“I was cleaning out some of my dad’s papers,” Audry wrote me this week, “and I found this. Imagine.”
Imagine indeed. It’s the receipt for a $5,000 term deposit from 1981 that her father arranged with one of the big banks. The length of time the money was tied up for was a mere 59 days. And the rate of return? Grab something. It was 14.5%.
Now let’s remember that the inflation rate in 1981 was 11.3%, and in August of that year the five-year residential mortgage rate topped out at 21.75%. Today, of course, inflation is just under 2% and a fiver can be yours for about 2.5%. Term deposits? A 59-day note at BMO these days will pay you two-tenths of one per cent interest. Can anyone still count that low?
So, as noted here a few days ago, ours is a world which seduces borrowers and bitch-slaps savers. Those who eschew any investment with market risk and opt for the predictability of interest-bearing assets better have a big pile of money, or else risk running out. On the flip side, in 1981 when savers were making almost 15% for just breathing, people renewing residential mortgages were facing a massive personal crisis. Many banks suspended long-term home loans and would only go variable (also in the 20% range), while real estate prices were going nowhere.
In 1981 the average Toronto house price was $90,200, and sales volumes plunged. The market recovered as mortgage rates declined to a more affordable 14%, and the average price peaked at $273,600 in 1989. Then, thanks to a deteriorating economy and mounting job stress, prices started to head down, bottoming in 1996 at $198,100. From peak to trough took seven years and shaved 27.6% off the average price – not that far off the 32% decline which collapsed the US middle class ten years ago.
By the way, it took until 2002 for prices to regain the level they achieved in 1989 – thirteen years. If you add inflation into the calcs, a buyer in 1989 did not get her money back until waiting more than sixteen years. During that same time, you might be interesting in knowing, the Toronto Stock Exchange’s main index increased 163%.
The past is no road map for the future, of course, but it’s instructive nonetheless. A couple of decades ago people with cash or liquid, invested assets were the cocks of the walk. Homeowners were shackled with often-illiquid and steadily depreciating, costly assets. The real estate and housing boom of the late 1980s in most Canadian cities was replaced not with a crash, nor a bust nor a cataclysmic economic event, but rather with a relentless melt.
Rising interest rates didn’t trigger the bust, since the cost of a mortgage fell steadily – from 14% down to 7% – during the period that houses were unloved. And still real estate lost almost a third of its value from the speculative, house-horny peak of the late Eighties. The reason was simple: recession.
Today Canada is in the grip of an oil collapse, as you know. Job loss seems epidemic. What started in Fort Mac spread to Calgary, the Martitimes, southern Ontario suppliers and now Bay Street financials. Our economy will be lucky to expand by 1% this year, and may slide back into negative growth for many months. The new government in Ottawa is about to plunge us into deficit financing and the Bank of Canada cut rates twice in the last 13 months to stave off an even bigger backslide.
Despite this, Canadians have been seduced by cheap money, increasing debt to 170% of income and pushing the price of houses in Toronto and Vancouver into territory that five years ago would have seemed breathless. Like hormonal teenagers, homebuyers now think they’re invincible, untouchable, incapable of injury because “houses always go up,” or “the government would never let bad stuff happen.”
So here’s a prediction for you: as far as savers go, 1981 will never return. Not in this lifetime, anyway. But for the house-crazed masses, a darker day likely lies around the bend. The past has a way of returning. If you don’t remember it, at least learn it.
215 comments ↓
The owner of that term deposit actually lost money, as the income tax rate was considerably higher than it is today, and income taxes are payable on nominal interest rates, not real interest rates.
So here’s a prediction for you: as far as savers go, 1981 will never return.
I wouldn’t be so sure of that, although definitely not in the short term. However, just like 1981, a return to such will prove to be an economic disaster for those who invest in such. High interest rates on account of high inflation rates are an after-tax disaster for most investors. Borrowing to invest with interest deductibility actually makes a lot of sense in a high rate environment.
Should I?
F-F-FFIRST!
Oh, and nice post and all that Garth.
Just having a nice glass of red wine and toasting “bandits” health.
Early today !
Ten years ago I was getting 30% average over 3 years on a balanced mutual fund at RBC. I remember seeing their bragging rights poster waiting in a bank line. I left with warm fuzzy feelings that I did the right thing.
Don’t see that now either.
Make that 20 years ago. Oops, getting older than I care to admit.
1st! ….Maybe???
Drat!
The boomer fossils love to complain about 1981. It was the year that T1 broke the patch, mortgages went to 20% and with savings rates you will never see again. I love to see those crusties getting 1% return now.
Where is the complaint? More importantly, why are you so bitter? Perhaps you should have been nicer to your parents. — Garth
I dug up and old set of interest rate tables that were used in the early 80’s before computers (tell us another one grandpa). The lowest rate in the tables was 6%.
BF
So here is a prediction for you: the US and the global economy are struggling, with US GDP expected to be in the 1.5% range in 2016,and with a $19 T debt we see one rate increase this year and by year end we see stimulus measures possibly including a cut in rates. In this environment we also see a second year of negative returns from equities.
In 1980 I had a new car loan from Royal Bank for a 3 year term at 16.5%
The economy is fine here in BC. Robust job market so far, what recession?
Mark: taxes are payable on interest earned, not on interest rates – real, nominal or otherwise.
“I love to see those crusties getting 1% return now.”
They’re actually doing better and becoming wealthier with the “1%” return today, than they were with that 14.5% return back in 1981 on a real after-tax basis.
Basically we’re in cash saver nirvana today. Which is why its been so easy to finance the RE bubble. Now, when both the RE and the cash bubble pop, things will probably be nasty for both the RE borrowers, as well as the cash savers. Higher rates are to be feared, not welcomed for those invested in fixed income or those who invest in assets that derive their pricing from fixed income prices (ie: RE investors).
My prediction is if you buy in small allotments on weakness in the Asset Allocation Areas that needs to be rebalanced the most, you will do well on a very long term time horizon.
dat dare doggie looks like it could take down
a big wild boar pig just fir fun,,,,
“Mark: taxes are payable on interest earned, not on interest rates – real, nominal or otherwise.”
Interest earned is nominal, at the quoted interest rate per unit time multiplied by time. I trust that our difference in views is solely on account of my poor use of grammar, right?
People don’t learn??? You mean like the dogs who come here and for some reason need to cry “first!” when they aren’t?
While going through some old books and toys, my wife found a US savings bond for $25 from 1972 a few years ago. We looked it up, and found that it was worth $160, if we were to cash it in.
I had dinner with a friend who is a financial planner, who shared a story of a client (a widow) who did quite well for herself, when his predecessor sold her a 30-year annuity, back in the early 1980’s. Thinking in today’s terms, I thought this was an unconscionable act, annuities being seemingly designed (to me at least) to return little, after accounting for inflation.
As was the case back then, too. However, time makes fools of us all: the annuity paid 11%!
Yes. And a number of us boomers were maxing out our RRSP’s, locking in those rates for 5 years, and getting 42% tax back for every dollar put into the RRSP. Meanwhile, the boomers we worked with who bought RE and were paying high prices and high interest rates were laughing at us. They told us if we didn’t buy now we would be locked out of ever owning a house. Well, when the market crashed, and me and others bought houses for 50-60% off, they hated our guts. Envy and jealousy. I learned then to keep my financial affairs to myself.
The 2nd house I bought I never said a word.
I’ve noticed since, the many boomers who got screwed over then never bring that up.
The bottom line is, following what Garth teaches here will work at all times, whether it is 1981 or 2016. Unless you are a Sue or a Sam. Deja vu, baby. It always is.
Mark – I agree with your point about the nominal rates being hurt by the taxation piece back then. However, saving rates are currently below inflation whereas back then they were above inflation. Seniors are not doing well in the current environment. Of course, if you are still under the misguided notion that we are in a deflationary environment, there is no point talking….
Did you take the red or blue pill yesterday? ;-)
Driving on the outskirts of Calgary a few months ago my wife asked, who the heck is buying all these new construction houses being built?
Apparently others now recognize this problem:
http://www.cbc.ca/news/canada/calgary/calgary-real-estate-cmhc-q1-assessment-2016-1.3422069?cmp=rss
This morning they said risk of collapse of the market, they have toned it down to risk of correction.
A Matter of perception I guess; It’s a collapse when you have lost your job and are underwater.
Like the unemployment rate; if it is you that is unemployed the rate is 100%.
Falling interest rates destroy capital, which is what we have been doing collectively at break neck speed since 2008.
A good article below talks about Yield Purchasing Power. You now need $100 million in savings today to earn the equivalent purchasing power as $100,000 would provide in 1979.
https://monetary-metals.com/yield-purchasing-power-100m-today-matches-100k-in-1979/
People respond to incentives. When we allow central banks to price fix interest rates at such low levels, there are perverse outcomes. You are forced to liquidate your wealth in retirement to buy groceries instead of earning a yield on your wealth to do the same.
