, SK and ON do earnings exceed the national average. An earnings slowdown at historic highs in household debt is not going to be easy for those at the margin.

#75 Marco on 08.16.15 at 5:06 pm

Thanks Garth,

Wow, Harper played the only hand he has and Mulcair flinched.

Justin better play his hand carefully. Or at least closer to his chest then Mulcair.

Cheers.

#76 my house is my friend on 08.16.15 at 5:10 pm

Low Interest rates:
After the crash of 2008, low rates were introduced to kick start the economy. Well here we are 7, 8 years later and still no rate hikes. What ever happened to “green shoots”. All we ever heard over the last 8 years is the economy is picking up. Why do people still believe this BS. Sure every once in a while they let rates move a bit to make it seem like there is still a market, but they will never let rates rise, because to do so will crater the bond, stock, and housing markets.

#77 shawn on 08.16.15 at 5:16 pm

Money versus Fish

Saskatoon at 47 said to me:

let’s say i spend my afternoon catching three fish…and my friend buys said fish for five dollars.

my friend now owns my three fish, and i own his five dollars.

no debt has been created here, and i have five dollars in savings.

there is only an issue (like you suggest) if the MONEY ITSELF is created through debt incursion…

****************************************
Fish are real. Money is an abstraction.

Your five dollar bill represents a “claim check” on five dollars worth of fish or whatever other goods and services you desire. Who owes you this five dollars worth of goods and serves? No one in particular, but the economy as a whole woes you this. All money is debt. Get used to it.

A government can create new money but they do so at the risk of inflation. They may clip a little from each existing dollar to create a batch of new dollars.

Bank’s create money but may do so in a manner that is not necessarily inflationary.

I doubt that anyone really understands all this. I don’t claim to but I know a little bit. And I think for myself.

One man’s “money” represents a debt due from the economy. A claim check.

Vert little to no trade ever exists without money and debt.

Point to me the rich society in which citizens all have no debt.

Debt is more than correlated with wealth. Credit is the grease of the economy. Debt begats wealth. (Though not always for the debtor)

#78 birdogio on 08.16.15 at 5:21 pm

“People could be in for a terrible surprise.”

Jeez, Garth, Tom sounds an awful lot like you.

;)

#79 MSM-Free Zone on 08.16.15 at 5:22 pm

#66 Shawn on 08.16.15 at 4:21 pm
_________________________

Nicely said, but don’t expect a rational response.

#80 MSM-Free Zone on 08.16.15 at 5:27 pm

To paraphrase our neighbours to the south:

“Trying to settle on a Canadian party leader in October is like trying to decide which STD is right for you.”

#81 Ole Doberman on 08.16.15 at 5:36 pm

Wow Alberta oil closes at $29 Friday!

#82 saskatoon on 08.16.15 at 5:40 pm

#65 knock knock knocking

thanks for adding fodder for my thesis.

snark alert!

#66 Shawn

notice how he sidesteps the underlying issues: trying to call attention to what i “do” for a living. this is a complete misdirect–standard operation for the unhinged mind.

for the sane, what any of us “do” is contextually irrelevant here.

also notice the manipulation of language: conflating “tax” with “owing the world something”.

what does this even mean?

more rhetorical psycho-drama nonsense.

think of what he is really saying here:

imagine watching a thief initiate force, stealing from your neighbor; you then walk up to the victim and proclaim:

“You think that all that money you had in your wallet was yours??? YOU MUST BE INSANE!!! Why are you upset? YOU OWED HIM. CHEER UP! YOU ARE NOW ‘ADDING VALUE’ TO THE WORLD!”

more freudian anti-logic:

over-simplification…reduction of complex issues into “easy fantasies.”

this is all the unhinged mind can handle; otherwise, reality would be confronted and illusion/proxy ego shattered.

a canadian citizen can’t just leave government:

1. it costs money to leave;
2. alternative “citizenship” is required.
3. what about the young, or infirm?

essentially, the canadian system does not allow ANYONE the freedom to LEAVE GOVERNMENT.

and even if one could: this “freedom” would still not justify the initiation of force.

any sane person will gather (from a rudimentary understanding of history,) that just because X number of people “vote” for something, that something does NOT necessarily become morally legitimized.

#83 Ponzius Pilatus on 08.16.15 at 5:45 pm

I thought massive inflation in the early 80s was the reason for the high interest rates.
Also, it was the savers who made out like bandits.
I did not have much savings, but my Father in Law made a killing locking in his RRSPs for 5 year at 15%.
Here in BC, those who had to renew at those crazy high rates got help from the government.

#84 salonist on 08.16.15 at 5:46 pm

coptic eunuch

#85 BS on 08.16.15 at 5:47 pm

#33 This interest rate explanation is total non-sense. If you would care to study elementary monetary policy theory, you would know that interest rates are determined completely differently. For one, an important determinant is the rate of inflation. Another one is the interest rate policies of trade partners. Third are concerns about capital flight and foreign investment issues. Then the trade balance trend factors in. The list goes on. What is not in there is domestic consumer demand and supply for residential loans. Please do not misinform people here. Or perhaps you are doing this deliberately because you are a realtor?

I too laughed when I saw Shawn’s explanation of interest rates. The most important factor is wage inflation. When wages rise you have inflation. Since wages have not been rising much for the past 15 years we have low inflation and interest rates can remain low. Wages have not been rising for a variety of reasons. Until that changes we will have low short term interest rates. Bond rates can increase not only due to inflation but due to increased credit risk. I suspect that we will see bond and mortgage rates increase even with low inflation due to credit risk when housing deflates and the economy tanks.

#86 bigtown on 08.16.15 at 5:50 pm

Ever since Target retreated to America Wal-Mart has morphed into an ugly reminder of Zeller’s.

Wal-Mart used to be the go to store for the typical middle-aged woman in Canada where you could find some choice at a low cost. That advantage is removed and the inventory is less than you would see in small town Mexico. Like Zeller’s Fruit of the Loom Ladies undergarments are in a cardboard display in total disarray requiring hours to find the right size.

I am brought low by the retail crisis as a result of Target going south. It has been months since they crossed back to the states and I am still grieving the loss. It’s not like I would trade in my passport for the American but with our loonie on a bender…the desire is very diminished to cross over to shop.

#87 saskatoon on 08.16.15 at 5:53 pm

#77 shawn

“All money is debt. Get used to it.”

this is interesting; i will need time to consider this.

#88 Ponzius Pilatus on 08.16.15 at 6:01 pm

Shawn.
Money vs. Fish.
Good analogy.
Jesus did not like the money lenders, and Christians were not allowed to lend money charging interest.
As a result, most of the Western world was mostly debt free.
As for fish, he, like modern banks and government, was able to create an asset out of thin air.
So, inadvertently, he was the first investment banker.

#89 MSM-Free Zone on 08.16.15 at 6:05 pm

#82 saskatoon on 08.16.15 at 5:40 pm
_________________________

The Defense rests, your honour. No more questions.

#90 knock knock knocking on 08.16.15 at 6:05 pm

#82 saskatoon on 08.16.15 at 5:40 pm
#65 knock knock knocking

thanks for adding fodder for my thesis.

snark alert!

Ah you are not the incarnation – just one of the Ayn’s channeling crowd.

We have to wait longer to know if there is Money.

#91 Victoria Real Estate Update on 08.16.15 at 6:11 pm

# 67 Ridiculous

# 33 Shawn is probably a realtor. They’ve been working hard to convince Canadians that today’s emergency level rates are permanent, that Canada is different, etc. Their claims are backed by nothing. Their motivation is to make sales ($$$).

It has helped to inflate Canada’s housing bubble.

Those who drank this industry kool aid and bought recently will be shocked when Canadian 5-year fixed mortgage rates begin to move higher within months, for reasons that you’ve mentioned.

House prices fall as rates rise and these recent buyers have many unpleasant surprises ahead of them.

As the 2006 US housing bubble inflated American realtors had convinced many Americans that the US was different and that house prices would keep rising. It happens in every country that has a housing bubble. And then the inevitable happened.

In the US house prices peaked and began to decline in 2006.

On October 28, 2005, David Lereah, chief economist of the National Association of Realtors (US), told Americans that “… housing activity will remain healthy for some time to come.”

The US was different… until it wasn’t. The same story will play out in Canada.

#92 Frank on 08.16.15 at 6:23 pm

I’ve been following this stuff for a year and while the housing market looks bad I have yet to see a catalyst for change.

Prices have held stable nation-wide. Gained in some areas, slipped in others, yet there are no signs of a real change.

Sure oil is bad today, may be good tomorrow. So when will anything change? In Vancouver we have high rent and high home prices and it’s just because the city doesn’t seem to have enough homes for people as it grows. So what happens? Is there ever any change?

#93 Andrew Woburn on 08.16.15 at 6:25 pm

Those who believe interest rates are flat should check out the US repo rate. Most of us have heard about the Federal Reserve rate but the repo rate is the overnight interest rate for the financial industry players outside the Fed system.

Fed member banks all have a bank account with the Fed called “reserves” which are used to settle interbank debts. Fed reserves are accepted by members as risk free assets. Any Fed bank can cover an overnight overdraft by borrowing from another member at the Federal Funds Rate. The FFR is managed by the Fed and is the rate always quoted by the MSM. Normally other short term interest rates are computed with reference to the FFR so any increase will tend to push up the whole yield curve (subject to other market pressures).

The non-bank financial industry cannot rent federal reserves but they also need overnight loans backed by risk-free assets so they created the repurchase contract aka, the “repo”. A borrower can pawn some of its most secure assets such as treasury bills and agree to buy them back tomorrow for a slightly higher price. The price bump amounts to an overnight interest rate called the “repo rate”. Functionally it is FFR for the rest of the financial industry.

