Bloat

1BIG 1

The pudgy dude in the next cubicle who trundles outside four times a day for a smoke is somebody you might not think of a lot. Until the paramedics wheel him out. Then you look at your own ample waistline and wonder…

So it is that people in 416 or 604 with obese debt, wobbly cash flow and the bulk of their net worth in one smoking-hot asset, their house, believe they’re immune from anything ugly happening. Until they notice others getting whacked. And that takes us briefly back to Alberta – where the locals decided change is good, killed off the Conservatives, embraced a tax-and-spend crew, and promptly started paying the price.

Of course, the difference between, say, Fort Mac and Mississauga is oil. Commodity prices have a huge impact on the place where commodities come from. But Canada as a whole has an economy interwoven with the price of rocks and trees. Oil’s our biggest export. Alberta was the engine of the national economy two years ago. Calgary was the housing epicentre. Baristas in Fort McMurray earned more than finance graduates on Bay Street. What a difference a year can make.

So house sales in Fort Mac are down 40%, while realtor commissions have plunged by almost 50%. The average sale price has collapsed 12.6%, and continues to fall by about 1% per month. Entry-level houses used to be seven hundred grand. Now they are in the fives. New construction stopped like someone pulling the plug from a Skilsaw.

Owners are sweating, especially those with a job loss and a house they can’t sell. Renters rule. The vacancy rate has soared to more than 22%, or three times what it was a year ago. Housing starts are lower by 42%, on their way to something closer to zero.

Oil is cheap, of course, falling again on Wednesday. There are no solid indications the price will rebound, maybe for years. Meanwhile Canada is a high-cost producer of sub-standard bitumen without all the pipes needed to easily gush it to US markets, where frackers can produce at a fraction of the cost. What’s worse, voters here think that electing governments which promise to spend more money “to get things going” and support it with more taxes and more debt, are hot.

Albertans went majority Dipper. Canadians went majority selfie. The outcome is now completely unknown, except we know there will be bigger government and higher taxes. They told us. We still bit.

It’s not just Fort McMurray, or course. I’ve reported consistently about Calgary – where sales are down now 31.9% (as of Wednesday) with average prices off 6.5% – as reductions pick up speed as quickly as the locals realize this misery ain’t temporary. Across the province sales have fallen by 24%, the average price is 5% lower and realtor commissions have dropped by a third.

Meanwhile, did you notice even CREA is acknowledging a shift in the winds? House sales across Canada dropped 10%, with declines apace in the GTA and delusional YVR. Eight in ten of our regional markets have started to stagnate, even as we sit in the age of 1.85% fixed-rate mortgages and have elected a national government willing to sacrifice retirement savings for house lust.

Speaking of rates, I told you the Bank of Canada would not decrease its benchmark rate on Wednesday, and it didn’t. Remember what central banker Stephen Poloz told some international audiences a few days ago? Here it is: “Borrowers and lenders bear the ultimate responsibility for their own decisions at the individual and firm level. It is not the role of monetary policy to protect individuals from making bad choices.”

Bad choices. Too many Timbits, too many Du Mauriers, too much debt.

Poloz knows this, that reducing rates again to bail people out of their cash flow quagmires or epic mortgages will simply increase borrowing and lead to a bigger structural problem. This might all be okay if we were not a commodity-driven country with about a quarter of our GDP now linked closely to Love It or List It. But, alas, there she be. And now we have a national government committed to at least $30 billion in new deficit spending, which will pressure the bond market and raise mortgage rates.

As the central banker said in his no-rate-hike press release this week, “As financial vulnerabilities in the household sector continue to edge higher, risks to financial stability are evolving as expected.” If you really want to know what that risk looks like, take a gander at cowboy country, where truck nutz are shriveling in the chill. Nobody, even in Yaletown, Leslieville, Arbutus, North Toronto or Unionville is immune from this. Especially after Monday night.

Donut?

236 comments ↓

#1 irish stew on 10.21.15 at 5:25 pm

Welcome to the tax abyss.

#2 Mr. White on 10.21.15 at 5:26 pm

Small point. The cost of Bakken crude is not that much lower than oil sands oil. The big advantage of the oil sands is there is zero risk of not finding oil when you spud a well.

#3 pathcontrolmonk on 10.21.15 at 5:28 pm

Everyone I know in YVR voted for the guy with the nice hair, and yet none of them seemed to equate his plans to rising rates. In fact, most are doubling down as they believe the new guy will be more sympathetic to their financial needs.

#4 TurnerNation on 10.21.15 at 5:29 pm

Game’s on. Bandit needs a bath and trim as per photo.

#5 Mark on 10.21.15 at 5:32 pm

With the US going into recession, with Alberta/Saskatchewan/BC O&G activity collapsing, and with RE declining nationally, and with a new government elected on a platform of relative austerity ($10B/year deficits versus $15B/year deficits under Harper) — where is the demand going to come from to even maintain GDP in the positive range?

Even the predicted bounce in the manufacturing sector is barely happening.

Let the falling house prices in an environment of low interest rates be a lesson to those people over the years who blindly swore up and down that house prices could not fall if interest rates were low. Well, then and now, housing is just yet another commodity, and if there’s too much of it relative to demand, like any other commodity, it will fall. And severely at that.

Curiously, the timeframes in Canada are evolving roughly similar to that in the USA. The USA’s housing market peak was ~2006. Canada’s was 2013 (with Budget 2013’s CMHC measures). It took 2 years till significant drops set in. So if Canada continues to follow the same roadmap, it could be an incredibly interesting next 2 years.

#6 Londoner on 10.21.15 at 5:32 pm

“Borrowers and lenders bear the ultimate responsibility for their own decisions at the individual and firm level.”

Absolutely, which is why the BoC doesn’t make policy decisions based on consumer debt levels. To think that’s why they didn’t cut rates is nonsense. They’re only beginning to look at how consumer debt trends could lead to structural imbalances in the economy but it’s not yet part of the curriculum. Go talk to Joe instead.

#7 Kreditanstalt on 10.21.15 at 5:36 pm

“Tax-and-spenders”.

All parties are. Maybe that’s why elections are correctly pilloried as “advance auctions of stolen property”.

Moreover, the belief that “government stimulus” can “promote growth” and “kick-start the economy” is shared by all political parties, all politicians and virtually all voters.

The Conservatives followed this prescription as much as other parties do. That’s why they got their central bank counterfeiters to rig “interest rates” at zero, why they will not go up anytime soon, why downpayments are effectively zero, house prices are being puffed up (downdraft notwithstanding), subprime car loans are booming and why cheap credit is being flogged to even the dead.

“Liberals”? “Conservatives”? No difference.

But look for new “stimulus” spending (borrowing or printing, actually) to be blown on “infrastructure” in coming years. That will be the new thing.

And when that doesn’t work, real incomes continue to fall and growth doesn’t return, we will see direct drops of money, helicopter-style, into people’s wallets.

But never a reduction in debt issuance.

#8 Londoner on 10.21.15 at 5:38 pm

“Eight in ten of our regional markets have started to stagnate, even as we sit in the age of 1.85% fixed-rate mortgages and have elected a national government willing to sacrifice retirement savings for house lust.”

Which is why I say that price imbalances in the housing market will eventually work themselves out. It has very little to do with interest rates and much more to do with other local factors.

#9 DisgustMadeMePost on 10.21.15 at 5:38 pm

Yup.

We need a good purge. Been waiting for it a long time. If we’ve got to pay, let’s start paying ASAP … Get the pain over with already.

#10 S.Bby on 10.21.15 at 5:41 pm

The pudgy dude in the next cubicle who trundles outside four times a day for a smoke… do you have a camera in my office? Don’t know if he smokes Du Mauriers.

Several people in my office are now considering buying investment real estate. One who lives in the lower mainland is thinking about buying a condo in Edmonton (I kid you not) and another just bought a condo in False Creek for $550K. Yet another just bought a condo for their kid in Burnaby and another person not office related I know recently bought a condo for their daughter to get her out of the house. People diving in with both feet taking their built up equity and dumping it into more real estate. Total madness.

#11 Mel for the Peg on 10.21.15 at 5:45 pm

Crash baby crash!!

#12 Randy on 10.21.15 at 5:45 pm

Guess What ? Stress Kills ! Your problems are over …

#13 ivec on 10.21.15 at 5:45 pm

“Speaking of rates, I told you the Bank of Canada would not decrease its benchmark rate on Wednesday, and it didn’t.”
Finally you got it right about the interest rates ;P
Just kidding Mr. Garth, keep up the good work :D

#14 VandammeCouver on 10.21.15 at 5:47 pm

“…now we have a national government committed to at least $30 billion in new deficit spending, which will pressure the bond market and raise mortgage rates.”

Garth why does the issuing of new debt by the federal government pressure the bond market and necessitate the increase mortgage rates? That would be a great blog post.

#15 Ardy on 10.21.15 at 5:48 pm

Yes please, old fashioned plain.

I will just sit and watch how all this plays out.

#16 Vundo on 10.21.15 at 5:49 pm

Oh, please. Even the Fraser Institute admitted that we can’t blame the NDP for all Alberta’s woes before they even have a chance to act. Extreme reliance on a single commodity can’t be fixed by electing a party slightly more sycophantic towards the industry that extracts that same commodity from the ground. Blaming the guys wearing orange is a lazy copout. Jim Prentice was closet to identifying who really is responsible.

#17 Randy on 10.21.15 at 5:49 pm

New Story Released on Monday by the Obama-Trudeau Political Strategy Team.

Hope – Change – Fail…… Canadian Style.

#18 Jacko on 10.21.15 at 5:59 pm

I spoke to the 1% Elite Group, the .01%?. Net worth in excess of $30M. Taking Garth’s 90 rule, he is 64 yrs old, thus 26X$30M=$7.8M invested in a house is the rule.

Explained to me, he wants a house worth even more since there is no capital gains to pay when he sells, granted the price goes up (which he believes will always at this price level and this technique of investing). If he invested this same amount in a rental property, he would lose up to 50% to tax when he sells.
Does this make sense? I am heading to some major money and he claims this should be my strategy over stocks? My net worth is $1M in stock (stock/rrsp/Tfsa), $750K house value with $300K mortgage. Own my company which is not factored yet in net worth until I sell. Expect $5M over next 5 years. Age 54.

#19 SunShowers on 10.21.15 at 5:59 pm

“Borrowers and lenders bear the ultimate responsibility for their own decisions at the individual and firm level. It is not the role of monetary policy to protect individuals from making bad choices.”

While that’s true, if Trudeau made paying personal income tax completely optional, I don’t think anybody would let him off the hook that easily because “it was ultimately the people’s decision to not pay their taxes.”

A duty exists for both government and central banks to avoid detrimental fiscal/monetary policies.

#20 Bill on 10.21.15 at 6:03 pm

Garth, it’s a good article, except for your tax and spend mantra about the non-conservatives. You’re a bit like a broken record on this.

As far as I can tell, the conservatives did the spending without the taxation to pay for the spending. Claiming one balanced budget after years of deficits doesn’t make you prudent fiscally, does it?

Trudeau hasn’t actually done any spending yet. Give the new guy a chance.

#21 Senta on 10.21.15 at 6:06 pm

I don’t buy this “tax and spend” argument Garth. You look at only the cost side of the equation, not the benefit side. For example infrastructure spending has a multiplier effect on the economy. Improving the Health and Education of our population will pay back many times in the future. We need to take the long view. I do agree with the real estate argument though. BTW, did you guys notice the drop in VRX – buying opp. or shades of BreX?

#22 Senta on 10.21.15 at 6:10 pm

What do you feed that dog?

#23 Albertans are Blue on 10.21.15 at 6:14 pm

No,
Albertans recovered from the provincial hangover and went majority CPC. Canadians went majority selfie.

Now we will all shared the bill: in installments for the next 4 years.

What a shame this PM is – and worse, will be.

#24 Freedom First on 10.21.15 at 6:22 pm

Well, I feel better now. I always do after reading the truth. My main sources of truth come from reading this Blog, and the large independent agencies outside of Canada, such as the IMF and Moody’s, among others, who have spelled out the severity of the financial $hit$storm Canada is facing.

Hell, even Poloz went outside of Canada to make his statement about Canadians being responsible for their own “bad” choices.

Of course, I am not only financially fit, but physically, I am a prize specimen of male physical strength and stamina. I have to work at keeping my ego in check.

#25 Panhead on 10.21.15 at 6:24 pm

And out here in 604land Mayor moonbeam is salivating for federal money for his beloved Broadway extension …

#26 Nemesis on 10.21.15 at 6:25 pm

#Donuts&duMauriers?… #ThoseThings’llKillYa… #MPAA[R]…

https://youtu.be/Ft2O-OG8SdI

#27 Freedom First on 10.21.15 at 6:26 pm

An addendum to my earlier post. Smoking Man, how do you do it, and by that I mean retain the humility you display? I have much to learn from you and Garth in this regard, as well as from a few of the other Posters on this site.

#28 JSS on 10.21.15 at 6:27 pm

Went to a Lexus dealership in Edmonton to make an offer on a used SUV.

Buggers don’t want to haggle. It’s either their sticker price or “see ya later”. It seems like people still want to buy their RX350’s.

Yet I hear the opposite – job losses, declining house sales and prices, etc.

Don’t know who to believe.

#29 conan on 10.21.15 at 6:29 pm

Local Rasta dog jumps for joy as Trudeau majority announced.

#30 MoneyDriven on 10.21.15 at 6:33 pm

@ #14 VandammeCouver

I think this is the process:

1) $30 billion in new deficit spending has to be finance by issuing bonds.

2) There is over supply of government bonds and in order to make it more appealing then government has to offer higher interest rate to ensure they raise enough cash to finance the deficit.

3) Mortgages, particularity fix rate mortgages are finance through bank and lenders issuing mortgage backed bond. ie bank raises $1 billion dollars by issuing bond at 1.5%. then get $1 billion and lend it as fixed mortgage at 2% and pocketing the extra interest after expenses etc.

4) Since government bond are offering higher interest which are the safest (lowest return) bonds then banks have to also raise their mortgage back bond rate to stay competitive.

5) Now bank cost of acquiring funds to lend as mortgage has gone up and they’ll have to pass the saving to mortgage borrower. Hence the new mortgage would have a higher interest.

Am I on the right track Grath or is my imagination taking the best of me?

PS you can already see the effect as preferred rate reset share are on the rise. so who did listen to Garth advise and load up on those share?

Preferreds have exploded over 10% hugher in a week. I told you they were cheap. Still are. BTW, you are on the right path with the bond analysis. — Garth

#31 Michael King on 10.21.15 at 6:39 pm

On his first day on the job, Trudeau actually spoke to the press and suspended our military actions in Syria. Have to like that. What a nice change!
#14:Issuing bonds increases competition for capital in the financial markets. That leads to a higher price for money i.e. interest rates.

#32 Reality on 10.21.15 at 6:40 pm

Vancouver inventory at record low.

Hence the drop in sales.

That was funny. Love realtor comedy. — Garth

#33 kommykim on 10.21.15 at 6:41 pm

RE:

If you really want to know what that risk looks like, take a gander at cowboy country, where truck nutz are shriveling in the chill.

