The blind date

YOGA1

Like most babes, Michelle knows the way to my heart. “I’ve been reading your blog for a few years now and really appreciate your efforts to demystify some very important financial information,” she coos. “I’ve really come to appreciate how little the average Canadian understands about markets and investing, how simple it really can be if you take the time to learn the basics, and how much risk is involved in buying what should just be a place to live.

“Now that I’ve buttered you up, I’m hoping you will post some further information for us ignorant masses about interest rates.”

Ah, Michelle. You’ve picked a sweet week to open up a discussion on the cost of money. Come Thursday afternoon, there will be little else to yak about. History is about to happen.

“Recently, I had a conversation with my mom about–what else?–real estate, prices,” Michelle continues, “and what will happen if this party doesn’t end. Or it does end.

“Rates are staying low,” my mom said. “The BOC can’t raise them now.”

“That doesn’t mean mortgage rates won’t go up,” I said smugly, “Fixed-terms will go up when the US Fed raises interest rates, because fixed rates are set by the bond market.”

Did I sound smart? Because I have no idea what any of that means. How exactly does the bond market figure in? And had no answer to her question, “Then why do fixed rates go down every time the BOC lowers rates?”

Can you please explain? So I can feel smug again?

Yes, Michelle, you did good – right up to the ‘no answer’ part. Your mom is wrong, because while Canadian interest rates may stay in the ditch for a while, the era of awesomely cheap money is definitely coming to an end. More on that in a moment.

First, an answer to your smartass parent’s second question: fixed-rate mortgages fall (usually but not always) when our central bank lowers rates because the benchmark 5-year Government of Canada bond also falls. That happened back in January, but to a lesser extent in July. So a fiver mortgage dipped to an historic low point at the end of last winter, and has since swelled a little.

The reason this won’t hold for the future? Regardless of what the Bank of Canada does, what the Fed does matters more. History proves it. The Canadian bond market has followed the US debt market in close correlation 93% of the time over the past 25 years. And our central bankers, poodles that they are, have followed the lead of their American counterparts also more than 90% of the time over the same period.

Here, show this to Mom. Fed rate in dots, Bank of Canada in solid:

BANK RATE CHART1

Since December of 2008 US interest rates have been at low tide – in a range between zero and a  quarter point. This was an emergency situation created to mitigate a credit crisis by flooding the economy with cheap money. It was augmented by an aggressive Fed policy called ‘quantitative easing’ which saw Washington spend trillions buying government bonds and then shovel all that money into chartered banks with a mandate to lend like little wizards.

It worked. The US has created 13 million jobs in the past five years, corporations have recovered, deficits fallen and the economy repaired. All that stimulus was no longer needed, so the Fed ended QE last year (the macroeconomists who read this blog moaned it would never happen), and is now about to start raising rates.

Why? Because if rates stay this low inflation could roar back as wages and prices rise, plus asset bubbles emerge (real estate’s a good example). People like your mom think the cost of money will never rise, so why not borrow and spend? The solution to inflation, of course, is w-a-y higher interest rates, and nobody wants to go there.

Now once the US central bank starts to raise rates, it won’t stop – at least not for a couple of years. The expectation is that current level of under one quarter will end up being about 3% by the time this ‘tightening’ cycle is complete. The Fed types has indicated everybody should expect about 1% more per year. This could change if the economy heats up a lot (more hikes) or takes a China-induced hit (the hikes stop). In any case, up she goes.

The tricky part is when it might begin. That brings us to Thursday. The Fed may well pull the trigger that afternoon at 2 pm. If not, it will happen towards the end of October.

Lots of people think this week is the go-date because the economic data lately has been strong, the Fed has been patient long enough and more waiting won’t accomplish anything, plus Fed boss Janet Yellin doesn’t want to be seen delaying her decision because stock markets have been roiled. That’s what her predecessors often did, and she wishes to change course. Likely she will.

While everyone knows this is coming, it will nonetheless be a shock, Michelle. The world is drunk on debt after a decade of cheap money, and taking away the punchbowl won’t be easy. The US dollar will go up, commodities, our dollar and emerging market currencies will fall, realtors will quiver, stock markets will flop around like a landed carp and your mother will think the world is run by idiots.

She won’t be entirely wrong.

152 comments ↓

#1 TurnerNation on 09.14.15 at 4:38 pm

Don’t fight the Fed.

#2 Frank on 09.14.15 at 4:47 pm

I contribute cash to my portfolio monthly and invest it quarterly (save on trading fees). Between a raise and a bonus recently I have cash equal to 10% of my portfolio. Should I wait out a volatile period with it or just toss it in and trust it works out in the long run?

#3 Obvious Truth on 09.14.15 at 4:50 pm

#1 TurnerNation

That is the number one rule.

Janet has it all under control.

#4 IM in C on 09.14.15 at 4:55 pm

Rates can’t go up . Basic supply and demand. There is an ocean of money out there. More importantly, the money is locked up in GIC’s and bank accounts, ultra safe but not doing anything. Hence , we will see the lowering of interest rates into negative territory.

#5 Bytor the Snow Dog on 09.14.15 at 4:56 pm

I feel like I’ve read this post before…

#6 I'm stupid on 09.14.15 at 5:02 pm

What happens to interest rates of the NDP win the federal election? Investors don’t like socialists.

#7 Mavis Wedcop on 09.14.15 at 5:05 pm

So then, who is backing up the truck and Loading up on Preferred shares now? Time to back up and enjoy the guaranteed rate hike cycle. I take it Garth that it is not a crowded trade?

#8 prairie person on 09.14.15 at 5:10 pm

A house down the block went up for sale, had a sold sign on it in a few days, two weeks later the sold sign was gone and a for sale sign was up again. The deal probably fell through. Is that possible? Is there anyone the banks or credit unions won’t lend money to? I know a mortgage broker and, lo and behold, instead of oh joy, the more money we can pump out the door the better, he sounded like a reincarnation of Garth. Is such a conversion possible? Saying things like why do young couples think they have the right to the most expensive houses and toys? Why don’t they start with something they can afford? How can anyone pay an 800,000 dollar mortgage when interest rates go up? Don’t they understand anything about money? Does everyone have to have granite countertops? Maybe he is one of the realtors who’ve been coming here to diss Garth but got converted?

#9 DM in C on 09.14.15 at 5:24 pm

My parents recently wanted to remortgage for repairs to their place on the east coast and were turned down by the big green bank, whom they’ve been with for 40 years.

Then were then turned down by the local credit union.

Ageism, they cry. They are 65 and retired. V small pensions. Sound business decisions by the banks, we told them not to expect otherwise.

I suggested a mortgage broker. 2.45 rate for 5 years by the bank named after their home province. Done and done. Papers signed this week.

WTF.

#10 NextYear on 09.14.15 at 5:24 pm

Before claiming that QE worked, the Fed would have to normalize interest rates and shrink it’s balance sheet without causing everything to fall apart.

#11 Freedom First on 09.14.15 at 5:33 pm

Yes. There has never been a need to ever make myself vulnerable to interest rates. I think all financial plans right from the start should focus on the inevitable goal of being able to live on passive income streams. It is a lot easier to live smart than to live stupid. No exception.

#12 Smoking Man on 09.14.15 at 5:36 pm

It worked. The US has created 13 million jobs in the past five years, corporations have recovered, deficits fallen and the economy repaired. All that stimulus was no longer needed, so the Fed ended QE last year (the macroeconomists who read this blog moaned it would never happen), and is now about to start raising rates.
……

13 million jobs over 5 years with a population of over 300 million, yawn!!!!!

For the FED to spike now, when the world ecomomy is slowing is insanity.

However Ive got a big bet she will. I’m playing the player, not the cards.

Her Reputation is on the line….

#13 MSM-Free Zone on 09.14.15 at 5:41 pm

Personal Floatation Devices. Sadly, summer is over.

(Took a couple of minutes, but finally noticed the dog in the photo.)

#14 Frank Castle on 09.14.15 at 5:42 pm

To IM in C #4

If interest rates go negative then real estate, stocks, REIT’s, dividend paying stocks, mutual funds, junk bonds, ETF’s, commodities etc., etc. etc. will all continue to fall as they are.

Deflation and being Japan is what you are predicting, buddy boy!

#15 Mr. Reality on 09.14.15 at 5:45 pm

AGarth you didn’t even touch on the issue of a rate increase and its impacts on EM’s. That’s where its gets really juicy especially when debt is denominated in US dollars.

But the sheeple need to first understand the compound interest formula……….

Mr. R.

#16 bb on 09.14.15 at 5:50 pm

Garth should have shown Michelle this beautiful and affordable Markham/Unionville house. Still up for grabs –

http://www.realtor.ca/Residential/Single-Family/16120080/28-UPPER-DUKE-CRES-Markham-Ontario-L6G0C3-Unionville

#17 ozy - RATES will go NEGATIVE in a few years on 09.14.15 at 6:01 pm

RATES will go NEGATIVE in a few years.

Garth – you forget the banks only borrow 10% of the mortgage money, the rest is made of toilet-paper and lend to ‘suckers’ aka us, for profit.

So, imagine in you vivid dreams, bonds run to 5%, banks cost is 0.5% so they can lend with 0.62% a year and make 20% profit

Where on EARTH did u get the idea that is correlated with mortgage rates???????

my bet? banks will be paying you $$$ (negative rates) to have a mortgage – like n Europe

NO LATER THAN 2020!!!!

Gorge on the cheap money brothers….. it’s freeeee

#18 Trojan House on 09.14.15 at 6:11 pm

The Fed is between a rock and a hard place – the IMF are pressuring them not to raise rates. If they do there will be havoc internationally for those who borrow in dollars.

If they don’t, the domestic economy will suffer.

I would say it’s 50/50 at the moment.

#19 Smoking Man on 09.14.15 at 6:35 pm

#13 MSM-Free Zone on 09.14.15 at 5:41 pm
Personal Floatation Devices. Sadly, summer is over.

(Took a couple of minutes, but finally noticed the dog in the photo.).

Depending on where you are, next three days look great for boating in Toronto…

Thats where ill be.

#20 common sense on 09.14.15 at 6:35 pm

Gotta agree with the SM #12..

Insanity to raise now but saving face is everything..

I never knew Yellen was Japanese?

Funny a week of trying to buy shorts and no one is selling.