Many financial companies depend heavily on repo financing to fund large portions of their business and the daily volumes are huge. It has been estimated that global foreign exchange traders alone move around $4 trillion every day. At these numbers, very small changes in the repo rate move the cost of doing business very quickly. The repo rate is a big deal in financial circles.

The Fed has set the FFR at 0 to.0025% and it has been hovering around .0015%. The repo rate was under .0010% a year ago and has moved steadily to over .0025% in August. As the repo rate is currently more influential in the US economy than the FFR, and as the repo rate has almost tripled since August, 2014, it is hard to conclude that a modest hike in FFR is really going to damage the economy. Also, if the Fed doesn’t get its rate up soon, it will have no firepower when the next real recession hits which may well be within two years.

The repo rate chart is here: http://www.dtcc.com/charts/dtcc-gcf-repo-index.aspx

#94 Steerage bilge on 08.16.15 at 6:35 pm

#47 saskatoon on 08.16.15 at 3:00 pm
#38 Shawn

this may be the case today.

but it doesn’t HAVE to be this way, and it is certainly not a good or sustainable phenomenon, as you suggest.

today, money is “created” based on the issuance of debt.

government (i.e., bank of canada) has the capacity to issue debt-free money–like many other, very prosperous places have done historically.

but (for a variety of reasons) it doesn’t do this.

let’s say i spend my afternoon catching three fish…and my friend buys said fish for five dollars.

my friend now owns my three fish, and i own his five dollars.

no debt has been created here, and i have five dollars in savings.

there is only an issue (like you suggest) if the MONEY ITSELF is created through debt incursion…
————-

You forgot to get a fish license. You don’t have 5 bucks.

#95 Nosty, etc. on 08.16.15 at 7:10 pm

Hi Greg and TNation. Thanks for your comments.

Re: #174 Greg on 08.13.15 at 12:37 am — “With the glut in oil and running out of places to put it all.”

Yes, seen chatter re: CERN (September?). In mid-June (just passed), I read about the fault lines under San Francisco getting uppity, as well as the NMF, SAF and Cascades acting up. Cascades (Oregon) would be particularly hard hit if a large tsunami accompanies it. Retribution from China / Russia for (nuke) blasts? Don’t rule it out. They probably don’t even need nukes, esp. if they have weapons which operate in space, but this is the new USAF one almost ready to roll.

Sooner or later, one or more faults will move heaven and earth, and there isn’t a thing anyone can do about it. Constant change (incl. climate) is what we live with — Fukushima and Ring of Fire.

Re: #162 TurnerNation on 08.15.15 at 7:48 pm — “Jibo: The World’s First Social Robot for the Home”

Great link. The one I provided a few days ago, about 90% of the North and Central American population being unemployed (our replacements due to tech advances) is coming true a lot more quickly than most consider.
— and —
#198 TurnerNation on 08.16.15 at 11:20 am — “USA factory and warehouse wages are in $12-15 range. Halved by the GFC – that was its point.”

Now we’re moving closer toward a NWO with TTIP, TISA and the TPP (at least the west).

#96 Randy on 08.16.15 at 7:17 pm

Don’t mind a socialist government. Because I’m smarter than you average socialist I expect that I’ll do all right.

#97 Setting the Record Straight on 08.16.15 at 7:18 pm

@130
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.
——–
Well I hope that you would either agree that democracy is the Dog that failed or only a small minority should enjoy the franchise.

#98 Love my Kia on 08.16.15 at 7:21 pm

You tell us the dippers make sense?

They usually do!

I really like you today Garth, especially for not always embracing the dogmatic viewpoint.

#99 Musty Basement Dweller on 08.16.15 at 7:24 pm

Wow I have to grudgingly at least give Mulcair credit for what seems like an honest answer.
Are the conservatives getting desperate or what. Harper must know that he is leading more lambs to the slaughter with his housing money promises.
It’s going to be hard to vote for his boys but it still truly feels like there is no option.

#100 Noa Lenderby on 08.16.15 at 7:36 pm

#66 Shawn on 08.16.15 at 4:21 pm
Saskatoon, can you enlighten us on what it is you do for a living and explain how your entire gross income should be yours (with noting deducted for tax) and why you owe this world nothing?

Oh Shawn, c’mon. Like a troll is going to answer that question?

He (it almost certainly is a he) has a very sticky caps lock key adding to the general shoutiness of his emissions.

No initial capital letters on his sentences. (“No, you won’t make me obey useless conventions!”)

Still a troll. Be nice, it’s only a baby. Some mother must love it.

#101 OttawaMike on 08.16.15 at 7:43 pm

Of course the reason the lumbersexual is freaked is because he’s remortgaged his house 11 times!!…”
———————————————————-

Mucklair obviously needed the money to pay off an NDP senator. Or was that the another political party that did that? This is all so confusing.
Why can’t Ford run for federal office so we can have our own federal Trump candidaTE?

#102 Bill Gable on 08.16.15 at 7:48 pm

This sort of sums it up:

“The Doomsday clock for global market crash strikes one minute to midnight as central banks lose control.

China currency devaluation signals endgame leaving equity markets free to collapse under the weight of impossible expectations”:

Link: http://tinyurl.com/ncg78fx

#103 No Canada, No on 08.16.15 at 7:48 pm

When the goverment is going to prop up housing bubble even more – that probably when one should get out. Not when Garth told you :)

Meanwhile, oil is in 41 handle, and very soooon it will be 30-ish range. We’ll see how renovation credit works when folks lost their oil drilling jobs.

Meanwhile, here in US smart folks are in huge demand (I’m talking about IT but everything else on fire as well). Facebook and such are simply asking what they need to do to move you over here?

#104 DreamingInTechniColour on 08.16.15 at 7:48 pm

# 33 Shawn

When the savers of the massive amount of money you mention in your post finally wise up and grow a pair – they will demand that their financial institutions start paying them normal rates of interest and stop using their saved funds to subsidize borrowers. Savers are being penalized. Once they start walking to get better rates – the financila institutions will wake up. Back in the mid 1970’s – 10% annual interest was being paid on savings accounts.

#105 my house is my friend on 08.16.15 at 7:50 pm

American Malls In Meltdown – The Economic Recovery Is Complete & Utter Fraud

http://www.zerohedge.com/news/2015-08-16/american-malls-meltdown-economic-recovery-complete-utter-fraud

#106 Retired Boomer - WI on 08.16.15 at 7:54 pm

#72 LOVES ENTERTAINMENT

You “missed” the irony. “So predictable, so unnecessary”

Nobody enjoys seing people fail. Well almost no one does. Yet many do. Entrepreneurs fail, often more than just once before they get it right. Sometimes even a country fails.

When you’ve done stupid on such an EPIC scale…all I can say is swirly, swirly, gurgle gurgle. We shall see us all in the leach field of history!

There is humor in there!! by the way it was post 62 not 58.

#107 OttawaMike on 08.16.15 at 7:58 pm

A prominent historian went back in time and discovered that Trump has a family history in politics that goes back to Roman times:
http://www.mcsweeneys.net/articles/donald-trump-through-the-ages#.Vc695fjJeOg.twitter

#108 Marco on 08.16.15 at 7:59 pm

http://www.telegraph.co.uk/finance/11805523/Doomsday-clock-for-global-market-crash-strikes-one-minute-to-midnight-as-central-banks-lose-control.html

“The US is expected to move first, with rates starting to rise from today’s 0pc-0.25pc around the end of the year. Investors have already starting buying dollars in anticipation of a strengthening US currency. UK rate rises are expected to follow shortly after.”

Cheers.

#109 saskatoon on 08.16.15 at 8:01 pm

#100 Noa Lenderby

at least i can spell my own fake name correctly.

#110 Nagraj on 08.16.15 at 8:03 pm

#86 BIGTOWN at 5:50PM: “Zeller’s Fruit of the Loom Ladies undergarments are in a cardboard box in total disarray requiring hours to find the right size.”

Curtain Up.
Stage Centre: aforementioned cardboard box.
ENTER Linda, Daisy Mae and Nora L.
(This is a one act opera.)
After two hours and forty-five minutes of screaming in frustration they find the one undergarment that might fit them. They fight over it.
Linda and Daisy Mae strangle each other to death. Nora L. then tries it on only to discover it doesn’t really fit. She walks serenely to the front of the stage and (like the heroine of “Diff’rent” announcing her suicide with “I’m going to my barn”) sings “I’m going back to Norway. Norway how I luv ya, how I luv ya, my dear ol’ Norway. he folks up north will see me no more, when I get to that Noooooooooooooooooooorway shore!”
EXIT Nora.
ENTER PONZIUS PILATUS, KREDITANSTALT and CROSSBORDERSHOPPER, they survey the mess and the two dead bodies, and sing the Credo from Schubert’s Mass in E Flat Minor.
Final Curtain.

Ignatieff, who is of course in the audience (along with Mrs. Black), does understand that this opera is a metaphor: Canada’s economic and political future.

#111 Exurban on 08.16.15 at 8:03 pm

#37 Chris

Harper has no shame. Now he is blaming the foreigners for pushing up prices.

Harper and the Conservative Party have an extensive marketing operation that continually conducts polls and focus groups. Right now, those polls and focus groups in the Vancouver area probably have every second person asking, “Why the hell don’t you do something about foreign money buying real estate?” Harper’s response is to look concerned and to announce a project to gather data.

It’s very unlikely that he is actually going to do anything. His actual thinking was signalled very clearly by the now-politically-dead Dean del Mastro, who smirked on his Facebook page about focus groups of Conservative supporters who consistently wanted immigration reduced, something insiders like Dino had no intention of doing.