It’s almost cold enough for them to retract right up into the bumper.

#34 Justin Trudeau - the world's new PILF! on 10.21.15 at 6:43 pm

…… or maybe PMILF?

http://www.independent.co.uk/news/people/justin-trudeau-internet-already-has-a-sexist-acronym-for-new-canadian-prime-minister-a6701231.html

But seriously Garth, did you fail your Grade 12 class in logical argumentation?

“And that takes us briefly back to Alberta – where the locals decided change is good, killed off the Conservatives, embraced a tax-and-spend crew, and promptly started paying the price.”

So….um…the election of the NDP led to Albertans “paying the price”, in barely 5 months?

The NDP dropped the price of oil, did they?

Such a simplistically dumb post hoc argument (look it up, Garth) really makes you sound like some cheap leftover Harper partisan hack. (And Poilievre won his seat back, so that post is taken.)

C’mon Garth, make your points without so obviously revealing such irrational and unsubstantiated conservative bias.

Taxes up, big deficit coming. Investment dollars fleeing. Take the blinders off. — Garth

#35 Randy on 10.21.15 at 6:46 pm

Best analysis of the Federal Election result that I’ve seen so far, by J.J. McCullough
https://www.youtube.com/watch?v=srSJdRsA1Ew

#36 ZIRP_Next on 10.21.15 at 6:46 pm

They did not lower because the stock market is holding on around 13700. If it was at 12000 they would have lowered.

This is the only indicato to choose between rate hike or lower rate.

If the market goes to 14K-15K-16K-20K-30K = No Rate Hike

If the market drop 10% = Lower rate

Nope. No correlation. — Garth

#37 For those about to flop... on 10.21.15 at 6:46 pm

I gotta get me one of those dogs to mop my floor with…it has to be faster!

#38 Zorba on 10.21.15 at 6:47 pm

You call it government spending,I call it government investing,Garth !

#39 ben on 10.21.15 at 6:49 pm

If sales are falling it still doesn’t put *big* pressure on people to drop prices. Given the mentality that houses will “go back up” soon we need a rate rise, even 50bps, to flush out those on the edge.

Come on Janet raise rates already.

#40 boopsie on 10.21.15 at 6:50 pm

Today there is a letter gone viral from Mary Cleaver in
BC, who says she is a poster child for Stephen Harper’s
policies. And yet, and yet, she says she will never again vote “in her own interest” but will go for the larger
picture and the common good.
Let’s face it , we formed our own coalition. We feel that we are out of jail at last. With that, I am out of here.

#41 ben on 10.21.15 at 6:52 pm

To say BoC doesn’t consider indebtedness when setting rates is nuts. Get in the real world people.

Carney is in London right now trying to add to his list of reasons *not* to raise rates. Employment is at record highs. Growth is not bad. This guy sure can talk.

#42 mountain guy on 10.21.15 at 6:54 pm

Given the long list of failings in Alberta, (largely correct), it should be noted that 90% have nothing to do with the new NDP gov’t. The NDP didn’t invent the oil boom nor the crash. They didn’t invent the insanely one-trick economy the PC’s put in place and doubled-down on repeatedly for four decades. Nor will the NDP be the ones to ‘fix’ it. By the time O&G prices recover we’ll all be playing a new economic game under new rules that recognize the the reality that climate science is solidly established.
That’s not to say Alberta can’t thrive under the new economy – there’s a lot of deep technical talent and an entrepreneurship culture. Not just the easy stuff like shiny new apps, but real physical stuff that works well in extreme conditions. The world will always need that.

#43 Smartalox on 10.21.15 at 6:58 pm

Instead of bleating about the loss of TFSA contribution room, best to get out there and write to your newly-elected MPs and get them thinking about keeping the TFSA contribution high (you’re asking to maintain the status quo – your MP literally don’t have to do ANYTHING). Seventy per cent of the electorate wants this, and it’s a low-risk alternative to buying bubbleicious residential real estate for tax-free wealth creation.

Which is the main reason that people feel the need to buy highly-leveraged real estate.

#44 For those about to flop... on 10.21.15 at 7:05 pm

Garth, I have suggestion which you will probably chuck in your ” stupid suggestion box ” under your desk but I think it would help guide investment hacks like myself.
My idea is could you post four times a year what returns your G.T. Style 60/40 portfolio is earning so that rookies like myself can see if we are on the right track.
I say this because a few weeks ago you stated that a balanced portfolio should be down around 2% and I looked at mine and was down 2.5 % so this made me less nervous and makes me want to continue to learn and invest.
Thanks for all your help and the cheque is in the mail!

#45 Don Derc on 10.21.15 at 7:11 pm

Today’s headlines on the front page of the PeaceArch News:

“Hundreds march after 3 months without answers” – sorry folks, no real estate info here, just another example of what the RCMP call “de-escalation”.

“I never have a plan B” Watts says. – no kidding honey. Diane is a politician I’d like to forget…hey that makes her a PILF!

Garth – honestly – the day a gov’t elected ever made a difference is long gone (hint: liberals eliminating debt in the 90’s , then bending over to the amerikan masters for Afghanda)…

Wouldn’t you agree that no matter who got a majority yesterday, they would fudge the numbers and save the debt laden, over consumed cdn consumer…especially in real estate? That this blog may be obsolete in 6 months because of it?

PILF…. great word.

#46 Hawk on 10.21.15 at 7:12 pm

Canadians thought they were being smart by voting in the ‘let’s eat the rich’ liberal dudes, but the rich will be laughing lol as they think EAT MY DUST,………. as the debt ridden suckers will pay the vast majority of the cost of ever more lavishly funded “Public Servants” while the rich will pay a negligible amount and continue increasing their wealth.

I forsee the socialist grasshoppers are gonna lose this gambit bigtime :-)

#47 BobC on 10.21.15 at 7:19 pm

It spreads. Got a call today from a friend that lives in an over 55 community in Florida. Lot of prices being dropped. Lot of homes going on the market by Canadian owners needing to bail. Going down in two weeks to lowball a couple to turn into rentals.
What goes around comes around. The profit is made when you buy not when you sell.

#48 Ken on 10.21.15 at 7:21 pm

Your insight is impeccable, Your sense of humor even more so,

Just Genius Garth, What I’ve learned here in less than a year sometimes takes some a lifetime, when its to late to learn from your mistakes

#49 elChogni on 10.21.15 at 7:22 pm

“Donut?”

Bravo Garth, what a master closing!

#50 jess on 10.21.15 at 7:23 pm

drug flippers?

It is called “Prescriptions Made Easy.” RLY?
http://www.nytimes.com/2015/10/20/business/drug-makers-sidestep-barriers-on-pricing.html?mtrref=undefined&_r=1

Tuesday, February 05, 2013
Defining Specialty Pharmacy
http://www.drugchannels.net/2013/02/defining-specialty-pharmacy.html

enronish Ghost ACCOUNTS??? Citron Research that alleges the drugmaker is channel stuffing.
http://www.citronresearch.com/wp-content/uploads/2015/10/Valeant-Philador-and-RandO-final-a.pdf

investigative journalist Roddy Boyd on his Southern Investigative Reporting Foundation website questioning the exact nature of Valeant’s relationship with these pharmacies.
http://sirf-online.org/2015/10/19/hidden-in-plain-sight-valeants-big-crazy-sort-of-secret-story/

US | Thu Oct 15, 2015 7:20pm EDT
Related: U.S., Health, Drug Pricing

Valeant subpoenaed by U.S. prosecutors; shares drop
By Ransdell Pierson and Bill Berkrot
http://www.reuters.com/article/2015/10/15/us-valeant-pharms-subpoena-idUSKCN0S90XO20151015

Drug Goes From $13.50 a Tablet to $750, Overnight
Andrew Pollack
Monday, 21 Sep 2015 | 6:59 AM ETThe New York Times

#51 Rural Rick on 10.21.15 at 7:25 pm

#2 Mr. White
Could you splain this for ricky

#52 Wild Roasted Nutz on 10.21.15 at 7:26 pm

#35 Randy on 10.21.15 at 6:46 pm

Best analysis of the Federal Election result that I’ve seen so far, by J.J. McCullough
https://www.youtube.com/watch?v=srSJdRsA1Ew

————–
The dude’s got a picture of the queen in his house next to an American flag…. and a great mustache.

#53 crossbordershopper on 10.21.15 at 7:26 pm

i speak on behalf of all the single mom’s in hamilton with 3 or 4 kids living on hamilton housing, waiting for their huge increase in child cheques. people have no ideal how much these single mom’s are going to get, im talking 800 per kid per month, because of course 1 has a disability, in hamilton everyone does. her cheque is about 1100 on disability and the rent is 300 per month. what a life this trudeau dude is giving them, why would anyone ever even try to go get a minimum wage job.
and in hamilton, well since everyone works for cash to keep their goverment cheque it has warped the society and this guy is making it even more skewed.
so, if your a single guy, you have no job, because there really non to have, single moms get cheques for the kids. and the society keeps progressing. but hey atleast he has nice hair.

#54 Terrorist Destroyer on 10.21.15 at 7:27 pm

I predict that all the Harper haters will be blaming TrueDough for all the hardship we will face as a nation in about a year. You got you wish deal with it..crash baby crash.

#55 Ronaldo on 10.21.15 at 7:28 pm

Sounds like a disaster in the making donut?

#56 westcdn on 10.21.15 at 7:28 pm

Justin Trudeau is an orator among other attributes. I went and found the eulogy he gave for his father as I remember, even 15 years ago, someone telling me he was an excellent speaker. Eulogy
https://www.youtube.com/watch?v=5p4NUJMPAjQ (the short form has not worked for me before)

His values and beliefs even show then. It will be interesting to watch his evolution as PM as his hope and change promise meets reality. I have high hopes the status quo changes rather than him.

Meanwhile, my purchases of underwater reset preferred shares (cdn) appear to be paying off. Time will tell. I see a long period of economic stagnation ahead for the world. IMO, debt is evil at an individual level and a disaster above. I just hope Justin does not eat the Wall Street diet of easy money. After all, there are 10,000 or more of us to one (0.1% elite). Curse the status quo…., yet I am a progressive conservative – go figure? Being a contrarian is not easy.

#57 Estrella on 10.21.15 at 7:37 pm

Trudeau mentioned a 50% female cabinet, however 80% of the MP’s are male.

Might be hard to accomplish. Hopefully his advisors can mention something to him about his math skills.

After all what can you do with a degree in literature? Well become Prime Minister of Canada, obviously.

#58 Retired WI Boomer on 10.21.15 at 7:41 pm

What a bunch of whining criers we have tonight. Seventeen posts and eleven bitching about the mess the government has made of things.

Must be a raving disease up there. 11 whiners with no stake in the country? 11 blameless sheep? Bah ha ha!

Your country is on drugs, and has ben for many years. RE drugs, granite and stainless, and mortgaged through the ass. Oil has nothing to do with it, neither does the kid you just elected to lead you. Whether he leads you over the cliff, or through the abyss remains to be seen.

Perhaps your money is nicknamed correctly “Loony”

Garth, are the Canadian Pharmacological leaders aware of the outbreak of this bitter hysteria, or have I just misread between the lines here?

#59 Wild Roasted Nutz on 10.21.15 at 7:42 pm

#45 Estrella on 10.21.15 at 7:37 pm

Trudeau mentioned a 50% female cabinet, however 80% of the MP’s are male.

Might be hard to accomplish. Hopefully his advisors can mention something to him about his math skills.

After all what can you do with a degree in literature? Well become Prime Minister of Canada, obviously.
—————————-
Could write a free blog 6 days a week for 10 years!
Dude churns it out.

#60 Linda on 10.21.15 at 7:46 pm

‘have elected a national government willing to sacrifice retirement savings for house lust’. Now wait just a second. What was elected is a government which has promised to change the RRSP rules so those who have said RRSP’s can raid them repeatedly. All 3 of the main parties were offering to do something to make it easier to access RRSP funds in the run up to election day as per this very blog.

So what makes the fact most people have the self control of a two year old set loose in a candy shop w/o supervision when it comes monetary discipline the governments fault? No one is being forced to take the cash out (exception – those aged 71+). These folks are doing this of their own free will & lord knows, there are no shortage of warning voices to tell them why that is a bad idea including this blog. These folks are addicts & housing is their drug of choice. And while people may not like to hear it, if you make these choices to spend every dollar you have & borrow more, then you also must accept that the mess you end up in is entirely due to your own actions.

#61 MSM-Free Zone on 10.21.15 at 7:47 pm

“……We believed that Canadians that are working hard should keep more of the money they earn because we believe that government should manage the people’s money the way that they manage their own…….”
– Stephen Harper, Monday Oct 19th, 2015
_________________________

The (C)onservatives seem to have taken those words to heart in copying Canadians’ spending habits by jacking their own federal debt by a record $170 billion.

#62 Smoking Man on 10.21.15 at 7:54 pm

Taxes up, big deficit coming. Investment dollars fleeing. Take the blinders off. — Garth

https://ca.finance.yahoo.com/q?s=USDCAD=XXX

Yup.

I saw this coming along time ago. Swapped out a cushy return to my former tax farm gig (three months are up)

Choose the unknown for Casino funding paid in USD.

Its a gamble but thats how I roll… How Ive always rolled.

Plus..took me four years to clean up the mess at tax farm..go back for what…wait for my apps to die..Im the best, my shit dont break. I would be board out of my mind.

How many Canadians do you know would trade safe and secure, dogging it all day, for Adventure the Unknown and hard work.

Not many I bet.

Im an idiot, but a happy one.

#63 Frank Blood on 10.21.15 at 7:56 pm

Anyone have some insight into preferred ETF’s performance for the last several days? CPD is on the move.

#64 Ogopogo on 10.21.15 at 8:00 pm

If you really want to know what that risk looks like, take a gander at cowboy country, where truck nutz are shriveling in the chill.

Speaking of which, I noticed fewer Alberta plates in Kelowna. The shriveling is driving the normally boastful Alabertamians away from their playground in the Okanagan. Business is starting to feel the chill here, with less oil sands money flowing in.

My challenge to anyone who can produce even ONE indisputably ethical Kelowna realtor still goes unanswered.

But I’m told a unicorn was spotted in West Kelowna two days ago trying to convince someone to sign a BRA.

#65 Mark on 10.21.15 at 8:01 pm

Garth why does the issuing of new debt by the federal government pressure the bond market and necessitate the increase mortgage rates? That would be a great blog post.

The more an entity borrows relative to its productivity capacity, the higher the real cost of that credit will be over the long run.

Government borrowing, at least under our current economic paradigm, is at the so-called “risk-free” rate. Government debt is hence considered to be the highest quality debt that an investor can invest in.

If excessive borrowing by governments fails to generate a commensurate increase in useful economic output (ie: malinvestment of those funds occurs), then interest rates will rise on government credit. And hence, push up the cost of credit to all forms of ‘junior’ credit that exists in the economy. Such as mortgages, corporate borrowing, right down to LOCs and loan shark rates.

