Mr. Negative

CARS

Why were so many knickers in a knot after our central bank said negative interest rates were a policy option if the world went dark? After all, the news was minor. No rates are coming down, let alone falling below zero. The Bank of Canada just updated its policy manual, in case another 2008 materializes. (It won’t.) The real news was the bank saying it can now launch a big stimulus program, like the ‘quantitative easing’ that swept the US out of recession.

It all goes to choices. Canadians have made some really bad ones. The bank knows it, and understands preparation is necessary. More on what this could mean in a few paragraphs.

As background, consider three fresh pieces of evidence as to where this could lead us. The first is a new survey on housing affordability factoring in real-life costs like daycare and commuting – not just the sterilized ownership expenses the banks weigh. The report (done by the Canadian Centre for Economic Analysis) found 26% of all Ontario homeowners (which probably means 50% in the GTA) are feeling “significant pressure” to meet their monthly bills. Needless to say, they save nothing.

Almost 60% of those people have average incomes and are under 45. No surprise there – this generation has jumped into houses at record levels taking on massive mortgage debt. Even with the cheapest rates ever, they’re in a hopeless financial vise. Should a job disappear or payments rise, they’re screwed. “What’s occurring at the moment,” say the economists behind the study, “is not sustainable.”

“It used to be we had a social housing problem — people who didn’t have a lot of money couldn’t find housing. But now, that line has moved and we have families, two-income earners, who can’t find affordable housing within striking distance of work.”

Second, poor Vancouver homeowners. Yeah, those who have owned for a few years and are smart enough to cash out have won the lottery. But recent buyers may be in for a lot of pain. And taxes.

BC Assessment is sending out 55% more letters this year to people whose houses have escalated in value and will soon be paying dearly to stay in them. Almost 40,000 households in the Lower Mainland are being told to brace for tax assessment notices at least 15% higher than the average hike in their area.

As we all know, the rampant speculation and inbred house lust in YVR & area has flipped houses in East Van up over the $1.2 million mark and made the Westside uninhabitable without the income of a 0.01%er. This is the direct result of 2% fixed-rate mortgages, and outfits like Vancity which have bent lending guidelines so far they resemble pretzels. Of course, this goes to the heart of the matter – Canadians have totally lost their fear of debt.

So, the third thing of note this week, as our dollar sags, oil suffers and the new gang in Ottawa ratchets up deficit spending: shocking evidence many among us are financially insane.

Consider this from the CD Howe’s Craig Alexander (former big cheese economist at TD Bank).

  • The number of homeowners who have mortgage debts worth 500% or more of their income has jumped from 3% (in 1999) to 11% today. Just imagine what happens when rates normalize.
  • In BC the average mortgage now equals 375% of income, and households hitting that extreme 500% range have doubled, to 20% – one in five. In Ontario the average is 350%.
  • The greatest debt belongs to the young – those at the bottom of the income scale, stretching to buy houses they cannot afford.
  • The number of people making the least, under 35, with mortgages over $300,000 has increased 11% since 1999.
  • And household debt in total is at a record level, now bloating by two-and-a-half times the rate of inflation and five times the growth of the economy.

Debt is one side of the balance sheet. Assets are on the other. As mentioned yesterday, fewer than 7% of people have maxed other their TFSAs ($41,000 cumulative total), while RRSPs have fallen off a cliff and the savings rate has plunged. Increasingly net worth is being concentrated in one asset. But the above helps demonstrate huge numbers of us are over our heads – seduced into real estate by cheap money and societal pressure, and now pressured by debt.

Alexander thinks this is more evidence the feds should raise minimum downpayments, as finance guy Bill Morneau is now mulling. But the damage may well be done. Which is where the Bank of Canada comes in – the mop-up-the-blood guys whose job it is to prevent chaos.

The new policy tools, including negative rates and QE, are meant to deal with an extreme situation. We’re not there. Not even close. And rates below zero would never extend to a personal loan or mortgage, just inter-bank transfers. Moreover, if any of these tools were required, Canada would look like America circa 2009. Big unemployment. Cascading house values. Middle class zombies.

This is not the future. Not yet. But many are at risk.

Really scary chart from CD Howe...

MORTGAGE DEBT

270 comments ↓

#1 TurnerNation on 12.09.15 at 4:45 pm

Dollarama record earnings today. Stock got smacked. Ask not what a dollar store can do for your nation, but what you can do for your dollar store.

#2 Allen on 12.09.15 at 4:49 pm

Let’s see how close I can get to the top

#3 Colleen on 12.09.15 at 4:51 pm

“in case another 2008 materializes. (It won’t.)”

Then why even care to mention the remote possibility of NIR?

As I look at businesses in my home town, I can tell you they’re not exactly thriving. I’ve never seen so many shops up for rental. It’s rather depressing. But hey, am I gonna argue with official statistics?

#4 Doug T. on 12.09.15 at 4:53 pm

China tried to duplicate American capitalism and failed and aint coming back – the European “union” is crumbling – commodities supercycle is over – Canada job losses continue to mount – debt is KING and debt is what will sink most Canadians

Chinese economic growth this year will double that of the US and investors in Euro stocks have reaped returns well above 10%. But, moan if you want. — Garth

#5 BIG DOG RY on 12.09.15 at 4:59 pm

Vancouver is incredibly bubbly, but can it ever be affordable again? Even a 50% crash in prices would still put houses on the west side out of reach for most.

Why should ‘most’ ever expect to live in the most expensive hood in the West? — Garth

#6 lost in space on 12.09.15 at 5:00 pm

Canadian Money Saver Magazine

Canadian Couch Potato

Canadian Money Forum

My Own Advisor

Mr Money Mustache

Garths’ Investment Posts

Most people, of course, simply don’t understand how they’re taxed or what to do to minimize the impact. They also don’t realize how the tax system is skewed to ensuring the rich stay that way.

RRSP basics

How to structure RSP with SAHM

TFSA basics</a

RESP</a

Taxation</a

Taxation of an RRSP </a

More Taxation of an RRSP</a

Taxes and Income Spliting</a

#7 Randy on 12.09.15 at 5:03 pm

We do need Property Tax reform. It’s ridiculous that my small household is paying the same taxes as a household with 5 or 6 people. Basing property taxes on property assessments is ridiculous. It should be based on services used by the household. Poll Tax should replace Property Taxes.

#8 noel on 12.09.15 at 5:04 pm

“No rates are coming down, let alone falling below zero.”

Your oft quoted housing bear economist David Madini is predicting that the BoC cuts rates in the second quarter of next year, along with a handful of other respected economists. More calls for BoC cuts than hikes next year.

Its definitely a possibility.

#9 Bram on 12.09.15 at 5:05 pm

That chart is labelled to 2012.

If in 2012, 20% of BC was in 500% debt,
then imagine the percentage in 2015.

Judging from the trend, maybe even half.

To be honest, I personally have a dangerously high ratio too. And yes, I’m in east van. My solace is that my equity is over 50% so I will never go underwater, and the property is freehold.

#10 Frank on 12.09.15 at 5:05 pm

Vancouverite here. The numbers have been scary for half a decade. What’s the precipitating factor that changes anything?

Price of oil hasn’t touched us.

Interest rates up 2% (the most to expect within the next 3 years) will only break <10% of mortgage holders here.

What changes here that matters?

#11 waiting on the westcoast on 12.09.15 at 5:06 pm

Let’s all pray the US continues to power up… We desperately need those exports.

I still think the BoC won’t drop as it is suicide if the US raise rates. They will collapse the dollar another 5-10%.

There was an arbitrage opportunity between the US$, CAD$ and the Uruguayan peso. The CAD$ was basically underperforming the US$ by a further 5-10%.

Shows where they think we are heading….

#12 Mr Negative on 12.09.15 at 5:09 pm

Justin Trudeau just handed out 4 Billion in Paris, the bulk to underdeveloped countries. Our carbon tax contribution? Now over 300 Million paid for refugees in Canada. Not one cent paid to a Canadian or a Canadian project to help our economy so far. Is Justin’s government thinking of helping Canadians anytime soon? Another day another few million down the drain, almost expect it now from this inept govt. Jr is going to bankrupt Canada like the Liberals did to Ontario. Thinks throwing money at something will make it better, or at least go away. Rich kid syndrome with no clue. I vote no confidence.
Former PM Harper had brought into line the same health care given seniors in Canada who have to pay their own dentures, eyeglasses, dental work, hearing aids and other items. Lucky refugees, now they get all of the above for free.
What about funding for the homeless Canadians out in the streets? Oh, they don’t matter? Ok.
Another day and more money being spent on NON Canadians. I don’t think our drama ski instructor leader has spent a dollar on a Canadian yet.
Tax tax tax spend spend spend increase the government to three times the sizes and send Liberal buddies on trips to Paris. That is Justin Trudeau’s Canada !
What gets under my skin is that services are given to refugees that many Canadians aren’t entitled to.Even though they have worked here all their lives and paid their taxes faithfully!!!!!

#13 CalgaryGuy on 12.09.15 at 5:09 pm

Garth,

Re: The stats you posted from the CD Howe report:

I think it’s worth noting that the mortgage-debt-to-income ratio of 500% is clearly stated in the report as being a ratio based on disposable income (after tax), not gross income.

I’m sure many readers will know this, but it may be worth stating it more clearly.

#14 lalaLand on 12.09.15 at 5:11 pm

If recession are now a thing of the past and that we will never see a recession ever again then yes, rate will not go negative.

If we are to see another recession in our life time then yes the interest rate will go negative. They did not raise them during the recovery but they will for sure lower them during the next recession and we don’t have much room to lower… so brace for negative rates.

They gotta support the economy (housing)

Of course there will be recessions and of course consumers will never see a negative rate. — Garth

#15 alan smith on 12.09.15 at 5:11 pm

Considering the horrific credit indebtedness: How is on earth increase in CAD rates even remotely possible or thinkable of?
The whole ‘economy’ (or whatever is left from it) would collapse.

Considering the attitude of the guy at BOC (sometimes showing the maturity of a kindergarten child) who is not just enjoying the fall of the CAD, but is exacerbating it with his policies and unmeasured statements, I place very little trust in responsible future actions by BOC in order to protect the (literally losing fast any value right in front of our eyes) loonie by raising rates to protect the value of the CAD.

Unfortunately we have surrendered BOC and the faith of the CAD to a single-person who is clearly incompetent. Just read the comments here:
https://ca.finance.yahoo.com/news/newsalert-sub-zero-policy-rate-option-unlikely-event-175143782.html
100 % of the people commenting agree that he is incompetent, not a single comment approving his actions.

It is a shame that we can not find a better person to lead BOC, I am hugely stressed at how inadequate his actions would be if a real crises is to emerge.

#16 Freeman on 12.09.15 at 5:13 pm

http://www.nowandfutures.com/images/predict_recession.png

Both of these lines will soon be below zero, in about 1 month’s time from now.

When both are below zero, there is a 100% chance of a recession in the U.S.

Canada has already been in a recession for a few months now, and our recession will become dramatically worse once it is confirmed that the U.S. is also in recession.

Over 2.5 million new jobs created in the US during 2015 alone. Some recession. — Garth

#17 Love my Kia on 12.09.15 at 5:14 pm

Great post today.

Unfortunately the housing bubble is also great.

Given what we know, I am in awe the previous government was encouraging an even higher percentage of home ownership. I wouldn’t dismiss ‘the hot one’ quite yet, his finance minister knows we have a housing bubble and seems to have a sensible way to approach deflating it, as opposed to making it larger.

#18 Canadian on 12.09.15 at 5:17 pm

41,500 iirc on the tfsa garth

#19 WillWorker on 12.09.15 at 5:18 pm

“shocking evidence many among us are financially insane”

It’s not insane to believe Superman will save you. It’s faith!

#20 WheresTheBeef on 12.09.15 at 5:20 pm

Did you say that QE swept the US out of recession? I am not sure that I understand how you would support that? The US economy is growing at 2% a year? The US stock market benefitted by being propped up by free money….just like Europe is today. Don’t kid yourself Garth…. We will see some form of QE in US before we see fully normalized rates. In case you haven’t noticed…global currency wars are just heating up.

#21 RayofLight on 12.09.15 at 5:25 pm

In the US, a growing portion of the “Boomers” are now renting. The reason given is they are still skeptical of home ownership after what they experienced during the GFC of 2008. In Canada, the fastest growing demographic for bankruptcies is the ‘Boomer”. To me, it appears the American ‘Boomers” are just further along in this process. Maybe in the next 5-10 years, Canadian Boomers will be the faster growing renting segment because they have had the crap scared out them by their real estate investment decisions.

https://ca.finance.yahoo.com/news/housing-bust-aging-population-leave-more-older-americans-050722945.html
https://ca.finance.yahoo.com/news/seniors-going-bankrupt-soaring-numbers

#22 Broke Dick on 12.09.15 at 5:27 pm

The tab at the top of my screen shows a miniature phot of Garth and beside that it reads Mr. Negative.

Priceless

You have no idea what I imagine when I look at your name. — Garth

#23 Mr. Negative | Realties.ca on 12.09.15 at 5:32 pm

[…] Source: http://www.greaterfool.ca/2015/12/09/mr-negative/ […]

#24 ALFRED E. NEUMAN on 12.09.15 at 5:34 pm

Sure do hope PM-T2 and FM-Bill Mordough soon develop the habit of reading this blog Garth.

Otherwise, even I’ll begin to worry..!!

#25 Smoking Man on 12.09.15 at 5:36 pm

#12 Mr Negative on 12.09.15 at 5:09 pm
Justin Trudeau just handed out 4 Billion in Paris, the bulk to underdeveloped countries. Our carbon tax contribution? Now over 300 Million paid for refugees in Canada. Not one cent paid to a Canadian or a Canadian project to help our economy so far. Is Justin’s government thinking of helping Canadians anytime soon? Another day another few million down the drain, almost expect it now from this inept govt. Jr is going to bankrupt Canada like the Liberals did to Ontario. Thinks throwing money at something will make it better, or at least go away. Rich kid syndrome with no clue. I vote no confidence.
Former PM Harper had brought into line the same health care given seniors in Canada who have to pay their own dentures, eyeglasses, dental work, hearing aids and other items. Lucky refugees, now they get all of the above for free.
What about funding for the homeless Canadians out in the streets? Oh, they don’t matter? Ok.
Another day and more money being spent on NON Canadians. I don’t think our drama ski instructor leader has spent a dollar on a Canadian yet.
Tax tax tax spend spend spend increase the government to three times the sizes and send Liberal buddies on trips to Paris. That is Justin Trudeau’s Canada !
What gets under my skin is that services are given to refugees that many Canadians aren’t entitled to.Even though they have worked here all their lives and paid their taxes faithfully!!!!!
………………

Welcome to Commie Land soon to be known as WTF happend

#26 ShawnG in TO on 12.09.15 at 5:38 pm

30% jump in suicide rates in Alberta. some of those might very well be 0% down on a million dollar house + truck and unable to liquidate right now

of course MSM would not make such connection

#27 Love my Kia on 12.09.15 at 5:41 pm

#21 Broke Dick

The tab at the top of my screen shows a miniature photo of Garth and beside that it reads Mr. Negative.
******************************

That’s cute. He’s a doomer now too.

#28 Ronaldo on 12.09.15 at 5:41 pm

#5 Big Dog Ry

”Even a 50% crash in prices would still put houses on the west side out of reach for most.”

When I first went house hunting in December of 69 at the ripe old age of 23, there were areas of the lower mainland that were unaffordable to most such as West Van, Kits, Shaughnessy. Today though, most of the lower mainland is unaffordable to most. And you’re right, even a 50% drop would still be unaffordable to most.

#29 Confused millenial on 12.09.15 at 5:41 pm

US “recovery”, ladies and gentlemen:
http://i.imgur.com/eawbUXI.jpg

I wish people would worry more, and do more, about our own economy. — Garth

#30 Randy Randerson on 12.09.15 at 5:43 pm

Debt slaves and house slaves are just hamsters running in their little wheels, going nowhere fast.

#31 MoneyDriven on 12.09.15 at 5:49 pm

Garth,
I know you would disregard or call me an idiot but this chart could simply be explained by foreign money coming in to Vancouver.
Many take on 1M+ mortgage with almost NO INCOME just a high 35%-50% down payment. These houses wont have any problem paying the mortgage when rate increases as the real income is hidden in corporation or overseas, yet these homeowner are well beyond 500% shown on the chart.

FYI. I agree with houses are supper bubbly and it is due for correction. I am renting and investing. Thanks for blogging everyday.

#32 salonist on 12.09.15 at 5:49 pm

100M + suicides in india per annum

#33 Roast my wildrose gonads on 12.09.15 at 5:55 pm

decaprio the idiot experiences a beautiful warm Chinook in Alberta while filming.. and declares it global warming to the carbon tax world party orgy ..

http://calgaryherald.com/entertainment/celebrity/that-awkward-moment-when-you-have-to-explain-a-chinook-to-leo-dicaprio

#34 Rexx Rock on 12.09.15 at 5:56 pm

#12 MR NEGATIVE.

I totally agree as do with most Canadians of what you say but the UN and our government spend our tax dollars any way they like to.Carbon tax is just a fraud and wealth confiscation on middle class.
Its a miracle that Garth didn’t call you a racist or a xenophobe or just delete you.As for real estate ,billions will continue coming from ham because they also don’t want their government confiscating their wealth.You ain’t seen nothing yet.

#35 Incubus on 12.09.15 at 5:58 pm

“Currently, both the Bank of Canada and Bay Street economists predict the Canadian economy to recover in 2016, and then to accelerate in 2017.

The ONLY way for this to occur is if the global economy sheds it’s government debt problem. IceCap places a 0% probability of this occurring.

Instead, everyone should expect:

Canadian economy to be in recession in 2016
Bank of Canada will be at 0% interest rates in 2016
Bank of Canada will be at NEGATIVE interest rates in later 2016
Bank of Canada will be PRINTING MONEY in later 2016

And for the Canadian Dollar? It’s headed lower, a lot lower. If you are not Canadian, just know that you are in a similar boat. And when it comes to boating, there is one simple rule – going against the flow is difficult, it’s exhausting, and it can be humbling.”

http://www.zerohedge.com/news/2015-12-08/canada-just-hinted-negative-interest-rates-are-coming

Read better material. In the 1990s we had oil under $20, a dollar weaker than now, real estate rout, recession and 8% annual stock market returns. We got by. No negative rates. Just a tough time for people who’d acted like idiots. — Garth

#36 Drill Baby Drill on 12.09.15 at 6:00 pm

Thanks Garth for the explanation on negative rates. If a QE is ever implemented in Canada I wonder which portion of the economy would bubble up the most ?

