It’s here

HUGS1

A recession, eh? What does that mean? Does it matter?

In case you missed it, StatsCan revealed Tuesday the Canadian economy has, unlike Mike Duffy, contracted monthly. It’s called ‘negative growth,’ and if you’re the sitting prime minister, it’s the worst news. When an economy shrinks for two consecutive quarters, it becomes recessionary. Thanks largely to oil, that’s us.

And while the price of crude took a giant leap up (27%) in the last week or so, it’s volatile, unstable and unpredictable (look at Tuesday’s drop). More worrisome has been a relentless plop in business investment in Canada – down 11% during the winter and 8% over the last few months (witness today’s 1,000-job oil patch slaughter).

As you might expect, things are getting worse in the People’s Republik of Alberta where the Dipper government has announced not only a recession but a provincial deficit of almost $6 billion. Oil, drought, blazes and ideology are whipping the former cash cow province into submission. Oil rig activity has fallen by 50%, big money has gone into fighting wild fires and the government is goosing social spending, bloating the budget to over $50 billion for the first time. Concurrently an extra $500 million is being removed from often-struggling corporations in the form of higher taxes. Go figure.

Of course, news we’re into the R-thing is manna for the Muclairs and Trudeaus among us. After nine years of Conservative rule, they’ll point out, we have almost $200 billion more in federal debt, epic personal indebtedness, structural unemployment, eight years of deficits and now a recession. It’s hard to know if this will affect the outcome on October 19th, but hard to see how it won’t.

Anyway, what does a recession mean to us wage slaves and house-snorflers?

The last one of consequence hit at the end of the Eighties and extended through to the mid-Nineties. It was caused by high inflation and climbing rates, which makes our low-inflation, cheap-money recession all the more remarkable. But it’s interesting to note that residential real estate, which spent most of the 1980s in bubble territory (as now) suffered a US-style crash once recession gripped us.

The peak-to-trough decline in the average price of a Toronto house, for example, was 24.5%. Ouch. And during that entire period, mortgage rates got more affordable – with no measureable result. As I mentioned here yesterday, houses were cheaper in 2000 than they were in 1990. It took 14 years for the price of a house bought in 1989 to recover – not even factoring in inflation and buying/selling fees. Double ouch.

However, being a sunshine-and-ponies kinda guy, I have to point out that this recession is likely to be shorter and shallower than the one that hit the last time. The decline in business activity in the second quarter was less than in the first. That’s good. While business investment was way down, household spending was up – a lot. So you can thank all the idiots running up the LOCs and taking mountainous mortgages for mitigating the commodity price collapse. The US is motoring ahead (as the labour stats Friday morning will show), and that’s always good for Canada. Finally, the $3 billion largesse the desperate Conservative government bestowed on parents in July is also a factor, seeing it all got spent on Huggies and Heineken.

Now, despite recession being official, don’t look for cheaper interest rates. Ain’t gonna happen. Even economist David Madani, beating the drum for a third rate cut ever since the second one took place, has thrown in the towel. “Overall, this latest economic data is broadly consistent with the Bank of Canada’s economic projections presented at the time of the July policy meeting. Accordingly, we now expect the Bank to hold off lowering rates any further for the time being.”

In fact, given that the Fed will raise its key rate in September (odds are 44%) or October (odds overwhelming), fixed-rate, five-year mortgages in Canada will cost more by Thanksgiving – regardless of what happens with our central bank. That means 2015 likely marked the bottom of the interest rate cycle. This might even have been the cheapest money you’ll see in your lifetime.

So the real consequence of this could be political, not economic. Canada will get back on its feet when global growth moves higher and commodities respond. But in the process it might take a dramatic swerve left. As Alberta has started to prove even in the nascent days of NDP control, spending and deficits go up, and taxes follow. Is the answer embracing bigger, more costly government and less disposable income? I guess we’ll find out next month.

You might wish to prepare.

222 comments ↓

#1 Get back Loretta on 09.01.15 at 3:42 pm

Houses, huggies and Heineken – the suburban dream.

#2 S.H. on 09.01.15 at 3:48 pm

“In case you missed it, StatsCan revealed Tuesday the Canadian economy has, unlike Mike Duffy, contracted every month”
————
Actually, not every month. June, the economy grew leading the way for a 3rd quarter rebound.

#3 ben on 09.01.15 at 3:48 pm

If the Fed raise rates in Oct I’ll buy a hat and eat it. With much joy.

I’m skeptical Garth.

#4 reality-check on 09.01.15 at 3:48 pm

told you sooooo about the markets, hehe, do you believe me NOW…. this is gonna get ugly people, grab onto something and hold on for the slide of your life, dow @ 1000 and s&P @ 600 +/- a few points … cu @ the bottom :) btm is june 2016

Nothing ever changes. The market corrects, and people run for the Depends. — Garth

#5 Cheerful Observer on 09.01.15 at 3:50 pm

Anyway, what does a recession mean to us wage slaves and house-snorflers?

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

Nothing, nothing at all.
For people in china our real estate is dirt cheap.
My neighbour in White Rock just received a 300,000 deposit on a 2.5 mil home with balance payable as soon as the money makes its way out of China.
The End.

#6 skube on 09.01.15 at 3:52 pm

I thought a Fed key rate rise impacts variable-rate mortgages here in Canada, not fixed-rate ones? Fixed-rate mortgages being set essentially by the stock market/economy. Subtle but different.

#7 Mark on 09.01.15 at 3:56 pm

“Now, despite recession being official, don’t look for cheaper interest rates. Ain’t gonna happen.”

Really? Might very well be the case at the retail level, especially with credit-worthiness of consumers being the issue. But the stars are clearly aligned for an additional two BoC policy rate cuts in the coming months, and even NIRP/QE if the funk doesn’t dissipate (which it won’t, as Canadian housing will lead an enormous amount of deflation in the future).

The US situation isn’t really any better. Expect major dislocations in the market over the next few weeks as it becomes obvious that claims of US “rate hikes” were just, at best, jawboning. The data simply doesn’t support anything but rate cuts and additional stimulus. The true fools are those who believe the propaganda of rate hikes being put out there.

#8 Dave's my hero. on 09.01.15 at 3:57 pm

Even economist David Madani, beating the drum for a third rate cut ever since the second one took place, has thrown in the towel. “Overall, this latest economic data is broadly consistent with the Bank of Canada’s economic projections presented at the time of the July policy meeting. Accordingly, we now expect the Bank to hold off lowering rates any further for the time being.”
——————
Well if Dave says that the BOC is done lowering, they’ll definately lower. After all, he’s the Dennis Gartman of the North.

Actually David Madani, Dennis Gartman and Jeff Rubin should start a reverse ETF. It would short what ever they say to buy.

#9 Diogenes on 09.01.15 at 3:59 pm

I probably laughed way more than I should have at that picture. And the blog was excellent today.

#10 Mark on 09.01.15 at 4:01 pm

“I thought a Fed key rate rise impacts variable-rate mortgages here in Canada, not fixed-rate ones? Fixed-rate mortgages being set essentially by the stock market/economy. Subtle but different.”

US interest rate policy has little to do with fixed rates in Canada. Completely different currencies, and completely different economies and central banks.

Actually, if the BoC/Fed were to somehow change course and start hiking (which there’s no reason to, since inflation is completely under control in Canada/USA, and both economies clearly have huge output gaps), overly aggressive hikes on the short end of the curve would actually push the longer term rates down as the yield curve inverts.

#11 Nosty, etc. on 09.01.15 at 4:14 pm

[…] “it’s volatile, unstable and unpredictable” […]

A good description of life. If it was predictable, it would be beyond boring. Much better to live with unpredictability, then act, not react.
*
#134 gut check on 09.01.15 at 8:31 am — “The MSM is a propaganda machine . . .”

Correct. It has been well known for some time now that six companies control 90% of the west’s m$m, and as you say, they (and most govts.) are not worthy of paying attention to.

#133 Smoking Man on 09.01.15 at 8:25 am — “How did things get so upside down and retarded here you ask..”

Unpredictability (see above).

Comparing the USAF’s new F35 to the Russia’s new T50 is comparing an old, rusted VW Bug to a Lamborghini.

The cost overruns of the F35 is not a problem, as taxpayers will be picking up the tab!

#12 Nick on 09.01.15 at 4:28 pm

From crisis come opportunity, and change. I finally feel the Canada I know and love is on the cusp of a great comeback – whether it be Liberal Red or NDP Orange, or possibly a Red/Orange combination Pumpkin or Salmon colour. Either way, better days are ahead!

#13 Silent the people on 09.01.15 at 4:28 pm

However, being a sunshine-and-ponies kinda guy

Garth, There will be nothing pretty with this picture!

Keeping oil prices low won’t help anyone and Canada
is heading for a Socialist government. What follows
is anyone with money fleeing Canada!

Too bad the current pigs at the trough won’t feel it! (current government)

Adios!

#14 ANON on 09.01.15 at 4:29 pm

You might wish to prepare.

…for getting Mauled by BigDarth.
I always found the financial horseman (hint: it’s the black one) being a more suitable metaphor. However, gotta stay current with the times: aliens and lizards, MOTUS and illuminati, freemasons and NWO-ers :)
No way this could be the work of the little innocent compounding percentages of promises over long periods of time, because that would be much to prosaic.

#15 Nora Lenderby on 09.01.15 at 4:34 pm

This is aimed at US millenials, but it might get some younger people interested:

http://www.vice.com/en_ca/read/a-millennials-guide-to-planning-for-retirement-815

I don’t agree with it all; it is better than nothing and it indicates Vice News becoming less of a porn-and-party media outlet. (I read it for the cat jokes :-)

#16 Sheane Wallace on 09.01.15 at 4:36 pm

The current ‘recession’ is structural and will be very long/if not indefinite/ unless we restructure the economy to be more competitive and productive.
We have been running on fumes and excessive debt accumulation which is equivalent to running deficit to the tune of 40-50 billions a year (through CMHC guarantees and excessive loans that would not have happened without CMHC). Even with that the economy stinks, we have run deficit every single year, our dollar has literally collapsed by 30 % vs the USD and we have consecutive 6 months with negative GDP growth despite the understated inflation!

What more can I say?

We bet on horses: energy bubble and housing bubble and failed on the first. Now the bust of the second is coming (actually long overdue) and it could be horrific.

Our economy is not productive, we are not innovative, the bubbles caused miss-allocation of capital and we can not attract the brightest and the smartest to be competitive internationally.

What we would have left literally few years down the road would be pieces of the economy that survive the bust of the bubbles (energy and housing), destroyed currency (expect significant inflation in CAD) and savings (hence inability to invest and become more productive) and cheap labour and I can not really see what could take us out of the (so called) recession in relative short time frame.

It would be long, thick and nasty.

#17 gladiator on 09.01.15 at 4:47 pm

Garth, the LOCs have to be repaid sometime (or go bankrupt on them), which means significantly lower household spending. We are up to our eyeballs in consumer debt and at an historic housing peak from where the way is only down.
The BOC has no more dry powder left in the form of rates that can be cut to stimulate the economy.
How this recession can be shallower than the last one is beyond me…

#18 Josh in Calgary on 09.01.15 at 4:49 pm

Garth,
What’s the effect on the markets if the NDP win the federal election?

Would it not be prudent to reduce one’s canadian holdings just in case? I hate to over react to such things, but the markets usually do.

#19 Oceanside on 09.01.15 at 4:52 pm

#12 Nick on 09.01.15 at 4:28 pm
From crisis come opportunity, and change. I finally feel the Canada I know and love is on the cusp of a great comeback – whether it be Liberal Red or NDP Orange, or possibly a Red/Orange combination Pumpkin or Salmon colour. Either way, better days are ahead!

Ready for a big change federally, look forward to more “Dipper” governments, they are now so middle of the road no fear of creeping socialism….Anybody but Harper.

#20 Deb on 09.01.15 at 4:54 pm

How the recession affects Canadian consumer confidence will be key in the coming weeks and months. Losing a job, or the fear of losing a job, tends to lower household spending in general. Also, in most cases, big purchases can be removed from the picture for quite some time. The effect of both on the next two quarters could make matters much worse, given that consumer spending accounts for 65% of the Canadian economy.
Strange days have found us.

#21 Sheane Wallace on 09.01.15 at 5:03 pm

#19 Oceanside

Looking at the debt and liabilities at all levels (personal, municipal, provincial, federal) I see little reason to justify the optimism and the hope for ‘grand comeback’ but after all what do I know?

I never thought they could pull it (the housing bubble) that long and over-blow it to that extend.

It is an achievement by itself that no one else has ever achieved so we might be different after all.

#22 Joe2.0 on 09.01.15 at 5:05 pm

Bus loads of perspective Chinese and other foreign home buyers out there.
Money pulling out of Asia at a rate never seen before looking for shelter.

Why?
The Chinese market is crapping the bed.

Let’s get real Garth, Canada’s economies and populations a drop in the bucket.

Real estate’s not about Canadians anymore, it’s fuelled by immigrants, Canadians to be.

And there are millions of foreign millionaires out there.
Do the math.

#23 Axehead on 09.01.15 at 5:23 pm

#17 Josh

Expect the following if the NDP win the Federal election:

1 – more taxes
2 – higher taxes
3 – more debt
5 – more spending
6 – more deficits
7 – protection of a bloated civil servant population
8 – increased funnel of funding to social programs at the detriment of core federal responsibilities (i.e. military, money, etc.)
9 – relaxed drug and crime prevention measures
10 – creative financial budgets

The end result is punishment for Industry and the Entrepreneur , and increased reward for the lazy, incompetent and priviledges. That will lead to an exodus of talent, resources and spirt from Canada which will eventually affect the markets in a negative way.

#24 Shawn on 09.01.15 at 5:24 pm

Believing as many as Six Impossible Things Before Breakfast…

#5 Cheerful Observer on 09.01.15 at 3:50 pm said:

For people in china our real estate is dirt cheap.

****************************************
So, the people who “took our manufacturing jobs” by working for much lower wages than us became rich doing this.