The problem that seems to exist right now is that non-government borrowing is on a trajectory to fall much faster than government borrowing is set to rise (if at all, since Trudeau’s platform implied a reduction in borrowing compared to Harper’s actual performance!). This is amongst the reasons why I argued that additional policy rate cuts, right into negative territory, will inevitably be required.

The $900B in loan guarantees granted by the CMHC (insurance + reinsurance) against subprime credit can be thought of as ‘pulled forward’ aggregate demand in the economy. Much of that $900B added in the past decade. The hole to be filled is thus enormous.

http://www.mises.ca/wp-content/uploads/2012/07/housing-mortgage-guarantees.jpg

#66 For those about to flop... on 10.21.15 at 8:02 pm

I seen a stat on Election Day that 45% of voters had made up their minds on who they were going to vote for before an election had been called.
Judging by the result a lot of people have already decided who they are voting for in 2019.

#67 the jaguar on 10.21.15 at 8:03 pm

A colleague of mine has a family member who is a senior executive in a very large commercial construction company, and he was told there is enough significant work for about another 9 months, but after that many big projects will be shelved until returns can be justified to offset the costs and market risk.
Maybe that will change with infrastructure spending under the new regime, but if not…..’oh boy’…..

#68 omg the original on 10.21.15 at 8:23 pm

So house sales in Fort Mac are down 40%……..The average sale price has collapsed 12.6%.

I’ve reported consistently about Calgary……with average prices off 6.5%
——————————-

This again demonstrate that people will sell their granny to pirates rather than lose money on their house.

Cowtown has had a huge job loss of well paid professionals. Proportionally Toronto or Vancouver would have to be in deep depression to experience similar job loss. Yet in a city where house prices have doubled in the last decade here has hardly been a whimper on prices.

FMac, a one industry town, is in even worse shape – but prices are down about the same as 2013 FMac house price appreciation.

Again demonstrates the concept that, unless there is a major catalyst significantly changing peoples’ ability to hang on, the road down in prices is a long slow multi-year grind.

BTW – the only catalyst on the horizon for a rapid housing correction in Canada right now is a significant rise in interest rates – and by that I do not mean a measly 200 basis points.

#69 Victor V on 10.21.15 at 8:24 pm

http://news.nationalpost.com/full-comment/john-ivison-phase-2-of-the-trudeau-era-disappointment

“…governments should be judged by their actions, not their intentions. Justin Trudeau is nothing, if not a man of good intentions.

Yet, as was once explained to me by a venerable and veteran Liberal, Tom Axworthy, “liberalism’s dirty secret is that government doesn’t seem to work well much of the time.”

Then there is the corrosive influence of the first directive of all politicians, in all democracies, at all times: what will this decision mean to my prospects of re-election?

As Bill Clinton advisor George Stephanopoulos once said so revealingly: “The President has kept all the promises he intended to keep.”

History suggests that finite resources and realpolitik will limit the transformative change espoused by the new kids in town. We will be watching.”

#70 45north on 10.21.15 at 8:26 pm

Senta: You look at only the cost side of the equation, not the benefit side. For example infrastructure spending has a multiplier effect on the economy. Improving the Health and Education of our population will pay back many times in the future. We need to take the long view.

Here’s a line from The Condo Game: “we’re going to have a huge problem in 10 or 20 years”
http://www.cbc.ca/player/Shows/Shows/Doc+Zone/ID/2419796099/

so taking the long view, the Condo Game points to investment that should never have been made. Now Justin Trudeau has promised massive new investment. Let’s make sure that it pays off. Holding a press conference announcing new investment does not mean that it makes sense.

The most obvious target of our skepticism is housing. Lots of houses should never be built because of bad location, poor building quality or poor financing. Under the heading of poor financing is marriage breakup.

Let’s take the long view.

#71 Yuus bin Haad on 10.21.15 at 8:30 pm

I dunno Garth. Every election results in the need for a change in strategy – you’ve outlined some of the considerations for this time around in the past couple of posts. Maybe it’s a bit of a 180 this time, but it’s still possible to maintain the surplus.

#72 Ralph Cramdown on 10.21.15 at 8:32 pm

The Bank of Canada is going all ECB on us. In the Monetary Policy report of today, it revises down nearly all its growth estimates, and says inflation is predicted to be in the lower half of the target band (i.e. between 1% and 2%) until 2017.

This is a dangerous game. It is a tacit admission that policy has been a bit too tight, with the just-in-time-to-save-the-day prediction of an uptick eighteen months from now making a convenient excuse, given the lag in policy’s effect on inflation, not to ease today.

We all know what happens when a new government announces it will spend more on infrastructure. Either poor projects are chosen just because they’re “shovel ready” or better projects get the cash, but with a two year delay for engineering work and environmental assessments.

#73 dontcallmeshirley on 10.21.15 at 8:36 pm

Garth is exaggerating, $30 billion is rounding error in the bond market. Rates will not be pressured by $30 billion.

We’d love to hear a valid rationale for why Canada’s $1.3 trillion mortgage debt can’t be even higher. That’s no where near the max.

Can I get an Amen?

#74 Micah Whitman on 10.21.15 at 8:38 pm

Garth, Do you think Justin Trudeau plans to buy some gold for the bank of Canada to give the Canadian Dollar a stronger Floor in case the economy goes south?

No. — Garth

#75 Millenial on 10.21.15 at 8:41 pm

‘Baristas in Fort McMurray earned more than finance graduates on Bay Street.’

It’s funny to me you think 22 year olds out of university business programs should be making more than baristas. What do people in finance really do? They push money around, other people’s money, and it really doesn’t take a lot more skill than being a barista.

This economy we have is going to stall whether interest rates go up or not; zero percent interest rates can only sustain growth for so long. When things do tank all these useless people in finance, insurance, and real estate are going to lose their jobs. They’ll apply for different jobs, but really what useful skills do they have? They’ll take huge pay cuts if they can find anything.

Anyway, Garth, with Valeant Pharmaceuticals taking a dump today, i’d like to present you with the three biggest publicly traded companies by market cap in Canada:
(1) Royal Bank of Canada,
(2) Toronto-Dominion Bank,
(3) Bank of Nova Scotia.

Yep, that’s progress for ya right there, brave new world economy we have right here. BTFD on those TSX 60 ETFs!!!

#76 Nora Lenderby on 10.21.15 at 8:45 pm

#24 Freedom First on 10.21.15 at 6:22 pm
…I have to work at keeping my ego in check.

For an ego that shape, I suggest a surgical truss ;-)

#77 Borland West on 10.21.15 at 8:46 pm

Elizabeth May for Minister of the Environment in Trudeau’s Cabinet!!

#78 Nora Lenderby on 10.21.15 at 8:48 pm

#22 Senta on 10.21.15 at 6:10 pm
What do you feed that dog?

Small people in comfortable shoes, evidently.

#79 whitehorn on 10.21.15 at 8:56 pm

#68 OMG, “So house sales in Fort Mac are down 40%……..The average sale price has collapsed 12.6%.

I’ve reported consistently about Calgary……with average prices off 6.5%”

Yes, I agree with your comments. Although, people can only ride the storm for so long before they need to sell at a substantial decrease in house prices. I don’t think there will be any fast turnaround in the price of oil. Some say the worst oil downturn since the 50’s with only 98/99 and 86/87 being worse. Also, being an Albertan resident house prices went up to quickly and to fast (basically doubled in the last 10 years), a correction is inevitable.

#80 it's a new day on 10.21.15 at 9:02 pm

#31 Michael King on 10.21.15 at 6:39 pm

On his first day on the job, Trudeau actually spoke to the press and suspended our military actions in Syria. Have to like that. What a nice change!

exactly, the ruling elite, central banks, and the military industrial complex can all suck air, JT is in the house

#81 Washed Up Lawyer on 10.21.15 at 9:02 pm

On October 27, Alberta’s Finance Minister, Edmund Fitzgerald, delivers a budget.

Fellas, its too rough to feed you.

On the positive side, Athabaskow’s new and only debt will be about 2.66% of Ontario’s.

And the mountains are beautiful.

#82 Leo Trollstoy on 10.21.15 at 9:05 pm

#18 Jacko on 10.21.15 at 5:59 pm

Your recollection of the story doesn’t sound right. Something is off. And it’s likely that you don’t know enough to question the gentleman properly. Get educated and stop rushing to burn your money.

#83 batt519 on 10.21.15 at 9:07 pm

“Borrowers and lenders bear the ultimate responsibility for their own decisions at the individual and firm level. It is not the role of monetary policy to protect individuals from making bad choices.”
The rest of that half-statement should be ‘and that is why your Conservative Government passed financial institution bail-in provisions in their 2013 budget bill’.

#39 0% chance of dear Janet raising anything this year or the first half of next year.

#74 Canada sold of the last of her gold not long after the low. So if she were to purchase again it will be at the high, just like the average hooplehead would. But London and The Fed would never allow it.

I’m excited to see what the deficit numbers will be that the Lieberals come out with for the current year. They’re going to go digging deep to hang it on the last crew.

Safe in $ilver.

#84 Leo Trollstoy on 10.21.15 at 9:08 pm

Of course, I am not only financially fit, but physically, I am a prize specimen of male physical strength and stamina. I have to work at keeping my ego in check.

I hear ya bro

Kudos and rock on!

#85 When will they raise rates? on 10.21.15 at 9:12 pm

That was an excellent post tonight Garth. I really enjoyed your perspective and think you absolutely nailed it, once again.

I enjoyed the read, thanks!

#86 Leo Trollstoy on 10.21.15 at 9:12 pm

#34 Justin Trudeau – the world’s new PILF! on 10.21.15 at 6:43 pm

All history will remember once Alberta tanks is that the NDP were in charge during the inevitable carnage.

Perfect timing.

#87 Leo Trollstoy on 10.21.15 at 9:16 pm

#47 BobC on 10.21.15 at 7:19 pm

What city? Which county?

I’m interested.

#88 Herethere on 10.21.15 at 9:18 pm

Talking about bloated and pudgy. Hopefully, our fearless ex-leader, will get a soothing note from Mr. Duffy. Karma is a bitch!

#89 When will they raise rates? on 10.21.15 at 9:19 pm

#81 batt519 on 10.21.15 at 9:07 pm

^ agree with what he said

https://media.giphy.com/media/GQnsaAWZ8ty00/giphy.gif

#90 Chris in Nanaimo on 10.21.15 at 9:27 pm

#66 For those about to flop.

I hadn’t made my mind up until about an hour before I voted.

My first Canadian Election, and I agonised over who was the best of a bad bunch.

And i took Garth’s advice and actually voted for something. Whereas it seems most of the country voted against one man, figuring pretty boy was the best bet, with the NDP being caught in the cross fire.

And i suspect most ‘strategic’ voters have absolutely no idea about the economic and personal financial implications of thrir vote. All they cared about was getting rid of Stevo.

#91 Keith in Calgary on 10.21.15 at 9:36 pm

The crash in Prince Rupert will be bloody and swift now that the northern gateway pipeline is dead.

Trudeau has said it isn’t going to happen.

There are 128 places for sale on MLS right now in PR. Gonna keep a watch on it. Trust me, it’s the last place that “I’d” wanna buy……..but I enjoy a good train wreck.

#92 BobC on 10.21.15 at 9:38 pm

#87 Leo
Pinellas county, Clearwater down to St. Pete.

#93 james on 10.21.15 at 9:38 pm

Went back to Toronto for campus outreach last week. I almost died of laughter. In Ukraine, where my girlfriend is from, every nice building you see is either government, or a bank.

In Toronto, it is the same. Government (e.g., provincial, university, hospital), bank, or professional services firm that serves governments and banks (e.g., KPMG).

It is obviously a service economy. There are a few people on Bay street and in hospitals who make serious money. Then there are vast hordes of public servants who parasitize off the private sector (e.g., 5 to 1 pension contributions at Ontario power generation).

Everyone else has a middling service sector job. There’s no industry. MaRS and the startup incubators there are jokes. Toronto has retail, tourism, and restaurants. (Good restaurants, by the way).

I see these young people splurging on clothes and iPhones, knowing full well what the stats on incomes are for the city of Toronto as a whole.

It is a shock after the Bay Area and Seattle, where we have a robust private sector middle class with disposable income.

#94 common sense on 10.21.15 at 9:48 pm

#62 Smoking Man

Jackson is proud your working for the legal tender…

#95 Leo Trollstoy on 10.21.15 at 9:54 pm

As the U.S. economy continues to do well, the number of available job openings boom as employers can’t find enough people to hire.

http://www.businessinsider.com/shrinking-labor-pool-leads-to-payroll-declines-2015-10

#96 Brian Ripley on 10.21.15 at 9:56 pm

“Borrowers and lenders bear the ultimate responsibility…”

Responsibility yes; but what should the social contract look like?

Do we just let the market decide? It has not worked out so far.

Obviously if we are intent on shipping manufacturing jobs out of Canada into low wage jurisdictions then at some point we will have to figure out how to manage a country containing mostly low wage service workers.

And those workers are going to need affordable housing. The market is not going to provide it even with record low credit costs that may be with us for another decade or more (Japan).

Surfing Youtube today I came across a freshly posted video on the mess that is California housing:

http://www.chpc.biz/history-readings/california-or-bust

And California has very large corporate employers.

If our private sector does not want to build affordable housing, and if we don’t want the public sector to have to pick up the tab, then perhaps it’s time to look at partnering with foreign investors who are in love with negative yields. That we can provide.

#97 Patrick on 10.21.15 at 10:00 pm

We got tax-and-spend in Alberta, Ontario and federally.

In 4 years when the country is in tatters the pendulum is going to swing the other way. Cons at every level and I heard on the radio they are going to smile more in the next election.

#98 Ralph Cramdown on 10.21.15 at 10:00 pm

Time for another prediction, since my track record is pretty good.

Valeant is going down. The CEO and the CFO are both old hands from McKinsey, the consulting outfit. If they wanted to present the financials in a clear manner that provided guidance, they certainly have the skills. So they’re deliberately opaque. Rapid growth by acquisition, using overpriced stock as currency and blaming lack of profits on acquisition and restructuring costs is an old strategy, though one that hasn’t been seen in a few decades. It was big in the 1960s and 1970s. The problem is that you have to keep doing deals, or your accounts become less opaque. An easy way to overpay for a company is to NEED to do deals. Valeant has convinced many sell-side analysts that it has been buying hundred dollar bills for $80. How likely is it that all the companies it bought have been underpriced?

The analyst at TD, in reiterating his buy rating yesterday, even suggested that this overleveraged turd might start buying back stock (at a P/E of 85, when it’s paying 7.5% on its debt???)

Still lots of stock available to borrow from Canadian retail investors…

#99 Marco Polo on 10.21.15 at 10:02 pm

I enjoy the comments tonight. It’s really appaling how simple people are, the Harper haters are now gone. Stephen Harper wasn’t the cause of most of their problems. Or even any economic changes. In contrast, George Bush’s loosening of the credit industry and that following housing bubble is all on him and his team.

If you’re to blame Stephen Harper, you should also blame Tony Abbott, Tony Blair, and John Key. All three prime ministers of developed commonwealth countries have followed the same path into the housing debacle caused by cheap money. People are so myopic.