#37 mr noodles on 12.09.15 at 6:06 pm

fort mcmurrays real estate numbers ,out today,continue a steep decline in sales and values.this is my second oil price collapse here,but this time its way worse

The local report is here. — Garth

#38 ZhangTheRealtor on 12.09.15 at 6:10 pm

FACT: Canada is a Global Housing Superpower.

Housing MUST be supported AT ALL COSTS.

#39 Looney Baloney on 12.09.15 at 6:17 pm

O Canada!
Our home in banksters hands!
True patriot love in all our debts command.
With glowing hearts we see thee rise,
Our home price valuations
From far and wide,
O Canada, we fear a market correction.
Poloz keep our land gloriously indebted!
O Canada, we stand by for a correction.
O Canada, we stand by for a correction.

#40 Hotdogs from Heaven on 12.09.15 at 6:19 pm

Read better material. In the 1990s we had oil under $20, a dollar weaker than now, real estate rout, recession and 8% annual stock market returns. We got by. No negative rates. Just a tough time for people who’d acted like idiots. — Garth

———————–

Yes, but we also had tens of thousands of factories that we no longer have. Asia and more importantly, Mexico have eaten our lunch. We just do not have the capacity to recover like we did back then.

I’m looking for the stats, but I remember reading a few weeks ago that in 2000 we had over 104,000 factories in Ontario and today we have less than 50,000.

The good middle class jobs are disappearing fast, replaced by minimum wage jobs that require people to be in debt up to their eye balls just to live in a city like Toronto.

#41 Tax avidance? may be not in the future on 12.09.15 at 6:22 pm

There goes your theory on tax avoidance:

https://ca.news.yahoo.com/blogs/canada-politics/expect-tweaks-to-liberals-income-tax-reforms-184205628.html

“I think they will announce they will close many tax-avoidance opportunities for high-income earners,” Laurin said in an interview with Yahoo Canada.

Closing tax loopholes in addition to the rate increase should boost anticipated revenues to between $2 billion and $2.5 billion, he said

May be Morneau listens to these things and actually has the right intention to carry out the initial Liberal plan of shifting the tax burden as it has shifted out of proportion in the last 10-20 years.

And may be he reads your blog, so may be you shouldn’t taunt him like that. He is in charge :)

#42 Hotdogs from Heaven on 12.09.15 at 6:22 pm

US “recovery”, ladies and gentlemen:
http://i.imgur.com/eawbUXI.jpg

I wish people would worry more, and do more, about our own economy. — Garth

—————————————–

From StrategicInvestor.com a few weeks ago:

At 5%, the jobless rate stands at its lowest level since April 2008 – before the Great Recession.

Nonfarm payrolls for the month rose by a seasonally adjusted 271,000, which is more than 50% higher than what economists had predicted.

U.S. exports are also doing much better than what most analysts had expected, especially when you look at what’s happened with the dollar. Measured in October, the dollar has gained 13% in the past year against a basket of other currencies. With such a big surge, you’d expect to see exports down sharply.

That’s because when the dollar rises in value against other currencies U.S. goods become more expensive overseas. However, despite their relative costliness, American exports remain strong.

And those strong U.S. exports are a particularly welcome sign for technology investors. That’s because technology accounts for roughly 18% of all U.S. exports. In fact, based on 2013 numbers, the last year for full data, the World Bank estimates the value of our tech exports at $147.8 billion, up 11.6% since 2009, when the economy was coming out of the financial crisis.

Now, exports are off about 4% for the first nine months of the year. But that’s only one part of the story. There’s a more important number to watch.

In September, the U.S. “trade gap” (the difference between exports and imports)fell 15% from the previous month. And despite the strong dollar, exports actually gained 1.6% that month.

Consumers Ignore the Noise

If consumers are worried about the recent spate of negative economic headlines, they sure aren’t showing it. That’s a good thing because consumer spending, which includes smartphones and wide array of high tech devices, accounts for nearly 70% of economic growth.

Spending rose 0.6% in September, which was 50% more than what economists had expected. Not only that, but these shopping sprees are roughly 14.1% higher than the same month last year.

As they’ve done throughout 2015, car sales remain on fire.

Last month, U.S. auto sales rose 13.6% to 1.44 million cars and light-duty trucks. At that pace, 2015 could come in higher than the 17.4 million vehicles sold in 2000 – and set a new annual sales record.

This historic performance is being “driven” by such advanced connected car technology as in-dash infotainment systems, assisted braking, lane departure warnings, front and rear cameras, and sophisticated audio and Bluetooth integration.

Federal data suggests another encouraging trend, one that promises to keep the current economic ball rolling: Consumers may be spending more money simply because they’re earning more money.

The U.S. Bureau of Economic Analysis says that real disposable personal income, which adjusts for taxes and inflation, rose 3.5% in the third quarter. That was nearly three times the second quarter’s 1.2 % gain.

Meantime, the housing rally shows no signs of slowing.

The National Association of Realtors says that existing home sales have shown annual sales increases for 12 consecutive months. In September, the last month for data, they came in at 5.5 million units. That’s an annual increase of 8.8%. Residential construction rose 17.2% as the ratio of mortgages in foreclosure fell 22.6% to just 1.46% of all home loans.

Again, that bodes well for high tech because today’s buyers are filling their homes with smart appliances, sophisticated home theaters, Web-based surveillance cameras, LED lighting made from semiconductors, and Wi-Fi and broadband systems.

With such broad-based economic gains, no wonder small-business confidence is rising. Witness business owners’ willingness to borrow in order to fund new growth.

The Thomson Reuters/PayNet index for September rose 11% from a year ago to 140.4. Borrowing in transportation, warehousing and construction led the advance.

#43 Hotdogs from Heaven on 12.09.15 at 6:23 pm

Sorry, that should have been strategictechinvestor.com.

#44 Nanaimo Bar on 12.09.15 at 6:26 pm

Looks like an oil price war between OPEC and the U.S. Maybe OPEC fears that if they cut oil production , the U.S. will keep dumping oil on the market driving down the price. Maybe the U.S. wants low oil prices low to really kickstart other sectors who can benefit with low oil prices? The U.S. finally has want they always wanted, oil. The Bakken Field is a juicy one.

#45 Mortgage Rates Up Again on 12.09.15 at 6:30 pm

Update from the mortgage broker world. Scotia just emailed an increase , 2.99% for the 5 year fixed. Only .01% away from the dreaded , market bubble popping , 3% rate!!! OMG!! A rate over 3% ?? Can’t wait for the social media firestorm with posts like “But my realtor said rates were going to be low forever??” “Buy now or be priced out forever?”

get your popcorn ready folks….

#46 pwn3d on 12.09.15 at 6:30 pm

Second, poor Vancouver homeowners. Yeah, those who have owned for a few years and are smart enough to cash out have won the lottery. But recent buyers may be in for a lot of pain. And taxes.
———————
Wait, I thought housing in YVR had been going down the last 3 years. Could that information have been incorrect???

Honestly, I think YYZ the right time to cash out will be the spring. A new peak and lots of hungry buyers. But YVR I think may have legs for years to come. You just can’t underestimate the desire for PEK and PVD to get their money the heck out of dodge.

Also canadian 5 year has lost 20 bips in the last month. Not the direction it should be going if it was supposed to rise with the US.

#47 Victoria Real Estate Update on 12.09.15 at 6:33 pm

The future direction of housing prices across Canada is down.

Some realtors on this site want you to think that the BoC bringing in negative interest rates would somehow push house prices higher. This, of course, is completely false.

As Garth wrote, negative rates wouldn’t be extended to mortgages.

Also, if negative rates were brought in, Canada would be in a similar position that the US was in during the 2008 financial crisis. That situation would be as bad for Canadian house prices as it was for American house prices during the US housing meltdown.

Negative rates would clearly signal that Canada is in the midst of the worst (or second worst) financial crisis in Canadian history.

Now, back to what is actually happening in Canada. Canadian 5 year fixed mortgage rates have already begun moving higher in anticipation of the US Fed beginning its inevitable series of rate hikes that will push 5 year rates north of 5% within 2 to 3 years.

House prices fall as rates rise.

Several Canadian markets have already begun the inevitable correction process, despite record-low rates.

House prices in Victoria have remained virtually flat since 2008 to the shock and disappointment of many Victoria mortgage holders who are aware that house prices in a lot of other Canadian cities have increased 35% or more over the same period of time.

It doesn’t necessarily take rising rates to start a major housing price correction. This has been proven many times in housing markets throughout the world over several decades.

House prices in Canada will be much more affordable in coming years for those Canadian families who have refused to buy at today’s bubble prices.

Buy now and you will soon be stuck with an underwater mortgage. That situation will be with you and your family for a long time. Your friends, who waited for prices to fall before buying, won’t be dealing with the financial problems associated with an underwater mortgage while you regret buying when you did.

#48 Incubus on 12.09.15 at 6:34 pm

“Read better material. In the 1990s we had oil under $20, a dollar weaker than now, real estate rout, recession and 8% annual stock market returns. We got by. No negative rates. Just a tough time for people who’d acted like idiots. — Garth”

Economics environment were not the same.

Take a look to the interest rate in canada. There is no room to boost the economy like in the 90’s

http://1.bp.blogspot.com/-bAodE__1vHM/UKQ53DddspI/AAAAAAAAASU/E0tjTO-BjJE/s1600/Bank+Rate+Canada.png

http://charleshughsmith.blogspot.ca/2015/12/the-american-dream-is-over-and-voters.html

#49 Randy on 12.09.15 at 6:34 pm

Sell everything now.

#50 Mark on 12.09.15 at 6:39 pm

“I know you would disregard or call me an idiot but this chart could simply be explained by foreign money coming in to Vancouver.”

A lot of what you see in Vancouver is people abandoning traditional cultural norms. Such as paying a mortgage off before retirement. In the past, banks generally would have excluded people from taking out an amortization that exceeded their probable time in the workforce. Today, lenders don’t even bat an eye at lending to someone in their early 60s at a 70% LTV. Lenders don’t even care about the cyclicality of income. Heck, during the debates on RFD, a mortgage broker even went claimed, to the point of ad nauseum that banks don’t even care what occupation a person has as long as they can show income in a form acceptable to the CMHC. I, of course, claimed that banks, while they might not care at the initial underwriting (where the only ‘test’ is whether CMHC will accept the loan), they certainly do care in terms of their own proprietary in-house risk metrics.

Additionally, you see a lot of the same in lending to newcomers to Canada. In Mississauga, a market I’m better acquainted with, its not uncommon for mortgage loans and even home titles to have 5, 6, sometimes even 7-8 names on them. I even met a few engineering interns at a conference a few years back that had co-signed loans for newcomers on the strength of their internship income as a favour to their own ethnic community. In times past, the bankers would have said unequivocally “no” to such arrangements. Today, largely egged on by the CMHC, basically anything goes.

The ‘foreign money’ argument comes up a lot, but nearly all of the evidence points to money not only not coming to Canada, but actually leaving Canada. Seizures of currency of any significance at YVR/YYZ are only minimal and not consistent with what would be ‘expected’ if there was large-scale money smuggling. And if you listened to one of the more recent Ross Kay interviews on Howestreet.com, there are only minimal FINTRAC forms filed by Realtors and other transactional intermediaries which are legally obliged to file such for offshore-sourced funds.

The sad thing about this ‘foreign money’ narrative is that its being used to scapegoat entire ethnicities for what is an out of control domestic borrowing/lending situation. Absolutely disgusting I must say.

#51 Caught In The Grip on 12.09.15 at 6:40 pm

https://www.fraserinstitute.org/sites/default/files/comparing-the-debt-burdens-of-ontario-and-california.pdf

This is a great read. Prepare for an Ontario debt downgrade.

#52 Mark on 12.09.15 at 6:43 pm

“There goes your theory on tax avoidance:”

There is no chance whatsoever that any government, nevermind this current Liberal government, will attack the most significant tax ‘avoidance’ measure, and that is, the principle that interest on money borrowed to invest is tax deductible. While capital gains can be deferred for the long term.

So if the Liberals close a few loopholes, particularly those involving offshore accounts or transfer pricing abuses, which were inherently full of trickery and fraud — good for them. Wealthy people still have plenty of other ways to shelter/defer tax, and many of them are profoundly good for the future of Canada’s economy.

#53 Leo Trollstoy on 12.09.15 at 6:46 pm

All these poor Canadians are jealous of the U.S. economy all because they ignored Garth’s advice to invest there.

Feels bad man.

#54 Neta on 12.09.15 at 6:59 pm

#10 Frank…
In 2007-2009 in the US mortgage defaults reached 4%
I can imagine what 10% would do to Van.
Just think about it, the fifth house to your right and your left are foreclosed.

#55 Gray man on 12.09.15 at 7:01 pm

Watch out its coming this way soon!
http://www.zerohedge.com/news/2015-12-08/canada-just-hinted-negative-interest-rates-are-coming

The zero guy: the worst possible source of news about Canada from people who have never been here. — Garth

#56 Nagraj on 12.09.15 at 7:02 pm

Why were so many knickers in a knot . . . ?

Seems that many people mistakenly thought that negative rates would apply to their meagre savings account at their local bank branch.

And many people – accustomed to MSM’s message that Canada is a super country – must’ve been discomfited by the news that the BoC is adding the jaws of life to its little tool kit . . .

The larger question: just exactly WHO needed to hear, loud and clear, that NIRP is a Canadian option?
Was it necessary to make that announcement via the Empire Club with the press in attendance?
And why now?

Poloz has one enormous PR failure under his belt already: “Why don’t they work for free for a year?”
The Empire Club speech ain’t no PR success either: it undermined public confidence in Canada’s future. I suppose it was meant to do the opposite.

Jitters everywhere. JT or no JT, Canada is a very nervous place.

#57 Little Choice but to Run on 12.09.15 at 7:04 pm

POLOZ is going to spank the C$ again as he mulls LOWERING INTEREST RATES BY MAY.

http://calgaryherald.com/business/local-business/investors-think-bank-of-canada-could-cut-rate-before-may-despite-poloz-comments

This loon doesn’t care what happens to millions pf homeowners four years from now. He’ll likely be retired in the Caribbean by then with the rest of our civil service buddies…..probably Cuba.

PS…the Thai Baht has appreciated 30% against the C$. I get paid in Baht these days…and since November I’ve got a $8000 raise just on the forex…..nice to be out of Canada and out of the Canadian dollar and into a country where the sun shines every day that is cheap to live in…and also has an appreciating currency….win win…now back to the pool. It’s a fact that Canada is the third world economy now.

I really feel sorry for the 73% of Canadians who didn’t vote Liberal. And was anyone listening when Trudeau said ‘just watch me’ when he was asked if he would impose a new electoral system in Canada without asking Canadians to vote on it…..just like dear old dad.

There are some bad years ahead.

#58 Gerry in Toronto on 12.09.15 at 7:15 pm

Garth, the chart illustrating 500% debt to disposable income is interesting in regard to the magnitude of change across the country. In terms of the absolute percentage, B.C. appears to be wacko at 21%. However, if I read the chart correctly, comparing 1999 to 2012 this chart illustrates that the proportion of these mortgages doubled in Atlantic Canada and Quebec over the 13 year period. This category of mortgages tripled in the Prairies and B.C. Good old Ontario quadrupled in the same period and one might presume most of that increase happened in the GTA. I interpret this to suggest Ontario [aka GTA] is outpacing all other areas in the race to become most indebted [relative to disposable income].

#59 Retired Boomer WI on 12.09.15 at 7:19 pm

#12 Mr. Negative-

Well, in MY country seniors pay 20% of ALL medical visits. You buy a medicare supplement to help with that, or it is out of your pocket. You pay 100% of your prescriptions, dental, and eye care unless YOU bought, and paid for extra insurance at the market for these insurances.
Medicare does pay 100% after a generous per occurrence deductible, of your hospitalization. Your medicare premium is $121.00 per month per person.

Any questions, Mr. Negative?

We pay less in taxes, and have roughly the same pre-tax, as well as after-tax (TFSA type) investment opportunities.

Neither country is perfect, and both are better than average.

Feel free to run for elected office if you believe you can do a better job, and could get voters to support your beliefs.
Good luck to you, sir.

An observation: NEVER have I seen a closed hand (fist) used to offer a refugee, or other truly needy soul anything, only an open hand.

Sorry pal, but my experiences are that these open hands have been treated well by these same truly needy ones later.

You do as you see fit, but as for me, I’ll stand on the side of the helping hands. Maybe that is why these countries have done well, and continue to ‘do good.’

#60 prairie person on 12.09.15 at 7:24 pm

I’m surprised that this didn’t get jumped on when I posted it yesterday.
Royal Bank of Canada 5.50% 5-Year Rate Reset Preferred Shares, Series BK
Perhaps someone can explain to me why and how the bank is offering 5.5% when it has issued all these mortgages at -3%. To make money on the money it is going tp pay 5.5% for, it has to get a substantial percentage to cover not just the 5.5 but its costs. Would someone please enlighten me? Do they think they’ll be getting say 7% and from whom? All indications are that the move in the USA will be very gradual and the BOC will drag its feet. What margin does the bank have to make over the 5.5% to make a profit? Will their outrageous charges on credit cards make up the difference? Or commercial loans?

#61 BC Guy on 12.09.15 at 7:24 pm

Yes, Garth, we know all this already. Canadians have too much debt, house prices are too high in most major centres, mortgages are too high. What is your solution? Rent.

Mr. Trudeau, make me a cabinet minister and I will solve the problem. I will:

– increase taxes on the wealthiest, this will help flush out speculators, people who own several houses/condos/cottages/properties
– gradually increase interest rates from .5 % to 3 % over three years
– impose a federal surtax on land over 10 acres that increases exponentially as the size of the property increases (exempt grain farmers on the Prairies of course), this will force large land holders to subdivide and sell making land affordable to the average Canuck
– make more Crown land available for purchase by the average Canadian (every Russian has the right to claim land in the country called a “dacha” to build a country home) http://www.telegraph.co.uk/sponsored/rbth/6105903/Russian-culture-Dachas-are-the-traditional-place-for-Russian-families-to-escape.html
– move more government services and offices out of major centres like Toronto, Vancouver, Victoria and move them to smaller towns

Still hung up on land for your chickens, I see. So, run for prime minister. Look what Donald Trump did. — Garth

#62 Bp Yaroslaw Sereda on 12.09.15 at 7:25 pm

Hi Garth
I think you need to get your sun glasses off. A number of European countries have negative interest rates. And with world conditions we shortly will be next.