How does that work?

Surely it’s not the hourly Chinese workers you speak of? And just how many rich business owners are there in Canada?

And is it a bad thing if someone comes and buys your house for an inflated price?

When you say “our” real estate what do you mean? It’s not collectively owned. It’s privately owned. What business is it of yours if I sell “my” real estate to a rich Chinese immigrant (if such an opportunity exists).

#25 Axehead on 09.01.15 at 5:24 pm

#23 priviledged, not priviledges

#26 zedgt87 on 09.01.15 at 5:27 pm

“However, being a sunshine-and-ponies kinda guy, I have to point out that this recession is likely to be shorter and shallower than the one that hit the last time”

Well Garth, good thing you deploy a diversified investment strategy because your speculations are frequently dead wrong. This recession is just getting started, and no the USA economy is not doing fine, this correction is just getting started.

#27 Smoking Man on 09.01.15 at 5:29 pm

It sure is here…

Communists…..

The driving laws in Ontario are for one single purpose… $$$$$ and the bottom line of insurance companies, I’ve said all along that industry owns the Liberals.

So with any suspension, you can expect your insurance to double. Even if you fight and win, the suspension is there and you get dinged. the more opportunities for suspensions, the more the owners of liberal party win.

Always have insurance companies in your portfolio.

Now about 6 months ago, a cop pulls me over for going about 10 klics over.

So i give him my license and insurance, had them in the glove box.

He let’s my of the hook, on the speeding ticket, but says my insurance slip is out of date, so I get a 40 dollar ticket…

I knew I had the current on in my wallet, but I also had a stack of Browns one inch thick. Thought, pay the ticket. Didn’t want him to see the stack.. We were heading to Vegas that night.

So I give it wifee poop who says, I’ll pay it when we get back.

We forgot about it…

Thing comes in the mail… You’re licence is suspended, . Pay the fines and have it back in four days.. Ten times the amount of the ticket.

No reminder notice about the ticket.. This is pure communism with a slice of oligarchy .. My insurance will get jacked now…

I can afford it, but it sucks for the 99%ers.

#28 Danny from Surrey on 09.01.15 at 5:30 pm

Anyone know if kamloops is a good breeding ground for rentals? I have a cousin that lives up there. Says the sushi is great!

#29 Shawn on 09.01.15 at 5:31 pm

The Rest of the Story

As you might expect, things are getting worse in the People’s Republik of Alberta where the Dipper government has announced not only a recession but a provincial deficit of almost $6 billion.

***************************************
Yeah, the update to the conservatives $5 billion deficit budget? This, after oil fell a lot more.

As an Albertan who voted NDP (for the first time in my life) to get rid of a tired and corrupt and generally tone deaf conservative government I am not blaming this deficit on the dippers.

Basic fiscal policy theory calls for government deficit spending during recession. What would others do, add to the layoffs by chopping government spending at this time?

Long May She Reign Over Us…

#30 Setting the Record Straight on 09.01.15 at 5:35 pm

People say don’t bet against America. But the American people have never faced such a malicious, powerful and reckless opponent as they now have in the Federal Reserve Banks.

#31 pinstripe on 09.01.15 at 5:35 pm

the coffee shop was full today and the morning coffee lasted till 1100 when we were told to make room for the lunch crowd.

the alberta pc’s screwed Albertans royally. the pc’s spent many dollars on subsidies to businesses and now these same businesses are folding. BILLIONS of dollars gone the route of subsidies. No wonder alberta was in debt after the biggest boom in the province history. no one knows where the money went. all of a sudden the wra become so knowledgeable. Where was this wra gang when the pc’s were in power, especially when most crossed the floor to prentice territory. No one hears anything from the ctf either.

now the leakage is occurring at the fed level. many stories are popping about the same type of money control with the feds. the local fed pc candidates are no where to be found, and when they are spotted they refer to the talking points by harpo.

In alberta Rachel will have her hands full for the entire four years recouping the mess left by the pc’s.

harpo will do anything to get another four years. the world is in a Debt Crisis and no politician will admit that the was a failed experiment.

the time is now to say Enough is ENOUGH.

#32 Brian Ripley on 09.01.15 at 5:43 pm

I updated my interest rate charts with August data.

On the Yield chart: http://www.chpc.biz/yield-curve.html

… the 10yr less 2yr spread remained on trend at 106 beeps wide. The last major widening of the 10-2yr spread (rising 200+ bps) in 2007-2009 saw the TSX Real Estate Index Price Momentum plunge into the March 2009 Pit of Gloom.

#33 Investorz on 09.01.15 at 5:43 pm

With this technical recession a real thing, and China slowing down and day trading their markets, those of us investors, we’re now getting a chance to test our “volatility tolerance” profile.

Even large money managers are selling. So, can’t blame small time retail investors for selling too. For months BNN guests talk about long-term investing. Then half of them recommend raising cash.

SP500 touched 1910.

#34 Jon on 09.01.15 at 5:48 pm

Well the Libs have a better track record on the economy than the Cons. I’m not sure we’d get a “Paul Martin with a chainsaw” Finance Minister this time around though at least over the last generation…

By the way, who spends more money on their hair? JT or Steve?

#35 SunShowers on 09.01.15 at 5:48 pm

“As Alberta has started to prove even in the nascent days of NDP control, spending and deficits go up, and taxes follow.”

At least Mulcair is pretending to like balanced budgets and Margaret Thatcher. Sure, he could be lying, but I’d prefer to roll the dice on Mulcair possibly fibbing over Trudeau telling the truth about 3 more years of deficits any day.

The Libs have gone left and the NDP have gone center, go figure.

#36 Setting the Record Straight on 09.01.15 at 5:50 pm

Greenspan, Bernacke, Yellen

The Gang of
Three

#37 Butch on 09.01.15 at 5:54 pm

Remember – September odds of a rate increase were “overwhelming” a short time ago. October will be no different.

There will always be an excuse not to raise them.

#38 common sense on 09.01.15 at 5:55 pm

#16 nice post Sheane…

“Customer spending was up a lot!” Hmm on more debt/credit purchases or cash? Let’s take a poll…

Small town Ontario where I live finds more business development with no population/market growth, more locals holding weekly yard sales to get by or turning their garages into a space for second business to raise cash until the town shuts them down, streets that used to be repaved now crushed stone topped,etc, etc,etc.

Let’s face it. The average person is tapped out financially. Debt has to be paid back not only in housing.

Am I calling this doom and gloom? More like reality.

We had a fun time at the party the last 6 years..I hope you take your profits, re-balance and relax til the next opportunity comes along….

That is unless Yellen and China reduce rates, more QE and the party continues…

That my friends is the real story…..

#39 Freedom First on 09.01.15 at 5:56 pm

I like the picture. Just need to make one change to it. Have the sign read: FREE MONEY. There, perfect.

#40 Mark on 09.01.15 at 5:59 pm

“And there are millions of foreign millionaires out there.”

Sure. But how many of them really have liquid wealth that they could, on a dime, just bring to Canada? So far, the data pretty much tells us that the entire Canadian RE marketplace is driven by domestic leverage, not by foreign investment.

People might think of the ‘rich’ as being ‘rich’, but in reality, most of them only got to be that way because they have investments, and those investments tend not to be particularly liquid in any significant quantities. Additionally, the ‘rich’ tend to have a keener sense of value and can easily see that buying some of the most expensive RE in the world that is entirely propped up by overleveraged domestics is not a good business proposition.

“Real estate’s not about Canadians anymore, it’s fuelled by immigrants, Canadians to be. “

No, its entirely fuelled by Canadians borrowing huge sums of money on subprime loans. Alchemized into pristine quality credit courtesy of the CMHC and its dramatically below-market insurance rates.

#41 old gringo on 09.01.15 at 6:00 pm

This is wear the jobs are moving to.

Virtually every automaker is adding capacity in Mexico, including General Motors, Ford, Toyota, Honda, Volkswagen, Audi, BMW, Hyundai and Mazda.

The country is a “massive untapped market” that could grow by another 1 million to 2 million vehicles a year, DesRosiers said.

By 2020, Mexico is expected to build one in four vehicles in a North American industry of 18.6 million units. The U.S. will hold its own at two-thirds of the output, or 12.2 million vehicles. Canada is the big loser, down to 1.6 million vehicles and 9% of the output.

In 2014, automakers announced $18.25 billion in additional investments in North America. The breakdown: almost $10.5 billion for the U.S., $7 billion in new projects for Mexico, and a single $750-million project for Canada, according to the Center for Automotive Research in Ann Arbor.

That is on top of the 18 plants already in Mexico, and there are least five more planned or under construction. Mexico has seen a 40% increase in auto jobs since 2008 to 675,000 last year while the U.S. saw only a 15% increase in the same period to more than 900,000.

#42 Llewelyn on 09.01.15 at 6:13 pm

Garth you really have to rechannel all that negativity directed against the NDP in Alberta

For the past few years corporate tax revenue in Alberta generated 10% of all Provincial revenues while personal income taxes generated 23% of all Provincial revenues. Collectively income taxes generated $16.8 billion in 2014/15, 1/3 of all government revenues.

In 2015/2016 the combined impact of increases in both personal income taxes for those earning over $125,000 and larger corporations will actually generate $100 million less than total taxation revenue collected in 2014/15.

Corporate tax revenue is projected to decline from $5.8 billion in 2014/15 to $4.78 billion in 2015/16, a decline more than $1.1 billion. This decline was offest by a projected increase of $1.0 billion increase in revenue from personal income taxes.

Even after an increase in the corporate tax rate from 10% to 12.0% only two Provinces in Canada have a lower corporate tax rate B C (11.0%) and Ontario (11.5%).

In 2014/15 revenue generated through the exploitation of from non-renewable resources was $8.95 billion or 18.1% of total revenues.

The NDP government has projected that the revenues realized from non-renewable resources will decline by over $5.4 billion to $3.5 billion in 2015/16. 90% of the projected deficit you seem so deeply concerned about has absolutely nothing to do with the policies introduced by the NDP.

As a counterpoint I would remind the readers of this blog that the Federal government racked up additional debt of $150.0 billion before the value of oil began its precipitous decline. Now that my fellow bloggers is how the big dogs ‘dip’.

#43 Andrew on 09.01.15 at 6:14 pm

If you didn’t notice already GDP went up by 0.5% in June. The mini-recession lasted from January to May and is now over.

#44 Jimny on 09.01.15 at 6:15 pm

Oh my golly gosh, what a sizeist you are!
Two days in a row.
Who will defend poor Linda and now Mike!

#45 Linda on 09.01.15 at 6:18 pm

Of course Garth you cannot possibly be suggesting the Alberta NDP are responsible for any of this…? In power all of, what, minutes….?

This is yet another sorry notch down in the longterm neocon game.

Cut government mandates, game the economy to favour the wealthy, indebt the taxpayer population so that new effective programs (and oversight of the wealthy cliques and corporations) is harder and harder to implement.

This crap has been going on since the 1980s. I am a long time PC voter, but never again. This will take a generation to correct back to a more equitable way to run a society and economy.

Most Canadians, it appears, are thinking along the same lines. Smart people. Not cynical or self-interested, like the current group in power.

#46 Blacksheep on 09.01.15 at 6:20 pm

Sheane # 210,

‘Don’t judge rashly’ said the Bible.
Fully aware of the rules of the game and playing it (the game) accordingly.
Ignorance is not always a virtue, sometimes it is a sin.
—————————————————
A Gold bug and a thumper, no wonder your writings are so bleak. It’s OK dude…I won’t berate you for your closed mind.

Dog bless.

#47 OttawaMike on 09.01.15 at 6:23 pm

Dave’s my hero. on 09.01.15 at 3:57 pm

Hee hee ha.

#48 Simmie Simchuck on 09.01.15 at 6:23 pm

#4 Reality Check. “HaHa- Losing it all- Got physical gold and silver B***H*.” The sad part is- This is NOT a them(1% Garths) vs Us issue. The sound money people are just trying to help the paper people see the light. They are just flustered by the childish rebuts and personal attacks. The only way this world will come through this debt crisis that is currently blowing up is for people to understand our fiat debt based system and shun it for real wealth in the form of tangible assets. There is NO money to be made by those advocating physical gold and silver. The problem is that ‘financial advisers’ don’t make money off of this recommendation either. I have fought the good fight but have become jaded after warning people about this crash for 7 YEARS!!! So reap what you sow- B*****s! There will be no recover anytime soon after this meltdown. This is NOT the same market and this is NOT the same kind of crash. Sorry for laughing at the misfortune of the ‘diversified investment’ guys and girls but– You were warned. One more time for good measure- SELL EVERY PIECE OF PAPER PROMISE’S YOU HAVE AND GET PHYSICAL GOLD AND SILVER IN YOUR POSSESSION OR YOU WILL LIVE IN POVERTY FOR THE REST OF YOUR SAD LIFE! THIS GOES DOWN NOW!
Peace.

#49 BC Guy on 09.01.15 at 6:31 pm

The OPEC nations are feeling the pain too … they’ll meet in the near future to discuss curtailing production. This will cause oil prices to rise dramatically.

The oil industry has always been plagued by wild swings up and down, then up again. A fun ride if you can time it right. I’ve always been a “buy low, sell high” guy. The time to buy oil stocks is NOW. The best time to make a fortune is when the future looks gloomiest. This is because the prices of stocks are the cheapest.

Just watch, as soon as OPEC announces it’s next meeting, oil futures will spike upward, and won’t look back for a couple of years at least. May be too little too late for many oil-patch workers.

#50 Kevin on 09.01.15 at 6:37 pm

You’d never know the US markets were in freefall reading this blog.

Canada isn’t the only economy going down the drain, the US is too, but that’ll never get play here on Garth’s blog, where he’s convinced himself that Canada will singularly and separately crash while the US strides along.

Too funny.

#51 LowRent of Arabia on 09.01.15 at 6:41 pm

Been a few weeks. More bombings. They blew up some 2000 year old monuments. Oil up and down. Iranians back in the oil market.