Yet as a friend said, in 2 years this won’t mean a thing..

#21 John Prine on 09.14.15 at 6:39 pm

6 I’m stupid on 09.14.15 at 5:02 pm
What happens to interest rates of the NDP win the federal election? Investors don’t like socialists.

These guys aren’t the old CCCF, they won’t influence rates as they are wanting to be the new Liberals. This was a nice change today with nothing said about Harper, Trudeau or Mulcair……..

#22 IM in C on 09.14.15 at 6:52 pm

To #14 Frank Castle

Here’s another prediction for ya. Real estate will continue to rise..until the year 2020. That’s the year when the leading edge of the baby boom hits 75. Then you will start to get lots and lots of people who have to sell. Basic law of supply and demand. Housing prices will start to drop.

#23 Cory on 09.14.15 at 6:55 pm

Interest rates need to go up sooner than later. If the U.S. headed into another recession at zero interest rates then bigger problems would surface.

#4 – can’t tell if you’re being sarcastic or not but rates can and need and will go up. It has! To happen. I applaud it and welcome it but then I’m not a debt pig who thinks credit is an extension of my income.

My money says they will raise this week too. Why wait? As I said in past there will never be a perfect time and this is probably as close as it can get is right now. To wait another month will mean zip other than will cause continued market gyrations as money sits on the sides or idle waiting for the Fed to move.

As the U.S. economy builds steam, history will repeat though. Consumers will over-consume due to a high dollar, China, Canada, Europe etc will benefit as well in terms of exports The only problem for the U.S. is exports will suffer while imports will gain and the cycle repeats…the only question is how long the cycle goes.

The Fed knows much much more than anyone in this blog so for those who say what the Fed can do or not do because they feel they’re smarter than the Fed are delusional and they should visit their doctors for a prescription. It’s always easy to be critical but when those critical are given the chance to prove their worth, it’s typically a massive fail. Just look at the NDP in Alberta as proof.

#24 common sense on 09.14.15 at 6:56 pm

So can someone keep a running tally the next 2 days of

Raise or staying put? I say they Raise.

I would volunteer but will be in Cuba doing more research on seeing how a majority of Canadians may be living in 5-10 years….working just to live, buying only the essentials, rarely traveling over 10 kms from home.

#25 Bill Gable on 09.14.15 at 6:57 pm

I just love how you can take us down a fairly complex economic trail and make it easy to understand.

When’s the new book coming out? (*As if you have time to write a book).

#26 BC Guy on 09.14.15 at 6:58 pm

The start of the rise of interest rates is long overdue. I hope it happens this week and keeps going.

Extremely low interest rates have made housing in many parts of Canada unaffordable unless you’re willing to take on mountains of debt.

Extremely low interest rates have punished savers and rewarded speculators and borrowers. It forces cautious people to have more exposure to stocks and preferred shares, which have BOTH taken a big hit this year.

Can’t wait for rates to go up, the housing market to cool off, savings accounts that will pay at least 1% interest.

#27 Julia on 09.14.15 at 7:01 pm

In the office today, 1 other of my coworkers let us know they bought a house last week. New build, bigger, shinier.

Another one is closing on their new build in the next few weeks, also bigger and shinier (and further out), but their current house has not sold. 3 months, 2 price drops. They are starting to panic.

Why buy? I asked. The market keeps going up. Rates will stay low. Houses are really nice.
I don’t get it.

#28 Ralph Cramdown on 09.14.15 at 7:02 pm

Why does everyone want to be a macro tourist, trying to predict the actions of a data driven Fed, undoubtedly without quite as much data? At least not everyone is betting on the outcome — a (periodically re-) balanced portfolio says “don’t know, don’t care.”

If the FOMC does raise, it’ll be because the doves among the voting members of the committee are sick of being henpecked by the hawks and the op-ed page of the WSJ. Inflation has been consistently below target, and current estimates of whether unemployment rates are at full employment are guesses. Possible contents of the Fed minutes one year from now, which won’t be released for years: “There. See what you made us do? Are you happy now?”

Place your bets. Or don’t.

#29 Brian Ripley on 09.14.15 at 7:06 pm

On my Interest Rate Spread Chart:
http://www.chpc.biz/interest-rate-spread.html

…when the spread between the BoC Bank Rate and the 5 year retail mortgage rate widened from April 2007 to Dec 2008, the TSX Real Estate Index rolled over and plunged into the March 2009 pit of gloom.

Since the beginning of 2015, the spread has been ticking wider and the TSX Real Estate Index (overlaid on the chart) has reversed to the downside also since the beginning of the year.

No biggie yet, but it does look like a potential trend is building to continue.

#30 Josh Linden on 09.14.15 at 7:08 pm

To ozy #17

So will be people’s incomes, assets, investments, cashflow, employment prospects, hours worked, pay, wages, salaries, benefits, pensions etc.

All will go negative, big time!!!!!!!!

#31 Federer on 09.14.15 at 7:13 pm

Yellen won’t raise rates.because of imf and the scare in emerging markets? Ha ha ha, that is what they were waiting for, USA is going on a shopping spree starting Friday. They are the only ones that partially fixed their economy. Well the rest can suffer, they have been warned!
I am buying October put options in $hcg by november the tide in real estate will be out

#32 BS on 09.14.15 at 7:15 pm

What happens to interest rates of the NDP win the federal election? Investors don’t like socialists.

If the NDP wins a majority (unlikely) the $CAD drops to 55 cents within 4 to 6 months and the BOC will be forced to raise rates to support the dollar above 60 cents. Canadian bond rates will also spike upwards as investors dump them with the financial risk the NDP brings. Bond investors want to be paid for risk and right now bonds are priced for a Conservative government, not one run by a guy who refinanced his house 11 times.

#33 Retired Boomer - WI on 09.14.15 at 7:20 pm

I don’t much give a hoot WHAT Janet does at 2:00 P.M. on Thursday.

I would love to see that old broad raise rates .50 but that is definitely out a .25 maybe and that is merely 50/50 according to most so called “experts”

As for me, I’ll collect my dividends and when the time is ripe add a bit to fixed income. Me thinks the equity market will be stalled for a time allowing accumulated debts to be re-paid. Maybe we go “crash” into a recession, but I have my doubts on that one, too.

That dam balanced portfolio though down a bit is not “off the charts” so, why should the retired boomer care? it is YOU who are in debt that need worry. Me, and Alfred E. Neumann say, “What, ME worry?”

…apologies to MAD magazine…

#34 Smartalox on 09.14.15 at 7:22 pm

@ DM in C (#9)

Mortgage brokers get paid based on the value of the mortgages that they write, therefore your parents’ mortgage broker was well motivated to get your parents that mortgage.

I know, my 70-something parents (CPP and OAS only one with a discharged bankruptcy) were able to obtain a partial mortgage some years ago, by working with a mortgage broker.

How do they do it? Well I wouldn’t say that mortgage brokers are shady, but there’s this:

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

And this:

http://www.theglobeandmail.com/report-on-business/economy/housing/home-capital-cut-ties-with-dozens-of-mortgage-brokers-over-falsified-documents/article25762694/

The interesting things would be whether CMHC will cover them in the event of a default.

#35 Harbour on 09.14.15 at 7:23 pm

Edmonton

The colleague at work going through the big D… they sold their 3 bdr, dble gar for 375K

He bought a shit box 90 year old 2 bdr, no basement, no garage, corner lot for 200K

She goes to buy a condo and was refused a mortgage at the bank because there’s not enough money in the condo association.

#36 BS on 09.14.15 at 7:24 pm

These guys aren’t the old CCCF, they won’t influence rates as they are wanting to be the new Liberals.

There is no question looking at election platforms under Mulcair the NDP has moved right and under Jr. Trudeau the Liberals have moved way left. But, until either governs you never know what they are going to do and the NDP have always been a financial disaster. I wouldn’t expect any different if the NDP are elected this time.

#37 Smoking Man on 09.14.15 at 7:33 pm

#29 Brian Ripley on 09.14.15 at 7:06 pm
On my Interest Rate Spread Chart:
http://www.chpc.biz/interest-rate-spread.html

…when the spread between the BoC Bank Rate and the 5 year retail mortgage rate widened from April 2007 to Dec 2008, the TSX Real Estate Index rolled over and plunged into the March 2009 pit of gloom.

Since the beginning of 2015, the spread has been ticking wider and the TSX Real Estate Index (overlaid on the chart) has reversed to the downside also since the beginning of the year.

No biggie yet, but it does look like a potential trend is building to continue.
……

Real estate is sessional, pricrs generally peak in spring market, dies in summer months, sideways fall and winter, then makes new highs in the spring.

Supply and demand always. 2000 people every single week move to GTA.

Its then herd that drives the market.. Not a fancy chart.

#38 BS on 09.14.15 at 7:34 pm

The tricky part is when it might begin. That brings us to Thursday. The Fed may well pull the trigger that afternoon at 2 pm. If not, it will happen towards the end of October.

I say the Fed raises this week, the S&P 500 rallies 10% before year end and the USD adds another 5 cents on the CAD.

#39 ready for the relief rally.... on 09.14.15 at 7:47 pm

“It worked. The US has created 13 million jobs in the past five years, corporations have recovered, deficits fallen and the economy repaired. All that stimulus was no longer needed, so the Fed ended QE last year (the macroeconomists who read this blog moaned it would never happen), and is now about to start raising rates.”

uh, I must have misplaced my sunglasses….
China has, and will continue to rain on the parade….
oh, and forget about the +25 on thursday….

#40 Smoking Man on 09.14.15 at 7:53 pm

And the election just got tighter.

http://www.theglobeandmail.com/news/politics/surprise-surplus-good-news-for-tories-ahead-of-economic-debate/article26351079/

Was out visiting a client by the airport
Saw Justins 737 nice paint job.

Why doesn’t he just fly economy class with all the middle class.?

#41 Nomad on 09.14.15 at 7:53 pm

Funny that realestate has already corrected on the stock market. Look at RioCan or H&R REITs. RIOCAN went from 30 to 24 and rates didn’t even rise yet!

It shows what will happen to houses when rates rise (though for hard assets it will take a looooong time).

#42 Frank Castle on 09.14.15 at 8:03 pm

To #22 IM in C

This will not happen as you said because many will have reverse mortgages that will smooth out this selling because these elderly boomers and others have to sell their real estate when they move, die or are tapped out.