Chances: nil. — Garth

#63 winterpeg on 12.09.15 at 7:26 pm

What would be considered a healthy percentage of mortgage debt to income?

#64 Herf on 12.09.15 at 7:26 pm

“Almost 60% of those people have average incomes and are under 45. No surprise there – this generation has jumped into houses at record levels taking on massive mortgage debt. Even with the cheapest rates ever, they’re in a hopeless financial vise. Should a job disappear or payments rise, they’re screwed.”

“The greatest debt belongs to the young – those at the bottom of the income scale, stretching to buy houses they cannot afford. The number of people making the least, under 35, with mortgages over $300,000 has increased 11% since 1999.”

Oh well. As a former boss once said (different context/situation, but still the same result):

“They don’t know, and they don’t know that they don’t know”.

#65 Ruskie Ryan on 12.09.15 at 7:35 pm

Garth, you should do a weekly podcast. I’m sure you have all kinds of interesting friends and acquaintances who you could have on. Hell, maybe even some you don’t quite see eye to eye with. Sit down, have a couple scotches, hit record on your iPhone and that’s basically it. Come up with a clever name, say Garth Turner Overdrive (GTO Podcast) or perhaps Talk Money To Me. Upload to iTunes, rinse and repeat. Could be 20 minutes, or two hours. I for one would definitely tune in to that!

#66 Freedom First on 12.09.15 at 7:43 pm

Mr. Negative. Yes indeed. Exactly what people call someone who tells them the truth. Sadly, it is the very person who is trying to help them.

I can’t imagine putting myself under the kind of financial pressure I just read about from Garth. I believe that people have at least 1000 excuses for why they behave as financially insane as they do. However, there is not one sane reason.

#67 cd on 12.09.15 at 7:47 pm

to make your post today a little more negative…

saw this the other day…
http://www.vice.com/en_ca/read/theres-a-food-security-crisis-in-canada-and-its-worse-than-you-think

basically there has been an increase of food bank usage

#68 Mark on 12.09.15 at 7:50 pm

“All these poor Canadians are jealous of the U.S. economy all because they ignored Garth’s advice to invest there. ”

What’s there to be jealous of? A small handful of companies with no or barely any earnings (or hopelessly levered to advertising revenue) propping up the stock market? Outright statistical trickery when it comes to the unemployment rate (simply stop counting people who have involuntarily left the labour force, particularly in their prime working age)? Government policy (Obamacare) which highly discourages full-time employment?

I’ll take Canada and the TSX over that nonsense any day of the week for all its flaws. Even if, in the short term, the returns haven’t been quite as swell.

What margin does the bank have to make over the 5.5% to make a profit?

Preferreds are part of the leveraged equity of a bank. Banks don’t have to lend at greater than 5.5% to earn a margin to pay preferreds. But they have to earn a positive spread (and/or fee revenue) from the more senior forms of credit they do take out.

#69 common sense on 12.09.15 at 8:04 pm

Mr. Turner…I think people are less worried about Canada here as most are financially secure thus have no direct worries…

As for worries about the USA, as the USA goes Canada usually follows and the situation though better than Canada is not exactly “booming” as many think..”Ok? Yes. BOOMING? no.

And regarding your comment about “What I think about when I see BROKE DICK’S name…”, you likely do not want to imagine what Freedom First thinks and feels when he sees yours daily…..swahhhing!

#70 Diversified In Oakville on 12.09.15 at 8:05 pm

Absolutely crazy how much debt some people want to take on to buy some bricks and mortar in the GTA and 905.

I hope they save some to buy my Oakville SFH in the Spring of 2016 or 2017. Time to cash out, rent, travel, and win the game; and move to the East Coast where it costs a fraction of what it does here.

Just sheer lunacy.

#71 MoneyDriven on 12.09.15 at 8:06 pm

#48 Mark
Considering you user LTV instead of equity, I know you know a thing or two. Here are my counter point.

a “cheap” detached home in east van is 1.2M now. after putting 240K (20%) we need 960K mortgage. Assuming 2.6% 5 years fix mortgage we are still looking about ~ 160K to qualify.

I think average family income in Vancouver is ~ 70K.

I don’t think everyone should be able to buy a house. but needing more than double median income to qualify for below average in the cheaper side of town raise an eyebrow. Point to something beyond horny locals.

Other study, which Garth disqualified, showed the richer neighborhood of Richmond the declared income did not cover property tax.

Other study, which Garth disqualified, showed job title of majority of houses in west Vancouver (most expensive area) were home maker, business person. I dont really care where they are from but these people are making money more than likely from outside Canada.

Other study, which Garth disqualified, showed BC hydro numbers that lots of luxury houses in west Vancouver are empty ie they did not use hydro. Local people dont live multi million dollars houses empty.

Other study, by CMHC showed percentage of condo ownership is gone from ~2% to 3%. The study is questionable to start with but 1% increase when only small percentage of condo changed hand last year shows a hug inflow of cash.

My personal experience, the population growth has not been all that significant but we have build an insane number of condo in past 5-10 years. yet it is VERY hard to find a 2 bedroom rental in downtown below 2400. A lot of these condos are empty AND sold.

All that being said, sure local people are going crazy andover paying for suburbs at insane prices. condos are horrible “investment” and will correct once interest rate normalized. But I really dont understand how anyone can argue against foreign money or trickle down effect. (People who make money outside Canada and may or may not live in Canada)

Also about money leaving Canada is referring to investment which is what we need but when it comes to real estate the story is entirely different.

Lastly and most importantly. I DO NOT blame this on HAM. I am an immigrant myself (not ham so still cool :p ). This has been shortcoming of government allowing this getting so out of hand. we have corner ourselves as people kept borrowing and spending. Our GDP and income relies on this madness of real estate. We even had 14% increase last year but even a reversal of just last year would put a lot of people under water which is beyond ridiculous IMHO.

#72 Tony on 12.09.15 at 8:07 pm

Re #14 lalaLand on 12.09.15 at 5:11 pm

My lifetime!!??

Canada is odds on to fall back into recession in 2016. Two months of positive growth in 2015 were a direct result of money given to the voting public before the Conservatives were ousted. I’m certain oil prices will not go up while Obama is in office.

#73 Retired Boomer WI on 12.09.15 at 8:11 pm

RE chart seems to indicate much higher DET snorkeling (albeit at cheap rates). When -if ever- this cheap debt reverts to the mean, it shall be painful.

HEY! That reminds me. Yellen is supposed to make a declaration on Dec 16th on rates.

Any clue on what old Janet might do? Yeah, data driven last that promised a rate hike by years end. Now the year end is here,

As OIL goes so goes much of the US economy. Do you believe rates will go up? Do you believe in Santa? How about the Easter bunny? Credibility, Creativity, extend, and pretend? Reincarnation, or just car nations?

Do I sound like a cynical ass, or just an ass?

#74 Tony on 12.09.15 at 8:12 pm

Re: #61 winterpeg on 12.09.15 at 7:26 pm

Most of that would hinge on the current inflation rate and the inflation rate looking forward in years to come.

#75 crowdedelevatorfartz on 12.09.15 at 8:17 pm

@#59 BC Guy

Ho Hum another day another diatribe from our resident communist “BC Guy”….
Wants to take the land from the rich that own it and give it to the poor multitudes.
News Flash BC Guy.
Communism is a failure.
Your “seize the land from the rich” sounds like Hugo Chavez in Venezuala “Chavismo’ . After 15 years rampant corruption, rampant inflation, lineups for the basics….Go ahead try THIS brand of Socialism that failed miserably.
http://www.google.ca/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=12&cad=rja&uact=8&ved=0ahUKEwjOjNnt_8_JAhVW5WMKHYB1BT0QFghbMAs&url=http%3A%2F%2Fhotair.com%2Farchives%2F2015%2F12%2F07%2Fshock-venezuelans-give-chavistas-the-boot-in-parliamentary-elections%2F&usg=AFQjCNFHNQ6ZvWHY08Lz3GkAYjURPuC5Fw&sig2=NJz2tF6WdpBYzdKbQ0qX5g

Or better yet. How about Robert Mugabe’s Zimbabwe ” seize the land from the rich” debacle.
Again we have rampant corruption, rampant inflation and a country that went from being a net providor of food to Africa to a basket case needing UNESCO food to delay starvation.

http://www.google.ca/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=5&cad=rja&uact=8&sqi=2&ved=0ahUKEwik5LingdDJAhVSwWMKHT4BC-oQFgg2MAQ&url=http%3A%2F%2Fwww.economist.com%2Fnews%2Ffinance-and-economics%2F21643205-introduction-new-coins-triggers-debate-about-what-currency-use-nothing&usg=AFQjCNGPf30KEYKpEFYHePmBNr8Iv3Q-sw&sig2=CWa54lO9DZzhkxqGE43PYQ&bvm=bv.109395566,d.cGc

Tut tut there BC Guy.
Why let facts and reality get in the way of your idea of a socialist “utopia”…… Keep hoarding bees wax for the inevitable “run” on candles after the apocalypse and invest in shovels……perfect for digging graves and latrine pits…..something that I’m sure you can excel at if you put your tinfoil thinking cap on…..

#76 Salutations Sally on 12.09.15 at 8:19 pm

What s “QE”? I see it mentioned almost daily, but haven’t been able to figure it out.. Thx!

Quantitative Easing = government-financed economic stimulus. — Garth

#77 Whoever on 12.09.15 at 8:24 pm

Not sure if raising taxes on the 1% , who are already taxed to death and spending it on 50,000 Syrian refugees is good public policy but perhaps someone could shed some light on how this benefits Canada and existing canadians as a whole

#78 eddy on 12.09.15 at 8:25 pm

mva=tax on inflation
inflation is a hidden tax, because it is the result of one party in the lender-borrower relationship being allowed to lend something they don’t have.
who, besides a bank has that privilege? no one
who, gave away the privilege? Kings

#79 Tony on 12.09.15 at 8:30 pm

Canada could end up like Germany with negative yields on bonds up to 5 years.

http://www.cnbc.com/bonds-germany-treasurys/

In Canada in all likelihood it will be out to two years on bonds.

I just can’t see more than two rate hikes in America. This December the 16th and in March next year. I think rates will fall later in the year and possibly turn negative in 2017.

You said rates hikes were impossible. — Garth

#80 Jenny Hampson on 12.09.15 at 8:32 pm

My brother-in-law is of Swedish background and his uncle has a huge farm which he has now elected to get his surplus sales in British pounds not Swedish Krona.

He can get 3.00% bank rates instead of crappy Swedish rates. Yes less money for Swedish banks.

#81 SUPERALTUS on 12.09.15 at 8:43 pm

#14 Of course there will be recessions and of course consumers will never see a negative rate. — Garth

Semantics in that statement doesn’t rule out a negative rate between institutions.

#82 Housing Grief on 12.09.15 at 8:51 pm

Stages:
Denial (you are here)
Anger
Bargaining
Depression
Acceptance

#83 TurnerNation on 12.09.15 at 8:54 pm

This is how we party in Toronto yo. New Owelimpic sport:

https://www.instagram.com/p/_F2RPSgREM/

Tag this

#luddites
#turntup
#dawggingit

#84 Caught In The Grip on 12.09.15 at 8:57 pm

Oil is probably going through $30. It will then trade around $30-40 for many months before its final leg down to $20. This is the new norm. The oil & commodity bubble is over. Fort Mac is the new Dawson City. Alberta’s economy is back to bust. No one will care.

$CAD will eventually fall through the old lows of 62 cents. It’s a new world. Oh right, it happened before – the mid 1990s.

Here’s what is important:

Low oil prices will stimulate the US economy. It is like an enormous tax being lifted from corporations and the US consumer.

The NASDAQ will lead the US stock market through an echo technology boom during which the Internet of Things will continue to proliferate. Biotechnology, internet, health care & aerospace will continue to be dominant themes.

The DOW will pass 25000. The NASDAQ will pass 7500. The S&P 500 will pass 3000. All of this before 2020.

Most Canadians will be sitting on the sidelines watching the price of their homes decline and their net worth shrink. The more financially literate Canadians will be watching their Canadian stock and bond portfolios lag the globe more significantly than during the last growth cycle. Some will still phone in on BNN asking for buy, sell and hold recommendations on commodity related companies.

This is just how it will be. So let it be written.

#85 Chris on 12.09.15 at 9:08 pm

It is crazy that higher than median income cannot even afford an average house anymore. Canadians are forced to live with lower and lower standards when it comes to housing. Hard working people pay 50%+ of their income to the government to support those wasteful and entitled public sector while cannot afford a decent place for shelter. That is great Canadian dream come true.

Actually the Canadian Dream seems to be blaming someone else for your own unfulfilled entitlement, then expecting Justin to fix it. — Garth

#86 AACI Home-Dog on 12.09.15 at 9:08 pm

Regarding…

BC Assessment is sending out 55% more letters this year to people whose houses have escalated in value and will soon be paying dearly to stay in them. Almost 40,000 households in the Lower Mainland are being told to brace for tax assessment notices at least 15% higher than the average hike in their area.

BC Assessment are “bracketing” properties that have sold far above assessed value. It is a red flag for them & they investigate the property on MLS etc. Unfair, because other remodelled homes that have not sold go undetected, yet the home buyers get screwed.

Years ago they used to mass re-appraise whole jurisdictions at once, with interior inspection & all. Now…no. I have lived in the same city now for 20 years, and no mass reassessment. Many assessment way out to lunch.

#87 Bottoms_Up on 12.09.15 at 9:10 pm

#75 Whoever on 12.09.15 at 8:24 pm
————————–
Hard to believe the rich are “taxed to death”.

1) Canada needs immigration to sustain growth
2) A diverse society is a more resiliant and accepting one
3) immigrating 25,000 Syrian refugees ensures Canada does it’s part to help out in this extensive humanitarian crisis of unbelievable proportions

#88 RoCK BEATS PAPER on 12.09.15 at 9:15 pm

Chances are obviously NOT nil

I agree that consumers will not see negative rates, but that is not the point. Its the over night lending rate that could go negative. I give this a very low probability because I see the US $ (DXY) topping and commodity prices bottoming.

#89 Doug t on 12.09.15 at 9:22 pm

It’s always been about oil – everything that is manufactured is by six degrees of separation tied to oil – and it is why western nations allow the Saudi kingdom to kill innocents and leaders will not confront Saudi Arabia, the source of Islamist brainwashing and infection. They won’t because of oil and the profits made by arms sales.

#90 For those about to flop... on 12.09.15 at 9:24 pm

My in-laws are retired living in a paid off East Van house with less than 100k in savings.
I don’t know how much longer they can afford to pay all the taxes/ assessments that go along with owning a house.
I work in construction and so I give them a lot of free labour on the house to keep it in shape ,once I stop doing this the house will really show its age.
Also even though tfsa discussion is so yesterday ,I wonder if the Cons had just moved it up to $7500 whether this would have been election candy.
I know it’s all been said but with Canadians in record debt and the Silver Tsunami about to hit it just seems moronic to do this to people who are interested in looking out for themselves such as myself .

#91 Entrepreneur on 12.09.15 at 9:31 pm

“Why were so many knickers in a knot…as if the world went in the dark”…because we are worried and scared! We are worried and scared for the youth, the families, the children and for ourselves. We can see the changes: small stores are closing; longer line ups at the food bank (more children); dad and/or mom not working; higher food prices; higher taxes on everything; higher prices on insurances, house & car; the youth are renting & not having any children (& this is not short term). Oh, we definitely feel the sadness.

“Look after your own backyard first before helping someone else” which I am sure #12 Mr. Negative means. I bet Mr. Negative would be the first person to help someone. The homeless need help in this country as long as I can remember. Maybe this will spur to do something meaningful for our own. That is a lot of money T2 is dishing out!

It seems only the rich run for the top job nowadays.

#92 MF on 12.09.15 at 9:33 pm

#85

Yeah how’s that working out in Europe?

So let me get this straight.

Our own young people and recent immigrants alike cannot find meaningful employment and reproduce themselves, but you think it’s a good idea to rush in tens of thousands of non-English-speaking unemployable people from an area of the world that is a hotbed of extremism?

Like I said just look at Europe.

MF

#93 Whoever on 12.09.15 at 9:34 pm

12.09.15 at 9:10 pm
#75 Whoever on 12.09.15 at 8:24 pm
————————–
Hard to believe the rich are “taxed to death”.

1) Canada needs immigration to sustain growth
2) A diverse society is a more resiliant and accepting one
3) immigrating 25,000 Syrian refugees ensures Canada does it’s part to help out in this extensive humanitarian crisis of unbelievable proportion
———-
If you are going to quote me then do so correctly. I never said the “rich” I said the 1% . The 1% do not equal rich.

1) immigration for the sake of immigration without an assessment of said immigrants ability to come off of public dole at some point and assimilate is a bad idea.
I think this will be difficult for these people.

2) a diverse society is great but not sure these immigrants will feel the same way. Hopefully they will merge successfully into our canadian way of life but I am doubtful.

3) there are those who believe that we could have helped out in many ways without immigrating them here.

Just an opposing viewpoint

3)

#94 don't diss the USA... on 12.09.15 at 9:37 pm

#51 Leo Trollstoy

“All these poor Canadians are jealous of the U.S. economy all because they ignored Garth’s advice to invest there.

Feels bad man.”

yes, but they can still buy the dip….

#95 randman on 12.09.15 at 9:40 pm

US “recovery”, ladies and gentlemen:
http://i.imgur.com/eawbUXI.jpg

I wish people would worry more, and do more, about our own economy. — Garth

Garth you were just presented with irrefutable data points that prove your USA views are wrong….and yet you remain flippant …..what exactly is your agenda?

Investors who bet against America have lost big, and will continue to lose. — Garth

#96 ben on 12.09.15 at 9:41 pm

Why are so many in this position? Who gave out these mortgages?

Isn’t the entire point of banking that they know how to efficiently allocate capital?

They should let housing collapse and when the banks go down the state should hoover them up, assets and all. Then run them sensibly. Let the state issue the money, not greedy idiots chasing a bonus.

#97 MF on 12.09.15 at 9:41 pm

#86 Smoking Man on

Haha Yup. The US is looking more and more appealing. 5 seconds on the CBC website and I inch closer to the move.

#100 Freedom First

Yes. Eyes opening and starting to finally put my freedom first!