Mild panic when someone ,FT,

http://www.ft.com/intl/cms/s/0/909c399c-4b2f-11e5-9b5d-89a026fda5c9.html#axzz3kWshB0Wv)

hinted Saudis might delink the Riyal from the Dollar…killing expats salaries…then Saudi gov’t comes out in support of the peg.

My saudi friends complain that the price of a slaughtered sheep has doubled in 5 years.

Water in short supply. GCC countries looking at stopping subsidized gas, electricity, water for citizens.

My advice to all BlogDawgs…read…look beyond today and the headlines…look to the future in China, India, Gulf countries, Europe. Not all is rosy. America and Europe prosper for a reason. Remember despite the feminist bleating about campus rape culture…no buses in America drive around for 5 hours while someone is gang-raped and then dump bodies when they are done.

Happens in India and other EM. ‘Emerging’ yes but very slowly.

Garth. Feel free to censor. But it is true.

#52 Canadian on 09.01.15 at 6:45 pm

#38 Linda on 09.01.15 at 6:18 pm

>neocon

What decade did you fall out of honey?

#53 tonsorial guru on 09.01.15 at 6:47 pm

#27 By the way, who spends more money on their hair? JT or Steve?

No brainer. Justin gets a trim every few days @$50.
Harpoon splashed out $50 for his rug 10 years ago. Looks like it, too.

#54 Whinepegger on 09.01.15 at 6:54 pm

Manitoba has been in a recession since 1999 (Google ‘Doer wins majority government’). Woe to you that wish for a federal socialist government. Gather ’round -let me tell you a story.

A man died and was met in the after-life by a benevolent angel. The angel told the man that they’d been keeping an eye on the election campaign in Canada and were going to allow him to choose his party of choice from three different rooms, seeing as how he wouldn’t be able to vote on October 19th. The angel told the man to choose carefully, as the room he chose would be his abode for eternity.
The angel took the man to a big blue door and opened it. Inside was a moderately populated room but the people in the room were standing in $hit up to their waists. Behind the second red door the man found an equal number of people as the first but in this room the people were up to their necks in $hit. As they moved to the orange third door the man was desperately hoping for something more pleasant. To his chagrin as the door opened it wafted the same $hitty smell that the other two rooms had emitted. In this room there were more people but the $hit was only knee deep and everyone was standing around having a coffee.
“Which room do you choose?” asked the angel. The man thought for a moment and replied, “If I have to be in $hit I might as well enjoy the company of more people and a good cup of java. I choose the orange room.”
“As you wish,” muttered the angel, and ushered the man into the room.
As the door closed behind the angel a voice could be heard coming from above, “OK, coffee break is over. Everyone back on your heads!”
For those wishing to choose the orange door on October 19th, come visit Manitoba first. Coffee’s on me.

#55 pinstripe on 09.01.15 at 6:59 pm

the alberta pc’s business model was to sweep things under the rug. OTOH, the new sheriff in Alberta is starting to enforce the rules and laws set in the policies set by the PC’s.

http://www.cbc.ca/news/canada/calgary/nexen-energy-to-shut-down-long-lake-oilsands-facility-1.3211751

#56 Freedom First on 09.01.15 at 7:01 pm

#41 Simmie Simchuck

Calm down. You need to be more diversified. Trust me, you’ll feel better.

#57 MSM-Free Zone on 09.01.15 at 7:09 pm

#29 Shawn on 09.01.15 at 5:31 pm
“…….As an Albertan who voted NDP (for the first time in my life) to get rid of a tired and corrupt and generally tone deaf conservative government I am not blaming this deficit on the dippers…….”
_________________________

As did so many other Albertans. Why is it that so many non-Albertans fail to see the logic in this?

Same thing is going to happen on Oct 19th. “…get rid of a tired and corrupt and generally tone deaf Harper government….”

#58 Sheane Wallace on 09.01.15 at 7:12 pm

#46 Blacksheep

It depends.

In crises there are opportunities you just need to see them. I do and unfortunately they are not in Canada.
That’s it.

As for the gold bug part I already wrote countless times that I am not one but that does not prevent me from seeing the potential in miners.

I am just presenting a view point. Supported by evidence. While you are enforcing yours with no arguments or examples. Everybody is entitled to an opinion.

#59 Kreditanstalt on 09.01.15 at 7:14 pm

“The last one of consequence hit at the end of the Eighties and extended through to the mid-Nineties. It was caused by high inflation and climbing rates, which makes our low-inflation, cheap-money recession all the more remarkable.”

…and, furthermore…

“I have to point out that this recession is likely to be shorter and shallower than the one that hit the last time.”

Really. Premature conclusion-drawing.

That 1990s recession was “cyclical”; this is SYSTEMIC. This time I predict any significant growth is gone for as long as these governments all believe n the efficacy of “stimulus”, i.e. more debt.

Get ready for quarter after quarter after quarter of waffling either side of zero growth…

#60 Andrew Woburn on 09.01.15 at 7:16 pm

“Canada has given oil sands a dirty reputation, but a breakthrough, commercially viable technology has caught the eye of a former Exxon Mobil president who is putting it to use to clean up Utah’s billions of barrels of oil sands.

Imagine extracting high-quality oil out of the estimated 32 billion barrels buried in Utah’s oil sands, without creating the toxic wastelands that have resulted from oil sands projects in Western Canada. And imagine doing it at a cost that can still turn a profit in today’s oil price slump.”

http://oilprice.com/Energy/Crude-Oil/Former-Exxon-President-On-Mission-To-Clean-Up-Oil-Sands.html

#61 T.O. Bubble Boy on 09.01.15 at 7:16 pm

well – we all know why Harper called the early election now, don’t we!

if you’re going to run on the economy, you probably don’t want to be in the middle of your 2nd major recession while claiming to be a miracle economist.

#62 Jas on 09.01.15 at 7:17 pm

Why the Rest of the Year Will Be Difficult for Markets:

http://www.bloomberg.com/news/videos/2015-09-01/why-the-rest-of-the-year-will-be-difficult-for-markets

#63 Jacko Suggo on 09.01.15 at 7:19 pm

Great quote from a comment section in the NP.

“socialism promotes greater resiliency and future prosperity ”

The NDP and Libs will know exactly what to do during a recession…Bwahahahahahahahahahahahahahahaaha

#64 Bytor the Snow Dog on 09.01.15 at 7:21 pm

#16

“It would be long, thick and nasty.”

Normally, I would insert some sort of joke here, but it would likely be DELETED.

#65 Jake Swanson on 09.01.15 at 7:21 pm

In Alberta, they are going into a mild depression and Canada will too if the NDP get their way.

They have no idea what they are talking about. They could not run Canada’s biggest province and all they can tout is small provinces like Saskatchewan that have maybe 1 million to 1.1 million people at most.

They are the last try on the buffet menu that will be spit out later with a bitter taste like what happened in Ontario 20 years plus ago.

#66 T.O. Bubble Boy on 09.01.15 at 7:25 pm

Garth – I noticed your old pal Sherry Cooper is back in the POST City magazine real estate round table… as “Chief Economist” for Dominion Lending Centres! (you know, the same place that used Don Cherry in their ads)

So… why does a subprime lender need a “Chief Economist” exactly?

#67 Shawn on 09.01.15 at 7:29 pm

Looking at the Invisible

#19 Oceanside

Looking at the debt and liabilities at all levels (personal, municipal, provincial, federal) I see little reason….

***************************************
‘course you never have looked at such ’cause the figures don’t exist do they?

And if they do exist, how did you put the dollars in context?

And why did you not all look at the assets and the equity?

#68 Bytor the Snow Dog on 09.01.15 at 7:31 pm

@23 Axehead- Your Axe sure ain’t the sharpest tool in the shed, is it?

Forgive the formatting.

Axehead sez:

“Expect the following if the NDP win the Federal election:

1 – more taxes
2 – higher taxes”

So, this is needed.

“3 – more debt”

Doubtful.

“5 – more spending”

Likely, but it’ll be prioritized.

“6 – more deficits”

But you repeat yourself.

“7 – protection of a bloated civil servant population”

Agreed this must stop.

“8 – increased funnel of funding to social programs at the detriment of core federal responsibilities (i.e. military, money, etc.)”

Good. Enough of the phony war on terror and government by fear.

“9 – relaxed drug and crime prevention measures”

Good. Enough of the war on drugs and government by fear.

“10 – creative financial budgets”

Stop talking about Harper like that!

“The end result is punishment for Industry and the Entrepreneur , and increased reward for the lazy, incompetent and privileges. That will lead to an exodus of talent, resources and spirit from Canada which will eventually affect the markets in a negative way.”

Enough of the neo-con talking points. Oh, and you’re welcome for correcting your spelling.

#69 Shawn on 09.01.15 at 7:37 pm

Meant to say in China

from above…

So, the people who “took our manufacturing jobs” by working for much lower wages than us became rich doing this.

How does that work?

Surely it’s not the hourly Chinese workers you speak of? And just how many rich business owners are there in Canada?

should read, in China of course

#70 J man on 09.01.15 at 7:40 pm

I am in the oil industry and I will still say Notley has had nothing to do with the current fiscal situation in AB other than what people have worked up in their mind. Not the least of which is the rabid AB PC brainwashed crowd. She hasn’t increased spending yet (speculate all you want but nothing major has been announced above small potato’s stuff) Increase in corporate tax profits isn’t likely to affect the lion’s share of companies that are losing money and don’t have profits. I see the economic runs and the tax increase is a tiny piece of the equation. Not helpful but hardly as bad as it is being oversold by people hell bent on killing anything NDP. While oil is 98% of the problem the NDP policy that hasn’t even had time to take effect is getting 98% of the blame and 98% of the negative press…go figure. Ultimately this is simply about companies and individuals working hard to spread misinformation in order to back their interests. Nobody willingly pays their fair share. But at the same time nothing in life is free.

Would you rather have higher taxes and universal health care or low taxes and risk losing your house if you get cancer…when most consider this their answer would be YES. YES to lower taxes when it suits them and YES to comprehensive non-profit driven coverage when they need it. Shocking!

Everybody hates socialism until an insurance claim replaces their burnt down house. I mean that’s all insurance is right? Socialised risk. Everything has a good and bad side including socialism.

#71 OttawaMike on 09.01.15 at 7:44 pm

old gringo on 09.01.15 at 6:00 pm
Re : Messikin auto plants

Don’t feel too bad for Canada. I was at wedding on the weekend talking to a UK CEO based in Turkey and that middle eastern / Europe hybrid is sopping up auto plants from all over the EU.
1/3 the hourly wage of W Europe.

#72 Shawn on 09.01.15 at 7:46 pm

You Earned “Four Cars” last year?

A pretty good mid-level car costs about $20,000.

Someone earning $80,000 (let’s say after tax) “earned four cars”

They worked about 2000 hours or just 500 hours per car.

How many hours would it take a very skilled tradesman with every hand tool and a full machine shop to make a single car out of raw materials? 10000 hours? forever?

Is this not remarkable that someone can earn four cars in a year and it would have taken them untold years build even with a lot of tools?

All hail the economic system that makes this miracle possible.

#73 OttawaMike on 09.01.15 at 7:47 pm

Smoking Man on 09.01.15 at 5:29 pm

I got one of those no proof ins. Tickets 6 yes ago. No points but my insurance Co raised my premiums. Moving violation. They knew I was insured.

#74 young & foolish on 09.01.15 at 7:48 pm

Please, God, no more rate cuts …. out dollar has already been savaged !!!

#75 Frank on 09.01.15 at 7:56 pm

So far, the data pretty much tells us that the entire Canadian RE marketplace is driven by domestic leverage, not by foreign investment.

I’m with you in the sense that I want to see ownership origin data to prove it but what about the sales mix data?

That’s a bit of a smoking gun.

Highest growth was the $3M+ property sector? This isn’t house horny middle-classers borrowing or upsizing. This is money above and beyond what the incomes are. Where’s it coming from?

http://www.cbc.ca/news/business/luxury-real-estate-foreign-buyers-1.3211587

#76 the Jaguar on 09.01.15 at 8:01 pm

1000 job cuts in Calgary. I wonder if people recognize the significance of these numbers. And it is far from over. If you work outside of oil & gas earning a more ‘normal’ salary you assume that those in the patch must have huge cash reserves with the high incomes, heavy bonus structure, employee savings plans, etc. Surely those people must put 50% of their annual income away given the low cost of living in Calgary. I mean that relative to Toronto or Vancouver.
It’s true for some, but it might surprise many how heavily leveraged others are with big mortgage payments, big auto payments, credit lines maxed out due to expensive toys or vacations or second homes. Add in a divorce or private school and you get the monthly cash flow picture. When one oil company has problems and lays off workers skilled professionals usually find a another job with a competitor down the street. But when the whole industry shuts down there is no refuge. Those who were culled in the first cut last fall must be running short on their severance money and credit lines. Hoping against hope the industry would bounce back. But it’s not looking that way, and the Keystone announcement will likely come before the long weekend. Another shadow cast over the industry. Expected, but it will still feel like a hard slap.
Garth called it long ago. This won’t end well.

#77 Vanecdotal on 09.01.15 at 8:02 pm

#99 Ted (from yesterday)

Your story should be required reading for every kid in Canada. Certainly puts things in perspective, wise words indeed.

Thanks for sharing.

#78 M on 09.01.15 at 8:02 pm

Gartho baby.. I wonder when you gonna learn the banking tricks ?
Ok..repeat after me:
US FED WILL NOT RISE AN EMPTY CAN OF COKE NEVER MIND THE INTEREST RATES.

Do this exercise in the morning , before lunch and after dinner.

As I was telling you before the latest CDN rate drops, I so tell you now: CDN FED WILL lower the interest rates again and for the last time.
Then the full blown recession will set in and the suckers will start selling bonds at a discount initiating the bond armaghedon. THIS is what will puch canadian interest rates into the stratosphere.