We are going to see a long term slow grind of many years, decades of a crappy, lower prices for Canadian real estate.

There are not high enough wages, salaries and Canadians, new and current to support another 20 year real estate rise and binge.

Sorry to say, most of the western world will be more like Japan, like it or not.

#43 TurnerNation on 09.14.15 at 8:04 pm

A while ago I posted that our elite rulers will never allow us new 1st World infrastructure without new tolls.
See BC new BC bridges.

Apparently, charging us 50% of income in taxes and almost highest in the world costs/fees for ancient technologies like electricity and running water, gas for internal combustion engines, and now old cell phone technology is never enough.

“Forcing drivers to pay tolls to use the revamped Gardiner Expressway and the Don Valley Parkway could fund all the freeways’ costs with extra cash left over for transit projects, city staff say.
They envision flat-fee tolls, for a single trip on either or both roads, of between $1.25 and $3.25, with trucks paying double those amounts”

http://www.thestar.com/news/city_hall/2015/09/14/tolls-considered-for-gardiner-don-valley-expressway.html

____________

freedom of movement! Just pay your A/C, tire, disposal, recycling, battery, tire, emissions, plate, road, gas taxes, and you can drive anywhere.

Flying? Port, border, Sept 11, security, import/export, passport, customs, jet fuel tax, airport impovement fees.

Slow noose tightening on travel . Soon, cities to become car-free.

#44 Trojan House on 09.14.15 at 8:11 pm

#28 Ralph Cramdown

Wasn’t it Ben Bernanke who, with all this data available to him, said something like there was no housing bubble right before the housing bubble burst back in 2008?

#45 Steve E. on 09.14.15 at 8:13 pm

#37 Smoking Man on 09.14.15 at 7:33 pm

Real estate is sessional, pricrs generally peak in spring market, dies in summer months, sideways fall and winter, then makes new highs in the spring.

Supply and demand always. 2000 people every single week move to GTA.
—-
2000 people every week in a city metro over 6 million, yawn!!!!!

#46 Capt. Obvious on 09.14.15 at 8:14 pm

@#1 TurnerNation

Don’t fight the Fed.

Word. Pay attention to the playbook Janet has been showing everyone for the better part of the year.

#47 Capt. Obvious on 09.14.15 at 8:18 pm

@ SM

Its then herd that drives the market.. Not a fancy chart.

Yeahbut what they can pay depends on what they can borrow, unless you posit all those new folks are paying cash.

#48 Paul G on 09.14.15 at 8:18 pm

Today in the financial post: last-50’s woman struggles to make ends meet while living in a $1-million home.

http://business.financialpost.com/personal-finance/family-finance/this-woman-lives-in-a-1-million-house-but-is-struggling-to-make-ends-meet

The advice? Sell her house and move to something cheaper. Wait till all the other single-asset strategists are in the same boat. Let’s see how much that $1-mill home will be worth when they flood the market.

I personally know 2 other, early 60’s women, in the exact same boat. They refuse to sell their million dollar mcmansions even though they can’t afford the utilities or use the stairs.

Sounds like a bunch of lemmings. Unfortunately, I found out that the ‘lemming suicides’ are actually a myth. Only real-estate hungry canadians are dumb enough to follow each other off a cliff.

#49 Frank quinn on 09.14.15 at 8:26 pm

Hey Garth
With elections coming here and in the U.S..Will not the governments hold of on interest rate increases?
Thanks
Frank

Rates are set by appointed central banks, not elected politicians. — Garth

#50 John on 09.14.15 at 8:26 pm

“There’s just no cash.” That’s the Coles Notes from a senior banker describing the book of oil service loans he manages for one of Alberta’s leading lenders. There’s simply not enough cash flow to support current levels of debt.” oilprice.com

Who will want to fund losing stuff anywhere when a road to normalization event has begun?

Going with SM; she’ll raise ‘em to save face and so she can still pretend to be riding shotgun. But that roar you hear is the sound of green stuff doing a tsunami event back into the USA. Hope you folks don’t own debt payable in greenbacks.

Hard to imagine the Harperettes will swim through this mess….at the polls.

#51 Capt. Obvious on 09.14.15 at 8:27 pm

Why does everyone want to be a macro tourist, trying to predict the actions of a data driven Fed, undoubtedly without quite as much data?

For sport man, for sport.

Excerpt of statement from last FOMC meeting:

The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen some further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term.

Sounds an awful lot like leaning towards increase, especially given the labor market numbers have continued to look good.

The September meeting has a press conference scheduled as well, which is… convenient.

#52 Tony on 09.14.15 at 8:29 pm

QE did nothing except create asset bubbles. The intended purpose was for it to filter down to the average worker or Main Street. Not one red cent found its way there. Then they tried again and the definition of insanity: do the same thing again and expect a different result. Same result each time. America is now in much worst shape than during the height of the Lehman debacle. The U.S. stock markets and the German DAX are the two biggest asset bubbles on Earth.

#53 elmsley on 09.14.15 at 8:39 pm

Yo G, what’s your take on MICs?

Run! — Garth

#54 Investx on 09.14.15 at 8:40 pm

You might actually be right this time, Garth, about how soon we’ll see rates start to rise.
But remember, prolonged low rates can happen here too.

#55 Tony on 09.14.15 at 9:02 pm

Re: #22 IM in C on 09.14.15 at 6:52 pm

Canadian real estate prices have been falling since around March of 2013.

#56 Keith in Calgary on 09.14.15 at 9:04 pm

So I am sitting here in my hotel room in YVR.

We’ve had two sunny days in row. Does that mean rates will go up….. ? I don’t care because a 1/4 point here or there, in either direction, is totally irrelevant. It’s posturing……nothing more, nothing less. Rates will not normalize for a “minimum” of decade at least. That is my prediction. I have no debt, so it’s really meaningless to me anyways.

What is interesting though, is that last night as my wife and I walked back from a restaurant in Gastown at 1030 PM on a clear Sunday night (when everyone except tourists are at home and the lights are on) only about 50% of the Coal Harbour condos had lights on. Many had the sun binds closed.

I guess all those “locals” who are driving the RE market must be busy somewhere else because they were not home. Looks like the stats about household income and roughly 85% being required to support a mortgage are wrong as well. I mean, forking out $1MM or so and not even living in it kinda proves them wrong.

Of course, it could be something else too.

;<)

#57 cd on 09.14.15 at 9:11 pm

silly questions…

but why are interest rates always raised by 0.25 increments? It is possible for fed/boc to adjust rates by say 0.1, 0.05, or 0.01 increments?

Also, why do they these policy people only do this a few times a year? Would it make sense to meet more often and then adjust the rate a small amount, instead of a couple of times and make bigger steps?

Both the Fed and the BoC have eight possible interest rate adjustment dates per year. — Garth

#58 Mike Tyson on 09.14.15 at 9:17 pm

Fed will increase rates by 0.15 %.

#59 Just Checking on 09.14.15 at 9:27 pm

#33 Retired Boomer – WI on 09.14.15 at 7:20 pm

“that old broad”?

What decade, or century, are you from? We all sprang from apes but you didn’t spring far enough!

#60 Smoking Man on 09.14.15 at 9:31 pm

Test is my phone broken

#61 Mister Obvious on 09.14.15 at 9:36 pm

#56 Keith in Calgary

…a 1/4 point here or there, in either direction, is totally irrelevant. It’s posturing……nothing more, nothing less.
——————————

Your sort of half right. It’s ‘something more’.

When rates haven’t budged in seven years after plummeting to the ground it’s a pretty big deal. Couple that with the fact the central banks is loath to alter course once a direction has been set, you have significant event.

Try to think in terms of direction of change rather than the change itself. A new direction will begin soon and the future will be altered accordingly.

Yes, the quarter point itself wont mean too much but the positive change is huge. Wait for the predictable, tedious moaning to being when it happens.

#62 Leo Trollstoy on 09.14.15 at 9:36 pm

Real estate prices in Toronto and Vancouver have been in an unsustainable and irrational uptrend for years. Now the guys behind the Teranet-National Bank House Price index is using the term ‘bubble’

http://www.vancouversun.com/touch/story.html?id=11362718

Ridiculous.

Hope this madness ends.

It’s stupid.

#63 kommykim on 09.14.15 at 9:37 pm

RE:#56 Keith in Calgary on 09.14.15 at 9:04 pm
Gastown at 1030 PM on a clear Sunday night (when everyone except tourists are at home and the lights are on) only about 50% of the Coal Harbour condos had lights on.

Maybe they can’t afford electricity after paying the monthly mortgage.

#64 Nosty, etc. on 09.14.15 at 9:38 pm

Rate hike? Wake me next lifetime!

SMan and a few others — Gettuhloadofthis Given the Wildfires Raging on the West Coast, Take a Look at This 2012 DHS Report Entitled “Terrorist Interest in Using Fire as a Weapon”
Germany (and France) have apparently left the US-led (illegal) alliance, and Eurabia.

#65 Marco on 09.14.15 at 9:39 pm

I want rates to go up. However, knowing that millions of people have taken on a profound amount of debt and will be instantly underwater if they do go up, I’m losing confidence the rate will increase anytime soon. The Feds have let this go on for far too long making it closer to impossible for change. Any increase will simply destroy millions and I can’t foresee it happening during this election year.

#66 VicPaul on 09.14.15 at 9:42 pm

Wow! Today’s picture….awesome!
Without question, the most important qualities in a woman.
No, not what you’re thinking….although a shapely bust and no pants will always be an enticing offer, it’s her humour and honesty that slay me. Garth, you ah, have her number?

#67 SWL1976 on 09.14.15 at 9:43 pm

The Federal Reserve has been a con on the American people since its inception just over 100 years ago.

They are not in the business of doing what is right for the American people or the people of the world.

They will raise and so begins going public with the new world order

Give me control of a nations money supply and I care not who makes its laws

#68 Leo Trollstoy on 09.14.15 at 9:48 pm

Was out visiting a client by the airport
Saw Justins 737 nice paint job.

Why doesn’t he just fly economy class with all the middle class.?

Cuz he’s not middle class.

That would be pretending

#69 Leo Trollstoy on 09.14.15 at 9:51 pm

#38 BS on 09.14.15 at 7:34 pm

Bold.