MF

#98 Kreditanstalt on 12.09.15 at 9:42 pm

Suppose the worldwide falling freight shipments, poor retail sales, lack of breadwinner jobs, stock market breadth, junk bond prices, disappearing market liquidity &c., &c. are NOT a soon-to-be-over “cyclical” event but a slow-moving long-term SYSTEMIC one…?

And this blogger won’t even ADMIT U.S. weakness…

Some things move like icebergs but are the proverbial “lead pipe cinch”…

#99 Smoking Man on 12.09.15 at 9:45 pm

Dr Smoking Man told you Dogs not but a few days ago that with Donald Trumps outrageous comment about banning Muslims with out proper vetting It will give him the nomination.

I’m sure many of you urban grasshoppers though, no friken way.

Latest poll results.

http://www.torontosun.com/2015/12/09/trumps-muslim-bashing-only-winning-him-votes-polls

Non Urban Main street America hates MSM, and Washington’s Smoking Men.

To cap this off, all he has to do next time he’s grilled.

FREEDOM OF SPEECH — CONSTITUTION. Eat my shorts…

Dr Smoking Man
PhD Herdonomics.

#100 TRT on 12.09.15 at 9:52 pm

“Why were so many knickers in a knot after our central bank said negative interest rates were a policy option if the world went dark?”

Herein lies the problem. Governments have a mandate to provide stability for the people they serve. If they can’t perform this vital function, then might as well have anarchy.

By saying rates can go negative, they are pumping asset bubbles….the antithesis of stability.

I am more surprised at the author here who is shocked by the tone of the comments. Maybe it is an age thing where boomers had it good at the beginning of the various Ponzi schemes. But I digress.

And no this isn’t personal. And I’m not suffering (I was telling people to move all assets to USD over 2 years ago). But I hate when suffering is unleashed on the people who are for a lack of a better term ‘less educated’ and know not what causes it.

It is the role of government to anticipate and provide stability.

Then elect better governments. — Garth

#101 ben on 12.09.15 at 9:53 pm

Garth your attitude towards the “entitled” young is bad. First up, by young we now mean anyone under 40. Second why shouldn’t they be mad that land prices have detached from wages.

Time and again politicians have refused to make hard choices when called upon to stand firm. Kids have been born into a mess. It’s not their fault.

http://www.greaterfool.ca/2014/07/13/regrets/

> So, I bought it. The rest of the government did, too. We brought in the Home Buyers Plan, but only on a temporary and urgent basis. Once middle class equity was stabilized, the program would end.

> The deal: virgins could withdraw money from RRSPs for a down payment and pay no tax, on the condition they repaid it starting in two years and finishing 15 years later. Any missed payments would be added to their income in that year, and taxed at their marginal rate. The immediate goal was to rescue a free-falling housing market. The ultimate goal was to encourage people to save and invest for retirement.

There’s one of many times politicians took the easy path.

The kids did not do this.

#102 Joseph R. on 12.09.15 at 10:02 pm

#97 Smoking Man on 12.09.15 at 9:45 pm

You are correct, SM. After all, in this country, Rob Ford got elected in the same fashion; by appealing to the low hanging fruit. Also, Herouxville’s city counselor with its “town charter.”

Bigotry is a universal trait.

#103 Paul on 12.09.15 at 10:04 pm

#94 ben on 12.09.15 at 9:41 pm
Why are so many in this position? Who gave out these mortgages?

Isn’t the entire point of banking that they know how to efficiently allocate capital?

They should let housing collapse and when the banks go down the state should hoover them up, assets and all. Then run them sensibly. Let the state issue the money, not greedy idiots chasing a bonus
——————————————————————–

#104 Paul on 12.09.15 at 10:05 pm

Laughing so hard I pushed the enter button

#105 Doug t on 12.09.15 at 10:05 pm

#96 – spot on – that is exactly how this is rolling out

#106 The real Kip on 12.09.15 at 10:09 pm

The fact that Poloz even mentioned negative rates indicates that it is a very real possibility and could easily happen. The BOC is stinking of desperation now and, with stock markets around the world looking like a house of cards, the unthinkable may become reality faster than you can say Houseageddon.

The macrocraneconomist strikes again. — Garth

#107 BG on 12.09.15 at 10:13 pm

I am getting really tired of this culture of rewarding spenders and punishing savers. No government shows any will to end it.

It is really vicious because the true greater fools will be savers who give up and jump on the train too late.
“Late adopters”.

I have no doubt that some people are suffering because they put all their eggs in the same basket, but the message that society sends us (savers) everyday, from almost every source, is that we missed that train.

Fortunately for me here in Montreal rent is controlled and if you take your time you can find really good deals in rental.
But if I were in Toronto paying a high rent for a very ordinary apartment, I may have gave up and bought like so many.

#108 OXI in GREECE on 12.09.15 at 10:13 pm

You can hate on Government and Government employees all you want but your statements were still moronic and false.

I am not Pro More Government at all. It is inefficient and can be wasteful.

But if you think the last 10 years were bad wait until PM Selfie empties your wallet.

And if you live in AB or ONT… You will get double teamed by either the JT/Nutley or JT/Winnie crew.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

Your “Govt Worker” tax dollars …..not at work.

Mr Govt Worker…..considering you keep throwing around how “Moronic” I am…..maybe you could enlighten us on why the Canadian Public Service needs to be 500% bigger than Germany’s? Speaking of moronic……

Please….educate us….

#109 Smoking Man on 12.09.15 at 10:15 pm

#100 Joseph R. on 12.09.15 at 10:02 pm
#97 Smoking Man on 12.09.15 at 9:45 pm

You are correct, SM. After all, in this country, Rob Ford got elected in the same fashion; by appealing to the low hanging fruit. Also, Herouxville’s city counselor with its “town charter.”

Bigotry is a universal trait.
…………….

I’m just a humble observer. Perhaps you can go to Fort Mac and share your thoughts at a union meeting. Tell them about low hanging fruit, you city slicker you

I encourage you to fib. Other wise It won’t end well for you..

Dr Smoking Man
PhD Herdonomics

#110 Daisy Mae on 12.09.15 at 10:16 pm

“Alexander thinks this is more evidence the feds should raise minimum downpayments, as finance guy Bill Morneau is now mulling. But the damage may well be done. Which is where the Bank of Canada comes in…”

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

So the Bank of Canada is controlled by government. The blame falls back on Harper.

#111 OXI in GREECE on 12.09.15 at 10:19 pm

Then elect better governments. — Garth
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

HAHAHAHAHAHAHAHAHAHAHAHAHAHAHA

Funniest comment in a long long time…..

#112 Patrick on 12.09.15 at 10:25 pm

Finally watched some HGTV the other day. “Income Property”. Quite the show. Decided to give it a shot after a co-worker was raving about it.

Female Co-worker: I was watching “Income Property” last night. I’m obsessed. Why haven’t YOU bought any real estate?
Me: Not really my thing. Seems like too much work on top of long work hours. (I rarely discuss real estate with anyone, outside of asking the odd probing question)
Co-worker: I tried watching the american version of “Income Property” but it isn’t very good.
Me: Why’s that?
Co-worker: The houses on the american version are unrealistic, they’re only like $150k and the rents are terrible
Me: Wouldn’t you worry that houses HERE might fall to $150k?
Co-worker: That’ll never happen here.
Me: Why not?
Co-worker: I just don’t think it will
Me: oh ok…..(pause)…ya, I don’t really know. I’m not handy like Scott McGillivray anyways. Probably better I stay out.

I tell a lot of anecdotes on here but they are all nearly verbatim conversations or stories from millennials. And these conversations happen daily. It is madness. Just trying to give people a glimpse into the minds of young Canadians. Here’s to hoping millennials can keep this market pumped for 5 more years though.

If not, it’ll be. YOU-S-EH! ALL-THE-WAY! YOU-S-EH! ALL-THE-WAY!

#82 Caught In The Grip on 12.09.15 at 8:57 pm
I agree with your outlook/hope you’re right. Wouldn’t low oil prices help the developing world too? Where more demand should come from to? I am hoping for a boom either way. Just not sure about public debt levels.

#113 Sean on 12.09.15 at 10:31 pm

“Dr Smoking Man told you Dogs not but a few days ago that with Donald Trumps outrageous comment about banning Muslims with out proper vetting It will give him the nomination.”

He will win 0 states in the primary.

#114 Freedom First on 12.09.15 at 10:33 pm

#67 common sense

common sense, Broke Dick, and loft. You guys remind me of the Three Stooges. Except you’re not funny and the 3 of you only embarrass yourselves. Unknowingly too. Sad.

#115 ben on 12.09.15 at 10:34 pm

let’s hear it paul – two posts where you wrote nothing.

#116 SWL on 12.09.15 at 10:36 pm

#39 Hotdogs from Heaven

I’m looking for the stats, but I remember reading a few weeks ago that in 2000 we had over 104,000 factories in Ontario and today we have less than 50,000.

And of the ~50k factories that remain, most are likely running their remaining equipment into the ground and chiseling wages and benefits steady.

I was looking for some balance machine mandrels online today for the shop I am at here in the oil patch. When looking, I was nerding out looking and big production CNC machines. It got me thinking that sadly the hay day for those beasts of machines are in the rearview mirror for Canada.

We bet on a on a one trick pony of oil from dirt.

Speaking of the oil patch, moral is at an all time low and lots of stressed out people are not thinking clearly and making bad decisions. Panic mode all around and it’s getting depressing. Fortunately for me I am in a position to either take it or leave it, but many simply are not. I’m going to ride out the storm until the ask me to leave or I simply decide I have had enough.

Misery seems to love company here, but I am cautious of the company I am willing to keep

it’s a sad state of affairs many have put themselves into. However, it’s hard to blame them as we sure have been sold quite a lie.

Most have been to consumed with consuming to notice

#117 James on 12.09.15 at 10:44 pm

Hi Garth, If interest rates become negative, does that mean CRA will pay me interest for my tax owing?

#118 Leo Trollstoy on 12.09.15 at 10:46 pm

#82 Caught In The Grip on 12.09.15 at 8:57 pm

Spot on.

The US economy will boom and carry the wealthy up with it.

The poor will just live in denial and complain as they get poorer.

That’s how it always has been, how it is, and how it will always be.

#119 Patrick on 12.09.15 at 10:52 pm

#99 ben on 12.09.15 at 9:53 pm
Garth your attitude towards the “entitled” young is bad. First up, by young we now mean anyone under 40. Second why shouldn’t they be mad that land prices have detached from wages.

Time and again politicians have refused to make hard choices when called upon to stand firm. Kids have been born into a mess. It’s not their fault.
_______________________________________

The young could have solved this problem by “standing firm” and refusing to buy real estate at inflated prices. No new buyers would’ve done some damage to house prices.

Nobody told millennials to buy. I was looking at houses to buy this time last year. Decided to do some more research into bubbles, demographics, etc., before taking the plunge. you know, since it was a $300-400k loan and 25 years of my life! I can’t decide on a 2hr netflix title, forget a house for 25 years.

Long story short I ended up here. In the long run, if I can’t get out of here, I may have been better off with the house.

#120 Millmech on 12.09.15 at 10:53 pm

Your response to #83 sums it up,no more needs to be said,would appreciate a blog on how to draw down RRSPs with minimal tax.
Regards,Millmech

#121 Washed Up Lawyer on 12.09.15 at 10:57 pm

Off topic and wandering. I have been curious about the definition of “luxury housing” in Calgary. It is based solely on price ($1MM +) and square footage. So I looked up the meaning of “luxury”. There are many different meanings.

The one that appealed to me was “a foolish or worthless form of self-indulgence.” I have always thought that Calgary luxury homes were mostly wretched excess, but I am a misfit.

To me, luxury is that rustic cabin that Robert DeNiro lived in in the movie he starred in with John Travolta where the former was an ex US military guy and Travolta was the Balkan soldier who witnessed a military crime and came to the US hunting DeNiro who was in retirement. Don’t know the name of the movie, but that cabin struck me as luxury.

The response of International Harvester Crawler Tractor Guy would be welcome.

#122 Mark on 12.09.15 at 10:58 pm

“What s “QE”? I see it mentioned almost daily, but haven’t been able to figure it out.. Thx!”

QE is basically where central banks buy the bonds that they (in their sole view) see as mispriced. That’s why its so terribly destructive, because it is an attempt to substitute the judgement of public servants at the central bank, for that of the collective judgement of the markets (which clearly drove prices down because of previous overvaluation!).

In the United States, most QE was used to purchase US Treasury bonds (ie: government debt), and Mortgage Backed Securities (MBS) on the theory that driving down financing costs on those particular instruments would revive the economy.

Only problem is, it mostly didn’t work. Sure, they reflated the housing bubble, at least temporarily on account of such. And they inflated a giant “government” bubble. But the “real economy” didn’t recover. Nearly all of the new credit created through QE went to sectors that already were subject to overstimulation. Its like using heroin to treat a morphine addiction!

Negative interest rates, debt to equity restructurings, and bail-ins are arguably far fairer and more equitable ways of resolving insolvent businesses, institutions, and the economy itself if it systemically slows down. No specific sectors are targeted for cheaper credit. I’d suggest that if the US Fed had driven down policy rates well into negative territory, they would have achieved a far more robust recovery than “QE” targeted only at very particular sectors.

#123 Zorba on 12.09.15 at 11:05 pm

No hike next wednesday,Garth !

#124 Warren - the lagging indicator on 12.09.15 at 11:07 pm

post #50 yesterday by Dwilly was thoughtful and really well put. I guess the alternate viewpoint is that it is not a punishment of the wealthy because they already have the money but rather affects those trying to become financially free and secure, maybe even wealthy.

By the way, everyone should stop worrying so much about the preferred shares. I just put an order in for traunch #2 (of 5 total) with the first being just above 10 on ZPR. You will not pick the bottom so this is a good way to enter your position in this type of falling knife market. I am happy to see it go lower and so should you. No worries.

#125 Debt to income ratio over 500% on 12.09.15 at 11:14 pm

How could our governments let that happen… that is disgusting. Harper poor government, JT not much better so far. Direct Democracy is needed in this country, start thinking about it Canada, because its the one thing that might save your a$$.

#126 For those about to flop... on 12.09.15 at 11:19 pm

I don’t wanna go all granola muncher ,but what’s the point of pumping all the money into global warming when we don’t seem interested in keeping plastic out of our ocean and keeping toxins from entering our fresh water supplies.
Start with the basic stuff and work up,seems obvious but it isn’t sexy enough.Whats the point of breathing fresher air and drinking dirtier water.
I guess I can always go back to Tasmania where we have some of the cleanest air on the planet .Google it if you give crap.People travel from all over the word to suck in big ones .Wtf.

#127 Chris in Nanaimo on 12.09.15 at 11:28 pm

#97 SMoking Man

The Donald has perfect game. Not a F*#% given. Folks think he”s an idiot! But he’s playing everyone so well. The GOP don’t know what to do with him. Leading in all the polls, and what’s hilarious is he’s spent almost nothing on his campaign.

And just to top it off….checkout

http://www.jebbush.com

Owned…!

#128 Jeffrey of Saskatoon on 12.09.15 at 11:38 pm

Better to have a whoore for a country than a engineer for a brother.

#129 MF on 12.09.15 at 11:50 pm

#105 Patrick on 12.09.15 at 10:25 pm
#99 ben on 12.09.15 at 9:53 pm

ben I have to agree. I’m a fellow millennial as well. We are just as responsible for this housing disaster as the older folks. All you have to do is ask your friends what they plan on doing with their life savings. The answer 99% of the time is “condo/investment condo/RE”.

Most of us are too busy going clubbing, getting tattoos, going on tinder and smoking weed to learn what an ETF is.

MF

#130 Can ANYONE answer this, PLEASE! on 12.09.15 at 11:54 pm

Garth, (or anyone) can you please tell me if my idea is fiscally possible? I’ll try to keep this short:

A couple of years ago, I thought of a credit system to help Canada pay its debt. I wrote to Flaherty about it and got no response except for a receipt confirmation…

Here it goes: we often hear that Canada’s debt is (ex:) 45,000$ per person (don’t know exact number) and so I thought what if companies (or rich people) could “buy” some of other people’s debt and in turn receive an exemption (or credit) on future capital gains???

For example: a company/rich person is sitting on cash and decides to “buy” 100 people’s debt for 4,5 million dollars. In turn, this person receives an exemption on future capital gains up to (for example) 6 million dollars, or some other number/variation that makes “sense”.

Could anything I’m saying possibly work?? I’m thinking if 500 companies ” sitting on cash” (and we KNOW there ARE some) do this, it would be “problem solved”, no?

Or is it just that they DON’T WANT to solve the problem…? Please, chime in, Blog Dogs!!!!

PS: I want props for solving all of Canada’s problems!
Just sayin’!!!

#131 Pierre Petitpas on 12.10.15 at 12:01 am

My forecast for 2016:

– Q1: Canadian economy going into recession, this time not merely a technical one. CAD at 70 cents to the USD.

– Q2: Bank of Canada moving to 0% interest rates, CAD going down to 65 cents USD. Housing prices coming down by 10-20% average.

– Q3-Q4: Bank of Canada to start QE, CAD going down to 55 cents to the USD.

2017: more misery, CAD down to 50 cents to the USD. Manufacturing starting a comeback based on foreign inflow of investments. Housing down by 30 percent.

2018: housing down to 40% from peak, but economy no longer weakening due to foreign investments picking up steam rapidly.

2019-…: housing reach stable bottom, economy starting to grow again.

#132 triplenet on 12.10.15 at 12:02 am

Garth
Please don’t quote BC Assessment unless you understand multiple regression analysis in the real property valuation context.
They don’t.
Their 2016 valuations will prove that.
I wouldn’t be surprised if many GVRD Municpalities appeal the entire assessment roll. It’s deja vu …all over again. Been there, done that. More than once.
Look for tax rate ‘quantitive easing’.
And line ups at city hall. Like last time.

#133 45north on 12.10.15 at 12:09 am

Alexander thinks this is more evidence the feds should raise minimum downpayments, as finance guy Bill Morneau is now mulling.

“Who do we disappoint next and how soon?” wasn’t how this was supposed to go. But it’s where the Liberals are, rather suddenly. The trick will be in whether they can identify which bad outcome is least harmful, not primarily to the party and its reputation, but to the country.

http://www.ottawacitizen.com/news/national/michael+tandt+98who+disappoint+next+wasn+this+supposed+where/11574310/story.html

as Den Tandt says the Liberal Government has some hard choices. as Yogi Berra said “when you come to a fork in the road, take it”.

I mean the Liberal Government doesn’t have to go looking for big issues. They’re there. Right in front of them!