#6 Ben

Thanks for your informative posts about real estate in Britain. I agree with you that Ottawa is going to go exactly the same way, taking every possible step to prop up real estate prices and construction activity. I myself expect increased immigration and direct federal investment in real estate, and I expect this no matter the result of the current federal election.

#112 90% of the North and Central American population being unemployed on 08.16.15 at 8:11 pm

Re: #162 TurnerNation on 08.15.15 at 7:48 pm — “Jibo: The World’s First Social Robot for the Home”

Great link. The one I provided a few days ago, about 90% of the North and Central American population being unemployed (our replacements due to tech advances) is coming true a lot more quickly than most consider.

The “job creator” myth meets the reality of creating efficiency by the way of eliminating demand for labor.

#113 Shawn on 08.16.15 at 8:14 pm

Interest Rates Explained

Ridiculous at 67 and BS at 85 argue that argument that low interest rates are caused by today’s glut of savings is non-sense. They argue that inflation is a prime driver interest rates.

Actually, upon reflection, I agree, that is a good point.

So let my argument focus on REAL interest rates after backing out inflation. REAL interest rates are at record lows and REAL interest rates were higher in the 80’s.

It’s real interest rates that matter the most and I think my simple supply and demand argument has merit as an explanation of low real interest rates.

Japan was the first major country with really low real interest rates. Also the first to reach a stage of having tons of old people with savings and fewer young people needing to borrow. Coincidence?

In this argument I have not advocated for any particular individual to borrow more.

I am not predicting rates to stay low, although I said if my explanation is correct I don’t see much catalyst for an increase. North America certainly remains awash in savings when pension and RRSP and other investments are considered.

I think it is true that savings = debt. The rules of supply and demand dictate that demand is always equal to supply and the price adjusts to make it so. This is true for every commodity including money.

With more old savers and fewer young borrowers interest rates HAD to decline in order to entice the young to borrow enough to sop up all those savings. (Think of Garth’s pile of loot alone!). There is nothing nefarious here. The economy HAD to drop interest rates when there were tons of savers and fewer buyers. And low interest rates automatically entice more borrowing. And this automatically pushed up house prices. Nothing nefarious in that.

In effect, low real interest rates are caused by savers.

As I have been saying since about 2009, we will see Canadian House prices get closer to those in the U.S. I expect that to happen more by continued increases in U.S. house prices than by a drop here in Canada. But that depends on interest. Which I expect but certainly don’t guarantee will remain low due to low economic growth and the glut of boomer savings including in private and government pension funds and the dearth of young borrowers. Young borrowers are small in number so they need (as a population) to take on massive debt in order to sop up all those boomer savings. Are you young? Are you doing your part? Are you sopping? If you don’t, the economy may have to lower interest rates again to encourage you to sop.

Sop on.

#114 young & foolish on 08.16.15 at 8:15 pm

The government and the opposition know full well that peoples’ focus on housing is an easy distraction … sort of like katnip. The entire developed world is in the same slow growth soup, why would it be any different here?

#115 Dave on 08.16.15 at 8:16 pm

Real estate is overvalued in many countries due to low interest rates. It is overvalued in many cities in Canada due to low interest rates. It is grossly overvalued in Vancouver due to offshore money laundering. What else can explain the difference in magnitude between Vancouver prices and those anywhere else in North America?

#116 sideline sitter on 08.16.15 at 8:25 pm

Caesarstone? Ewww… Cambria is where it’s at!

#117 eddy on 08.16.15 at 8:25 pm

surprise ,in the middle of a six hour fakeologist podcast (2hr 30min mark) Garth’s blog gets a plug

http://fakeologist.com/2015/08/15/audiochat-ab-jon-le-bon-ro11o-unreal/

#118 fake name on 08.16.15 at 8:34 pm

#109 saskatoon
#100 Noa Lenderby

at least i can spell my own fake name correctly.

You could certainly improve on punctuation.

Separating important from unimportant would probably be too much of a challenge.

#119 young & foolish on 08.16.15 at 8:34 pm

“…….. about 90% of the North and Central American population being unemployed (our replacements due to tech advances) is coming true a lot more quickly than most consider.”

I know many people who are seriously worried about this issue … the tech advances that are coming faster than the economy can adjust and absorb the unwanted.

#120 omg the original on 08.16.15 at 8:41 pm

“There could be a bubble here,” he (Mulcair) said late last week, “and we could be in for a terrible surprise.”
—————–

2 bucks says……

……Mulcair will back away from that statement so RA-PID-LY if pushed on it this coming week.

Canadians do not want to hear how stupid they are being.

#121 omg the original on 08.16.15 at 8:48 pm

Rexx Rock on 08.16.15 at 12:59 pm
Interest only mortgages will be the norm for the future.Its already happening everywhere.
———–

That and we will see a return of longer term amortizations if the market trends down in any meaningful way.

Lost of ways for governments and banks to delay any corrections – that’s why you need a Rip van Winkle time perspective.

The Canadian market will correct in a slow grinding way over the next 10 to 20 years….

…..all the way back to normal price to income multiples.

#122 Grantmi on 08.16.15 at 8:51 pm

#2 Gord In Vancouver on 08.16.15 at 12:17 pm

Fourth, changes to the CMHC rule which now allows 100% of rental income to count towards a mortgage application…

This is it! the last piece of the puzzle to have everyone “ALL IN!”.

Here comes the crash!

#123 Interstellar Old Yeller on 08.16.15 at 8:55 pm

#80 MSM-Free Zone on 08.16.15 at 5:27 pm
To paraphrase our neighbours to the south:

“Trying to settle on a Canadian party leader in October is like trying to decide which STD is right for you.”

Just hilarious!

#124 omg the original on 08.16.15 at 8:56 pm

Van real on 08.16.15 at 2:54 pm
Canada actually has a very small amount of land compared to the U.S., because most of our land is uninhabitable. The lower mainland of BC and southern Ontario is where 90% of our population want to live. That is why Toronto and Vancouver are expensive. SoCal is a vast area that has lots of land available for development
————–

Not sure how old you are, but we were making that argument about Vancouver and Victoria in the late 1970s. Back then there were just no place to put more houses in these mountain/ocean locked cities.

Then we had the early 1980s and discovered that not everyone wanted to live in Lotus land and there was actually lots of development potential.

#125 Frank on 08.16.15 at 8:56 pm

I really like you today Garth, especially for not always embracing the dogmatic viewpoint.

You only refer to dogmatic because you don’t like it. Garth actually is pretty good about relay what he likes from all parties and what he doesn’t like (you hear more of the latter). Dogmatic would be you who won’t listen to anything from Stephen Harper’s mouth even if he said he found a unicorn that shat gold bricks and held it in front of you.

#126 debtified on 08.16.15 at 8:57 pm

#50 Freedom First.

Most times I am tempted to respond to posts like #29’s. It is so tempting really but usually I manage to dismiss the idea because I believe that for most of these people it is just a waste of time. This would have been one of the few where I couldn’t resist.

I am glad this time I scrolled down first before typing my response. Your response is exactly what I was thinking of writing. Thank you for letting me save my breath.

Ditto on #38 Shawn.

I don’t know how Garth keeps his sanity reading comments like these incessantly.

You know, to be fair, these guys are capable of doing well in life. They probably live comfortably and, by any measure, some of them are what we might objectively consider successful people. Such is the world we live in.

#127 ricky on 08.16.15 at 8:58 pm

#33 Shaun WTH are you talking about???
‘Interest rates rose in the 1970’s as the big wave of baby boomers were all borrowing at once and there were not many old people with savings to borrow from.’???
Money from banks is not ‘borrowed’ from someone else! It is created as a debit to your account- FROM NOTHING MORE THEN AN ACCOUNTING ENTRY AND YOUR SIGNATURE TO PAY IT BACK!! Interest’s rates rose in the 70’s and 80’s because Nixon took the USA off of the Gold standard and the USA started printing money from nothing to pay off Vietnam war debt! Causing inflation causing the US to increase interest rates to entice investment in US t-bonds= DEBT! LEARN SOME FRICKN MONETARY HISTROY! God- there are way too many idiots in this world. When ‘they’ come be the first on the ship- Shaun.

#128 Raptors Truth on 08.16.15 at 9:03 pm

I have been collecting writings of the housing bubble here: https://www.reddit.com/r/canadahousingbubble/

Contributions welcome!

#129 debtified on 08.16.15 at 9:15 pm

Regarding foreign buyers….

I love Vancouver. It’s my favourite city in the whole world. I have many friends there that I constantly visit. They all, with no exception, believe that HAM is a major problem. They blame HAM for the stupidly high prices of houses in the city.

The all recently bought houses (within the last five years), all paying high prices including a sibling who each bought a house for $620K in New Westminster. Household income couldn’t be more than $80K. They admitted that they would not have been able to afford had their agent not made all the “arrangements” for them.

I was so tempted to retort: “And you blame the Chinese for the high house prices?!” I had to bite my tongue.

You know what’s funny about the houses they bought is that it actually is a single house. One bought the upstairs and the other bought the downstairs. One gets the front yard and the other gets the backyard. Basically, the whole thing costs $1.2M and it’s not even a big house. I can only see all sorts of trouble ahead for these guys.

The thing is, this is true for practically all the people I know who purchased recently. They all admit that they couldn’t believe they managed to buy such expensive houses. They can only thankful for their “good fortune”.

Yep. HAM. Yeah right!

#130 young & foolish on 08.16.15 at 9:18 pm

“It must be heartbreaking for smart and responsible people with strong roots in this country, and who love this country, to contemplate the worst – a currency crisis, a jobs crisis and a default crisis all at the same time.”

