Coming to an end

SOLAR modified

For reasons as yet unclear, an unruly pack of moist Millennials was spotted attacking this pathetically defenseless blog yesterday. When they were finally chased off by Bandit and several aroused Amazons, we found this spray-painted on an inside wall:

Interest rates will remain low for a generation. Boomers will be made to pay for all the unfair advantages, and so will their estates. They have sucked way more than their fair share out of society through transfers, health care and preferential tax treatment. The last thirty years of excess privilege for this boomer generation is coming to an end. The gold will all be pulled out of your teeth before you are laid to rest, be assured. Finally. And if the boomers don’t like it? LOL!!

Hooligans. But is there any validity to it? Seems every single person born since 1985 believes the cost of money will never increase. That mortgages will stay below 3%, and ‘the government’ won’t allow more since everybody’d be screwed. Besides, the pre-pubes add, we now have a new-gen PM who’s so technologically advanced he can selfie on any device, will soon give the masses weed, understands the rich must be eaten and that rates shall never rise.

No doubt about it. The kids are brash since T2 ascended. The laws of economics no longer apply to Canada. They can borrow and spend with impunity. It’s the wrinklies who will end up mashed.

If rates stay low ‘for a generation’ and the moist ones keep buying condos and slanty semis, they figure real estate will endlessly rise, building equity while you text. Thus, they’ll inevitably get wealthy by borrowing and not by saving. Equity will increase and debt diminish, all on its own. Don’t believe it? The leader of our nation does. “The deficit will take care of itself,” he famously said. So there. Suck it up, geezers.

But what if it turns out the Hot One’s wrong? After all, the pressure for higher rates is bound to come from the south, not from Ottawa. As the US increases the cost of money, bond markets follow and higher mortgages are not far behind. The federal government doesn’t control bond yields, and it might not matter that much what the Bank of Canada does.

But let’s say mortgages climbed moderately over the next 13 months, rising 1.2% by January of 2017. What might we expect as a result?

“Over the weekend we plugged those numbers into our model for Canada’s current housing sales chain,” says analyst Ross Kay, “to see what consequence these mortgage rates will have on Canada’s housing market. Of course while first time buyers will have no choice other than simply choosing to pay less for that first time home, the fallout further up the sales chain is massive.”

Kay looked at homeowners in the ‘mature’ stage who, after years and years of mortgage payments, have at least 75% equity. The rise in overall interest costs by a little over one per cent, he estimates, would rob most people of 12% of the value of their home – about $100,000 in a city like Toronto.

“That 12% will be removed from the 75% equity position many of them currently sit at.  This means their net worth would drop around 16% as a result of only a 1.25% increase in bond rates, as each trade in the sales chain has a cumulative negative impact as rates rise versus the cumulative positive impact as rates fell. When interest rates drop those homes higher up on the (mistakenly called) “property ladder”, lose the most money.  That is money they are relying upon for retirement.”

Well, is Kay delusional with this crazy talk about more than a 1% jump? Here are some expert opinions:

First, the most optimistic view, which comes from the BC Real Estate Association. Here’s what it said about rates as the US Fed jacked higher for the first time in a decade this month:

“While the benchmark qualifying rate for Canadian mortgages has not changed in eight months, offered or discounted mortgage rates at banks and other lenders have recently moved higher. The average 5-year rate offered by lenders has increased about 20 basis points in recent weeks to 2.79% and the discount from prime lending rates on variable rate mortgages has narrowed from 60 to 40 basis points. Rather than reflecting changes in underlying economic factors, these increases are largely due to regulatory and other market structure changes that are pushing banks’ cost of capital higher.”

The realtors say by the end of 2016 a five-year mortgage will be 5.11%, based on US rates rising all this year by only half of one per cent.

Forbes disagrees. The US publication says the Fed will increase rates steadily, but prudently, for two years – “about one and one-half percentage points per year” in both 2016 and 2017. “The Fed has pushed rates up or down at the rate of three percentage points per year in the past, so expect a milder rate of change this cycle.”

That means, says Forbes, that in two years (the end of 2017) the Fed rate will be 3.25%. Today it’s 0.5%. So you do that math.

Trading Economics, an online US resource, is banking on a further .75% increase to happen in 2016, and for the Fed to keep on trucking for the next four years. “The United States Fed Funds Rate is projected to trend around 4.5% in 2020, according to our econometric models,” it says. That, kids, would see you renewing a five-year mortgage taken today at a rate you only hallucinated about (while toking).

And what does the Fed itself say? Here’s the Bloomberg report from just after the central bank announced the end of its zero-rate policy:

“The Federal Open Market Committee unanimously voted to set the new target range for the federal funds rate at 0.25% to 0.5%, up from zero to 0.25%. Policy makers separately forecast an appropriate rate of 1.375% at the end of 2016, the same as September, implying four quarter-point increases in the target range next year, based on the median number from 17 officials.”

Four quarter-point hikes is actually about what Ross Kay plugged into his gee-whiz forecasting machine to come up with that 12% decline in housing prices. So, if you’re a Millennial with 7% equity in your sexy, expensive condo, maybe you should write your hip Lib MP.

Good luck with that. (LOL.)

240 comments ↓

#1 Jimmy on 12.27.15 at 4:21 pm

First!!

#2 TurnerNation on 12.27.15 at 4:23 pm

Greetings, this week from the Least Coast. Can’t wait for futures’ open. Expecting a volatile Q1.

#3 Kenchie on 12.27.15 at 4:34 pm

Thanks Garth for talking about something I have been warning my millennial friends about. The effect of higher rates will most definitely leave less equity to be rolled over into high priced assets when people “trade up”.

It’s very much an under-appreciated risk.

#4 Irish Stew on 12.27.15 at 4:34 pm

2016 Rule of Thumb – Pay yourself first.

#5 Harbour on 12.27.15 at 4:34 pm

A 12% decline in housing prices?

That’s it?

Based on a single factor of higher interest costs. Your local mileage may vary. — Garth

#6 No debt on 12.27.15 at 4:35 pm

It’s snowing out like a mofo in the interior of bc right now, I’m gonna stay in my theatre room with wife till the spring. Shit… I just have to drive my kids to school! Sure glad I have my house paid for and plenty in the bank! Happy new year everyone!

#7 nubbers on 12.27.15 at 4:38 pm

Interest rated, Forbes … yada, yada, yada…

But wow. First pictures of cats start creeping in and now a mention of Amazons (aroused ones at that).

Is there some back story that you are going to fill us in on later?

#8 Oceanside on 12.27.15 at 4:43 pm

Poor T2, getting the blame for the last 8 years of Harper manipulating the economy to benefit a small section of the population ….And Alberta, (who did not benefit by it)

Harpo did Canadians as a whole no favours, just kept kicking the can down the road. We miss Flaherty and his efforts.

#9 Rick on 12.27.15 at 4:46 pm

Just got off the phone with my 53 yo friend in Edmonton. He was complaining about not being able to afford a SF home. I told him wait a couple of years. Prices are dropping folks:)

#10 OXI in GREECE on 12.27.15 at 4:48 pm

Staying warm with the snow outside on the Carbon Tax Coast of Bring Cash…..

#11 Leo Trollstoy on 12.27.15 at 4:49 pm

Why would a sex machine still require power when it’s obsolete?

#12 Firebird on 12.27.15 at 4:52 pm

I read your blog each day and you give great advise consistently. The only issue I have is the constant bashing of the new PM and name calling. Why not say something positive about him sometime? I know you are True Blue and will not be surprised when I see you standing with Peter MacKay trying to gain the peoples confidence next election. I’m not one of the young people but a retiree.

This political agnostic will only be standing to have a whiz. As for T2, the attribute he’s shown so far is that he’s not Harper. That was enough for most people. From here on he’ll be judged on his actions. — Garth

#13 crowdedelevatorfartz on 12.27.15 at 5:05 pm

You’re wasting your breath Garth. The Millenials are smug in the knowledge that they are always correct. The internet told them so…..
We’ll see what kind of song they’re singing in a year after Trudeau realizes he doesnt set interest rates…….the plummeting Canuck buck and the US Fed do.
The Canadian “economy” with its 34 million people is irrelevant to anyone except Canadians.
Hillary will set the tone this year and for years to come.

#14 Jules on 12.27.15 at 5:06 pm

Okay I laughed out loud… “building equity while you text”. Now that’s funny.

#15 NoName on 12.27.15 at 5:07 pm

#187 Macduff

https://en.m.wikipedia.org/wiki/Philippine_Fault_System

#16 Calgary's Housing Market on 12.27.15 at 5:08 pm

EXAMPLES OF CALGARY HOMES LISTED BELOW ASSESSED VALUE

*** 11% BELOW ASSESSED VALUE ***

96 Evergreen SQ SW, # C4034513
* 4+1 beds, 4 baths
* located in Evergreen Estates
* hardwood and slate flooring, etc.

*** 11% BELOW ASSESSED VALUE ***

9704 Alcott RD SE, # C4035096
* 4 beds, 2 baths
* hardwood floors
* detached double garage

*** 9% BELOW ASSESSED VALUE ***

40 Woodglen ME SW, # C4042385
* 3+1 beds, 3 baths
* upgraded home, new paint throughout, professionally finished kitchen cabinets
* located in a quiet cul-de-sac
* listed at 9% below assessed value (with upgrades) and the seller still can’t find a buyer

These houses will likely sell for less than their current list prices, perhaps in the 15% below assessment range or even lower (-20%).

There are more examples like these.

The recent sales of two estate homes (for 60% below appraised value) in nearby Priddis act as a clear indicator of the weakness that exists with the SFH market in and around Calgary.

As of November 2015, the bankers at Teranet (through their price index) claim that house prices in Calgary are down only 2.2% from the peak level reached in October 2014.

Their index includes SFHs, condos and townhouses. Calgary’s condo and townhouse markets are probably weaker than the SFH market.

Apparently the Teranet index isn’t painting an accurate picture of Calgary’s price decline. It appears to be upward biased. Teranet’s claims about Victoria also appear to be upward biased. This is evident when comparing Teranet’s results for Victoria with the more bearish results of the local board’s index.

It’s no secret that bankers have a vested interest in keeping house prices high in Canada. They can make their index say whatever they want. It isn’t likely that an independent body reviews the results of their index.

Canada lacks a housing price index that comes from a source that (1) is independent of the housing market, and that (2) doesn’t have a vested interest in keeping house prices high.

The US has the Case-Shiller index, which is independent of the American housing market.

Canadians deserve a reliable and accurate housing price index, like the Case-Shiller.

#17 Lulu on 12.27.15 at 5:11 pm

The trend among the millenials is to stay skinny of their body image, so, they must prepare for the diet coming—eating drywall to stay afloat.

If I were them, I’ll sell the shoot out of it right now while drywall is still pretty damn pricey rather a waste when it turns to food source….LOL

#18 mitzerboy aka queencity kid on 12.27.15 at 5:14 pm

https://youtu.be/A6c6eUeoa9Q

if these guyz say it …it must be true

the hag and willie

hope everybody is enjoying the holidaze

#19 polecat on 12.27.15 at 5:14 pm

I’m gen X and had to wait until 38 to buy a modest place here in N.S. Lived in Ontario and B.C. for work and rented.Would’ve rentd here too but the mortgage is about the same as renting a decent spot. I fully get the taxes and maintenance thing. Lot of younger people I worked with out west were buying with the 40 year mortgage and running LOC. Hope it works out for them. I’ll just lay low and keep the powder dry, the future doesn’t look too good. Thank’s for the blog Garth. And to Smokey, cheers.

#20 Vundo on 12.27.15 at 5:16 pm

The only thing to be learned from yesterday and today is that stupidity does not discriminate by age. Indeed, the one quoted by Garth is an embarrassment to us milennials. He is, however, not entirely wrong. A lot of boomers are in for a rude awakening. The moms and dads who kept on trading up the ladder, while gifting down payments to their sons and daughters… They are far from safe. It ain’t just guys my age who own heavily mortgaged one-bedroom condos that will feel the pinch.

And yes, it is also true that the smart boomers/GenX/older millenials who made all the right moves need to be keenly aware of the consequences of an increasingly unequal society. You can only win so much before the poor and angry start showing up in greater numbers at the voting stations demanding socialism.

#21 Hope & Ruin on 12.27.15 at 5:18 pm

rosholt made a music video. kinda catchy.

DELETED

#22 Raging Ranter on 12.27.15 at 5:20 pm

I’m pretty sure Rosholt was a troll. First he cries that the boomers have sucked everything dry and left the next generation with nothing, and now his generation is going to extract revenge. Later he makes another lengthy post bragging about how much his generation is going to inherit from their boomer parents. He completely contradicted himself. How can “the new generation”, led by JT, take the boomers to the cleaners, yet leave the inheritances intact? Either Rosholt is just trolling by trying to emulate the worst of the worst that the Millennial generation has to offer (if so, nicely done), or he hit his head hard between the first and second posting.

As for contradicitons, he “clears” $1300 per cheque, and pays $1300 interest each month. Assuming his cheques are bi-weekly, he’s giving up half his income most months just to interest. And this is “peanuts”. Nope. This is not a real person. Even if he were clearing $1300 weekly, 25% of his income is going to interest. Not even a Millenial with poor math skills would say that.

Troll exposed.

#23 blind leading the blind on 12.27.15 at 5:20 pm

there seem to be quite a few Gypsies around here trying to predict the future.

#24 saskatoon on 12.27.15 at 5:21 pm

gotta laugh when the psychologically unhinged liberal uses phrases like…

“fair share”…

to virtue-signal.

pathological altruism.

a completely arbitrary “line in the sand”…spoken by the weak and jealous…those “targeting” individuals with slightly higher net worth than their own.

the line changes (of course) as the r-selected liberal rabbit steals more carrots.

#25 Nemesis on 12.27.15 at 5:24 pm

#TwasTheDayAfter… #TheDayAfterXmas… #AsJDSoakedSmokingMenEverywhere… #SuccumbedToPostPrandrial… #OntologicalIllusions’OYouth…

https://youtu.be/XeNY-_Jo6oQ

#26 Kenchie on 12.27.15 at 5:30 pm

An explanation on why asset classes are cyclical:

“The Positive feedback loop is broken”

http://thereformedbroker.com/2015/08/09/the-positive-feedback-loop-is-broken/

#27 Randy on 12.27.15 at 5:49 pm

Millennials…now you know why Tigers eat their young.

#28 Me on 12.27.15 at 5:51 pm

What ever happened to the great country of my youth? I don’t hold much hope for it’s future considering all the divisive and vindictive rants that are posted on pretty much every Canadian forum I read. Good luck everyone.

#29 David on 12.27.15 at 5:57 pm

I just had a visit from a analyst that doesn’t provide FREE info.. or is in main stream and also has a track record is 2nd to none I know of.
Its going to be tough for any country to raise rates. In time this will be accepted as a depression. There will be more deflationary forces to come and if you think gold is your savior you better think again.
China’s economy has some deep issues and will have a currency problem in possible a couple years. Expect the Yuan to tank then. They will sell gold to offset these their currency depreciation as Russia did. I had posted that their little stock market bubble was about to pop this year and did rightfully so…725 down to 400… They are not the little engine that could.
Not a whole lot looking good but the Pig south of us has the best lipstick!…
Be carefull out there!!

#30 bruce_le_bruce on 12.27.15 at 6:00 pm

Great post Mr. Turner.

Can someone please explain:

“the US increases the cost of money, bond markets follow and higher mortgages are not far behind.”

How does the bond market impact the price of mortgages? Do bonds increase their % return when interest rates go up? How are the rates set through bonds? Which bonds? Where is the money?

The bond market befuddles me. Garth, a suggestion, a post on the bond market would be very helpful!

#31 For those about to flop... on 12.27.15 at 6:00 pm

#12 Firebird on 12.27.15 at 4:52 pm
I read your blog each day and you give great advise consistently. The only issue I have is the constant bashing of the new PM and name calling. Why not say something positive about him sometime? I know you are True Blue and will not be surprised when I see you standing with Peter MacKay trying to gain the peoples confidence next election. I’m not one of the young people but a retiree.
.
///////////////////////////////////////
I thought Peter Mackay was done?
He always looked like the likely replacement ,I was shocked when he didn’t run.
What’s this dude up to nowadays ?

#32 Big Dipper on 12.27.15 at 6:09 pm

“we now have a new-gen PM who’s so technologically advanced he can selfie on any device, will soon give the masses weed, understands the rich must be eaten and that rates shall never rise.”

————————————-

What happened to the recent commitment to treat T2 with respect, if he (He?) were to increase house purchase down payment requirements?

Even for an ex Con politician this has to be something of a whiplash causing record reversal of promises!

Just listened to Ambrose bleating on CTV about “Conservative Values” – an oxymoron if there ever was one.

About the Hooligans – aka moist Millennials – they realized that this blog is populated by sclerotic geezers whose slogan is, “in Viagra we trust”, and whose sentences inevitable start with the word “nowadays”….

My last gig was as a Lib MP. No Viagra. — Garth

#33 not 1st on 12.27.15 at 6:30 pm

“The deficit will take care of itself,”


I believe the beloved and revered conservative hero and patriot Dick Cheney said the same thing in 2000.

#34 RayofLight on 12.27.15 at 6:34 pm

I got some Forbes magazines at the library to see if they could be useful, or had some insights. I can’t say I was impressed. The whole magazine was a mutual admiration society for the ultra-rich. The ads mostly pitched 3’diameter watches or personal jets. The articles, (I did find a few among the ads) made some stock recommendations that were designed to keep the readers, and believers of said stock advice, from ever having their photo in the magazine. The stock advice they gave, what is the appropriate cultured term, sucked! But that was my humble opinion, and I am confident Forbes cares, about as much as the rest of the blog dogs do.

#35 Ret on 12.27.15 at 6:35 pm

#18 “Canadians deserve a reliable and accurate housing price index, like the Case-Shiller.”

Good luck with that. No one believes the StatCan monthly CPI or employment numbers now.

We don’t need some tool of the politbureau to comment on our housing mess. We have the man himself, Robert Shiller.