If CMHC raises minimum down payments then it has a chance to remain solvent. It must.

#134 Bottoms_Up on 12.10.15 at 12:09 am

#7 Randy on 12.09.15 at 5:03 pm
———————————-
Garbage men still have to stop at 2-person households…firemen and police have to respond to 2-person households…the paved road out front of your house doesn’t care whether a 5 or 2 person car is on top of it…public transit still needs to be funded (regardless whether anyone uses it)….

#135 No debt on 12.10.15 at 12:11 am

Go TRUMP!!! At least he has the balls to say it the way it is!

#136 chapter 9 on 12.10.15 at 12:14 am

#97 Smoking Man
#109 Chris in Nanaimo

Back in 1952 the US government introduced the Nationality Act which was geared at screening and restricting communists from entering the country. President Jimmy Carter,Secretary of Treasury and the Attorney General invoked this provision in 1979 to deal with the Iranian crisis. Carter ordered 50,000 Iranian students in the US to report to immigration offices to validate all visas, in one month. The net result was 15,000 were deported. Visas were not renewed or new ones issued. This was done to put pressure on the Iranians and the safety and security of the USA.

#137 For those about to flop... on 12.10.15 at 12:17 am

Freedom First on 12.09.15 at 10:33 pm
#67 common sense

common sense, Broke Dick, and loft. You guys remind me of the Three Stooges. Except you’re not funny and the 3 of you only embarrass yourselves. Unknowingly too. Sad.

///////////////////////////////////////////
I presume you meant me…were not the three stooges.
We are this blogs Rat Pack along with OLC .
Remember this…

Because
I never
Take
Crap
Here.

#138 45north on 12.10.15 at 12:18 am

BC Guy: impose a federal surtax on land over 10 acres that increases exponentially as the size of the property increases (exempt grain farmers on the Prairies of course)

you have a deep abiding ignorance of Canadian political structures.

in the context of the discussion, income taxes are the purview of the federal and provincial governments. Property taxes are and will remain the purview of municipal governments.

http://www.greaterfool.ca/2015/11/30/the-rich-guy/#comment-414256

#139 Rabbit One on 12.10.15 at 12:29 am

> #58 prairie person
>Royal Bank of Canada 5.50% 5-Year Rate Reset Preferred

Sctiabank also issued same deal, 5.5%, about 450 bps Rate reset.

This is a wonderful deal for investors, get some if not too late, but no worries, expect more like this coming out in 2016 & 2017.

This level of deals were not seen since 2009 (post financial crisis), banks need capital treatment.
Credit spread (Corporate debt and Gov’t debt) has been widen for last few months (big time).

Banks are losing credit balance projection (commercial) contrary to record high debt level seen on papers (residential), they will be tightening credit from now on.

Fasten your seatbelt, be liquid to grab FI deals.

#140 Bottoms_Up on 12.10.15 at 12:37 am

#106 OXI in GREECE on 12.09.15 at 10:13 pm
———-
You’re wrong on Germany (ps. Canada has 1/10th the size of Germanys public service)

The Public Service in Germany (Öffentlicher Dienst) employed 4.6 million persons as of 2011.[20] Public servants are organized[by whom?] into three categories: blue-collar workers (Arbeiter), salaried employees, (Angestellte), and directors (Beamte). All three groups are employed by public bodies (Körperschaften des öffentlichen Rechts), such as counties (Kreise), states, the federal government, etc. In addition to employees directly employed by the state another 1.6 million persons are employed by state owned enterprises[21]

#141 45north on 12.10.15 at 12:47 am

caught in the grip: from your link :

Ontario suffers from an excessive debt burden. On any metric, it is in far worse shape than the state of California, which (rightly) has a reputation itself for fiscal irresponsibility

key word being burden

#142 Freeman on 12.10.15 at 12:50 am

Here is a more ‘magnified’ graph of those indicators that I was telling everyone about:

http://www.nowandfutures.com/images/yield_curves_short_term.png

Look at the heavy blue line in that chart; what on Earth has happened to the economy lately to make it start to crash like that? I have no idea, but whatever it is, its really bad.

That heavy blue line is the same as the blue line in this graph:

http://www.nowandfutures.com/images/predict_recession.png

Hopefully, that thick blue line WON’T go below zero, because if it does then in 3 to 12 months later there will be a confirmation that a U.S. recession has begun. However, if that thick blue line stops falling and starts heading back up then we will have just barely scraped by having a new and very serious recession in the U.S.

And it has nothing to do with how the U.S. is creating all of those millions of part-time minimum wage jobs lately, no, it has everything to do with how China’s economy is cooling down extremely quickly and we see that in the crashing commodities markets. It is the China Syndrome that is pushing the U.S. into a new recession.

#143 Salutations Sally on 12.10.15 at 12:52 am

Thanks Garth and Mark (comment #120) for the explanations/answers. Much appreciated!

But Mark is wrong, of course. — Garth

#144 Tiger1960 on 12.10.15 at 12:58 am

135 for those about to flop!
No your not the three stooges., you make them look intelligent

#145 Tiger1960 on 12.10.15 at 1:05 am

135 flop!
Whear do you take your crap from , you eat crap that’s rude keep that to your self ,are you from Newfoundland

#146 pwn3d on 12.10.15 at 1:06 am

#97 Smoking Man on 12.09.15 at 9:45 pm
Dr Smoking Man told you Dogs not but a few days ago that with Donald Trumps outrageous comment about banning Muslims with out proper vetting It will give him the nomination.
———————–
What’s comical is the Liberals were ok banning men from coming from the refugee camps. And why do you think that was exactly, they might be Jewish? They might be atheist?

So, it’s ok to basically say we’re going to ban Muslim men from coming, because they might blow stuff up, but when Trump says he’ll ban the women and children as well, now he’s like Hitler.

Trump is a doofus, but I love the fact that he can say whatever he wants and he gets the media so worked up which is playing right into his hands.

He has more freedom than any of us, that’s for sure, and in that way, he’s a genius.

#147 pwn3d on 12.10.15 at 1:09 am

#99 ben on 12.09.15 at 9:53 pm
Garth your attitude towards the “entitled” young is bad. First up, by young we now mean anyone under 40.
————–
no way man, that still includes gen-x. the entitled young is the millenials, so you’re talking 35 years old or younger.

#148 The American on 12.10.15 at 1:10 am

Tony, you’re so marvelously stupid that it has got to hurt in the head. I fear you are in a constant state of utter humiliation as you secretly jerk off to photos of U.S. How do you even dress yourself in the morning? Seriously, seek help. You need it. BTW, USD is now buying nearly $1.36 canadian. I remember you said USD peaked when it was a $1.32, and I called your bullshit. Remember, just because you *wish* something may be true does not make it true. You’re a sad and pathetic little-minded man.

#149 The American on 12.10.15 at 1:17 am

At #98: TRT, you said, “It is the role of government to anticipate and provide stability.”

I would say that’s the fundamental difference between a Canadian and an American. An American would say it is the role of government to protect an individual’s rights that are in play. It is an individual’s responsibility to anticipate and provide her/his own stability – not the government’s responsibility.

#150 pwn3d on 12.10.15 at 1:17 am

#125 Chris in Nanaimo on 12.09.15 at 11:28 pm
#97 SMoking Man

The Donald has perfect game. Not a F*#% given. Folks think he”s an idiot! But he’s playing everyone so well. The GOP don’t know what to do with him. Leading in all the polls, and what’s hilarious is he’s spent almost nothing on his campaign.

And just to top it off….checkout

http://www.jebbush.com

Owned…!
——————-
The funny part for the GOP is if they dump trump he will run as a independant and take half their votes. They have to run him.

#151 Nagraj on 12.10.15 at 1:30 am

#119 WASHED UP LAWYER
The name of your deNiro Travolta movie is “Killing Season” (2013). It got lousy reviews.

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

Speaking of entertainment, if Craig Alexander “former big cheese economist at TD Bank” were a Beatles fan, and if he were to pay a nostalgic visit to TD, walking out of his erstwhile office he might quietly sing, “All the little cheeses, where do they all come from?”

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

In chronological order, selected words and phrases from “Mr. Negative”: hopeless financial vise/screwed/a lot of pain/suffers/shocking/insane/fallen off a cliff/plunged/mop up the blood/chaos/zombies.

#152 Leo Trollstoy on 12.10.15 at 1:32 am

#129 Pierre Petitpas on 12.10.15 at 12:01 am

I like it.

#153 Koshy Alex on 12.10.15 at 1:40 am

“The real news was the bank saying it can now launch a big stimulus program, like the ‘quantitative easing’ that swept the US out of recession.”

Garth when you make statements like this your credibility suffers, the very fact that they had to print several trillions of dollars just to prop up their economy shows that there is no real recovery from recession, they will need to do this more to keep the show going, it is utterly foolish to think that the central bankers can solve everything, 2008 GFC happened under their watch. We still have the same people there playing with our financial destinies.

#154 DON on 12.10.15 at 1:47 am

Freedom First, about the post with the Smoking Man text. It seemed to flow from one paragraph to another, no differentiation, who said what. Easy to take the wrong way. I haven’t been reading Smoking Mans as of late, just too negative – bad time of the year I guess.

Lot’s of negativity on here as well – too bad. This blog has the potential to turn ideas into solutions, still might, a Port in a storm to come.

That or you SM, MF (Smoking Man’s son?) can challenge Floppin, SWL1976, common sense to a game of Dodge Ball.

I’ll referee.

#155 The American on 12.10.15 at 1:52 am

At #110: Patrick, where in the hell is your coworker finding these so-called $150,000 rental homes in the U.S.?!?! In case canada hasn’t gotten the memo (and chances are you haven’t, with only another three years to go before you get the message), the U.S. is back as Canada falls and fails.

http://www.economist.com/blogs/graphicdetail/2015/11/daily-chart-0

#156 DON on 12.10.15 at 2:00 am

I was saddened by news of increased suicide rate in Alberta. Keep your minds healthy, you will get through this – stay together, life is worth it. Safe travels.

#157 Herf on 12.10.15 at 2:02 am

#134 chapter 9
#97 Smoking Man
#125 Chris in Nanaimo

According to the following article, Trump is playing the media and RINOs for hysterical fools:

http://www.redstate.com/2015/12/07/this-is-a-brilliant-move-by-donald-trump/

However, the author of the above article has come under flack from various commenters where I first found the article – see posted comments following the main article excerpt:

http://www.freerepublic.com/focus/f-news/3370069/posts

Interestingly, the above Free Republic (FR) post also included a couple of interesting comments supporting Trump’s spiel about banning Muslims. See posted comments #6 and #35 following the initial article at the above FR link. In particular, comment #35 included the following link to the U.S. IMMIGRATION AND NATIONALITY ACT (which, interestingly enough, is stored on a Canadian-based server, according to my web browser):

http://www.uscis.gov/iframe/ilink/docView/SLB/HTML/SLB/act.html

From the previous link, Act 212 lists the various categories of aliens who are ineligible for admission and/or for a visa to the U.S. Note in particular, the inadmissibility of terrorists under Act 212, Section (a)(3)(B)(i), including terrorist sympathizers/supporters at (a)(3)(B)(i)(VII).

Also, see the definitions of “Terrorist Activity” under Act 212, Section (a)(3)(B)(iii).

All the above suggests that the Canuck media and politicians (including Jr. Trudeau) should shut up about Trump’s comment and mind their own Canuck business, given their ignorance of U.S. law.

In contrast to the above U.S. law, here’s the section of Canada’s Immigration and Refugee Protection Act that discusses Inadmissibility:

http://laws.justice.gc.ca/eng/acts/I-2.5/page-19.html#h-23

From what I see in Sections 34, our Act seems a bit anemic – it doesn’t seem to directly address terrorist sympathizers. At the very least, it appears to leave a lot undefined and/or open to interpretation and/or discretion of the decision makers who are deciding an immigrant applicant’s status as a security threat.

#158 kommykim on 12.10.15 at 2:12 am

RE:

#58 prairie person on 12.09.15 at 7:24 pm
I’m surprised that this didn’t get jumped on when I posted it yesterday.
Royal Bank of Canada 5.50% 5-Year Rate Reset Preferred Shares, Series BK
Perhaps someone can explain to me why and how the bank is offering 5.5% when it has issued all these mortgages at -3%.

It is interesting to note that these are being offered on the same day when the US Fed announces a potential rate increase. Also note that any new money RY raises will be for NEW mortgages and loans. Existing mortgages are already covered by other offerings by RY.
The Bank of Nova Scotia is also offering something similar the next day at 5.50% (451bp spread).

#159 Where's The Money Guido? on 12.10.15 at 2:15 am

Christy Clark accused of interfering in local band election to aid brother’s deal http://www.theglobeandmail.com/news/british-columbia/christy-clark-accused-of-interfering-in-band-election-to-aid-brothers-deal/article27654979/

Bruce Clark was Harper’s and Christy’s campaign manager in their last elections.
He was in on BC Rail….

And…Harper’s buddy, Bruce Carson is in court fighting influence peddling.
http://www.thestar.com/news/canada/2015/09/15/former-harper-aide-bruce-carson-exaggerated-his-pull-with-government-prosecution.html

I guess birds of a feather. Low life fraudsters….in my opinion and to be determined…..hopefully sooner than later

#160 jane 24 on 12.10.15 at 2:18 am

The thing that I don’t understand is this Canadian LOC on your home. It used to be normal thinking to pay your home off asap and then enjoy free living. Now I know folk who have been in their homes for that 25 years but still owe their original mortgage or more on the LOC which has been spent on toys and holidays.

It is now usual thinking to use your home as a ATM.

Or they decide in their 60’s to upgrade to the dream house and start another 25 year pay-off. Why? They will die with a mortgage! What is the point of having such stress to the end?

Yes indeed the usual rules of saving and spending seem to be totally reversed in Canada 2015.

#161 Frank on 12.10.15 at 4:20 am

http://www.economist.com/blogs/buttonwood/2012/04/house-prices-and-interest-rates

So if house prices and interest rates don’t have a strong correlation then what’s to stop Vancouver and Toronto? There isn’t an over supply of housing (maybe condos in TO but only that). Vancouver is as tight as a drum, the vacancy rate is <1% in the rental market and real estate inventory is low. There just isn't enough housing here.

#162 When will they raise rates? on 12.10.15 at 4:30 am

#68 Diversified In Oakville on 12.09.15 at 8:05 pm
Absolutely crazy how much debt some people want to take on to buy some bricks and mortar in the GTA and 905.

I hope they save some to buy my Oakville SFH in the Spring of 2016 or 2017. Time to cash out, rent, travel, and win the game; and move to the East Coast where it costs a fraction of what it does here.

Just sheer lunacy.
————————

Too late. You should have already sold.

Good luck selling when everyone else is trying to cash out at the same time. Lol. Don’t you know how bubbles work? Greed, then fear. Come spring of 2016, (definitely by 2017) we will be entering the fear stage… Everyone will be rushing for the exit at the same time.

You think you’re the only one with that plan? Lol

Good luck. Greed is a bitch.

#163 Freedom First on 12.10.15 at 5:18 am

#128 Can ANYONE answer this, PLEASE?

YES. My pleasure. That’s like paying off a milenial’s credit card without cutting off their credit. It’s called enabling.

Everyone’s enabled the debt binge though, BOM, Banks, Governments, etc.etc.etc. Can’t stop stupid borrowers though. And the world has had lots of those recently. $$$$hit$torms of RE bubble collapses world wide. Canadians may not be the first to get sucked in screwed over, and bankrupted, but they certainly could be next.

Glad I could help,

Lastly, talked with someone still working at FT. McMoney yesterday. He said it is like a ghost town up there now.

#164 Freedom First on 12.10.15 at 5:26 am

DELETED (language)

#165 Mark on 12.10.15 at 8:12 am

“So if house prices and interest rates don’t have a strong correlation then what’s to stop Vancouver and Toronto?”

Overcapacity, and dramatically tighter credit terms for entry-level buyers have driven price stagnation in Vancouver/Toronto for the past 2 years on ‘identical’ properties.

“There just isn’t enough housing here.”

There’s *never* enough housing in prime areas by definition. That’s why they’re considered ‘prime’ Doesn’t mean that all real estate in such areas is worth a gazillion dollars. The amount someone will be able to pay to rent such property is ultimately limited, and most owners of RE will not accept returns far less than their cost of capital or opportunity costs in other investments for a prolonged period.

“It is interesting to note that these are being offered on the same day when the US Fed announces a potential rate increase. Also note that any new money RY raises will be for NEW mortgages and loans. Existing mortgages are already covered by other offerings by RY.”

Preferreds are opportunistically issued to provide additional leverage for common shareholders. 5.5% might seem like a ‘high’ rate to pay, but at a GAAP-compliant after-tax E/P of roughly 10% on the common, it intuitively makes sense for RY to ‘borrow’ at 5.5% to buy back obligations that are implying a ‘cost’ of at least 10% by way of preferred share issuance.

RY is generating more than enough capital through earnings that they really don’t ‘need’ to issue preferreds at all to support their operations or their Tier1 capital ratio. But if people are willing to buy them for returns lower than that implied by the common shares, then RY is happy to oblige.

#166 lol on 12.10.15 at 8:21 am

The graph that you are missing is debt service ratio, Canada has one of the lowest debt management costs on earth. Only job losses will bring the market down in a big way, otherwise it will stay stale and hollow out society

You examples of someone earning 200k buys 1M dollar house is extreme? Hardly

1m home is about 20k interest a year
200k after tax is 120k a year, the interest is nothing on this salary. Add in principal of 20k, still 40k is only 33% of total AFTER TAX income

Why does this seem extreme? All it tells you is that rates are low and will cause prices to go even higher until they can’t reach anymore – are we at that point? If we do, government will reduce rates to keep the game going….

Debt servicing costs are low because rates are. We all know this will not last. — Garth

#167 Mark on 12.10.15 at 8:30 am

“Could anything I’m saying possibly work?? I’m thinking if 500 companies ” sitting on cash” (and we KNOW there ARE some) do this, it would be “problem solved”, no?”

Your example is already implemented in practice through the modern financial system. Savers/companies already own the entirety of the debt of Canadians. They do this to earn a return on the ownership of their debt.

“cash” in the accounting sense typically refers to both currency issued by government/central banks, as well as other short-term investments such as commercial paper, short-term bonds, etc. So no, there isn’t just some massive “cash” store of value sitting in big “Corporate Canada’s” vaults waiting to be unleashed in the economy. “Cash” is lent out, and someone is on the other side of the transaction. Even if its just the government on the other side benefitting from the seigniorage of being the issuer of currency.