I like it!

#70 Waterloo Resident on 09.14.15 at 10:03 pm

You guys are not going to like this, but my timing system is crunching out big red warning signals, more and more each day.

Right now its telling me to set a Sell Stop on the S&P at the 1931 level. So if stocks fall tomorrow or the next day, that is the level to get the heck out of equities because if it goes down that far then that will be just the beginning.

My feeling is that its almost a sure bet that the FED will be raising rates this Thursday, and after that the markets will drop, and drop a lot.

#71 Smoking Man on 09.14.15 at 10:14 pm

#63 Nosty, etc. on 09.14.15 at 9:38 pm
Rate hike? Wake me next lifetime!

SMan and a few others — Gettuhloadofthis Given the Wildfires Raging on the West Coast, Take a Look at This 2012 DHS Report Entitled “Terrorist Interest in Using Fire as a Weapon”
Germany (and France) have apparently left the US-led (illegal) alliance, and Eurabia.

My most epic post ever, a malfunction, a wierd error message, nothing to do with gartho censorship..

The basterds are on to me..if I show up tomorrow, suicide by three shots to the head.

CIA, Mossad, Homeland ……it was them..

Great , now that I’ve outed them..its going to be food poisoning..or a random 18 wheeler who didn’t see the stop sign doing 120k in a 20 km speed limit

All I was trying to say is for the last 30 years the herds life style has been in decline and accelerating.

The machine uses that frustration..it chanels it away from the main issue. That is who does the world owe Trillion’s too.

Feminists wanting to castrate anything with a set of balls.

Left vs right.

White vs Brown.

Brown vs black

Black vs white.

LGTB vs everything.

Big red rock eaters vs batman.

Cyclists vs cars.

The grand distraction. The slight of hand.

I know how these bastards think..I did door to door sales.

Dr Smoking Man.
The leading athority on herdonomics and mind

#72 Randy on 09.14.15 at 10:17 pm

Can I trade my wife for a robot ? They are getting all the jobs !

#73 OXI in GREECE !! on 09.14.15 at 10:18 pm

#49 Frank quinn on 09.14.15 at 8:26 pm
Hey Garth
With elections coming here and in the U.S..Will not the governments hold of on interest rate increases?
Thanks
Frank

Rates are set by appointed central banks, not elected politicians. — Garth
<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<

And central bankers are appointed by elected politicians.

#74 Marco on 09.14.15 at 10:22 pm

Many of the economists that say rates won’t be rising indicate a reason that a strong dollar means exports would be less competitive.
Another reason is the devaluing of the yuan, to help Chinese exports makes a U.S. Rate hike unlikely.
But:
“Many of the industries supporting these exports, such as manufacturing aircraft and medical apparatus, involve highly sophisticated and advance processes. America’s unemployment rate improved to an estimated 5.8% as of October 2014 compared to 7.3% in July 2013 according to the US Bureau of Labor Statistics. One driver for that improvement is that scientists, skilled tradespersons and international trade professionals supporting the above exports are in demand.”
Reading this I would say Americas exports won’t suffer due to the specialization in these exports.
The U.S is the largest consumer market in the world. A strong dollar would make imports cheaper and lower inflation.

Cheers.

#75 TurnerNation on 09.14.15 at 10:28 pm

Sorry folks no Fed hike till March 2016 – and BofC will follow suit. (Pity the pretty boy who gets elected into that mess. It’s planned. )

Sincerely

“Dr.” TurnerNation

#76 Moses71 on 09.14.15 at 10:33 pm

Feds won’t raise rates & China will have have more downhill slopes to report soon. Gotta say the Chinese seem good at trickery accounting, though.
Admittingly still a a doomer
What goes up must come down, unless some supportive mathematics to back up the sustenance?

#77 Washed Up Lawyer on 09.14.15 at 10:41 pm

On the anniversary of the selection of Jim Prentice as the leader of the Alberta PC party, a post mortem was held to discuss what went wrong and how to resurrect the party (the flat broke party).

The second rate conference room was slightly larger than a phone booth and 66 politicos showed up.

No streamers, no boaters, no warm Pepsi and no cabbage rolls were served. The potluck failed.

http://calgaryherald.com/news/politics/one-year-after-prentice-sworn-in-alberta-tories-hold-post-mortem-on-defeat

#78 Armando on 09.14.15 at 10:54 pm

“Because if rates stay this low inflation could roar back as wages and prices rise, plus asset bubbles emerge”.

So asset bubbles could emerge?? Could?? The US Stock Market is valued at twice its average historical norm and is primed to return only 0.5% per year on for the next 10 years on average!

Nonsense. Valuations are in line with earnings. — Garth

#79 Dirty Debtor on 09.14.15 at 11:00 pm

Houses are too expensive. So is food, transportation, clothing, entertainment, university, booze, smokes… you name it.

Dropping a million on a house, its like spending $100 on a cab ride, a pair of pants, or a concert ticket.

Only one answer – Asta la vista, baby!

Earn dollars, spend pesos. Even with the canadian dollar in the tank, still better deals & living abroad.

#80 Randy Randerson on 09.14.15 at 11:07 pm

My way of thinking about US interest rate and bond is this:

When Fed raises rate, bond rate will follow as investors will demand higher return. Since investors don’t have any national allegiance, just like multinational corporations, they will seek out government bonds with higher coupons/returns. When investors dump Canadian bonds in favor of US ones, Canadian bond yield will have to go up, thus affecting fixed rate mortgage.

#81 HellYeah on 09.14.15 at 11:12 pm

Is the “surprise” surplus more like a “surprise” pregnancy or more like a “surprise” cheesecake?

Hint: neither are particularly surprising

#82 When Will They Raise Rates? on 09.14.15 at 11:22 pm

The anticipation is killing me!

Will Garth be proven right come Thursday? Or, will the no-rate-hike sceptics be here gloating?

I have my popcorn ready!

Thus week or next month – the moment is not the issue. The change is. — Garth

#83 Ponzius Pilatus on 09.14.15 at 11:22 pm

Ever wonder what Yellen does between the FED rate pronouncements?
Most useless job. Waste of taxpayers money.
Same for Poloz.
What’ s Carney doing by the way?

#84 Shady McGurt on 09.14.15 at 11:29 pm

“That brings us to Thursday. The Fed may well pull the trigger that afternoon at 2 pm. If not, it will happen towards the end of October.”

Garth…you’ve been sawing at the same dead tree for six years now…give it a rest. ZZZZZZZZZZZZZZZZZZZZ

Raising rates will blow a hole in every government budget big and small. That’s why Yellin has been to see Obama 43 times in the last 12 months according to reports. He doesn’t want a crash of his black run cities supporting him on his watch….they have to keep up the massive borrowing. ……and you won’t get one.

Hahahahahahaah on a lighter note…Illinois has started giving IOU’s to lottery winners. The money is all being stolen by the mob at city hall.

#85 MF on 09.14.15 at 11:36 pm

#23 Cory on 09.14.15 at 6:55 pm

Great comment. So much truth the people cannot handle.

Quoted for emphasis:

“Interest rates need to go up sooner than later. If the U.S. headed into another recession at zero interest rates then bigger problems would surface.

#4 – can’t tell if you’re being sarcastic or not but rates can and need and will go up. It has! To happen. I applaud it and welcome it but then I’m not a debt pig who thinks credit is an extension of my income.”

The next quote the best. Lots of armchair economists around here. Again, no one under 35 believes rates will ever rise again.

“The Fed knows much much more than anyone in this blog so for those who say what the Fed can do or not do because they feel they’re smarter than the Fed are delusional and they should visit their doctors for a prescription. It’s always easy to be critical but when those critical are given the chance to prove their worth, it’s typically a massive fail. Just look at the NDP in Alberta as proof”

Thanks for that Cory.

MF

#86 M on 09.14.15 at 11:58 pm

Gartho baby:
Gringos will not jack up interest rates.
Nor will kanukistan. In kanukistan morons will actually cut further.
However.. cnd bonds will be decimated (with yields popping up) no matter the yanks.
Mt Market will take care of it
bottom line kkda bond yields will go into stratosphere as the recession goes depression into 2016/2017 with fracking derivatives coming down for payment about then

#87 valleyboy on 09.15.15 at 12:02 am

Question
How will governments pay off there debts from the increase in rates? Increase taxes I take it.

#88 Tiger on 09.15.15 at 1:36 am

Angella calla helps a 68 year old buy his first new home,i kid u not Doesn’t this women have no shame ?

listen to her at 35:20.

https://soundcloud.com/cknw/the-mortgage-show-with-85?in=cknw/sets/the-mortgage-show

#89 Great Canadian Bubble Co. on 09.15.15 at 2:20 am

Garth, what are your thoughts on the current value of the CDN and the impact that will have on markets like the GTA and GVA? While I agree that foreign buyers have not necessarily been doing all of the heavy lifting there, it does make it more attractive to them at this stage.

Not to mention the perception that Canada is cheap and investors are coming just adds flames to those two fires. No?

#90 BillyBob on 09.15.15 at 3:05 am

I won’t lie, the picture is pretty much my dream woman.

Have to agree with #78 that this is not the time to be earning Canadian pesos. Shame, as I would like to return home and willing to take a pay cut to do so but between the crap wages, taxes, and now exchange rate massacre…80% pay cut just ain’t…cutting it.

Another 36C day in Dubai, please let summer end already.

#91 Tony on 09.15.15 at 3:10 am

Re: #69 Waterloo Resident on 09.14.15 at 10:03 pm

The consensus is at some point in time a one-quarter of a percentage point increase followed by QE4 likely one or two months after that. My guess is rates won’t rise for at least another five years. The odds of a September increase are probably about one in a million.

#92 Steve French on 09.15.15 at 4:17 am

Your GF roving reporter here.

I’m not sure what to make of the coup d’etat against Tony Abbott. Except one thing is clear– do you think Herr Harper would have put up with such a no confidence vote?

Ya right, he would have grabbed his opponent by the throat and lifted him off his chair.

Harper has a chokehold over the Conservative Party. I’m not sure of the exact mechanisms of why this is the case, but in general party leadership is stronger in Canada.

Second, Abbott was an idiot, but I’m not sure exactly what he did that was the cause of his demise. He was moving down in the polls, but why specifically was that? There was no particular scandal that he was mired in.