Feb. 28th/15

https://www.youtube.com/watch?v=5uo0nkAMkYs

and on Sept 30th/15

http://www.bnn.ca/News/2015/9/30/Dow-could-drop-to-11000-Economist-.aspx

#36 For those about to flop... on 12.27.15 at 6:36 pm

Big Dipper
About the Hooligans – aka moist Millennials – they realized that this blog is populated by sclerotic geezers whose slogan is, “in Viagra we trust”, and whose sentences inevitable start with the word “nowadays”….

///////////////////////////////////////
Thank you for teaching me a new word today…..sclerotic.
Never heard of that one before but the letters erotic leaped off the page.
The definition was not what I expected but makes sense now with your post.

#37 The American on 12.27.15 at 6:43 pm

At #13: Crowdedelevatorfarts, as sad as it is I second every word you wrote.

#38 Godth on 12.27.15 at 6:48 pm

I’m tired of being a retarded Canadian. We’ve wasted the greatest fortune for myopic short term gain. I’m moving to Lisbon ASAP. It’s a beautiful city dripping in blood and it knows it. Enjoy your hell.

#39 Diogenes on 12.27.15 at 6:57 pm

Sometime in 2016+: In a strange twist of history, Canada re-enacts the first economic bubble when a Toronto condo sells for the price of a tulip.

Oops. Did I just get my metaphors mixed up?

https://en.wikipedia.org/wiki/Tulip_mania

#40 not 1st on 12.27.15 at 6:58 pm

Garth, I am afraid the millenials are right and you are wrong. Just try raising those rates and see what happens. This a group that will stop buying cars and eat dog food in front of facebook for entertainment. So what if the cost of owning a house goes up a few hundred more a month. These guys will just stop eating out one or two nights a month to make it or Uber around in a friends car or Airbnb right on to their parents couch if they have to. And thats not good for the greater economy and then poloz will be walking the rates back down anyway. Same goes for Old Yellen.

#41 ANON on 12.27.15 at 7:01 pm

Serves me well missing a few days of comments. Now I’m not sure if this is the Millennial or the Boomer bashing comment thread, the commies vs capies one, or I should simply rant freely against whomever is above me, beneath me, both, or against those who don’t do what I think everyone should do in order to turn everything hunky-dory.
But, posing as Captain Obvious, I’ll simply state that the first ones in the bubble profit the most from it, but also get hit the most from the burst. Such is life, you either deal with it, or get consumed by even greater anger when the Big Nasty Surprise is revealed.
Or, I could just say that interest does not exist, and call it a day, since this is perhaps the most concise explanation possible, by far. :)

Now back to profiting from what may very well be the last happy holidays for quite some time… :*)

#42 rosholt on 12.27.15 at 7:04 pm

Everyone be sure to tune into tonights great interview with Justin and see how he is leading Canada into the new technological era. He will be live tweeting too! Should be awesome to see the guy EVERYONE voted into power with a MAJORITY!!

Out with the VHS and in with the Iphones and Instagrams!

I bet Putin and Trump will be watching, maybe even tweeting about it!

#43 Francis on 12.27.15 at 7:04 pm

Happy to be on the good side born 1984, no house, no debt, 1/3 of million in investment. Thanks God can’t imagine what would happen if I was born a year later.

#44 RayofLight on 12.27.15 at 7:07 pm

I don’t know if T2 is felony naive, or masterful deceitful. He appears to be manipulating the voting system in a manner that will always ensure Liberal wins at the polls in the future. He also promised to govern with transparency and then revokes transparency requirements for the finances of the First Nation accounting. I have always thought the funding Canada supplied to the First Nations was reasonable, the problem was the funding didn’t get any further than the “management “ level. ( Didn’t Chief Spence actually gain weight on her hunger diet?) I regress.

http://news.nationalpost.com/full-comment/rex-murphy-the-liberal-government-does-not-have-the-right-to-unilaterally-change-our-voting-system
http://news.nationalpost.com/full-comment/kelly-mcparland-ottawa-pleads-openness-while-reducing-first-nations-transparency

#45 Only-inflation-to-reduce-debt-burden on 12.27.15 at 7:09 pm

With every T2 joke you present how so very much you sound just like that someone who disrespected you, so good-luck with that…!!! You know very well that the statement you mention” the debt will take care of itself” refers to the total debt relative to the size of the economy and that by growing the economy at a faster rate than growing the debt, the ratio between the two eventually becomes manageable….

So the problem today is that economies are stuck in a no-growth place where concerned leaders trial several unconventional measures to break out of this no-growth trap while having very little success….

I makes zero sense that raising interest rates will grow economies again,,, so this attempt by the States is a solo attempt that will end quick enough as they too are in need of better growth….

These are NOT normal problems and so all the “Normalizing” speak is simply BS appeasing the right-wing for a moment…. The best voices of what is needed in this day and age come from Paul Krugman or Larry Summers and not from Right-wing ding dongs of which you seem to sound off from too….

Your attempts at the future are as silly as are mine but there is an example of what seems to be the path the world economies are following and that is Japan…. THOUGH VERY LOW UNEMPLOYMENT, THEY CANNOT GROW THEIR ECONOMY AND SO THEIR DEBT BECOMES MORE AND MORE PERILOUS….

Its growing the economy stupid and that’s that. All for the point of managing debt, period…….

#46 rosholt on 12.27.15 at 7:09 pm

I didn’t actually read todays post until now. Garth seems to misunderstand that we think that we will not pay down any mortgages. WRONG. With rates as low as they are now, we pay LESS interest on $600k that the wrinklies did with $200k @ 10%. And you wrinklies paid down your debt.

It’s called being smart about debt. Or maybe the wrinklies being jealous about interest? Because you were gouged with interest 20 years ago doesn’t mean you need to be green with envy of the new normal.

Hopefully you will be sane enough to look back in 15yrs to say that we were right and SMART about our debt.

#47 JG on 12.27.15 at 7:12 pm

“we now have a new-gen PM who’s so technologically advanced he can selfie on any device, will soon give the masses weed, understands the rich must be eaten and that rates shall never rise.”

Such wonderful prose, Garth.

#48 Godth on 12.27.15 at 7:15 pm

DELETED

#49 BC Guy on 12.27.15 at 7:17 pm

US govt debt, $18.8 trillion:
http://www.usdebtclock.org/

Canada govt debt, $615 billion:
http://www.debtclock.ca/

Ontario govt debt, $294 billion:
http://www.debtclock.ca/provincial-debtclocks/ontario/

Add to that corporate debt, mortgage debt, household debt, credit card debt.

All that debt has to be serviced (interest paid). If interest rates go up too much, payments can’t be made, the loan is considered defaulted. Governments of all levels in Canada and the US are sitting on mind-boggling amounts of debt. If their interest payments rise too much, then will be insolvent. NOT. GONNA. HAPPEN. Central banks will not allow it.

So yes, I agree. Low interest rates are here to stay for the long term. Maybe tick upwards a half or whole percent. Not a whole lot more.

#50 Bobs ur uncle on 12.27.15 at 7:17 pm

#31 flop

Word round the campfire in his riding was that he was trying to recruit a stand-in candidate from the community for this past election who wouldn’t mind stepping down once he runs for the leadership again. The folks telling me this were PC voters who thought he was great. Me, not so much. IMO, he saw the writing on the wall that the cons were hooped, wasn’t too keen to be in opposition again, and headed for the exit.

Personally I’d love to see a game of Jeapordy with JT and Mackay. Would be a contest for who’s dumber. Difference being that Peter acts like he’s supposed to be brilliant. I guess Garth would be in a position to judge…but he’s clearly too nice to cast aspersions…especially round Christmas.

#51 Linda on 12.27.15 at 7:21 pm

Ah yes, the rant of the disenfranchised youth, who feel that they’ve been ‘robbed’ of all opportunity by ‘da geezers’. In order to be robbed, do you not first have to earn or acquire something worth stealing? #22, Raging Ranter, says it well – you can’t expect to grab the loot & also inherit it from those you’ve grabbed it off of. Once that cupboard is bare, there is nothing left to grab – unless you are clutching ‘da geezer’ who you just grabbed from. I would imagine most moist millennials et al would rather not & would in fact recoil in horror at the very concept.

However, I do have some trouble with the concept that somehow all those who have real estate will be able to turn that asset into retirement income when the time comes to retire. Like anything else, those at the head of the line will doubtless do quite well. However based on stats that line is plenty long & frankly, most in it are truly screwed if they are counting on selling at the top of the market to fund retirement. The first baby boomers turned 65 in 2010. Even if every single boomer works right up to age 65 or even age 70 the oldest boomers all turn 70 in 2015 & hey, 2016 is just around the corner. 9 million Canadians qualified as boomers. The very youngest of the group all turn 50 in 2016. 15 years from now all 9 million of the boomer group will be aged 65 or older. That is one whopping pile of people who might need to sell their RE in order to have enough to live on in retirement. I just can’t see everyone selling at a profit & an endless supply of buyers paying premium prices.

Which leads me to inheritances. What happens from a tax perspective when a person inherits real estate? If they didn’t own any other RE but rather move in to the inherited property (I’m talking residence, not commercial or business property) do they have to pay taxes on that inheritance? If it is where they now live – their principle residence – does that protect them from taxation or does the fact it was inherited mean they or the estate of the former occupant is subject to taxation? And if property is being inherited rather than being bought/sold, what if any effect would that have on housing prices in general?

#52 For those about to flop... on 12.27.15 at 7:22 pm

#42 rosholt on 12.27.15 at 7:04 pm
Everyone be sure to tune into tonights great interview with Justin and see how he is leading Canada into the new technological era. He will be live tweeting too! Should be awesome to see the guy EVERYONE voted into power with a MAJORITY!!

Out with the VHS and in with the Iphones and Instagrams!

I bet Putin and Trump will be watching, maybe even tweeting about it!

/////////////////////////////////////////////
Troll,troll,troll your boat,
Gently down the stream.
Merrily, merrily, merrily, merrily,
Life is but a dream.

#53 BC Guy on 12.27.15 at 7:25 pm

All that government debt is due to wealthy individuals and corporations not paying their fair share of taxes.

Ideally, any society should have balanced books. What we have is mega-billion dollar debts by governments and mega-billion dollar investment accounts held by the wealthy (mostly the Boomer generation). So yes, I agree, there was a massive wealth transfer from the public to the 1% over the past generation.

The Millennials have a right to be pissed off. Good jobs are scarce, housing unaffordable, cities more and more overcrowded, land everywhere is mostly locked up by the 1%. Wealthy Boomers bitching about losing the $11k TFSA, being cut to $5.5k. Boo-hoo. I feel so sorry for you. Not.

#54 Blobby on 12.27.15 at 7:26 pm

I remember back in March, Harper gave a speech where he said pretty much the same about the budget balancing itself – but he had his words written for him slightly better so no-one could pounce on it and say “HA! Caught you out wiggy! You’ve been attacking jnr over that!”.

In other words, he didn’t say it. Would that be accurate? — Garth

#55 batt519 on 12.27.15 at 7:33 pm

Great blog post today host. I laughed at that comment when I read it late last night, it stood out. The only comments I really have about it is the author was raised by those has he/she was biting and learned the real estate way. The genetic genes of that group include “nouveau riche” “notional gazzillionaire” “fancy everything” the delusional “I’m invincible”. Reality will set it and they will have to learn the hard way. It’s too bad that the last real real estate crash was what? ’89-’95ish.
The only way Trudeau v2.0 could possibly attempt to remedy this situation would be to undo the change to the Bank of Canada that Trudeau v1.0 implemented and increase the old rule to a greater percentage of its’ ability.
The banks are out of control and so or the Hoopleheads.

Maybe you could do a music history lesson blog post and introduce the younger crew to a fine Canadian, David Clayton Thomas. The band wasn’t called Blood Sweat and Tears for nothing…

https://www.youtube.com/watch?v=P5J_aGZcID0

It’s peeps that you write about host, that keep my safe in $ilver!

Regards,
Batt

#56 Brian Ripley on 12.27.15 at 7:35 pm

Rising rates are a threat, but as we have seen in Japan, a rate trend can last more than 20 years.

I think in Canada, employment earnings will be the major issue even with the promise of fiscal spending on infrastructure.

It’s only been a year so far in Alberta that earnings have changed trend, chart: http://www.chpc.biz/earnings-employment.html

The commodity bust has been on since 2011 and there is no change evident there yet.

Infrastructure spending may help some of the unemployed, but will it support earnings growth if those earnings need to be directed at debt repayment?

I am visiting family in the Cowichan Valley on Vancouver Island and I doubt there will be much federal money spent here. I suspect it is a similar story elsewhere in small-town Canada.

#57 The American on 12.27.15 at 7:37 pm

At #40: not 1st, congratulations! You’ve woke, once again, the Biggest Moron award! These millennial snare ALREADY loving hand-to-mouth! Plus, you’re thibking small (go figure). A few hundred a month you say? To many, it will be over a thousand a month. Add to that the declining Canadian economy, and a lot of them are out of jobs on top of increasing rates. It’s a house of cards that’s just getting started with the decline. It will indeed accelerate, affecting millions of Canadians, young and old.

#58 The American on 12.27.15 at 7:38 pm

And goddamn, I wish there were an edit button after one submits his/her comment. Autocorrect is a total bitch.

#59 ANON on 12.27.15 at 7:38 pm

I’m tired of being a retarded Canadian. We’ve wasted the greatest fortune for myopic short term gain. I’m moving to Lisbon ASAP. It’s a beautiful city dripping in blood and it knows it. Enjoy your hell.

Godth,
Still angry…Since you are probably also an expat, please remember what the situation was in Europe before the 80s (and you can go back as much further as you wish to get an even bigger picture). Do you think all those people came over the Atlantic in droves since 1492 because life was too nice to them on the Old Continent? Do you still think this is a moral or intellectual issue?
Best of luck over there, I would rather camp at Kuujjuaq with the polar bears, thank you very much. ;)

#60 Chris on 12.27.15 at 7:43 pm

It is sad but Canadian living standards are becoming lower gradually. If housing price keeps moving higher, people that should have been able to afford 4 bedroom would only br able afford a 3 bedroom and so on. Can a family of 4 fit into 2 bedrooms? Sure if they have to. It is about living stamdards getting lower until it gets to tipping point when the cons of living in Toronto or Vancouver will outweigh the pros. Maybe Canada too. Not looking forward to that.

#61 Ontarians should volunteer to pay more tax! on 12.27.15 at 7:47 pm

“Christmas is a time for giving and that is what Ontario Premier Kathleen Wynne is asking of her citizenry. With almost $300 billion in debt, and almost 1 in 10 dollars of revenue going to pay interest, and already facing the highest tax rates in North America, The Star reports that Ontario officials are asking that ‘patriots’ voluntarily donate their tax refund or write a cheque to defray the province’s massive debtload.

http://www.zerohedge.com/news/2015-12-27/ontarians-urged-voluntarily-pay-more-taxes-cut-provinces-debt

Uhhh. Yeah. I’ll get right on that.

BWAHAHAHA!!!

#62 Retired Boomer WI on 12.27.15 at 7:50 pm

“The deficits will take care of themselves.” T2

“Deficits don’t matter.” Darth Vader aka Dick Cheney

“Rates will remain low for a generation…” delusional one

Well, he could be HALF right, that delusional one, in that have been lower than usual for over a decade. So, as people are impacted by ‘recency bias’ that is, to believe what has recently transpired will continue. I do harbor some sympathy. Of course, having said don’t be fooled by today, there is NO sympathy should rates be up a year from now, and markets lower.

Hey, we could be in another recession even more severe than the last one. I am NOT expecting that, nor am I saying it couldn’t happen.

If you want certainty, ask someone who knows for sure, a Millennial, or a Fortune Teller.

Be prepared to PAY the fortune teller, who comes with the infamous ‘tail-ight guarantee’, that means his prediction is valid as long as you can see his taillights…

The Millennial will always believe his phone…

As for me, I just don’t know, but I tend to believe in rising rates -slowly- over the foreseeable future.

Buy, Sell, and Hold accordingly

#63 Godth on 12.27.15 at 7:53 pm

#13 crowdedelevatorfartz on 12.27.15 at 5:05 pm
Here’s Hitlery’s tone:
https://www.youtube.com/watch?v=mlz3-OzcExI

So more of the same insanity. Unleash the nihilists from Saudi Arabia, Qatar, Turkey and Israel stands back laughing. From the underbelly of Russia to the western provinces of China these nihilists will be a weapon throughout central Asia. Too bad the common folk will flee and bleed into Europe or any other refuge. Chaos and destabilization; re-drawing borders, erasing history into a uni-polar world. Good luck! World war is simmering now…when does it boil? When not if is the question.

#64 VICTORIA TEA PARTY on 12.27.15 at 7:55 pm

#332 Big Dipper

Your attitude toward Geezers, especially the ones who live debt-free like me, stinks. And you will pay in every way for your silliness.

Your attitude needs a good old fashioned shake-out.

Why?

Because what St. Garth of “Impending Millennial Financial Doom” has not been hitting to hard upon for quite some time needs to be re-explained now.

It is your need, and the need of the balance of your financially vaccuum-headed generation, to NOW understand what really governs your life: the world’s credit markets and not the latest insane computer “pad” development or whatever.

Debt runs the world.

Why?

Because there is not enough equity to finance all the various public and private “initiatives”, such as Trudeau the Second’s much anticipated infrastructure boondoggles.

The money has to come from SOMEWHERE. That somewhere is the credit markets. Those markets are made up of actual people, and various banking and other-than-banking sources (Canada BTW also has to compete with China, India, Europe and so on for those bucks. Heavy duty).

Canada, whose finance minister is soon to be given the heavy responsibility, by Trudeau, to go round up some loot will have a tough job.

First off, he’ll be going with a “Please Sir, may I have some more?” attitude rather than a Millennial spoiled brat attitude of a “Hey, guy, like gimme the loot NOW…” or somesuch.

Why?

Because of the oil price crash. Just because Canada’s energy sector represents less than 10 per cent of our total economic output, it is FUTURE POSSIBLE oil prices that will be cobbling Mr. Morneau’s “call to duty.”

Why?