Now if corporations were merely hoarding, say, gold, or severely excess inventories in their warehouses, rather than investing, then there might be a case to be made that such holdings are not helpful to the economy. This is said to be a significant problem in the India economy, that a lot of capital is locked up in (mostly imported) gold on account of the cultural affinity India’s residents have for gold, rather than being deployed to business ventures which have a pretty high chance of greater returns.

#168 T2 on 12.10.15 at 8:56 am

Can everyone just stop worrying? the budget will balance itself. In the meantime I have a busy photo op schedule to attend.

http://news.nationalpost.com/news/canada/trudeaus-hit-the-pages-of-vogue-dont-worry-sophies-5700-dress-is-a-loaner

T2

#169 Herb on 12.10.15 at 8:57 am

… seduced into real estate by cheap money and societal pressure …

If this were a paternity case, it would be real easy. But,

It’s just normal business, to wit Finance, Insurance and Real Estate, Your Honour. The ‘chaperone’ who enabled the tryst is government, so no one is responsible but you, Madam. No one forced your legs open, so it’s your own fault. Bear the consequences!

Good luck with that argument in court.

#170 Renter's Revenge! on 12.10.15 at 9:03 am

#124 For those about to flop…
Whats the point of breathing fresher air and drinking dirtier water.

It’s an excuse to drink more scotch.

#171 crowdedelevatorfartz on 12.10.15 at 9:14 am

@#128 Can Anyone answer this Please”
“I wrote to Flaherty about it and got no response …..”
+++++++++++++++++++++++++++++++++++

You do realize he’s dead. For several years.

#172 CJBob on 12.10.15 at 9:17 am

I have transferred my TFSA from the orange guys shorts to a direct investing account and I’ve picked out by ETF’s based on 40% maple (VCN), 30% US (VUN)and 30% international (XEF).

Does anyone have a link or tips for the next steps? I’ve read not to buy during the early or late market hours. Anything other tips as I do this for the first time?

Thanks.

Tip: sell what you bought. Bad choices. Too much Canada. No balance. — Garth

#173 crowdedelevatorfartz on 12.10.15 at 9:18 am

@#154 DON
“Keep your minds healthy, you will get through this….”
+++++++++++++++++++++++++++++++++++

We also have the “double stress whammy” of Christmas and a full moon landing on the same day…..

Can you say 911 overload? I expect lots of sirens on Dec 25th.

#174 gut check on 12.10.15 at 9:22 am

@ #124 For those about to flop… on 12.09.15 at 11:19 pm

exactly, and that’s why I’m not behind the carbon scheme. They are playing games and have no real interest in ending pollution. Water. water water water water – they seem happy to destroy that resource. Food – they like to play with the genetics and reduce its nutrient value. Land? they could not care less about toxifying via fracking, dumping or ‘spills.’

It is a scam. They are going after “warming” because they know they’ll not have to show any results. And they can blame each one of us for contributing to it. Also there could be no credit trading for clean water, earth or food as we would see right through it.

Bottom line is, though, that people will worship at the altar of ‘science’ not even realizing that the scientists have been captured, gagged and hidden away only to be replaced with corporate spokesmen. “Science” can tell too many of them that flammable water is perfectly healthy and they’ll believe it.

#175 crowdedelevatorfartz on 12.10.15 at 9:24 am

@#157 Where’s the money Guido”

Gee Christy Clark is implicated in more influence peddling and her brother may be involved. Q’uelle surprise.

And it looks like Mike Duffy’s trial testimony yesterday
suggests that both Christy and Harper went to the same “management class” aka “Plausible Denial 101”

Post it notes, zero emails were the rule….. no permanent writtten records to snare them in any activities that may have come back to bite them.
Bottom dwelling Pond Scum has nothing on the politicians of today.

#176 SWL on 12.10.15 at 9:24 am

As I was leaving labour camp this morning I couldn’t help but notice the half assed flyer’s that were being put up stating that…

Notice to all BLANK employee’s there is no work today

In other words…

Enjoy your unpaid day off in camp

To all those who like to bash on Mark; I do believe he called the Alberta wage slide a long long time ago here. Contracts are no longer worth the paper they are printed on, overtime is long gone and once standard perks are now a luxury.

Full on panic mode, but the big players will survive and thrive. It’s the construction work force will need to begin migration…

To where?

#177 learningfromyou on 12.10.15 at 9:32 am

Thank Garth for this post

1->But Mark is wrong, of course. — Garth
I do not have the knowledge to fully understand where Mark is wrong, Garth please could you provide more information?

2-I have a challenging question to the forum, let’s assume you have 40k from a secured credit line (3.5% interest) and you want to use it for investments.

I have the possibly scenarios

2.1-Do nothing. I just want to be better than that.

2.2-Open a non registered account and fund it with the 40k and get back the interest paid in my annual tax report for using loan for investments.

-what type of investments I should do in this case for tax efficiency?
-there are also taxes to pay from the ROI.

I was thinking to buy some REITs why high dividends returns in this case.

2.3-Fund my TFSA (Garth baby) :)
-what type of investments I should do in this case for efficiency?

2.4-Fund my RRSP

Once again, I just want to learn from those who really know about this subject.

Thank in advance for your guidance, these questions are more important than trying to fix life variables out of my control.

Thank those who advised preferred shares in the portfolio, I made it happen.

#178 Godth on 12.10.15 at 9:33 am

Oh Donald!

#179 Wetdog on 12.10.15 at 9:36 am

Bless you Garth, I wish someone here in lower mainland would listen to what you have to say. Everyone thinks they are rich although mortgaged to the max. The housing casino continues unabated, it seems owing 700k on a 900k starter home qualifies you as a one percenter. Gotta have a leased Beamer and granite counter tops to fit with the neighbours. It’s a shame that good people could make such a stupid mistake. This won’t end well.

#180 Did I ever make a mistake voting for Justin on 12.10.15 at 9:52 am

I have a mortgage and I pay taxes. I don’t have a nany for my children. “Rich people should pay for their own nannies”. I think that is essentially what JT said prior to being elected. It may be a small topic on its own, but extrapolated it means that ‘rich people’ (Politicians in this case) should pay for their own ‘luxuries’ (as defined by your average tax paying citizen/household). “Why didn’t the prime minister keep his word, and is it because he’s entitled to his entitlements? she (Karen Vecchio) asked”. A legitimate question from the opposition (for a change). You can refer to it as “shuffling” your ‘family budget’ all you want, JT, but it still boils down to tax payers paying for your ‘nannies’. “Trudeau repeatedly attacked the Conservatives’ enhanced universal child care benefit during the election campaign, maintaining that “wealthy families” like his didn’t need taxpayers’ help.” So why is he even taking a “household budget”?
I am so disillusioned by his / Liberal lies. Stop with the photo opportunities with your wife and get back to work. If she has that much time on her hands then tell her to watch the children.

#181 pbrasseur on 12.10.15 at 9:53 am

The BoC can say what it wants but I think the BoC doesn’t actually have the luxury to go negative, not while the Americans are raising, at least not if you don’t want the CAD to collapse and explore new depth!

If fact (and this is THE BIG difference with the 1990s) we don’t have much for margin anywhere. Some of the differences:

Rates already to the floor.
Population ageing entering phase where workforce shrinks (in several provinces).
Household debt…
Provincial public debt amid exploding health care needs.
More or less tapped out fiscally (GST already in place).
Industrial base depleted.
Only bright spot is the federal deficit, but that will likely change very quickly under «junior».

So no we won’t go negative, but that’s because we can’t afford it not because we are not screwed!

#182 jaybee on 12.10.15 at 10:07 am

#141 Salutations Sally on 12.10.15 at 12:52 am
Thanks Garth and Mark (comment #120) for the explanations/answers. Much appreciated!

But Mark is wrong, of course. — Garth

———————————————————-

Sally,

Garth’s comment here is correct. Mark is an articulate writer, but don’t mistake that for being knowledgeable about Economics, Personal Finance or Investing.

He pretends to have more knowledge than he actually possesses.

#183 Ronaldo on 12.10.15 at 10:10 am

#177 Wetdog on 12.10.15 at 9:36 am

”Bless you Garth, I wish someone here in lower mainland would listen to what you have to say. Everyone thinks they are rich although mortgaged to the max. The housing casino continues unabated, it seems owing 700k on a 900k starter home qualifies you as a one percenter. Gotta have a leased Beamer and granite counter tops to fit with the neighbours. It’s a shame that good people could make such a stupid mistake. This won’t end well.”

And probably the same ones who are shoppping at Holt Renfrew and buying $1800 dollar fur lined shoes that you could buy anywhere else for less than a $100. It’s all about appearance isn’t it. You’re right. It won’t end well.

#184 westcdn on 12.10.15 at 10:15 am

I don’t like to whine. The guy in my basement just won $ 250,000 on the 649 Extra. I am not in his plans. I had to laugh at my neighbor who asked what my bud was going to do….

We share divorce stories – he got taken to the cleaners. My former wife called me the other day and proceeded to run up on one side and down the other. I don’t where she was coming from but I took it because I am, what I am. Man, it can be it tough to be a guy….

#185 Dups on 12.10.15 at 10:16 am

Canada is becoming the new Norway, but without the nice Volvo’s.

#186 MF on 12.10.15 at 10:26 am

#154 DON on 12.10.15 at 2:00 am

“If you can dodge a wrench, you can dodge a ball”

-Patches O’ Houlian

http://youtu.be/OnL_4QCODEU

MF

#187 Mike the Anxious Realtor on 12.10.15 at 10:30 am

STOP THE SYRIAN REALTORS!!!!!

Holy crap, I just read that the first planeload of 160 Syrian realtors lands tonight. This will be a DISASTER for the real estate industry in Canada. We must TURN THIS PLANE BACK!

Don’t do it Justin! I voted for you, even bought one of your “50/50 Because it’s 2015” t-shirts – WHY are you doing this to me now?

Realtors in Canada spend days, often WEEKS, studying diligently to get their licenses. Even after that, most of us can barely sell one house a year. There are now already MORE realtors in the GTA than Garth has Amazons!!!

Stop this INVASION!!

These Syrian realtors will have to spend MONTHS to learn English phrases like “location, location, location” and “buy now or be locked out forever”, and will be too absorbed in their own arcane religions to learn the book of TREB and worship at the altar of HGTV. They might as well be ATHEISTS!!!

They won’t even learn how to use the Bank of MOM and DAD in time for the spring market and sales will drop! The federal deficit will grow!

I hear some of them will be wearing Burkes!!!!!! The last Burke we had in the GTA was Brian Burke, and that Phil Kessel trade was a disaster we still haven’t recovered from!

This will be a GROSS DISSERVICE to home buyers everywhere!

STOP THE SYRIAN REALTORS!!!!!!

CALL YOUR MP NOW!!!

——-

What’s that?

Excuse me………..oh….um……ooohhhhhh…..you say it’s

R_E_F_U_G_E_E_S, not R_E_A_L_T_O_R_S.

Hehehe…,….Sorry folks, guess I spent even less time reading that news story than I do reading most home inspection reports before telling buyers “hey, no problem!” LOL!

Refugees………..hmmm…………………………

SYRIANS, WELCOME TO YOUR NEW HOME!!!

Syrian-Canadians, you’ll be needing to buy a house right away, condos are cool too!

And in Canada we have a saying that only LOSERS like the readers of Greater Fool are renters. ;)

You want to fit in, don’t you? Of course, and you will!

Come right to our office and we’ll set you up. You’ll fit right in. Commission is only 5% if you call by Friday.

The market here goes UP and UP forever – it’s DIFFERENT here!!

WELCOME TO CANADA! 

SUNNY DAYS, SUNNY DAYS!

:) :) :)

#188 CJBob on 12.10.15 at 10:30 am

#170 CJBob: 40% maple (VCN), 30% US (VUN)and 30% international (XEF).

Tip: sell what you bought. Bad choices. Too much Canada. No balance. — Garth
______________________________________-
My overall percentages including RRSP’s are 50% bonds and safe stuff (I’m fairly risk adverse), 50% split as above. The TFSA should contain the most aggressive portion so all in the markets.

The orange guy is a closet ETF with 50% CAD, 25% US and 25% International charging 1.07% thus the reason for the change.

For that fee you can get an actual advisor. — Garth

#189 Daisy Mae on 12.10.15 at 10:32 am

#7: “We do need Property Tax reform. It’s ridiculous that my small household is paying the same taxes as a household with 5 or 6 people. Basing property taxes on property assessments is ridiculous. It should be based on services used by the household. Poll Tax should replace Property Taxes.”

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

It’s always been this way. Fair? Who knows? Our strata fees are based on the square footage of our homes regardless of the number of occupants. These assessments apply across the board including utility costs — we all need heat and light.

As they say, “Two can live as cheaply as one.”

#190 Leo Trollstoy on 12.10.15 at 10:35 am

I do not have the knowledge to fully understand where Mark is wrong, Garth please could you provide more information?

Evidence that Mark misleads novices who are unable to distinguish accurate financial information from Mark’s often incorrect spewing.

#191 Mark on 12.10.15 at 10:43 am

“Thank in advance for your guidance, these questions are more important than trying to fix life variables out of my control.”

I don’t think anyone here is trying to give you the cold shoulder. But the questions you ask are really into the realm of soliciting personal financial advice, for which it would be completely unethical, even for those qualified and in the “advice” business to render it over a blog comments section, or in any manner which does not reflect the outcome of consultation in a proper professional-client relationship.

Much of what is written in the comments section is debate, and in debate, it is very commonplace for people to employ the rhetorical device of hyperbole. However, it would be tragic if anyone selectively took such hyperbole to heart and invested on the basis of what’s been written here.

Mark, like basically everyone else here, is partially right, and partially wrong. Even leaning towards the latter in practice (but maybe not in theory). But if there’s one thing that most of us agree on, it is that extreme positions lead to extreme outcomes that are often extremely bad. Hence, Garth’s constant exaltation of balance, particularly when it comes to portfolios.

#192 IHCTD9 on 12.10.15 at 10:46 am

#12 Mr Negative on 12.09.15 at 5:09 pm
Justin Trudeau just handed out 4 Billion in Paris, the bulk to underdeveloped countries. Our carbon tax contribution? Now over 300 Million paid for refugees in Canada. Not one cent paid to a Canadian or a Canadian project to help our economy so far. Is Justin’s government thinking of helping Canadians anytime soon?…
____________________________________________

I suggest real life action. Don’t pay for it. Avoid taxes like the plague. Reduce your retail spending (buy big items used- Kijiji etc, go to a reserve), reduce your consumption, employ your talents to reduce exposure to government – that goes double if you live in Ontario.

If you start now, when the S really HTF in 5-10+ years from now, you will at least have some options other than packing up and leaving.

Although, some of the tripe coming out of Wynne’s mouth lately is really scaring the hell out of me.

Honestly, if I were single with no kiddies – I’d probably be doing what needed to be done to effect a permanent exit from Ontario – maybe even Canada as a whole. It sure would be a lot easier than what I am doing.

#193 Mark on 12.10.15 at 10:57 am

“Evidence that Mark misleads novices who are unable to distinguish accurate financial information from Mark’s often incorrect spewing.”

I have never done anything of the sort. The statistical evidence pointing to a lack of a broad-based ‘recovery’ in the USA supports my comments fully. You, on the other hand, trying to spoonfeed us all nonsense about the ‘sales mix’ not existing…strikes me as the definition of ‘spew’.

#194 IHCTD9 on 12.10.15 at 11:19 am

#40 Tax avidance? may be not in the future on 12.09.15 at 6:22 pm
There goes your theory on tax avoidance:

https://ca.news.yahoo.com/blogs/canada-politics/expect-tweaks-to-liberals-income-tax-reforms-184205628.html

“I think they will announce they will close many tax-avoidance opportunities for high-income earners,” Laurin said in an interview with Yahoo Canada.

Closing tax loopholes in addition to the rate increase should boost anticipated revenues to between $2 billion and $2.5 billion, he said

May be Morneau listens to these things and actually has the right intention to carry out the initial Liberal plan of shifting the tax burden as it has shifted out of proportion in the last 10-20 years.

And may be he reads your blog, so may be you shouldn’t taunt him like that. He is in charge :)
____________________________________________

Guy, since the very day tax was invented governments have been trying to prevent the tax mules from avoiding them. How has that been working? Tax avoidance can be as simple as cutting consumption, piling it into RRSP’s, buying a fuel efficient used car, buying a woodstove etc..

Our society is very complex, and the more complex it gets, the less control government can effect.

Closing these “loopholes” will not generate a dime – in fact, it will likely end up similar to T2’s plan to ding the 200K+ club where the result looks to REDUCE revenue by about 4 Billion.

Sounds good as a headline, but just doesn’t work in real life. T2 and Co. are shaping up to be an epic clustrfk of a government. You’d best start making plans to avoid taxes yourself, they will be coming thick and fast in the years to come without a veritable miracle taking place.

#195 NorthOf49 on 12.10.15 at 11:20 am

#166 T2

Notice where his hands are? I’d be smiling too. She looks that good in a borrowed dress? The woman is a gem, he’s lucky to have her.

#196 Broke Dick on 12.10.15 at 11:21 am

#21 Broke Dick on 12.09.15 at 5:27 pm
The tab at the top of my screen shows a miniature phot of Garth and beside that it reads Mr. Negative.

Priceless

You have no idea what I imagine when I look at your name. — Garth

/////////////////////////////////////////

I’m sure it is something pleasant but let me give you a little background on what “Broke Dick” actually means.
In the car sales business a “broke dick” is someone who has no cash and also has poor credit. (yes for many years I was one of those guys, a car salesman I mean).
So when an “up” (an up is a customer. called an up because sales staff generally go in a rotation and when a new customer walked on the lot we would say “Who’s up”. but I digress) had no money and could not get bought (financed) we would call such a person a “broke dick”.
We also theorized that a “broke dick” would buy anything on the lot as long as you got them bought.

Ahhhh, memories.

#197 SWL on 12.10.15 at 11:45 am

#172 gut check – RIGHT ON – you nailed it

#198 IHCTD9 on 12.10.15 at 11:47 am

#39 Hotdogs from Heaven on 12.09.15 at 6:19 pm

Yes, but we also had tens of thousands of factories that we no longer have. Asia and more importantly, Mexico have eaten our lunch. We just do not have the capacity to recover like we did back then.

I’m looking for the stats, but I remember reading a few weeks ago that in 2000 we had over 104,000 factories in Ontario and today we have less than 50,000.