It was wonderous to hear that a 30 Billion dollar deficit borrowed from the bond market would go unnoticed, and would be some drop in tbe ocean. On a GDP basis, it is small, but it is a large share of foreign currency that must be exchanged to buy the bonds. Our dollar will suffer further. It’s possible to imagine a currency slide, with Canadian dollar home prices unchanged from years ago, but a massive decline in the dollar, yielding a huge discount in real terms for the ‘ asset’, and I use the term loosly, as a home is an expense.

#100 Freedom First on 10.21.15 at 10:15 pm

#76 Nora Lenderby

Thanks for the laugh Nora! I had to look that one up.

I must start being even more humble. I don’t want to go there.

#101 Dave on 10.21.15 at 10:22 pm

Why don’t you have advertisements on your site? Stop being silly – readers don’t care if you have a few ads….make some money

No ads. Just me. Nice beard, though. — Garth

#102 White Crock BC on 10.21.15 at 10:23 pm

Garth, you’ve been eerily silent lately on the likelihood of a Fed rate increase this year.

Patience. — Garth

#103 Freedom First on 10.21.15 at 10:24 pm

#84 Leo Trollstoy

Thanks. You too. Your Posts are inspiring. Except to the few people you keep correcting, and rightly so. Stay strong.

#104 Smoking Man on 10.21.15 at 10:25 pm

#100 Freedom First on 10.21.15 at 10:15 pm
#76 Nora Lenderby

Thanks for the laugh Nora! I had to look that one up.

I must start being even more humble. I don’t want to go there….
…….

Don’t go there.. Humbleness is your schooling coming out.

If you’ve got it figured out, happy as shit..

Tarzan cry …..

Only pricks that will chirp you are the ones that never made it to the summit.

Man up now..

#105 For those about to flop... on 10.21.15 at 10:25 pm

#90 Chris in Nanaimo on 10.21.15 at 9:27 pm
#66 For those about to flop.

I hadn’t made my mind up until about an hour before I voted.

My first Canadian Election, and I agonised over who was the best of a bad bunch.

And i took Garth’s advice and actually voted for something. Whereas it seems most of the country voted against one man, figuring pretty boy was the best bet, with the NDP being caught in the cross fire.

And i suspect most ‘strategic’ voters have absolutely no idea about the economic and personal financial implications of thrir vote. All they cared about was getting rid of Stevo.

/////////////////////////////////////////
Hey Chris ,I did not vote in this election but I thought it was about who was the best candidate to govern the country not Canada’s next top model.
I don’t mind my politicians a little rough around the edges .Not Mike Duffy rough ,that’s taking it a little too far!

#106 Darius Donut on 10.21.15 at 10:28 pm

Garth

Brilliant analogy re. smokers and house lust. Now throw a bit of ganja in the mix and you have delusional house lust.

Re. the donuts, the conspiracy theorist in me says that all of the cops hang out at the donut shop not to get their own caffeine buzz, but to ensure that the great unwashed masses keep consuming and fattening themselves……the ganja munchies will also exacerbate this and take focus away from the crashing housing market…….mass doughnut bingeing while Rome burns…

#107 meaning of the word 'government' on 10.21.15 at 10:29 pm

http://www.truthin7minutes.com/government/

#108 Darius Donut on 10.21.15 at 10:33 pm

#97 Patrick on 10.21.15 at 10:00 pm
We got tax-and-spend in Alberta, Ontario and federally.

In 4 years when the country is in tatters the pendulum is going to swing the other way. Cons at every level and I heard on the radio they are going to smile more in the next election.”

You may not be far off….this is kind of what Bush did to Obama….dumping a whole lot of problems on him to keep him occupied while in office, and guarantee a swing back to the right in the coming election…I predict Harper gets a brush cut or flaptop and comes back in 4 years to lead the battle charge against the Hair Bear bunch liberals…

#109 Smoking Man on 10.21.15 at 10:34 pm

#94 common sense on 10.21.15 at 9:48 pm
#62 Smoking Man

Jackson is proud your working for the legal tender…
.

Wrong, I’m working on satisfying a gambling chic who I Sort of fear , love and loath.

Being Dyslexic.

I’m a problem solver after all. A fixer of things.

Shit I got to do to keep the booze going down smoothly.

#110 Nagraj on 10.21.15 at 10:35 pm

#57 ESTRELLA rhetorically mocks, “After all what can you do with a degree in literature?”

To which I say, “But, alas, there she be.”

ESTRELLA must be blissfully unaware that our gracious host has an MA in Eng Lit.

– a mote to trouble the mind’s eye EXCEPT THAT: one Heather Mallick wrote this week that “Looking back, the hallmark of the Harper gov’t was its dislike of intellectuals, particularly scientists but also anyone who seemed literate or artsy.”

So this thought, of its own accord to be sure, crossed my mind – that the BOOR’s vengeance suffered by our gracious host was more than politically motivated.

The greater tragedy though: consider Laureeny’s Bollywood performance in Brampton. What could she not have been, had she not married a pig-headed barbarian whose comprehension of choreography begins and ends with Line Dancin’, eh?

[Laureeny: And I aint no friggin “Sweet Caroline” neither, you goddamn JERK! ]

Estrella is Spanish for star. Estrella fugaz means shooting star.

[Heather Mallick is a veteran Harper critic over at The Liberal Apologist (aka The Toronto Star). She raises a serious cultural question, as I see it, as to what makes for party differences beyond money issues.]

#111 45north on 10.21.15 at 10:35 pm

BobC: Got a call today from a friend that lives in an over 55 community in Florida. Lot of prices being dropped.

Sun City Center, FL is an over 55 community. prices are set by the retired middle class which means they ( prices ) are stable. I mean prices are set by retired American middle class. Canadian influence is small.

#112 batt519 on 10.21.15 at 10:38 pm

#99-I’m a Harper hater. Still here. Don’t kid yourself, Steve liked to spend. How would we have paid for those expensive jets if that deal went through? Conservative administrations, be they of the progressive type or the CRAP type, have presented the largest federal budget deficits in the history of this outpost of the Dominion.
It was ‘liberal’ Bill Clinton that deregulated the financial industry and combined with the rolling over of long term debt into short term debt that precipitated the easy flow of cheap credit.
C$30billion, $10b/year I think they said they want to run for 3 years is a nothing in the foreign exchange markets. Much like a 1oz shot in a 5 gallon pail.

#113 hold thy horses on 10.21.15 at 10:39 pm

#80 it’s a new day on 10.21.15 at 9:02 pm
#31 Michael King on 10.21.15 at 6:39 pm

On his first day on the job, Trudeau actually spoke to the press and suspended our military actions in Syria. Have to like that. What a nice change!

exactly, the ruling elite, central banks, and the military industrial complex can all suck air, JT is in the house”

Whoa, not so fast…such quick and rash decisions can also spook markets as it leads to uncertainty about what other rash decisions could also be made…..markets like predictability…

#114 young & foolish on 10.21.15 at 10:42 pm

Property …. over-valued and going down
Consumers …. tapped out
Economy … energy export dependent and in a funk
Global Economy …. not much better

but don’t worry, balanced and diversified is infallible

#115 Micawb or Macabre on 10.21.15 at 10:42 pm

#2 Mr. White on 10.21.15 at 5:26 pm
Small point. The cost of Bakken crude is not that much lower than oil sands oil. The big advantage of the oil sands is there is zero risk of not finding oil when you spud a well.”

Talk about an optimist….ne’er ye mind something good will turn up…..very Micawberish!

#116 Hawk on 10.21.15 at 10:47 pm

#1 irish stew on 10.21.15 at 5:25 pm

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

No worries,….. from now on…. “The Budgets will balance themselves” :-)

#117 Ulsterman on 10.21.15 at 10:49 pm

S Bby “People diving in with both feet taking their built up equity and dumping it into more real estate. Total madness.”

It would be total madness if this hadn’t been a one-way winning bet for 15 years. Bears have been predicting the end/madness/stupidity of the Lower Mainland market for 10 years, and yet the buyers of single family homes have made out like bandits. I’ve completely given up using logic to predict this market and assume that there’s every chance those buying a house now will be doing well in 5 years. You may scoff, but the same old reasons for the “end is nigh” have been recycled year-in, year-out on this site. NOW of course all the conditions are right for a correction, just like they were right in 2009, 2011, 2013 etc etc.

The situation IS crazy but it’s crazy for bears to start lecturing the bulls on real estate timing.

#118 common sense on 10.21.15 at 10:49 pm

Smoking man #109

Your a joker and a smoker…a midnight toker.

Likely getting your chic lovin on the run too.

#119 Another Albertan on 10.21.15 at 10:50 pm

Calgary Commercial Real Estate Anecdote:

We are starting to kick tires to prepare for our negotiations on our office space, so we are touring around downtown buildings.

There are two whole floors (~ 15000 sqft each) available in a tower immediately adjacent to the head office of a large integrated energy company (onomatopoeia: “Woof Woof”). Available through 2023 with office furnishings for $8/sqft + $13/sqft op costs.

Asked the commercial realtor for a one-word description of the state of the union in office space. Response: “Devastation”

He indicated there are 4 groupings of office space right now. People will only talk about 3 of the 4. The fourth, nobody wants to address yet.

1 – Acknowledged sublet space (i.e. – space that is advertised as being available)
2 – Ghost sublet space (i.e. – space that is empty but hasn’t hit the market yet)
3 – Shared sublet space (i.e. – cannot be subdivided, so you are physically sharing offices and cubicles with another party)
4 – Bankruptcy space (i.e. – space that will start to become available with little to no warning over the next year)

I was standing in an office yesterday that will likely become bankruptcy space before Easter. One-quarter of a floor will become available as a private, junior O&G has bullets put in it.

With this much downward pressure on office space, it’s practical that our new lease in 2017 might be in the range of 33 to 50% of our existing rate.

The carnage in Calgary is far from over.

Everyone else’s mileage may vary.

#120 Ralph Cramdown on 10.21.15 at 10:52 pm

#96 Brian Ripley — “If our private sector does not want to build affordable housing, and if we don’t want the public sector to have to pick up the tab, then perhaps it’s time to look at partnering with foreign investors who are in love with negative yields. That we can provide.”

I don’t really understand what you’re saying. The private sector is building a lot of housing, at least as much as is required by household formation. It sells selling, so in some sense it’s affordable. As newer homes are often fitted with more luxury features than old stock, perhaps poorer people buy the older homes at a relative discount?

There isn’t much to be done about buyers who are price takers, is there?

#121 boonerator on 10.21.15 at 10:55 pm

We have to remember how much of the Liberal gain was revulsion from the Conservative(Harper) style of governing.
New Conservative leader, more like Stanfield (I voted for him in 68), and JT will have to work much harder to keep the ABC votes that went to him this time.
Lots of people will feel that they can vote Conservative again.

#122 timbitenomics on 10.21.15 at 10:55 pm

I am going to go on the line and predict that Trudeau’s next big policy announcement will be to slowly increase the size of the whole in the donut, in line with the sinking economy…..people will not notice on a daily basis, but don’t mind as people will buy even more i.e. spend more and more but receive less and less….but by the end of 4 years, that donut’s gonna resemble an anorexic pretzel…you heard it here first, timbitenomics…..

#123 VanMan on 10.21.15 at 10:56 pm

Big cuts coming in Van corporate job market. There is chatter everywhere and lots of people are terrified they will be out of work by Xmas… everything is slowing down and cuts are on the way.

#124 batt519 on 10.21.15 at 10:58 pm

#116 Unfortunately(because I don’t particularly care for him personally) his taken out of context statement is somewhat correct. But we’d have to be in a period of somewhat sustainable economic expansion to experience that phenomenon.

#125 Mark on 10.21.15 at 11:00 pm

“It was wonderous to hear that a 30 Billion dollar deficit borrowed from the bond market would go unnoticed, and would be some drop in tbe ocean. On a GDP basis, it is small, but it is a large share of foreign currency that must be exchanged to buy the bonds.”

What makes you think that the $30B would have to be borrowed from foreigners? Most GoC debt, BTW, is held by Canadian entities in Canada and interest upon such is paid to Canadians. So no forex involved.

We’d love to hear a valid rationale for why Canada’s $1.3 trillion mortgage debt can’t be even higher. That’s no where near the max.

With ownership rates at record highs with only limited possible upside arising from such? With the demographics for RE looking horrible over the next few decades as the number of >65-year-old RE sellers out-number the number of <18-year old potential buyers? With the RE marketplaces' overall capitalization being at an abnormally large ratio compared to that of Canada's stock of publicly traded corporations?

"Possible", of course. But highly implausible.

As the U.S. economy continues to do well, the number of available job openings boom as employers can’t find enough people to hire.

Wow, are you ever gullible if you believe any of that narrative whatsoever.

#126 Smoking Man on 10.21.15 at 11:00 pm

#118 common sense on 10.21.15 at 10:49 pm
Smoking man #109

Your a joker and a smoker…a midnight toker.

Likely getting your chic lovin on the run to…

……..

Your good.
..

Some people call me the space cowboy, yeah
Some call me the gangsta of love
Some people call me Maurice
Cause I speak of the pompatus of love

People talk about me, baby
Say I’m doin’ ya wrong, doin’ ya wrong
Well, don’t you worry baby
Don’t worry
Cause I’m right here, right here, right here, right here at home

Cause I’m a picker
I’m a grinner
I’m a lover
And I’m a sinner
I play my music in the sun

I’m a joker
I’m a smoker
I’m a midnight toker
I sure don’t want to hurt no one

Cause I’m a picker
I’m a grinner
I’m a lover
And I’m a sinner
I play my music in the sun

I’m a joker
I’m a smoker
I’m a midnight toker
I get my lovin’ on the run

Well, You’re the cutest thing
That I ever did see
I really love your peaches
Wanna shake your tree
Lovey-dovey, lovey-dovey, lovey-dovey all the time
Ooo-eee baby, I’ll sure show you good time

Cause I’m a picker
I’m a grinner
I’m a lover
And I’m a sinner
I play my music in the sun

I’m a joker
I’m a smoker
I’m a midnight toker
I get mu lovin’ on the run

Cause I’m a picker
I’m a grinner
I’m a lover
And I’m a sinner
I play my music in the sun

I’m a joker
I’m a smoker
I’m a midnight toker
I sure don’t want to hurt no one

Wooo Woooo

People keep talking about me baby
Say I’m doin’ you wrong
Well don’t you worry, don’t worry, no don’t worry mama
Cause I’m right here at home

You’re the cutest thing I ever did see
I really love your peaches want to shake your tree
Lovey-dovey, lovey-dovey, lovey-dovey all the time
Come on baby and I’ll show you good time

Read more: http://artists.letssingit.com/steve-miller-band-lyrics-the-joker-8bcxlbn#ixzz3pGIOUl5t
LetsSingIt – Your favorite Music Community

#127 like the Aussie on 10.21.15 at 11:14 pm

Ouch! 70% drop

http://www.bloomberg.com/news/articles/2015-10-21/sydney-housing-boom-is-over-as-price-growth-slows-domain-says

#128 Christopher Lackey on 10.21.15 at 11:24 pm

Remember last year? When health care stocks posted those lights out returns? Yeah banks and resources you’re a sucker. Concordia Healthcare started the year at 6 bucks and was over 30 at year end. Valeant, after almost hitting $200, settled down at about $120 (vrx used to be a 12$ stock

2015 rolls around, and VRX and CXR just keep on rolling. Concordia hit 110$ on Sept 4, Valeant $350 on Aug 5. Valeant joined ignominious company in becoming the 3rd company (after rim and nortel) to pass the banks for biggest market cap on the tsx.