Because Canada is ALSO one of the most indebted per capita Western developed countries in the world.

So it is not one, but two, factors that will determine the outcome of this quest for more filthy lucre from the world’s banking and loan sharking communities.

First, the commodity price collapse, and second our debt track record to date.

Mr. M. will get the money OK, but at WHAT INTEREST RATE, and how will that rate impinge on the 345 Trudeau election promises he wants to keep?

I’m talking about fiscal policy here, budgets and the like.

Fiscal policy is a very powerful force because it tells the world how our government conducts its spending.

Monetary policy, is the other financial policy we must also look at.

Monetary policy is the purview of the Bank of Canada. It sets interest rates at the short end of the interest rate yield curve, for want of a better explanation.

Mr. M ALSO knows this.

And his deliberations with the international loan sharking group will have to factor in what the BoC might do with our rates depending on the amount Mr. M may be thus ALLOWED to borrow and at what rate of interest.

Remember, Millennials, Argentina, Brazil, and Zimbabwe are classic economic basket cases because they borrowed too much and couldn’t, or can’t, or won’t repay. They are in deep doo-doo and that’s all she wrote. The people suffer muchly.

They took on the loan sharks and lost. Period.

It’s a stretch for me to forecast a similar fate for Canada.

To prevent that from ever happening here, please do this: do NOT make too many demands on Trudeau. He will be walking away from very many election promises, because he will have no choice. It’ll take guts but it will be the right and only thing to do.

Our economic cupboard is bare.

And just how bare it is will come to to an iPad near you in the fullness of time.

The lesson I learned years ago was to not borrow money unless I absolutely had to.

I am what is described as a lousy consumer. I spend as little money as possible. My loot NEVER sees the inside of a coffee shack, but occasionally a restaurant, and rarely in a retail outlet of any kind.

Life is good when you have jingle in your pockets and no debts; the skies seem to be sunny all day!

#65 Retired Boomer WI on 12.27.15 at 8:00 pm

Justin will be “live Tweeting” tonight on an interview?

I’ll be ‘tweaking’ my new flatulent Santa present to mimic him – Boomer Revenge – you might say….

PHHHT “That’s all your getting for Christmas (2016)”

#66 not 1st on 12.27.15 at 8:01 pm

#45 The American on 12.27.15 at 7:37 pm

—-

I advise that you attend to your election sideshow and leave Canada to us. We will call you when we want to know more on how goose an economy with fake QE and runaway debt to the tune of 20 trill.

#67 Michael on 12.27.15 at 8:02 pm

Look up 1982, interest rates 21%!!!

#68 Warren - the lagging indicator on 12.27.15 at 8:07 pm

Keith in Calgary – “all fours states have legalized weed, and every single piece of fear mongering from the hypocrites hasn’t come to fruition.”
I am with you on this one Keith. These people are sadly ill informed and yes, hypocritical. They so easily dismiss issues such as this as not important because it does not inpinge upon their freedoms, lifestyle or medical needs yet spout off about free markets, personal choice, freedom, and responsibility in the very next cigar puff or at least between drinks. Their fatuous arguments of addictiveness or health concerns would be exposed quite quickly if their nightly glass of wine or overindulgence of scotch were rightfully labeled addictive and a bane to society. Oh yes, how swiftly they would revert to a screed about god given freedoms, dictatorial big government intervention and the like. Those that can not see the benefit in legalization is the personal freedom it affords would have to be intellectually honest and ask themselves if they would support a ban of alcohol right now, feasible or not, because really, what benefit to society does it afford and is it more harmful than a puff of weed. We have laws in place to discourage impaired driving and the like, make those more punitive. It is a personal choice and responsibility.

So we should make another impairing substance widely available because you want it? — Garth

#69 Godth on 12.27.15 at 8:11 pm

#55 ANON on 12.27.15 at 7:38 pm

We need another couple of planets so we can all conspicuously consume our way to neverland. Civilization is always a moral and intellectual issue. Enjoy talking to the polar bears, maybe you’ll make sense to them because you sound like what I want to flee.

#70 Smoking Man on 12.27.15 at 8:15 pm

Getting so hard to remain anonymous.

http://www.ufostalker.com/

#71 Mark on 12.27.15 at 8:15 pm

” But is there any validity to it? “

A lot of validity to it, at least in the short-medium term, as the boomers, with houses that are rapidly losing value (including the GTA/GVR), hunker in, stop borrowing, start saving — and saving a lot, desperately hovering up assets with any sort of a yield now that housing is increasingly being discredited as an asset class that can provide for a retirement.

The real danger to housing-backed borrowers is that as housing increasingly goes into oversupply as an asset class, that the collateral itself becomes insufficiently valued to cover the loan. Risk premia against the asset class of housing specifically rises, even with constant or falling BoC (and even Fed) policy rates.

Fortunately for investors, there’s lots of great yielding long-term assets available, and such assets are historically cheap outside of the RE marketplace. Especially in Canada where the stock market has barely moved upwards over the past 15 years. Or in the emerging markets where for reasoning that can only be described as bizarre, the indicies, often increasingly comprised of best-of-breed companies, have sold off severely. Even the gold mining sector, generally not a great performer, offers incredible value at this juncture with the its indicies (ie: XAU, HUI) hitting levels not seen since 2000 and fundamentals improving all the time.

I do expect the ‘kids’ will eventually get the last laugh, as demography which has worked against them, will eventually work in their favour, driving inflation up significantly, and eventually long-term interest rates (a further strike against the boomers who, by then, will have their portfolios largely allocated to fixed income in their twilight years). But in the short-medium term, there’s still tens of millions in the US/Canada economy unemployed or underemployed, lip service is granted to productivity improvement, and there’s a number of extremely bloated sectors in finance, RE, and government which require liquidation that will contribute to deflationary tendencies for a while to come.

#72 Mark on 12.27.15 at 8:18 pm

“hovering up ”

Meant “hoovering up” in my previous post.

Stupid autocorrect. Really gotta figure out how to disable it.

#73 The American on 12.27.15 at 8:20 pm

not 1st, there is a reason you go by the name “not 1st.” Sorry, your jealousy is showing through. Fake QE you say? Oh, I say it was real indeed. Canada is diving head first into the shitter, everyone saying “weeeeeeeee!!!” while still making excuses and denying the inevitable. It’s okay, little one, you are naive and just going through the five stages of grief. 1)Denial 2)Anger 3)Bargaining 4)Depression 5) Acceptance. Currently, you are in denial. You have a long, a very long, road ahead of you.

#74 Warren - the lagging indicator on 12.27.15 at 8:20 pm

Yes Garth, but would you support the ban?

#75 Keith in Calgary on 12.27.15 at 8:24 pm

#46 Linda…….

There is no inheritance/estate tax in Canada on the value of the principal residence which was occupied by the recently deceased. The cottage in Muskoka however gets taxed on the capital gains like anything else when it is sold. This is why it is a bad idea to put allow your parent/s to put your name on the title to their principal residence merely to avoid probate fees when they die, if you do not live there.

As for interest rates, as I have no debt it really doesn’t matter except as to how it affects the currencies I trade. But for fun I played around with the RBC mortgage calculator a bit.

$500K amortized over 25 years has a carrying cost of $234 per month for every 1.00 % rate increase. Not significant, and for even the most financially buried consumer, quite manageable I’d imagine, and unlikely to cause any spike whatsoever in the default rate. Increase that by a factor of 2-3-4% however any you’d have a cataclysmic disaster in the RE markets and literally everywhere else in the financial world.

Rates will NEVER go back to where they were pre 2008 in 20+ years……..maybe never, ever, unless the world’s financial markets experience a reset of some sort. And the chance of a reset triggered by events out of the control of central bankers are far greater than anything else.

The FED would like us to think they will…….and if they really meant what they want us to think their .25% posturing means, why don’t they raise rates 1 or 2 % this week ?

Surely you cannot be this naive. No, wait… — Garth

#76 Doug t on 12.27.15 at 8:24 pm

Debt is debt – it must be paid. The word mortgage is Latin for ” death pledge” – so really when you think about it the banks are right there beside the mortician.

#77 Kreditanstalt on 12.27.15 at 8:29 pm

This “the Fed has begun a tightening cycle” nonsense will soon be revealed as ludicrous.

There is going to be no “tightening cycle”.

This is a one-off act of utter desperation by a coterie of PhD.-hampered central planners at wit’s end because their theories and models are being proved useless…

They simply won’t work in a zero-real-growth, peak-debt environment – one created by these central banks and governments flooding the system with cheap money for decades.

#78 Mark on 12.27.15 at 8:29 pm

“Because there is not enough equity to finance all the various public and private “initiatives”, such as Trudeau the Second’s much anticipated infrastructure boondoggles.”

What really is equity and money? Its having an available pool of labour that is willing to work in exchange for it. Or failing that, foreigners willing to buy it in exchange for their labour and goods.

With Canada’s horrific unemployment/underemployment problem, is there really a shortage of value in money? Of course not. That’s why the Canadian dollar has kept its value remarkably well in the past year (only losing ~1.4%). And to say that Canada has any shortage of resources is laughable.

The challenge for Trudeau et al will be to allocate those resources semi-usefully if they choose to allocate them. Canada, egged on by the government, has done some incredibly stupid things over the years, yet hasn’t been wiped off the map. If anything, the tragedy might be that of not making the “investments”, and having Canada’s tradespeople, engineers, etc., sitting on the sidelines for another many years while the economy continues to naturally self-liquidate itself.

For instance, the productive capital in the railway sector has been depleted to such an extent, relative to demand in the Montreal-Toronto corridor, that a passenger train that took under 4 hours over 40 years ago cannot be run in less than 5 today. Its practically a no-brainer for government to invest in upgrades there to the infrastructure its railway needs to operate, and to, as much as possible, create a regulatory environment that incents Canada’s railways to invest ~$100B-$200B to modernize their infrastructure. Likewise in telecom where $100B in investment will be required to bring modern optical telephony to most Canadians. I personally very much prefer private sector approaches to this, and for these reasons, prices need to rise, and regulatory disincentives need to be removed.

#79 ROCK BEATS PAPER on 12.27.15 at 8:29 pm

“So we should make another impairing substance widely available because you want it? — Garth”

All impairing substances should be decriminalized. They should be regulated and taxed similar to alcohol. Spend the tax money on education and other mitigating services. That will hopefully put the drug dealers (other than pharma companies) out of business.

#80 Godth on 12.27.15 at 8:30 pm

#65 not 1st on 12.27.15 at 8:01 pm
They have the world’s largest hammer and talk like that will make you a nail. Bow before Caesar or be bludgeoned!

#81 TRT on 12.27.15 at 8:32 pm

They got one thing right. Boomers should have to pay for their own healthcare by way of age based premiums based on wealth, not income.

No way the working class young should have to pay for that. And over time, they won’t.

And maybe raise the retirement age to 72 immediately and keep it that way until the boomer hump passes. Then bring it back to 65.

People near retirement (Boomers) pay a large amount of tax, since incomes peak at that period. I regret you hate your parents. Did they not tell you that you’re special often enough? — Garth

#82 Coming to an end | Realties.ca on 12.27.15 at 8:34 pm

[…] Source: http://www.greaterfool.ca/2015/12/27/coming-to-an-end/ […]

#83 Kilt on 12.27.15 at 8:41 pm

Hey Garth.
Looking at buying in area that is moving into buyer’s market conditions. My Realtor seems reluctant to give me any details on previous sales prices or if the places I have been watching were sold or taken off the market. I have done my own research and seen several of the places listed for rent in Craigslist, but can only assume they were taken off to be rented out and not purchases (rental photos same as listing photos).
I am looking to put a bit in for 10+ percent below asking, but my Realtor says the offer would be ignored. These are houses that have been listed for six months and have seen two price drops. Whats your take? I’m concerned the variable rate will drop again before the spring market and turn the buyers market into a sellers one.
Kilt

#84 Mark on 12.27.15 at 8:45 pm

“Apparently the Teranet index isn’t painting an accurate picture of Calgary’s price decline. It appears to be upward biased. Teranet’s claims about Victoria also appear to be upward biased. This is evident when comparing Teranet’s results for Victoria with the more bearish results of the local board’s index. “

The major problem with the Teranet index is that it has a severe lag to it on account of its methodology. Essentially it is a low-pass averaging filter (lpf). What you’re seeing in the numbers today is actually more reflective of the peak in Canadian RE reached 2-3 years ago (the Flaherty Budget-2013-induced “peak” of the Canadian RE market), rather than what’s happening on a real time basis.

The Teranet index, likewise, will suffer problems in a rising house price environment, understating house price upwards, as its moving average/lpf behaviour will average such changes out with many prior years which may very well have been stagnant or falling.

If a person is dealing with a Realtor, the sort of analysis to request is that of similar properties in one’s neighbourhood sold recently. When one does this, it should be obvious to most that prices are weakening/falling, with the corresponding drop in consumer confidence that we typically see with falling RE prices. The ‘headline’ numbers are only higher because the sales mix has undergone such a dramatic shit with the “entry-level” buyer mostly having disappeared from the market, and, particularly in the GVR/GTA, an onslaught of brand new un-depreciated supply coming to market.

#85 Mark on 12.27.15 at 8:46 pm

“dramatic sh**”

bleh.. I’m getting terrible. Sorry, ‘shift’. Bleh :(

#86 ANON on 12.27.15 at 8:52 pm

#68 Godth on 12.27.15 at 8:11 pm

We need another couple of planets so we can all conspicuously consume our way to neverland.

No arguments here.

Civilization is always a moral and intellectual issue.

Civilization is a narrative.

Enjoy talking to the polar bears, maybe you’ll make sense to them because you sound like what I want to flee.

I don’t think 36 million (+1) retards have anything against you or your own personal narrative of having your cake and eating it too, because it does not sound like you’re fleeing because you can’t wear your cilice proudly on this side of the Atlantic.

.

#87 ROCK BEATS PAPER on 12.27.15 at 8:55 pm

Garth,

Your post is just conjecture at best. I believe you called for Canadian rates to be on the rise only to witness thier 2 quarter point drops.

The problem with economist forecasting is how often it is completely wrong. The consensus at the beginning of the year was for the 10 year Treasury to rise to 2.8 %, but it ended flat for the year.

Moreover, the FED does not know if it will raise rates and besides they may want to keep us in the dark, as they remain data dependent. They had delayed their first raise for most of the year, so it is not a stretch to imagine that they will delay the second raise until the end of the year (note: I am on record as one and done, but even that is not a forecast, just what I think the odds on favourite are).

The irony is that even rates rise 1% in Canada and real estate were to fall in the GTA by 12%, that will only bring prices back to the beginning of the year. IT WOULD DESTROY CONFIDENCE IN PRICES GOING INTO 2017.

#88 BG on 12.27.15 at 8:56 pm

I actually despise weed smoking but #67 Warren made some very valid points for at least not opposing legalization.

#89 No debt on 12.27.15 at 8:57 pm

#53 BC GUY
I love being in business and paying less tax! It’s fu…..great! You have the chance to do the same! Why cry about it? Don’t be a pussy cat! Lmfao

#90 Mark on 12.27.15 at 9:01 pm

I am looking to put a bit in for 10+ percent below asking, but my Realtor says the offer would be ignored. These are houses that have been listed for six months and have seen two price drops. Whats your take?

I’d suggest tell the Realtor to put your offer in anyways, and if they refuse, basically tell them that any B.R.A. you signed with them (which you shouldn’t have signed in the first place if you listen to Garth) is null and void on account of their failure to perform their obligations as your faithful agent. And find a new Realtor.

But seriously, you really should ditch the Realtor. There’s plenty of them hungry for work these days who won’t jerk you around or fail to follow your orders, especially since the market has been falling (and likely continues to fall). Of course, put your request, if necessary, and your cancellation of the BRA to your Realtor in writing, so that you have something to fall back upon if the disgruntled ex-Realtor decides to sue you for commission if you do end up closing a deal with a different Realtor.

#91 Mark on 12.27.15 at 9:06 pm

“the plummeting Canuck buck “

The Canuck buck has only lost 1.4% YoY:

http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/cpis01a-eng.htm

The long-term target for loss of value of the CAD$ is approximately 2.0%/annum.

Against the US$ the loonie has lost 16.1% of its value thus far in 2015. — Garth

#92 Millmech on 12.27.15 at 9:11 pm

Should be interesting all the posters saying they will never raise rates any higher,pretty well same group of people saying QE won’t ever stop.When it was they said it would be reinstated,nope rates went up,now they are all saying rates will retreat when the system is pricing in rates raising.

Poster stating that they can easily pay down $600,000 mortgage at low rates,I wonder with paying that mortgage how do they come up with the 10-20% accelerated payment.Now if all these people who have under 3% mortgage are prepared for a new “monthly” bill that has doubled as in the first 10years are mainly interest not principal.

I’m a Gen X and seen interest rate devastation as a young man and remember the neighbours with 20% mortgage rate and suffering the financial devastation and they were expecting high interest rates.

I’m staying balanced,liquid and diversified as I’ve seen this played out a generation ago and those who were unencumbered with debt and had cash for bargains did very well for themselves.

#93 context is everything on 12.27.15 at 9:13 pm

For all the “budget will balance itself” demagogue parrots, who intentionally don’t quote the entire sentence:

That’s a reference to an interview that the Liberal Leader did with CPAC in February in which he said: “The commitment needs to be a commitment to grow the economy and the budget will balance itself.”

http://politics.theglobeandmail.com/2015/08/05/attack-ad-reality-check-do-these-conservative-and-ndp-claims-stand-up/

Grow the economy and the budget will balance itself.

Argue with that.

#94 not 1st on 12.27.15 at 9:17 pm

I suggest anyone who thinks decriminalizing mj spend some time in vancouver. They do that sh*t every where there. Parks, playgrounds, theatres, parking lots, mall bathrooms, the ferries, the tram, the beach, the gondola, the ski hill, stanley park, etc

People in BC can’t seem to enjoy anything without getting totally messed up on bud first.

The average drinker has a few drinks a week. The average dope smoker tokes up as much as an average smoker does so that probably 10 a day. Its not the same thing.