I’m still waiting for that bottle of grey goose buddy

#79 young & foolish on 09.01.15 at 8:05 pm

Housing in “hot” markets is obviously way too expensive …. so, why are people not all “selling high”?
Confidence in that their neighbourhoods will stay attractive over the years to come? Rents are sky high in those hoods as well. And if they sold, where would they invest their money besides more paper assets (they probably have plenty of those already). Thus, the proverbial lack of listings.

#80 Small town Steve on 09.01.15 at 8:23 pm

Well the only silver lining I see with Alberta being hit with this pooo storm is “no more transfer payments to Quebec” for the foreseeable future…

#81 Capt. Obvious on 09.01.15 at 8:23 pm

I hope those people who think rates will never rise realize they would have been called crazy 10 years ago if they’d said the Fed rate would go below 1%. Recency bias is a bitch.

#82 young & foolish on 09.01.15 at 8:23 pm

” …. middle eastern / Europe hybrid is sopping up auto plants from all over the EU.”

Um, auto assembly is yesteryears “well paying job”.

#83 Washed Up Lawyer on 09.01.15 at 8:24 pm

#27 Smoking Man on 09.01.15 at 5:29 pm:

No reminder notice about the ticket.
***********************************

Doctor, with respect, I think you slipped here with this point. Such a system could certainly be arranged but it is unlike you to want a mechanism requiring hundreds, maybe thousands, of new civil service positions. You could take it one step further and have those civil servants come to your door with handheld debit machines before the deadline for payment. I do not think you want that.

On a related note, I saw an item in the gnus that ICBC is likely to seek a premium hike due to increased litigation costs and increased damage awards.

I glance at the decisions issued by the B.C. Supreme Court on a daily basis and my Dog, I am flabbergasted by the number of injury claims in which the Plaintiff is suing for personal injury damages arising out of 2 and 3 car wrecks in a span of 2 or 3 years.

For 15 years in Alberta, a staple of my diet was defending a major insurer in car wreck cases giving rise to everything from garden variety whippers to quadruple fatalities, and I never had a case involving 2 or 3 accidents. What is going on out there? Largely in Vancouver by the way.

#84 young & foolish on 09.01.15 at 8:25 pm

BTW … Canadian companies are making business investments … just not in Canada … ha!

#85 saskatoon on 09.01.15 at 8:29 pm

#70 J man

would it be “good” if you got mugged in an alley, and the robber gave 10% of your stolen money to charity?

NO.

the initiation of force (socialism) is NEVER good.

try arguing from PRINCIPLE.

#86 Confused millenial on 09.01.15 at 8:35 pm

>Nothing ever changes. The market corrects, and people run for the Depends. — Garth

Garth, are you aware of this whole “QE” thing? How about ZIRP?

#87 Smoking Man on 09.01.15 at 8:36 pm

#73 OttawaMike on 09.01.15 at 7:47 pm
Smoking Man on 09.01.15 at 5:29 pm

I got one of those no proof ins. Tickets 6 yes ago. No points but my insurance Co raised my premiums. Moving violation. They knew I was insured.
……

This is how entrepreneurs are wired..

You witness legalized theivery, you can make a sign, go to the next protest rally.. Call and cry to an ombudsman or MP, MPP . You just get more pissed.

Or buy into it…. Oun the company… You know they can’t lose…

You know the herd will take it, and take it.

#88 Smoking Man on 09.01.15 at 8:38 pm

#74 young & foolish on 09.01.15 at 7:48 pm
Please, God, no more rate cuts …. out dollar has already been savaged !!!
.

Now if you’re long USDCAD you’d be singing a different tune.

#89 tundra pete on 09.01.15 at 8:42 pm

US rates going up as predictable as a winter snow. They print their own money, make their own rules and lets just say Wall Street takes care of itself. Thats the way that one works. Think what you want. Any sane person can see it shouldn’t work but never going to change.

Nothings going to blow up in that economy. Take Garth’s advice; this is a buying opportunity.

#90 Llewelyn on 09.01.15 at 8:46 pm

Only Stephen Harper could look into the camera and look happy that the GDP of Canada increased by a whopping 0.1% in June.

Apparently our economy has turned the corner and there is nothing but blue skies and pots of honey in our future.

Thank goodness he is not a doctor. Don’t worry about your heart Mabel I see the you ate half your breakfast today, this is a good sign.

A positive spin is one thing. Refusing to acknowledge that the Canadian economy is in very sad shape is just plain irresponsible.

Surely someone in the mainstream media will point out that GDP growth of 0.1% in June represents growth of only $1.8 billion, or $51/capita. Projected government deficits for 2015 currently exceed $2.0 billion per month or $56/capita.

Woo Hoo!!! I can hardly wait for the good news from July.

#91 Retired Boomer - WI on 09.01.15 at 8:48 pm

Noticed in This weeks Barrons a comment by former Fed Treasury Secretary Lawrence Summers. He said, “At this moment of fragility, raising rates risks tipping some parts of the financial system into crisis, with unpredictable and dangerous results.”

This, from a leading light on financial deregulation, then Citibank, and not wanting derivative trading regulated, he help bring about the crisis in the FIRST place.

Hmmm, I wonder what someone like Mr. Summers needs to do to lose ANY credibility in the U.S.?

I hope they raise rates as stated, though I think the dove Yellin in the end will not!! As previously stated.

Yes, a correction perhaps not SO shallow as China the unknown, and untrusted entity of the markets. We will see.

As for me, I’m watching the parade.

#92 Lesson 2 on 09.01.15 at 8:52 pm

Deflation is good for workers.

Inflation is good for the bankers and 1%.

Don’t believe otherwise. Think.

Deflation slaughters people with debts. No workers there. Nope. — Garth

#93 OttawaMike on 09.01.15 at 8:54 pm

Shawn on 09.01.15 at 7:46 pm

Good one but let me ask you this: How many houses can a skilled tradesman buy in a major CND city with a year’s wages?

I’d bet same tradesman could build said house in less than 10000 hrs.

Oh yeah its the land value. You can’t build that and Canada has a huge shortage.

#94 OttawaMike on 09.01.15 at 8:57 pm

Washed Up Lawyer on 09.01.15 at 8:24 pm

I know 3 people with separate auto accidents. Severe physical injury in 2 of them. Psychological in 3rd. All caused by other party.

Took 8-10 yes to reach settlements. Scammed just hurt legit victims.

#95 TurnerNation on 09.01.15 at 8:59 pm

Goldbugs have defalcated all over this weblog.

#96 Andrew Woburn on 09.01.15 at 9:11 pm

DELETED

#97 I'm stupid on 09.01.15 at 9:16 pm

#27 smoking man

You want to talk about getting screwed over by insurance… Last year I got caught in a bad winter storm and my car hit a concrete barrier. 3k damage
Then I was driving myself to the hospital because my back was killing me and I had a fender bender my fault. Now my insurance won’t renew my policy and I’m a high risk drive facing premiums of $6500 a year. Those are the only accidents I’ve had in over 20 years. It’s a joke!

#98 Scott in Gibsons on 09.01.15 at 9:17 pm

QE ends, commodity prices collapse, global stock markets crash, debts are defaulted on, wealth evaporates including preferred shares, bonds, US stocks; gold prices spike lower as losers look for liquidity, more and more debts are defaulted on driving the cycle to its ultimate puke point where enough of the bad debt is gone that the remaining can be serviced. Banksters will hate this and give us some nasty scratches as they are forced to take the reality cramdown. Buying opportunity ahead!

Is weed now legal in Gibbons? — Garth

#99 Herb on 09.01.15 at 9:18 pm

#70 JMan,

Thank you for telling the screeching wingnuts how it really is, as opposed to how their ideology requires it to be.

#100 it is different here on 09.01.15 at 9:19 pm

From my vantage point, there are large pockets of Vancouver and Toronto where real estate prices has, since 2005, been completely out of line with the local economy, local wages, etc. It is only getting worse. Try buying any SFH for under 2M anywhere on the West side of Vancouver (which is a very large area) that is not a teardown. The entire North shore of Vancouver is also defying gravity. Anyone living in these areas who has followed garth’s advice over the past 8 years has completely missed the boat. These areas are driven primarily by offshore money and anyone who disagrees with this has blinders on.

#101 young & foolish on 09.01.15 at 9:21 pm

So, can you be diversified in capital markets, or is that an investment meme? It seems markets are moving in tandem these days.

#102 Mortimer on 09.01.15 at 9:25 pm

Garth,
What of we add more job loses and a very large trade deficit to this weeks numbers? Will BoC cut then?

#103 Paul on 09.01.15 at 9:26 pm

Looks like oil workers are hurting all over!

http://money.cnn.com/2015/09/01/investing/conocophillips-oil-job-cuts/index.html

#104 Palebird on 09.01.15 at 9:27 pm

Mark, there is something wrong with your thinking..Interest rates cannot stay this low for the simple fact that there are enormous investments tied up in interest bearing instruments and those investments are not doing well at all. Think major pension funds, etc. There is no easy way out of this but interest rates will have to recover..too bad for the housing market.. there are other interests at stake.

#105 Herb on 09.01.15 at 9:29 pm

#85 Saskagoon,

the only principle you seem to know is that “socialism = force”.

This will be news to you, but a principle is not a propaganda meme.

#106 Sheane Wallace on 09.01.15 at 9:30 pm

#78 M

They will initiate QE so no interest rates going up. Simply CAD going to nothing.

#107 Doug in London on 09.01.15 at 9:31 pm

The price of crude oil jumped by 27% last week. So where is the $20 a barrel oil the”experts” we’re predicting earlier this year?

It fell 8% today. — Garth

#108 OttawaMike on 09.01.15 at 9:34 pm

#82 young & foolish on 09.01.15 at 8:23 pm

Um, auto assembly is yesteryears “well paying job”.
————————————-

I worked in that sector in the 80’s but saw the writing on the wall already then. I am in skilled trades.

Problem with it being yesteryears job is not the poor semi-skilled assemblers losing jobs, it is the huge background of high paying skilled jobs that go with it such as Tool and die, millwrighting, engineering and all the spin off jobs. A typical auto assembly plant creates about 8-10 jobs in the supply chain for every assembly job.

And now it is happening to our aircraft industry, as we begin to spin off all the high skilled production and maintenance to low cost countries.

I liked the old Auto-pact agreement a lot more than NAFTA. If manufacturers want to sell us a high value added product, they need to agree to build something here equivalent to the value they sell us.

Can you imagine once the Chinese get their act together and build N American market compliant vehicles? Can you imagine flying in Chinese built aircraft?

#109 Ret on 09.01.15 at 9:39 pm

I must confess. It was I who loosened the mounting bolts on the Trump tower.

#110 Andrew Woburn on 09.01.15 at 9:47 pm

#83 Washed Up Lawyer on 09.01.15 at 8:24 pm

For 15 years in Alberta, a staple of my diet was defending a major insurer in car wreck cases giving rise to everything from garden variety whippers to quadruple fatalities, and I never had a case involving 2 or 3 accidents. What is going on out there? Largely in Vancouver by the way.

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

Twice I have brushed bumpers in Vancouver with cars that were merging onto a bridge ahead of me. I turned my head left to see if I could pull out slowly and, before I could even turn back, I had unaccountably bumped into the car ahead which had stopped or slowed down in the merge lane. On the last occasion, with a grace worthy of the Cirque du Soleil, the driver and front seat passenger launched themselves as one from their car while clutching their necks. We did a little theatre of inspecting our bumpers for non-existent damage.

They offered me the option of settling whiplash damages in cash. As they were not native English speakers, I had to explain to them what a “wazoo” was before I could explain how to blow things out of it. I never heard any more about it but I am sure I would have if their car had any visible damage.

I have trusted Indian friends who are disgusted and embarrassed by these “bazaar con-men” that are found in some Indian subcultures, but they exist and that is why you see a focus of these claims in Vancouver. They are also really good at screaming “discrimination” so sensitive government agencies are reluctant to take them on. After all, unlike your clients, they’re only wasting taxpayer money.

#111 BS on 09.01.15 at 9:49 pm

Of course Garth you cannot possibly be suggesting the Alberta NDP are responsible for any of this…? In power all of, what, minutes….?

It doesn’t take the NDP long to screw things up royally. Just wait 4 years. These will be the good times under the Alberta NDP.

#112 BS on 09.01.15 at 9:54 pm

So… why does a subprime lender need a “Chief Economist” exactly?

The same reason the banks do. To tell the sheep there is no subprime lending in Canada, no housing bubble and keep borrowing bigger and bigger mortgages to take advantage of these low rates.

#113 Anorexic Hoarder on 09.01.15 at 9:56 pm

A documentary explains how corporations legally avoid paying tax to CRA on 100 to 170 billions dollars per year:
http://tvo.org/video/documentaries/the-great-canadian-tax-dodge

Sorry, if this was previously posted.

Do you think rising corporate taxes will make them comply? — Garth

#114 joblo on 09.01.15 at 9:56 pm

“You might wish to prepare.”

Response from Huggies and Heineken crowd……..

https://youtu.be/lWsuokWmEZI

#115 Mark on 09.01.15 at 10:15 pm

“Mark, there is something wrong with your thinking..Interest rates cannot stay this low for the simple fact that there are enormous investments tied up in interest bearing instruments and those investments are not doing well at all.

Pension funds and insurers are likely to suffer in the rising rate environment on account of capital losses in their long-term investment portfolios. I don’t see anyway around that. The current low rate environment is about as good as it gets for those organizations, as they have enjoyed significant historical capital gains on their previous investments.

Sustainability is the big problem facing the pension sector. Only putting 10-20% of one’s income aside for 30 years of a working life, and expecting enough growth for such to suffice for income replacement for the next 30-40 years of life just doesn’t add up in our economic climate of relatively low real GDP growth. Pension solvency issues will not be fixed short of radical changes to overall economic policy which accelerates real GDP growth, but there are various demographic and physical limits to such. Funding shortfalls, and benefit reductions are very likely in the future for most pension plans which are based on outlandish long-term actuarial assumptions.