The good middle class jobs are disappearing fast, replaced by minimum wage jobs that require people to be in debt up to their eye balls just to live in a city like Toronto.
____________________________________________

Not to mention factory count is not really telling the whole story. Take GM Oshawa, the factory is still there – but there’s only 2600 workers in there compared to the 15,000 they used to have.

The immigrant population in Toronto is also massive compared to the 90’s. Believe what you want, but I have seen enough. These folks drive wages down – not their fault, but it is what it is. Desperation has a way of letting itself be known, their circumstances are being exploited – often by their own countrymen.

Organized labour membership is steadily dropping in Ontario.

I am waiting for that sub .70 Loonie and when it happens, I’m heading straight to the US to try and pick up work for my employer down there. I am not even going to bother with the GTA, it is already cut throat and set to become even worse. Steel is just tanking right now – 90’s pricing. Nickel is under 4.00, getting real close to the flame out in 1999. Scrap is like 100.00/ton.

Last I heard from Wynne, she is still talking ideological garbage and new taxes. Seriously, I don’t think she even understands the gravity of what’s happening out there…

#199 paul on 12.10.15 at 11:54 am

#192 NorthOf49 on 12.10.15 at 11:20 am

#166 T2

Notice where his hands are? I’d be smiling too. She looks that good in a borrowed dress? The woman is a gem, he’s lucky to have her.
———————————————————-
His hands are there on us as well, digging for our wallet !

#200 Broke Dick on 12.10.15 at 12:02 pm

#112 Freedom First on 12.09.15 at 10:33 pm
#67 common sense

common sense, Broke Dick, and loft. You guys remind me of the Three Stooges. Except you’re not funny and the 3 of you only embarrass yourselves. Unknowingly too. Sad.
///////////////////////////////////////

For Freedom First.
Let me relate to you a story from my car selling days, which reminds me of you.
On day there was a customer in the showroom asking ridiculous questions and seeming just wanting to put down the car brand I was selling. I could see he had no intention of buying said car and after about 10-15 minutes of his going on and on I said to him “Why don’t you just [email protected]#% off”.
Well wasn’t this rude customer now just flabbergasted.
He says to me “Did you just tell me to [email protected]#% off?”
Yes, I said.
Well I want to speak to your manager says the customer.
So into the managers office I go and I said to him that the customer wants to see him.
(To add a little colour to this story picture my manager as a car salesman straight out of the sixties, plaid suit and all. And for to keep his identity a secret let’s just call the manager Peter Pecker).
My manager exits the office, introduces himself to the customer and asks the customer how he can be of assistance.
The customer replies that I had told him to [email protected]#% off.
Mr. Pecker turns to me and asks “Did you just tell him to [email protected]#% off?”
Yes, I replied.
Mr. Pecker, my manager, turns back to the customer and says “So what are you still doing here, get lost!”.

Freedom First, you remind me of that customer.

#201 Can ANYONE answer this, PLEASE! on 12.10.15 at 12:04 pm

@169 crowdedelevatorfartz : You do realize he is dead, right? For several years.

Please, the guy died April 10th 2014….This is hardly “several years”, but yeah, I know. He was still alive when I wrote to him though!

#202 AB Boxster on 12.10.15 at 12:08 pm

CJBob
———————–
Good idea to move away from the Tang fund, but still too much Canada in your balance.

Have a look at:

Greater Fool – The Deceivers

This was a good post on balance recommended by GT earlier this year.

#203 IHCTD9 on 12.10.15 at 12:09 pm

#63 Ruskie Ryan on 12.09.15 at 7:35 pm
Garth, you should do a weekly podcast. I’m sure you have all kinds of interesting friends and acquaintances who you could have on. Hell, maybe even some you don’t quite see eye to eye with. Sit down, have a couple scotches, hit record on your iPhone and that’s basically it. Come up with a clever name, say Garth Turner Overdrive (GTO Podcast) or perhaps Talk Money To Me. Upload to iTunes, rinse and repeat. Could be 20 minutes, or two hours. I for one would definitely tune in to that!
____________________________________________

This is a damn good idea :) I bet Garth would be a natural, and like you say- has the contacts.

I think this blog is just a hobby for G though, he may not want another one.

Weekly podcast is here. — Garth

#204 The Other Chris on 12.10.15 at 12:16 pm

It’s not just the tax increase that will drive people out of the country, it’s the tax increase combined with the weak currency.

If the loonie his 70 cents, Ontario will have a marginal tax rate of ~54% for people earning the equivalent of $140k USD! If you told someone in Washington state or Texas earning that money (which is by no means a particularly excessive income by US standards) that they should be hitting a 54% marginal tax rate, they’d treat you like you were crazy.

#205 IHCTD9 on 12.10.15 at 12:19 pm

#64 Freedom First on 12.09.15 at 7:43 pm
Mr. Negative. Yes indeed. Exactly what people call someone who tells them the truth. Sadly, it is the very person who is trying to help them.

I can’t imagine putting myself under the kind of financial pressure I just read about from Garth. I believe that people have at least 1000 excuses for why they behave as financially insane as they do. However, there is not one sane reason.
___________________________________________

I have a theory about this. The tornado of debt lunacy exists solely in big urban areas anywhere you look. People just live too close together, they see what their neighbour is doing, where they’re going, what they’re buying, what’s in the driveway, what renos they’re doing, etc…

They don’t want to fall behind the herd, and if the herd is doing it, why can’t they do it too?

Common sense ends up going out the window.

#206 learningfromyou on 12.10.15 at 12:27 pm

#188 Mark
Thank for your answer.

I ask questions in the meantime I search for a decent financial adviser with a proper fee for his/her work and that prove that his primary goal are the clients and not the commissions.

So far I haven’t received the answer from those I like the most, unfortunately I do not have enough funds to bring their attention (yet)

Until I get them please do not get offended for certain “unintended unethical questions”, I have to keep investing not matter what, and I’m full responsible for my results.

#207 No Downpayment up to $2 million on 12.10.15 at 12:41 pm

http://www.cnbc.com/2015/12/10/2-million-mortgage-no-down-payment-no-joke.html

#208 Mr. Frugal on 12.10.15 at 12:51 pm

#100 Joseph R. on 12.09.15 at 10:02 pm
#97 Smoking Man on 12.09.15 at 9:45 pm

You are correct, SM. After all, in this country, Rob Ford got elected in the same fashion; by appealing to the low hanging fruit. Also, Herouxville’s city counselor with its “town charter.”

Bigotry is a universal trait.

—————————————————

What a libtard! You talk of “low hanging fruit” and immediately brand anyone that disagrees with your point of view as a bigot. It would seem that YOU are the low hanging fruit.

Countries like Iran, Saudi Arabia, Syria, etc. can murder homosexuals and stone women to death for being raped and that’s quite alright with the MSM and their libtard supporters. But, God help us if anyone questions this and suggests that something needs to be done. Political Correctness is killing the western world.

#209 IHCTD9 on 12.10.15 at 12:52 pm

#97 Smoking Man on 12.09.15 at 9:45 pm
Dr Smoking Man told you Dogs not but a few days ago that with Donald Trumps outrageous comment about banning Muslims with out proper vetting It will give him the nomination.

I’m sure many of you urban grasshoppers though, no friken way.

Latest poll results.

http://www.torontosun.com/2015/12/09/trumps-muslim-bashing-only-winning-him-votes-polls

Non Urban Main street America hates MSM, and Washington’s Smoking Men.

To cap this off, all he has to do next time he’s grilled.

FREEDOM OF SPEECH — CONSTITUTION. Eat my shorts…

Dr Smoking Man
PhD Herdonomics.
___________________________________________

Wow…

I guess if Trump carries on winning, we’d better start preparing for 6.7 million or so Muslim immigrants from the USA.

#210 bdy sktrn on 12.10.15 at 1:01 pm

#197 Broke Dick on 12.10.15 at 12:02 pm

Mr. Pecker turns to me and asks “Did you just tell him to [email protected]#% off?”
Yes, I replied.
Mr. Pecker, my manager, turns back to the customer and says “So what are you still doing here, get lost!”.

Freedom First, you remind me of that customer.
———————-
now THAT was funny.

#211 Gonkman on 12.10.15 at 1:04 pm

@ #192 NorthOf49 on 12.10.15 at 11:20 am

Notice where his hands are? I’d be smiling too. She looks that good in a borrowed dress? The woman is a gem, he’s lucky to have her.

—————————————————————

Lol.. you have that backwards. She is lucky to have HIM.

She’s no special snowflake…

PM Selfie could tell her to “blow” and he would have 20 better replacements within a day.

I love it when men say things like
“You are lucky to have her”
“My Better Half”
“I can’t go out. I have a honey do list to work on”
“I have to ask the Boss”

It instant identifies them as WHIPPED.

Selfie is now PM of an entire Country… She is LUCKY to have him.

#212 kommykim on 12.10.15 at 1:10 pm

RE:

#58 prairie person on 12.09.15 at 7:24 pm
Royal Bank of Canada 5.50% 5-Year Rate Reset Preferred Shares, Series BK
Perhaps someone can explain to me why and how the bank is offering 5.5% when it has issued all these mortgages at -3%.

Here’s a link you might find useful:
http://business.financialpost.com/news/fp-street/banks-have-to-pay-up-if-they-want-to-issue-preferred-shares-royal-and-bns-offer-5-50

#213 bdy sktrn on 12.10.15 at 1:15 pm

#7: “We do need Property Tax reform. It’s ridiculous that my small household is paying the same taxes as a household with 5 or 6 people. Basing property taxes on property assessments is ridiculous.
———————————————–
of course the old single guy in the 5M house should pay less than a family of 4 in a 500k house because “Basing property taxes on property assessments is ridiculous.”

#214 Saucey on 12.10.15 at 1:16 pm

Things are not rosy- 27 world markets are DOWN double digits in 2015. We are in collapse- It is accelerating and will be disguised/blaimed on.
http://kingworldnews.com/ten-warning-signs-that-the-world-will-see-a-terrifying-panic-and-collapse-in-2016/

There is no systemic collapse. Stop reading marginal doomer sites. — Garth

#215 CJBob on 12.10.15 at 1:36 pm

#199 AB Boxster
———————–
Thanks, I bought my first EFT this morning (VUN) and I’m balancing advice from a number of sources including other blogs which I won’t mention but I read them while sitting on a canadian couch like a potato ;-)

#216 Love my Kia on 12.10.15 at 1:42 pm

I didn’t know you had a weekly podcast. AWESOME!

#217 IHCTD9 on 12.10.15 at 1:49 pm

#119 Washed Up Lawyer on 12.09.15 at 10:57 pm
Off topic and wandering. I have been curious about the definition of “luxury housing” in Calgary. It is based solely on price ($1MM +) and square footage. So I looked up the meaning of “luxury”. There are many different meanings.

The one that appealed to me was “a foolish or worthless form of self-indulgence.” I have always thought that Calgary luxury homes were mostly wretched excess, but I am a misfit.

To me, luxury is that rustic cabin that Robert DeNiro lived in in the movie he starred in with John Travolta where the former was an ex US military guy and Travolta was the Balkan soldier who witnessed a military crime and came to the US hunting DeNiro who was in retirement. Don’t know the name of the movie, but that cabin struck me as luxury.

The response of International Harvester Crawler Tractor Guy would be welcome.
____________________________________________

If you are wondering what appeals to me as far as shelter goes, we are probably not too far apart.

Go on YouTube and search Dick Proenneke – it’s probably the self reliance that appeals to me most. He described his 3 decades at Twin Lakes “heaven”, it probably doesn’t get more simple and honest than this guy.

If I am reading you right, you should quite like the vids on youtube covering Dick’s life at his Alaska Cabin.

#218 bdy sktrn on 12.10.15 at 1:51 pm

east van identical property prices still raging higher for identical props. higher assessments , whatever, same as every other year, taxes in vancouver are still low after basically everything has tripled since 2005.

more smog in Beijing today? 604 takes another step up.

BC is a sparkling jewel and the ROW will keep pouring cash in for decades/centuries.

—-
bc guy – land is dirt cheap in the country, have at it and quit yer whining.
—–
sally (new?) – welcome, but type qe into the white stripey thing at the top of your screen. 3 keystrokes and you don’t have to ask silly questions.
———————-

cpd under 12 zpr under 9.50 – are these things tracking gold stocks?

in fairness my costco pick also got kicked a bit on slightly weaker quarter but its coming back already with the dollar move i’m still green over a week or so.

—————–
still calling oil a good buy at anything under 30.

#219 Smoking Man on 12.10.15 at 1:55 pm

So Wynne and T2 are at the airport to take some selfies with the new comers.

Is there not something more important to do than that.

Liberals is all I’m saying…..
…………….

Political Correctness gone mad.

So school in the USA has someones name on it, the last name being Lynch.

The students in an up roar. Demand that the guy last name be removed. It’s offensive…

On another front
15 year old students suing Exxon for destroying the planet.
Wonder who put that Idea in there heads?

Climate change moment is full blown communism masquerading as a just cause.

The back Lash in 4 years will be huge. Anyone wanting to get into politics, Join the conservatives now.
They will sweep the entire country, less of course they get leaders who are secrete liberals and sabotage the election.

#220 bdy sktrn on 12.10.15 at 1:59 pm

If you are wondering what appeals to me as far as shelter goes, we are probably not too far apart.

Go on YouTube and search Dick Proenneke
————————
dick needs a chainsaw.

#221 TurnerNation on 12.10.15 at 2:06 pm

Podcast seems to be 1hr of bone chewing and bathing noises from Bandit.

Maybe I need an updated Codec

#222 bdy sktrn on 12.10.15 at 2:10 pm

still calling oil a good buy at anything under 30.
——————–
correction – in the 30’s. won’t see 20’s.

#223 OXI in GREECE on 12.10.15 at 2:15 pm

#140 Bottoms_Up on 12.10.15 at 12:37 am
#106 OXI in GREECE on 12.09.15 at 10:13 pm
———-
You’re wrong on Germany (ps. Canada has 1/10th the size of Germanys public service)

The Public Service in Germany (Öffentlicher Dienst) employed 4.6 million persons as of 2011.[20] Public servants are organized[by whom?] into three categories: blue-collar workers (Arbeiter), salaried employees, (Angestellte), and directors (Beamte). All three groups are employed by public bodies (Körperschaften des öffentlichen Rechts), such as counties (Kreise), states, the federal government, etc. In addition to employees directly employed by the state another 1.6 million persons are employed by state owned enterprises[21]
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
You are correct. Its not 500% its 183%

Not sure how you get your math….4.6/82 million is 5.6 percent.

In Canada its 3.6/35 million is 10.2%

http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/govt62a-eng.htm

PLUS……in Germany Post Secondary is FREE Health Care is TOTALLY free unlike Canada where you have to pay for drugs, glasses, teeth, thousands of procedures that are not free (unless you are a govt worker in Canada. Then its free). The whole country has free wifi. Their infrastructure is amazing and ON BUDGET unlike the over budget over time never on time crap here. The list goes on…..

#224 Bottoms_Up on 12.10.15 at 2:20 pm

#202 IHCTD9 on 12.10.15 at 12:19 pm
——————————–
Lack of guidance perhaps?

What should a family spend on living accommodations? 30% of family income? And how to balance “monthly payment” vs. Overall price paid…..should people factor in a 20, 25 or 30 yr amortization in the calculation of monthly percent hit to the family nut?

#225 Lee on 12.10.15 at 2:26 pm

Michael Babad of the Globe says housing prices in Toronto will remain strong. Too much immigration, including from commodity crash tricken Provinces. Up, Up, Up she goes.

#226 bdy sktrn on 12.10.15 at 2:32 pm

#184 westcdn on 12.10.15 at 10:15 am
. My former wife called me the other day and proceeded to run up on one side and down the other. I don’t where she was coming from but I took it because I am, what I am. Man, it can be it tough to be a guy….
———————-
i don;t understand .

‘former’ wife , is not the main benefit of ‘former’ that you don’t have to listen to them yak anymore?

there are despicable women out there who should be avoided at all costs. men too. about equal proportion. my wife is perfect. no nagging allowed. no uptight anything. total 50 50 partnership. all trust, no doubt. effortless.

with texting they write that s#it down too , my friend (with a bad ex) shows me on his phone what they write and it’s shocking.

#227 Gonkman on 12.10.15 at 2:34 pm

@ #223 OXI in GREECE on 12.10.15 at 2:15 pm

OXI.. I have the perfect solution for your… see link below.

http://www.kanada.diplo.de/Vertretung/kanada/en/03/immigrate/settling-in-germany.html

Canada won’t miss you.

Lassen Sie sich nicht die Tür schlug deinen Arsch auf dem Weg nach draußen.

Auf Wiedersehen!

#228 van real on 12.10.15 at 2:39 pm

Article in the Globe predicts house prices in Vancouver and TO to continue to rise next year as well.

http://www.theglobeandmail.com/report-on-business/top-business-stories/why-analysts-see-no-quick-end-to-the-toronto-vancouver-housing-booms/article27661566/

#229 family beagle on 12.10.15 at 2:43 pm

#218 bdy sktrn on 12.10.15 at 1:51 pm
east van identical property prices still raging higher for identical props. higher assessments , whatever, same as every other year, taxes in vancouver are still low after basically everything has tripled since 2005.
more smog in Beijing today? 604 takes another step up.
BC is a sparkling jewel and the ROW will keep pouring cash in for decades/centuries.

…….

Current residents not invited? Seattle here we come. Have manufacturing business, will travel. Too expensive to house staff in BC.

#230 Andres on 12.10.15 at 2:43 pm

@ #9 Bram

You own 50% of a home in East Van (which at today’s prices is a lot of dough), you have a dangerously high debt to income ratio, and you read this blog. Tell me why you haven’t sold your house?

#231 Chris in Nanaimo on 12.10.15 at 2:46 pm

#221 Gonkman

“Selfie is now PM of an entire Country… She is LUCKY to have him.”

Good example of SMV (Sexual market value) i was yacking about the other day cause someone asked.

Scale 1-10….our new PM is about a 20.

Women are attracted to Power, influence, confidence, looks, and money. T2 has it all.

Another good example is Mrs Trump…..although in this case i suspect you can scratch ‘looks’ from her attraction to her husband. He’s a total alpha male….ZFG attitude.

#232 IHCTD9 on 12.10.15 at 2:51 pm

#220 bdy sktrn on 12.10.15 at 1:59 pm
If you are wondering what appeals to me as far as shelter goes, we are probably not too far apart.