#95 Smoking Man on 12.27.15 at 9:21 pm

#71 Mark on 12.27.15 at 8:18 pm
“hovering up ”

Meant “hoovering up” in my previous post.

Stupid autocorrect. Really gotta figure out how to disable it.
….

Just unplug yourself Mr Roboto.

#96 devore on 12.27.15 at 9:21 pm

#45 Only-inflation-to-reduce-debt-burden

You know very well that the statement you mention” the debt will take care of itself” refers to the total debt relative to the size of the economy and that by growing the economy at a faster rate than growing the debt, the ratio between the two eventually becomes manageable….

First, the quote is “the DEFICIT will take care of itself”. Second, it is taken quite in context. Third, a good economy does not fix a deficit. A deficit is a spending problem, not an income problem. Lots of deficits were run even during the headiest boom years. As such, stating that a better economy will take care of the deficit is incorrect and misleading.

#97 Smoking Man on 12.27.15 at 9:24 pm

Fargo Marathon…

Oh yeah…..

#98 Tony on 12.27.15 at 9:26 pm

Re: #46 rosholt on 12.27.15 at 7:09 pm

The most likely scenario is the Canadian housing market will end up like Japan and Germany. Rates will fall and real estate will also fall in price. When the U.S. stock market indexes implode real estate will move sharply lower here and in America.

#99 VICTORIA TEA PARTY on 12.27.15 at 9:28 pm

#77 Mark

I also agree the private sector needs a prominent role in building infrastructure.

My only point here is that once the borrowed money arrives in Canada, then a labour force will be hired and the various primarily government infrastructure projects will be built. This has been happening for years here and will continue but only moreso, according to our new PM.

Fine and good.

It’s just that this money has to be repaid, and workers will be back on the jobless roles once the job is done, unless these projects ALSO provide hundreds of thousands of jobs long into the future.

The problem here is that the job market is undergoing such traumatic changes, with much work simply evaporating due to technology or off-shoring, that finding replacement jobs, by the government and private sectors, seems to be something that will daunt us all for the forseeable future.

God help our workers and our private businesses which also borrow money to hire people.

#100 imparing substance on 12.27.15 at 9:28 pm

So we should make another impairing substance widely available because you want it? — Garth

==

Most prescription drugs are impairing substance, with way longer list of side-effects, including death – and much more restricted, questionable overall health benefit than marijuana.

Your lack of knowledge and unwillingness to educate yourself about the topic is embarrassing.

No, your statement was embarrassing. — Garth

#101 The American on 12.27.15 at 9:30 pm

At #90: Mark, do you remember January, 2002? What’s that you say? No? Let me help remind you…. The CAD is going lower than this. http://www.forecasts.org/data/data/EXCAUS.htm

#102 Leo Trollstoy on 12.27.15 at 9:44 pm

Against the US$ the loonie has lost 16.1% of its value thus far in 2015. — Garth

Garth wins again. It never gets old.

#103 Tony on 12.27.15 at 9:44 pm

Re: #76 Kreditanstalt on 12.27.15 at 8:29 pm

Most Americans already know it. It provides a good opportunity to buy long term bonds around April or May next year before rates start to fall again.

#104 Rweinc on 12.27.15 at 9:56 pm

Don’t bother travelling outside of Canada! It’s shocking to see what has happened to the Canadian dollar. It’s equivalent buys very little elsewhere in the world.

My travel days are over!

#105 Joe Schmoe on 12.27.15 at 9:59 pm

Some interesting sidebars the last couple of posts.

I won’t touch legalization of MJ or the generational differences…not worth the keystrokes.

But does anyone think inheritance tax cometh? Seems like JT wants to tax the heck out of the rich, letting them die and get off the hook seems improbable.

Seems people are counting on that wealth transfer…ZOINK! taxes!

#106 imparing substance on 12.27.15 at 9:59 pm

#99 imparing substance on 12.27.15 at 9:28 pm

So we should make another impairing substance widely available because you want it? — Garth

==

Most prescription drugs are impairing substance, with way longer list of side-effects, including death – and much more restricted, questionable overall health benefit than marijuana.

Your lack of knowledge and unwillingness to educate yourself about the topic is embarrassing.

No, your statement was embarrassing. — Garth

===

The unwillingness of recognizing marijuana – and other plants – as a traditional medicine, with a history going back thousands of years, is rooted in the same political, cultural ignorance and discrimination that operated the residential schools for indigenous Canadians.

Refusing the results of modern medical researches, confirming the medical benefits of marijuana and other native medicine plants, based on ideological shortcoming, intellectual laziness is embarrassing.

The debate is not over medical weed. This is recreational. Like Mortal Kombat. — Garth

#107 Leo Trollstoy on 12.27.15 at 10:06 pm

#100 The American on 12.27.15 at 9:30 pm

As pro-USD as I am, when looking at that chart, it’s difficult to make a case for much more downside for the CAD. We should just enjoy the CAD where it is. It’s at a nice spot right now. Comfortable.

#108 Westcoast Woman on 12.27.15 at 10:07 pm

In response to #93: “I suggest anyone who thinks decriminalizing mj spend some time in vancouver. They do that sh*t every where there. Parks, playgrounds, theatres, parking lots, mall bathrooms, the ferries, the tram, the beach, the gondola, the ski hill, stanley park, etc” – as someone living on the West Coast, I would LOVE to see pot made legal so that they can be banned from all those places you listed, similarly to cigarettes!

#109 In Debt to Whom? on 12.27.15 at 10:07 pm

I’ve got a question that I can’t quite wrap my head around. Perhaps someone can help me out.

When we speak of Canadian debt (or any country’s debt for that matter) who exactly are these countries in debt to?

With all first world countries being in trillion+ dollar debt, then does debt even matter? What difference does no annual deficit, 10 billion, or 25 billion make to the grand debt? It is mainly just a rounding error…

https://en.wikipedia.org/wiki/List_of_countries_by_external_debt

#110 ROCK BEATS PAPER on 12.27.15 at 10:14 pm

Decriminalize means big savings for the tax payer as less go through the criminal justice system, while tax collection rises.

#111 Rexx Rock on 12.27.15 at 10:21 pm

With Ontario in debt hell that’s what the taxpayer is going to get in the next few years.The majority of politicians are self serving liars that only care for power and money.Canada is in decline and the people will pay dearly for its government incompetence.Lol to Canadian standard of living in the next few years.

#112 Ulsterman on 12.27.15 at 10:36 pm

So we should make another impairing substance widely available because you want it? — Garth

I’m a non-smoking BC resident and I’ve yet to meet one person who wants to smoke weed who can’t find a local gangster or someone connected to one who will happily supply them. It’s freely available to anyone who wants it. It’s simply a question of who we want supplying it: gangsters or gov/big pharma.

#113 Parsonage on 12.27.15 at 10:39 pm

85 ANON

Cilice … nice!

#114 Fine Wild Roasted Gonads on 12.27.15 at 10:47 pm

#71 Mark on 12.27.15 at 8:18 pm

“hovering up ”

Meant “hoovering up” in my previous post.

Stupid autocorrect. Really gotta figure out how to disable it.
——–
A true autocorrect would pretty much rewrite every single word you type………… bloody hell dude.

#115 cynically on 12.27.15 at 10:54 pm

#28 Me – Canada ia also my country of youth but I wouldn’t award it the title of “great” at that time. I don’t hold much hope for its future because it hasn’t done anything great in its past. Still a “foreign” queen for our head of state and all our political institutions British fashion. No new thinking in all these past years. The US started out at the same time as a colony but changed its thinking and became the greatest world power, succeeding its mother country as world leader. One of the most important factors was open immigration, the taking in immigrants from all countries, not just British and some northern european. I realize that it’s too late today in the present world political climate to change that policy but there are parts of our early policy and type of government that could be changed. e.g. the parliamentary system including an elected senate.

#116 saskatoon on 12.27.15 at 10:56 pm

#108 In Debt to Whom?

may i suggest a another question:

if the canadian government has the power to create and issue its own “interest-free” money (which it does) then why has it “needed” to borrow anything at all?

#117 R2D2 on 12.27.15 at 10:57 pm

Who needs House Porn when you now have Justin Porn…

http://calgaryherald.com/life/swerve/fan-fiction-centred-around-prime-minister-justin-trudeau-takes-a-disturbing-and-impassioned-turn#——————————————–

#118 Mark on 12.27.15 at 11:01 pm

“Garth wins again. It never gets old.”

Most of us use CAD$ to buy thing in Canada. The ‘value’ of the CAD$ is thus what we can buy with that CAD$, and over the past year, the decline in that purchasing power over an average basket of goods and services consumed by Canadians has been approximately 1.4%.

If inflationary pressures start appearing, well, that’s quite bullish for the CAD$, as the current crop of deflationary pressures are largely correlated with the currency. Canada’s heavy investment in export capacity will pay huge dividends over the long run, especially with excess housing-related consumption amongst the 70% of Canadians who own their own home significantly truncated on account of falling RE prices.

Decriminalize means big savings for the tax payer as less go through the criminal justice system, while tax collection rises.

But how many people are really prosecuted these days for simple possession? If marihuana is legalized, the anti-social elements of society will move onto other activities. Which may be harder to enforce/prosecute and/or may cause more societal harm . Gangsters be gangsters, marihuana is just one of many rackets they run.

I don’t disagree with legalization/liberalization, but I don’t think it will be the sort of magic panacea for the out of control law enforcement costs that we are currently seeing.

#119 Kenchie on 12.27.15 at 11:02 pm

#30 bruce_le_bruce on 12.27.15 at 6:00 pm
“Great post Mr. Turner.

Can someone please explain:

“the US increases the cost of money, bond markets follow and higher mortgages are not far behind.”

How does the bond market impact the price of mortgages? Do bonds increase their % return when interest rates go up? How are the rates set through bonds? Which bonds? Where is the money?

The bond market befuddles me. Garth, a suggestion, a post on the bond market would be very helpful!”
————————————————-

It’s not too complicated but here’s a simple primer on how mortgage rates follow bond yields.

1) Banks issue bonds (debt obligations that pay a fixed-income of X% on $100 par values, so 5% = $5 on $100) that are traded in the bond market. These “securities” are priced versus the Canadian government bonds, which also trade in the bond market. The way they are priced vs gov’t bonds is via a “Bond yield spread”.

2) Bond prices are inversely related to their yields. So if a bond price goes up, the yield on the bond goes down. For example, a bond that pays 5% on new issue will be traded at $100. But if yields go down, bond prices go up, say to $110, then the new yield of that bond is 4.55% (i.e. $5/$110).

3) So let’s assume that a bank’s bond yield is 3% currently. The bank will issue bonds for 3%, and use that money that comes in via bond sales to fund mortgages for 5%. The banks will make 2% spread on that money being lent to the home owner. Banks concentrate on the 5-year terms to minimize the asset-liability mismatch between mortgages (a bank asset) and the corresponding bonds (a bank liability), so they mature at roughly similar times.

4) As a result, the 5-year government bond yield is extremely important in the pricing of mortgages. If the gov’t bond yields go up, as many people expect them to over the next few years, then banks will be forced to issue higher yielding bonds in order to provide mortgages for homebuyers and refinancers. And then the mortgage rates will have to rise so banks can keep their 2% spreads between their assets (mortgages) and liabilities (bonds).

Hope that helps.

The US mortgage market is predominantly based on the 15-year and 30-year bond terms.

#120 For those about to flop... on 12.27.15 at 11:03 pm

#101 Leo Trollstoy on 12.27.15 at 9:44 pm
Against the US$ the loonie has lost 16.1% of its value thus far in 2015. — Garth

Garth wins again. It never gets old.

////////////////////////////////////
Put down your Mark voodoo doll for 5 minutes and cough up an apology to Keith in Calgary for your despicable Xmas eve post.
Be a real man ….or troll or whatever you are.

#121 Bram Stolk on 12.27.15 at 11:15 pm

#108 In Debt to Whom? on 12.27.15 at 10:07 pm

A debt to private citizens, pension funds, etc.

#122 kommykim on 12.27.15 at 11:20 pm

RE:

#24 saskatoon on 12.27.15 at 5:21 pm
gotta laugh when the psychologically unhinged liberal uses phrases like…
“fair share”…

It’s even funnier when a rabid right winger says it.

#123 kommykim on 12.27.15 at 11:25 pm

RE:

#71 Mark on 12.27.15 at 8:18 pm

“hovering up ”

Meant “hoovering up” in my previous post.

Stupid autocorrect. Really gotta figure out how to disable it.

Hmmmm. Could Mark be SmokingMan? I seem to remember SM complaining about autocorrect using exactly the same wording.

#124 Kenchie on 12.27.15 at 11:25 pm

#46 rosholt on 12.27.15 at 7:09 pm
“I didn’t actually read todays post until now. Garth seems to misunderstand that we think that we will not pay down any mortgages. WRONG. With rates as low as they are now, we pay LESS interest on $600k that the wrinklies did with $200k @ 10%. And you wrinklies paid down your debt.

It’s called being smart about debt. Or maybe the wrinklies being jealous about interest? Because you were gouged with interest 20 years ago doesn’t mean you need to be green with envy of the new normal.

Hopefully you will be sane enough to look back in 15yrs to say that we were right and SMART about our debt.”
———————————————-

Actually, you’re completely idiotic, and this is coming from a millennial.

1) You do not speak for a generation, so don’t use the word “we” when you’re speaking about your personal experience and opinion.

2) You’re not being “smart about debt”. You may pay “less interest” but you pay a heck of a lot more in principal for an asset that’s not really worth what you’ve paid for. Furthermore, if interest rates do rise significantly before your next renewal, you’ll be paying more in interest then you are paying today, for an asset that is likely to be worth less than you bought it for. That’s not being “smart” at all.

3) If you asked people 30 years ago what they thought interest rates in 2015 would be, there is zero chance in hell they’d say sub-3% because it was so high back then. So don’t expect to be able to say in 15 years that interest rates will be <3% because they could easily be in line with their historical average of 5-6% for a 5-year fixed, or roughly double what it is today. Or even higher if there is a massive manufacturing capacity crash in China (unlikely, but you never know).

4) Do you know what happens when you're on a variable mortgage and the Bank of Canada raises rates? Sure, the interest portion goes up. But do you know what that effectively means? Well, it means your amortization schedule will be thrown out because it's no longer on schedule. Imagine going from 2.05% to 3.05% in the course of 18 months. That will set you back ~5 years on your amort schedule (i.e. your 25 years is now 30 years).

Good luck with that mortgage because you might need luck more than you think. And don't be cocky, it's unbecoming.

#125 imparing substance on 12.27.15 at 11:34 pm

#99 imparing substance on 12.27.15 at 9:28 pm

So we should make another impairing substance widely available because you want it? — Garth

==

Most prescription drugs are impairing substance, with way longer list of side-effects, including death – and much more restricted, questionable overall health benefit than marijuana.

Your lack of knowledge and unwillingness to educate yourself about the topic is embarrassing.

No, your statement was embarrassing. — Garth

===

The unwillingness of recognizing marijuana – and other plants – as a traditional medicine, with a history going back thousands of years, is rooted in the same political, cultural ignorance and discrimination that operated the residential schools for indigenous Canadians.

Refusing the results of modern medical researches, confirming the medical benefits of marijuana and other native medicine plants, based on ideological shortcoming, intellectual laziness is embarrassing.

====

The debate is not over medical weed. This is recreational. Like Mortal Kombat. — Garth

===

There was no separate debate.

You can read yourself the history, the transcripts related to the Marihuana Tax Act of 1937.

There was no consideration whatsoever that legislators are banning certain plants that were part of the traditional medicine, medical practice of the indigenous people.

The same in Canada. Maybe as a former legislator yourself, you can tell us, if it was otherwise.

What happened was the equivalent of eliminating language, traditions – fundamentally a form of cultural genocide.

Like “Mortal Kombat”, indeed.

#126 Hawk on 12.27.15 at 11:44 pm

#20 Vundo

You can only win so much before the poor and angry start showing up in greater numbers at the voting stations demanding socialism.

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

Yup that’s solution, vote yourself more lollipops at other people’s expense, driving ever more productivity and capital out of your land, till one day……Canada = Venezuela.

As the man said ………”Good Luck with that” – (LOL)

#127 Kenchie on 12.27.15 at 11:45 pm

#82 Kilt on 12.27.15 at 8:41 pm
“Hey Garth.
Looking at buying in area that is moving into buyer’s market conditions. My Realtor seems reluctant to give me any details on previous sales prices or if the places I have been watching were sold or taken off the market. I have done my own research and seen several of the places listed for rent in Craigslist, but can only assume they were taken off to be rented out and not purchases (rental photos same as listing photos).
I am looking to put a bit in for 10+ percent below asking, but my Realtor says the offer would be ignored. These are houses that have been listed for six months and have seen two price drops. Whats your take? I’m concerned the variable rate will drop again before the spring market and turn the buyers market into a sellers one.
Kilt”

If you don’t have a “Buyer Representation Agreement”, ignore the realtor and go directly to the listing agent.

Use this as a rough guide on the things to think about (non-price wise):
https://www.discover.com/home-loans/articles/10-steps-to-buying-a-home

#128 Hawk on 12.27.15 at 11:57 pm

#38 Godth on 12.27.15 at 6:48 pm

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

Lisbon is lovely, been there, ……the roast goat dinners amazing…….the employment and economy,…..not so much.

http://www.reuters.com/article/portugal-unemployment-idUSL5N0Y35QS20150521

#129 Karma on 12.28.15 at 12:01 am

#93 not 1st on 12.27.15 at 9:17 pm
“I suggest anyone who thinks decriminalizing mj spend some time in vancouver. They do that sh*t every where there. Parks, playgrounds, theatres, parking lots, mall bathrooms, the ferries, the tram, the beach, the gondola, the ski hill, stanley park, etc

People in BC can’t seem to enjoy anything without getting totally messed up on bud first.

The average drinker has a few drinks a week. The average dope smoker tokes up as much as an average smoker does so that probably 10 a day. Its not the same thing.”