Calm down, the sky is not falling on Canada. Sheesh … and I thought I was the foolish one on here …

#131 rar on 08.16.15 at 9:19 pm

I’m going to vote. Unsure for who yet. My guess is no matter who gets into office the Canadian economy GRUDGE will slop downhill right after the election. That’s what so many are bracing for I think. Renting Calgary for 9 years now next summer maybe my time to buy a home. Crossing my fingers and toes!

#132 Mister Obvious on 08.16.15 at 9:27 pm

#45 Van real

“SoCal is a vast area that has lots of land available for development”
———————————-

But unfortunately, no water.

#133 Mister Obvious on 08.16.15 at 9:32 pm

#129 debtified

“One bought the upstairs and the other bought the downstairs. One gets the front yard and the other gets the backyard.”
———————————–

The embodiment of “a recipe for disaster”.

Who gets to clean the eaves-troughs?

#134 As Is Old Man on 08.16.15 at 9:32 pm

As Smoking Man would say: “You guys are boaring”. Smoking Man, please rescue this blog.

You’re welcome.

#135 Bytor the Snow Dog on 08.16.15 at 9:36 pm

Ya gotta amore Saska-kook’s tenacity. After all, he drives on privately funded roads every day, to sit in his office with privately funded power, to post his thoughts on a privately funded internet, while having all of his opinions guarded by privately funded police.

#136 No Lenderby on 08.16.15 at 9:37 pm

#110 Nagraj on 08.16.15 at 8:03 pm
#86 BIGTOWN at 5:50PM: “Zeller’s Fruit of the Loom Ladies undergarments are in a cardboard box in total disarray requiring hours to find the right size.”

Curtain Up.
Stage Centre: aforementioned cardboard box.
ENTER Linda, Daisy Mae and Nora L.

Work on it my friend, it’s not The Duchess of Malfi, but it has legs. (And so do the undergarments.)

As for my name, I’m coxing in a regatta soon and have to lose weight. Avast behind!

#137 Roland on 08.16.15 at 9:44 pm

I’m not terribly surprised that a career politician, esp. left of centre, would have remortgaged. Politics is an expensive game and you have to pay to play.

A long time ago my Dad ran unsuccessfully for MP (he was a Tory). We lost the house, and it was a long time before the family finances recovered.

At least Mulcair seems to be staking his own fortune rather than hiring out as a shill.

#138 David on 08.16.15 at 9:45 pm

There seems to be a slight tint of NDP hate on these days.
My Mom and Dad were good CCF and NDP socialists and told me when I was young and getting married to only buy a house if if I had 25% down and had an open payment mortgage. Otherwise it was just renting MONEY. Aside from housing we all have to live and do things like go to movies and have BBQs, drive a reliable car and have a steady decent paying job. Things are totally out of focus. Having a decaying shack that consumes 66% of after tax income is neither a good investment nor allows for something called a decent life.

#139 Jumpin Hot on 08.16.15 at 9:51 pm

So Garth….you’re suggesting that voting for ‘the big dipper’ and his tax increases will fix the housing affordability issue? What will happen to your financial advisory when no one has any disposable income to hand over?

Now, where did I say that? — Garth

#140 pinstripe on 08.16.15 at 9:54 pm

In alberta there is no end to the corruption by the alberta PCs.

Rachel will have her hand full for a long time.

many Albertans decided that enough is ENOUGH. The same is needed at the fed level.

http://www.cbc.ca/news/canada/edmonton/government-refusal-to-hand-over-documents-stalls-political-interference-investigation-1.3192093

#141 Victoria Real Estate Update on 08.16.15 at 10:02 pm

# 121 omg the original

Major housing bubbles don’t correct in a slow, grinding manner as you suggest will happen in Canada. Are you a realtor?

Wolf Richter (Wall Street) knows a thing or two about housing bubbles. Quoting:

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

Recent examples of imploding housing bubbles include: Spain, Ireland, the US, Greece, Japan, Iceland, etc. Please find us one example of a country with a major housing bubble that went through a slow, grinding price correction.

Let’s take a look at some recent examples of market corrections in Canada.

From 2007 to early 2009, SFH prices in Calgary fell (crashed?) at a rate of 12.2% per year (for 18 months) until emergency interest rates were brought in.

. . Calgary Single Family Home Prices. . .
. .Percent Below July 2007 Price Level. . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
. .0%. . .*. . . . . . . . . . . . . . . . . . . . .
– 2%. . . . . . . . . . . . . . . . . . . . . . . .
– 4%. . . . . . . . . . . . . . . . . . . . . . . .
– 6%. . . . . . . . . . . . . . . . . . . . . . . .
– 8%. . . . . . . . . . . . . . . . . . . . . . . .
-10%. . . . . . . . . . .* . . . . . . . . . . . .
-12%. . . . . . . . . . . . . . . . . . . . . . . .
-14%. . . . . . . . . . . . . . . . . . . . . . . .
-16%. . . . . . . . . . . . . . . . . . . . . . . .
-18%. . . . . . . . . . . . . . . . . . . . *. . .
—————————————————————-
. . . . . .July. . . . .January. . . . January.
. . . . . 2007. . . . . 2008 . . . . . .2009. .
(source: Bob the realtor’s site)

Prices in Calgary would have continued to fall if interest rates hadn’t suddenly been slashed from near-normal to emergency levels.

During the same period of time, SFH prices in Edmonton fell (crashed?) 22% in 21 months.

It has recently been revealed that Canada’s housing bubble has inflated with a significant amount of mortgage fraud (liar loans). It’s no secret that liar loans create big problems during the deflation of a housing bubble. The US experience provides us with an example of that.

Rising interest rates are not a necessary condition for the complete deflation of a housing bubble.

Canada’s bubble will deflate in an environment of rising rates.

#142 Shawn on 08.16.15 at 10:08 pm

Interest Rates

Ricky at 127 said:

Interest’s rates rose in the 70’s and 80’s because Nixon took the USA off of the Gold standard and the USA started printing money from nothing to pay off Vietnam war debt! Causing inflation causing the US to increase interest rates to entice investment in US t-bonds= DEBT!

*****************************************
Yes, this agrees with my thesis that in the 70’s there was much demand for money, be it boomers buying the first house or governments borrowing.

At the same time there was not today’s large population of old people with savings (GICs, bank deposits, balanced funds in RRSP etc) and there was not today’s massive pension pots of money available to lend to government or those buying a first home.

Hence interest rates were high as the many wannabee borrowers sought the few available savings and real interest rates rose as they had to to keep the supply and demand for loans in balance.

Thank you for your support of my thesis.

You got a little off-track though in forgetting that banks fund loans via deposits which are savings. One man’s debt is another man’s savings. (But yes the day the loan is created the bank puts the loan money in the man’s saving account and so the man has borrowed his own money. The next day he uses the deposit to buy a house and the loan must be funded by someone else’s savings.)

I suspect only one of Ricky and me spends hours each year reading bank annual reports and balance sheets. Probably only one of us was loading up on bank stocks in early 2009.

#143 Smoking Man on 08.16.15 at 10:09 pm

#134 As Is Old Man on 08.16.15 at 9:32 pm
As Smoking Man would say: “You guys are boaring”. Smoking Man, please rescue this blog.

You’re welcome.
……

Working on the book. Sorry.
2 more chapter re writes this weekend.
Christ it takes Steven King 3 months per book. I’m on year 6. I finaly can focus.

Removing all the add verbs after “He Said.” apparently this is bad. And I got a shit load of em.

Not sure why it’s bad. Going with Steven kings tips.

#144 young & foolish on 08.16.15 at 10:10 pm

“And some of the renovators are on EI, used to make 6 figures plus in oil and gas, and are already hurting. I hear their incomes they were making, and wonder why they are already hurting. But then I look at the mortgages, the big shiny new trucks with nutz, trips to Mexico, and motorcycles. ”

Imagine having tried telling these folks that they should be investing their good fortune into a equity portfolio while those 6 figures were coming in. Or that the province should be creating a Norway style fund with the oil proceeds to protect the populace from commodity downturns. I think you get the picture.

#145 Shawn on 08.16.15 at 10:15 pm

Buffett would thank you

(Walmart’s) “like Zeller’s Fruit of the Loom Ladies undergarments are in a cardboard box in total disarray requiring hours to find the right size.”

*****************************************
In 2003 the only year I attended Buffett’s big meeting in Omaha he had just finished buying Fruit of the Loom. He said “we now cover the asses of the masses”.

#146 TurnerNation on 08.16.15 at 10:22 pm

Of course he’ll win. The IS propaganda is on thick. Till Oct. He’ll thump chest and claim to Uphold Our Shared Canadian Values overseas. The blue rinse set will coo. Our boy.
Meanwhile tens of millions over there are forced into refugee/internment camps. Off their land. By way of the bloody British Empire. It happened here too, hundreds of years ago. Human behavior never changes. Fighting only over procreation and money/land.

#147 Smoking Man on 08.16.15 at 10:23 pm

Look at item 4 As is old Man

http://www.openculture.com/2014/03/stephen-kings-top-20-rules-for-writers.html

Obviously he knows what he’s talking about.. But I’m pretty spot on on about 15 of his points.

#148 Andrew on 08.16.15 at 10:28 pm

Tourism is way up. The low Canadian dollar means that there is going to be an economic boom outside Alberta.

#149 Tim on 08.16.15 at 10:32 pm

http://democracywatch.ca/pmoprosecutionfund/

#150 Whoa! on 08.16.15 at 10:33 pm

Cat: This doesn’t look like the Vegetarians office

Dog: Dumb cat … you’re here to get snipped

#151 45north on 08.16.15 at 10:40 pm

Is the Big Dipper actually making some sense?

people usually say what they think. Yesterday Ponzius Pilatus posted this link:

http://www.bnn.ca/News/2015/8/14/NDP-leader-Mulcair-sees-serious-danger-in-Canadas-housing-market.aspx

my reading, is Mulcair will promote housing debt.

but let’s imagine Garth on BNN:

BNN: so what’s your answer to the housing crisis?