Now? Both companies traded at times today for a third of what they did in the past three months. A quick look at Google finance reveals balance sheets with debt levels that would make the most wildcat dividend paying oil junior blush. My point is that how many people who took the elevator up got off at or near the top floor. This is a cautionary tale of speculative bubbles. At least the banks and oil majors have continued paying dividends despite flat or declining stock prices all through this madness
Slow and steady wins the race

#129 tundra pete on 10.21.15 at 11:36 pm

Jeepers Garth, you almost had me feeling sorry for poor realturds. Poetic justice or the old saying; what comes around goes around?

Almost as pathetic as that a$$hole Harper thinking the price of oil would never go down, particularly bitumen, slowly becoming the scurge of Alberta.

Perhaps True-dough infrastructure spending will include burying that bitumen back in the ground in Ft. Mcmisery.

#130 kilby on 10.21.15 at 11:38 pm

#64 Ogopogo on 10.21.15 at 8:00 pm
If you really want to know what that risk looks like, take a gander at cowboy country, where truck nutz are shriveling in the chill.

Speaking of which, I noticed fewer Alberta plates in Kelowna. The shriveling is driving the normally boastful Alabertamians away from their playground in the Okanagan. Business is starting to feel the chill here, with less oil sands money flowing in.

Two trips through the Okanagan in the last 2 months and was reminded of why we moved out 4 years ago after 25 years in Summerland, the valley is still plugged up with F-150 Harley Davidson pickups….

#131 HAsh on 10.21.15 at 11:39 pm

Hi People, Can someone tell me why preferreds and preferred ETF’s have been going out significantly over the past couple of days? Insight will be helpful.
Thanks,

#132 stage1dave on 10.21.15 at 11:43 pm

Has it occurred to anyone else on this forum that gov’t in general might revert to just being gov’t if there wasn’t as many businessmen (and women) so damned concerned about having their phone calls returned?

Or am I the only “businessman” who goes to the next job not really giving a damn who is sitting in the legislature? NDP, PC, Lib, Green; they’re all gonna get a piece of what I’m making…I don’t go to work needing (or wanting) to know the gov’t “has my back”. They got elected because there’s more important things for them to worry about. (roads, infrastructure, health care, royalty rates, etc)

However, the last few months have me wondering…bodyshop owners, car dealers, welders, plumbers, motorcycle mechanics, wheelchair salesmen (you might think I’m kidding, but I’m serious) vactruck drivers, my MIL (!) all raving about the “damned Dippers” & that “F’n Trudeau”…and how “they’re gonna kill this province”…huh? The international oil market cartel seems to do that all by itself once a decade, and tunnel vision (both the short and long term variety) on the part of many of it’s victims will probably accomplish the rest. Where the hell have these people been for the last 40 yrs? Pluto?

Just why is it “the governments” priority to make sure these peoples’ showrooms are full, their orderbooks bulging, & their timetickets maxed out? Look in the mirror, indeed; I kinda thought that’s why these people (and myself) are in business…aren’t we supposed to do everything we can to make that happen? Or just blame someone else when it doesn’t?

And all these “fleeing investors”? Do they not like the price of oil; crashing FT Mac RE; or is the NDP not “their kinda people”? Perhaps they could relocate to SK; where the PC’s still govern…that will make them comfy. Won’t help the price of oil (apparently, it’s set somewhere else) but at least there will be sympathetic ears in Regina.

Obviously, any gov’t that does not espouse a strict Chamber of Commerce view is going to negatively influence “business confidence”, resulting in “fleeing investors”. Just what are these people “comfortable” investing in? And with whom? And how tightly should their hands be held? (true investors don’t “flee”; they double down! Buy when things are blackest!)

Put succinctly; maybe what’s needed is for “investors” to invest in “some-thing” or “some-one” instead of “some-paper” (guaranteeing some rate of future profitability for years to come; but whose value will probably go up and down like a toilet seat, much like the debates over it’s “true value”…until some scam artist or investment bank craters the value to zero, after making out like bandits…and blames it all on someone else)

In a perfect world, they’d be so damned busy looking after their investments and doing business with other busy investors they wouldn’t have time to notice the friggin’ NDP just banned menthol cigarettes…bastards!

Maybe that’s why this country doesn’t build too much stuff anymore…too risky…not the right kinda people…no guaranteed return…hmmmm…better move to the USA…taxes are cheaper…

(Btw, I was only out on my prediction of an “almost NDP majority” by a one hundred or so seats)

#133 OXI in GREECE !! on 10.21.15 at 11:52 pm

#123 VanMan on 10.21.15 at 10:56 pm
Big cuts coming in Van corporate job market. There is chatter everywhere and lots of people are terrified they will be out of work by Xmas… everything is slowing down and cuts are on the way.
<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<
I wonder how many GOVT jobs will be lost – LAUGH OUT LOUD !!

#134 Clueless on 10.22.15 at 12:14 am

Would you pay 1300 to live in a mold infested 1 bedroom house? My cousins landlord seems to think so! cousin said screw u made an offer on a house at 40 percent off and guess what seller jumped at the offer lol.

#135 Bob Santarossa on 10.22.15 at 12:26 am

#58 Retired WI Boomer: So true what you say.

It will take a year before the Liberal budget affects the economy. Blame or laud the Conservatives for what happens in the economy in the next year.

And Garth, in 2006-07, Harper inherited a surplus of $13.8 billion which he turned into a deficit of $55.6 billion (3.6% of GDP) by 2009. This year 1st surplus in 9 years ($1.9 billion).

Explain how that amount of borrowing then did not affect mortgage rates:

a) $55.6 billion in 2009 and you generally agree with #30 MoneyDriven’s analysis.

b) We have a $1.9 billion surplus now.

c) $30 billion projected deficet in 2016-2017 under Trudeau = net $28.1 billion deficet (30 – 1.9).

d) Much less than $55.6 billion in 2009.

e) About the same as the deficets in 2011/2012 ($25 to $26 billion).

f) In 2009 variable mortgage rates were at 2.4% and increased in the range of 2.8 to 3% over next 6 years.

Explain how rates will go up under Trudeau when they barely budged under Harper?

Not trying to be a butt head. I understand the theory, just explain why it did apply from 2009 to 2015. There has to be a reason and I do not know it.

#136 Vampire studies GMST 454 on 10.22.15 at 12:52 am

38 Zorba – a defecit would then be “investing” with borrowed money.

40 boopsie – if we each vote in our own interest we will get the government for the common good and big picture.

#137 Mark on 10.22.15 at 1:22 am

Some pretty shocking numbers on the GoC’s debt situation.

September, 2005 — $382B
September, 2015 — $641B

http://www.bankofcanada.ca/stats/goc/results/27487
http://www.bankofcanada.ca/stats/goc/results/20451

It gets far worse when you consider that such debt is marked at par, has seen the benefit of a significant fall in average interest rates, and that CMHC liabilities have likely been severely under-stated.

I knew Harper had run up a bunch of official GoC debt, but I never realized that it was [I]this[/I] significant! $259B change over the past 10 years!!

For comparison, add another data point, in 2003:

September, 2003 — $392B

http://www.bankofcanada.ca/stats/goc/results/20451

#138 BS on 10.22.15 at 1:25 am

It would be total madness if this hadn’t been a one-way winning bet for 15 years. Bears have been predicting the end/madness/stupidity of the Lower Mainland market for 10 years, and yet the buyers of single family homes have made out like bandits.

The ONLY buyers that have made out like bandits are those that have sold and not bought again. That is few. The people that bought 5 or 10 years ago still live in the same house. The house didn’t get any nicer. In fact it is not as nice as it once was. Unless they sell and exit the market they have gained nothing.

#139 big dipper on 10.22.15 at 1:32 am

Of course there will be an Alberta deficit. Their main source of income just went to zilch.
Of course there will be tax increases to pay for healthcare, schools, roads, sewage treatment and other items people insist on having.
Of course Garth will blame the NDP for all of the above. Ideological mindset.

#140 DON on 10.22.15 at 1:50 am

Elizabeth May as environment minister

If Trudeau sweeps up the Green support in BC, Fed Liberals have a good chance of getting elected in more ridings.

I hope she doesn’t do it – Her Party will grow now. Especially in the coastal areas. Giving her a legit role would show his leadership skills. We’ll see how this play out.

Alright no election talk.

Thanks for the financial advice (everyone) but especially our host.

#141 Great Canadian Bubble Co. on 10.22.15 at 2:02 am

Bloat can last for decades. As long as politicians are left to make the changes to Canadian real estate we will be waiting a long time. No elected official would ever risk losing their seat by moving against 70% of the population.

#142 ApplePi on 10.22.15 at 2:15 am

So having a Liberal government sounds like it means mortgage rates go up. It would seem that Garth should be happy as this will fizzle the housing market faster than cons would have.

#143 Freedom First on 10.22.15 at 3:23 am

#104 Smoking Man

I wanted to see what it felt like to not intentionally or unintentionally insult someone for an entire 24 hour stretch. I am failing. I think it’s Trudeau’s fault. He admitted he is a feminist. This part would be deleted.

#144 BC Guy on 10.22.15 at 3:34 am

“And now we have a national government committed to at least $30 billion in new deficit spending, which will pressure the bond market and raise mortgage rates.”

Great. Hopefully it will caused the housing bubble to pop so that prices start to come back down to Earth. This will flush out a lot of real estate speculators, the rich folks who have bought up two or three houses/condos making it impossible for the average Joe-bag-of-donuts to get into the market.

Rising interest rates will punish borrowers with excessive debt. It will then start to make sense to be a saver again. Savers have been punished for the last, oh, 10 years or so, forcing them into risky assets like equities and preferred shares which crashed 10-15% this year.

Also, the benefit of increasing taxes on those earning over $200k will be this: Boomers in their late 50’s and 60’s in the high-paying jobs and professions will decide that it ain’t worth working and clinging on to their job forever, they’ll decide to retire. That will open up some of the lucrative jobs to us younger folk who have been shut out of the job market.

So, in summary, lots of good things to come:

1. Housing bubble pop. Ultimately much cheaper houses.
2. Increased interest rates leading to savers being rewarded not penalized.
3. More jobs from infrastructure projects as well as more jobs from retiring Boomers who feel they are being overtaxed.
4. The federal debt and deficit will rise which is not a good thing, but hey, it’s not my f’n problem.

#145 Freedom First on 10.22.15 at 3:35 am

#114 young and foolish

Yes, you most certainly are young and foolish.

Being liquid, diversified, and balanced is always the best strategy. No exception. None. 0. At no time. Ever.

#146 Buy? Curious? on 10.22.15 at 3:37 am

*sigh* After talking to the Mrs, we are putting our house up for sale in Feburary and planning to rent for the next 18 months – 3years. You are right Garth. (There! I said it! Now can you tell me the Netflix password!)

#147 BC Guy on 10.22.15 at 3:42 am

The Poop Problem: What To Do With 10 Million Tons of Dog Waste:

http://www.livescience.com/44732-eliminating-pet-poop-pollution.html

Jerry Seinfeld: Dogs Are The Leaders Of The Planet

https://www.youtube.com/watch?v=IuH6XdSh5tk

#148 Londoner on 10.22.15 at 4:31 am

#75 Millenial

Love your sarcasm man. But you’re right about one thing – we have a bunch of millennials where I work (in finance) and they’re mostly useless. I say “mostly” because if there’s one thing these millennials know, it’s how to make a mean macchiato ;)

#149 Londoner on 10.22.15 at 5:16 am

#41 ben on 10.21.15 at 6:52 pm
To say BoC doesn’t consider indebtedness when setting rates is nuts. Get in the real world people.
___________________________________________

Of course they don’t – you can even read about it in the link that Garth posted the other day. It’s something some central bankers want to consider but not currently part of the equation. Current policy in it’s simplest form looks like this:

Stimulate business investment and spending with low interest rates
+
Raise/maintain asset values (e.g. real estate and investments) to create a wealth effect
+
Maintain reasonable trade balance
=
wage inflation and an increase in consumer spending based economic growth

Current rises in consumer debt levels are transitory factors and will be balanced by real wage inflation. Of course it won’t be equal for everyone but you get the general idea.

As for the UK, I’ve been saying for a while that the BoE will not raise rates despite having the fastest growing economy in the G7 and low unemployment. Why? Because they still haven’t seen any sustainable wage inflation.

Well now the UK government is planning to get CGN to build a nuclear power plant in Somerset. You can bet I’ll have left these shores before they fire that sucker up (hopefully back to my “home and native land”).

#150 Rick in Japan on 10.22.15 at 6:19 am

250,000 Syrians by the end of the year…

Trying to help the housing??

Canada gets what it deserves.

Glad I left

#151 Eaglebay on 10.22.15 at 6:35 am

#80 it’s a new day on 10.21.15 at 9:02 pm
#31 Michael King on 10.21.15 at 6:39 pm

On his first day on the job, Trudeau actually spoke to the press and suspended our military actions in Syria. Have to like that. What a nice change!
___________
Trudeau is not the PM yet. He cannot make decisions until appointed by the GG.
Beside, Obama hasn’t given his OK yet.

#152 Mark on 10.22.15 at 7:31 am

“Stimulate business investment and spending with low interest rates
+
Raise/maintain asset values (e.g. real estate and investments) to create a wealth effect
+
Maintain reasonable trade balance
=
wage inflation and an increase in consumer spending based economic growth “

The problem with such a strategy is that stimulating asset values doesn’t work in the long term. It only ends up causing the formation of too many new assets, which gets them right back to square one — falling asset prices.

That’s why, as I suggested (and was promptly shot down by Garth), other taxation measures are important. Such as small/large business tax parity. Emphasis on increasing productivity through a higher minimum wage (forces businesses to substitute capital for labour which inevitably leads to higher living standards). More flexible capital markets and regulations. Low barriers to entry in the financial sector to discourage the formation of significant pricing power and rent-seeking amongst financial intermediaries. Reduction of taxes on capital.

Some of the most successful Asian economies over the past few decades are those in which an overall ‘systems engineering’ approach was taken towards integrating tax, fiscal, social and economic policy. I’d highly encourage Canada’s new leadership to adopt such principles, rather than the patchwork of frames of reference in which current legislation is examined before being passed into law.

#153 Dominoes Lining Up on 10.22.15 at 7:55 am

Japanification is here. The economy is swooning, and unlike the 1990s low loonie era, the manufacturers have turned to Mexico and China instead of us. We get no rebound boom this time.

I think this is a key force that drove so many to vote for the Liberals Monday, a sense that their middle class aspirations are truly in peril and at least Trudeau was offering hope.