Zero interest rates has reversed the tradition of centuries of capital accumulation.
#1 Mark on 01.27.16 at 5:29 pm
I’ll take the 14.5% interest for a savings account, thank you. Whether it’s 1981 or 2016.
“…not with a crash, nor a bust nor a cataclysmic economic event, but rather with a relentless melt.” Garth
Today I mashed up charts on the latest Case-Shiller U.S. Housing Market Index and Vancouver SFD prices:
http://www.chpc.biz/history-readings/big-bigger-deal
Both markets are currently in a “melt-up” phase since the last nearby low, except Vancouver detached house prices are under a broiler up 41% compared to the Case Shiller up 36%.
Meanwhile in credit markets; a DEC 2015 snippet from:
http://www.cnbc.com/2015/12/23/default-danger-for-us-high-yield-in-2016.html
“The U.S. market, is about 20 percent oil and gas related and then if you add the mining and the capital expenditure, that supports both of those industries. It is starting to become a pretty significant part of the market – and that’s why people are concerned… I am not saying there is an event coming, but I am saying our liabilities are riskier than what most people appreciate.” Head of European Leveraged Finance at Fitch Ratings, Edward Eyerman told CNBC.
The Canadian real estate market pushed to extremes by risk-off credit issuance reflects the above observation that “our liabilities are riskier than what most people appreciate.” Look out Canada if the U.S. melts down.
Facebook CRUSHED IT with Q4 earnings.
lol doomers, lol America haters.
Zuck is the man.
FB & GOOG going beastmode for my portfolio.
Good news and bad news, I’m told. The good news is that Canadian deficit this year will only be $10 billion. The bad news is it will be $10 billion USD.
What blog dogs fail to realize is that baby boomers are not going away.
They love SFH’s in YVR and YYZ.
They are NOT retiring.
They are getting pensions, watching their properties appreciate and are making more money than at any point in their life.
They don’t just hit 55 in govt and 65 in the real world and then stop working.
No
Their incomes are increasing.
My own parents are making more money than ever in their 60’s. And they don’t want to stop working, because it’s fun, they’re making money and they have something to do.
Booemrs are in their own league. Yes they’re selling houses to each other and that’s a chief reason they keep going up and up. Along with “mainland chinese”, builders that are flipping etc..
The Net Worth gap is only going to get worse between generations. Boomers are killing it, Gen X is doing well as long as they have equity in a SFH, a solid job and a portfolio.
Millenials, well. Better smarten up or pray to the God of Selfies and Facebook love, T2
Get your fingers into RE, Portfolios and good paying jobs. ASAP.
Boomers are not going away into the sunset any time soon. Find a way to employ them or get them on as contract, 3 day a week type positions. You win, they win.
Or marry rich.
All across the board, it’s more difficult to find returns, and I’m struggling to understand why that is, compared to the 1980s for instance.
Were global growth rates so much higher back in the 1980s? Because it seems our record-breaking population growth globally is not supporting the diminishing levels of economic activity, which leads me to believe that the industrialized world is contracting while the developing world (most of which is not developing) is just adding millions of human squatters strictly into poverty with no noticeable increase in associated economic activity.
This is a worrying trend that may topple all of our assumptions and models for the future.
The fundamentals are pointing to a very different reality. Maybe raising those two beautiful rat dogs instead of a proper family wasn’t such a great idea?
The Toronto condo market is doing exactly the opposite to what you ” predicted ” it would do years ago……overbuilding etc etc ????
Mark,what is the root of deflationary forces in the last three decades,or so?
Drive around Edmonton Area. There are > 10,000 listings. Notice a lowered listing Prices in Acreages. Many with new homes in subdivisions not moving in price, Yet! I like how Humans won’t negotiate on price. I low ball these guys selling Harley FatBoyz all the time. They hate me. Call back in a month still for sale. I believe the same mentality will prevail in RE. How many visitors a day Garth. Is traffic picking up on RE awareness??
PB43
“Ring drove two hours to attend the event and buy a one-bedroom unit. It’s his first condo investment, which he intends to flip to another buyer before it’s completed, taking advantage of the advertised 40 per cent return. “I don’t want to invest in stocks because they’re crazy and real estate is a solid, safe investment.”
from a Star article in the today’s paper…..
Remember those days well. All the millenials, gen xers, transgenders or whatever you want to call yourselves these days, you can see, rates will go up. Maybe not to the moon but won’t take much to do damage when average house prices are in the stratosphere.
Of course you already knew that anyway, that’s why you are reading this pathetic blog. Imagine the difference in just a paltry mortgage payment when the rates rise more. Won’t be just a “couple hundred” more a month. Could easily become exponential.
Rick Mercer takes Montreal mayor to task over energy east pipeline.
http://www.cbc.ca/news/canada/calgary/rick-mercer-s-energy-east-rant-1.3419698
14.5% interest on term deposit? yes pls
I don’t understand how even Garth says there is no inflation. Housing is 300% higher (rent or debt based). That’s most of my income.
“Many banks suspended long-term home loans and would only go variable (also in the 20% range), while real estate prices were going nowhere.”
Talk about bad market timing!
Why oh why is the long-expected housing market “melt” still not happening? I am beginning to suspect that no matter how bad economic conditions, as long as mortgage rates are cheap this party may not be turning nasty for many more years to come. Perhaps no price increases and then stagnation for years. But, let us be honest, if that is the case, and it has been in the past years, it means that everyone who invested in a house until 2013, say, did a very wise thing. On contrast to what this blog has been saying for about a decade by now. Garth, where is your rebuttal. Show me!
“So here’s a prediction for you: as far as savers go, 1981 will never return. Not in this lifetime, anyway”
I bet that people use to say the exact opposite in the 80’s, interest will never go back up. Recency bias is a bitch for prediction.
Double-digit rates were the central bank response to double-digit inflation. Figure it out. — Garth
#38 Toaster
I agree, even though “rent” is in the calculation, I’ve think the market was (is) so unhinged from reality that this shadow inflation factor should have been included in calculations somehow.
Cost of living has increased far more that the 1-3% as is reported.
I also have a book of mortgage tables for Canadian mortgages published by Real Estate Press, Willowdale,Publication No. 80, First Printing May, 1978.
Rates begin at 8% and go up to 15%.
Toaster, there is inflation. Looked at your property taxes, water rates, electricity bill, grocery bill, auto and home insurance bill, condo fees.
They are all up between 4% to 10% annually over the last 10 years plus. Even rent is up 3% to 3.5% for most places in Canada. Some much more than that.
The only ones that seem to be lower only recently months and a few years are gasoline prices, heating oil and natural gas prices.
Whatever.
CMHC securitization guarantees ensure Canada’s mortgage debt swells by at least $12 billion per month.
Equivalent to say, 24,000 $500k mortgages. It’s a thing of beauty.
http://www.cmhc-schl.gc.ca/en/corp/nero/jufa/jufa_001.cfm
#10 Bottom Feeder on 01.27.16 at 5:45 pm
I dug up and old set of interest rate tables that were used in the early 80’s before computers (tell us another one grandpa). The lowest rate in the tables was 6%.
BF
————————-
That is the normal interest on real money.
Why are we not getting the same rates today?
Simple, they are stealing our returns from us now with their NIRP/ZIRP policies.
Which means that what you count as ‘your money’ is not yours but jointly owned by you and the government.
And definitely is not ‘money’. Money’s cost is defined by open markets, not by stupid incompetent bureaucrats who never hold real job in their life.
14.5% is what the Brazilian Central bank is at right now. You get 15% if you have 50K R$ in the bank. No balanced portfolio required. And the R$ is close to the bottom.
haha, I remember that era….bought my 1st house in ’85 for $120K @ 11.5% !!!
sold in ’90 for 245K and used the profit as down payment for 2nd home, $300K @ 9% !!!
sold it in 2004 for $800K, now retired so bought a condo here in the ‘Beaches’ (416), 1140 sq ft (nice!) for $380K (paid cash)…
worth over $700K now but won’t leave except in a horizontal state…oh, I have some savings too!
not so blue, Swede……
A little inflation keeps people spending which can be good. It will cost more if you wait so you consider purchasing goods today.
However, with lots of inflation and you pay big taxes on bank interest and salary gains that buy you less and less by the day in the economy. You got 10% interest or pay increase because the economy was inflating at 10% but then you had to hand back a third of that interest or pay in income taxes. A great deal for the government but you couldn’t get ahead. Price increases always seemed to be greater than wage increases.
Real estate inflates, but after paying $17,000 interest on a $35,000, 10.75% mortgage over 5 years (1979-84), I barely owned the front door of the house.