LOL! You’re correct about smoking anywhere and everywhere. But you’re horribly incorrect when you say “average smoker tokes as much as an average smoker does so that probably 10 a day”. Only the very biggest of stoners smoke multiple times a day. Most smoke once in the evening after work, or on the weekend. Most are young urban professionals (and some oldies too).

#130 Freedom First on 12.28.15 at 12:01 am

Pot, booze, cigarettes, gambling. Too bad the decisions are always about the money.

Personally, I absolutely love living a life devoid of any of those habits. I consider them all as being anti-fun and life ruining. Kind of like marriage. Look around.

Sincerely, Freedom First

#131 ROCK BEATS PAPER on 12.28.15 at 12:02 am

“But how many people are really prosecuted these days for simple possession? If marihuana is legalized, the anti-social elements of society will move onto other activities.”

The rhetorical question is contradicted in the answer sentence. Most of the people who posess are not anti-social, nor are their activities. The slippery slope argument has long been debunked as well.

On the other hand, alcohol is far more dangerous than marijuana. Are you against its legalization? Casinos?

The point is that if ALL recreational drugs are legalized and regulated you will remove the drug dealer, and have money to “socialize” or educate, as well as mitigate any fallout by collecting taxes and applying those resources.

#132 Bobs ur uncle on 12.28.15 at 12:03 am

So we should make another impairing substance widely available because you want it? — Garth

Um, as I already pointed out – it’s already widely available. The dealers are making a mint. I’m still waiting on a decent argument for how keeping it illegal is actually at all beneficial to society, or how it would curb kids’ access to it. All you have been doing is repeating a variation on the same line above. Can’t think of anything else? I honestly didn’t think you would bother to comment on a topic unless you had carefully considered the issue from all angles.

I guess we all have our blind spots.

I also wouldn’t even bother commenting about it if so many commenters didn’t keep blathering on about how anyone who has let a joint touch their lips is a pothead with the IQ of an eggplant. Just clearly not the case.

And BTW, I didn’t vote for Trudeau. I honestly thought legalization was a cynical ploy for youth voters – which apparently worked for some. But anyone who votes for the PM based on one issue alone – be it weed or TFSA – is an idiot.

Flame away people…

#133 IKnow on 12.28.15 at 12:07 am

Vancouver (north west of the Fraser river divide) single family detached house prices will NOT be affected by a measly one to two percent rise in mortgage rates.
If you think otherwise, then you really do NOT comprehend the factors that drive this market.

#134 Karma on 12.28.15 at 12:15 am

#95 devore on 12.27.15 at 9:21 pm
“Third, a good economy does not fix a deficit. A deficit is a spending problem, not an income problem. Lots of deficits were run even during the headiest boom years. As such, stating that a better economy will take care of the deficit is incorrect and misleading.”

Actually, it really depends on what is the cause of the deficit: 1) decrease in tax revenue due to higher unemployment, lower corporate tax receipts, less GST, etc. or 2) higher structural spending or cyclical spending (i.e. automatic stabilizers such as unemployment insurance when unemployment goes up).

Ontario Liberals, for example, have had a spending problem for the past 3-4 years. Before that, it had a revenue problem as the GFC destroyed tax revenue. Harper’s Cons had a few surpluses (inherited from Libs) before the GFC, which thusly destroyed Federal tax revenues for the subsequent years. That was not their fault, and thus you can’t blame it as a “spending problem”.

Bush’s administration is a great example of a gov’t that ran deficits during booming years. They had a spending problem.

David Cameron’s Conservative-Lib Dems coalition had a deficit of 12% of GDP in his first year in office (2010-11) and has had a deficit every year since above 3% of GDP. Now the UK has both problems at once: too low revenue that hasn’t fully recovered from the GFC and a spending problem due to an expensive welfare state. The economy is getting better now, but the UK is still expected to run deficits for the next few years.

So regarding your claim that a “better economy will take care of the deficit is incorrect and misleading” is incorrect and misleading because it lacks the context required to make an appropriate observation.

#135 Berniebee on 12.28.15 at 12:19 am

#93 Not 1st

“The average drinker has a few drinks a week. The average dope smoker tokes up as much as an average smoker does so that probably 10 a day. Its not the same thing.”

Such utter tripe, is this what you remember from when the local constable did his grade school anti-drug exhibit?

You might want to do a little research to catch up. Start by going to the library, and borrow a video called “The Union: The Business Behind Getting High”.

Oh, and try not to look too shocked when legalization happens and all these “average dope smokers” turn out to be your family, friends and neighbours, as well as the manager of the local grocery store, lawyers, and anyone who doesn’t have to do regular drug tests.

#136 Karma on 12.28.15 at 12:19 am

#107 Westcoast Woman on 12.27.15 at 10:07 pm
“In response to #93: “I suggest anyone who thinks decriminalizing mj spend some time in vancouver. They do that sh*t every where there. Parks, playgrounds, theatres, parking lots, mall bathrooms, the ferries, the tram, the beach, the gondola, the ski hill, stanley park, etc” – as someone living on the West Coast, I would LOVE to see pot made legal so that they can be banned from all those places you listed, similarly to cigarettes!”

So true!

#137 returning ex-pat on 12.28.15 at 12:21 am

Garth, have enjoyed reading your blog for years and just moved back to Toronto Canada.The tepid
weather,manageable traffic and affordability of housing, won us over.We are looking forward to our first winter trip in years.Going to lovely Winnipeg to see a very sick aunt of ours.She is brain dead I am told, but still has a heartbeat.
Nice to still have a liberal in the family.

#138 Karma on 12.28.15 at 12:27 am

#108 In Debt to Whom? on 12.27.15 at 10:07 pm
“I’ve got a question that I can’t quite wrap my head around. Perhaps someone can help me out.

When we speak of Canadian debt (or any country’s debt for that matter) who exactly are these countries in debt to?

With all first world countries being in trillion+ dollar debt, then does debt even matter? What difference does no annual deficit, 10 billion, or 25 billion make to the grand debt? It is mainly just a rounding error…”

Investors: Institutions such as pension funds, life insurance companies, banks, mutual funds, ETFs, hedge funds, and high net worth individuals, regular joes who buy “Savings Bonds”. Essentially anyone who wants to buy government bonds or bonds of crown corporations.

Annual deficit means the govts need to issue more debt to cover their budget. The budget can actually contain provisions to pay off debt that comes due within the 12 months. Higher the deficit means more debt is being piled on. At some people, investors decide they need more interest to account for the various types of risks involved with gov’t debt: downgrade risk, spread risk, sovereign risk, and depending on the currency, default risk.

#139 Karma on 12.28.15 at 12:29 am

#109 ROCK BEATS PAPER on 12.27.15 at 10:14 pm
“Decriminalize means big savings for the tax payer as less go through the criminal justice system, while tax collection rises.”

No. what you are describing is legalization and regulation. Decriminalizing may lead to savings for the judicial system but it doesn’t raise much money via fines.

#140 Neo Anderson on 12.28.15 at 12:31 am

I am part of the Millennials. However, I just want to say that I am very aware of my finances and have zero debt and an investment portfolio going on. There are some of us that don’t have our heads up our asses and find your blog very helpful Garth. Thanks for all your efforts.

#141 Karma on 12.28.15 at 12:40 am

#115 saskatoon on 12.27.15 at 10:56 pm
“#108 In Debt to Whom?

may i suggest a another question:

if the canadian government has the power to create and issue its own “interest-free” money (which it does) then why has it “needed” to borrow anything at all?”

Do you actually think this hasn’t already been considering in human history?

We have learned from others’ mistakes because it is a recipe for disaster from a number of causes:
1) too much borrowing for pet projects, even more inefficient projects and general waste, thus increasing the money supply and high inflation.
2) It provides risk-free income for institutions that need to manage their risky asset portfolios with an Asset-Liability Management programs (i.e. insurance companies, banks, etc).
3) It’s risk-free rate provides the basis for valuing assets via discounted cash flow analysis all across the investable universe (stocks, bonds, real estate, infrastructure projects, etc). Without risk-free rates to use as benchmark, cost of equity would likely be higher and less economic growth would happen.
4) It makes governments more disciplined because they know they have to pay interest on the debt and keep budgets relatively healthy otherwise their cost of debt will go up.
5) Undisciplined countries wind up like Zimbabwe and Ecuador, in which their monetary policy is determined outside of their countries, despite not being in a monetary union of their choice because their currency breaks down.

So be careful of what you wish for.

#142 bruce_le_bruce on 12.28.15 at 12:42 am

@Kenchie #113

Thank you very much. In order for the banks to maintain their profit (the spread), the rates will move with the corresponding gov’t bond rates.

It is a bit hard to fathom that all of these bonds are being bought up by investors, which are being paid by the mortgage holders? This assumes that all issued bonds are purchased. How can that be? It just seems like money is disappearing somewhere down the line.

Thanks again.

#143 SunShowers on 12.28.15 at 12:44 am

“They (boomers) have sucked way more than their fair share out of society through transfers, health care and preferential tax treatment.”

While the decade-long ZIRP prediction is most likely wrong, this part of the rant seems pretty accurate.

You saw how rowdy the 604 Millennial crowd got over a HOCKEY GAME. Imagine the blood in the streets when they get told they won’t get OAS because there’s not enough money.

This Millennial is investing and renting…if I end up surviving, that’ll be how.

#144 IHCTD9 on 12.28.15 at 12:45 am

“Grow the economy and the budget will balance itself”

I think the humor in the never ending regurgitation of this boneheaded Trudeau quote is the gall required to talk seriously about growing the economy in such a manner that revenue could displace the deficit given the situation out there.

Go ask Wynne about how figuring in a 2+ % annual increase in Ontario’s economy into her budget has worked out. Budgets always look great initially when you throw reality out the window and just start plugging in the numbers required to make it all work out.

Harper left T2 a billion dollar deficit, should be easy parcheesi to grow our economy out of that one no?

Let’s see how he makes out.

More importantly – is he going to barge ahead and spend billions on whatever knowing full well 2016 will see government revenues sink like the Titanic?

Does T2 have a pair of brass ones that clank, or will he just take the wide, well travelled road of borrow, spend, and tax?

FWIW, I still harbour some hope for Morneau, hope he does not let us all down…

#145 canadian on 12.28.15 at 1:09 am

Hah, its funny how dull Canada is that we have imported the worst, most toxic elements of the broken American political system. Anyone who is older or younger than me is apparently evil, anyone on the other side of the political spectrum is apparently evil. Anyone who is of another sex is apparently evil. Anyone who disagrees with me is evil.

Its a wonder Canadians even manage to perpetuate ourselves with the amount of venom we spew at each other.

#146 canadian on 12.28.15 at 1:11 am

A commentor comparing marijuana to residential schools, now I’ve seen it all. Why not just compare banning dope to the holocaust and go full throttle idiocy?

#147 Smell the Roses on 12.28.15 at 1:22 am

In order to ‘borrow and spend’ this gov’t must keep rates low…they have no choice..ipso facto…rates will remain low…period…it’s that simple. Canada and it’s cities, municipalities and towns are so deeply in the hole that even a slight rate increase would sink entire provincial budgets. Look at the 10 year yield on C$ vs USD…proof that we have entirely decoupled from the USD influence and we have nowhere to go but down.

Will a servile state and hyperinflation dissuade Liberal voters? No way…they have the MINCOME to look forward to.

#148 waiting on the westcoast on 12.28.15 at 2:07 am

#90 Mark on 12.27.15 at 9:06 pm
““the plummeting Canuck buck “ The Canuck buck has only lost 1.4% YoY: http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/cpis01a-eng.htm. The long-term target for loss of value of the CAD$ is approximately 2.0%/annum.

Against the US$ the loonie has lost 16.1% of its value thus far in 2015. — Garth”

Mark – don’t forget that the bulk of our trade is also with the US, so Garth’s number is that much more painful (except for Trollstoy)

#149 jane 24 on 12.28.15 at 2:39 am

The bit that I find most amusing is the belief by the young that the government will not allow rates to increase. This shows such stupidity about global financial matters that it is hard to listen too but you can understand why they think this way. Canada has had it so good for all their lives that the young don’t know any different. Good times though are indeed finished. Shame as they will blame it on us boomers.

Re moving from Canada to Lisbon. Go for it, a really wonderful place. A real life with cheap bills. Someone commented that people left Lisbon for Canada in 1492 for a reason. Let me tell you that both Lisbon and Canada have changed a lot in 524 years!!

I wish that my fellow Canadians, especially the young, traveled more and then they would truly realise how screwed they are. But with the collapse of the Cdn $, European travel will be the preserve of the rich from now on. Before they get eaten of course.

Since there has been a lot on this blog about the cost of fresh veggies in Canada I actually went down to Sainsbury’s to see how much they cost in England. Groceries are usually hubby’s job. I can report that a double head of broccoli is $1.70 CND and a cauliflower is $1.30 CND. These seem to be the two judging veggies on this site.

Watching the floods in our North on the telly. Poor, poor people and at Christmas as well but they did choose to live in valleys and on flood planes and they exist for a reason. One chap said they their village has had floods for 500 years and yet folk still live there!! That’s us humans for you.

#150 #46 rosholt, Box of Rocks, Sack of Hammers... on 12.28.15 at 3:20 am

True, less interest:

10% on $200K mortgage, 25 yr amortiz = $233K total interest paid

2.79% on $600K mortgage, 25 yr amortiz = $337K total interest paid

Savings = $104K over 25 years

Minor point:

With savings you still have $400K more to pay over that 25 years than the wrinkles.

The wrinkles could have bought 2 more homes with the starting principle difference.

Better yet, if the wrinkles invested since early 80s at inflation rate (BoC Inflation Rate Calculator @ $400K since 1982), that $400K difference would become in 2015, about:

$900K

I would not let you manage the mail room, if there still is one out there.

#151 Leo Trollstoy on 12.28.15 at 3:21 am

My posts are perfectly crafted to attract the lowest IQ groups. There’s brilliance in that. More RFD gems to come. Enjoy the CAD/USD at these levels. Hope that they stay around this level for awhile. Vancouver and Toronto real estate prices will decline. Some day. Just not right now. Data still says that prices are rising despite the sales mix in these two hedonistic cities. No deflation in our time. Thankfully. Gold still sucks. Don’t touch it.

#152 drydock on 12.28.15 at 3:55 am

#42 rosholt on 12.27.15 at 7:04 pm

Read the ‘Big Short’ , if you have the attention span that is.

#153 TRT on 12.28.15 at 4:00 am

http://m.scmp.com/news/china/policies-politics/article/1892403/china-says-graft-fugitives-abroad-abuse-system-prolong

Please report any individuals who may have smuggled corrupt money out of China to the authorities. Much of it is in Vancouver. This robbery has caused Much pain to the working class Chinese people.

English.gov.cn

#154 Vers on 12.28.15 at 4:10 am

Sorry to be too wordy:

#1 Yellin had been hinting that rates could go higher in 2015 as far back as six months before the December rate hike, based on improving economics and employment numbers. And yet, she waited until that story was fully written into the financial news and the larger majority of her colleagues and peers could be ‘more than certain’ that it was time. So, the Fed didn’t ‘jump the gun’, they actually ‘dragged their feet’. Not a clear lack of leadership – it’s hard to get consensus and stop a tailgate party during such a Superbowl. The Fed acted slowly. Too slowly.
They are at least 6 months behind ‘schedule’ (the US 10yr treasury yield bottomed 10 months ago), compared to how fast they would have been able to act without the consensus building and hand tipping that was thought to be required. And they will now be playing catch up. The second move will be another similar sized increase, right on time. That’ll come with a few more words of warning, and continued guidance. But it will be the 3rd or 4th scheduled increase when it becomes apparent (it’ll already be priced into bond market by that time), that they are playing catch up.
Rates will have to either rise faster than previously thought (get it all done quickly enough), or they will continue to rise for a much longer period and possibly end up over shooting what the economy can bear. They really only have so much of a window of opportunity (political and economic time) to deal with this (at least that ends up being the way they usually look at it). And no one has to be nice about this. What’s the appropriate short term target for this cycle of tightening? They have to, absolutely have to (sin duda) get this back up over 2% while they still can, otherwise they risk losing the war against deflation: 4-5% will be the actual goal (followed by a sharp contraction to keep everyone guessing).
While the 10 year treasury looks likely to be able to break it’s long term downtrend and shoot upwards based on just technical price movement if it does so, it needs to be kept in mind that, compared with the ten year treasury yields, the fed rate is more volatile. That is, as a policy tool, it has always changed more rapidly once it changes direction. People would be betting against logic and the functionality of what a policy tool is in the first place to think that it’ll move in a steady, predictable fashion. To extend that argument, it may also be an appropriate bet to expect it to CATCH UP TO the 10 year treasury rate during this tightening cycle.
#2 Canada would be well advised not to try to avoid this, because if we try to lag the US by six months, once they start playing catch up, our rate increases will get fairly extreme, rising much too quickly for what our FIRE economy can withstand. It would be better to just swallow the medicine and accept a hard landing rather than an eventual crash and burn scenario that causes systemic damage (mass ouflows of financial and human capital.
https://www.google.ca/search?q=interest+rate+graph&biw=1600&bih=763&tbm=isch&tbo=u&source=univ&sa=X&ved=0ahUKEwi-7pnUif7JAhUCw2MKHZkzCOIQsAQIGg#tbm=isch&q=fed+rate+vs+ten+year+treasury&imgrc=nrUFtqetbTdQmM%3A

#155 When will they raise rates? on 12.28.15 at 4:24 am

I love this blog and I think your message is vitally important to Canadians regarding finance and RE, but I think you will lose credibility with gen X and below if you continue to engage in the weed debate… It’s over, a done deal. You lost. That ship has sailed. No point in trying to close the barn doors after the horses have bolted, etc…
I don’t understand what you have to gain by continuing this topic… but you have A LOT to lose:
Young people who are crucially in need of hearing your message (and may become your future clients) will tune you out if they perceive you to be an “authoritarian” douchebag – That’s precisely why they voted out Harper. If you are doing this to appease the conservative boomers who are/will become your clients, then by all means, I get it – business is business. However, if this blog means more to you than just getting new clients, then I implore you:
Stick to the message. That’s why I read every day. You are scary good at conveying that message and you do your fellow Canadians a disservice by diluting it with an argument you cannot possibly win, and giving your haters an additional attack vector, if you get my drift.
Just my $.02, and I’m telling you because I give a shit about this pathetic blog and its gracious host.