Garth: I would increase interest rates, tighten lending requirements, tighten CMHC regulations and remove homeowner tax incentives. Net result would be more affordable housing.

BNN: But wouldn’t that mean that the value of housing would go down?

Garth: So what’s your point?

#152 Smoking Man on 08.16.15 at 10:41 pm

#146 TurnerNation on 08.16.15 at 10:22 pm
Of course he’ll win. The IS propaganda is on thick. Till Oct. He’ll thump chest and claim to Uphold Our Shared Canadian Values overseas. The blue rinse set will coo. Our boy.
Meanwhile tens of millions over there are forced into refugee/internment camps. Off their land. By way of the bloody British Empire. It happened here too, hundreds of years ago. Human behavior never changes. Fighting only over procreation and money/land.
……

Who wins is who the machine wants to win..

Gery Webb was featured in a show the other day, to kill a Mocking bird.

He exposed drugs for Guns in South America, good sources. MSM with CIA burned him.

Apparently he committed suicide by shooting himself in the head twice.

Then the NIST report, building 7
MH17
USA department of stats.

And on and on

There are no choices. Until the next revolution.

Then you will have freedom for a short period of time, then a new machine forms.

Ground hog day all over again.

It’s a cycle. You can fight it or exploit it. Our time us short.

I go with exploitation….. £$$$$$$

#153 Balmuto on 08.16.15 at 10:47 pm

#147 Smoking Man

Love number 17:

“Leave out the boring parts and kill your darlings. “(kill your darlings, kill your darlings, even when it breaks your egocentric little scribbler’s heart, kill your darlings.)”

Kill your darlings. That would make for a good book title.

#154 TurnerNation on 08.16.15 at 11:02 pm

Any doubt to the “agenda 21” type theory of forcibly getting people off their land into crowded innercity barrios?

Scroll down to photo:

“Kilamba New City, developed by Chinese company CITIC, is designed to accommodate 500,000 people and includes 750 eight-story apartment blocks.”

http://qz.com/480625/photos-african-cities-are-starting-to-look-eerily-like-chinese-ones/

#155 Love my Kia on 08.16.15 at 11:05 pm

#125 Frank
“Dogmatic would be you who won’t listen to anything from Stephen Harper’s mouth even if he said he found a unicorn that shat gold bricks and held it in front of you.”
————————————–
Agreed. But it would never happen either.

#156 Margarite Deville on 08.16.15 at 11:22 pm

Garth

Are you the guy in the pic wearing the funky fedora ….if so, well done….tres retro-chic dude!

#157 suede on 08.16.15 at 11:29 pm

#143 smokie

writers use adverbs when their writing is weak and theyre trying hard to get the point across. Its like arse kissing and brown nosing.

just be assertive and readers will get it

#158 joe on 08.16.15 at 11:29 pm

people will walk away from their under water properties
flippers/banks will be bailed out on expense of tax payers
bad credit will be a norm
people will start over -some divorces and heart attacks

#159 European on 08.16.15 at 11:34 pm

Someone should do a political cartoon about this, picture this:

A crowd of people with lots of cavities showing on their teeth, and the 3 political leaders:

Harper holding and giving out a bunch of candy from a basket, with a shabby cover up of a caption “debt” on it. A closer look at the candy it has ballots attached to it.

Mulcair a holding a poster, personal debt is bad for you – let the government take on the debt for the people.

Trudeau in the background behind the crowd examining the candy, deciding what he should do.

And finally Garth Turner dressed like a dentist standing on the side and trying to spread the message about cavities.

#160 Carpe Diem on 08.16.15 at 11:35 pm

The whole Mulcair discussion refinancing his home is silly.

1. Maybe he took a loan to invest in a diversified portfolio?

2. He lent his 2 kids 100K so they can get $2M homes?

3. He’s a crack addict.

Now talking about possibly being a bubble….

He’s a pussy.

He doesn’t want to rock the boat.

What we need in Canada is a sailor how isn’t afraid in a boat.

We need an asshole like Trump in this country.

#161 Steerage bilge on 08.16.15 at 11:44 pm

#159 European on 08.16.15 at 11:34 pm

Someone should do a political cartoon about this, picture this:

A crowd of people with lots of cavities showing on their teeth, and the 3 political leaders:

Harper holding and giving out a bunch of candy from a basket, with a shabby cover up of a caption “debt” on it. A closer look at the candy it has ballots attached to it.

Mulcair a holding a poster, personal debt is bad for you – let the government take on the debt for the people.

Trudeau in the background behind the crowd examining the candy, deciding what he should do.

And finally Garth Turner dressed like a dentist standing on the side and trying to spread the message about cavities.
————————————————–

Is it safe?

https://www.youtube.com/watch?v=dG5Qk-jB0D4

#162 Investorz on 08.16.15 at 11:49 pm

“What mess lies ahead”

Garth, I wouldn’t be surprised Harper increases the number of years you have to replenish your RRSP after taking the 70k out to buy your first house.

Why not, it’ll make voters happy. Us renters will get nothing to reward our efforts.

#163 Coasting in Costa Rica on 08.17.15 at 12:06 am

I find it very depressing to see some people spend their entire life doing nothing but typing INCREDIBLY long winded crap to post on this site.

#164 kommykim on 08.17.15 at 12:22 am

RE:#95 Nosty, etc. on 08.16.15 at 7:10 pm
90% of the North and Central American population being unemployed (our replacements due to tech advances) is coming true a lot more quickly than most consider.

Then you’ll like this article about us entering the postcapitalist era:
http://gu.com/p/4ay9c/sbl

#165 will on 08.17.15 at 12:32 am

I’ll keep my rrsp in equities thank you very much Mister harper. I know you’d like to bankrupt me but that ain’t gonna happen. So f__k off.

#166 sailor on 08.17.15 at 12:35 am

#160 Carpe Diem
We need an asshole like Trump in this country.

We don’t have Elon Musk – we don’t have an asshole like Trump.

We are left with all the boring mediocre assholes.

We are the country of mortgages and low yielding, risk free portfolios.

The most exciting thing on Canada’s top financial blog is a gambling, drinking, smoking Greek. But even he is unable to cheat – so it’s pretty much just talk… no action.

Country with no chutzpah.

#167 kommykim on 08.17.15 at 12:54 am

RE: #153 Balmuto on 08.16.15 at 10:47 pm
Kill your darlings. That would make for a good book title.

The movie is already out:

http://www.imdb.com/title/tt1311071/

#168 Joe2.0 on 08.17.15 at 12:56 am

Want to know where this is going.
Eventual 0 interest rates and QE Canuck style.
It’s not different here.

#169 YVR2ZRH on 08.17.15 at 1:00 am

So – If half of these borrowers have been unable to pay – have they become a “mass” that would need to be catered to? What do you think the chances are that a political party will change the rules to extend the payback period – say – 10-15 more years – or never?

As much as I could never really want an NDP government – perhaps this country needs 10 years of it to shake the tree a bit and break the current political ties.

#170 Nagraj on 08.17.15 at 1:35 am

NO LENDERBY
If you get down to 110lbs fer cryin’ out loud all that may be left of your name is the Y.
Do you use a mike or just yell loud?
Do they make you pay if you bang up the boat?
All the best and hello to the Winklevoss twins.
Nagraj

(I had to get the Twinkletoe twins in because this is a money blog, Bitcoin, etc., and so I must also mention that the bobbing head in the 2012 Oxford/Cambridge was a socialist revolutionary . . . )

(Don’t tell where the regatta is or the SASKATOONSTABBER might show up.) (And be drowned.)

(You’ve probably discombobulated SMOKING MAN with the word “coxing”.)

(Maybe even Mr. Turner too.)

#171 Kreditanstalt on 08.17.15 at 1:39 am

Completely agree with this post! But there is another shoe set to drop soon: job losses. And much further after that, another: price inflation.

It’s called “stagflation”. Follow Brasil.

#172 New Babblemaster on 08.17.15 at 1:54 am

“Mostly it ignores the real reasons houses cost too much, which are Bank of Canada policies, lax lenders, fraudulent liar loans, subprime lending, CMHC regs, homeowner tax incentives (see below), governments that encourage debt and eunuch finance ministers.” – Garth

—————————————————-

Immigrants and foreign investors also help to inflate housing prices. Anyone who claims otherwise is just being “politically sensitive.”

#173 juno on 08.17.15 at 2:12 am

Canada is technically at the beginning stages of a technical recession.

Yet the power to be says it will be mild and a recovery will be quick.

Its been 5 months and I haven’t seen a recovery yet.
What I see is a long and prolong recession.

A crashing dollar, lower capital.
I see us hovering slowly down until after the election, when the king discovers he has no clothes.

I see the next stage of the game, being massive un-employment, companies afraid to take the risks to expand, instead they will contract. Due to most canadiens being broke-asses. Luxury items and companies whom provided them will have to hibernate until things get better

But then the next stage. No jobs means, no pay on the real-estate. Massive selling, coupled with the old retiring into 2020 where the majority of the boomers will be retired. The huge debt load and the falling prices will be the chink which cracks the real estate façade. And bring reality into peoples mind

#174 Tony on 08.17.15 at 2:39 am

Re: #41 Van real on 08.16.15 at 2:26 pm

Shawn fails to mention what will happen when the excess pool of money to borrow against shrinks as all the boomers end up flat broke and penniless from the zero interest rate policy.