From my perspective- as an expat Canadian soon about to lose their right to vote due to working overseas, there seems to be a very thin level of political analysis in much of the Australian media.

They don’t debate policies, they debate personalities. It’s all he said/she said.

When people, or the media barons, (Rupert Murdoch) get tired one of personality, who shows signs that they might not win the next election, they bring in a new face.

There’s very little substance. Politics is dominated by media posturing in Australia. Concentration of the media facilitates this.

Also, a huge segment of the population have benefitted from the housing bubble and have grown wealthy through trading property. They can afford to not pay attention to national politics.

But that’s all about to change very soon, because Australian property is going to go down hard.

Interesting times lie ahead.

That’s my take.

Steve French-O reporting from Down Under.

#93 TRT on 09.15.15 at 4:55 am

I wish I could short Garth Inc. with 200x leverage to boot.

Bank of Canada won’t follow FED. Bond markets won’t follow USA bond markets. Ever hear of QE?

Cmon Garth, even you know they won’t let rates rise if it affects housing in any way. At least guide your loyal readers the right way.

#94 Londoner on 09.15.15 at 5:01 am

Dear Michelle,

Don’t get caught up in the argument about whether or not the Fed will raise rates this week. The only people that really know is the US Fed and if you don’t understand the implications then it doesn’t really matter to you anyways. Just remember that, even if they do hike, rates will still be cheap for a long while. After all, if you’re going to believe the Fed when they say they have sufficient data to raise rates then you should also follow their suggestion that the path of rate rises over the coming years will be glacially slow. Besides, if “inflation roars back as wages and prices rise”, as Garth so eloquently puts it, then what do you think that will do to housing affordability? Remember that the BoC doesn’t actually want house prices to correct – they want wages to rise to the point where debt levels are sustainable.
Anyways, I’m glad that your Mom embarrassed you in your little family discussion. It’s not because I think that she’s right. It’s because she’s reached her conclusion through observation, experience and deduction (similar to Garth). Unlike you, who has just regurgitated something you’ve read on the Internet, without understanding what it means, in an ill-fated attempt to sound intelligent. This just shows how willing people are to blindly follow others instead of using that thing between their ears to make their own decisions. All the best!

#95 Victor V on 09.15.15 at 7:21 am

http://www.financialpost.com/m/wp/blog.html?b=business.financialpost.com//investing/trading-desk/how-the-fed-can-hike-rates-but-keep-the-u-s-dollar-from-spiking

The market has priced in about a 30-per-cent chance that the U.S. Federal Reserve will raise interest rates on Thursday, but many think it’s pretty much a done deal, paving the way for some potentially sharp movements later in the week.

That’s particularly true for the U.S. dollar, which could have a healthy rally as foreign-exchange markets don’t have such an increase priced in — at least not yet.

“We don’t expect the move to get out of hand, though, because the Fed will seek to offset its rate hike with dovish communication in its projections and press conference,” said Greg Anderson, global head of FX strategy at BMO Capital Markets.

#96 pbrasseur on 09.15.15 at 7:40 am

Whether rates rise or not, soon or not the Canadian economy is screwed.

Rates rise and it’s a crisis, obviously.

Rates stay low money and cheap credit still flows towards housing but not enough is left for the rest of the (productive) economy and eventually our low productivity and the lack of investment in productive activities will hit us.

Damage is already done no matter what, just a matter of time before it become clear.

Airbus opening a new (non-union) plant in … Mobile Alabama, I’m sure they really considered Montreal and Winnipeg, yeah right!

#97 Apocalypse2015 on 09.15.15 at 7:42 am

The lead items on CNN just this last half hour are worth noting.

Former Senator Tom Coburn (R), a medical doctor and smart guy has pointed out how disastrously weak the American economy actually is.

He describes how the US deficit this past year may have been “only” something over $480 billion, but there is much worse news. Unfunded liabilities, such as medicare, Medicaid and government military pensions added about $4.8 trillion to that amount.

So in 2014. the US debt grew by about $5 trillion. In one year. As Coburn says, the liability is now $1 million for every American. The deficit this year will be less, around $426 billion, but those other liabilities could be the same, or worse.

How is this not a country on the precipice of major troubles?

The next story CNN covered was how North Korea was “threatening nuclear war against the US”.

Thank heaven the government over there is stable and predicatable. :(

No matter how you slice it, the US economy is actually at great risk, as well as world security.

http://www.cnn.com/?refresh=1

#cnndebates

Wow. A former MD ex-senator and a whacko kid dictator. You’re really on to something this morning. — Garth

#98 ted on 09.15.15 at 7:44 am

Garth, the company you started-up in your early 20s, in what line of business was it?

Manufacturing. — Garth

#99 John on 09.15.15 at 7:45 am

“We do know one thing very clearly, and we should have learned it during the housing bubble – suppressed interest rates encourage yield-seeking speculation, enable low-quality creditors access to the capital markets, direct scarce savings toward unproductive malinvestment, subsidize leveraged carry-trades, and unleash a whole host of “structured” products “engineered” by financial institutions to directly or indirectly piggyback on the good faith and credit of Uncle Sam.” (John Hussman) YUP.

#100 TurnerNation on 09.15.15 at 8:00 am

People don’t want Owelimpics?

Cp24.com poll:

TODAY’S QUESTION
Are you disappointed Toronto will not be bidding on the 2024 Olympics?
THANKS FOR YOUR VOTE
Yes
72 (21 %)
No
272 (79 %)

#101 Slow Canada on 09.15.15 at 8:02 am

Garth, my man, careful with the spellin’! It’s Janet Yellen, not Yellin. Real estate owners should be sellin’.

#102 fancy_pants on 09.15.15 at 8:26 am

#70 Smoking Man on 09.14.15 at 10:14 pm
LGTB vs everything

haha. What % of that community do you think voted for Wynnie last Ontario election just because she is of the same feather?

She could be promoting banana farms over wind farms, doesn’t matter. They have a whole other agenda to promote, the rest doesn’t matter.

This province is financially on it’s way to hell in a hand basket, but at least the mecca of the province has great pride parades, right?

#103 westcdn on 09.15.15 at 8:55 am

Thoughts du jour

The Capital Gains Tax was introduced by Pierre Trudeau in the early 1970’s through his finance minister – Edgar Benson (a buck is a buck). It more than doubled the size of the Income Tax Act. http://www.v1.theglobeandmail.com/servlet/story/LAC.20110913.OBBENSONATL/BDAStory/BDA/deaths

This new tax was hotly debated and it was determined that home owners should be exempted (otherwise politicians could get shot on sight). Edgar Benson was a clever man and left a back door to tax capital gains on the sale of a principal residence. The Principal Residence Exemption (PRE) was born.
http://www.taxtips.ca/filing/principalresidence.htm

When you sell your home, you are supposed to report the gain and claim the PRE. They usually offset one another. It is possible for the PRE formula to be adjusted easily thereby making a portion of the capital gain from the sale of a principal residence subject to tax. There is a silver lining. If RE prices collapse, you may be able to claim a capital loss.

If the government does make a change to the PRE – you will know they are desperate.

#104 MF on 09.15.15 at 8:57 am

#99 TurnerNation on 09.15.15 at 8:00 am

Lol it’s no 78%. As in “No I am not disappointed Toronto will not be bidding for the Olympics”.

I voted no as well. Not interested in having that expensive political circus here. Pan am was bad enough.

MF

#105 MF on 09.15.15 at 9:10 am

#92 TRT on 09.15.15 at 4:55 am

Like Garth said in the yesterday’s post. The BOC is a midget and our overvalued housing fiasco has zero importance to the US Fed. You think Yellen is worried about the cost of Toronto shoe boxes? Yeah right.

When US rates start to slowly rise, like Garth says up she goes for us as well, so prepare accordingly.

#93 Londoner on 09.15.15 at 5:01 am

Don’t be so sure. Watch the CAD get massacred when the Fed raises. The BOC screwed up big time and the guy running it is a moron. They will be forced to raise earlier rather than later. It may be a year but it’s coming (good). The idea that the rise is on the way. That’s all that is needed.

MF

#106 Smoking Man on 09.15.15 at 9:21 am

#91 Steve French on 09.15.15 at 4:17 am
Your GF roving reporter here.

I’m not sure what to make of the coup d’etat against Tony Abbott. Except one thing is clear– do you think Herr Harper would have put up with such a no confidence vote?

Ya right, he would have grabbed his opponent by the throat and lifted him off his chair.

Harper has a chokehold over the Conservative Party. I’m not sure of the exact mechanisms of why this is the case, but in general party leadership is stronger in Canada.

Second, Abbott was an idiot, but I’m not sure exactly what he did that was the cause of his demise. He was moving down in the polls, but why specifically was that? There was no particular scandal that he was mired in.

From my perspective- as an expat Canadian soon about to lose their right to vote due to working overseas, there seems to be a very thin level of political analysis in much of the Australian media.

They don’t debate policies, they debate personalities. It’s all he said/she said.

When people, or the media barons, (Rupert Murdoch) get tired one of personality, who shows signs that they might not win the next election, they bring in a new face.

There’s very little substance. Politics is dominated by media posturing in Australia. Concentration of the media facilitates this.

Also, a huge segment of the population have benefitted from the housing bubble and have grown wealthy through trading property. They can afford to not pay attention to national politics.

But that’s all about to change very soon, because Australian property is going to go down hard.

Interesting times lie ahead.

That’s my take.

Steve French-O reporting from Down Under.
……..

I believe the term is he was shirt fronted . lol

#107 Hot Albertan Money on 09.15.15 at 9:39 am

Thanks for today’s post Garth because I too had very little knowledge about the relationships between Interest Rates/Bonds/Fixed mortgages.

But I have a question about this line…

plus asset bubbles emerge (real estate’s a good example).

By your chart, Interest Rates in the US were around 4.5% in the early stages of the housing crisis. How/Why did a bubble emerge under those high rates (compared to today)?

#108 doncallmeshirley on 09.15.15 at 9:44 am

Media never talks about how a rate increase appreciates currency which then reduces the cost of imports.

Marvel will be able to film Avengers 6 in Midland, ON for next to nothing. Book it.

#109 Axehead on 09.15.15 at 9:50 am

This is the end, my friend, of the days of cheap money … well, it’s the start of the end.