#156 willworkforpickles on 12.28.15 at 6:07 am

#63
A much worse fate awaits Canada than that of Argentina , Brazil or Zimbabwe….

#157 JamesA on 12.28.15 at 7:13 am

Here is a good explanation (at the clever golden retriever / high school level of smarts) of the relationship between bond prices and the interest rate:

https://www.youtube.com/watch?v=I7FDx4DPapw

the Khan Academy has many videos on other aspects of financial literacy.

Garth, just as an aside, if you want to communicate to the youth (pre millennial) you should consider doing something similar to the Khan A. people, but, for Canada and financial literacy. You have a history of video production and a knack for zingers. Might be a good combo. You might have to write the script and gets young actors to do the lines for them to pay attention. As far as I can tell, for those pre-millennial and millennial kids, the main way they learn is via humorous youtube clips. If this country is going to improve we have to learn from history.

All the other generations (Gen X + Y) are probably too far along and lost.

#158 gladiator on 12.28.15 at 7:16 am

I think that the recent plea from Ontario govt that “patriots” donate their tax return money to cover some of the province’s debt is worth a post.
I mean, it’s not April Fool’s day and even if it were, this would still be a joke of a very bad taste.
They probably realized that the news of such an unusual request will spread all over the world and we Canadians will look like clowns and will be the butt of many jokes, but they still did it.
If this doesn’t say “desperation”, then it for sure says “sheer stupidity”, but since I am more of a doomer these days, me thinks things are dire behind the curtain.
If they thought that us here, being taxed through the nose already, paying way more for food and stuff than our neighbours to the South, hurting from a falling home currency, losing jobs all over – that we will still be “patriotic” enough to give whatever little money we get back from OVERPAYING taxes throughout the year to them, who pay billions for breaching contracts, who overpay their employees, who yadda yadda yadda, then again I get back to choosing between either stupidity or desperation.
I think it’s the latter one.

#159 gladiator on 12.28.15 at 7:21 am

I meant that those getting a refund overpay taxes in general, and that we are supposed to donate them to the Ontario govt. Not that we overpay taxes to Ontario govt.
apologies

#160 maxx on 12.28.15 at 7:37 am

#4 Irish Stew on 12.27.15 at 4:34 pm

“2016 Rule of Thumb – Pay yourself first.”

A universal truth which will never change – and it’s done most effectively when you consistently avoid paying to make someone else rich.

Pay yourself first, grow it and protect it.

Good times are now dawning for those with cash whose assets and lives are mobile and not chained down with a one-asset prison.

#161 not 1st on 12.28.15 at 8:04 am

The 10 year closed mortgage at RBC is hovering around 3.99%. Thats lower than I financed my first 3 year mortgage back in 2001.

Poloz will be lowering rates in 2016, probably twice and when he does that thing will be in the mid to low 3% range.

Makes no sense to pay off a mortgage when money is this cheap, but that could be a once in a life time interest rate offer similar to what the americans got on the 25 a few years back.

#162 Dennis Wilson on 12.28.15 at 8:12 am

Garth you need to start removing the many many posts that are just inane drivel of dubious merit. It takes too long to scroll through all the off topic crap and attempts at humour to find the interesting stuff.

#163 young & foolish on 12.28.15 at 8:40 am

“The money has to come from SOMEWHERE.”

Hmmmm …. I wonder how this works? If there was a limited amount of money available, would it still be devalued through inflation?

#164 young & foolish on 12.28.15 at 8:47 am

“My posts are perfectly crafted to attract the lowest IQ groups. ”

Um … that would be me?

#165 paul on 12.28.15 at 8:58 am

#154 When will they raise rates? on 12.28.15 at 4:24 am

I love this blog and I think your message is vitally important to Canadians regarding finance and RE, but I think you will lose credibility with gen X and below if you continue to engage in the weed debate… It’s over, a done deal. You lost. That ship has sailed. No point in trying to close the barn doors after the horses have bolted, etc…
I don’t understand what you have to gain by continuing this topic… but you have A LOT to lose:
Young people who are crucially in need of hearing your message (and may become your future clients) will tune you out if they perceive you to be an “authoritarian” douchebag – That’s precisely why they voted out Harper. If you are doing this to appease the conservative boomers who are/will become your clients, then by all means, I get it – business is business. However, if this blog means more to you than just getting new clients, then I implore you:
Stick to the message. That’s why I read every day. You are scary good at conveying that message and you do your fellow Canadians a disservice by diluting it with an argument you cannot possibly win, and giving your haters an additional attack vector, if you get my drift.
Just my $.02, and I’m telling you because I give a shit about this pathetic blog and its gracious host
———————————————————-

If you are in bushiness I would love to see your card.
“authoritarian” douchebag

I give a shit about’
Must have a big plant and ‘Have weed will Travel’

#166 maxx on 12.28.15 at 9:03 am

“#60 Ontarians should volunteer to pay more tax! on 12.27.15 at 7:47 pm

“Christmas is a time for giving and that is what Ontario Premier Kathleen Wynne is asking of her citizenry. With almost $300 billion in debt, and almost 1 in 10 dollars of revenue going to pay interest, and already facing the highest tax rates in North America, The Star reports that Ontario officials are asking that ‘patriots’ voluntarily donate their tax refund or write a cheque to defray the province’s massive debtload.“

http://www.zerohedge.com/news/2015-12-27/ontarians-urged-voluntarily-pay-more-taxes-cut-provinces-debt

Uhhh. Yeah. I’ll get right on that.

BWAHAHAHA!!!”

No kidding!

OMG, Ontario has turned into the village beggar.

We were considering moving there and buying re, but that fiscally disastrous idea is now in the rear view mirror and disappearing fast.

This elephantine debt will have to be repaid and only renters and the rich will have the ability and means to dodge that SH*tstorm.

So hard to decide where to put down roots. We should all evaluate provinces and places to live exactly like corporate analysts.

Misallocation of taxes and enormous waste always result in a long-term fiscal train wreck.

Voluntary tax payments…..wow. As if it weren’t already a citizen’s nightmare and growing. Horrendous municipal tax assessments, nosebleed energy increases and myriad “creative” tax taps not enough?

Maybe couples can donate the former extra TFSA room.

BWAHAHAHAHA!

#167 For those about to flop... on 12.28.15 at 9:10 am

#150 Leo Trollstoy on 12.28.15 at 3:21 am
My posts are perfectly crafted to attract the lowest IQ groups. There’s brilliance in that. More RFD gems to come. Enjoy the CAD/USD at these levels. Hope that they stay around this level for awhile. Vancouver and Toronto real estate prices will decline. Some day. Just not right now. Data still says that prices are rising despite the sales mix in these two hedonistic cities. No deflation in our time. Thankfully. Gold still sucks. Don’t touch it.
///////////////////////////////////////////
Hey Leo Toiletspray,did you used to work at Enron?
I was just wondering because only you seem to think that your the smartest guy in the room.
Waaaaay smarter people on this blog than you.
Garth’s thumb is smarter than you!

#168 Broke Dick on 12.28.15 at 9:20 am

Interest rates will remain low for a generation.-Hooligan

Maybe Hooligan is right, Ben Bernake said basically the same thing

Wrong on both counts. — Garth

#169 Broke Dick on 12.28.15 at 9:36 am

WARNING everyone.
VRUE has morphed into Vancouver’s Housing market and most recently seen heading east as Calgary’s Housing market. VRUE is to be considered unbrained and dangerous, no doubts that she is trying to infiltrate Saskatoon’s Housing market. No worries thou, she and Mark are discussing the housing market mix and if that doesn’t kill her it will at least daze and confuse her.

#170 crowdedelevatorfartz on 12.28.15 at 10:23 am

@#51 Linda
Well said, however some of the dates were a bit off.

The baby “boom’ was from Jan1st 1946 to roughly jan1st 1965. Thus the last “boomers” wont hit “retirement” ie 65 until 2030.

Rosholt has a bit longer to wait before he eats his dead parents.

#171 crowdedelevatorfartz on 12.28.15 at 10:29 am

@#53 BC Guy
“All that government debt is due to wealthy individuals and corporations not paying their fair share of taxes. ”
+++++++++++++++++++++++++++++++++++
You have that socialist itch that you just cant seem to find a medication for.
Oh well, you’re improving. You’ve posted two comments today without mentioning expropriation of Billionaire ranches.
FYI. The owner of the Douglas lake ranch is a billionaire and his wife(daughter of Sam Walton) is even richer. They own 10( yes 10) “mega ranches” all over the world. They own over 1.5 million acres of land………..all for themselves. :)

#172 crowdedelevatorfartz on 12.28.15 at 10:43 am

@#62 Godth

I’m a Canadian.
I cant vote Hillary in to office. But , if you think “The Donald” or Ted Cruz are a much “safer” option to avoid WWIII. Vote away.
Unless of course you’re also a Canadian with delusions of grandeur and dont believe the consistant polling numbers that show madame President Clinton as the next Commander( Commandress?) in Chief.
Should be interesting watching muslim and Russian and Chinese leaders kowtow to a woman since it goes against every fiber of their being.
I for one, will enjoy watching the show while you sit in Moms’ basement in your underwear searching the internet for more “proof” that armageddon is upon us.
Tinfoil and toiletpaper will be the new currency.

#173 crowdedelevatorfartz on 12.28.15 at 10:47 am

@#64 Retired
“I’ll be ‘tweaking’ my new flatulent Santa present to mimic him – Boomer Revenge – you might say….”
+++++++++++++++++++++++++++++++++++
There’s a flatulent Santa icon that I didnt know about?
The horror.

#174 crowdedelevatorfartz on 12.28.15 at 10:51 am

@#82 Kilt.
Dont buy.
Fire your realtor.
Wait for the drop.

#175 Aggregator on 12.28.15 at 10:51 am

It now takes 21 years of minimum wage labour to buy an average home in Canada.

Average Minimum Wage in Canada

Years of Minimum Wage Labour To Purchase Average Home

Meanwhile…

Quebec Politicians' Pay May Increase By More Than 50 Per Cent

MONTREAL — The Quebec government is considering a bill that could see members of the legislature get a substantial increase in their base salary and make them the country's best-paid provincial politicians.

The proposal is essentially the result of recommendations in a report from retired Supreme Court justice Claire L'Heureux-Dube on how to improve their pay conditions.

Under the plan, the base salary would climb to $140,000 from $90,000, although the hike would kick in at the earliest in 2018 and only if the bill passes unanimously in the national assembly.

If you don't go out and borrow more to spend, they will.

#176 maxx on 12.28.15 at 11:01 am

#76 Kreditanstalt on 12.27.15 at 8:29 pm

“This “the Fed has begun a tightening cycle” nonsense will soon be revealed as ludicrous.

There is going to be no “tightening cycle”.

This is a one-off act of utter desperation by a coterie of PhD.-hampered central planners at wit’s end because their theories and models are being proved useless…

They simply won’t work in a zero-real-growth, peak-debt environment – one created by these central banks and governments flooding the system with cheap money for decades.”

Maybe…..maybe not. The exercise of cheap money has turned into hell on wheels with no brakes. Debt has led us to government begging for money from its citizenry.
A wee bit ironic, but more accurately, tacky and tragic.

Let’s try something different – measured, but different. Certainly can’t be worse than the current epic failure.

#177 Reality bites, or is it ironic? on 12.28.15 at 11:03 am

#154

I’m GenX and you don’t speak for me and our generation, so please don’t try.

It happens that I agree with Garth’s views on real estate / finance as well as his right-of-centre political views including where smoking pot is concerned.

BTW, do you know Garth manages upwards of half a billion in client assets? You think he needs *your* advice on business development after the career he’s had?

Give your head a shake…

#178 crowdedelevatorfartz on 12.28.15 at 11:04 am

@#144 canadian
“Its a wonder Canadians even manage to perpetuate ourselves with the amount of venom we spew at each other….”
+++++++++++++++++++++++++++++++++++
We’re a new species of snake?

Either that explains a great deal or……you’re evil.

#179 prairiegopher on 12.28.15 at 11:07 am

The only way I would waste valuable time watching Turdeau on TV, is if I was being held hostage and being tortured by the Taliban!

#180 IHCTD9 on 12.28.15 at 11:10 am

#170 crowdedelevatorfartz on 12.28.15 at 10:29 am
@#53 BC Guy
“All that government debt is due to wealthy individuals and corporations not paying their fair share of taxes. ”
+++++++++++++++++++++++++++++++++++
You have that socialist itch that you just cant seem to find a medication for.
Oh well, you’re improving. You’ve posted two comments today without mentioning expropriation of Billionaire ranches.
FYI. The owner of the Douglas lake ranch is a billionaire and his wife(daughter of Sam Walton) is even richer. They own 10( yes 10) “mega ranches” all over the world. They own over 1.5 million acres of land………..all for themselves. :)
————–

I think I hear someone’s blood pressure spiking :)

I was talking to a buddy of mine yesterday about rich folks, they are all over the place in Canada, and they all have way more than they need!

He was telling me the same thing you mentioned, they have billions of acres for a family of three, and they tell the government what to do!

AND THEY NEVER PAY THEIR FAIR SHARE – NOT EVEN ONCE!!

#181 crowdedelevatorfartz on 12.28.15 at 11:12 am

Whew!
I read through every post with the exception of Mark. Sorry Mark but when I read your comments backwards they sound like “Hail Satan! God is dead” and I find that a tad disturbing.
Anywho, a holiday Monday is so productive.
I cant wait to be retired and spend my entire day here.
The legacy of Boomer retirement.
:)-

#182 saskatoon on 12.28.15 at 11:32 am

#140 Karma

dude, i stopped reading after…

“Do you actually think this hasn’t already been considering in human history?”

wtf.

#183 paraphrase on 12.28.15 at 11:39 am

#176 Reality bites, or is it ironic? on 12.28.15 at 11:03 am

#154

I’m GenX and you don’t speak for me and our generation, so please don’t try.

It happens that I agree with Garth’s views on real estate / finance as well as his right-of-centre political views including where smoking pot is concerned.

BTW, do you know Garth manages upwards of half a billion in client assets? You think he needs *your* advice on business development after the career he’s had?

Give your head a shake…

****

You think he needs *your* defense, after the career he’s had?

“Give your head a shake…”

#184 Ken on 12.28.15 at 11:55 am

First man to row across the Pacific solo. Is so Canadian and obviously doesn’t read this blog. When asked why did he do row across the Pacific? One reason was to avoid thinking about the mortgage payment. Apparently, renting wasn’t an option.
http://www.theglobeandmail.com/news/national/burlingtons-john-beeden-becomes-first-to-row-solo-across-pacific-ocean/article27942478/

#185 Vundo on 12.28.15 at 11:56 am

#125 Hawk: I never said it was a good or bad thing that people will demand socialism, just that it will be a thing that happens when the numbers of poor and angry increase relative to the wealthy and comfortable. So go ahead, make the case that young people voting left in large numbers would be the worst thing ever. But can you say that it won’t happen? It might not, but only if there are opportunities for people without existing mountains of cash to succeed – just like there was for the boomers.

#186 When will they raise rates? on 12.28.15 at 12:00 pm

#176 Reality bites, or is it ironic? on 12.28.15 at 11:03 am

I’m sure he doesn’t need my advice. It’s just my $.02.

Whether or not *you* happen to agree is irrelevant, the fact is that the numbers show that you are in a tiny minority.

#187 bobby on 12.28.15 at 12:06 pm

Not going to happen. The sole purpose of the canadian government is to keep the housing going up up and up.

The canadian dollar lost 30% of it’s value and these clowns are talking about negative rate.

in 2 years you will be able to get a 5 year fix mortgage at 1%, the CAD will be at 55 cent and vancouver shack on the east side will be put on sale for 1.9 mil and sale for 2.9 mil in one day after a bidding war.

In 10 years, the 5 years fix will go for -2%, the CAD will be at 20 Cents ( still no inflation though) and vancouver shack on the east side will be put on sale for 6 mil and sale for 10 mil in one day after a bidding war.

And remember… the government loves you!!!

Idiot predictions. — Garth

#188 Julie K. on 12.28.15 at 12:09 pm

Garth is right – it’s all coming to an end.

Really does not matter what any of us learn, believe or want because none of us really, truly, know what is going on and, most importantly, never will.

Your fooling yourself if you think you have anything at all about life figured out.

Just enjoy the ride (when you can), keeping your eyes, ears & mind open.

THE END.

#189 Godth on 12.28.15 at 12:13 pm

#171 crowdedelevatorfartz on 12.28.15 at 10:43 am

I agree, it’s too far gone. The president is a shadow play.
http://www.businessinsider.com/major-study-finds-that-the-us-is-an-oligarchy-2014-4
The debates should be cracking entertainment though.
http://www.counterpunch.org/2015/12/11/donald-trump-is-america/

So you’re going to enjoy watching WW whatever but I’m crazy for acknowledging the lunacy. Fill your depends with whatever you want.

I think the Russians and Chinese are demonstrating how they plan on dealing with these Wahhabi terrorists, before they reach their borders.

#190 onpar on 12.28.15 at 12:17 pm

Garth has my utmost respect. His guidance and advice herein have proven to be so valuable to not only myself, but most likely to the high-percentage of readers who heed his advice.
I am actually kind of shocked about Garth’s views on pot, however. The legalization of pot is not only inevitable, it will prove to be a win in so many ways. Through legalization and taxation we are taking the money out of the hands of criminal gangs and into the coffers of governments. We are also not wasting money and resources on prosecuting non-violent offenders of current pot laws. We can also educate the public more about pot and maintain quality control over the levels of THC (which, IMO, are much too high with current strains).
Garth, I encourage you to take a deeper look at this issue and at least provide some factual, evidence-based arguments instead of what I view as an antiquated ideology with regards to pot.
In any case, I will continue to be a daily reader and do appreciate all your advice, as always.
Best to you in 2016.