As for implying that the interest rates must rise to keep certain actors in the economy solvent — I find the argument somewhat weak of support in the historical real world. History is replete with examples of failures of centrally planned investment schemes, particularly ones marketed with overly optimistic planning assumptions.

#116 BS on 09.01.15 at 10:16 pm

Highest growth was the $3M+ property sector? This isn’t house horny middle-classers borrowing or upsizing. This is money above and beyond what the incomes are. Where’s it coming from?

The highest sales growth in cars last year was for Roll Royce. They increased sales by 33% worldwide. Sounds like auto sales are going gang busters until you look at the number of sales. RR only increased worldwide sales by about 500 cars. Toyota sold 10.3 million cars in comparison but sales were down and projected to fall by 1% in 2015 or by 100,000 cars.

In comparison the Rolls Royce sales are irrelevant to the auto sector as a whole and the surge in sales are irrelevant to the price of regular cars since there are so few.

Just like $3M+ house sales are irrelevant to property sales in Canada. Too few to matter. Try comparing the number of $3M+ house sales to sales under $1M and you will see which ones matter. You fall for the realtor marketing/spin too easily.

#117 young & foolish on 09.01.15 at 10:18 pm

“And now it is happening to our aircraft industry, as we begin to spin off all the high skilled production and maintenance to low cost countries.”

There seems to be no clear answer to this, except perhaps the next generation will propel forward as “new economy” workers such as programmers and bio-tech/nano-tech engineers (stuff we can only imagine at this time). If not, then I fear for Canada’s place among the G8.

#118 Mike T. on 09.01.15 at 10:21 pm

the ground just shook a bit in BC

I am not sure if it’s the frackers or if you could feel the walk off homer at the dome in Toronto out here as well

man, this team

no one cares about recessions or the 3 way election race ( I don’t count Trudeau)

#119 Smoking Man on 09.01.15 at 10:23 pm

You would think, I would be on national speaking gigs.

Whats it been , 7 Or so years on this pathetic blog, calling the markets perfectly, ok, so i fkd up on yellow pages and bombard …

I’ve destroyed sanctioned economist’s with lazer precision on market calls..

I get no Respect , not that I crave it…in fact I screw up everthing especially speeling. No mood for armatures.

I don’t want to be famous, makes massage parlour visits for my ancoliding spondilites hard to explain.

Know this dogs, when mr happy is totally dead, and has no more influence on my adventures , I will come out.

Full naked disclosure..

Its going to be ugly….

#120 Premature Gesticulation on 09.01.15 at 10:25 pm

Getting rid of those pesky Canadian jobs

(Stop me if you’ve heard this one before)

In the spring, Export Development Canada loaned Volkswagen 526 million dollars to expand in the southern US and Mexico. VW made non-binding promises to consider Canadian owned parts suppliers located in the southern US and Mexico when sourcing parts for their new operations. Meanwhile VW is the world’s largest automotive company, partly owned by the German government and has no plants in Canada.

http://www.cbc.ca/news/business/edc-lends-cash-to-volkswagen-in-bid-to-help-canadian-parts-suppliers-1.3045501

#121 kommykim on 09.01.15 at 10:33 pm

RE #110 Andrew Woburn on 09.01.15 at 9:47 pm
On the last occasion, with a grace worthy of the Cirque du Soleil, the driver and front seat passenger launched themselves as one from their car while clutching their necks.

The ROI of a dash cam is pretty good I hear.

#122 saskatoon on 09.01.15 at 10:41 pm

what i find so sad here:

those pushing the socialist agenda do not realize that doing so is akin to wearing a giant badge declaring:

I AM WEAK.
I AM WITHOUT SKILL.
I AM LAZY.
I AM A THIEF.

unfortunately, the group think and propaganda run deep; through their distorted vision, the words above read differently:

I AM NOBLE.
I AM COMPASSIONATE.
I AM INTELLIGENT.
I AM STRONG.

psychologically, their decimated ego can’t handle arguments based on even basic philosophical (logical) principles.

otherwise, they would see the true placards hanging around their necks.

reality is psychologically intolerable for the unhinged mind.

consequently, these are the most dangerous of people.

#123 Chris on 09.01.15 at 10:42 pm

Mark, what do you do for a living?

#124 Entrepreneur on 09.01.15 at 10:48 pm

Recessions are to keep depressions from happening. Every time there is a recession the world is getting worse. At least that what I have learned through my life. We have been on the wrong path for a long time.
Time for a correction but it well also be more of a earth correction.

#54 Whinepegger…You are correct by telling a tale of the parties running but people are running to the orange door to the least #hit pile. Also, noticed you did not mention the other parties (like the green party) so no point voting for them. It is only a three race election and vote for the least smelly one.

#125 kommykim on 09.01.15 at 10:51 pm

Do you think rising corporate taxes will make them comply? — Garth

According to the video the companies ARE complying. The problem is that there are too many tax loopholes for multinationals which results in them legally paying little or no tax in Canada. The government needs to close those legal loopholes.

Corporations have no nationality and are fully mobile. If it’s that simple to tax and retain jobs, why has it not happened? Think. — Garth

#126 Smoking Man on 09.01.15 at 10:53 pm

There is a sceen in my book,

Me , Ashman, Jeremiah and Barrington face a volly of bullet’s ,cia, nsa, mossad, and every other fk up saviour , kilp after clip shooting, safe in our plasma flyers .

We are safe.

https://youtu.be/hC-T0rC6m7I

#127 Wildroasted Nutz on 09.01.15 at 10:55 pm

119 Smoking Man on 09.01.15 at 10:23 pm

You would think, I would be on national speaking gigs.

Whats it been , 7 Or so years on this pathetic blog, calling the markets perfectly, ok, so i fkd up on yellow pages and bombard …

I’ve destroyed sanctioned economist’s with lazer precision on market calls..

I get no Respect , not that I crave it…in fact I screw up everthing especially speeling. No mood for armatures.

I don’t want to be famous, makes massage parlour visits for my ancoliding spondilites hard to explain.

Know this dogs, when mr happy is totally dead, and has no more influence on my adventures , I will come out.

Full naked disclosure..

Its going to be ugly….
—————————–

So the porn star gig in LA is still on?

#128 ideoloop on 09.01.15 at 11:01 pm

120 saskatoon

===

Is there a single thought, idea, act that you come up with on your very own, during your entire life?

Just a tiniest original anything?

#129 Nebbio on 09.01.15 at 11:03 pm

It is hard to have much sympathy for “often-struggling” corporations in Alberta who are paying their CEO’s many millions of dollars. Perhaps a time to look in the mirror before crying foul.

#130 Wildroasted Nutz on 09.01.15 at 11:05 pm

#123 Chris on 09.01.15 at 10:42 pm

Mark, what do you do for a living?
—————————-
Annoy people to no end.

#131 Ponzius Pilatus on 09.01.15 at 11:11 pm

#36 Setting the Record Straight on 09.01.15 at 5:50 pm
Greenspan, Bernacke, Yellen

The Gang of
Three
———–_—–
you mean The Gang of Juice.
Deleted

#132 for sure - but why on 09.01.15 at 11:12 pm

#125 kommykim

Corporations have no nationality and are fully mobile. – Garth

===

There is no some special law of the universe, something that moves the stars, the planets that corporations should exist this way – or if they must exist at all.

A specific group of people decided this way, at a very specific time, in a fairly recent history to serve their own best interest, embodied in an artificial legal construct, called “corporation”.

It can be changed or even eliminated with a stroke of the pen – just like as it was created with a stroke of a pen.

#133 Mel on 09.01.15 at 11:13 pm

Sorry Garth. This Canadian recession will become a real full blown next year. For the U.S., forget it. It will be in their own recession next year.

You are way too… optimistic. The worst is coming to our world economy. It will be global in nature. World debt will make sure it will stay that way until it will be taken care of . Be it by default, or long struggle paying it down. It will have to be dealt with. There are no short cuts in the end.

Lastly, Bank of Canada will reduce interest rates sooner then you think. That’s all they know. After that, it’s all over. No more tools in their tool bag.

#134 Victory on 09.01.15 at 11:28 pm

@Saskatoon #121

“… their decimated ego can’t handle arguments based on even basic philosophical (logical) principles.” …

… Speaking of which, you might want to familiarize yourself with these concepts of logic and debate:
– Loaded language
– Ad hominem

Also, I might add something from Terry Eagleton (I paraphrase): Ideology is like halitosis – it’s always what the other guy suffers from.

Cheers!

#135 Musty Basement Dweller on 09.01.15 at 11:42 pm

So the CBC says 35,000 oil patch jobs have been lost so far in our Alberta. Wow. Considering support jobs the figure lost is probably 100k then.
Meanwhile The real estate cartel says prices haven’t gone down that much there yet. Assuming the cartel is telling the truth, it makes you realize how sticky real estate prices are. In the short term only of course.

#136 Mr.Hulot on 09.01.15 at 11:46 pm

# 8

Nice one. We can throw Kay the Real Estate agent in there too

#137 Big Dipper on 09.01.15 at 11:48 pm

The Alberta deficit is totally the result of Con mismanagement. Nice Con trick blaming a few weeks of NDP government for the disaster caused by the failure of conservative policies and a collapse in oil prices. I surely hope that the ideological blindess behind this blog content is recognized by the voters in October.

#138 BillyBob on 09.01.15 at 11:59 pm

J man on 09.01.15 at 7:40 pm

Everybody hates socialism until an insurance claim replaces their burnt down house. I mean that’s all insurance is right? Socialised risk. Everything has a good and bad side including socialism.

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

Well….no.

Insurance companies are for-profit entities who attempt (and generally succeed spectacularly) in producing said profits by charging more in premiums than they pay out in claims.

They are not “socialized risk”. They are very much a capitalistic invention. I seem to recall some guy named Buffett making a bit of money in insurance.

If you’re going to have a rant it’s best to start with a premise that is correct.

#139 stage1dave on 09.02.15 at 12:04 am

Judging by the ramblings of “saskatoon” I’d say it’s time to shut down that free injection site once & for all!

Repeating tired cliches from the Ryand/Limbaugh/Savage/Coulter playbook is getting somewhat boring…how about a short personal history as to how you came to regurgitate these nasty utterances? And agree with; & promote them? I’m kind of curious as to how “taxes” got equated with “muggings”, etc?

Besides, my newsgroups are filled daily (& have been since the 80’s) with stories about all the roadkill from all this Uncle Miltie crap.

Moving on, I noticed a few posters commenting on the “rich” yesterday, & it got me thinking about an ongoing experiment I’ve been participating in (well, actually, initiating) for almost 40 years.

In my working career, and in over 30 yrs of self employment I’ve had my share of wealthy clients, & most of them will talk in general terms about money, investing, hiring, firing, business experiences, etc. My experiment has always centered on asking them directly how they became wealthy, or made their money; & then I STFU & listen to the answer.

Here’s the incredible thing: they won’t tell you! In the hundreds of times I’ve asked this question, I can count on the fingers of both hands how many direct, concrete, & useful answers I’ve obtained. (and half of them were worthless, because the word “inheritance” entered the conversation)

One fellow actually admitted that his mom had won several mil in 6-49, so I gave him points for honesty :)

Seems kinda anticlimactic, but if you’re looking for clues on how to get rich, you’ll learn more from this blog; than by asking questions of people who actually have money. And there is lotsa books out there, if people still read them…

In the meantime, work hard, save as much as you can, invest wisely; & don’t forget to be nice to that idiot relative of yours that you really can’t stand…you can never tell when his numbers might come up!

#140 kommykim on 09.02.15 at 12:10 am

Corporations have no nationality and are fully mobile. If it’s that simple to tax and retain jobs, why has it not happened? Think. — Garth

That’s exactly the problem. Corporations have too much freedom to move money around internationally. Our trading partners need to get together and write laws that prevent this method of tax avoidance. Instead, they participate in the race to the bottom in tax rates while trying to woo businesses to set up shop in their own country. Reciprocal tax agreements need to be included with every trade deal.
Some politicians themselves carry large sums of cash across the border in a paper bag and see nothing wrong with that. Maybe that is really the root of the problem. We need to get money out of politics…..
.
..
I just answered my own question: We are doomed.

#141 You're so vain you probably don't think this satire is about you on 09.02.15 at 12:22 am

Those ideologies you’re fixated on are much inferior to the ideologies I am fixated on. Of course I can’t support this with a cogent argument but that hasn’t stopped some of the other posters here either. Your inferior intellect obviously does not allow you to see that your perverted ideologies will destroy Canada if not the world. Do not try to trap me with your subtle, logical arguments for I am decisive unlike you. If you respond to this comment with insults I pre-empt you by saying “I know you are but what am I”.

#142 Vanecdotal on 09.02.15 at 12:36 am

#125 kommykim

Re GT’s response “Corporations have no nationality and are fully mobile. If it’s that simple to tax and retain jobs, why has it not happened? Think. — Garth”

My question Garth, is how does a powerhouse economy like Germany (http://www.tradingeconomics.com/germany/indicators) for example, with comparatively high corporate and personal tax rates, maintain such a consistently high rate of employment and standard of living, alongside a powerhouse manufacturing sector? By almost every economic metric they blow us out of the water. (http://www.tradingeconomics.com/canada/indicators).

They do not “appear” to be in a race to the bottom via corporate tax relief. One apparent variable appears they have not outsourced the bulk of their manufacturing, unlike Canada. Unions are pervasive in their workforce. Yet, they have low unemployment. Not intended as snark, honest question. What are they doing right that we’re not? When compared to Canada’s economic record, it’s apples & oranges. Why?

#143 J man on 09.02.15 at 12:37 am

Corporations have no nationality and are fully mobile. If it’s that simple to tax and retain jobs, why has it not happened? Think. — Garth

Trump may be an arrogant SOB but some of his ideas aren’t so wacky at all. If you want to play the game of taking the ball and going home to another country where the production costs are cheaper that’s fine…but don’t expect a free import market for your product in OUR country to reap bigger profits from OUR country all at the cost of OUR middle class. Your return will be met with a surcharge equivalent to what you’ve underpaid some third world employee whilst profiting based on full price paid for by our first world middle class! Manufacturers need buyers. Buyers have negotiating power and that fact is grossly neglected by our politicians pandering to certain interests. Its called hardball and our politicians have been pathetic at the game.