Add a zero to the interest and mortgage numbers and you have what today would look like at 10.75%. A $350,000 mortgage would cost $35,000 a year to service for the interest alone.
I asked a few retail stores here in my city, what their sales are like, and all of the managers keep telling me “NEVER BEEN BETTER.”
No shortage of buyers, checkouts have long lineups, very few sales or mark-downs anywhere to be seen.
From what I can see, the economy of Ontario is firming up nicely, and if the economy keeps recovering like this I’m sure that home sales this year will rise 20% to 30% over last year and prices should rise by similar amounts.
Keep the GOOD TIMES ROLLING !
Thanks #190 sue jasquie
Been there – done that. I believe the savings rate actually got a couple of points higher than that. And of course borrowing costs a couple of points higher yet. The house prices here in 604land dove off a cliff as you can well imagine. Worked out perfect for me as I was poised with cash. Remember well a fellow colleague at work that had already bought a property and was screwed by the ever higher rates. He was making good coin and his wife was working a job or sometimes two to keep up, but still lost the house. Bank sold it for a loss and he had to keep making payments until the loss was paid off. Then lost the wife. Many stories like that out here … but you gotta be old enough to remember … but that could never happen again?
By the way, it took until 2002 for prices to regain the level they achieved in 1989 – thirteen years. If you add inflation into the calcs, a buyer in 1989 did not get her money back until waiting more than sixteen years. During that same time, you might be interesting in knowing, the Toronto Stock Exchange’s main index increased 163%.
I can only get my girlfriend to read so many of these articles before she gets annoyed.
So we’ve come to an agreement: If she bugs me about buying a house/condo then I can show her one greaterfool article.
Swear to god, I haven’t had to look at pics of condos on Pinterest in 2 months. A new record. But this article, this is the one that’s coming out next time. Can’t wait.
#19 Get back Loretta on 01.27.16 at 6:03 pm
”People don’t learn??? You mean like the dogs who come here and for some reason need to cry “first!” when they aren’t?”
Not to worry Loretta, they are generally immature boys and likely premature in other areas as well.
#29 Suede on 01.27.16 at 6:26 pm
“What blog dogs fail to realize is that baby boomers are not going away.
They love SFH’s in YVR and YYZ.
They are NOT retiring.
They are getting pensions, watching their properties appreciate and are making more money than at any point in their life.
They don’t just hit 55 in govt and 65 in the real world and then stop working.
No
Their incomes are increasing.
My own parents are making more money than ever in their 60’s. And they don’t want to stop working, because it’s fun, they’re making money and they have something to do.
Booemrs are in their own league. Yes they’re selling houses to each other and that’s a chief reason they keep going up and up. Along with “mainland chinese”, builders that are flipping etc..
The Net Worth gap is only going to get worse between generations. Boomers are killing it, Gen X is doing well as long as they have equity in a SFH, a solid job and a portfolio.
Millenials, well. Better smarten up or pray to the God of Selfies and Facebook love, T2
Get your fingers into RE, Portfolios and good paying jobs. ASAP.
Boomers are not going away into the sunset any time soon. Find a way to employ them or get them on as contract, 3 day a week type positions. You win, they win.
Or marry rich.”
The Boomers will eventually die and leave their goodies to their grandkids…
I don’t know if I agree. Many Boomers are looking to retire early as well. Maybe start a businesses helping Boomers help themselves stay in the workforce.
They are, and always have been, the demo to reckon with. I am good with it. There are many niches to outplay the herd. Just need to keep eyes open and jump when opportunity persuades itself.
Why would house prices decline. It’s basically a job apocalypse in Calgary and prices barely budge. Vancouver doesn’t have a single pump jack so imagine what it woul take to bring down the grand cayman of canada
@Condo buying frenzy in Waterloo…
How can anyone advertise a 40% rate of return?
What do these real estate condo “investors” know that apparently the morons that manage funds, banks and portfolios don’t?
Why is Warren Buffet such a mediocre half-wit for barely beating the S&P500 index when he could have been growing his money at a steady 40% investing in shoebox condos in the GTA?
In fact, people should quit their day jobs and become day traders of condominiums, leading eventually to a live exchange, where condos can be sold and traded like other securities on the TSE! It will be brilliant…
As trade increases, the GDP growth motors to 15% speeding past China, as investment dollars from CHMC-insured loans pour into the condo market in the trillions, as borrowing is extended to children and domestic pets. Canada becomes so affluent, we import 50 million Syrians, more than the entire CURRENT population of Syria! Moscow burns, the Chinese are forced to grovel at our feet and we send care packages of socks and loose buttons to our destitute American neighbours. Trudeau is awarded a Nobel prize for his academic pursuits as a substitute drama teacher. Canada enters a Golden Age….
It’s because of doomers like Garth that we can’t have nice things in Canada.
1981, CSBs paying 20%.
And our college union negotiated a 14% wage increase.
With 12% inflation, that was normal for the times, so not a windfall.
But that increase to the base salary never dropped so when low inflation hit a few years later, we still had a 2% increase or so on a base that increased by 14%.
Fiat Chrysler Profits Fall
http://www.freep.com/story/money/cars/chrysler/2016/01/27/fca-profits-fall-40-410-million-2015/79365248/
“…the company to focus more on the production of its popular Jeep SUV and Ram pickup brands, which have been growing, and exit the production of some passenger cars.”
#1 Mark on 01.27.2016 at 5:29 pm
Mark,
In the good old days of 1981, the Canadian Government maintained a token gesture of encouraging tax payers to save. At that time and for a couple of years more, the first $1,000 of interest incomes were non-taxable.
Just saying,
LM
“However, saving rates are currently below inflation whereas back then they were above inflation”
But after-tax, the rates “back then” were dramatically beneath even zero in real terms.
For instance, let’s suppose that the tax rate back then was 40% (rates back then were actually higher). 14.5% * (1-40%) = nominal after-tax interest rate of 8.7%. Subtract inflation (11.3%), and that “14.5%” term deposit had a real after-tax return of -2.6%.
Today, we have similar term deposits at what, 1%? Inflation = 1.6%. Using the same 40% tax rate and running through the math, real after-tax return = -1%.
Hence, “1%”nominal interest today actually represents a greater real after-tax return than 14.5% interest represented back in 1981.
Garth, reading your site today has brought that time back; a painful time. I don’t understand the guy that said this….
“The boomer fossils love to complain about 1981. It was the year that T1 broke the patch, mortgages went to 20% and with savings rates you will never see again. I love to see those crusties getting 1% return now”.
Man, you don’t have a clue! All the old boomer fossils lived this and so many didn’t survive. We had a mortgage go from 11% to 23% on renewal – double the monthly payment and no way to sell the place. We didn’t see it coming. We have just got up every morning and went to work. We both managed to stay employed and made it thru this period but, you never, never forget what it was like. After that time, you never will allow yourself to get in a financially compromised position again! Garth knows that cause he’s old and man, experience is everything! What we forget is the year after year of wondering when the financial stress would leave. Watching friends fall apart. Knowing the loss of one of our jobs meant for serious life changes.
Yes Garth, I remember it. There’s no way us old boomer fossils can’t. I sure learned from it! After that, debt was always the main consideration and managing it rather than having a bigger and nicer house or luxury car…so stupid looking back. If things get half as bad as the past, a lot of people today will remember the past just like the old boomers do now. The memory is not a fond one.
This is a great site. Garth, you do a great service to your readers and for…free. Thirty years from now, I know thousands of people will be saying – “I wish I had paid more attention and did just ONE thing that that Garth Turner guy said to do!
Was the inflation calculation the same?
Surprise, surprise….the f***ing liberals and the pipeline review decision of today stabs Alberta in the back just when we needed a little help. The flames of western separatism will be fanned once again. This time I hope we take it to a vote.
‘I’m done’: Alberta’s laid-off oil workers forced to abandon industry in worst downturn they’ve ever seen
http://www.financialpost.com/m/wp/news/blog.html?b=business.financialpost.com/news/energy/im-done-albertas-laid-off-oil-workers-forced-to-abandon-industry-in-worst-downturn-theyve-ever-seen&pubdate=2016-01-27
Good news about your friend’s court battle (http://www.greaterfool.ca/2014/07/04/the-fight/)
http://business.financialpost.com/legal-post/judges-affirm-that-canada-revenue-agency-has-duty-of-care-to-taxpayers
#54 Waiting…..
as to the millenials ‘get a good paying job’, etc, etc…..
good luck to that, they should pray that the well off boomers you describe are their parents! and leave it all to them…..and don’t live toooo long…..lose it, etc, etc….
#29 Suede ~
Nailed it.