This convo is over. My view that the world already has too many ways to divert people from what matters will not change. Done. — Garth

#191 IHCTD9 on 12.28.15 at 12:18 pm

#154 When will they raise rates? on 12.28.15 at 4:24 am
I love this blog and I think your message is vitally important to Canadians regarding finance and RE, but I think you will lose credibility with gen X and below if you continue to engage in the weed debate… It’s over, a done deal. You lost. That ship has sailed. No point in trying to close the barn doors after the horses have bolted, etc…
I don’t understand what you have to gain by continuing this topic… but you have A LOT to lose:
Young people who are crucially in need of hearing your message (and may become your future clients) will tune you out if they perceive you to be an “authoritarian” douchebag – That’s precisely why they voted out Harper. If you are doing this to appease the conservative boomers who are/will become your clients, then by all means, I get it – business is business. However, if this blog means more to you than just getting new clients, then I implore you:
Stick to the message. That’s why I read every day. You are scary good at conveying that message and you do your fellow Canadians a disservice by diluting it with an argument you cannot possibly win, and giving your haters an additional attack vector, if you get my drift.
Just my $.02, and I’m telling you because I give a shit about this pathetic blog and its gracious host.
———–

LOL! Buddy, although I’m sure GT’s knees are knocking in fear after reading your “advice” you really do need to work on your coercion skills.

Hot tip 4U: Garth has ZERO to loose ripping tokers a new one. Many new ones have been ripped here on GF, and in the comments section, everyone keeps coming back for more – even if under a new username.

No one here cares if millenials get offended and leave. No one here cares if you get offended and leave. Garth has graciously opened the door for previous butt-hurt dogs with their panties in a bunch and outright invited them to depart for folks who think more like they do.

Unfortunately, you’re not going to change anyone’s opinion with “scary” posts predicting some kind of “loss” citing “barn doors”, “horses”, and “ships” etc…

I hope some day, you will learn the Internet…

#192 Godth on 12.28.15 at 12:20 pm

#85 ANON on 12.27.15 at 8:52 pm

What should we call this narrative? Diary of madness; prelude to a suicide.

I avoided the free cilise and coffin that came with the mortgage and assorted other debts. I’d prefer a shirt made of sliced ham, a hat of bread and maybe some pasta pants.

#193 saskatoon on 12.28.15 at 12:23 pm

#174 Aggregator

“Under the plan, the base salary would climb to $140,000 from $90,000, although the hike would kick in at the earliest in 2018 and only if the bill passes unanimously in the national assembly.”

they are just taking their fair share.

don’t you believe in fairness?

;)

#194 Millennial Realist on 12.28.15 at 12:27 pm

#169 crowdedelevatorfartz

Actually, the baby boom differs across countries but is generally now accepted as from 1946 to about 1960, sociologically.

Generation X has been a term in use since the late 1980s, referring to those born between about 1960 and 1980. Although Generation X is sometimes considered to have started as part of the boom, in fact demographically Gen Xers show remarkably different outcomes in terms of lower incomes, periods of longer unemployment, number of children and cost of housing compared to those born before about 1961.

Millennials/Gen Y generally refers to those who came to age of majority at the millennium and the first decade after, mostly the children of boomers.

Millennials, all together with most parts of Gen X, now outnumber, outpoll, and out-influence boomers politically.

This is why JT, Notley et. al. are just the beginning of a series of major changes we will be seeing. It is now unstoppable – time and mortality will take care of that.

Politicians who do not cater to what millennials and Gen Xers want and need simply won’t be elected anymore. If boomers strongly resist change as a group, the rest of us will simply wait until enough additional boomers are dead to make our political and economic takeover complete. That should be done within about four years, by 2020, at the latest, I would say.

The boomer generation, some of whom still proudly talk of how they acted for ‘change’, often have great difficulty accepting that change will now apply to them, as well. Better to keep things the same, and invent all kinds of conservative rationalizations for doing so, seems the common attitude of many boomers now.

Boomers, there’s still time to enjoy that final sunset at the beach. But don’t think you can continue to put fencing up all around the beach and claim it as your private property. That is so yesterday. And you will very soon be mostly ashes, like the sand on the beach. Boomer mortality rates have now entered the ‘hockey-stick’ phase. We all know what comes next. any WWI veterans left in Canada? Nope. How about WWII? Not many thousands left, all gone within the next two years. Boomers? They’re next to walk this inevitable path.

Sometimes the truth is hard to swallow, but it’s still the truth.

#195 IHCTD9 on 12.28.15 at 12:35 pm

#184 Vundo on 12.28.15 at 11:56 am
#125 Hawk: I never said it was a good or bad thing that people will demand socialism, just that it will be a thing that happens when the numbers of poor and angry increase relative to the wealthy and comfortable. So go ahead, make the case that young people voting left in large numbers would be the worst thing ever. But can you say that it won’t happen? It might not, but only if there are opportunities for people without existing mountains of cash to succeed – just like there was for the boomers.
————-

Well, if young folks vote hard left in large numbers, then the existing well off will become more well off, and the opportunities for youth will shrink.

Look at Trudeau, he’s barely out of the gate and so far he’s has cost all Canadians 1.2 billion to give comfortable folks like me a tax cut, and better child benefit payments. Was doomed to not be reverenue neutral right off the bat, and who get’s to pay for this boondoggle?

You do. great huh?

Cliff notes: young millenials get angry with their troubles and vote leftwing, they then take money from young folks with little, and give it to folks like me who already have more than enough.

Final thoughts from a Gen X’er: only those who have bungled their finances have something to fear from left wing governments. The rest of us just get richer and subsequently contribute even less to government revenue…

#196 Love my Kia on 12.28.15 at 12:44 pm

#24 Saskatoon
*******************************
So you’ve reared your head, even after the ultra wealthy man here gave you a good piece of his mind.

#197 Robert on 12.28.15 at 12:45 pm

The Millennials should stop bitching and go to work. I am 62 years old comfortably retired and worked my ass off my entire life, never once took a nickel of unemployment or welfare. These kids don’t know how to work and are too interested in their quality of life. Well wake up kids, that is why the boomers worked so hard, they wanted a better life and earned it. We lived through times where we shopped for our food with a calculator in hand and our parents lived a life where just keeping a roof over their heads and food on the table was a struggle. My father lived for 78 years and never once owned a new vehicle! So don’t lecture me just get off your sorry ass and go to work!

#198 When will they raise rates? on 12.28.15 at 12:49 pm

#190 IHCTD9 on 12.28.15 at 12:18 pm

Where did I say what my views on pot are? I didn’t, so I’m not sure why you would come to the conclusion that I’m offended… Maybe I agree with Garth on pot, maybe not. That’s not the point.

I just think that Garth’s RE and finance message is better served by leaving the pot issue alone as it’s now clear that a vast majority of Canadians disagree with him on this issue.

Of course it’s his blog and he can do as he pleases, but I assume he wants his message to resonate with the largest possible audience… I don’t see how preaching his pot views help him to that end. Correct me if I’m wrong.

I don’t preach. But neither do I agree with a position just because it’s majority-held. Most people are numb. — Garth

#199 InLoveWithEdibles on 12.28.15 at 12:54 pm

Whether pot is legalized or not won’t make it any easier to get hold of. And it isn’t just the under 30’s who indulge. As a late gen x’er, early boomer (depending on which chart you go by), I’ve recently rediscovered the pleasures of MJ and know many in the over 50 age group who regularly smoke, vape or eat and live normal, law-abiding, tax-paying lives. Agree that smoking is not the best for the lungs though – prefer edibles myself. I made the best chocolate chip cookies for the holidays this year. Finally got the butter recipe down.

#200 Victoria Real Estate Update on 12.28.15 at 12:55 pm

# 168 Broke Dick

Wrong again.

You wrote:

“…she (referring to me obviously) and Mark are discussing the housing market mix…”

Please find the quote that proves that I am “discussing the housing market mix with Mark”.

You won’t find one because a recent quote of that sort doesn’t exist.

You are probably a realtor who is angry that I have posted factual information of some sort recently that you don’t like. Apparently you don’t appreciate such information.

Do you lie to clients to make sales? You might find that you have a better chance succeeding at that than trying to come up with something of value to post on Garth’s blog.

#201 Wait...Over Here! on 12.28.15 at 12:57 pm

The Fed can only raise rates if the economy can support it. With the US gov sitting with a $19 T debt level, and GDP at 2%, the fact remains that there is a high probability that the Fed will have to back-off in 2016.

Garth…how about bringing a balanced perspective to your view that the Fed never backs off a previously communicated path? A little common sense would suggest that everybody should be cautious in this environment. The rest of the globe is in stimulus mode, and now even the US is forecasting that increased rates will create headwinds that the US cannot overcome?

http://www.cnbc.com/2015/12/28/debt-distress-level-at-highest-since-recession.html

#202 Gulf Breeze on 12.28.15 at 1:36 pm

#29 David,

I agree. In spite of what Jim Rickards says, gold has not behaved as it should, in past crises. All of the arguments about manipulation, paper gold backed by nothing, etc…etc.. Are true, but as things deteriorate there is likely going to be more manipulation, not less. Plus, we are moving to a purely digitilized currency.

In short, I sold all of my gold recently and my place in the South West so I could pay cash for another house while I wait for mine to sell. I have little faith in gold anymore and have become wary of the ‘two Americas’ and the police state atmosphere in the U.S.

The U.S. is an accident waiting to happen. Lots of smoke and mirrors, masking the underlying fear the society is based around. I know many Americans and most of them live in a constant state of tension and simmering anger.

That Trump could gain any traction at all, politically, is a shot across the bow. He’ll never get in, but his Atilla the Hun style politics, pushes the center farther to the right. It will give Hillary tremendous license to carry out the fascist-light politics of the power elite.

I felt I should get out while I could. If you have real estate down there, sell it and take advantage of the strong dollar.

#203 Gulf Breeze on 12.28.15 at 1:48 pm

#196 Robert,

You worked your whole life, didn’t take a dime from anybody, yadayadayada …welfare…yadayadayada..

Hey Robert, living in a 500 square foot box, while working 2 or 3 contract jobs, in a constantly shifting economic environment, is rather difficult.

And so many millennials opt not to have kids, not for lifestyle reasons, but because they don’t have the physical space to raise a family, for starters.

I have an idea. Why don’t you do a quick calculation of how much it would cost today to live the lifestyle you lived, during your working years.

Very rarely am I tempted to insult somebody, in very harsh terms, but this is one of those times. I will refrain. Let’s just say you are painfully out of touch.

#204 preet89 on 12.28.15 at 1:57 pm

I have been here on and off for 2 years reading Garth’s blog. I’m 26 living in Vcr area looking to buy a place next year hopefully.

I feel I have to defend the millennial position as we are getting a bad rap lately.

I have waited for 2 years for the real estate market in Vcr to drop and it hasn’t. I’ve probably lost over $100,000 in that time by not buying something.

I will buy in 2016, yes my parents will be assisting with the down payment with a housing gift. That’s the term used. This gift comes with no strings attached. It can be paid back or it doesn’t need to be. All the kids get the gift. My parents worked hard to purchase multiple properties over the past 25 years – mostly in Surrey and Abbotsford. My parents made sacrifices by housing many other family members so that they too could save for housing for themselves.

I have saved almost $150,000 for my down payment and my gift will match what I saved. I have complete incentive to save because I (and my siblings) get matched 1:1 for what I saved on my own. How did I save so much. I lived at home and saved. I didn’t get charged rent as long as I was either going to school or working.

I think there was a big cultural divide 25 years ago when my parents started out. They experienced racism for buying a big home and helping other relatives out by offering them living quarters.

Ideally I want to buy something near Vcr city center but I may buy in Surrey. If I want to be a landlord and follow in my parents footsteps I will buy in Surrey.

Many, many of my social circle gets into their house with over 50% of the price in funds. By renting out a couple suites in the home we can actually make money every month while paying it off. This is how my parents own multiple homes now.

We do not talk about death or inheritances at all but culturally all parents look after their family very fairly but that will include the aunts and uncles, not just kids.

I have been taught to respect and look after my elders and I will. By being able to buy more homes in the future, I will be able to provide support for my family members if they ever need it.

I owe everything to my family members that came before me and I know that. My social circle all feels the same so I don’t think we all should be painted with the same brush.

A prosperous and happy new year to everyone.

If your goal is to turn into your parents, you are doing swell. — Garth

#205 Bla bla bla on 12.28.15 at 1:57 pm

Watch the US dollar get stronger into the 3rd or fourth interest rate hike before it turns south triggering a massive stock market sell off.

US rates will rise as data indicates the economy is strong to absorb them. It’s beyond ignorant to predict a ‘massive stock market sell off’ when the economy is growing at such a pace, whatever the strength of the currency. — Garth

#206 rosholt on 12.28.15 at 2:04 pm

Robert you said it exactly! YOUR life is better than you parents. OUR life should be better than yours. That is progression.

The work we do today can’t be compared to the work of the generations gone by. You didn’t have Ipads, smartphones… It’s waay more mentally tough now writing code for apps than any job before. We work from home many times and can be expected to work some weekends if deadlines are tight. People get used to physical jobs by getting stronger physically. Tough mental jobs don’t have that advantage. I do not think that you will ever understand unfortunately.

The jobs your parents did are way different than the jobs that you did, the same for comparing our generation to yours.

Stereotype much? — Garth

#207 Millennial Realist on 12.28.15 at 2:15 pm

#196 Robert

The Millennials should stop bitching and go to work. I am 62 years old comfortably retired and worked my ass off my entire life, never once took a nickel of unemployment or welfare. These kids don’t know how to work and are too interested in their quality of life. Well wake up kids, that is why the boomers worked so hard, they wanted a better life and earned it. We lived through times where we shopped for our food with a calculator in hand and our parents lived a life where just keeping a roof over their heads and food on the table was a struggle. My father lived for 78 years and never once owned a new vehicle! So don’t lecture me just get off your sorry ass and go to work!
—————————————————————-

Wow, Robert, where to begin?

Your sense of Boomer entitlement to moralize to those younger is exemplary, and utterly typical.

1. We should “go to work”. Do you also mean, a la Poloz, unpaid internships until age 30 due to lack of good jobs, the time by which boomers like you already had kids and a house already paid for?

2. “Never once took a nickel of unemployment”? Many of us too, since most of our unemployed periods have been ineligible for EI payments – “self-employed” work, internships, extended studies due to lack of jobs, etc…

3. We “don’t know how to work…”? You mean ‘find work’, don’t you? Boomers typically walked into an employer’s place, had their pulse checked and were put onto the management track, thanks to masses of WWII era workers before them getting ready to retire. Plus much stronger unions, and it was all aboard the gravy train for any of you boomers who could simply show up to work not overly drunk.

4. Keeping a roof over your heads was a struggle? But you did keep it, didn’t you? Jobs were there, prices were low, and now you sit on massive equity. Ready to chow down on a pool of retirement benefits that your generation has only paid an embarrassing fraction of what it will consume.

5. Your dad only owned used cars? Many millennials will never afford even that. But you want transit users to pay full fares, while boomers in their SUVs drive on publicly subsidized highways.

5. Retired at 62? How quaint and pleasant for you. People younger than you are now getting ready to work until they drop, 70, 75, whatever it takes to pay the bills with no expectation of a restful retirement ever.

6. “Comfortably retired”, are you? Most younger people today will never even be ‘comfortably employed’, LOL! Too many boomers have blocked our career paths, outsourced our jobs to make themselves rich, and built up massive public debt to benefit themselves. You are SO out to lunch, dude!

The absolute stench of boomer entitlement and self-justification in this comment section is really something!

What gives, boomers!!?? You are so entitled, so utterly blind to your privileged lives.

A generation born on third base, thinking it hit a triple.

Boomers, please, admit it, at least.

You really just have no clue at all about what the rest of us are facing!!!!

The generalizations being thrown around are comical – on both sides of the age divide. Pointless. — Garth

#208 Hawk on 12.28.15 at 2:19 pm

#184 Vundo on 12.28.15 at 11:56 am

There are opportunities for people to succeed without moutains of cash, although one major factor limiting that is offshoring of jobs (which I am dead against).

The young people that work hard are making a lot of money from several professions such as construction, high end restaurant services and managment, and even in white collar professions. There are several that I have seen first hand. But there are also large swathes of people that embrace debt and choose to live beyond their means, there is no cure for that unless the entire “credit based” culture is abandoned wholesale by society. Short of that people have to learn personal responsibility.

#209 Axxman on 12.28.15 at 2:36 pm

I was just playing a word game that I got for Christmas with some friends and someone said “my card says carnie, what’s a carnie?”. Someone quipped “someone who sets up a precarious ride that will terrify you….or….the former Governor of the Bank of Canada”. Another person added “aren’t they the same thing?”

#210 crowdedelevatorfartz on 12.28.15 at 2:41 pm

@#188 Godth
“I think the Russians and Chinese are demonstrating how they plan on dealing with these Wahhabi terrorists, before they reach their borders….”
+++++++++++++++++++++++++++++++++++

Ummm, they dont seem to be doing such a bang up job so far.
What with their own citizen muslims wreaking havoc for several decades.

Russia’s subjugated muslims?

http://www.google.ca/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=3&cad=rja&uact=8&ved=0ahUKEwjo5P2Jpv_JAhUL02MKHU9aBx4QFggqMAI&url=http%3A%2F%2Fwww.bbc.com%2Fnews%2Fworld-europe-20067384&usg=AFQjCNFG_9_Rq986b04OqDhvLk8UyZ4S1A&sig2=MA1lTRZycRdpxFxnzxwh5A

Chinas?

http://www.google.ca/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=2&cad=rja&uact=8&ved=0ahUKEwiyu8vYpv_JAhVL8WMKHQdQCYoQFgglMAE&url=http%3A%2F%2Fwww.cnn.com%2F2014%2F03%2F01%2Fworld%2Fasia%2Fchina-railway-attack%2F&usg=AFQjCNFwRkZRl-UOdTWZgsY40QQcKeuBYg&sig2=ou6bLBuXuaKCxJ4FyLfHvA

Perhaps western style democracy….as flawed as it is…is the way to ‘win”?