Infrastructure spending will cover up some of this reality perhaps, for a while. But what after?

Meanwhile, climate change is accelerating, threatening the other side of our balance sheets with huge unforeseen expenses.

http://www.cnbc.com/2015/10/21/last-month-was-the-hottest-september-on-record-noaa.html

Hottest September, hottest year. So it continues.

Really smart and courageous spending now would see us invest billions in non-oil energy alternatives, and get those vehicles etc… on the road soon. But even the NDP was too gutless to let its candidates speak about the need to leave tar sands oil in the ground. I don’t see us seizing this more risky opportunity – instead we’ll be passed by, by more aggressive countries. And don’t think we can all go back to the farm and start over; TPP will make mass purchase of our arable land easier for foreigners. Remember, that early in our history, immigration of the poorer among us to rural areas was a key driver of personal freedom and democracy.

The 2020s are lining up to be very grim indeed.

Real estate values by then may well be just a fraction of those now. More Detroit than San Francisco in Canada, I fear.

Those who have lived most of their working lives to this point will not likely see much to envy in the decades ahead, sadly.

There seem to be no leaders around with the possibility of truly addressing what we will be confronting.

#154 Sean on 10.22.15 at 8:08 am

#60 Linda on 10.21.15 at 7:46 pm

So what makes the fact most people have the self control of a two year old set loose in a candy shop w/o supervision when it comes monetary discipline the governments fault?

————–

In a free market society, composed of self respecting grown ups, this would be accurate. Unfortunately, in the great socialist utopias of western democracies, in Compassionate Canada… the government will come to the rescue of those irresponsible, by “redistributing” wealth in the future. The government is the two year in the candy shop when it comes to personal and collective self responsibility.

#155 The American on 10.22.15 at 8:35 am

And The Daily Show’s perspective of the recent Canadian election, after the fact… LMFAO! Also, no offense, but please take Drake back. Those are the most embarrassing moves ever, and their making headlines from coast to coast…. and not in a good way.

http://www.cc.com/video-clips/b9zumi/the-daily-show-with-trevor-noah-canada-s-hot-new-prime-minister

#156 The American on 10.22.15 at 8:40 am

I’m sorry… I just have to post it again. LMAO. Thank you, John Oliver!

https://www.youtube.com/watch?v=0V5ckcTSYu8

#157 pbrasseur on 10.22.15 at 8:56 am

Some seem to somehow doubt we just elected a tax and spend government!

But just look at their promises, it should be plenty enough to convince you:

Spending and income reduction:

150 million to the CBC (no wonder they support him)
180 to 360 million to the Art Council
Cancel Canada Post decision to stop home delivery in cities
125 billions on infrastructures over 10 years
No toll on new Montreal Champlain bridge (busiest in Canada)
Bringing back pensions at 65
Enhancing CPP
10% more for income supplement
Enhancing health transfers to provinces
Child allocation improvements
Tax cut for small businesses (11 to 9%)
2% tax cut for middle class

Etc….

All financed by:

Hike income taxes to 33% for incomes over 200K
Slashing TFSA in half
New carbon emission plan
Cancelling income sharing

And of course more borrowing (which is in fact delayed taxes)

Now if this doesn’t correspond to a tax and spend/reduce inequalities (in short socialist) agenda I wonder what does!

#158 DJIM on 10.22.15 at 8:59 am

Inflated house prices support record debt to fund the housing industry to support a faltering oil industry to barely squeak us out of a recession. I think we may need $30 billion investment to get keep the economy from collapsing on us!

The economy will grow by 1% this year. Grow…not collapse. Don’t let the political rhetoric muddle you. — Garth

#159 Leo Trollstoy on 10.22.15 at 9:19 am

#137 Mark on 10.22.15 at 1:22 am

Doesn’t look that bad.

Post the debt adjusted for inflation. And relative to GDP.

If you can.

#160 Ralph Cramdown on 10.22.15 at 9:22 am

#156 pbrasseur — “Some seem to somehow doubt we just elected a tax and spend government!

The two most important things I expect my governments to do are:
1) tax, and
2) spend

Saying you don’t want a tax-and spend government is saying you want a government that does nothing, and does it for free.

Under the Harper government, doing my income taxes became a longer and more arduous task, and tax planning got more complicated. The size of the deficits while he was in office and the debt as it stands today suggests he was active on the ‘spend’ side as well.

I realize that the “tax and spend” meme has been around for so long that many people use it as a shortcut to demonize their political enemies, but THINK about the words you are using.

#161 Adam on 10.22.15 at 9:24 am

Now we find out if the Libs can dump this money into the economy in ab efficient way. Fortunately, the unions seemed to really believe it the the Dippers turn and put their support their so I don’t think the Liberals owe them too many favours. If this money can actually get put into infrastructure without any massive pay raises for everybody involved then we might not be doing so bad.

#162 pbrasseur on 10.22.15 at 9:24 am

#157 DJIM I think we may need $30 billion investment to get keep the economy from collapsing on us!

No we don’t, not at this point anyway. Here’s the reason why:

The Canadian economy needs to correct BEFORE you start throwing government money at it, otherwise it won’t correct properly, all you’ll end up doing is to (somewhat) maintain a non-viable situation, making it worse in fact because you will have wasted precious manoeuver margin for when the real problems arrive.

Markets need to do their job before you throw money at them to alleviate the pain. Governments do not have the capacity to rebalance/restructure economies on a viable path, markets can and they do it through corrections, sometime painful ones, they will correct no matter what, the longer you try to prevent that through artificial means the worse it’s going to be.

#163 Leo Trollstoy on 10.22.15 at 9:25 am

http://www.cbc.ca/m/news/business/u-s-economy-expanded-by-3-9-in-second-quarter-1.3243359

Remember when the U.S. growth was revised upward to almost 4% in the 2nd quarter? Amazing. Looking forward to more upward revisions. U.S. economy is lookin good!

#164 Ralph Cramdown on 10.22.15 at 9:31 am

#153 Sean — ‘In a free market society, composed of self respecting grown ups, this would be accurate. Unfortunately, in the great socialist utopias of western democracies, in Compassionate Canada… the government will come to the rescue of those irresponsible, by “redistributing” wealth in the future. The government is the two year in the candy shop when it comes to personal and collective self responsibility.’

I think you’ve got this a bit backward, ironically in your use of ‘Utopia.’ It is you who are describing Utopia when you dream of a society inhabited by rational economic actors. Homo Economicus makes a handy model for the equations they crank out at the University of Chicago, but decades of research has definitively shown that the average man in the street is an irrational economic dolt. This isn’t new or secret — it’s so mainstream that it was awarded a Nobel over a decade ago.

Whether we can afford to collectively subsidize each others’ economic foibles is another issue entirely, but to suggest that government should make policy for an ideal race of Vulcans rather than for the flawed clay it actually represents is ludicrous.

#165 Jamie Dimon on 10.22.15 at 9:36 am

So, houses in Fort Mac are down 200 g’s? I don’t think we’ve seen bottom or who knows how long OPEC’s middle finger stays pointed at the west but Fort macs oil is still there and the world still runs on the stuff, when do we start talking investment strategies, relating to housing in struggling, commodity dependent areas.

#166 Bottoms_Up on 10.22.15 at 9:37 am

No ads. Just me. Nice beard, though. — Garth
————————————
Ahhh, there’s the Garth we’ve grown to love. Thought you were losing your comedic side in the red tidal wave.

#167 The Other Chris on 10.22.15 at 9:52 am

@93 james on 10.21.15 at 9:38 pm

That’s a good observation. You’re right, more and more in Ontario the only people who have “middle class” disposable income are either public sector or the broader public sector.

I don’t even consider myself middle class anymore. I have a reasonably high income (nominally enough to put me in the top 8% of earners in Canada), but my wife doesn’t work, and after all manner of taxes, rising energy prices, and the rising cost of living, we basically have very limited disposable income.

Private sector businesses are hurting, and the private sector middle class is disappearing in Ontario. It’s not my preferred solution, and I’m not necessarily proud of it, but I have a number of job applications in with the Federal government. Trying to stay afloat for the future.

#168 pbrasseur on 10.22.15 at 9:55 am

#163 Ralph Cramdown

Libs agenda leads to more spending and (obviously) more taxes. I you think this is wise just say so and why.

A fact’s a fact!

Sure Harper increased the debt, mostly by getting through the great recession, but then he made efforts to rein in spending and deficits.

#169 young & foolish on 10.22.15 at 10:27 am

” My point is that how many people who took the elevator up got off at or near the top floor. This is a cautionary tale of speculative bubbles. At least the banks and oil majors have continued paying dividends despite flat or declining stock prices all through this madness
Slow and steady wins the race”

Well, you have to ride the wave up, and not get greedy. And you don’t need to do this with your whole portfolio. I agree that financials have been relatively steady, but they too will soon come under “disruptive technology” pressures.

#170 Nora Lenderby on 10.22.15 at 10:30 am

#163 Ralph Cramdown on 10.22.15 at 9:31 am
decades of research has definitively shown that the average man in the street is an irrational economic dolt.

lol…don’t forget your average wimmin – apparently they are all hysterical kitchen-obsessed Barbie wannabes…

Just kidding…but you have summed up what the problem is and what this blog is about.

It seems that government policy over the last few years has made the personal and government debt situation worse (we were already strung out in 2011). Although popular in certain circles, it wasn’t prudent and has resulted in significant distortions and a lack of resiliency.

Let’s hope the next bunch prove to be no worse.

#171 batt519 on 10.22.15 at 10:41 am

#158 Trollsky

So the debt will take care of itself? ;)

#172 Hank Daniels on 10.22.15 at 10:44 am

Ya’ll really need to read this article regarding the TFSA clawback and get behind a massive protest to back the goons down from lashing out at private citizens while leaving the public service to gorge in the trough.

http://business.financialpost.com/personal-finance/managing-wealth/cutting-tfsa-limit-unfair-when-our-tax-dollars-pay-for-gold-plated-public-pensions-citizens-group-charges

Paying for life on savings you’ve already been taxed on is gouging…plain and simple.

#173 Retired WI Boomer on 10.22.15 at 10:45 am

Bravo…. The newly elected PM has chosen to get out of the Syrian mess, but not quite….

While ending the air works he did commit to retain training.

I would have preferred he got ALL the support out of Syria.

A clear, definitive message that can not be misunderstood.

Politicians can speak out of both sides of their mouths at the same time, thus allowing people to only hear ‘their’ message. I mostly fear what the US neo-cons have done, and are doing. The smart will get as far away from them as possible.

We have our own contest in 2016 for “leader” and right now can’t even hoist up a speaker of the house. Yeah…

#174 pbrasseur on 10.22.15 at 10:48 am

A nice plea in favor of 10K TFSA

http://business.financialpost.com/personal-finance/managing-wealth/cutting-tfsa-limit-unfair-when-our-tax-dollars-pay-for-gold-plated-public-pensions-citizens-group-charges

#175 Ralph Cramdown on 10.22.15 at 11:02 am

#167 pbrasseur — “Libs agenda leads to more spending and (obviously) more taxes. I you think this is wise just say so and why.”

I think it’s a good idea, because I believe in Keynesian economics. The economy is running below capacity (says the Bank of Canada), we have crappy infrastructure, and the Federal government has the balance sheet. Building long lasting infrastructure with money borrowed at lifetime-low rates is stimulative, and smart besides. Redistributing some money from people who don’t spend their surplus to people who do is stimulative.

“Sure Harper increased the debt, mostly by getting through the great recession, but then he made efforts to rein in spending and deficits.”

He cut the GST when the economy was already doing well, stimulating it even more and reducing the government surplus. This gave him less flexibility when the Great Recession hit, so he relied on a housing bubble to keep Canadian demand somewhat stoked. Then, in the face of a slow and uncertain economic recovery, he reduced Federal government spending (in real dollars per capita) in order to achieve his stated goal of a balanced budget in time for the election — much good that it did him. Keynes would have given him an F. But what could we expect from an economics grad who specifically referenced Keynesian theories in his thesis anyway? If only he’d done a better job of convincing the middle class that they were doing just fine.

#176 Daisy Mae on 10.22.15 at 11:10 am

#16: “Oh, please. Even the Fraser Institute admitted that we can’t blame the NDP for all Alberta’s woes before they even have a chance to act….”

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

Appears to me, the new Alberta NDP and the new federal LIBERALS are now left with the task of cleaning up the mess left behind by the Conservatives….provincially and federally.

#177 Figmund Sreaud on 10.22.15 at 11:13 am

… gush it to US markets, where frackers can produce at a fraction of the cost.
________________________________________

Really Mr. Turner? Is that why oil companies, in the U.S., are laying off staff, cutting budgets and selling assets?

Anyway, … your comment, I suspect, is based on this:

https://raymondjames.bluematrix.com/sellside/EmailDocViewer?encrypt=c68c6e0f-f471-4e22-b90b-f7138304a6cf&mime=pdf&co=RaymondJames&[email protected]&source=mail

Correct?

F.S. – Calgary, Alberta.

My comment is correct. Fracking oil is far cheaper than sautéing tar sands. And, no, never read that. — Garth

#178 Leo Trollstoy on 10.22.15 at 11:16 am

The Conservatives will be remembered by subsequent generations as presiding over growing house and oil wealth while the NDP and Liberals will be remembered as presiding over the destruction of the oil sands and housing crash.

Perfect timing.

#179 Leo Trollstoy on 10.22.15 at 11:17 am

NDP and Liberals a.k.a. Bag holders

#180 Keith in Calgary on 10.22.15 at 11:41 am

#177 Leo Trollstoy……

Good name because you are full of shit.

No government controls the price of oil, so none can be blamed for the $120 to $45 decline.

But the conservatives did inflate the housing bubble to it’s epic proportions thru stunning mismanagement designed solely to keep them in power over a couple of elections.

And just so you know, this is coming from a former conservative.

#181 Grey Dog on 10.22.15 at 11:45 am

Hey, what is wrong with living in Uville? My family has lived there for 30 years with no plans to move. I know all the paths and trails as I inspect them every day. Retirement books recommend retiring to a place with lots of trails with destinations at the end of the trails. This is Uville. Schools here are EXCELLENT provincial ratings prove this. What used to be family homes are now being turned into holiday homes, occupied for a week or two each year, as long as the lawn is getting cut every week who cares?

#182 Keith in Calgary on 10.22.15 at 11:50 am

EI claimants up 82.5% in Calgary versus last year at this time…….7,800 files opened.

———————–http://calgaryherald.com/business/local-business/employment-insurance-claims-soar-in-calgary-region

The number of Employment Insurance beneficiaries soared in the Calgary region in August, the 12th consecutive monthly increase, according to Statistics Canada.

The federal agency reported Thursday that beneficiaries in the Calgary census metropolitan area were up 480 people or 2.9 per cent from July. However, year-over-year the increase is a whopping 82.5 per cent or 7,800 people.

In Alberta, the number of EI beneficiaries rose by 150 people or 0.3 per cent from the previous month. Compared to a year ago, it is up by 23,660 people or 82.2 per cent.