#boomerlife
Garth,
Stop crying Wolf ever so often. GTA/VAN will do fine in real estate. We are an open market and people will always buy here from anywhere. Go drive around town and see how many streets have rebuilt homes! This is the normal price of homes, I didn’t want to believe . I waited too long to get in, and now it looks like I made the wrong call.
Garth, first time commenting but long time reader. Great blog and always something to look forward to and learn something new every day!
Curious to know your thoughts on the expected Swiss referendum on banking regulations thinking of forcing FIs there to only loan fully backed loans, basically 1:1 leverage. Do you think that would fly over there and any possible chain reaction around the World because of that? Could that happen here and would it turn everything upside down were it to happen!?
Thanks! E.
#52 Hope & Ruin
“So we’ve come to an agreement: If she bugs me about buying a house/condo then I can show her one greaterfool article.”
——–
Why on earth are you considering buying a property with your girlfriend?…!!! DOn’t even entertain the idea unless you are married……
.oh and seriously think about marriage as well. It’s fine as long as you want to lose your personal, financial, and sexual freedom….
Until the people in charge come to grips with the long term debt cycle and the deflationary pressure on every damn developed market rates are going nowhere. If there is one thing I have learned in my minimal time on this planet, the corp, bankers and big money always win. They aren’t going to give up without a fight. Ten years of 0.25% or negative rates is a possibility and y’all need to admit it. Diversify your portfolio with real estate. This isn’t 1981. Go Trump. Rattle em to the core. The only one standing up to the man. Go Trump go.
Excellent post, Garth!
”All the old boomer fossils lived this and so many didn’t survive.”
very true mikey.
2 guys at the sawmill I worked at felt the only way out of the financial debacle they found themselves in was suicide.
-on more than a couple of occasions at this grim time we [scow tenders and boom men] were visited by the North Fraser Harbour Patrol and asked to keep an eye on the back eddies that were formed by the various riverside mill structures.
“not first’ [your not even no 2 kid] I guess I dont have to tell you what we were looking for eh?
Sears is closing stores as quickly as possible. My instincts were right. Costco packed. Sears empty. Can The Bay be far behind? Do a walk through. Big sales at The Bay. Empty aisles. What I don’t understand is since the higher end stores are turning into zombie spaces, why aren’t people flooding Walmart? It’s not like there are a lot of competitors within the city limits. Big Box stores require a car, gasoline, time. You have to buy a lot to save money after you take out your expense of getting to a place like Costco. They don’t supply buses for the urbanites on bicycles. As always, the best deals go to the mobile. The highest prices are in poor neighbourhoods. Mobility, however, comes at a high price. Many years ago, I looked to buy a house five miles outside of the city limits. Meant two cars. Gasoline, upkeep, insurance. As people are pressed for money the cost of living in some place where they have to commute to work, to the grocery store, to the mall five miles or ten miles away will become a serious expense. Those suburban hoods I saw the last time I drove through Calgary may turn into traps, not just because of the fall in house prices but because one income, or even no overtime, never mind no job, will make daily, weekly, monthly expenses difficult to meet.
It’s tough to pull off the use of the term ‘bitch-slap’…but I think you have succeeded
Got a cauliflower at Lobby Laws three days ago for 3.98. Was a huge sucker! But the Celery is maybe the new cauliflower? Almost $5 for a bunch. Shop accordingly Greater Fools!
Yup…the good old days. I was funding seconds back then at 20%…and T Bills paid 14.5%. I was borrowing millions to build million dollar houses at 16.5%…and sleeping just fine.
Bottom line…the only group who hates the market is the government who wants to borrow from itself and spend to fund the status quo.
But….this time around the incompetence of government is more mind numbing than ever before. This current government is being pressed from all sides to begin governance and yet it refuses to do anything other than tear down the past, give away money to dictators and fund terrorists.
http://business.financialpost.com/news/energy/joe-oliver-canadas-foolish-pipeline-flubs
We have allowed our own terrorists to be funded by US interests that wanted to tie the CDN energy industry in knots….they succeeded and now only higher taxes and unemployment are the new normal…such it goes when the national broadcaster is allowed to run a 9 year propaganda campaign against good government.
new edict. Given that the health of our economy is predicated on debt.. if you’re NOT part of the problem, you ARE the problem!
#41 Francis on 01.27.16 at 7:11 pm
“So here’s a prediction for you: as far as savers go, 1981 will never return. Not in this lifetime, anyway- Garth”
—————————————————————-
”I bet that people use to say the exact opposite in the 80’s, interest will never go back up. Recency bias is a bitch for prediction.”
—————————————————————-
”Double-digit rates were the central bank response to double-digit inflation. Figure it out. — Garth”
—————————————————————-
Snippets from the past:
Aug-Dec 1974 – No autumn relief is in sight for the frustrated home buyer facing the highest prices and mortgage rates in BC history.
Vancouver July average only slightly higher than June price of $54,254 reflecting slowing sales. It is up $7767 from the average of $46,487 in final quarter of 1973.
Mortgage rates 11.75 to 12%.
Labor and subtrade rates will rise by 15% by Feb. 1975.
Lumber prices have dropped and further drop expected.
Building lots are scarce and any that can be bought will be higher by Feb.
Interest rates to remain high for at least 18 months.
BC continues to be a popular place to live.
Don’t expect rates to ever go below 10% again.
Resale market very good for homes in lower bracket.
Vendors asking big prices.
In the medium and more so in lower range, buyers have to go out to Surrey, Haney and Abbotsford and away from Metro area to get prices they can afford.
Dow hits 4 year low to 731.34 after 7 declining sessions.
Gold $155, Silver, 4.46, Cdn$ 1.02
Investors thorougly disenchanted with common stocks.
First time in 20 years real earnings declining.
There will have to be an increase in growth rate of money supply in U.S. to generate the business recovery.
A home is so costly today that many homeowners feel it should be passed on to their descendants.
Home renovations brisk and contractors finding it hard to keep up.
Odds on nuclear war by 2000 set at 50/50.
Gold hits $198 on Dec. 28/74
“Surprise, surprise….the f***ing liberals and the pipeline review decision of today stabs Alberta in the back just when we needed a little help.”
I was pretty disappointed as well. The NEB process basically became a circus, where pipeline opponents could waste voluminous amounts of the board’s time with “testimony” that had very little relevance to the pipeline itself. By opening the potential ‘climate change’ consequences of upstream activity to NEB review insofar as pipelines are concerned, and expanding the native ‘consultation’, the government is basically lining the pockets of the lawyers involved with the NEB process on all sides, and very likely chasing many good projects away completely.
Pipelines alone won’t save the upstream industry from the consequences of over-investment and over-capacity. But its like rubbing salt in the wound.
Suede, interesting comment about Babby Boomers, Gen X and Millenials.
Is Gen Y the silent or forgotten generation?
[…] Source: http://www.greaterfool.ca/2016/01/27/deja-vu-baby/ […]
dogman01: it was impossible to read the CMHC report from your link so I looked it up:
http://www.cmhc-schl.gc.ca/odpub/esub/68456/68456_2016_Q01.pdf?fr=1453915537325&sid=1ncRIGTr8anvPcMqKW7IuduzQPMU9Mjjnk4ZjnrpcN8oDn6h23XvbyFNAC7d99av
the language is contradictory and confusing: The analytical framework detects strong evidence of problematic conditions in Toronto, Calgary, Saskatoon, and Regina.
“strong evidence of problematic conditions” strong is weak, weak is strong. this is poor English.
Yesterday Garth commented on the demise of the newspaper business. The old time newspaper editors would throw out the dribble that comes out of the CMHC.
#9 not 1st on 01.27.16 at 5:43 pm
. I love to see those crusties getting 1% return now.
—————————————–
Why would boomers complain aboout something that happened in 1981, except as a warning for those today.
For boomers, that have mucho money, they would like 5%, but they will survive on 1%.
And they will just keep working as long s they can.
Oh, and their houses are paid off.
You on the other hand, are far more impacted by low rates.
You bought your house, at vastly elevated prices because of those low rates.
You can’t get jobs cuz boomers won’t let go of them, because of those low rates.
The low rates indicate a lousy economy that you now ‘have’ to find a decent job and a way to save.
Boomers, got their savings.
They got their house.
They got their jobs.
So ok, be happy for low rates, because they are hurting you far more
Edmonton has legalized UBER!
Taxi plate values have probably fallen 90% from the peak. What a corrupt industry that allowed plates to go from $10,000 to $800,000 in Vancouver. I wouldn’t touch a plate for $50,000 now.
Ridesharing services are coming! Good for former taxi drivers who can drive now without paying cash rent!
“But for the house-crazed masses, a darker day likely lies around the bend. The past has a way of returning. If you don’t remember it, at least learn it.” – Garth
————————————————–
Around the corner? No way! There will be no correction in Toronto. There’s a plane load of fresh and house hungry immigrants landing at Pearson every 10 minutes. No offense meant ( I come from immigrant stock), but that’s just the way it is in Toronto. As well, the BoC has demonstrated that they will sacrifice the Cdn dollar and savers to keep the economy going. That includes saving housing.