Personnally, I’m positioned so that any debt I owe is tax deductable.

So I really don’t care…other than any opportunity that surfaces because of it.

#110 Nora Lenderby on 09.15.15 at 9:59 am

I’ve spent a few evenings going door-to-door asking for donations to the charity of the month (Arthritis Society).

It’s slow, even in a village with a population of mostly older people. Many are really strapped for cash, houses falling apart. 3 houses in 10 are well kept. The rest are candidates for the bulldozer.

And these are meant to be the good times.

I get a lot of drool donations though. Everyone has a minimum of two dogs :-)

#111 Stickler on 09.15.15 at 10:00 am

So funny -> making fun of the NDP’s financial record…

The fact is, the Harper Conservatives have the worst economic record of any government since the Second World War (economic growth, job creation, trade deficit, etc., you name it.)

#112 yes yes on 09.15.15 at 10:09 am

As a prudent member of a society who does not over stretched beyond his/her means, regardless, will be impacted when the housing market goes sour. Our tax dollars will be used to prop up the people at the other side of the fence, no?

#113 Mark in Guelph on 09.15.15 at 10:14 am

No Fed rate hike this year, and probably not next. It’s all pretend with these jokers, always waiting for more data, better weather, etc. This recovery is nothing but a bubble, and they have no interest in pricking it now.

The Fed needs to be at 4 or 5% before the next recession in order for lowering rates to provide “stimulus.” At this rate they should be there by 2025. I guess it’s perpetual sunshine for the next decade.

#114 Wildroasted Nutz on 09.15.15 at 10:25 am

Canadian commie manifesto on the way..

https://leapmanifesto.org/en/the-leap-manifesto/

#115 Rebs on 09.15.15 at 10:30 am

#101
Not to open up a whole can of worms or anything, but actually interesting to note: According to the latest Statistics Canada data, about 2% of Canadians identify as homosexual or bisexual.

Maybe it’s a bit more for statistical error but am I the only one that finds that number really small compared to their presence/political power?

Interesting study recently in the US: http://www.bloomberg.com/politics/articles/2015-05-22/americans-vastly-overestimate-size-of-lgbt-population

#116 Londoner on 09.15.15 at 10:40 am

#105 MF

CAD getting massacred by a Fed rate hike means the BoC doesn’t have to cut again – the Fed will be doing the job for them.

Don’t get me wrong, it’s possible the Fed will hike but this isn’t the end of cheap money by any measure.

#117 Londoner on 09.15.15 at 10:43 am

#105 MF

Yellen said that two of the improvements in the labour market they’re looking for are an improvement in the labour force participation rate and a shift in the quality of jobs being created (specifically from part-time employment to full-time employment). Neither of those 2 metrics have moved measurably in the direction they wanted (since making that statement). On top of that wage growth has fallen slightly and there’s no indication that inflation is a risk. So tell me where the pressure is to raise rates significantly?

#118 Panhead on 09.15.15 at 10:48 am

#71 Smoking Man on 09.14.15 at 10:14 pm

Left vs right.
White vs Brown.
Brown vs black
Black vs white.
———————————————————–

Don’t forget :
Those who can make TFSA contributions vs those who can’t

#119 Steven on 09.15.15 at 11:00 am

Garth, fixed rates going up will not pop the bubble. BOC won’t raise rates and therefore VARIABLE RATES WILL STAY LOW and continue to fuel the market. So obvious.

Three-quarters of loans are fixed. — Garth

#120 Randy Randerson on 09.15.15 at 11:28 am

Three-quarters of loans are fixed. — Garth

Well at least those fixed rate mortgagee won’t feel they were suckered punch until their renewal times, then we’ll all hear about their sob BS stories of “I can’t afford higher interest rate, and little Johny/Janette will have to sleep in a smaller room, oh the humanity!”

Looking forward to seeing them squirm.

#121 Llewelyn on 09.15.15 at 11:46 am

Having supported what became known as left-wing political parties since the 1960’s I have become used to the way mainstream media, and their financial backers, undermine the credibility of any political party dedicated to a more equitable distribution of wealth.

Corporate Canada has virtual control over the distribution of news and I have observed how this control has been used to discredit all attempts to establish a more equitable Canada.

What I don’t understand however is how the myth that all ‘left-wing’ governments will run up large deficits gained such widespread currency.

If Canadian citizens actually took the time to compare the financial records of NDP governments against the financial records of all other Provincial and Federal governments since 1980 they would learn that 50% of the NDP budgets generated an operating surplus, compared to 38% for Conservative governments and 28% for Liberal governments. They would also learn that the size of deficits incurred by NDP governments, expressed as a share of GDP, were smaller than deficits incurred by other political parties. This actual fact is never mentioned in the mainstream media.

In fact if you exclude the one term NDP government in Ontario from consideration the fiscal record of NDP provincial governments when compared against provincial governments led by other provincial political parties at the same time is exemplary. In almost every comparison the financial performance of the NDP government was superior to the performance of other political parties.

Democratically electing governments is based on the premise of providing the greatest good to the greatest number of citizens. This can be achieved by assuming additional debt however I would prefer a more pragmatic approach.

All I am asking is that the Canadian electorate look at the actual financial performance of all political parties since 1980 to determine who might actually provide the greatest good to the greatest number.

Specious argument since Liberals or Conservatives have formed government much more often that Dippers. — Garth

#122 Mister Obvious on 09.15.15 at 11:56 am

Good Huffington Post article today about the long anticipated end of low interest rates.

People don’t often specifically mention how the ‘quality of investment’ has fallen since money became cheap.

Why invest capital in factories, machinery and business expansion when you can make a great wad of cash selling former industrial land for unnecessary housing?

That only lasts for so long and now it’s pretty well over.

http://tinyurl.com/nzyv8n9

#123 Steven on 09.15.15 at 11:58 am

Three-quarters of loans are fixed. — Garth

It doesn’t matter Garth, the three quarters of fixed mortgages can RENEW into low variable rates…

If history is any guide, the BoC will follow the Fed after a suitable lag of a few months. — Garth

#124 Londoner on 09.15.15 at 12:06 pm

#119 Steven

People probably won’t need to move into variable rate mortgages as higher rates on renewal won’t impact those who have ridden the wage inflation curve. Rate rising cycles can last decades unless there’s a period of rapidly rising inflation, which seems unlikely at the moment. A rising rate environment alone won’t trigger a housing market correction and there are other factors that will likely influence that more.

#125 Nagraj on 09.15.15 at 12:23 pm

Prologue

I know, I know, I know I’m not suppose ta be lookin at the dam CHART, I’s suppose ta be lookin at the FUNDAMENTALS. I know that. Okay?

Fundamentals

Abbott is out, Corbyn is in, Harper is out, Mulcair is in. (No limpics fer Tronna.) And at that fab outdoor seafood shack I went to last week with the famly in Mass (or RI) everybody there ceptin us weighed at least a ton, like the circus Freak Show team was out fer lobster treats. At least 26 tons of human flesh. Then again at the gas station downtown everybody was skinny as a broomstick, emaciated. Thus the funamentals, see?

The dam chart

Well (how can anybody not be fascinated by this) the dam utterly classic bearish SPX pennant is STILL operative, implying a repeat of that “monkeyhammering” (or “black crows” in candlestick parlance) we got about three weeks ago (and kindly do note that a lotta people is carryin on as if that 1000pt “swoon” never happened, eh) (like as if the mkt suffered an instance of incontinence we’s all gonna politely ignore).

Epilogue

“Life’s but a walking shadow . . . ”
This is the 5th Aussie PM in as many years. Is this political instability? In Canada, I suppose, political instability is thought of as sumpin Quebeckish, or two minority gov’ts in Ottawa in a row. I think house prices in Tronna and elsewhere, and household debt have ALREADY destabilized the country.

#126 Lorne on 09.15.15 at 12:36 pm

#121 Llewelyn on 09.15.15 at 11:46 am
Having supported what became known as left-wing political parties since the 1960’s I have become used to the way mainstream media, and their financial backers, undermine the credibility of any political party dedicated to a more equitable distribution of wealth.

Corporate Canada has virtual control over the distribution of news and I have observed how this control has been used to discredit all attempts to establish a more equitable Canada.

What I don’t understand however is how the myth that all ‘left-wing’ governments will run up large deficits gained such widespread currency.

If Canadian citizens actually took the time to compare the financial records of NDP governments against the financial records of all other Provincial and Federal governments since 1980 they would learn that 50% of the NDP budgets generated an operating surplus, compared to 38% for Conservative governments and 28% for Liberal governments. They would also learn that the size of deficits incurred by NDP governments, expressed as a share of GDP, were smaller than deficits incurred by other political parties. This actual fact is never mentioned in the mainstream media.

In fact if you exclude the one term NDP government in Ontario from consideration the fiscal record of NDP provincial governments when compared against provincial governments led by other provincial political parties at the same time is exemplary. In almost every comparison the financial performance of the NDP government was superior to the performance of other political parties.

Democratically electing governments is based on the premise of providing the greatest good to the greatest number of citizens. This can be achieved by assuming additional debt however I would prefer a more pragmatic approach.

All I am asking is that the Canadian electorate look at the actual financial performance of all political parties since 1980 to determine who might actually provide the greatest good to the greatest number.
…..
Specious argument since Liberals or Conservatives have formed government much more often that Dippers. — Garth
******
Yes, of course, Garth…we all realize the Liberals and Conservatives (won’t denigrate them by utilizing a cheeky description of them) have been in power much more of the time than the NDP. However Llewelyn utilizes %, not actual times a government has created a deficit or surplus. There is no other way to compare fairly…..which Llewelyn does very well. Of course, since the MSM is owned by the right, this is not surprising!

#127 pbrasseur on 09.15.15 at 12:42 pm

#116 Londoner

Don’t get me wrong, it’s possible the Fed will hike but this isn’t the end of cheap money by any measure.

No but it’s the beginning of the end!

Make no mistake about it, easy money is not sustainable economically and it will end, willingly or not.

#128 Llewelyn on 09.15.15 at 12:43 pm

Garth

In order for my observation to be specious it would have to be wrong. I will acknowledge that the Conservative Party and the Liberal Party have formed more provincial governments than the NDP since 1980 but the fact that 50% of the budgets managed by NDP governments generated a surplus is certainly not specious.