Nationally, 7,890 fewer people received regular EI benefits compared with July, down 1.4 per cent, said Statistics Canada. On a year-over-year basis, the number of EI beneficiaries increased by 35,620 or 7.1 per cent.

“Compared with August 2014, there were more EI recipients among workers whose last job was in primary industry (+16.7 per cent), natural and applied sciences (+16.5 per cent), and who worked as trades, transport and equipment operators (+14.2 per cent),” said the federal agency.

#183 Herb on 10.22.15 at 11:52 am

I love the sound of over-torqued wingnuts in the morning!

Keep it up, Trollstoy, pbrasseur, Sean and Company.

#184 Herb on 10.22.15 at 11:57 am

#132 stage1dave,

well said!

#185 kommykim on 10.22.15 at 12:02 pm

RE

#160 Adam on 10.22.15 at 9:24 am
If this money can actually get put into infrastructure without any massive pay raises for everybody involved then we might not be doing so bad.

Yes, because pay raises would be bad for the economy.

#186 Figmund Sreaud on 10.22.15 at 12:23 pm

My comment is correct.
________________________

Let’s agree, … still, most efficient U.S. based oil producers – EOG, Pioneer, Continental – lost between U$10 and U$24 per barrel in the first half of 2015 at average realized crude oil price of U$48 per bbl, … all from the best tight oil plays – Bakken, Eagle Ford, Permian production.

F.S. – Calgary, Alberta.

Source: Company SEC filings and Labyrinth Consulting Services, Inc.

My comment is still correct. Just admit it. Saves time. — Garth

#187 Holy Crap Wheres The Tylenol on 10.22.15 at 12:23 pm

#62 Smoking Man on 10.21.15 at 7:54 pm
Taxes up, big deficit coming. Investment dollars fleeing. Take the blinders off. — Garth
https://ca.finance.yahoo.com/q?s=USDCAD=XXX

Yup.
I saw this coming along time ago. Swapped out a cushy return to my former tax farm gig (three months are up)
Choose the unknown for Casino funding paid in USD.
Its a gamble but thats how I roll… How Ive always rolled.
Plus..took me four years to clean up the mess at tax farm..go back for what…wait for my apps to die..Im the best, my shit dont break. I would be board out of my mind.
How many Canadians do you know would trade safe and secure, dogging it all day, for Adventure the Unknown and hard work.
Not many I bet.
Im an idiot, but a happy one
____________________________________________
True but you are happy!
Told ya though loose the ball and chain and you can be truly creative!

#188 Holy Crap Wheres The Tylenol on 10.22.15 at 12:34 pm

#173 pbrasseur on 10.22.15 at 10:48 am
A nice plea in favor of 10K TFSA

http://business.financialpost.com/personal-finance/managing-wealth/cutting-tfsa-limit-unfair-when-our-tax-dollars-pay-for-gold-plated-public-pensions-citizens-group-charges
____________________________________________
No politician, and I mean NO POLITICIAN is worth these gold plated pensions. In the real world where real people live, struggle and work every day just to see their own pensions from the government redeemed when they retire based on dollars and time worked is fair. Politicians are pigs at the trough feeding as much as they can as fast as they can. In the end they should only get what every other real Canadian gets! You receive what reap and sow. No specials, no favors, no extras for the pigs.

“Comrades!” he cried. “You do not imagine, I hope, that we pigs are doing this in a spirit of selfishness and privilege? Many of us actually dislike milk and apples. Milk and apples (this has been proved by Science, comrades) contain substances absolutely necessary to the well-being of a pig. We pigs are brainworkers. The whole management and organization of this farm depend on us. Day and night we are watching over your welfare. It is for your sake that we drink that milk and eat those apples.”
George Orwell Animal Farm.

#189 pbrasseur on 10.22.15 at 12:34 pm

#174 Ralph Cramdown

«I think it’s a good idea, because I believe in Keynesian economics.»

Been to Montreal lately? The city, in fact the whole region is already a forest of orange cones! And I’m told Toronto is pretty overwhelmed too.
In fact pretty much all major infrastructures in and around Montreal are being redone or about to be via projects already budgeted for. Already productivity in the region is impacted negatively by so much hindrance. How much more can we take without paralysing the city?

As for public transit I’m sorry but building a few more subway stations won’t have much of a structural impact on anything besides the fact that we’ll end up subsidizing a bigger network, so yeah there will be a structural impact, a negative one!

One area we could do better is Universities, many of them are severely underfunded, but that should be done very carefully to minimize waste and there is no need for major deficits for that.

Cutting the GST was a bad idea? Not for the financially strained Quebec government who was quick to use that fiscal space… It was good that it went to the level of government that needed it most.

Ottawa’s doing fine and spending/taxing a lot already, doing more will only hurt.

#190 Quebec is Great on 10.22.15 at 12:38 pm

fyi that dog is a Komondor – for those of us without large farms or sheep herds, a minified version of this dog is available.. known as a Puli.

#191 Holy Crap Wheres The Tylenol on 10.22.15 at 12:45 pm

#267 Herb on 10.21.15 at 5:14 pm
#218 Tylenol,
you know, if you took a whole bottle of Tylenol you would destroy your liver and it would match your Kool-aid-soaked brain.
How many budgets did your idol balance, one (the last) out of eight? Truly an accomplishment to rank with the others on your list!
In the interests of your health and of your sanity, lay off the Tylenol and the blue Kool-aid!
_____________________________________________
Sorry Herb I was busy counting all the money I have made over the last ten years. I was a little preoccupied with the mounds of cash. Hold on while I pop some more Tylenol and wash it down with Blue Curacao liqueur. As I said I have done extremely well over the last decade while Mr Harper was in control. So whats your problem? Oh I get it you love the new guy! I guess your pissed that you where doing it wrong for the last ten years. Don’t worry now you’ve got four years to make it up. Lets all meet here in four years to discuss…………

#192 fancy_pants on 10.22.15 at 12:46 pm

#31 Michael King on 10.21.15 at 6:39 pm

On his first day on the job, Trudeau actually spoke to the press and suspended our military actions in Syria. Have to like that. What a nice change!

lol. doesn’t even have a caucus formed and he is already making single handed decisions. yes, sounds like a refreshing change ;)

http://www.torontosun.com/2015/10/21/trudeaus-first-move-doesnt-bode-well

http://www.huffingtonpost.ca/2013/11/08/trudeau-china-dictatorship-answer_n_4241777.html

http://www.huffingtonpost.ca/daniel-dickin/trudeau-dictator_b_6314494.html

#193 Mark on 10.22.15 at 12:48 pm

“The Conservatives will be remembered by subsequent generations as presiding over growing house and oil wealth while the NDP and Liberals will be remembered as presiding over the destruction of the oil sands and housing crash.”

Sad but true. Of course, correlation does not imply causality. But voters whose personal or business interests favour housing or the oilsands probably will look upon periods of (“Progressive”) Conservative governments with relative fondness.

For people with balanced portfolios, a crash in these sectors doesn’t have to be a negative thing though.

#194 Patrick on 10.22.15 at 1:01 pm

#177 Leo Trollstoy on 10.22.15 at 11:16 am

The more I think about the election the more I wonder if the Cons deliberately threw the election. There was no major “Economic Action Plans” they mostly just did the “Trudeau isn’t ready” schtick plus a lot of “Be afraid, be very afraid” about the economy bit.

Why stay when the political & economic climate is so against your success. Wynne, Notley, a recession brewing. Harper was also oddly cheery and supportive in his speech afterwards. And they still got what 99 seats?

#139 big dipper on 10.22.15 at 1:32 am
**Of course there will be an Alberta deficit. Their main source of income just went to zilch.**

Ya, it did just go to zilch, and the reason that the dippers deserve blame is that as their income went down they told the oil industry to f-ck-off, we don’t need you anyways. So when oil prices return there will be a lag to when Alberta returns to prosperity because the oil industry will look elsewhere. Socialism requires wealth, lots of it, to pay for stuff. Hurting the industry that pays the bills isn’t a good idea.

#140 DON on 10.22.15 at 1:50 am
**Elizabeth May as environment minister**

I hope if she gets it she’ll ban wifi in public places. Those frequencies are killing me.

#195 batt519 on 10.22.15 at 1:04 pm

176&185 SF-The man, GT, is right. The Americans are laying off because ‘The Kingdom’ and every other kingdom with slave labour can produce it cheaper than the Americans who can produce it cheaper than us. Fracking is cheaper(and just as disgusting) as tar sands oil.

177&178 Trollsky-Bang on.

#189 Magyars, in all forms, are beautiful! :)

#196 fancy_pants on 10.22.15 at 1:14 pm

stock markets will crash along with housing when shtf. As much as there is persuasion that you are safer in one over the other, I don’t buy it. both have been bloated with the expanded credit/money supply. I prefer to live in my portfolio, thank you very much

There is zero correlation between Canadian residential real estate valuations and North American equity markets. You just made that up to justify having all your net worth in one place, right? Good luck with that. — Garth

#197 Hope & Change (Canada) on 10.22.15 at 1:15 pm

#188 pbrasseur on 10.22.15 at 12:34 pm
#174 Ralph Cramdown

«I think it’s a good idea, because I believe in Keynesian economics.»

Been to Montreal lately? The city, in fact the whole region is already a forest of orange cones! And I’m told Toronto is pretty overwhelmed too.
In fact pretty much all major infrastructures in and around Montreal are being redone or about to be via projects already budgeted for. Already productivity in the region is impacted negatively by so much hindrance. How much more can we take without paralysing the city?

In Montreal, they just finished 2 major hospitals. The McGill hospital sits smack next to some of the cheapest RE in Montreal. That is, within a 5 minute drive, a nurse or any hospital worker can find really, really affordable housing to buy or rent. This will not last. Already, prices are up considerably.

Also, in the same area, between 2015-2020 they will be spending about 5B$ on the Turcot interchange . Add another 5B$ for the Champlain Bridge.

Yes, a pain in the ass but in the end, the south-west of Montreal will have a brand new highway and bridge.

Already, the is gentrifyication at a furious pace. We haven’t even talked about the subway stations in that area that will get you straight downtown in 10 minutes, the duplexes for 400K, the bike path straight downtown and old Montreal, etc, etc

#198 pbrasseur on 10.22.15 at 1:21 pm

#193 Patrick

«The more I think about the election the more I wonder if the Cons deliberately threw the election. »

No questions the timing is good for the Cons, better to leave now before TSHTF, than later. Given the headwinds and structural defects facing the Canadian economy it will be very difficult for the Libs to look good four years from now.

Harper’s a very smart man, despite having tortured poor Garth :-), I doubt he threw the election but I’m pretty sure he knows this.

#199 Reasonfirst on 10.22.15 at 1:23 pm

“The benefit of the TFSA is sustained long-term growth so this becomes the meaningful retirement vehicle it was always intended to be. The extra $4,500 invested annually over three decades at an average 7% return would amount to $459,000, of which $320,000 is tax-free growth. The obvious capital gains tax saved is $48,000, but the returns would be reduced considerably if tax had to be remitted annually. Additionally, a balanced portfolio would return not just cap gains, but also dividends and interest, which are more heavily taxed if retained in a non-registered account. This is not an inconsequential matter. — Garth”

30 years sure, but my horizon, as a late boomer, is 10 which leaves me with chump change (~$6-7000). So for most boomers (biggest chunk of voters) and a large contingent on this website…

And don’t forget the NPV of any savings at the end of 30 years is about half….

I don’t offer investment advice for people planning to die soon. Try Wood Gundy. — Garth

#200 S.Bby on 10.22.15 at 1:29 pm

#98 Ralph
Re. Valeant:
That was the same problem with Loewen Group in the 1990’s doing acquisitions all over the place competing with Service Corp. for the same funeral homes. Over paying and over leveraged. What a train wreck that was.

#201 Ralph Cramdown on 10.22.15 at 1:30 pm

#193 Patrick — “Ya, it did just go to zilch, and the reason that the dippers deserve blame is that as their income went down they told the oil industry to f-ck-off, we don’t need you anyways. So when oil prices return there will be a lag to when Alberta returns to prosperity because the oil industry will look elsewhere. Socialism requires wealth, lots of it, to pay for stuff. Hurting the industry that pays the bills isn’t a good idea.”

Here’s your hat, what’s your hurry.

Send us postcards. I hear there’s opportunities for joint ventures in Russia. Deepwater offshore’s good, BP just made $50 billion on one hole… no wait, they LOST that much. Shell shows how it’s done in the Arctic. Brazil and Mexico are promising; I understand they’ve almost got the corruption thing fixed. And Nigeria, who could forget Nigeria? Where 1/4 of your oil gets stolen before it gets to the export terminal, and Boko Haram is on the march.

Keep us posted.

#202 fancy_pants on 10.22.15 at 1:30 pm

#57 Estrella on 10.21.15 at 7:37 pm

Trudeau mentioned a 50% female cabinet, however 80% of the MP’s are male. Might be hard to accomplish.

don’t be ridiculous. Wynnie has a taxpayer funded program to correct these problems when nature makes mistakes. Coming soon to a province near you.

http://www.theglobeandmail.com/life/health-and-fitness/health/ontario-to-expand-approval-sites-for-publicly-insured-sex-reassignment-surgery/article25120580/

#203 pbrasseur on 10.22.15 at 1:32 pm

#195 Hope & Change (Canada)

«Yes, a pain in the ass but in the end, the south-west of Montreal will have a brand new highway and bridge.»

Same capacity as before, mucho pain, no gain.

The new Hospitals merely replace old decrepit ones that were close by in both cases, same for the bridges and interchange.

Meanwhile the heath budget growth is being cut. Apart for some minor displacement, the trickling effect is bound to be minimal

#204 steerage steward on 10.22.15 at 1:39 pm

How the Liberal victory is a major setback for Canada’s wealthy.

http://business.financialpost.com/personal-finance/managing-wealth/liberal-landslide-a-setback-for-nations-wealthy

#205 Mike in Edm on 10.22.15 at 1:39 pm

Someone made a comment about how house prices remain very sticky in AB and the only way they’ll decrease is with a big interest rate hike. 12% down in Ft mac and 6% in calgary…. Look at those #’s a few months ago. Prices had barely dropped. There has been a big drop in prices in the last couple months and obviously the longer $45 oil stays around, the worse that’s going to get. It has begun (At least in the prairies).

That commenter also said big deal, prices up in ft mac are now where they were in 2013.. Incorrect. Try more like 2005. The average house is now 550k up there. I lived up there from 2008-2010 and the average house was about $650k, and like garth said, they peaked around $700k. I have a good friend that bought 13 months ago for $700k and I promise you his house is MAYBE worth $600k (if he could find a buyer, which I doubt). Ft mac is getting creamed. And people aren’t going to be able to keep them and just rent them out with 22% vacancy rate. That rate BLOWS my mind because i’m used to ft mac having about a 1% vacancy rate.

#206 Leo Trollstoy on 10.22.15 at 1:43 pm

The more I think about the election the more I wonder if the Cons deliberately threw the election.

Whether deliberate or not, the timing is perfect for the Conservatives. They’re leaving on a high.

Our country’s debt is lower on an inflation-adjusted basis as well as relative to GDP. Oil and housing has boomed during the Harper reign.