I think I’ll follow the saudi citizens that booted “outraged” wahhabi vigilantes off a stage in Jeddah when they interrupted a female saudi poet from reciting poetry. ” Do you accept this brothers?” They demanded to the crowd.
“Yes we do!” yelled back the crowd as the astonished men were hustled off stage.

That video was “viewed” by Saudi’s all over the Kingdom since it happened Dec12th. Then it was yanked.
Western democratic values are trumping the theocratic curmudgeons everywhere no matter what Czar Vladimir Putin will have you believe…..

#211 OXI in GREECE on 12.28.15 at 2:43 pm

A generation born on third base, thinking it hit a triple.

Boomers, please, admit it, at least.

You really just have no clue at all about what the rest of us are facing!!!!

The generalizations being thrown around are comical – on both sides of the age divide. Pointless. — Garth
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

Please tell us how many of the points are wrong? Wrinklies had worked here and made stuff here. NOW its all made in China and India and not EVERYONE can be a computer programmer or stock picker.

So please Garth……enlighten us about how he was wrong about all those points?

#212 OXI in GREECE on 12.28.15 at 2:51 pm

If the US Recovery is strong…..then someone should tell the 100 million people that are not working in it….

http://davidstockmanscontracorner.com/the-warren-buffett-economy-why-its-days-are-numbered-part-4/

“By contrast, during 2014 only 240 billion hours were actually supplied to the US economy, according to the BLS estimates. Technically, therefore, there were 180 billion unemployed labor hours, meaning that the real unemployment rate was 42.9%, not 5.5%!”

Subtract Govt Workers and Defence Contractors (govt workers) and its even higher…….

Recovery? Maybe if you want to compare the USSA to the USSR…….

#213 Kenchie on 12.28.15 at 2:56 pm

#181 saskatoon on 12.28.15 at 11:32 am
#140 Karma

“dude, i stopped reading after…

“Do you actually think this hasn’t already been considering in human history?”

wtf.”

Then you missed all my points. Clearly, the person I quoted didn’t think through his point. And I’m sure you are aware that is where I started since the preceding sentences were quotes from the other person.

#214 Robert on 12.28.15 at 2:57 pm

Millennial Realist! Why do you kids think that boomers had it easy? At one point in our lives my wife and I cleaned offices at night after our regular jobs so we could afford to put our son in hockey. You want a job there are many jobs listed to do just what my wife and I did! Go to work instead of blaming the world for your laziness. It does not come easy buddy you have to work for it! You bad mouth us boomers but have no problem putting your hand out to Mom and Dad and taking some of that entitlement money. You can accomplish anything you want my friend but unfortunately it takes a willingness to do whatever it takes.

#215 For those about to flop... on 12.28.15 at 3:03 pm

#199 Victoria Real Estate Update on 12.28.15 at 12:55 pm
# 168 Broke Dick

Wrong again.

You wrote:

“…she (referring to me obviously) and Mark are discussing the housing market mix…”

Please find the quote that proves that I am “discussing the housing market mix with Mark”.

You won’t find one because a recent quote of that sort doesn’t exist.

You are probably a realtor who is angry that I have posted factual information of some sort recently that you don’t like. Apparently you don’t appreciate such information.

Do you lie to clients to make sales? You might find that you have a better chance succeeding at that than trying to come up with something of value to post on Garth’s blog.
////////////////////////////////////////
Hey Brokie ,just give up on Victoria.
I reached out last week to the crew to try to get her some help with her charts and she lashed out at me too.
Maybe that makes me a realtor as well!

#216 DON on 12.28.15 at 3:04 pm

The generalizations being thrown around are comical – on both sides of the age divide. Pointless. — Garth

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

This has become an increasingly popular theme in the comments section. Apparently, the terms balanced and diversified are only applicable to finances and no other line of reasoning. A sign the shit is hitting the fan?

#217 Robert on 12.28.15 at 3:07 pm

Gulf Breeze you don’t have to live in a 500 square foot overpriced box that is your choice! You could pack your belongings and move somewhere where you could afford a home or perhaps even rent a home. But oh no you want to live in Toronto or Vancouver. You and only you are the director of your life so rather than bitching and blaming FIX IT!

#218 vic guy on 12.28.15 at 3:14 pm

So this broad wants us to donate 300 billion to her province…LOL! This is 300,000 million, where the hell did it go? You sit down and wright me a list of where all this money went and I might send you a looney. $1 out of $10 goes to service the interest alone. They can’t afford to raise rates EVER. And they wonder why we’re all pissed at the boomers…and this is just the start!
Thinking I’m going to start smoking weed, maybe that’s their plan…just get everyone high as a kite, they won’t remember.

#219 IHCTD9 on 12.28.15 at 3:14 pm

#197 When will they raise rates? on 12.28.15 at 12:49 pm
#190 IHCTD9 on 12.28.15 at 12:18 pm

Where did I say what my views on pot are? I didn’t, so I’m not sure why you would come to the conclusion that I’m offended… Maybe I agree with Garth on pot, maybe not. That’s not the point.

I just think that Garth’s RE and finance message is better served by leaving the pot issue alone as it’s now clear that a vast majority of Canadians disagree with him on this issue.

Of course it’s his blog and he can do as he pleases, but I assume he wants his message to resonate with the largest possible audience… I don’t see how preaching his pot views help him to that end. Correct me if I’m wrong.
—————-

If majority held positions should not be opposed, then Garth may as well close up shop here altogether at GF because his views on RE and finance are undoubtedly even less a majority opinion than his views on pot.

Fact is, plenty agree with his pot views just like his extremely unpopular RE and personal finance views – presumably, you are here as part of this group.

If a guy can’t listen to Garth’s excellent and free financial advice because Garth disagrees with him on legal pot, I’d be plenty happy to see a guy like that take a hike. I don’t agree with everything Garth says, or plenty of what the dogs have to say, but I’m not so boneheaded to forsake all the great advice from both parties just because some dog thinks Trudeau is a great PM, while I think otherwise.

As far as your views on legalized pot goes, I can read between the lines.

#220 IHCTD9 on 12.28.15 at 3:22 pm

#205 Millennial Realist on 12.28.15 at 2:15 pm
——-

I don’t disagree with most of what you’ve said.

I have a question. How do millennials reconcile their left wing voting tendencies with their poor future prospects for gainful employment, decent wages, and home ownership?

Do millennials vote to improve their prospects, or do they not consider their financial future when they vote?

#221 GSyes on 12.28.15 at 3:22 pm

Garth is the de facto Communist moderator. This blog truly is pointless..

This blog will not descend into the vulgar, myopic morass that characterizes the comments section of most well-trodden sites. I moderate with a light hand. Get used to it. Or, better, get lost. — Garth

#222 For those about to flop... on 12.28.15 at 3:43 pm

As a Gen Xer , I’m going to stay out of the generation war ,but as I work away on the 10million dollar houses on the west side of Vancouver I remind myself if I plug away for the next 150 years I too could afford a house like this one day.
A truly sobering thought.
I’ll settle for a 1500 sq ft rancher thanks.
My wife has a cleaning disorder, if we ever bought a big house we’d never spend any quality time together!

#223 No debt on 12.28.15 at 3:44 pm

#196 Robert
You said it right buddy, I’m 41 and nobody wants to work or work there ass off. Quite obvious there parents taught them no work ethic or money management skills, how’s retirement treating u? Enjoy it

#224 Casual Observer on 12.28.15 at 3:48 pm

In 1971, it cost less than 2.4 times average income to purchase a new house (not a condo).

1971 COST OF LIVING:
New House………………………………..$ 25,200.00
Average Income…………………………$ 10,622.00
New Car…………………………………… $ 3,560.00
Average Rent……………………………. $ 150.00 per month
Tuition to Harvard University………. $ 2600.00 per year
Movie Ticket……………………………… $ 1.50 each
Gasoline…………………………………… $ 0.40 per gallon
U.S. Postage Stamp……………………. $ 0.08 each

Source: Seek Publishing – “Remember When” 1971 Cost of Living Chart

Today, the Median Multiple (median house price divided by gross annual median household income) is widely used to compare housing affordability between markets by organizations such as the OECD, the IMF, and The Economist.

Historically, the Median Multiple has been remarkably similar in Australia, Canada, Ireland, New Zealand, the United Kingdom and the United States, with median house prices from 2.0 to 3.0 times median household incomes.

The 2015 Demographia International Housing Affordability Survey uses the following affordability ratings:

RATING MEDIAN MULTIPLE
Severely Unaffordable 5.1 & Over
Seriously Unaffordable 4.1 to 5.0
Moderately Unaffordable 3.1 to 4.0
Affordable 3.0 & Under

Today, the Median Multiple in Canada for major markets (over 1,000,000 Population) is rated as Seriously Unaffordable (4.3) and in cities like Toronto (6.5) and Vancouver (10.6) it’s rated Severely Unaffordable.

Even suburbs of those cities have been rated Severely Unaffordable. The Fraser Valley (Abbotsford) has the same multiple (6.1) as New York City, NY.

Having said all that, RE is a religion in BC. I still have trouble convincing most people who bought their first houses during the 1970’s and 1980’s that the numbers today are “out of whack” as far as affordability is concerned.

They say that it’s always been expensive. It’s an argument you just can’t win – never mind what the numbers say.

#225 No debt on 12.28.15 at 3:49 pm

#202 Preet89
You have lost 100k? How is that possible? U never had it to begin with. I lost 100 bucks it fell out of my pocket at the mall! You carry around that much cash with u? Have fun living with ur mommy daddy sisters brothers and cousins for life! Lmfao

#226 old gringo on 12.28.15 at 4:01 pm

ROBERT#212.
These millennial’s have never accepted responsibility for their own mistakes.We boomers made many, but forged on, without handouts from our parents as they have come to expect as normal.
I remember working more hours in three years then these morons in 10 years worked.
We lived through many crashes that they have never endured or will understand.
Let’s not be afraid to tell it like it is!

#227 Leo Trollstoy on 12.28.15 at 4:03 pm

DELETED

#228 vic guy on 12.28.15 at 4:11 pm

I think the younger generations want to see more young blood running the gov’t…at least mix it up a bit like 50/50.
I for one am sick and tired of looking at all these political faces reassembling that of an old catchers mitt, suggesting patriotic donations to make up for their mismanaged policies to the tune of $300 Billion or the whole Province is going in the sh!tter.
This is only going to get worse!

#229 polecat on 12.28.15 at 4:49 pm

Can we just get some boomers, gen x and millenials to smoke some weed together? That will end the scratching and biting here.

#230 Millennial Realist on 12.28.15 at 5:01 pm

#218 IHCTD9

I don’t disagree with most of what you’ve said.

I have a question. How do millennials reconcile their left wing voting tendencies with their poor future prospects for gainful employment, decent wages, and home ownership?

Do millennials vote to improve their prospects, or do they not consider their financial future when they vote?
——————————————————————

Thanks for your comment, but your suggestion really carries its own answer.

Has what has happened with neo-conservative political leadership since Reagan and Mulroney made things better for us and our prospects?

Isn’t the definition of insanity to keep doing the same thing, expecting different results?

Having anything but “left wing” government policies for decades has devastated the prospects for the non-boomers. We have not really had anything that could remotely be called “left wing” or even progressive policies in Canada for over thirty years, even longer. Don’t kid yourself.

You imply that we need just a little bit MORE of those kinds of neo-con policies now, so things will finally work out?

Seriously??????????

And it will magically, suddenly, start to work for anyone except the 1%? Like it has all been a long preamble to this turning point, where things will suddenly start to benefit ordinary people again?

Again, no offence intended, just some effort to build awareness, do you boomers even have the remotest of clues about what younger people are facing today? Or how easy you had it by comparison? (Trust me, we’d all love to bust our butts to get ahead, but we have barely even been given the chance to do that.)

Continuing on with what so clearly has not worked for decades is simply not on the table this time.

And we are now the voting, controlling majority, for the rest of your lives. We will continue to vote based on our own experience, not your mythology that worships right wing lunacy that has no evidence of success anywhere.

That sad experiment has run its course. Anything that fails as badly as conservatism has for thirty years needs to be put back on the shelf, permanently.

#231 confused in BC on 12.28.15 at 5:07 pm

Man, sure allot of whinning going on here.

Every generation had slackers – look at the 60’s and the hippies.

Every generation had hard workers. I know some kids who go to school full time and work nights full time. Nearly all of these kids are indo-Canadian.

Where I work we have tons of overtime available and 99% of the people who only sign up for it are the indo-Canadians. They are only 1/3 of the workforce too.

The white kids smoke the most and blow their money on Xbox, Starbucks. The brown people do not.

The indo-Canadians know how to get ahead. Hard work. Look how many low level service jobs (Wendy’s, Timmy’s, …) are mainly filled by indo-Canadians.

You have to admire the culture’s work ethic for sure. They put the Caucasian kids to shame easy.

#232 waiting on the westcoast on 12.28.15 at 5:13 pm

To Boomers vs Millenials vs GenXrs (my personal favorite):

Everyone is dealt a hand – good or bad. Move on and do what you can with it. I was told as a teen that there was no hope following the Boomers…

My parents told me I could do anything I wanted (if I wanted it bad enough and went after it). I have and have seen others try and fail and others do far better than myself.

Get over your circumstances and make your life into what you want. Expect problems and overcome them. You can!

#233 MissConstrued on 12.28.15 at 5:19 pm

I chuckled when I read this

http://www.theglobeandmail.com/news/british-columbia/remedial-measures-urged-as-bc-property-assessment-jumps-loom/article27941928/?click=sf_globefb

#234 Rational Optimist on 12.28.15 at 5:23 pm

202 preet89 on 12.28.15 at 1:57 pm

“I have waited for 2 years for the real estate market in Vcr to drop and it hasn’t.”

Oh, man: not two WHOLE years, I hope. You’d better be rounding up, otherwise that’s truly rough. Two years. How did your parents manage to instill you with such patience?

#235 Millmech on 12.28.15 at 5:27 pm

#196 Robert
It’s never been easy for any generation,there will always be adversity and triumph.I was always taught the reason you fall down is to learn how to get back up,we are neither owed or entitled to anything.It is up to the individual to make their own way,I know some boomers who are not well off mainly by their own decisions.Enjoy your retirement you’ve earned it.
Disclaimer-Gen X,45 yrs old,no real estate holdings, financially independent at 50

#236 the Jaguar on 12.28.15 at 5:30 pm

Reading some of the comments here ( like #205). One begins to understand the anger and resentment this generation feels to older generations. Scary really. You just want to get as far away from them as you possibly can… I sense a coming exodus. They just elected JT and the repercussions of that are in plain sight. I suppose the place to go is away from the cities. Here are the keys then. Appears you don’t need us for anything and our presence is irritating to you….
signed, no forwarding address.

#237 jess on 12.28.15 at 5:40 pm

shocking! as the police watch afghanistan

The Killing of Farkhunda
By JOHN WOO, ADAM B. ELLICK and ALISSA J. RUBIN

http://www.nytimes.com/?action=click&contentCollection=Middle%20East&region=TopBar&module=HomePage-Button&pgtype=article

#238 kayak_guy on 12.28.15 at 5:40 pm

Everyone needs to take care of themselves ultimately. We choose not to have kids. I retired from the family business in my early 40’s while my wife decided to keep working a little longer.

We live off dividends and invest the wife’s income.

I have a place in Mexico and in the Gulf Islands and enjoy kayacking as much as I can.

Choosing not to have kids saved us a ton of money enabling me to pull the pin last year.

I’m the fittest I’ve ever been and the happiest. We all make choices and sacrifices.

Cheers.

#239 Retired Boomer WI on 12.28.15 at 6:06 pm

This daily installment has been -enlightening for me.

Am I going to change how I continue to live my life? No, but I will have a bit more empathy for that 35 year old struggling with 2 car payments, kids, a house payment, or a rent payment. I do realize ‘things’ are not quite the same as 30 years ago, and they weren’t quite the same as 60 years ago either.

Every generation has its own issues. I had the choice of 18% interest on a mortgage, or wait a while. I chose to wait awhile. You have cheap money now, or likely cheaper houses later. Choose. Jobs were never ‘easy’ to find, gotta back 60 years for that here.

We may need agree on everything.

I would chose a government that said, we will not be doing this, and that for you, but instead we will lower taxes. I would vote for the politician who promised nothing except spend LESS by eliminating some programs. We will always need to keep up schools, water, sewer, the electric grid bridges, roads.

There is a great deal we can do without provided by governments, Federal State (Provincial), & local.
Think, before you vote.

RB

#240 Happy Prairie guy on 12.28.15 at 11:25 pm

#224 Casual Observer on 12.28.15 at 3:48 pm
In 1971, it cost less than 2.4 times average income to purchase a new house (not a condo).

1971 COST OF LIVING:
New House………………………………..$ 25,200.00
Average Income…………………………$ 10,622.00
New Car…………………………………… $ 3,560.00
Average Rent……………………………. $ 150.00 per month
Tuition to Harvard University………. $ 2600.00 per year
Movie Ticket……………………………… $ 1.50 each
Gasoline…………………………………… $ 0.40 per gallon
U.S. Postage Stamp……………………. $ 0.08 each

Source: Seek Publishing – “Remember When” 1971 Cost of Living Chart
************

That chart I notice is American and curious as to where these costs were in effect (average across the US?)

We bought our first house in 1976 when I was making $10K and my wife considerably less. It (a semi) cost $59K in Mississauga and we upped our down payment by borrowing from family so would only have a $35K mortgage. So we were likely about 3.5 times our income then. That would put us at moderately unaffordable according to 2015 Rating Medium Multiple.

I guess the GTA even then was pricey. Unfortunately only had the house two years due to a transfer and only got $59,500 for it, at least I didn’t have to pay RE fees!

#236 the Jaguar on 12.28.15 at 5:30 pm
Interesting post re the comments yesterday and today from the millennials to us boomers. I certainly can sympathize with the difficulty of getting and holding jobs, having to change careers, etc. but not too much. Even I got the boot at age 50 and returned to school at 53 for four years to pursue a second career which only lasted six years anyway. We could not afford then to retire where we wanted due to RE prices, but are happy in our small prairie town with our son, daughter-in-law, and their four kids living here.