My observation that 62% of all budgets managed by Conservative governments and 72% of all budgets managed by Liberal governments since 1980 generated a deficit was made to illustrate how mainstream media has selectively focused negativity on the NDP.

You have a very loyal following and all I ask is that instead of accepting everything they read as if it was actually true they take time to investigate published facts. One fact is that 50% of all budgets passed by NDP governments since 1980 generated an operating surplus. How can this be specious?

#129 Mister Obvious on 09.15.15 at 12:58 pm

#121 Llewelyn

In BC we’re still smarting from the fast ferry fiasco. And yes I know that was 15 years ago. But my point is this: The BC NDP of the late nineties felt it could accomplish by decree that which was not physically and/or economically feasible

I don’t think that attitude was an anomaly but instead typical of socialist leaning governments.

The aluminum ferry hull design had already proven a complete failure in two European countries and several experienced marine engineers had offered up dozens of reasons why the project was doomed from the start.

Nonetheless, the project was rammed through and the three ferries produced failed in every predicted way then were scrapped after a couple of years for peanuts.

You may say the conservatives are arrogant and I might agree with that. But the NDP can be just as arrogant with the added irritation of a belief in unicorns and fairy dust. (Or, in this case, ‘ferry dust’)

#130 pbrasseur on 09.15.15 at 1:07 pm

#128 Llewelyn

Spacious it is indeed. NDP are in favour in the west where population is sparse and commodities plentyful (and have been booming)

Wonder how many surpluses NDP would have had if they were running Québec…

#131 Londoner on 09.15.15 at 1:12 pm

#127 pbrasseur

No but it’s the beginning of the end!
____________________________________________

You don’t know that – nobody does. It’s a fair prediction. But equally the rate lowering cycle, especially in Canada, could play out for a few more years still.

Just last week Sal and the boys (BMO) predicted the BoC will not move up until 2017 with an outside chance of another cut before then, depending on oil prices.

We shall see.

#132 Obvious Truth on 09.15.15 at 1:25 pm

When will treasury Bulls see that the jump the shark moment has already past.

#133 Dual Citizen In Canada on 09.15.15 at 1:49 pm

Interest rates are getting the headlines here but disposable income matters more. If you focus on your monthly payment but seeing your disposable income being battered by rising costs of food, insurance and utilities, then you are taking your eye off the ball. You will be affected by both events. Check your budget numbers if you are in denial.

#134 MF on 09.15.15 at 2:05 pm

#117 Londoner on 09.15.15 at 10:43 am

I think the pressure comes from realizing that the consequences of a prolonged ultra low rates policy is more disastrous than what happens when they are raised (slowly). We hear almost daily on this blog (and everywhere else) how the economy is not improving as it should despite zero bound interest rates.

We can see the consequences (reckless borrowing, massive asset bubbles etc.) everywhere.

Increases in interest rates also signal the bankers think the economy is healthy enough to move forward. the psychology of it is important.

Moreover, I think the FED must be thinking that if another recession hits, and we are already at rock bottom, there are no bullets in the chamber. I also don’t think negative rates are possible here.

MF

#135 Smoking Man on 09.15.15 at 2:16 pm

I just hate it when my posts, get spoofed and cleand up by others..

This guy is a Smoking Man Fan…in other words , yup expect a spike, but its insane with current labour market.

http://www.bloomberg.com/news/articles/2015-09-15/yellen-s-former-aide-says-a-rate-hike-would-be-a-serious-error

#136 Llewelyn on 09.15.15 at 2:27 pm

#129 Mr. Obvious

I’ll see your BC ferry disaster and raise you one natural gas plant fiasco by the Liberal government in Ontario and the sale of a provincial highway to a Spanish company by the Conservative government in Ontario. Top that if you can!

The mainstream media in Canada made a meal of the $1.6 billion cost of constructing highway 407 under the NDP government in the 1990’s. What they have never mentioned is the potential net revenues to be realized over the expected life of this highway. The $3.1 billion realized by the Conservatives when the highway was privatized recovered construction costs but land acquisition for the highway cost Ontario taxpayers over $100 billion between 1970 and 1995. Yes essential infrastructure is expensive but necessary.

Sometimes a government invests in infrastructure projects that generate revenues and benefits for future generations. Sometimes a government reaps the benefits initiated by previous governments and squeezes the lemon dry. Privatizing revenue generating assets financed by one government to balance the budget of another government is not always in the best interests of the majority of citizens.

Relying on the mainstream media to examine the performance of all governments in an impartial manner is not recommended.

#137 Lorne on 09.15.15 at 2:29 pm

#129 Mister Obvious

#121 Llewelyn
In BC we’re still smarting from the fast ferry fiasco. And yes I know that was 15 years ago. But my point is this: The BC NDP of the late nineties felt it could accomplish by decree that which was not physically and/or economically feasible

I don’t think that attitude was an anomaly but instead typical of socialist leaning governments.

The aluminum ferry hull design had already proven a complete failure in two European countries and several experienced marine engineers had offered up dozens of reasons why the project was doomed from the start.

Nonetheless, the project was rammed through and the three ferries produced failed in every predicted way then were scrapped after a couple of years for peanuts.
……..
Now, what has received very little publicity by the right leaning MSM, is the fact that the “Coastal” ferries built for BC Ferries in Germany (taking away jobs from Canadians and not having those who built the ferries, available for ongoing maintenance) are actually fuel guzzlers as well. Despite realizing the problems of the “fast ferries” the geniuses in charge of BC Ferries (thank you million dollar CEO David Hahn!) made precisely the same mistake by overpowering these ferries…which sit at the dock much of the winter as they are not economical to run!

“BC Ferries’ fuel records show how much new vessels guzzle
By ANDREW MACLEOD
Published November 25, 2008
The new Super C-class vessels were supposed to save B.C. Ferries fuel, but internal company documents show they burn much more of the expensive stuff than do older vessels of a similar size.

To make proper comparisons between vessels, recent media reports quoted president and CEO David Hahn saying, one would have to look at a ship’s performance over a full day of service. The Tyee requested that information from a company spokesperson, but got no response.

We did, however, get an internal B.C. Ferries fuel consumption chart through a different source. It shows why the new German-built vessels will be strategically kept at the dock if the company is serious about saving fuel.

The chart for June 2008 shows the Coastal Renaissance was used on the route between Horseshoe Bay and Departure Bay. To make the round trip, which it did 94 times, on average it used 8,416 litres of fuel.

The other ships used on that route each used significantly less fuel: Queen of Coquitlam (6,891 litres), the Queen of Cowichan (7,050 litres) and the Queen of Oak Bay (6,491 litres).

While the Coastal Renaissance carries 370 vehicles and 1,600 people, each of the Queens carries 362 vehicles and 1,500 people.

The Coastal Inpiration, with the same capacity as the Renaissance, made 60 round trips between Tsawwassen and Duke Point. On average it burned 9,719 litres of fuel.

Used on the same route, the Queen of Cowichan (362 vehicles, 1,500 passengers) burned 6,378 litres of fuel per round trip. The smaller Queen of Alberni (295 vehicles, 1,200 passengers) used 7,153 litres of fuel.

The third Super C-class vessel, the Coastal Celebration, was put into service November 21 for a few runs between Swartz Bay and Tsawwassen. It has since been out of service.

B.C. Ferries spent $542 million to buy the three Super C-class ships from the German shipyard Flensburger Schiffbau Gesellschaft. The Tyee reported a week ago the ships have major problems including high fuel consumption, noise and vibrations that have kept the ferry company from putting them into full service.

– See more at: http://thetyee.ca/Blogs/TheHook/Transportation/2008/11/25/GuzzleFerry/#sthash.l9Zp8xQP.dpuf

#138 MF on 09.15.15 at 2:31 pm

#132 Obvious Truth on 09.15.15 at 1:25 pm

Just googled what “jump the shark” means.

A little before my time but I like it.

MF

#139 Mark in Guelph on 09.15.15 at 2:38 pm

#134-MF-Moreover, I think the FED must be thinking that if another recession hits, and we are already at rock bottom, there are no bullets in the chamber. I also don’t think negative rates are possible here.

I hear this often lately, how much stimulus are they going to get from dropping rates from .25 or .5%. Truly, Garth’s graph shows they are usually at 4-5% when there’s a downturn, how long before we get there? Does anyone other than Garth not see a US recession on the horizon?

They’ll have to restart QE before they get these rates to anything even remotely resembling normal.

#140 Holy Crap Wheres The Tylenol on 09.15.15 at 2:40 pm

#40 Smoking Man on 09.14.15 at 7:53 pm
And the election just got tighter.

http://www.theglobeandmail.com/news/politics/surprise-surplus-good-news-for-tories-ahead-of-economic-debate/article26351079/

Was out visiting a client by the airport
Saw Justins 737 nice paint job.

Why doesn’t he just fly economy class with all the middle class.?
____________________________________________
Don’t worry he doesn’t have to fly economy class with all the middle class as the plane will find him a seat. The budget will balance itself.
As well Justin and his Liberal party can not add, subtract or multiply either. Given that they were schooled as you so put it. Must have been idiot school! So when is a 1.9 billion dollar surplus apparently a deficit? When your a sociopath Liberal grasping for power.

http://www.therebel.media/trudeau_refuses_to_accept_news_that_canada

http://business.financialpost.com/news/economy/ottawa-balances-books-one-year-early-after-posting-surprise-1-9-billion-surplus-monday

#141 Retired Boomer - WI on 09.15.15 at 2:44 pm

#59 JUST CHECKING

Sorry, “the old broad” offended you.

One needed to understand the context, like the hesitant lady in the crosswalk….. she has the walk light but hesitates to cross while you are waiting for her to exercise her right to cross!

We have watched the dear woman dithering for months about a minuscule .25% rate hike. YES!! It changes direction, but in the great scheme of things means very little at any one .25% increase.

Unless of course, you are a seriously indebted person that a .25% goose to your borrowing costs might make your life capsize. I doubt many live “that close to the edge”

Should I raise them, should I not, should I raise them????

Your prime time has probably well past, my dear Janet

My flaw is people who dither endlessly before making a decision-paralysis by analysis ARRRGGGHHH!!!!!!