Going forward, none of this looks to be getting better. Go NDP/Liberals! I think the Conservatives just sit on their seats and watch the show for the next half decade.

#207 Leo Trollstoy on 10.22.15 at 1:46 pm

Federal debt looked good under Harper. Good luck JT.

http://www.novascotia.ca/finance/site-finance/media/finance/20120615-NBSA3.jpg

#208 Grantmi on 10.22.15 at 1:48 pm

WOw.. just now on CNBC… looks like the US could be headed towards… NEGATIVE interest rates… YOU pay the government for keeping your money in the bank.

Gheee… I wonder how Strip Bar Bouncer JT is going to deal with that, if it lands on our shores….

Oh wait! It will just balance itself!!!

There will be no negative consumer interest rates. — Garth

#209 Leo Trollstoy on 10.22.15 at 1:48 pm

http://www.novascotia.ca/finance/site-finance/media/finance/20120615-NBSA3.jpg

Federal debt looked good under Harper. Hopefully the Liberals can keep the GDP growing strong to match the increased debt. Good luck JT.

#210 Mark in Guelph on 10.22.15 at 1:55 pm

#162 Leo-Looking forward to more upward revisions. U.S. economy is lookin good!

And yet still no rate hike. Why?

#211 batt519 on 10.22.15 at 2:17 pm

#198
-most boomers (biggest chunk of voters) and a large contingent on this website…

…should realize the tax-free gain staring them in the face and take advantage of it before it’s too late. And then, like the host says, max yours’ and the misses’ TFSA. If you can’t stand the thought of selling your casa and renting, then eat cake. Like the moisties now are told.

#212 S.Bby on 10.22.15 at 2:35 pm

#117 Ulsterman
I see it as no different than doubling down at the local casino.

#213 Nemesis on 10.22.15 at 2:44 pm

#”ChampionSimplicity!”… #”GuardAgainstExtravagance!”… #NewDirectivesSanction”GangOfFore”…

[Time] – China’s Communist Party Bans Cadres From Golf, Extramarital Sex and Eating Too Well

…”The new moral guidelines, adopted after an Oct. 12 meeting of the party’s political bureau, urge its 88 million members to “separate public and private interests, put the public’s interest first,” as well as “champion simplicity and guard against extravagance.”

To that end, the new regulation “explicitly lists extravagant eating and drinking and playing golf as violations, which were not included previously,” according to Xinhua.

The party has also narrowed its definition of sexual conduct — a reason often cited in the takedown of government officials on moral grounds — by replacing earlier language pertaining to mistresses and adultery with the somewhat broader and stricter violation of “having improper sexual relationship with others.”…

http://time.com/4082827/china-communist-party-golf-sex-extravagant-meals/?xid=tcoshare

#Didn’tGetTheMemo…

[SCM[] – Economics professor has solution for China’s millions of bachelors: let them share wives, or even marry each other

…”With China facing the prospect of 30 million unmarried men by 2020, an economics professor has proposed a solution – allow poor bachelors to share a wife.”…

http://www.scmp.com/news/china/society/article/1871096/economics-professor-has-solution-chinas-millions-bachelors-let

#214 canwejustfreezetime30yearsago? on 10.22.15 at 2:48 pm

#188 pbrasseur on 10.22.15 at 12:34 pm
“One area we could do better is Universities, many of them are severely underfunded, but that should be done very carefully to minimize waste and there is no need for major deficits for that.”

yeeesh, watch out! Your generation is showing!

Universities are over abundant and utterly misused by the population. Let’s try to move on from 1970 a little bit and not send every kid for liberal arts / engineering degrees.

Canada needs more skilled blue collar workers and fewer over educated debt sponges.

#215 Herb on 10.22.15 at 2:53 pm

#190 Tylenol,

good for you, but I didn’t ask how you did personally, which I would consider irrelevant under the circumstances. I asked how many budgets your man had balanced over the years of his tenure. You know, questioning just one easily verified item on your list of Harper’s accomplishments.

Don’t know if you or I will be around in four years, but if so, happy to discuss.

#216 Figmund Sreaud on 10.22.15 at 2:59 pm

My comment is still correct. Just admit it. Saves time. — Garth
______________________________

Ah, but Mr. Turner, the best remedy for this brief quarrel is to just dig out most current published numbers! Here we go:

Canadaian Oil Sands (Syncrude Mine) current facts are as follow:

– break even price: U$39.49/bbl
– break even price including sustaining capital: U$49.21/bbl

Other current numbers for other Canadian tar-sands:

– Kearl Lake, U$54.02/bbl. (worst position)
– Horizon Mine, U$37.99/bbl. (best position)
– Average for all Canadian mining projects: U$46.24/bbl

For the U.S.:

– EOG, U$44.00/bbl.
– Pioneer, U$54.99/bbl.
– Continental, U$58.94/bbl.

Bestest regards,

F.S.

#217 flabergasted on 10.22.15 at 3:02 pm

#205 Leo Trollstoy on 10.22.15 at 1:43 pm

“Whether deliberate or not, the timing is perfect for the Conservatives. They’re leaving on a high.”

Have you seen the movie “Shutter Island”? How about “Vanilla Sky”?

You are living in a delusional alternate reality of your own creation; Harper was a caretaker PM and we lost a decade to his (literally) uninspired ‘leadership’:

• The dollar is sunk
• Houses are absolutely unaffordable to most Canadians
• Conservatives lost a general election to a 40 y/o who didn’t even want to be PM 6 years ago
• Harper’s legacy, what he’ll be remembered for, is only a list of things he destroyed / disbanded…

…and this is going out on a high!?

Wake up!

#218 Who Cares? on 10.22.15 at 3:04 pm

#149 Rick in Japan
250,000 Syrians by the end of the year…
Trying to help the housing??
Canada gets what it deserves.
Glad I left

Umm, Rick all the best in Japan.

#219 Ralph Cramdown on 10.22.15 at 3:09 pm

#203 steerage steward — “How the Liberal victory is a major setback for Canada’s wealthy.”

If the family that lives in the house pictured in that article isn’t getting most of its’ income from dividends and capital gains, it is doing something wrong. And look at the numbers in the article… a couple of grand more for someone with a wage income of $250k, less than $1k extra for someone with a wage income of $220k? Peanuts.

Really, the article talks about unicorns — people with incomes of $250k or more, all wages, who don’t save anything in tax sheltered accounts. People like that exist?

#220 Ralph Cramdown on 10.22.15 at 3:25 pm

#188 pbrasseur — “Been to Montreal lately? The city, in fact the whole region is already a forest of orange cones! And I’m told Toronto is pretty overwhelmed too.”

In July. Yes, you’ve a fine collection. Yours seemed mostly public sector, but Toronto’s right now is mostly private sector (high rise condos, especially, in the city proper). We block off traffic lanes for that. The City and Province argue over transit, spend money sor studies, then there’s an election and we start all over again. Nothing is ever settled, and long term planning is a fantasy.

How do you spend on infrastructure if your construction crews are already building condos, or other infrastructure? A good question.

#221 dontcallmeshirley on 10.22.15 at 3:34 pm

Mark,

The most efficient amount of leverage for an economy like Canada’s is a great academic discussion that is beyond the scope of this blog.

$641B isn’t alarming at all. If it was alarming, the interest rate on that debt would be much higher than it is.

———————-

#137 Mark on 10.22.15 at 1:22 am
Some pretty shocking numbers on the GoC’s debt situation.

September, 2005 — $382B
September, 2015 — $641B

#222 Blobby on 10.22.15 at 3:38 pm

Hate to throw a wrench in the works Garth, but you actually originally predicted rates would rise two days aft election if Tories didn’t get back in.

As for your comments about liberal deficits. I’d rather planned deficits, with something to show for them (such as more infrastructure, etc). Than unplanned ones, with the only thing to show for it being a temporary fake lake, ads telling us how bad harpers “hair” is, and a wheat board gone to the Saudis.

I said clearly the BoC would not increase. As for deficits, most of the Harper shortfalls were for infrastructure and stimulus spending when tax revenues collapsed. To be fair. — Garth

#223 Mark on 10.22.15 at 3:42 pm

“Federal debt looked good under Harper.”

Really? Adding $259B of it in the past decade after the Libs kept it relatively flat since the 1990s, is your definition of “looking good under Harper”?

Plus we have plenty of evidence that the stock market does considerably better under Liberal reign than it does under the various iterations of the Tories. Those who call a Liberal government a setback to the (stock-owning) wealthy show a profound ignorance of economic history.

#224 The American on 10.22.15 at 4:00 pm

Mark, funny thing… I put my feelers out for a job here in the U.S., and just landed a decent little deal. $230,000 CAD/year, nearly $200,000 CAD in Equity Grants as a sign-on incentive, a cash sign-on award, plus $30,000 granted every year in additional stock should I choose to stay with the company. Of course, they cover 100% of all medical, dental, and eye care as well. In addition, they contribute $6,000 CAD year to my 401K, and provide a target cash bonus each year of $53,000 CAD. 2 weeks paid holiday and 5 weeks additional of paid PTO too :-) Didn’t have any trouble getting the job whatsoever. My company is hiring like crazy, as are most of all the ones I am aware. Hiring is definitely not in a low spot here.

#225 Blobby on 10.22.15 at 4:22 pm

Ok, you are right, it wasn’t a prediction but that the guy was “leaning towards” lowering rates.. I was wrong! Put my hands up.

Now admit you were wrong about all the Harper deficits (which would’ve included this year, if he hadn’t had sold the farm, and dipped into ei and contingency funds).. Smile

(Just ribbing you)

Oh and I thought you said the dollar would nose dive if the libs got elected? Still waiting on that, I have American $ I need to bring over…

Smile.

#226 Chris on 10.22.15 at 4:26 pm

How naive are you people? Of course things are going to get worse for a while – any smart government coming in will go through the books and give the worst case scenario right off the top – things are much worse than we thought, but we inherited this from the last guys. They then have 3 years to right the ship and make things look better, in order to get elected again. I actually think this government is going to make some very good changes and reverse some terrible policies etc, but the short term news will not be good. Just like an investment portfolio tho, it’s the long term that’s important, not what the next 4-6 months look like – those numbers are based on the past, not the future. So, keep some cash handy to buy when things look grim and in 4 years when your portfolio is looking great you can remember this post.

#227 Broke Dick on 10.22.15 at 4:30 pm

#209 Mark in Guelph on 10.22.15 at 1:55 pm
#162 Leo-Looking forward to more upward revisions. U.S. economy is lookin good!

And yet still no rate hike. Why?
===========

They are waiting for the economy to get even gooder :)

#228 pbrasseur on 10.22.15 at 4:33 pm

#219 Ralph Cramdown

«How do you spend on infrastructure if your construction crews are already building condos, or other infrastructure? A good question.»

Good question indeed, surely a sudden and massive increase in projects, public or private is bound to create serious «bang for the buck» problems.

As I said it’s not as if governments are not already spending a lot on infrastructures.

I suspect this new government would be interested in investing in public transit project. I don’t see that much added value for the economy there and since public transit is subsidized, the bigger you make it the more recurrent subsidies you’ll need.

#229 Winterpeg on 10.22.15 at 5:19 pm

Winterpeg real estate is on fire

http://www.cbc.ca/news/canada/manitoba/3-5-m-fire-engulfs-3-storey-apartment-building-in-south-winnipeg-1.3283347

#230 Mark on 10.22.15 at 5:40 pm

“Mark, funny thing… I put my feelers out for a job here in the U.S., and just landed a decent little deal. ….

The vibrancy of the job market for the top 1% of earners is hardly of relevance to the other 99% who generally face poor participation rates, high unemployment (even if not officially reported) and little to no income growth. While I don’t doubt your experience, like the claims of $5M houses being bought up by “foreigners” in Vancouver, it would be completely inaccurate to generalize such against the entire population.

“And yet still no rate hike. Why?”

Because the US economy isn’t improving, duh!

Of course the US economy is improving, with the recovery continuing. Every major data point is consistently supportive of this. — Garth

#231 Hope & Change (Canada) on 10.22.15 at 5:44 pm

So who’s up for having Michelle Rempel as our new conservative PM in 4 years!

Go Michelle! I don’t know her much but she does have nice hair.

What, too early?

#232 waiting on the westcoast on 10.22.15 at 5:47 pm

#151 Mark on 10.22.15 at 7:31 am
“That’s why, as I suggested (and was promptly shot down by Garth), other taxation measures are important. Such as small/large business tax parity. Emphasis on increasing productivity through a higher minimum wage (forces businesses to substitute capital for labour which inevitably leads to higher living standards). More flexible capital markets and regulations. Low barriers to entry in the financial sector to discourage the formation of significant pricing power and rent-seeking amongst financial intermediaries. Reduction of taxes on capital.

Some of the most successful Asian economies over the past few decades are those in which an overall ‘systems engineering’ approach was taken towards integrating tax, fiscal, social and economic policy. I’d highly encourage Canada’s new leadership to adopt such principles, rather than the patchwork of frames of reference in which current legislation is examined before being passed into law.”

Increasing minimum wage will drive companies to invest in capex which will result in higher unemployment.

Any centralization of economies leads to lower productivity. China may have had some success (as did Japan before it) at early stages of industrialization/mechanization, but the freer the economy to innovate, the more flexible and resilient it will be to develop. The US’s strength comes from the combination of rule of law and creativity allowed by the creation and destruction of firms due to competition and openness.

#233 Mark on 10.22.15 at 5:52 pm

• The dollar is sunk
• Houses are absolutely unaffordable to most Canadians
..

I’d just add….no recovery in Canada’s tech sector. Bombardier on its deathbed. Ontario manufacturing in dire straights. The CRTC being run out of a Cabinet Minister’s office. Horrific levels of underemployment for much of Canada’s engineering community (internal brain drain!).

I’m not sure that Canadians actually wanted Justin Trudeau, more than they wanted to reject the systemic economic mismanagement of the previous Harper government. The election, and where the Tories won and lost, was an obvious verdict on overall economic management.

#234 meet the new boss... on 10.22.15 at 6:17 pm

Did H throw the election? Not of his own free will, he was given some really shitty tasks (HST, C51) anyone who thinks that these are Harpo initiatives is naive.
Maybe he was told that he would be taking a dive to be replaced by a bigger borrower-spender. It‘s the bankers world, we just live in it.
Watch how JT handles fake terror, remember his house got broken into?
I dont believe a word of it.

#235 Mark on 10.22.15 at 6:17 pm

“Increasing minimum wage will drive companies to invest in capex which will result in higher unemployment.”

In the short term, sure. But in the long term, its better for society that people are less employed than they currently are. Given how severely Canada’s demographics are about to turn against employers (ie: purchasers of labour), it is doubtful that unemployment should be a problem. Falling living standards will be the problem if productivity is not tackled head-on going forward, and the Conservative government did a piss-poor job on the productivity file by favouring small business, and allowing TFW’s instead of incenting productivity-related capex heavily.

#236 White Crock BC on 10.22.15 at 7:36 pm

Re: The American “Hiring is definitely not in a low spot here.”

but, you still have 45 million people on food stamps, living in poverty, correct?