#56 Unhinged Loon
“It’s because of doomers like Garth that we can’t have nice things in Canada.”
here’s another ‘doomer’ I came across….
“What The Fed did, and I was part of it, was front-loaded an enormous market rally in order to create a wealth effect… and an uncomfortable digestive period is likely now.”
– Former Dallas Federal Reserve Governor Richard Fisher – January 5, 2016.
Inflation would have been much much higher in the last couple years if they were using the same calculation they use in the 80s.
Now the government say it’s 1% when pretty much everything we buy just keep going up fast.
They don’t have a low inflation problem, they have a calculation problem!!! And we are getting screwed big time!!!
#36 AfterTheHouseSold on 01.27.16 at 6:47 pm
sent the rant to t2 and the ‘mayor’ of montreal….
Another day in the trenches and even after working in the insolvency industry since 2009 there isn’t a day that goes by that I still get floored by comments made from those seeking help. A somewhat scary trend I have picked up on are those who file with $60-$80k in credit card debt alone and the few that actually admit how the debt came about. What I am hearing more often are those who are in such a desperate state of affairs will take large sums of cash advances from their cards and hitting the casino in some strange belief that one lucky bet and all their financial worries will be solved…sadly most don’t realize that the odds are so seriously stacked against them that they sealed their fate with such a foolish act.
Yitzhak Rabin: Falling interest rates destroy capital, which is what we have been doing collectively at break neck speed since 2008.
Zero interest rates has reversed the tradition of centuries of capital accumulation.
zero interest rates tear at the fabric of capitalism. Basically it’s saying that savings are not valuable. That’s not true.
Justin Trudeau went to Paris and Davos and he has come back but in a more profound sense his head is still in the clouds. I wonder if his return to earth will be a domestic crisis: interest rates must go up to defend the Canadian dollar and housing prices must decline to the level where people can afford them?
How to stay ahead of the curve given our modern day scenario?
Work harder, educate oneself to become a more valuable commodity. That works.
Learn how to invest. Long term.
When the going gets tough, the tough get going.
Since when has it been any different?
Is it just me but do you think China may be in a wee bit of trouble when they inject 150 BILLION Yuan into their
currency to keep it up?
150 BILLION in 2 weeks…
Wow.
#63 46 and 0
Waa
Millennials are toast.
Well… Those of us that don’t see the writing on the wall anyway.
Create, speculate, Take chances, invest, diversify, explore.
A uni degree don’t cut it anymore. It’s a step in the door for a decent life. That’s about it.
You need two incomes to live in vancity now. Three in the next 10 years I’d venture to guess.
Ppl my age that didn’t take risk are f’d. They will always say well that ship has sailed.
Ships are sailing the port every day. Just gotta keep your eyes peeled
ndp and libs speed up the respective decline of ab and canada. cpc enjoy the show. history to record ndp and libs presiding over the collapse of ab and our country. poetic. u heard the prediction here first. heh
Saw a hilarious thing on the “news” about how to market your house to millenials. Millenials want a renovated home, they want to move right in to a brand new kitchen and so you should upgrade upgrade upgrade everything.
aka spend all yo dollas $$$$$$$$
meanwhile, as a millenial, all I want is a slanted semi that isn’t a million dollas
jus a reminder to u.s. tenants that rent is due this friday. usd only pls. thx.
#55 Westvan: “Why would house prices decline. It’s basically a job apocalypse in Calgary and prices barely budge.”
What’s playing out in Calgary is that as long as people can keep making the monthly payment that’s all that matters. Severances and EI are ensuring that many people can do so. Many laid off homeowners talk in terms of “the wife still has a good job” or “waiting a year to see what happens” or “oil will likely go back up and I’ll get another job soon.”
I also agree that governments and BoC will do everything they can to sustain housing. Their goal is to turn people in rats running on wheels, living just to make their house payments. Canadians are complying, so far.
from yesterday: The old media’s dying. This pathetic blog’s an example of what comes next, which should scare us all. No editors. No 10-year-old delivery boys. No photogs or compositors. No press guys. No building, newsprint, trucks or drivers.
I was the 10-year-old delivery boy. Toronto Star. 55¢ for weekly delivery. 75¢ including the Star Weekly Magazine.
stop picking on mark abt 1981. hes wrong again of course but no need to make him feel worse. he said canada in deflation but is wrong remember? he can’t understand 2016 how can he understand 1981? keep it low bar. keep it simple. he finds getting resume to hr call back is hard. talk abt resume writing. he needs help there. not 1981 inflation or 2016 investing. on rfd he posted big losses in usdcad and gold miners. no more salt in wound pls. move on
#74 prairie person on 01.27.16 at 8:14 pm
Sears is closing stores as quickly as possible. My instincts were right. Costco packed.
Out here in my 604land burb they are building a HUGE shopping mall that rivals Metrotown. I personally don’t see how it will make out here. Was yapping with an old colleague from work the other day and he asked “why don’t they just build a Costco?” Good question …
#96 Suede on 01.27.16 at 9:05 pm
Millennials are toast.
Well… Those of us that don’t see the writing on the wall anyway.
Create, speculate, Take chances, invest, diversify, explore.
A uni degree don’t cut it anymore. It’s a step in the door for a decent life. That’s about it.
You need two incomes to live in vancity now. Three in the next 10 years I’d venture to guess.
Ppl my age that didn’t take risk are f’d. They will always say well that ship has sailed.
Ships are sailing the port every day. Just gotta keep your eyes peeled
….
You want to really get scared, go on linked in, look up David McCay CEO of RBC his take on Devous Switzerland.
Robots are going to displace millions of jobs, surgeons and code smiths will rule the world.
#95 Suede
“Ppl my age that didn’t take risk are f’d. They will always say well that ship has sailed. ”
and they may be f’d regardless, since it is risky….
you seem to be ‘smart’, beyond your basic university grad ‘smart’ and to me that’s the ticket…keep an open mind, bounce back, and very importantly, a good sense of humour always helps…enjoy life and don’t get too caught up….oh, and I hope you have rich, friendly parents….
I live in middle America but find your blog interesting. I bought my first house with an interest rate of 10.25% in 1978 and the rate was going up literally every two weeks. I bought a house in 1981 with an interest rate of 16% . Sales were dead in the central US and I saw houses sit unsold for two years of more. CD rates were at least 15% and cost-of-living raises were about 15% a year as well. Anything less and you were sliding backward. Young people have NO IDEA how bad this can get.
#95….maybe you should line up to suck on Justin’s teet.
Waaaa
Benny Tal ‘winning’ from the TSX:
http://www.cbc.ca/news/business/cash-investors-cibc-1.3419271?__vfz=profile_comment%3D7026800002447
I thought higher of him. So sad.
He wants your money:
Many older people, 60, 65, 70 – they need to be in the stock market to get a reasonable return. Just GICs will not do because interest rates are so low,” he told CBC News.
Fear in the markets
He admits the stock market is a “scary place” right now. The TSX has fallen 6.7 per cent since the beginning of the year and is at a two-year low.
#81 Mark….I can actually hear the money fleeing Alberta (and Canada). Waiting for the green (as in new) governments of both Alberta and Canada to somehow prove their worth. Both Notley and T2 are already lost….I don’t think either has the game for what is coming at them.
#82 Rick on 01.27.16 at 8:31 pm
———————–
Gen Y = Millenials
#75 prairie person on 01.27.16 at 8:14 pm
Sears is closing stores as quickly as possible. My instincts were right. Costco packed. Sears empty. Can The Bay be far behind? Do a walk through. Big sales at The Bay. Empty aisles. What I don’t understand is since the higher end stores are turning into zombie spaces, why aren’t people flooding Walmart? It’s not like there are a lot of competitors within the city limits.
———————–
People use this thing called http://www.amazon.com now.
#44 Dana Stinson on 01.27.16 at 7:25 pm
—————————–
My home insurance is up for renewal, the company graciously extended sewer and overland flood insurance for a bargain premium increase of 35%.
#104 Smoking Man on 01.27.16 at 9:27 pm
#96 Suede on 01.27.16 at 9:05 pm
Millennials are toast.
Well… Those of us that don’t see the writing on the wall anyway.
Create, speculate, Take chances, invest, diversify, explore.
A uni degree don’t cut it anymore. It’s a step in the door for a decent life. That’s about it.
You need two incomes to live in vancity now. Three in the next 10 years I’d venture to guess.
Ppl my age that didn’t take risk are f’d. They will always say well that ship has sailed.
Ships are sailing the port every day. Just gotta keep your eyes peeled
….