#142 waiting on the westcoast on 09.15.15 at 3:48 pm

#118 Panhead on 09.15.15 at 10:48 am
“#71 Smoking Man on 09.14.15 at 10:14 pm
Left vs right.
White vs Brown.
Brown vs black
Black vs white.
———————————————————–
Don’t forget :
Those who can make TFSA contributions vs those who can’ttt

Don’t you mean:

Those whwill choose to and those who won’t…

#143 Holy Crap Wheres The Tylenol on 09.15.15 at 3:51 pm

#137 Lorne on 09.15.15 at 2:29 pm

#129 Mister Obvious

#121 Llewelyn
In BC we’re still smarting from the fast ferry fiasco. And yes I know that was 15 years ago. But my point is this: The BC NDP of the late nineties felt it could accomplish by decree that which was not physically and/or economically feasible

I don’t think that attitude was an anomaly but instead typical of socialist leaning governments.

The aluminum ferry hull design had already proven a complete failure in two European countries and several experienced marine engineers had offered up dozens of reasons why the project was doomed from the start.

Nonetheless, the project was rammed through and the three ferries produced failed in every predicted way then were scrapped after a couple of years for peanuts.
……..
Now, what has received very little publicity by the right leaning MSM, is the fact that the “Coastal” ferries built for BC Ferries in Germany (taking away jobs from Canadians and not having those who built the ferries, available for ongoing maintenance) are actually fuel guzzlers as well. Despite realizing the problems of the “fast ferries” the geniuses in charge of BC Ferries (thank you million dollar CEO David Hahn!) made precisely the same mistake by overpowering these ferries…which sit at the dock much of the winter as they are not economical to run!

“BC Ferries’ fuel records show how much new vessels guzzle
By ANDREW MACLEOD
Published November 25, 2008
The new Super C-class vessels were supposed to save B.C. Ferries fuel, but internal company documents show they burn much more of the expensive stuff than do older vessels of a similar size.

To make proper comparisons between vessels, recent media reports quoted president and CEO David Hahn saying, one would have to look at a ship’s performance over a full day of service. The Tyee requested that information from a company spokesperson, but got no response.

We did, however, get an internal B.C. Ferries fuel consumption chart through a different source. It shows why the new German-built vessels will be strategically kept at the dock if the company is serious about saving fuel.

The chart for June 2008 shows the Coastal Renaissance was used on the route between Horseshoe Bay and Departure Bay. To make the round trip, which it did 94 times, on average it used 8,416 litres of fuel.

The other ships used on that route each used significantly less fuel: Queen of Coquitlam (6,891 litres), the Queen of Cowichan (7,050 litres) and the Queen of Oak Bay (6,491 litres).

While the Coastal Renaissance carries 370 vehicles and 1,600 people, each of the Queens carries 362 vehicles and 1,500 people.

The Coastal Inpiration, with the same capacity as the Renaissance, made 60 round trips between Tsawwassen and Duke Point. On average it burned 9,719 litres of fuel.

Used on the same route, the Queen of Cowichan (362 vehicles, 1,500 passengers) burned 6,378 litres of fuel per round trip. The smaller Queen of Alberni (295 vehicles, 1,200 passengers) used 7,153 litres of fuel.

The third Super C-class vessel, the Coastal Celebration, was put into service November 21 for a few runs between Swartz Bay and Tsawwassen. It has since been out of service.

B.C. Ferries spent $542 million to buy the three Super C-class ships from the German shipyard Flensburger Schiffbau Gesellschaft. The Tyee reported a week ago the ships have major problems including high fuel consumption, noise and vibrations that have kept the ferry company from putting them into full service.

– See more at: http://thetyee.ca/Blogs/TheHook/Transportation/2008/11/25/GuzzleFerry/#sthash.l9Zp8xQP.dpuf
_____________________________________________
Don’t worry we ass holes here on Ontario elected a Liberal government that blew apart a gas plant deal that yielded minus two gas plants and a 1.1 billion dollar cost to Ontario taxpayers. On Aug. 20, 2013 Privacy Commissioner Ann Cavoukian said the Wynne government had provided “inaccurate and incomplete information in my initial investigation” about the ability to retrieve deleted emails. “As a direct consequence of the incomplete response, the public has been misled…about the ability of staff to retrieve potentially relevant information. On March 27, 2014 a court document became public in which the OPP stated they had probable cause to lay criminal charges against David Livingston, McGuinty’s last chief of staff. The document alleged Livingston hired an IT contractor to the Liberal Party, David Faist (who was also the common-law partner of the Premier’s Office staffer Laura Miller), to wipe clean the hard drives of computers in the Premier’s Office that contained information about the gas plant scandal. Police say the hard drives will “afford evidence” of breach of trust. Mr. Faist and Ms. Miller had since moved to British Columbia where Ms. Miller became the Executive Director of the BC Liberal Party. They were scheduled to give evidence to the Justice Policy Committee of the Legislature when an election was called, suspending the activity of the committee. So beware BC you got the runts of the litter and we still have the bitch to contend with!

http://www.theglobeandmail.com/news/politics/ontario-liberals-gas-plants-scandal-everything-you-need-to-know/article23668386/

#144 Mister Obvious on 09.15.15 at 4:37 pm

#137 Lorne

Is that all you’ve got? An 2008 article about fuel consumption of the Class C ferries?

Those ferries have been in full service for years. Last month I took the Coastal Celebration to Victoria. It’s a excellent boat and equal in comfort, capacity and utility to the BC built ‘spirit class’ vessels. All three ‘celebrations’ have decades of life left in them.

Contrast that with the so-called “FastCat” ferries. Three of them were built for $150 million each (twice the promised cost), decommissioned within two years and ultimately auctioned off for scrap at $6.5 million apiece.

I used to see them sitting idle under the 2nd narrows bridge every time I drove across to the North Shore. It gave me a sick feeling.

#145 Entrepreneur on 09.15.15 at 4:42 pm

Well said #137 Lorne, the truth prevails!!!

Rode on the German (B.C.) ferries and was not impressed, vibration, loud, smelly. The original ferries built here in British Columbia had class and rode the waves gently.

Yup, Liberal Premier Christy Clark slapped us in the face when had them built in Poland (Liberal ex-premier Gordon Campbell had 3 built in Germany). Btw, with our taxpayer dollars. I bet the Germans and Polish shipbuilders are laughing behind our backs.

My vote goes to the NDP; time to give them the Federal leadership. Let’s leave them in for at least eight years to see and judge. Time to protect Canadian jobs and to protect our resources for Canadians.

Time up on the Conservative and the Liberals.

#146 SWL1976 on 09.15.15 at 4:46 pm

#136 Llewelyn

Relying on the mainstream media to examine the performance of all governments in an impartial manner is not recommended.

I like your comment on the m$m but I would like to add…

Relying on the mainstream media for anything more than the crappy entertainment it is, is very misleading to the reality of the situation

All this talk of the Fed yet very few acknowledge that they are the very root of the problem

#147 maxx on 09.15.15 at 8:48 pm

#50 John on 09.14.15 at 8:26 pm

” “There’s just no cash.” That’s the Coles Notes from a senior banker describing the book of oil service loans he manages for one of Alberta’s leading lenders. There’s simply not enough cash flow to support current levels of debt.” oilprice.com

Who will want to fund losing stuff anywhere when a road to normalization event has begun? ”

See the The Exchange interview tonight with the CEO of CAPP? Thought he’d grind his teeth to a powder.
Seeing increasingly more Alberta license plates in our eastern neck of the woods these days….flocks returning home to roost and hoping for new work…..party’s over in the patch and the circus has left town………

#148 maxx on 09.15.15 at 8:57 pm

#60 Smoking Man on 09.14.15 at 9:31 pm

“Test is my phone broken”

Which one? The hot line to Necton? Just kidding Smoke ;-)

#149 maxx on 09.15.15 at 9:00 pm

#61 Mister Obvious on 09.14.15 at 9:36 pm

Agree- and there will be a chorus of “you were warned plenty and often for a good long time” once the indebted start screeching.

#150 TheAwakenedOne on 09.16.15 at 2:53 am

Garth, have you ever considered writing erotic novels for a living???

I get sufficiently aroused just by reading this real estate and financial blog… and how you described this birdie Michelle.

“she coos”… man, only if I were a bird…

Imagine if Garth starts writing erotic novels folks…

I imagine politicians should not wear pants on their campaign days… and do their speech at Wreck beach here in Van to get Canadian more aroused – we truly need to be more aroused… other than being stimulated by real estates here in Van folks !

#151 Stoopid Idiot on 09.16.15 at 3:14 pm

#34 Smartalox

You’ve got the cart before the horse. Most cases your Realtartd will want you to provide a letter of pre-approval. Simple put it’s the amount you qualified to borrow to the max. The real state person in not interested in showing you what you should buy say for practicality reasons but to optimize their pay check in commissions. The mortgage broker does receive their bonus for sales but at the end of the day no one holds a gun to your head and say’s sign here….. we do that all on our own regardless of how it was presented to us. Nice try but no one to blame but ourselves

#152 Stoopid Idiot on 09.16.15 at 3:17 pm

Now, today the Fed is meeting to discuss the question– to raise, or not to raise interest rates? And when I looked at the numbers, I realized something interesting is about to happen.The universal law of bond markets is quite simple: bond prices and interest rates move inversely to one another. In other words, when interest rates go up, bond prices go down. Think about it like this: let’s say the prevailing interest rate in the marketplace is 5%, and I have a bond that pays 5%. Right now if I wanted to sell it, my bond is worth $100. But then tomorrow morning the Fed decides to raise interest rates from 5% to 10%. Yet my bond still pays 5%. Is it still worth $100?No chance! Why would anyone pay me the same price for a 5% bond, when now they can go down the street and get 10%? The only way I can sell my bond is if I drastically slash the price. That’s what happens when interest rates go up– the value of existing bonds goes down. Now think about the Fed. They’re sitting on $4.5 TRILLION worth of existing bonds, most of which they purchased when interest rates were basically zero. So what happens if the Fed raises rates? The market value of their entire bond portfolio will fall. And given the razor-thin capital the Fed has in reserve, they can only afford a tiny 1.3% loss on their bond portfolio before they too become insolvent. So the grand irony of today’s Fed meeting is that by raising interest rates, the Federal Reserve will be creating its own insolvency.

https://www.youtube.com/watch?v=jt377DV2BKs#action=share