Think! Or perhaps you have;) You just happen to gain income from the reapers and think its reasonable that a person make out like bandits while sitting in a chair doing nothing whilst those doing the real jobs, the hard work, get shafted. No bias there.

Sorry but I’ll always favor the people doing the REAL work. Society runs on REAL workers not parasites. Society doesn’t NEED parasites. The builders, the plumbers, doctors, police, teachers. On that list the last thing we need to function as a society is a bloated middle management and financial spinners who’s sole purpose is to suck off value small percents at a time from the real workers and spend and risk other peoples money…with no consequence if they fail other than a golden handshake. Take away all financial rules, get rid of the market and let every play with their own money…let pure capitalism reign. Do ya really think it’d be the bankers and hedge fund managers negotiating the big dough if you strip away all the BS rules they’ve created to favor them. I think not! They’ll be laughed into starvation because they can’t plug in a fridge or refuse to risk breaking a nail whilst running some pipe. Meanwhile the doctor who’s knowledge you need to survive will be paid like a hedgefund manager. And the plumber that makes sure you aren’t wallowing in your own crap likely won’t do too bad either.

#144 kommykim on 09.02.15 at 1:04 am

RE: #115 Mark on 09.01.15 at 10:15 pm
Pension funds and insurers are likely to suffer in the rising rate environment on account of capital losses in their long-term investment portfolios.

Somehow I don’t think these large players bought their bonds in the secondary market.

#145 cynically on 09.02.15 at 1:19 am

#40 Mark – Stick to your professorial postings as you seem to know little of what is going on in the world of Vancouver real estate. Your statement that RE is ENTIRELY fueled by Canadians borrowing huge sums of money at low rates on subprime loans, etc. is wrong at least in the high end of the market. You obviously don’t live here to see it but it is not the locals buying the high end properties-they are selling them so stick to correcting others’ economic postings.

#146 Tamsen on 09.02.15 at 2:21 am

“it is different here on 09.01.15 at 9:19 pm

From my vantage point, there are large pockets of Vancouver and Toronto where real estate prices has, since 2005, been completely out of line with the local economy, local wages, etc. It is only getting worse. Try buying any SFH for under 2M anywhere on the West side of Vancouver (which is a very large area) that is not a teardown. The entire North shore of Vancouver is also defying gravity. Anyone living in these areas who has followed garth’s advice over the past 8 years has completely missed the boat. These areas are driven primarily by offshore money and anyone who disagrees with this has blinders on.”

So true!! Exactly what everybody has been saying for years about Vancouver and especially North Shore, West Van. It really has changed/been taken over. Too bad the locals have to leave as can’t afford a home. Some realtors do admit that it’s rich foreigners buying homes here as tax shelters, etc. …

#147 Vanecdotal on 09.02.15 at 2:23 am

Another outlier for 604 RE? http://www.vancouversun.com/business/commercial-real-estate/Downtown+Vancouver+office+vacancy+rate/11332949/story.html

The “bright spot” from per leasing schill: “…“Amazon, Microsoft and Sony Picture Imageworks — those three alone represent effectively new tenants to the downtown Vancouver marketplace. In my mind, that’s the good news story.”

Great news for skilled TFWs, they’re populating most of that new local office space as they “rotate through” to the US and a higher-paying permanent job.

http://www.cbc.ca/news/politics/microsoft-s-new-b-c-workforce-to-consist-mostly-of-foreigners-draft-plan-1.2990462
http://www.bloomberg.com/bw/articles/2014-05-22/vancouver-welcomes-tech-companies-hampered-by-u-dot-s-dot-work-visa-caps
http://www.cbc.ca/news/canada/british-columbia/sony-pictures-imageworks-moving-headquarters-to-vancouver-1.2659431

“Journalist David Cohen, who covers the… industry for Variety Magazine in Los Angeles, says the move makes Vancouver the VFX capital of North America. “The whole visual effects industry is basically built with a global migratory workforce of the best artists from around the world,” says Cohen. So they might be coming from Canada, but they might also be coming from India, China, France, you know, the U.S.A., Germany — wherever there are skilled visual effects artists. So they hire from a global workforce.”

Nevertheless, Imageworks’ director of publicity says they will definitely be hiring a lot locally too, “especially since there is a great talent base already established.” Cohen says ultimately Sony is taking advantage of a large tax credit in B.C., and could just as easily move to another city in the future, if it gets a better deal. Industry reports agree, crediting a 58 per cent tax incentive in B.C. for the company’s decision to move its entire studio north.”

Another excellent BC “economy” leg. Holding pen for US Visa applicants. Apparently we also work for “reasonable wages” (per bloomberg article). Small % of total employees are local hires. Brought to you by the BC Lieberals/Fed Harpocrites.

BC happens to have the lowest general corporate tax rate in Canukistan, yet this is the best we can do for real sustainable job growth? http://www.taxtips.ca/smallbusiness/corporatetax/corporate-tax-rates-2014.htm

I would love to see someone run the actual numbers on this phenomena to explain how running our economy on these principles is of any “net benefit” to BC & Canada in the mid to long term.

#148 CJBob on 09.02.15 at 7:26 am

Well Garth if you keep talking about rates rising eventually you’ve have to be right. No time soon mind you, but eventually.

#149 Shawn on 09.02.15 at 8:13 am

Pension Fund Bond Losses

#143 kommykim on 09.02.15 at 1:04 am responded to Mark:

RE: #115 Mark on 09.01.15 at 10:15 pm
Pension funds and insurers are likely to suffer in the rising rate environment on account of capital losses in their long-term investment portfolios.

KommyKim response:

Somehow I don’t think these large players bought their bonds in the secondary market.

***************************************
Right but they have to mark those bonds to market based on the secondary market and this is true even though they may plan to hold until maturity.

But anyhow, higher rates will make calculated pension liabilities drop like a stone and will be unabashedly good for pension funds.

#150 OttawaMike on 09.02.15 at 8:13 am

Nobody wants to buy our condos? OK, how about
Renting One?

#151 Sheane Wallace on 09.02.15 at 8:23 am

#141 Vanecdotal

Germany is a powerhouse because:
1. They care about their people
2. They support the middle class
3. They support progress, not political correctness
4. They don’t blow credit bubbles for bank profits and they definitely don’t have the equivalent of CMHC.

ask Herr Harper why we are not Germany. He will tell you how we are actually more then Germany.

#152 Llewelyn on 09.02.15 at 8:42 am

#128 Idealoop

My nephew who has far more experience with social media warned me not to pay attention to, or respond to, pejorative comments submitted by trolls. I had no idea what he was talking about until Saskatoon claimed that concern for the less fortunate was stupid and dangerous and suggested that taxation to support essential public services was theft.

I am embarassed to admit that I rose to the bait tossed out by Saskatoon several times before realizing what was going on. If he really believes the nonsense spewed out with such anger I offer nothing but pity. If he is just being foolish to get a reaction he should be ignored.

#153 skube on 09.02.15 at 8:46 am

@Mark (#10)

US interest rate policy may have little to do with fixed rates in Canada but they clearly trend together over the long-term.

https://businessincanada.com/wp-content/uploads/2014/08/Screen-Shot-2014-08-28-at-2.02.52-PM.png

#154 liquidincalgary on 09.02.15 at 8:47 am

vanecdotal re: Germany

Yet, they have low unemployment. Not intended as snark, honest question. What are they doing right that we’re not? When compared to Canada’s economic record, it’s apples & oranges. Why?

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

could it be that because germany was lending to eastern europeans, who would then bought german-made products, that this imbalance occurred?

#155 Shawn on 09.02.15 at 8:47 am

Real Work?

#142 J man on 09.02.15 at 12:37 am said:

On that list the last thing we need to function as a society is a bloated middle management and financial spinners who’s sole purpose is to suck off value small percents at a time from the real workers and spend and risk other peoples money…with no consequence if they fail other than a golden handshake.

***************************************
Actually, in a chain of production those people are needed as well. Do you think private companies would hire them if not needed? Salesmen for example are a grease in the economy that help move products.

The reality is that your value to this economy is generally inversely proportional to the physical difficulty of your work. Muscle power remains more abundant than solid and trained brain power and so “real work” is often simply less valuable than “paper pushing” in our economic system.

Skilled tradesmen are certainly far more valuable than laborers but, due to leverage, a middle manager looking after 50 people may be worth more than the tradesman in some cases.

If you don’t like it, start your own company and pay according to your own views. Get back to us on how it works out. I mean maybe it will.

#156 George S on 09.02.15 at 9:07 am

#97 etc. stories about insurance ….
“You want to talk about getting screwed over by insurance… my fault. …. high risk drive facing premiums of $6500 a year. ….. only accidents I’ve had in over 20 years. It’s a joke!”

These stories are about private, for profit insurance companies not public, non profit insurance companies. Like all businesses with investors, private insurance companies need to make a certain amount of profit, so they charge people they view as high risk drivers exorbitant premiums to recover their payout costs and encourage them to find other ways of getting around like public transit or taxis. Private companies also like to settle liability cases in court where legal costs also encourage people to not bother claiming damages.
Private insurance companies charge the higher premiums to high risk drivers so that they can charge low premiums to everyone else (about the same premiums as public owned insurance companies)and that gets them support from the general population so that people approve governments privatizing their insurance companies.
In SK, where there is public no fault insurance, instead of clutching your neck and trying to look injured, when you have an accident that causes an injury you are immediately evaluated by a doctor and provided with the best treatment for your injury until you get better. There are few court cases and people get better in a fraction of the time (there was a study done on this a few years after no fault was implemented). There is a modest discount if you have been accident free for a few years and premiums are adjusted so that there isn’t too much profit which goes into general revenue for the province anyway. So $110 million of profit ends up reducing the taxes for a family of four by $400 (which is not insignificant) rather than going out of province to some investors elsewhere.

Most people that don’t like public (govt run, non-profit) insurance, utilities, medical systems, etc,etc are the people that have been led to believe that all government run things are full of bloated, inefficient, highly paid with benefits, undeserving people. They prefer that people are severely punished for having an accident, getting cancer, having a relative get cancer, having a child get an unusual illness; so that somebody can make a huge profit on their investment, out of proportion to anything reasonable.
When you have a country like the US that has a for profit medical insurance system where people pay so much more for medical coverage than anywhere else on earth, they could have the same medical care as we have in Canada and then on top of that have the same medical care as Britain too and still have about the same cost; so they would get twice as much medical care as they need, but they like their system for some reason, I am not sure why… I guess propaganda and early indoctrination works.

#157 Axehead on 09.02.15 at 9:08 am

#68 Byteme.

No repeat: there is a difference between debt and deficit, google it.

Spelling: our great Canadian education experiment ruled that spelling is no longer a necessary skill.

So you want more spending and more taxes and more drugs and more crime?

If we had a republican party, I’d vote for it. Where have all the Lincoln’s and Reagan’s and Klein’s gone?

#158 Retired Boomer - WI on 09.02.15 at 9:26 am

#142 J MAN

You have just described the fallacy of “FREE TRADE”

If I take my company, whose combines state, Federal and taxes eat up 21% of revenue, add in payroll costs (my share) 34% roughly…. then off shore it.

Lower foreign taxes, a tax credit FOR moving… the country loses business taxes,payroll taxes, property taxes.. the ancillary impact on regional employment…AND then you get to run a trade deficit -which you will pay for- for buying my now imported crap at nearly the same price, or the same price when I made it here…

Do you feel abused?

#159 Mark on 09.02.15 at 9:44 am

“Somehow I don’t think these large players bought their bonds in the secondary market.”

Doesn’t really matter. The bottom line with bonds is that for the past 20-30 years, investors in them have been rewarded not only with the coupon, but also with additional return, capital gains, by keeping portfolio duration > 0. This excess return became so normal over the past 30 years of declining interest rates that many investors have come to think of bonds as an asset class that offers a superior risk/reward proposition to business ownership (stocks). Hence, the contemporary bond bubble we now see.

As interest rates climb, which they inevitably must (Garth is right, interest rates will climb eventually — we only disagree on timing!), what the market gave in additional capital gains return over the years on bonds in portfolios with duration held high — will turn to losses.

Planning assumptions in most pension schemes I have looked at tend to assume rates of return based on previous results in the bond market, for which the mathematical basis for repetition is thus extremely improbable on account of such. RE investment, and even a good chunk of the equity universe, similarly correlated, will not be able to pick up the slack either.

#160 David McKenna on 09.02.15 at 9:51 am

Smoking man, you’re the best. I really enjoy reading your comments and they are a great, fun part of reading Garth’s blog everyday.

#161 zeeman1 on 09.02.15 at 9:53 am

Garth, I would argue the economic slowdown will actually benefit Harper as we get past Labour Day and closer to the election. No one aside from the usual left wing nuts and the government workers will be voting for Mulcair and Jr. Harper has at least been cool and consistent, and with much of Europe and Asia now intercession, the blame Harper shtick is getting tiresome.

In tougher times private sector employees, who are thankfully still the majority, will not vote for guaranteed tax hikes and a bigger public sector.

#162 zeeman1 on 09.02.15 at 9:54 am

Oh, and garth, Canada AND the US will both be lowering rates this fall, not raising them.

#163 Malcolm on 09.02.15 at 10:06 am

Vancouver Sun reports the office vacancy rate for both Downtown Vancouver and Metro Vancouver have reached a 10-year high. Meanwhile, the residential real estate market, especially on the luxury end, continues to be red hot in Vancouver. From the Vancouver Sun:

“A rising tide of economic volatility at home and abroad could force up vacancy rates in downtown Vancouver’s office market, which is already experiencing the highest vacancy level in a decade, say local commercial real estate experts.