You want to really get scared, go on linked in, look up David McCay CEO of RBC his take on Devous Switzerland.
Robots are going to displace millions of jobs, surgeons and code smiths will rule the world.
—
Actually it was masseuses!! a skill we didn’t know you had?
Robotic surgeries already being done – lots more on the way
#75 prairie person on 01.27.16 at 8:14 pm
Sears is closing stores as quickly as possible. My instincts were right. Costco packed. Sears empty. What I don’t understand is since the higher end stores are turning into zombie spaces, why aren’t people flooding Walmart”
I thought about this and come to the conclusion “People are Sheeple” and they THINK it’s cheaper at Costco, but in fact, most of the stuff is MORE EXPENSIVE! Same holds true for Real Estate or the latest iPhone 4
Who was the PM back in 81, with inflation running rampant and the oil industry in Alberta in free fall?
We are so screwed.
#48 mike in kelowna on 01.26.16 at 7:59 pm
“Garth, your buddy Benjamin Tal was excoriating Canadians for holding so much cash, $75 Billion. He wants us to go out and spend it, go crazy, buy like never before, get the economy moving…However, large corporations are holding one heck of a lot more cash than we poor individuals are. I wonder why…”
Great point. Double standard at work here. Corps have been stockpiling cash for years.
Someone ought to tell this guy to go excoriate himself….he’s starting to sound way too much like GW during the GFC.
We’ll do what we damned well please with the fruit of our sweat Benji. Free country and all that.
I’ll spend when, where and how much I please, so go and hassle our central banker instead and take your silly, soapbox exhortations with you.
People are not interested in yet (yawn) another round of dumb petitioning to “go out and help” this furiously abused economy.
Even ZeroHedge finds Alberta’s doom impressive enough to post:
“Alberta Loses Most Jobs In 34 Years As Oil Crunch Cripples Labor Market”
http://www.zerohedge.com/news/2016-01-27/alberta-loses-most-jobs-34-years-oil-crunch-cripples-labor-market
Just waiting for some entrupenure to sell human dog collers with the tag, your birth certificate number and sin number.
Fk, it’s going to hurt writing CRA the next check. Biggest one so far.
Time to move my operation to Reno Nevada. Word has it, it’s the new Switzerland.
On a positive note, had I unloaded a week ago it would have been a hell of a lot bigger.
Your welcome commies.
Thats probably going to be my last one before I flee this cultural madness.
http://www.theglobeandmail.com/report-on-business/bombardier-to-report-worst-year-for-orders-since-2009/article28418856/
Bombardier is now officially a penny stock.
Speaking of taxi plates, here in Calgary, my limo driver whom I have the pleasure of hiring 4-6 times a month told me that several of his taxi friends have been offered their owner’s taxi licenses at $75K, which is half of what they sold for a year ago. He said he doesn’t think a plate has sold in Calgary for six months. The market has evaporated. And Uber is still fighting with the crooks on city council here.
Walked thru South Center mall here in Calgary tonight with my better half. It was empty and the stores all had signs like 50-70% off the last sticker price* posted everywhere……..
Drove down the “bar strip” on the way home and 80% of the places were dead on an NHL game night too………
Mark #1he owner of that term deposit actually lost money, as the income tax rate was considerably higher than it is today, and income taxes are payable on nominal interest rates, not real interest rates.
How do you know he paid tax?
14% of $5000.00 =$700.00
If you make $700.00 per year total income you pay no income tax.
The edge is crumbling.
One person I know is having her house repossessed by the bank. A second person managed, after four years, to get his house sold. Started at 560,000 asking. Sold for 280,000 two months ago. One on the prairies. The other in BC. Not next year, not this coming summer. Right now. Yes, some people are managing to hang on. Severance. But it runs out. New job. Doesn’t pay enough to cover those mortgage payments. Lot of people kidding themselves about the next couple of years. Losing your house like the first person isn’t a slow melt. Cutting your price by fifty percent isn’t a slow melt. Yet, the Sold signs keep going up all over the neighbourhood. People hope that Spams bringing in HAM. When I saw the pix on the news about the houses in California that have had to be abandoned because of the cliffs collapsing I thought of Garth and his warnings.
No surprise here:
Penticton-Calgary flights reduced
http://www.castanet.net/edition/news-story-157196-21-.htm#157196
…aaand real estate values in the Okanagan just dropped another 20% with the loss of all that Albertan money.
#119 Keith in Calgary on 01.27.16 at 10:28 pm
bombardier is a junk business. just like barrick gold.
#109 46 and 2 on 01.27.16 at 9:39 pm
#81 Mark….I can actually hear the money fleeing Alberta (and Canada). Waiting for the green (as in new) governments of both Alberta and Canada to somehow prove their worth. Both Notley and T2 are already lost….I don’t think either has the game for what is coming at them.
————————-
I agree. They both look really afraid in the media. Especially Notley. Wow, what a mess over there… trying to turn Alberta into sustainable, green revenue? Yeesh! good luck with that. If Oil rebounds, she’ll will be boiling the bitumen faster than she can say… “Windmills?… what are those?”
I have no idea why the Nectonites flew over my long branch bungalow In an orange plazma flyer, and sent a truth ray into my head. Forgot the year, it was the month of May. Thats all I remember.
Its in the archives her somewhere, let the historian’s figure it out.
But since that day, I started my book, and it’s going slow. Why they would chose such an illiterate drunck to get the message out, I have no idea.
Don’t know where the story ends, only know where it started.
I do know this, when I drink, the hold and power these pricks have over me is in a weakend state.
Shit I scarafice for humanity. My liver will be the first casualty.
Judging by episode 1 of the x files, Chris Carter is a Smoking Man Fan..
#122 “…aaand real estate values in the Okanagan just dropped another 20% with the loss of all that Albertan money.”
Give your head a shake. Prices in the Okanagan have not dropped anywhere near 20% if at all.
RE:
It wouldn’t even have been $700 since the term was 59 days. ie: 14.5% * $5000 * 59 / 365 = $117.19
Though someone in 1981 who had $5000 to put into a GIC probably had a job and thus income pushing them past their basic personal exemption. Or not.
The 1yr 19% CSB I got around that time was even sweeter…..
#85 AB Boxter –
”You can’t get jobs cuz boomers won’t let go of them, because of those low rates.”
I suspect that a good number of these Boomer jobs are redundant and good chance a large percentage of them would not be replaced. Particularly in the government service. Recessions are very good at getting rid of redundancy and replacing it with technology. Seen a lot of that over the past 30 years. As an example, the lowly fax machine and the introduction of email and cell phones did an excellent job in eliminating jobs.
“Double-digit rates were the central bank response to double-digit inflation.”
“Figure it out. — Garth”
——————————————
OK…..
The US was spending too much $ in Vietnam, making holders of US $ nervous. I think it was France that openly challenged and wanted gold, not more US $.
So in 1971, Nixon dropped the gold backing from the US $ to protect the US gold holdings.
Inflation rose quickly, as nothing was stopping the US from printing in attempt to stimulate the economy and job growth. Eventually Volker had to raise rates in 1981 to 20% to support the US $, calm inflation and saving the US $.
https://en.wikipedia.org/wiki/Nixon_Shock
https://en.wikipedia.org/wiki/Paul_Volcker
I see very little in common with today’s, situation.
RE:
Exactly. It’s how the government cuts pensions, welfare, minimum wages, and raises taxes (bracket creep) etc by stealth.
#99 Leo Trollstoy on 01.27.16 at 9:10 pm
”just a reminder to u.s. tenants that rent is due this friday. usd only pls. thx.”
Enjoy them while you can Leo cause our dollar will be back up to par before you know it. By summer we will likely see it back up to 85 cents and you will watch as your gains slowly melt away. You need to know when to holdem and when to foldem. That was ten days ago. Good luck with that tho.
New home sales soared 14.5 per cent to 501,000 units in 2015, the highest level since 2007. Economists had forecast new home sales, which account for about 9.1 per cent of the housing market, edging up to a 500,000 unit-rate last month.
Housing is being supported by tightening labor market conditions, which are spurring a rise in household formation. The data came on the heels of a report last Friday showing a record increase in home resales in December from a 19-month low in November.
http://www.theglobeandmail.com/report-on-business/international-business/us-business/new-us-single-family-home-sales-jump-in-december/article28412281/
A friend of mine was Let go from his job last month(December). Drilling Field Consultant for 35 years. He Died two weeks ago. He was Crusty, Good Guy. “Get Moving, Get Living”. Now!! God Bless Jim!
PB43
”
Edmonton has legalized UBER!
Taxi plate values have probably fallen 90% from the peak. What a corrupt industry that allowed plates to go from $10,000 to $800,000 in Vancouver. I wouldn’t touch a plate for $50,000 now.