#175 Bucky on 08.17.15 at 2:44 am

Seems the Chinese government is engaging in unsavory tactics to hunt citizens (or former citizens) abroad. Makes the recent election promise to gather data on foreign ownership look like a nod to the Chinese government.

http://www.nytimes.com/2015/08/17/us/politics/obama-administration-warns-beijing-about-agents-operating-in-us.html

#176 Lea on 08.17.15 at 3:30 am

#45 Van Real

I never realized until today that the U.S. and Canada are roughly the same size. Guess the geography of North America does not resemble Westeros.

#91 Victoria

#92 Frank

2006 in the U.S. was insane. The pressure to get into the housing market or upgrade was enormous. My husband got the fever and we were “pre-approved” for an enormous amount. When I explained to our banker that taking on the “pre-approved” mortgage left no margin for error, he said that we would get the cushion from our tax refund! It was like the Dutch with tulips. Fortunately, we refinanced at a low fixed interest rate and kept all our equity. No big gains, but also no losses and an affordable place to live. I think Greenspan and David Lereah turned a blind eye to tons of evidence because they hoped it would be a soft landing. It wasn’t.

Frank, what happens now? While Vancouver is a beautiful, desirable place to live, it is very, very expensive. If people decide it is too expensive they will either not move here or move away if they can. Under current conditions we aren’t planning to put down roots and neither are a number of expats that we know.

#177 Blacksheep on 08.17.15 at 3:34 am

Shawn #, all of them.

“I will repeat my simple explanation based on supply and demand of money. (Blacksheep – sorry if this makes your head explode)”
———————————————–
Thanks for your concern, but I no longer give a shit what the cattle believe .

#178 BC Guy on 08.17.15 at 4:34 am

Here’s a topic you don’t often hear but that should be part of the election: LAND REFORM

I travel around our beautiful province of BC all the time. Thousands and thousands of acres in as far as the eye can see in every direction, much of it unoccupied. However, if you try to buy land in BC, guess what? It’s ridiculously expensive. Usually one or two acres can easily cost $100,000 or more. I’ve seen land near Pemberton around $400k/acre.

Why is this?

Look at how the land ownership is allocated, these are my best-guess estimates, if some has the exact figure, please supply them:

– Natives claim 100% of the land of course, but control/occupy somewhere around 5% of the land mass
– about 10% is Provincial or Federal parkland
– of the remaining 85%, about 75% is Crown Land, controlled by the BC Government, leased out to corporations for mineral extraction, oil/gas development, BC Hydro, cattle ranchers, lumber companies (tree farm licences)
– that leaves approximately 10% for private ownership
– of the 10% private ownership, a large portion, maybe 6 or 7% is owned by the super-rich (millionaires, billionaires from Canada, the US and other countries), who own hundreds or thousands of acres, this includes CN and CP rail
– so the rest of the population is fighting over the remaining 5% of the land mass, driving up prices sky-high

Now, since the majority of the land mass is “Crown Land” (and/or Native Land), it is in the hands of the Native Band Councils and the BC Government.

In other words, 80% of the land in BC is controlled by about 1% of the population and the provincial government who gives control and access to large corporations.

Why isn’t this an election issue? I think this has more to do with the sky-high price of house and real estate in the Province than foreign investors and boomers.

I would like LAND REFORM to be an election issue provincially and nationally.

What would I do if I was Prime Minister? I would have a progressive land tax something like this:

– annual tax on 1 acre $500
– annual tax on 2 acres $1250
– annual tax on 10 acres $7500
– annual tax on 20 acres $25,000
– annual tax on 50 acres $75,000
– annual tax on 100 acres $150,000
– annual tax on 500 acres $1,000,000

What this would do is discourage large land ownership. Those super-rich who currently own large acreages would have an incentive to subdivide large acreages into smaller acreages, therefore allowing the average Joe to buy 1 or 2 or 5 acres at a more reasonable price.

So instead of squabbling over 300 sq ft micro-condos in downtown Vancouver, why not open the debate to the whole landmass of the province?

#179 Fakeologist on 08.17.15 at 6:08 am

Thank you Eddy for the link. I’m a big fan of Garth since he apparently stuck it to the PMO power hub back in the day. http://www.greaterfool.ca/2015/08/16/the-big-surprise/comment-page-4/#comment-390895

#180 jo on 08.17.15 at 6:50 am

#47 saskatoon

looks like there is something “fishy” in your example

#181 Jane Heathington on 08.17.15 at 7:44 am

Just like the federal NDP trying to look less scary and more to the middle, not as socialistic in their policies and as a party, Thomas Mulcair will surprise the inexperienced, delusional, utopian, young and less extent older voters just like Bob Rae did in Ontario in the 1990’s.

#182 SWL1976 on 08.17.15 at 8:17 am

#154 TurnerNation

Any doubt to the “agenda 21″ type theory of forcibly getting people off their land into crowded innercity barrios?

Scroll down to photo:

I always enjoy your finger on the pulse of agenda 21 here TurnerNation

The part I found most interesting was about the book

Now this is one cool book

The Drinkable Book

It’s not all bad news. We have some very talatended people alive right now working on some very cool projects.

Then we have real crazies calling the shots

Then we have soulless Politicals executing their orders

Then we have the herd mindlessly following direction without question

Where do you fit in?

Break the mould

#183 fixie guy on 08.17.15 at 8:33 am

@ #4 the Jaguar “Because it’s the only thing keeping the wheezing Canadian economy going, that is why.”

Speaks volume about the two terms of bankrupt Conservative policies. All Harper’s action plan achieved was government protection of mortgage industry profits with taxpayer money.
Harper and Carney: working overtime to destroy Canada’s global reputation.

#184 George S on 08.17.15 at 8:41 am

#178 BC guy
“What would I do if I was Prime Minister? I would have a progressive land tax something like this:

– annual tax on 1 acre $500
…..
What this would do is discourage large land ownership. Those super-rich who currently own large acreages would have an incentive to subdivide large acreages into smaller acreages, therefore allowing the average Joe to buy 1 or 2 or 5 acres at a more reasonable price.”

People use land for other things besides housing and tiny organic farms. If you tax the landowners more all that will happen is that everyone will pay more for goods and services that they provide.
One of the main reasons that land in BC is so expensive is that there isn’t very much good usable land for all uses so there is a natural shortage of land. The crops that can be grown on southern BC land are very high value crops that can only be grown there or in some parts of southern Ontario. Also the governments in most places have laws against development and subdivision of land to prevent wasting scarce good farmland by subdividing it into little inefficient acreages that end up being planted into 90% lawn and the rest into a tiny garden and shade trees.
Think of it like being encouraged to live closer to where you work in multi-unit housing and using highly efficient public transit instead of wastefully occupying valuable, scarce farmland with housing and driving for hours each day to work in a traffic jam.

A tax of that magnitude would hit large landowners like the CPP quite hard.

#185 Polozified on 08.17.15 at 8:45 am

I can feel Flaherty spinning in his grave from here, and I’m in Barrie!

#186 Smoking Man on 08.17.15 at 8:59 am

After the disaster, Empire Fed report today. Does anyone still think a Fed Fund rate hike looms.

Come on…. Cast your ballot.

More like QE 4 then 5.

#187 The New Blue is Orange on 08.17.15 at 9:25 am

Not swayed much by fear mongering much.

I am swayed by a truthful, former cabinet minister’s perspective and politicians with a bit of messaging honesty.

#188 Shawn on 08.17.15 at 9:30 am

Long-Winded Crap

#163 Coasting in Costa Rica on 08.17.15 at 12:06 am said:

I find it very depressing to see some people spend their entire life doing nothing but typing INCREDIBLY long winded crap to post on this site.

****************************************
Me too. Seeing short-winded crap is far less depressing.

#189 Mf on 08.17.15 at 9:32 am

#42 Julia on 08.16.15 at 2:29 pm

I don’t think the move is targeted towards millennials.

From what I see, those most upset about the housing market are people 35-45 who missed the boat and didn’t buy when the rest of their cohort did. A lot of frustration exists there.

What is the voter turnout amongst that group? That’s why Harper is playing that card.

Mf

#190 Mf on 08.17.15 at 9:44 am

#186 Smoking Man on 08.17.15 at 8:59 am

I do yes. And if not September, then at some point in the near future. Fact is normalization at this point only means up because we are at such a low point. I read the fed likes to stay ahead of the curve. With the recovery on, inflation could show up soon.

It seems if you look at history, interest rate moves are usually surprising to everyone anyways.

Mf

#191 No Lenderby on 08.17.15 at 10:01 am

#170 Nagraj on 08.17.15 at 1:35 am
Do you use a mike or just yell loud?
We strap a mike on the head connected to the cox box.

Do they make you pay if you bang up the boat? No, banging up the boat is for idiots apparently.

Srsly, I started rowing at 50 years of age. What a revelation! I had thought it was a wussy, elitist sport for toffs. I now think that the toffs keep the best stuiff for themselves :-)

(Hopefully I’ll never be as low as 110 lbs unless I’m near death!)

Don’t tell where the regatta is or the SASKATOONSTABBER might show up.) (And be drowned.
Aw, be nice. In person he is sincere, kind to his Mum and animals, and can probably swim. It’s a bit of a pity that he’s fixated at fulminating at people on the Internet but it can’t be helped. He thinks the rest of the world is insane and he is the only one with insight. And who knows? We could be the victims of Stockhom syndrome for all I know.

You’ve probably discombobulated SMOKING MAN with the word “coxing”.Maybe even Mr. Turner too.

(Wait until we talk about the coxless fours!)
No, I doubt it. Mr. SM is deep into gratuitously removing his hapless adverbs. Coxswains might not be on his agenda.