The downtown Vancouver office vacancy rate has climbed to nearly 10 per cent as of June 30, according to Avison Young’s mid-year Metro Vancouver Office Market Report. That’s the highest level of office vacancy for the downtown core since 2004.

The report said Metro Vancouver’s overall office vacancy rate has climbed to 10.3 per cent — also a 10-year high.”

http://www.vancouversun.com/business/commercial-real-estate/Downtown+Vancouver+office+vacancy+rate/11332949/story.html

#164 Victoria Real Estate on 09.02.15 at 10:09 am

Strong August for real estate in Victoria.

http://www.cheknews.ca/strong-real-estate-numbers-for-august-across-vancouver-island-113670/

#165 Anorexic Hoarder on 09.02.15 at 10:15 am

#113
Do you think rising corporate taxes will make them comply? — Garth

No, because the corporations are in compliance with tax laws. I think CRA need more experts working to close the loopholes. This would help lessen the tax burden on entrepreneurs and average Joe Canadian. It’s very unbalanced when the most profitable, largest corporations have hoards of highly skilled tax experts and tax lawyers outsmarting the CRA.

Nobody is outsmarting the CRA. Nor is there a Swiss cheese of loopholes. Corporations provide employment and expand operations based on bottom-line profitability. If you tax that away, you’re cutting off your nose to spite your face. All jurisdictions compete for investment capital, and easing taxation is a key tool in securing that investment and the jobs it brings. — Garth

#166 Vancouver Real Estate on 09.02.15 at 10:23 am

“A detached home reached $1,159,600, a 17.5 % increase over last year in Metro Vancouver”

Strong sales and active listings down.

http://www.vancouversun.com/metro+vancouver+home+sales+continue+soar+summer/11334954/story.html

Nice spin. August sales down 15.4% from July. — Garth

#167 Sheane Wallace on 09.02.15 at 10:31 am

#153 liquidincalgary on 09.02.15 at 8:47 am
vanecdotal re: Germany

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

could it be that because germany was lending to eastern europeans, who would then bought german-made products, that this imbalance occurred?

—————————————–

You conveniently forgot to mention that to export they must be:
a) more productive
b) more competitive in terms of prices and quality

Why don’t we export to eastern europeans and Chinese and to the whole world instead of the Germans?

And don’t forget: they are not exporting resources and have no housing bubble to ‘support’ the economy and the banks.

#168 Vancouver Real Estate on 09.02.15 at 10:41 am

“Nice spin. August sales down 15.4% from July. — Garth”
————-
To be fair Garth, August sales of real estate are almost always down in August from July – it’s a seasonal thing. This year is nothing unusual.

Oh, so you’re a realtor. Actually a 15% decline is historically significant. Worth mentioning so consumers are not fed a total diet of industry spin. — Garth

#169 Bottoms_Up on 09.02.15 at 10:45 am

Garth, 2 disgusting jokes slipped past in yesterdays blog. #69 and #222.

Jokes about battered women should not go unpunished.
.
If I deleted every off-colour comment made by an idiot visitor, this blog would be thin gruel. Often I leave them intact as they say more about the poster than the subject at hand. Does the community reading this site desire that level of moderation? Tell me. — Garth

#170 liquidincalgary on 09.02.15 at 10:46 am

Sheane Wallace

And don’t forget: they are not exporting resources and have no housing bubble to ‘support’ the economy and the banks.

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

and don’t you forget, germans were ‘exporting’ currency to have it ‘come back’ in the form of purchases from german companies. and yes, german made manufacturing products are coveted in my industry.

#171 Vancouver Real Estate on 09.02.15 at 10:48 am

“Actually a 15% decline is historically significant. Worth mentioning so consumers are not fed a total diet of industry spin. — Garth”
———–
No, not a realtor. The statistics are available for all to see.

http://www.rebgv.org/listed-vs-sold?

They were not available in the link you posted with the comment, “strong sales.” They aren’t, and you attempted to deceive. You deserved outing. — Garth

#172 Estrella on 09.02.15 at 10:51 am

http://www.economist.com/news/world-week/21662598-kals-cartoon?fsrc=scn/tw/te/pe/ed/kal

I getting seasick with all these up and down then up days….

#173 Bottoms_Up on 09.02.15 at 10:52 am

All jurisdictions compete for investment capital, and easing taxation is a key tool in securing that investment and the jobs it brings. — Garth
———————————————————–
Garth you sound like an industry lobbyist and spokesperson. Corporate taxation in Canada and especially Ontario is at historically low levels and some of the lowest in the world. The actual problem corporations face in coming here is not taxation, it’s having to pay their employees a living wage, is it not?

If you tax them more, they have less to pay employees. Duh. — Garth

#174 Smoking Man on 09.02.15 at 10:56 am

#159 David McKenna on 09.02.15 at 9:51 am
Smoking man, you’re the best. I really enjoy reading your comments and they are a great, fun part of reading Garth’s blog everyday.
…….

Ill have alot more comments for your entertainment and enjoyment after my book is done.

You my friend are Fan 57.

Thanks for the support.

#175 Smoking Man on 09.02.15 at 11:03 am

#172 Bottoms_Up on 09.02.15 at 10:52 am
All jurisdictions compete for investment capital, and easing taxation is a key tool in securing that investment and the jobs it brings. — Garth
———————————————————–
Garth you sound like an industry lobbyist and spokesperson. Corporate taxation in Canada and especially Ontario is at historically low levels and some of the lowest in the world. The actual problem corporations face in coming here is not taxation, it’s having to pay their employees a living wage, is it not?

If you tax them more, they have less to pay employees. Duh. — Garth
………

High paying jobs happen when you have a labour shortage.

Best way to achive this is by removing corp tax all together. Make it zero, nada, nothing.

A stampede of cash and investment will come to Canada. Jobs for all.

But then, the commies in provincal govts will scoop it, negating any gain…

Bad idea..sorry, thought i was onto something.

#176 Anorexic Hoarder on 09.02.15 at 11:08 am

Nobody is outsmarting the CRA. Nor is there a Swiss cheese of loopholes. – Garth

I very much appreciate your comments and am trying to understand your perspective on this. From my view, if alleviating taxes for corporations is a necessity for Canadian jobs and investment, then why doesn’t CRA issue a tax manual and provide advisors to clearly layout the variety of tax avoidance options (schemes)? This would put all companies on a level playing field and eliminate the need for corporations to hire expensive tax advisors and lawyers to find the information and loopholes.

#177 Axehead on 09.02.15 at 11:16 am

Garth – I vote NO for moderation in postings except for blatant prejudice/racism.

Germany – could success be attributed to a working culture?

#178 Vancouver Real Estate on 09.02.15 at 11:29 am

Garth, I’m afraid you only “outed” a poster on your blog. I was only providing a story about Vancouver August sales of real estate by reported by the REBGV.

The link that I provided clearly shows a seasonal drop in sales between August and July.

Here is another article about August sales and a quote from that article. Take it for what it’s worth. “The Real Estate Board of Greater Vancouver has reported that there were 2,771 multiple-listing-service sales in August. That was 27.9 percent higher than the 10-year average for the month. Sales volume was 21.3 percent above the figure for August 2014.”

http://www.straight.com/news/520166/vancouver-housing-market-far-hotter-normal-august

#179 Bottoms_Up on 09.02.15 at 11:57 am

Tell me. — Garth
——————————————————
There are certain things that should be off-limits and that includes prejudism and comments that appear to be tolerant of horrible things such as abuse of women or children (or people in general), intolerance of sexual choice or ethnicity etc.

You have done a great job at moderating to date, I’m just not sure why it ends with comments that appear to be tolerant of the battering of women.

#180 gut check on 09.02.15 at 12:00 pm

People get banned for suggesting there’s going to be an uprising agains the .1%, they get banned for insisting that there are foreign buyers of real estate, but when women ar a class have to repeatedly take it on the chin you pretend that you’re just trying to keep a hand-off approach?

disingenuous to say the least.

I’m not about censorship, but I do appreciate consistency.

(PS I’m going to say that Bytor will jump all over this post because he’s been spoiling for a fight for days. BUT, now that I’ve said it I’m sure he’s in a more awkward position. Likely a new nom de plume will surface to rebut me. Please save it, I’m not going to take any bait)

#181 Mark on 09.02.15 at 12:05 pm

“Best way to achive this is by removing corp tax all together. Make it zero, nada, nothing.”

I agree. With the slight caveat that if corporate income tax were to be eliminated, the income tax exemption on pension plans, RRSPs, TFSAs etc. should also be eliminated. To prevent the problem of tax leakage from occurring through the use of such vehicles. And of course, any dividends that are paid to non-residents should be subject to increased with-holding.

0% chance of such happening, which is why Canada is destined, like much of the western world, to wallow in a severely under-performing economy.

#182 april on 09.02.15 at 12:25 pm

#177- August 22 – HoweStreet.com – Ross Kay- CMHC Stats – Are they politically skewed.

#183 Josh in Calgary on 09.02.15 at 12:30 pm

#172 Bottoms_Up on 09.02.15 at 10:52 am
“The actual problem corporations face in coming here is not taxation, it’s having to pay their employees a living wage, is it not?”

That’s actually full circle to Garth’s central theme of this blog. Housing costs too much here. People may ask, “why is that a problem.” It’s a problem because it hurts our global competetiveness. People expect to make a “living wage”, and so they should. But if housing was cheap then people could make less money and be just as well off. Then auto companies could afford to keep plants in Ontario as opposed to moving them Mexico.

#184 april on 09.02.15 at 12:34 pm

#163 – How can so many people be hoodwinked into believing the spin being fed to us by the media coming from realtors and their association. Do some research folks……..

#185 TheLaughingCON on 09.02.15 at 12:44 pm

#141 Vanecdotal

What are Germany doing right that we’re not? When compared to Canada’s economic record, it’s apples & oranges. Why?
==================================

1. Their legendary work ethic

2. Second is this glaring statistics:

Germany – 4.6 million public servants (7 million in 1999) with work force of 41 million and population of 81 million.

Canada – 3.6 million public servants with work force of 18.25 million and population of 35-36 million.

It is very easy to compare Canada and Germany as both countries are organized similarly with governments on three levels (federal, provincial and municipal)

One more thing to keep in mind as there are hordes of barbarians on their gates. It is not reported here but there are reports from some small regional newspapers about the outright expropriation of empty houses/cottages to house the refugees and multiple cases of arson involving these houses. And as the Germans are the third most heavily armed people in Europe (after the Swiss and the Poles) the things may change in a flash.

#186 Victoria Real Estate on 09.02.15 at 12:44 pm

#182 april

“How can so many people be hoodwinked into believing the spin being fed to us by the media coming from realtors and their association. Do some research folks……..”
—————–
Probably, your information comes from the exacting research and dribble reported here by Victoria Real Estate Update. If not, maybe you’d like to provide some of your own exacting research…

#187 EB on 09.02.15 at 12:45 pm

“Does the community reading this site desire that level of moderation? Tell me. — Garth”

Everyone believes in unrestricted freedom of expression for ideas they agree with. Everyone. Sans legitimately objectionable content, support of open discourse should apply specifically to opinions you despise.

But that’s just my opinion, and somebody probably hates it.

#188 S.Bby on 09.02.15 at 12:47 pm

#146 Vanecdotal
To add, IT positions in BC are exempt from labour laws concerning overtime. So, a “Hi Tech” company can locate to BC (Vancouver) and employ tech workers and pay them in CDN dollars and with lower salaries than the USA and also work them overtime for no pay. This was brought in by Gordon Campbell when he was promoting BC as a Tech haven.

#189 OttawaMike on 09.02.15 at 12:58 pm

Smoking Man

Bad idea..sorry, thought i was onto something.
—————————————————-

Funny stuff! One of your gems.

Note that the US has a high corp tax rate but corps. totally game the system down there to get it to nearly zero.

#190 Bill on 09.02.15 at 1:11 pm

Yes it is here Garth.
I did mention that I would not touch the stock market and have very high levels of cash :) Garth you said it was a bull market and I said nope.
http://stockcharts.com/h-sc/ui?s=%24TSX&p=D&yr=2&mn=0&dy=0&id=p34936479464&a=419599383&listNum=1

Top drawer info here but if I was using it for real estate timing I would have lost my shirt. All you can do is manage the stupidity of the housing market.
Just heard that TO and Van were still doing double digit gains.

A correction does not mean the end of a bull market. Naive. — Garth

#191 OXI in GREECE !! on 09.02.15 at 1:11 pm

#160 zeeman1 on 09.02.15 at 9:53 am
Garth, I would argue the economic slowdown will actually benefit Harper as we get past Labour Day and closer to the election. No one aside from the usual left wing nuts and the government workers will be voting for Mulcair and Jr. Harper has at least been cool and consistent, and with much of Europe and Asia now intercession, the blame Harper shtick is getting tiresome.

In tougher times private sector employees, who are thankfully still the majority, will not vote for guaranteed tax hikes and a bigger public sector.
<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<

Your right……we people in the private sector would rather vote for the TPP, Bill C-51 Police State and another 4 years of Dictator Harper who exercises the lowest form of democracy Canada has ever seen in its existence…..

Good thing you DO NOT speak for the majority of the private sector or we would all be doomed.

#192 GrannyAnnie on 09.02.15 at 1:31 pm

re: Germany

Surprised nobody mentioned that Germany does not have an army After WW11 TPTB felt it prudent to put a non military clause into Germany’s constitution. The monies that would have gone into the military complex were used to rebuild the economy, education, infrastructure. This gave them (and Japan) a leg up over the other militarized countries. This has changed somewhat in recent years (with peace keeping missions allowed outside the country)

Of course, there is the famous German work ethic (diluted somewhat by globalization and the influx of Gastarbeiter since the sixties). More important is their educational system which proudly focuses on technical/vocational training and a relatively small percentage of university graduates as well as civil servants
(they have roughly as many cs as Canada, with three times the population!!!!)