Ridesharing services are coming! Good for former taxi drivers who can drive now without paying cash rent!”
******We have Grab Car, Grab Taxi and Uber in Bangkok along with ride sharing private cars and vans, along with regular cabs, public and private buses, Elevated trains and subways, together everything works great for riders who want specific services.
Taxi co’s are mad because these alternatives are eating their lunch with lower costs and better service.
Grab Car is great…call in, pay by Visa, no cash exchanged, fixed rate so there’s no incentive for the cabbie to take you for a ride…no cash exchanged. Uber has a different set up but it’s similar.
Canada has to come into the new century…because it’s incredibly behind in so many ways. Taxi monopolies are like no beer in the stores antiquated and Liberal Party ways of killing off ingenuity.
#108 Shawn Wallace
”Fear in the markets
He admits the stock market is a “scary place” right now. The TSX has fallen 6.7 per cent since the beginning of the year and is at a two-year low.”
Wouldn’t that indicate that it is likely a good time to be getting in? Two of the top 3 sectors are in the cellar and are not going to be there much longer. My crystal ball tells me that once we get past the summer, we will see the TSX rise and end the year up 20%. Time to go shopping while the sale is on.
http://toronto.ctvnews.ca/house-hunting-millennials-want-move-in-ready-homes-survey-1.2755203
“A survey of more than 1,500 millennials found that a modern kitchen tops the list of the desired features in a home.”
Of Course!! Granite and stainless baby!!
“How do you know he paid tax?
14% of $5000.00 =$700.00
If you make $700.00 per year total income you pay no income tax.”
A retiree, even back then (and today) gets OAS + GIS + usually some CPP. And most working people, especially with those able to put money aside, earn enough to be significantly taxable.
I’m sure we can come up with corner cases that shift the argument one way or another. And argue whether 40% is the ‘right’ rate to use. But if you re-do the math under the various scenarios, weighted appropriately to their actual statistical probability of occurrence, most savers are still doing better in the contemporary low rate environment than they did in the high rate, high inflation environment.
The larger point perhaps that I didn’t make is that people are unfortunately conditioned to think in terms of nominal interest rates, not real-after-tax rates. Not including tax planning in the investment process is a frequent and seriously wealth destroying mistake, and Garth has hammered on such point in numerous blog posts over the years.
bombardier is a junk business. just like barrick gold.
Barrick has performed just as well as its large-cap gold mining peers, despite its crown jewel asset, the Pascua Lama mine not being in production on account of rent-seeking Chilean officials. The case of Bombardier isn’t so much a condemnation of its management, but rather that of Canadian industrial policy. Their existing product line was obsolete, they had to so something or go out of business eventually. Their new airplane has no meaningful competition in its market segment, so like Bombardier in the early 90s, it will probably be tough slogging for the next few years, but eventually they will be successful with their class-dominating product.
Another plasma flyer. Another phycotic post.
Why do we go down the road of inclusiveness.
We have men with guns and pray with ass to the air who are hell bent on raping and groping woman.
Our woman are pissed at men, cause we out weigh then, and can kick the shit out of then with a fart. Pisses then off. It is what it is. 200 pound$ vs 100
They don’t realize the dumb shits with ass pointed up facing east have a different plan.
One smoking man, three sons brought up the rite way against this cancer.
We don’t stand a chance, but it will be fun dying as the last real men standing.
Wynne you’re against the wrong man.
Enjoy your new inclusive palls.
You can expect these to be implemented in the near future in the oil sands.
http://www.mining.com/two-aussie-mines-start-moving-all-their-iron-ore-with-driverless-trucks/
Garth a while back you mentioned a upcoming collapse of something and never expanded. …what was is it? Bombardier? Oil Sands? Come on do tell. ….
#126 Okanagan Man on 01.27.16 at 11:06 pm
#122 “…aaand real estate values in the Okanagan just dropped another 20% with the loss of all that Albertan money.”
”Give your head a shake. Prices in the Okanagan have not dropped anywhere near 20% if at all.”
I own a property in the Okanagan and I can tell you that if I was to try and sell it today, I would be lucky to get 20% less than I could have if I had sold it in 2010. Sister sold a house in Vernon 2 years ago for $100m less than what the market was at its peak in 2008. That was a 20% drop. Alberta money affects OK properties big time. Saw same thing happen in the 70s, 80s and 90s. Not different now.
Well, I don’t have any problem with the substance of “Deja vu, baby”, but it does sport some memorable stylistic FAILS. For instance, “a darker day likely lies around the bend” is maybe too memorable for comfort (kinda Mark Twainish in its schizoid lyricism, I’d say). “Invincible, untouchable, incapable of injury” describes Uebermenschlichkeit all right – but in a helter skelter sort of way; invulnerable and invincible woulda done, the untouchable is distracting.
“House-crazed masses”: Give me your tired, your poor, your huddled house-crazed masses
“Passing through huddled and ugly walls
by doorways where women haggard
looked from their hunger deep eyes
. . .
I came sudden at the city’s edge
on a blue burst of lake
. . .
masses of great grey wings –
veering and wheeling free in the open”
Isn’t every prolific prose writer a poet manque, our gracious INVESTOPOMP y inclus.
Still, this “pathetic” blog beats MSM by much more than a mere country mile.
Mortgage Delinquencies Hidden
Latest stats show 90 day mortgage delinquencies in Alberta as of October still near record lows. Less than one in 350 delinquent 90 days.
Difference being that 20 years ago banks did not allow four month holiday from mortgage payments upon job loss. TD bank manager told me this is standard practice now.
Extend and pretend…
http://www.cba.ca/contents/files/statistics/stat_mortgage_db050_en.pdf
relax – devaluation is the new patriotism in the currency war
keeps jobs here
relax – we are taking care of you
all of you…RELAX!
i’m getting 22% on CAD
keep looking
It’s blazingly, stunningly, incredibly OBVIOUS that soaring government overspending, debt issuance, budget deficits and manipulation of interest rates have rendered money nearly worthless in comparison to 1981.
Sound money is the equally obvious answer. (Watch gold!)
But no one ever sees that, do they?
In the 80’s very few millionaires from China, and even much fewer have a taste for dim sum in Canada.
Three decades later, Chinese millionaires are sprouting up, and they know great Chinese food in Vancouver, and some in Toronto.
Oh, and the good air, beautiful trees and outdoors too.
By East Asian valuation even Vancouver is cheap by a few hundreds percent.
Those are the differences between now and then.
Feel free to continue to talk about how Canadian fundamentals ought to have an influence on Vancouver house prices; the market here just ignores you.
And the market is always more right, when it’s about money.
#100 Gregor Samsa on 01.27.16 at 9:12 pm
#55 Westvan: “Why would house prices decline. It’s basically a job apocalypse in Calgary and prices barely budge.”
————————————
Just received my 2016 muni tax assessment (Calgary area). Assessed value has increased by 2.5% (based on July 2015 assessment). What the…?
I noticed that local new house listings ask about 10% over their muni assessments. At par, or slightly more then 2014/15 sales values. Lots of new listings but sales way down.
Also, CREB shows minimum year to year house price reduction, regardless of re-listings, DOM etc.
My theory: selling realtors are competing for listings by promising sellers the moon. This keeps the market artificially high. Buying realtors are in on it and encourage the few buyers to overpay.
We need the Harper government back in power mui pronto to enable the prompt and “red-tape” free construction of pipelines to tidewater.
Why did he cheap out on the $24 million dollar advertising posters in the Washington, D.C. subways to promote the Keystone XL?
The ad budget should have been doubled. $48 million would have moved men, equipment, steel and gunk from the oil sands industry 20 minutes north of from where I comment would be gushing.
Said most Albertans (deeply stuck in myths) always.
After all the seriousness, time for a bit of humour. Careful what you feed your pets.
https://www.youtube.com/watch?v=LAfKZUn9sZ0
Garth,
What, if any, are the risks to the Feds eventually raiding RRSP’s a/o TFSA’s down the road? Are there any laws in place that would supposedly prevent this?
If only the “perceived” wealthy are able to stockpile these two tax havens, because the rest of the minions are caught up in house trading, I’m wondering if at some point the feds continue their crusade on the rich and turn their targets towards the RRSP and TFSA funds that are cash rich and ripe for pickin.
I should feel assured that this will never be the case, yet this crosses my mind regularly as I continue to hear about savers being punished, the wealthy not paying their fair share, a Gov’t that encourages massive consumer debt loads, and the movement towards socialist ideologies in general society.
Am I out to lunch?
#1 Mark on 01.27.16 at 5:29 pm
The owner of that term deposit actually lost money, as the income tax rate was considerably higher than it is today, and income taxes are payable on nominal interest rates, not real interest rates.
Mark, you get a lot of hate on this blog, which I cannot judge on merit.