However, a nautical theme is often a popular metaphorical device. Perhaps he could turn his space opera into a pirate novel? International Talk-Like-A-Pirate Day (Sept. 19) is fast approaching after all. Ladies and Germs, I present to you, The Train Pirates

#192 Setting the Record Straight on 08.17.15 at 10:01 am

@137
I’m not terribly surprised that a career politician, esp. left of centre, would have remortgaged. Politics is an expensive game and you have to pay to play.

A long time ago my Dad ran unsuccessfully for MP (he was a Tory). We lost the house, and it was a long time before the family finances recovered.

At least Mulcair seems to be staking his own fortune rather than hiring out as a shill.

———

http://globalnews.ca/news/2084278/mulcair-says-he-had-no-intention-of-running-for-conservatives/
He was talking with them about working for the PMO but
Apparently was not aware that his “values” were inconsistent with those of the Conservative Party

#193 cramar on 08.17.15 at 10:29 am

On Sat., heard a financial commentary to which I cannot remember the subject nor any of the content except for two points which where striking.

The perception that Canadians have:

a) Renting is just throwing your money away;
b) Putting your money into RE is the best investment.

The commentary was reinforcing not arguing against the above.

#194 Llewelyn on 08.17.15 at 10:44 am

Let us look at the proposal to increase RRSP withdrawals by first time homebuyers by $10,000 in a logical manner.

If a two income household was to increase their equity by $20,000 at current interest rates over a 25 year term their carrying charges would be reduced by less that $95.00 per month or less than $1,150 per year.

A potential savings of $95.00 per month applied to a gross debt service ratio of 32% is equivalent to $300/month in gross household income. I find it hard to believe that two income households who failed to qualify for a mortgage because their gross income was $300.00/month short will suddenly decide to risk $20,000 of their retirement income to enter an over valued housing market.

Unless potential first time buyers have been living in a cave or have restricted their reading to CREA newsletters they will be aware that the Canadian economy is in a slump and that the current market value of housing will probably be affected by this slump.

If we assume that the average market value of dwelling units outside of Toronto and Vancouver is less than $400,000 a 1.0% reduction in market value will still erase thousands of dollars in equity.

A 0.5% increase in current mortgage rates would add $0.26/month to each $1,000 of mortgage debt. Any modest increase in mortgage rates over the next five years would erase the value of $20,000 of equity that must be returned to their RRSP at some point in time. Good luck with that!

All the mirrors in the world cannot defy basic market fundamentals. The cost of obtaining accommodation across Canada has reached a historical high in spite of historically low mortgage rates. Would a reduction in interest rates to zero suddenly generate an unlimited number of first time home buyers? Of course not!!

70% of all Canadian households bought into a giant Ponzi scheme in the belief that a sufficient number of new marks would be persuaded to enter the game each year. Expanding immigration targets, low interest rates, a decline in average household density, the creation of high ratio mortgages and contributions from Mom and Dad helped for a while but without employment at fair wages the supply of new marks necessary to keep the scheme alive cannot be maintained.

It is beyond irresponsible for a democratically elected government to deliberately participate in a Ponzi scheme when they know that the supply of new marks necessary to keep the scheme alive cannot be maintained under any plausible scenario.

Enough with the all these gimmicks Stephen!! One or two ideas about how your party proposes to improve our all sectors of our economy might be nice.

Withdrawal from our addiction to ever increasing real estate values will be tough but the affordability of housing must adjust to reflect the market fundamentals that actually exist within Canada. If not now when?

#195 Steerage bilge on 08.17.15 at 11:01 am

A lot of downward graphs…. Yellen is in a bind.

http://www.telegraph.co.uk/finance/11805523/Doomsday-clock-for-global-market-crash-strikes-one-minute-to-midnight-as-central-banks-lose-control.html

#196 Mister Obvious on 08.17.15 at 11:16 am

#163 Coasting in Costa Rica

“I find it very depressing to see some people spend their entire life doing nothing but typing INCREDIBLY long winded crap to post on this site.”
———————————–

Myself, I find that fascinating.

I don’t read any of it. I just find it fascinating. You’ve got to be very selective now. Ironically, those who post several screens full make themselves easy to ignore.

Except for Garth, of course, who must at least skim everything for offensive content. What a job.

#197 Nora Lenderby on 08.17.15 at 11:50 am

#163 Coasting in Costa Rica on 08.17.15 at 12:06 am
I find it very depressing to see some people spend their entire life doing nothing but typing INCREDIBLY long winded crap to post on this site.

I hope you’re not talking about our esteemed host (who’s price is above that of rubies)! Thanks to him this site is a fragrant and alluring ladies’ tea party compared to many.

All joking aside, some of the stuff that’s not crap is informative and insightful. The rest is often a great laugh. I believe the ability of people to connect and converse is important. While we talk, we’re not stabbing each other (except perhaps metaphorically).

Ms. Heather Mallick once said in her column something to the effect that if you want to stay sane, never, ever, read the comments, anywhere.

Ruff!

#198 waiting on the westcoast on 08.17.15 at 11:56 am

Re: no land in BC… boo hoo…

Maybe some of you should travel to Europe and see how they have converted vast tracts of “unusable” land into fertile terraces, etc.

Most land in the Vancouver area is still not used for any productive use. Go to Delta/Surrey/Langley/Coquitlam and see all of the acreages which are used as 5, 10, 20 acre homes… few used for productive agriculture.

#199 Nora Lenderby on 08.17.15 at 12:08 pm

#86 bigtown on 08.16.15 at 5:50 pm
Ever since Target retreated to America Wal-Mart has morphed into an ugly reminder of Zeller’s.

It’s truly getting ugly in there, and the restrooms are a shocking disgrace. Serious management problems are afoot when a company loses the will to keep it together.

There are stories about closures and layoffs. These days when a person is let go they have to work out their notice period. No payoff. If they find other work, their pay is stopped. And that’s for the “full-time” employees who barely exist. Perhaps they have a right to lose their work ethic and stop caring.

#200 Shawn on 08.17.15 at 12:25 pm

Walmart Washrooms

Nora Lenderby said:

It’s truly getting ugly in there, and the restrooms are a shocking disgrace.

*******************************************
That’s an interesting comment considering that several Walmarts in the U.S. recently closed due to mysterious “plumbing problems”. Perhaps a plugged toilet?

The bad washroom conditions may explain why there have been no recent reports of babies being birthed in Walmart washrooms.

#201 Shake Down Sam on 08.17.15 at 12:39 pm

DELETED (anti-Chinese)

#202 Big Mike on 08.17.15 at 1:01 pm

So Garth, do you endorse the fellow with delusional views on home ownership or the one with a realistic view on the housing bubble?

#203 Leo Trollstoy on 08.17.15 at 1:44 pm

What would I do if I was Prime Minister? I would have a progressive land tax something like this:

– annual tax on 1 acre $500
– annual tax on 2 acres $1250
– annual tax on 10 acres $7500
– annual tax on 20 acres $25,000
– annual tax on 50 acres $75,000
– annual tax on 100 acres $150,000
– annual tax on 500 acres $1,000,000

This will just cause a bunch of named corps owning a large number of 1 and 2 acre lots.

#204 bailout on 08.17.15 at 1:52 pm

which party is more likely to bail out all broke house owners (and therefore the banks) using taxpayer (i.e. savers’ and prudent investors’) money?
thats is effectively what happend in USA. nobody other than prudent taxpayer was harmed really.

You sure need to learn more. About $6 trillion in homeowner equity was lost and US middle-class net worth in general has yet to recover. The ‘bail-outs’ generally failed. — Garth

#205 jess on 08.17.15 at 2:01 pm

“Economists applaud promise to collect data on foreign investment in real estate”

whoopdedodaw – include those anon. trust and maybe get a standing ovation

=========

ABN Amro has stated that the suspect activities happened “out of the bank’s sight” and that V.’s employment contract has been terminated
ABN Amro banker suspected of millions in tax evasion – NL …
http://www.nltimes.nl/…/abn-amro-banker-suspected-of-millions-in-tax-evasio...
5 days ago – V. also seems to have played an important role in the pyramid scheme Partrust. ABN Amro has stated that the suspect activities happened “out

your mobile is an open book!
German hacker Luca Melette, who works as a consultant in security agencies, he demonstrated the process of tracking and bugging vulnerability of smartphones by tapping into SS7.

‘What if I could tell you senator, that it’s possible to listen /read text to any mobile phone from anywhere in the world – would you believe me?’ Mr Coulthart asked as the hacker listened on. watch @ 60minutes australia
http://www.dailymail.co.uk/news/article-3199978/Hackers-access-call-message-send-world-moment-German-computer-experts-just-easy-eavesdrop-smartphone.html#ixzz3izfMxz1C

so have they got duffy’s et al phones
=
Samson Resources to file for bankruptcy
leverage and fees!

‘shelf babies’ fake identities
http://www.cbc.ca/radio/day6/episode-246-oath-keepers-in-ferguson-exonorating-ethel-rosenberg-digitally-faking-death-and-more-1.3189944/how-to-fake-a-death-online-1.3189991

golf codes as trades!
http://www.justice.gov/usao-sdny/pr/father-former-investment-bank-managing-director-pleads-guilty-insider-trading

Here’s the advantage high-frequency trading firms have over everyone else
By Francine McKenna market watch
ITG, the electronic brokerage that was caught secretly trading against its own clients.
What triggered the SEC’s largest-ever fine against disgraced brokerage ITG? The dark side of Project Omega
By Steve Goldstein

#206 Steerage bilge on 08.17.15 at 2:06 pm

Maybe Canada could benefit from Trump’s giant wall!

http://business.financialpost.com/news/economy/this-chart-shows-that-canada-has-bigger-problems-than-just-oil-citi-strategist

#207 jess on 08.17.15 at 2:15 pm

….”In times of economic strain, larger numbers of investment frauds are exposed. One reason is that some investment programs which were not started as fraud schemes morph into Ponzi schemes as markets decline. When securities and real estate markets turn south, large numbers of investment programs incur substantial losses. Some investment managers fail to acknowledge reality, and turn to misleading their clients in an effort to keep their enterprises afloat. From there, it is a short step to recruiting new investments with lies, and dipping into investor funds for personal use.