Go on YouTube and search Dick Proenneke
————————
dick needs a chainsaw.

__________________________________________

I’d take a small track loader along with the saw myself.

A guy has to have some modern conveniences after all…

#233 IHCTD9 on 12.10.15 at 2:52 pm

Weekly podcast is here. — Garth
__________________________

Excellent, learn something every day. :)

#234 Gwine to be tough on 12.10.15 at 2:54 pm

Poloz agenda to crush the dollar examined.

http://business.financialpost.com/investing/trading-desk/what-donald-trump-and-stephen-poloz-have-in-common

#235 IHCTD9 on 12.10.15 at 2:54 pm

#221 TurnerNation on 12.10.15 at 2:06 pm
Podcast seems to be 1hr of bone chewing and bathing noises from Bandit.

Maybe I need an updated Codec
___________________________

LOL!

#236 IHCTD9 on 12.10.15 at 2:57 pm

#199 paul on 12.10.15 at 11:54 am

His hands are there on us as well, digging for our wallet !
________________________________________

LOL! there must be a gene for that :)

Truthfully, I’d rather have JT grabbing my arse than Wynne…

#237 Bat Flipper on 12.10.15 at 3:01 pm

That graph from 2012 has increased quite a bit. A mortgage at 500%+ is not the exception; instead, it is the norm. Those ones don’t have very much equity and will be the first to get slapped when the market regresses to the mean. Unfortunately with markets, it will regress pass the means until it finds support. How long until the market resets? Until we run out of people willing to mortgage their future.

#238 BS on 12.10.15 at 3:06 pm

The American on 12.10.15 at 1:17 am
At #98: TRT, you said, “It is the role of government to anticipate and provide stability.”

I would say that’s the fundamental difference between a Canadian and an American. An American would say it is the role of government to protect an individual’s rights that are in play. It is an individual’s responsibility to anticipate and provide her/his own stability – not the government’s responsibility.

If that is the American view then how did Obama get elected the last 2 terms? If Obama had his way you would be like Norway.

#239 Brydle604 on 12.10.15 at 3:19 pm

Honest, Some People Cannot Handle the Truth!
This one is for SM who loves Teachers!.
My Favorite Animal
Our teacher asked what my favorite animal was, and I said “Fried Chicken”
She said I wasn t funny, but she couldn t have been right, because everyone else laughed.
My parents told me to always tell the truth.
I did. Fried Chicken is my favorite animal.
I told my Dad what happened, and he said my teacher was probably a member of PETA.
He said they love animals very much.
I do too. Especially Chicken, Pork and Beef.
Anyway, my teacher sent me to the principal s office
I told him what happened, and he laughed too. Then he told me not to do it again.
The next day in class my teacher asked me what my favorite Live animal was.
I told her it was Chicken. She asked me why, so I told her it was because you could make them into fried chicken.
She sent me back to the principal s office. He laughed and told me not to do it again.
I don t understand. My parents taught me to be honest, but my teacher doesn t like it when I am.
Today my Teacher asked me to tell her what famous person I admired most. I told her “Colonel Sanders”.
Guess where the fk I am now!

#240 bdy sktrn on 12.10.15 at 3:24 pm

#229 family beagle on 12.10.15 at 2:43 pm
#218 bdy sktrn on 12.10.15 at 1:51 pm
/…
Current residents not invited? Seattle here we come. Have manufacturing business, will travel. Too expensive to house staff in BC.
————————–
add 35% on to seattle prices and triple prop tax and you’re not too much further ahead. land almost free just across the line from surrey. manufacture there. bellingham is growing and successful.

where you manufacture seems less important than where you sell these days. selling in usd is key.

#241 MF on 12.10.15 at 3:30 pm

#231 Chris in Nanaimo on 12.10.15 at 2:4

Man please stop with this pathetic PUA garbage.

Women like a man who is confident and healthy and successful…in other news we have landed on the moon.

MF

#242 young & foolish on 12.10.15 at 3:32 pm

The big irony here? Well, without growing debt hardly anybody would be able to make a sale any more …. and nothing would be worth “17 times earnings”.

Get real.

#243 bdy sktrn on 12.10.15 at 3:35 pm

#228 van real on 12.10.15 at 2:39 pm
Article in the Globe predicts house prices in Vancouver and TO to continue to rise next year as well.

http://www.theglobeandmail.com/report-on-business/top-business-stories/why-analysts-see-no-quick-end-to-the-toronto-vancouver-housing-booms/article27661566/
————————————-
boom.

the fewer and fewer east van lots available are going to 2m. just like the west side a few years ago.

#244 bdy sktrn on 12.10.15 at 3:44 pm

seattle – 800kusd or 1.08m cdn
2438 Queen Anne Ave N,
Seattle, WA 98109
4 beds 1.75 baths 2,190 sqft
==========
your typical old house in a central but cheaper part of town , taxes only double 8k vs 4k.

westscoast gonna cost you anywhere.

#245 bdy sktrn on 12.10.15 at 3:54 pm

#237 Bat Flipper on 12.10.15 at 3:01 pm
. How long until the market resets? Until we run out of people willing to mortgage their future.
—————–
i think there is no risk of the earth ‘running out of people’ anytime soon.
assume more people. billions more.
there are no restrictions whatsoever to any one of them buying a piece of lotus land other than cash in hand.

i’m 100% cdn and i just bought land in the usa (but closer to false creek than some vancouver suburbs) and it was easier than getting a hotel room for a night. I didn’t even have to show any ID.

#246 OXI in GREECE on 12.10.15 at 4:11 pm

#227 Gonkman on 12.10.15 at 2:34 pm
@ #223 OXI in GREECE on 12.10.15 at 2:15 pm

OXI.. I have the perfect solution for your… see link below.

http://www.kanada.diplo.de/Vertretung/kanada/en/03/immigrate/settling-in-germany.html

Canada won’t miss you.

Lassen Sie sich nicht die Tür schlug deinen Arsch auf dem Weg nach draußen.

Auf Wiedersehen!
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

I think you have it backwards. The taxpayer will not MISS YOU….when you are fired and the taxpayer gets a further tax break from the 100K a year it saves in salary, benefits and pension.

#247 Bram on 12.10.15 at 4:19 pm

>#230 Andres on 12.10.15 at 2:43 pm
>… Tell me why you haven’t sold your house?

Well, read this blog a little better, Garth states:

“Actually I know and understand YVR quite well. You’re all nuts. I am not forecasting a crash, but a decline”

From the horse’s mouth: No Crash.
I doubt the ‘decline’ is going to eclipse the selling costs.

Selling a house is expensive: agents, lawyers, city, lender all want to be paid.

Also, I look at the interest part of my mortgage payments: $1672,- pm interest (and declining), and the rest of the mortgage payment comes straight back as equity in the house.

$1672,- will get you a one bedroom in Vancouver. Whereas now I have 7 bedrooms. If needed, I rather rent out the basement than sell.

Bram

#248 OXI in GREECE on 12.10.15 at 4:36 pm

The incompetence of the West is unbelievable sometimes….

Here is Russia cleaning up NATO and “Murica’s” mess.

https://www.rt.com/news/322881-russia-cruise-missiles-isis/

#249 S.Bby on 12.10.15 at 4:38 pm

Bdy Sktrn:
#210 1:01pm
#213 1:15pm
#218 1:51pm
#220 1:59pm
#222 2:10pm
#226 2:32pm
#240 3:24pm
#243 3:35pm
#244 3:44pm
#245 3:54pm

This must be a posting record for you.
Nothing on TV today?
At least you’re keeping the East Van real estate pumping to a minimum.

#250 IHCTD9 on 12.10.15 at 4:50 pm

#224 Bottoms_Up on 12.10.15 at 2:20 pm
#202 IHCTD9 on 12.10.15 at 12:19 pm
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Lack of guidance perhaps?

What should a family spend on living accommodations? 30% of family income? And how to balance “monthly payment” vs. Overall price paid…..should people factor in a 20, 25 or 30 yr amortization in the calculation of monthly percent hit to the family nut?
____________________________________________

Something going on with post numbers today…

Those are questions only a current buyer can answer. When I bought in 01, the thoughts in my head were reasonable price, not too far from work, school, and 401, easy monthlies with the plan to put lump sums down every month to nuke the mortgage quick.

I did not have to worry about long amortization periods, stupid house prices, big land transfer taxes etc.. because none of those things existed back then.

If I were a 20 something today out looking for a house out my way, it would be the same deal as prices are normal here. If I were in the GTA or Van, honestly, I’d be trying like hell to find a decent job in a more rural setting where housing is affordable, and life is much easier all around.

If I was stuck in a big city, I’d rent and continue to plot my escape to the boonies.

#251 bdy sktrn on 12.10.15 at 4:53 pm

#249 S.Bby on 12.10.15 at 4:38 pm

read’em and weep.

i’m going for a record. hugs.

got to go soon – santa has work to do and picking up 2 foster dogs. both big black boys.

2 dogs=truck only – they cant go into her clean small ‘work’ car.

thank god for cheap us gas that v6 is thirsty – CO2 contribution for dogs to ride around. vroom.

#252 Nemesis on 12.10.15 at 4:55 pm

“Over 2.5 million new jobs created in the US during 2015 alone. Some recession.” — Garth

#Sure,ButQualitativelySpeaking… #You’veGotYourJobs… #AndThenThereAreThe… #J**’Jobs’…

https://youtu.be/I_X0TKL3bqk

#253 Panhead on 12.10.15 at 5:09 pm

#200 Broke Dick on 12.10.15 at 12:02 pm

This is priceless … keep the used car salesman stories coming … we are all ears … and now for those that are thinking of building in Van …
http://buildinginvancouver.com/

#254 Whinepegger on 12.10.15 at 5:13 pm

Garth, apparently you’re underestimating the Millennials. CIBC says 2/3rds are investing. Who knew?

http://www.winnipegfreepress.com/business/finance/two-thirds-of-millennials-investing-but-most-lack-financial-knowledge-poll-361384831.html

#255 45north on 12.10.15 at 5:17 pm

IHCTD9: Honestly, if I were single with no kiddies – I’d probably be doing what needed to be done to effect a permanent exit from Ontario – maybe even Canada as a whole. It sure would be a lot easier than what I am doing.

two men I know and their families could easily move to the US. With their jobs. The wife of one of them told me the thought had crossed her mind.

#256 IHCTD9 on 12.10.15 at 5:25 pm

Fixed rate at 5.3%/25yr on a million is a $5,988.00 monthly payment. You’d need to gross over 2K a week just to cover your mortgage payments – nothing else.

That is also $1508.00 more per month than the exact same mortgage was at 2.5%, and represents a gross income requirement of about $1960.00/month just to cover the increase only due to the rate bump.

Would your boss give you a $12.25/hr. (almost 25%)raise to cover that for you?

#257 Blacksheep on 12.10.15 at 5:43 pm

OXI # 248,

“The incompetence of the West is unbelievable sometimes…”
————————————
Do you really believe, the west to be, incompetent?

Really?

Think about it what your saying.

Now think about why, the US of A has failed miserably to get the job done, even with all their military might.

Connect the dots.

Yes….exactly.

#258 The American on 12.10.15 at 6:07 pm

At #238: BS, shows how little you know about the American political system. The President is NOT the collective government. In fact, it is Congress that sets the stage for nearly all legislation and action. Obama was elected BECAUSE his administration is all about the protection of one’s rights under the US Constitution, unlike that Canadian-born whack job Ted Cruz.

#259 Mark on 12.10.15 at 6:19 pm

“Well, without growing debt hardly anybody would be able to make a sale any more …. and nothing would be worth “17 times earnings”.”

Without debt, what would people transact in? Basically you’re left with some sort of metallic system (ie: the gold standard), which, on account of the slow growth rate in the world’s gold stocks (typically 1-2%/annum) may imply even higher P/E’s than a mere 17.

After all, P/E is just the inverse of E/P. Over the long term, firms in aggregate throughout cannot sustainably earn more than the rate of monetary expansion. If monetary expansion was fixed at an arbitrary 1-2%/annum, then P/E ratios would need to expand accordingly to match the rate of economic expansion with the rate of expansion of the monetary basis over the long term.

In such case, long-term equity index P/E’s of 50-100 may very well be quite common under a debt-free system of money.

Now, that’s not to say that if we switched to the gold standard tomorrow, that P/E’s would expand to 50-100. Your point, that many businesses largely only exist on account of debt expansion is well taken, and a good chunk of the debt-fuelled economy would simply go away. But it is likely that over time the markets would eventually reward the remaining businesses which are able to generate positive earnings with very handsome P/E ratios.

The reason why non-debt based systems of money (ie: non-fiat currencies) have been abandoned over the years is due to the severe cycles of inflation and deflation that typically are experienced under them. Now, of course, fiat money isn’t perfect, and has been the subject of a litany of abuses over the years, but at least there are reasonable tools of extricating the economy from a liquidity trap. While, with the metallic standards, eventually the ‘winners’ in the economy end up hoarding all the ‘money’, and severe deflation is the intractable end game.

#260 Patrick on 12.10.15 at 6:20 pm

#155 The American on 12.10.15 at 1:52 am

Browsing properties in midwest manufacturing cities. Plenty 150-230k, average around 180k. Not sure what kind of rental value they get.

I don’t know what episodes of the show she was referencing specifically. I was stretching my patience to watch the Canadian version.

#261 Bottoms_Up on 12.10.15 at 6:28 pm

#257 Blacksheep on 12.10.15 at 5:43 pm
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Interesting too that the article was published nov.20th and turkey shot down one of their jets a few days later. Guess they really were pissed about losing their black market oil supplies.

#262 Patrick on 12.10.15 at 6:32 pm

#155 The American on 12.10.15 at 1:52 am
At #110: Patrick, where in the hell is your coworker finding these so-called $150,000 rental homes in the U.S.?!?! In case canada hasn’t gotten the memo (and chances are you haven’t, with only another three years to go before you get the message), the U.S. is back as Canada falls and fails.
__________________________________

if you read my posts you’d know I’m a big fan of the US.

I can see from my work that the US is booming. More US orders everyday. Working 60 hour weeks and still behind. There’s no doubting that the US is in full-swing. The recovery is real.

I doubted it at first, maybe there was a lag to where I saw the increase myself but I definitely see it now.

#263 JuliaS on 12.10.15 at 6:34 pm

I work in Downtown Van. You want to know one store that gets top foot traffic day after day? It’s not the newly opened Nordstrom, it’s not the GAP, it’s not the FutureShop recently acquired by BestBuy. It’s the DollarStore near Waterfront station, few blocks away from Vancouver’s poorest neighborhood.

Retail is dead throughout the city. Housing is dead. All the new condos have fewer than 20% of windows light after 8pm. The city is hollow. The business is gone. The housing bubble is about to spread from Calgary Westward… and nobody saw it coming. As always.

#264 Jed on 12.10.15 at 6:35 pm

Re # 258

“Canadian-born whack job”–there is not shortage of these, especially in office, federally…

#265 Mark on 12.10.15 at 6:40 pm

“Garth, apparently you’re underestimating the Millennials. CIBC says 2/3rds are investing. Who knew?”

Interesting comment. I’m a member of a defined contribution public service pension plan (as an occasional/casual public servant — I occasionally substitute teach at a community college), and its always interesting to get their plan-holder materials in the mail every few months. Where they report on returns, and dish out little columns of financial/savings advice in the newsletter.

One thing that’s struck me is that the plan returns have been considerably better for those invested in the fund mix recommended for people in their 50s-60s, than those recommended for people in their 20s-30s. The asset allocation theory being, of course, that the young should hold higher concentrations of assets judged to be risker (to wit: equities), while the older plan members should hold more fixed income.

The contradiction is obvious. Here we have a financial industry which advises “higher risk for higher returns” for the Millennials. Yet when you open up the newsletter and see the actual achieved returns on account of the recommended asset mixes, those with greater allocations to fixed income have done better.

So what’s a Millennial supposed to do with such a contradiction, where conventional financial theory hasn’t quite delivered the ‘suggested’ results? I find a lot of people I talk to, particularly Millennials, are very confused by it all. I even know one guy in the early 30s who told the pension plan to change his asset allocation to the “Step” suggested for 50-60-year olds because of the poorer returns with the allocation for his age group. Yes, he’s just chasing the tail end of a fixed income bubble and I told him that, but nobody in the professional pension plan advisory ‘universe’ would ever be quoted using that language as calling anything a ‘bubble’ exposes dire fiduciary consequences as the bubble implodes.

#266 Old Man Too on 12.10.15 at 6:46 pm

#41: Tax avidance? may be not in the future on 12.09.15 at
The executives at my company have decided to bring next years dividend payment forward to the end of this year. This means 2 dividend payments this year and none next year. I will benefit modestly from the tax savings but some of them will be saving taxes in the 6 figure range: wrap your minds around that number! Poor T2 won’t know what hit him.

#267 common sense on 12.10.15 at 6:51 pm

BROKE DICK, FLOPPER…

I’m proud to be in such good company as you fine humble gentlemen.

No profanity, no large egos, maturity and we get along just swell with the opposite sex…

#268 westcdn on 12.10.15 at 6:54 pm

bdy sktrn

Years ago my brother bought a hand held police scanner. It was prior to cell phones and wireless telephones were the rage.

One day the antenna hit an aluminum bind and scanner could pick up wireless phone calls. He was shocked by women’s conversations – maybe some things don’t change….

#269 In the black on 12.10.15 at 10:11 pm

#40 Hotdogs from Heaven on 12.09.15 at 6:19 pm
You nailed it. I believe we will devaluate the loonie to compete..We dont make much in this country anymore and our gov is worse than ever. There was a great interview from John at Davis Rea on this. .65c is a no brainer. Hes said if we get down there we could be in SERIOUS trouble. Banana republic type trouble. He had his facts down. Prepair for the worst and hope for the best. We need to dig Ralf Klein up and put him at the helm. He would likley do a better job dead than the past clowns. Theres never a rainy day fund. Spend like crazy in the boom and do the same when the wheels fall off. Brilliant. Remeber how they thought they were so sh#t hot getting throught the finacial crisis better than most?? I told the wife over a year ago we are next. Maybe bring on alot more HAM? Lol
Im likely leaving Canada for a more sane place and better weather.

#270 Gus on 12.11.15 at 11:48 am

Show me a chart showing average mortgage rates, with the same years and regions, and you’ll see a pattern. Now, easy come easy go, so watch out for rate increases as we’ll see a lot less buyers and a lot more forced sellers. Prices can fall 10% on a 1% rate increase. Just try to be ahead of the pack when it hits the fan.