#193 Doug in London on 09.02.15 at 1:38 pm

@Josh in Calgary, post #182:
Makes sense to me, no argument there. I don’t see why more people don’t get it. If this housing bubble corrects in the short term it will cause a lot of pain to those who bought, highly leveraged, at the top but in the long run it will be good for Canada’s competitiveness. It’s short term pain for a long time gain. It’s probably got a lot to do with why the U.S. economy is recovering, now that the bubble has collapsed and the excess is purged out of the system.

#194 Gary on 09.02.15 at 1:45 pm

How did we manage 8 years of deficits with record oil prices? Oh yeah, Stephen Harper, worst economic record of any PM.

#195 Bytor the Snow Dog on 09.02.15 at 1:45 pm

@gut check-

I was going to say the same thing about you as far as multiple nom de plumes. Projection on your part perhaps?

As far as the censorship issue I agree with Garth. The comments posted say a lot about the “sensitivity” or lack thereof of the poster. This includes posts complaining about the posts of others.

Have a nice day gut check. There is no bogeyman around every corner.

#196 kommykim on 09.02.15 at 1:50 pm

RE:#158 Mark on 09.02.15 at 9:44 am
“Somehow I don’t think these large players bought their bonds in the secondary market.”

Doesn’t really matter.

Yes it does. They will not suffer a capital loss if they bought the bonds at par and redeem them at maturity. My disagreement was about capital losses and your statement that insurance and pension plans will suffer from a rising rate environment. Low rates hurt both insurers and pension plans.

#197 HCWT on 09.02.15 at 1:52 pm

Vancouver?
http://www.bloomberg.com/news/articles/2015-09-02/agency-seeks-chinese-fugitives?cmpid=twtr1

#198 BS on 09.02.15 at 2:12 pm

Germany is a powerhouse because:
1. They care about their people
2. They support the middle class
3. They support progress, not political correctness
4. They don’t blow credit bubbles for bank profits and they definitely don’t have the equivalent of CMHC.

No, Germany is a power house because they compete directly with more socialist countries like France, Spain and Italy for the European market which they trade with freely. Germany has a right wing government which supports business not demonizes it. Those other countries in Europe have debt bubbles which allowed them to buy German goods by borrowing. All the other countries in Europe have higher taxation and more left leaning governments which keeps the jobs in Germany.

Canada competes with the US and Mexico for manufacturing and other commodity exporting nations for commodities. Unfortunately there are no poorly run socialist countries for us to compete with near by.

#199 Mark on 09.02.15 at 2:19 pm

” Low rates hurt both insurers and pension plans.”

I disagree. Low rates have created huge capital gains for both insurers and pension plans. Creating, on a mark-to-market basis, the allusion of solvency and funding adequacy far in excess of the true long-term return on assets.

Insurers and pension plans that claim funding inadequacy at the tail end of a 35-year bull market in bonds obviously would not be sustainable if the next 35-years turns out to be a bear market in bonds (ie: rising interest rates, capital losses on bond portfolios, etc.).

From what I read of your response, you’re focussing on the narrow accounting aspect of realized capital losses, rather than mark-to-market capital losses which are certain to be quite real in the rising rate environment for bond portfolios.

#200 april on 09.02.15 at 2:40 pm

# 185 – Read # 181. Research for facts does not include the real estate industry manipulated numbers. It sounds like you have a stake in continuing home price appreciation………

#201 Dup on 09.02.15 at 2:44 pm

Name ist Schall und Rauch!
Canadian government is and always has been smoke and mirrors.

#202 Joe2.0 on 09.02.15 at 2:51 pm

Should be an interesting Market close today driven by margin calls.
Nice save by Japanese regulators last night.
But they to are running out of ammo, a bug looking for a windshield is a great analogy.

#203 Propaganda? on 09.02.15 at 3:33 pm

Garth, where are you getting your data? How do we get accurate data when Real Estate board and Media reporting is opposite?

“A detached home reached $1,159,600, a 17.5 % increase over last year in Metro Vancouver”

Strong sales and active listings down.

http://www.vancouversun.com/metro+vancouver+home+sales+continue+soar+summer/11334954/story.html

Nice spin. August sales down 15.4% from July. — Garth

#204 Tax guy on 09.02.15 at 3:43 pm

The video on the Great Canadian Tax Dodge is misinformed at best and misleading at worst. As Garth mentions, there is no swiss cheese of loopholes for corporations under the Tax Act. In fact, individuals and small businesses have far more mandated tax breaks and incentives than large corporations. For instance,

1) TFSA to earn tax exempt investment income
2) RRSP deduction
3) progressive tax rate (large corps have one flat rate)
4) personal basic exemption credit and numerous other tax credits
5) mandated income splitting (pension, spousal RRSP, family income splitting, spousal loans, etc)
6) capital gains exemption
7) small business deduction
8) favorable rules for employee stock options

There are many more planning tools available to individuals and small business.

The video mentions numerous write offs and tax credits available to corporations – so what? Businesses are able to deduct expenses and capital investments made to earn income. Our system taxes business activities on net profit, not gross income. If you start your own business, the same writeoffs are available to you in determining business income. How is this unfair?

The crying foul over offshore “tax havens” is laughable. No where is mention made that profits earned by a corporation and repatriated offshore have already been taxed domestically. Not only that, but wittholding tax often applies to money repatriated on its way out of Canadian borders. And, parking money offshore to earn investment income does NOT exempt it from Canadian taxation – on the contrary, such income is taxed as foreign accrual property income under an incredibly robust and complicated set of rules in the Tax Act. Finally, Canada now has Tax Information Exchange Agreements with most such jurisdictions. By the way, these same rules apply to individuals. Seems like a level playing field to me.

They complain about auditing charities. Why not? These are completely tax exempt entities with the power to hand out lucrative tax donation receipts. For such favored tax treatment, they are supposed to carry out charitable, non-partisan activity and not be used to house large quantities of tax-exempt assets and carry out profit driven activities. Unfortunately, given the favored tax treatment, the structure can be subject to abuse such that not all charities and tax-exempts follow these rules- hence they get audited.

The people who put this video together are incredibly misinformed, it would serve them well to actually learn a bit about how the Canadian tax system works before spouting off about how unfair it is. The scary thing is it is swallowed up as truth by the average person who has little to no understanding of the tax system either, truly the blind leading the blind. As a person who deals with our tax rules on a daily basis, it is infuriating to see this kind of misinformed rhetoric being put out there.

#205 MF on 09.02.15 at 4:02 pm

“Does the community reading this site desire that level of moderation? Tell me. — Garth”

To be honest Garth I think you do a great job of moderating already. I wouldn’t change a thing.

MF

#206 Vanecdotal on 09.02.15 at 4:13 pm

#187 S.Bby

You’re bang on. The beauty of this type of policy is the local population of resident workers who live here full-time subsidizes the multinational corporation’s tax relief indirectly through THEIR personal income taxes… and one of the reasons why I question there’s any sustained net benefit to Canada by continuing the race to the bottom.

#207 Vanecdotal on 09.02.15 at 4:27 pm

#197 BS

“Germany has a right wing government which supports business not demonizes it.”

You make some fair points, however after almost a decade of, pro business, pro corporate tax-break, right-wing Conservative govn’t. in Canada look where WE are. We’ve had the LOWEST interest rates, and the LOWEST corporate tax rates in Canadian history under their tenure, yet we’re now in our 2nd recession during their “brilliant economic stewardship”. This economic policy experiment has failed here. What can we do differently going forward?

http://www.tradingeconomics.com/canada/corporate-tax-rate

… and our PM is supposedly an “economist”(!)

#208 Freedom First on 09.02.15 at 4:28 pm

#168 Bottoms Up

Garth, thanks for asking. I think all of the comments allowed to be printed are rather tame. Nevertheless, the comments are still a pleasure to read. Of course, your Blog is the core, and what we all come here for, for your knowledge, humour, and creativity. And let’s not forget the #1 attraction. You put up with all of us.

#209 Sheane Wallace on 09.02.15 at 4:31 pm

#198 Mark on 09.02.15 at 2:19 pm
” Low rates hurt both insurers and pension plans.”

I disagree. Low rates have created huge capital gains for both insurers and pension plans.
—————————————-

These gains are temporary. If rates increase, return through capital gains would decrease both for stocks (valuation will decline) and bonds.
There is no way to squize water out of stone and if the economy sucks no bonds or stocks will help pension funds.
The problem with pension and insurance funds is that government mandates that some/significant part of their portfolio to be in ‘safe’ bonds.

But savers would be screwed through the low rates, and we should not undersestimate the phychological impact of low rates and high inflation,

confidence can be lost pretty quickly and if the money velocity picks up….

#210 Sheane Wallace on 09.02.15 at 4:48 pm

#206 Vanecdotal

If Steve was a capable economist he would be working in the private sector.

#211 Edward on 09.02.15 at 5:09 pm

#202 Propoganda?

“Garth, where are you getting your data? How do we get accurate data when Real Estate board and Media reporting is opposite?”
——————
The 15% decrease in Vancouver sales is a bit misleading if you just read it in isolation. July 2015 was an exceptionally strong month in sales with numbers 34% above the 10 year avearge for July. August is also seasonally weaker than July.

So (August) being down 15% from July is not a significant number when comparing it to a near record month. August 2015 sales were still higher than August 2014 by 21%.

There is no secret source of information.

#212 Edith on 09.02.15 at 5:26 pm

#199 april

“Read # 181. Research for facts does not include the real estate industry manipulated numbers.”
—————–
Wow, I didn’t think your source of information could be any worse than Victoria Real Estate Update. But it is Howesteet.com. Talking about being hoodwinked.

#213 Shawn on 09.02.15 at 5:30 pm

Silly Comment of the Day

#209 Sheane Wallace on 09.02.15 at 4:48 pm said:
#206 Vanecdotal

If Steve was a capable economist he would be working in the private sector.

***************************************
Truly a silly comment. The perks and power of being Prime Minister FAR outweigh the value of money once one already is making a comfortable living.

Can you name the chief economists of Canada’s top banks? Sure some of them get to be pretty well known by investors but their name recognition among the population would 1% of Harpers and their power would be 0.1% of Harper’s.

And really I don’t know that anyone ever claimed he was a great economist (which would be a dumb claim).

He is clearly a talented administrator / manager and politician. I am not voting for him but to suggest he is unskilled would be ludicrous.

#214 Nora Lenderby on 09.02.15 at 5:38 pm

#194 Bytor the Snow Dog on 09.02.15 at 1:45 pm
There is no bogeyman around every corner.

Some people might have experienced otherwise.

It’s difficult to read everything in the exact same sense as it is intended. A somewhat imperfect medium, really.

Some people might think that a series of “jokes” copied from the internet are hilarious and will be a fine ornament to the comments here. Other people might not.

I think the scroll thingy is probably the best solution, frankly.

#215 liquidincalgary on 09.02.15 at 6:24 pm

Vanecdotal says

… and our PM is supposedly an “economist”(!)

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

an economics degree does not, necessarily, an economist make

#216 Bytor the Snow Dog on 09.02.15 at 7:17 pm

@ Nora- I like you.

Therefore, in the interest of disclosure, I will tell all that I used the nom de plume of “Shecky Greene”, and I posted a bunch of horse jokes.

However, I was not the originator of, and I do not condone the “Soupy Sales” joke.

That was not me.

All of that said, these are words on a blog. Folks need to lighten up.

#217 Mark in Guelph on 09.02.15 at 8:15 pm

The problem with praising Garth’s moderating is that you don’t know what posts he’s refusing to publish. For example, last week when Garth praised stimulus measures in Europe for moving their economy forward, I suggested that maybe central planning wasn’t the answer. That the world’s central banks can’t really create growth, only bubbles destined to pop. Garth didn’t publish it, why?

Meanwhile, we’ve pushed the old Fed rate hike out to October, sure, that’s likely. After all, the final pieces of the seven year recovery puzzle should be revealed with an extra four weeks.

#218 JimH on 09.02.15 at 10:06 pm

Well, well, well!
Lookee here! Light at the end of the tunnel?

http://money.cnn.com/2015/09/02/investing/new-investors-buy-stocks/index.html

Of course, these are American kiddies; the poor unfortunates weren’t blessed with the fantastic privilege of living in the “Greatest Place on Earth”.

(why would anyone anywhere anywhen want that slogan on their license plate???)

#219 HanzoJinn on 09.02.15 at 10:55 pm

“entitled baby socialists”

As opposed to your generation of entitled babies. I mean, one man working one regular job being able to afford a house, car, and feed a huge family. Talk about spoiled brats.

#220 Bottom Feeder on 09.02.15 at 11:20 pm

Just got back from Vancouver. I helped my daughter and her friend move into a newly renovated rental basement suite in the Kits area of Vancouver. The rent is $2000/month. With the homeowner receiving the $2000/month they can finance an extra $400,000. Those statistics stating it takes 90% of average pre-tax earnings to buy a house in Vancouver does not take into account the tens of thousands of households who have earnings from a suite. Vancouver is famous for having rental suites and this is how the non-foreign buyers are dealing with it. Those tiny foot steps you hear are the tenants!

#221 Mike on 09.02.15 at 11:37 pm

All of you NDP lovers are in for a very nasty surprise if you vote them in. Just talk to anyone in Manitoba who have endured more than a decade of NDP rule. We are taxed to death in this province. Our services are cut back every year despite the heavy taxation. The government bureaucracy has exploded with useless positions created for party favorites. Welfare and crime has exploded in Manitoba, the natives keep taking more and more of our tax dollars while the poor middle-class continues to struggle under all the heavy taxes. We are charged with some kind of tax in everything we do. We have no future as long as the NDP are in power. Hopefully we can kick their tax and spend on welfare asses out soon

#222 Lana Faessler on 09.03.15 at 12:57 pm

Garth, I don’t mind reading something I may find offensive. I wasn’t crazy about the Linda Ronstadt comment because of her illness, but I would prefer being offended than you having to worry about political correctness, or screening every comment on here. We are adults…we can handle it.