Another reason that Ponzi schemes are exposed during difficult economic times relates to the nature of the schemes themselves. When investor money is lost, either through market reverses or simple theft, the scammers can pay prior investors only with the funds brought in by new investors. In hard economic times, as investors retrench and are more likely to resist the entreaties of smooth-talking fraudsters, the flow of new money dries up, and true Ponzi schemes come crashing down.”
http://www.justice.gov/usao/priority-areas/financial-fraud/investment-fraud

FOR IMMEDIATE RELEASE
Wednesday, July 8, 2015
Investment Company Executives Indicted for $1.5 Billion Ponzi Scheme

MRI
The president and chief executive officer and two former Asia-based executives of a Las Vegas investment company were indicted today for their roles in an alleged $1.5 billion Ponzi scheme.

more examples here:
http://www.theponzibook.blogspot.ca/

#208 JimH on 08.17.15 at 2:37 pm

#186 Smoking Man on 08.17.15 at 8:59 am
“After the disaster, Empire Fed report today. Does anyone still think a Fed Fund rate hike looms.
Come on…. Cast your ballot.

More like QE 4 then 5.
===============================
Granted, the ESMI report from the questionnaire-based survey done by the NY Fed was disappointing. But remember a few things here:
1. by its very nature the Index is highly subjective and in reality is a reflection of backward-looking conditions.
2. the US recovery and concurrent business cycle is still very much in its early stages.
3. although the ESMI has been historically influential and symptomatic, it is very much a regional survey of manufacturing activity in NY State. While NY State remains the financial center of the known universe, its usefulness as an indicator of American economic output has been at least somewhat eclipsed by the west and the south.

In stark contrast, we see homebuilder sentiment at its highest level in 10 years, techs, large and mid-cap growth ETFs doing well, and B2B broadband activity skyrocketing.

US rates will rise between now and year end, SM. As Yellen has indicated many times, such a move is dependent and predicated by employment and inflation data (the Fed’s primary mandate), and Yellen tends to be more concerned about employment. A move of .25% to .35% in the Fed funds rate is, after all, close to miniscule and can be easily handled by the markets. (with the possible exception of the emerging group)

As for your prediction of QE4 and QE5; out of the question.

#209 MF on 08.17.15 at 2:49 pm

#33 Shawn on 08.16.15 at 2:02 pm

#210 MF on 08.17.15 at 2:54 pm

#33 Shawn on 08.16.15 at 2:02 pm

Hey Shawn I find that theory really interesting. Did you read about it somewhere or did you come up with it on your own?

So, if savings are going down now (low dollar, high cost of food/housing/school/crappier job prospects) then it is only a matter of time until rates go up to reflect this newer reality?

MF

#211 Blobby on 08.17.15 at 3:29 pm

#24 Chris on 08.16.15 at 1:07 pm
If the housing market did/does weaken substantially, do you think any one of the three parties would try making mortgage interest deductible, like in the US?

That would be like the nuclear option to get the market breathing again.

Impossible. — Garth
———————————————–

Er no, that’d just cause the market to further inflate and cause people to get into further debt.

The BEST thing to help the market, the affordability, and people in general… I (IMHO) to make mortgages harder to get. Limit the amount of money people can borrow (say, no more than 3 times the average of the previous 5 years pre-tax income).

But that wouldnt be a vote winner, as people being as stupid as they are – would see that as making property “unaffordable”.

Whereas allowing people to borrow more apparently makes things “affordable”..

#212 JSS on 08.17.15 at 3:48 pm

I’m patiently waiting for TSE:CPD to drop around $12.30/share so that i can collect an annual 6% dividend yield. I’m looking for holding for a while, just for a nice cash flow.

Anyone else want to join me on this journey?

#213 Irrelevant on 08.17.15 at 4:05 pm

The biggest problem that Canada is facing in this new reality of a declining global economy is the fact that despite its massive land and vast resource deposits, the country and its population are largely irrelevant.

Canada is too far removed from the growing Asian markets. Not competitive in terms of infrastructure and productivity compared to Europe.

Canada is a one trick pony and that pony’s act is no longer attractive.

Now, if Canada was priced the way it was before this massive debt binge it might attract more investors.

As is though, it is too expensive and too irrelevant despite its proximity to the US market.

#214 Freedom First on 08.17.15 at 4:16 pm

#212 JSS

I just bought CPD about 1 week ago. I posted that on this Blog. My horizon is decades. I never try to hit absolute bottoms buying or absolute highs selling. Balancing, re-balancing, diversity, and liquidity are the keys. Everything else is just noise, like the political party speeches during elections. They lie, like almost everyone else. I come to this Blog for the truth.

#215 lee on 08.17.15 at 4:17 pm

#212,

How do you know CPD will not reset at a yield of 4.5% after all the resets and sales happen?

#216 bdy sktrn on 08.17.15 at 4:37 pm

#212 JSS on 08.17.15 at 3:48 pm
I’m patiently waiting for TSE:CPD to drop around $12.30/share so that i can collect an annual 6% dividend yield. I’m looking for holding for a while, just for a nice cash flow.

Anyone else want to join me on this journey?
————————–
i believe our host says the yield is safe but i wonder.

otherwise i’m there with you.

#217 cramar on 08.17.15 at 4:39 pm

#20 Rexx Rock on 08.16.15 at 12:59 pm

Interest only mortgages will be the norm for the future.Its already happening everywhere.Keeping up to the jones is ingrained in Canadian culture.I see people buying their first car for over $40,000.You might as well drive with a paper bag over your head if you drive a beater.

——————

Ain’t it the truth!

I love Dr. Thomas Stanley’s book Stop Acting Rich — And Start Living Like a Real Millionaire. People that want to appear rich drive new and expensive cars that are financed. He found the average millionaire drives a Toyota or Ford that is several years old.

My son in Chicago owns and drives (sporadically) a 16yr-old Honda Civic. He can afford to buy a Ferrari.

#218 REx on 08.17.15 at 4:46 pm

Once again shawn- YOU DO NOT KNOW WHAT YOU ARE TALKING ABOUT!
STOP POSTING LIES. Banks create loans from nothing!!!!!!
A borrower is NOT anyone else’s money YOU IDIOT SCHILL!

#219 NoName on 08.17.15 at 4:51 pm

@212 JSS

why would you wait on cpd for 6% when you can buy fie now yielding 7%, or there are some more exotic etf that yield 10-12%.

Note
I am in no position to give you a financial advice due to the fact that I am “registered” welfare recipient, definitely consult professional for financial advice.
This comment is not financial advice, it is only here for entertainment purposes only!

https://www.google.ca/finance?q=TSE%3Afie&ei=lkTSVdn0FcXTecnsiPAP

#220 TurnerNation on 08.17.15 at 4:52 pm

#212 yes I have 1300 room left TFSA this year. Awaiting CPD closer to $13.

#221 Shawn on 08.17.15 at 5:14 pm

My Interest Rate Theory

#210 MF on 08.17.15 at 2:54 pm commented and asked me:

#33 Shawn on 08.16.15 at 2:02 pm

Hey Shawn I find that theory really interesting. Did you read about it somewhere or did you come up with it on your own?

So, if savings are going down now (low dollar, high cost of food/housing/school/crappier job prospects) then it is only a matter of time until rates go up to reflect this newer reality?

MF

*****************************************
I read a ton about finance and economics and have for decades (and forget most of what I read) and so I can’t say how much of that theory is my own. I am sure it is not the first time it was proposed.

I think supply and demand for money is one of several standard theories around interest rates. I was trying to apply supply and demand and thinking about how demographics impacted that and also the advent of huge pension funds that did not exist in 1980 anywhere close to what exists today.

I agree if savings go down then interest rates should rise.

There is some debate about the savings rate but I am not sure that the total pot of savings including pensions and RRSP money is going down.

#222 JSS on 08.17.15 at 5:22 pm

#215 lee

I thought I knew everything.
But at the end of the day I found out that I know nothing.

#223 Leo Trollstoy on 08.17.15 at 5:24 pm

#186 Smoking Man on 08.17.15 at 8:59 am

No chance of QE in the U.S.

More likely in Canada’s future.

#224 TCContrarian on 08.17.15 at 6:09 pm

#20 Rexx Rock on 08.16.15 at 12:59 pm
Interest only mortgages will be the norm for the future.Its already happening everywhere.Keeping up to the jones is ingrained in Canadian culture.I see people buying their first car for over $40,000.You might as well drive with a paper bag over your head if you drive a beater.

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

Well, I drive a 1995 American-made mini-van (well-maintained and runs perfectly.)
Total cost of ownership (like Garth advises us to calculate on RE, not just monthly payment),
is $8,500 in 11 years (bought 2nd hand at $5,000, cash).
But I never was inclined to wear a bag over my head – weird!

#225 aoxomoxoa on 08.17.15 at 7:27 pm

Criminal Enterprise Unveiling
http://www.nationalobserver.com/2015/08/17/news/why-joe-oliver-seeking-economic-advice-scandal-plagued-corporate-honcho

#226 carl on 08.19.15 at 9:27 am

Insane. And he’s offering up reno credits too. Listen, I’m a homeowner, and enjoy low rates, but it’s not healthy. The rising interest rate will be painful, but if we plan for it now, (not with policies that encourage more debt), I think it can be managed by most – if not, well them’s the breaks.