But I must say you make an excellent point here.
I guess it does not matter if interest rates are high or low, no matter what decade: a savings account is a money losing proposition due to inflation and tax.
Even at 15% interest.
If inflation is low, the rates are too, and taxes eat the rest.
If rates are high, inflation is too, and taxes eat the rest.
The only sensible time for savings account would be high interest rate coupled with low inflation. I don’t think those scenarios happen?
Bram
#17
dat dare doggie looks like it could take down
a big wild boar pig just fir fun,,,,
——————————————————-
Those are not my ways. I walk with integrity in my heart and righteousness. I carry the big guys policies and morals. Mr Huh gave me something back in my life that I thought was vanishing. My disinheritance on this mudball means nothing. It is my inheritance beyond that is more important. I believe in Mr Huh, probably more so than anybody will ever know. Forever grateful. I just believe that somebody actually read the crap. There is a reason why we meet in our lifes. A purpose. Maybe I was chosen as a general manager for the big guy and Mr Huh is our first round draft choice. We need guys like him. He can play on my team anyday. Thank you Mr Huh.
https://www.youtube.com/watch?v=aN3iWeUY_wM
The real global warming.
I know somebody who worked in a supermarket in 1981, lived frugally and locked in $10,000 at 14% for five years while everyone else was complaining about high interest rates. When the certificate expired, he renewed at a rate that was lower, but still much higher by today’s standards. When he told me this story a few years ago, he was still laughing.
Re: 126 OK Man,
I was being facetious, but since you bring it up, I have in fact seen several houses in Osoyoos and Oliver drop their asking from 399 to 329 in the last year and a half. Many of those are still listed and I’ll be surprised if they sell at all before next winter without further price cuts.
I am aware of one neighbour who started at 430 and ended up selling for sub-300.
Certainly since the peak in 2008 prices have hardly budged in the south Okanagan. The albertan money is gone, and prairie/northern Ontario snowbirds were incredibly tight with their money even when things were booming and Canada was the envy of the post-08 world.
Trudeau Liberals jump to the defense of state sponsored terrorism.
http://news.nationalpost.com/news/canada/judge-hearing-case-where-terrorism-victims-seek-irans-assets-says-it-might-be-made-academic-by-liberals
The only thing Dion has been so passionate about was his run for the Liberal leadership. This stunning rhetoric from him on behalf of a self admitted sponsor o f terror is puzzling…and a bit frightening.
Shouldn’t Junior be the guy speaking up for the Canadian victims of Iran’s terror?
#156 Abolitionist on 01.28.16 at 2:57 am
Re: 126 OK Man,
”I was being facetious, but since you bring it up, I have in fact seen several houses in Osoyoos and Oliver drop their asking from 399 to 329 in the last year and a half. Many of those are still listed and I’ll be surprised if they sell at all before next winter without further price cuts.
I am aware of one neighbour who started at 430 and ended up selling for sub-300.
Certainly since the peak in 2008 prices have hardly budged in the south Okanagan. The albertan money is gone, and prairie/northern Ontario snowbirds were incredibly tight with their money even when things were booming and Canada was the envy of the post-08 world.”
You are quite correct.
Like these for example which originally came on the market in 2006 for up to $829,000. Last I saw, selling below $500,000, if at all.
When the Alberta cash dries up, so do the sales. Same thing happened in 70s, 80s and 90s.
http://www.6717000.com/blog/2009/05/discount-pricing-in-the-okanagan/
if you don’t drive, enjoy travel and buy groceries then today’s inflation rate is about 11.3% as well. Frankennumbers will suggest otherwise.
Something a lot of folks here may not remember is how “special” 1980-1982 was for taxation. 42-65%!!! The average “little guy” was lucky to have any money left to do something with.
With this government’s promises combined with the folks losing jobs and companies folding up shop you can expect to see that again…
There is a good graph of historical rates on page 17 of this paper:
http://www.iedm.org/uploaded/pdf/taxpayers.PDF
#156
I was looking at houses in the 150,000-200,000 range in Oliver seen a couple now and more to come.
#69 Stop it WolfMan
This is about debt my friend, not houses…
DEBT.
https://www.youtube.com/watch?v=CQsMFQZa8os
Smoking Man in the 80’s ?
Nah…
Mark now.
Wow, this zika virus pandemic is looking pretty serious.
http://www.bbc.com/news/world-us-canada-35425731
The zika virus tragically shrinks the size of the human brain and creates other personality disorders and delusions.
So you might have a brain the size of a golf ball, but think it’s a basketball.
Sounds exactly like Smoking Turd!
Smoking Turd, when did the mosquito bite you?
In a fractional-reserve, debt-based system, we can’t create money without creating debt, but we can create debt without creating money. how? secondary market – the selling of loans by banks. The sale of the loan wipes both the asset and the liability off the bank’s balance sheet — they’re still balanced, and they’ve cleared the way for making more loans.
The economy is suffering from a severe scarcity of real money, and it’s working under a system where the only way to get more money into the system is to borrow it. So we have a vicious circle where the necessity to pay the existing debt creates this horrible scarcity of money, and the only way to relieve the scarcity is to borrow more money, which aggravates the scarcity, which is only relieved by borrowing more money…
Essentially it’s operating like a pyramid scheme. In order to stay alive it has to grow, and the only way it can grow is to cannibalize and destabilize itself further. And guess what keeps this afloat – more consumption and debt.
So spend, spend, spend! the economy is depending on you! So let your credit card loose while holding tight to your captain’s wisdom … “the budget will balance itself -T2”
#33 Prairieboy43 on 01.27.16 at 6:35 pm
…..”I low ball these guys selling Harley FatBoyz all the time. They hate me. Call back in a month still for sale. I believe the same mentality will prevail in RE. How many visitors a day Garth. Is traffic picking up on RE awareness??”
2 days ago, we viewed a property and both listing agent and our agent were present. During the viewing, both agents were “politely” arguing about the state of affairs in re. One of course, bs-ing and the other stating facts culled from databases. Amazing.
Up ’till now, I’d never seen that. So, cracks are starting to appear in the rah-rah bs bulwark of re.
It’s starting to crumble. How could it not? Just looking around at the state of employment and debt, there is no denial that re is not the holy grail that it was.
Pull the buy backs/buy the pullbacks.
FX acct +300, back to Schock Market now.
It’s been reported by many that China has been using the ‘downturn in the economy’ as an excuse to stockpile like MoFo’s over the past months, including gold and oil. Millions of barrels of oil daily and now announced that they will buy 215 Tons of gold.
Me thinks the Chinese are playing us for fools by driving prices down with obvious collusion from trading partners like Saudi Arabia.
Abolitionist, apologies for my earlier some what snide remark. I missed the sarcasm. In terms of the okanagan market, sure some markets are not at 2008 levels. And sure there might be some price drops in listings and sales in the past year.
But overall, particularly in Kelowna the impact from Alberta has yet to be felt. Year over year there has been no decline in values although upper end is taking longer to move product, so may be price declines are a matter of time.
If the U.S. housing collapse is a model for what could happen when the bubble hits the fan in Canada, then this is ominous:
It may take another 5 years for home equity to return to pre-2008 levels. That puts it around 13-14 years to just return to where it was.
So a horny Millennial today will be middle age before they are back to where they are today or last year!
http://www.marketwatch.com/story/it-may-take-five-years-for-homeowner-equity-to-return-to-normal-2016-01-28/print
Senior Analyst for Real Estate Investment Network on CBC radio in Calgary.
Turns out Calgary is a good place to invest in real estate right now.
Time to liquidate all, and buy a house or two in Calgary.
Good idea for out of work oil patch workers to buy a couple of homes and rent them out, or maybe flip them in 6 months for a 30-50k profit.
REIN is a cult of aggressive house-pumpers, unregulated and irresponsible in its encouragement of speculative debt. Advising to buy in Calgary now is emblematic. — Garth
Observational RE update from mid Vanc. Island shares the same sentiment as those watching the BC interior – soft.
I have been watching prices since last summer. Many, stale listings with different techniques over the past 6 months to attract buyers – Delist, relist with minor price drops, and now larger price drops ($20k).
I have watched one property that by all appearances is very nice, drop from $629 – 589 – 569 – now at 549.
A quick search on craigslist reveals words like ‘huge reduction in price’ and ‘receivership’ creeping in.
You wouldn’t know from the excitement during open houses .. Realtors with a hint of desperation in their eyes salivating at the markets in GVR, expecting a lot of overflow to make its way here.
Perhaps that is why there are still many 6 month listings with no price drops or vacant listings on craigslist attempting to be rented out month-to-month. Or my own realtor’s hopes: ‘lots of buyers out there’, or ‘should get into see this one, it won’t last’.
THANK YOU GARTH.. my expectations for housing/investing have been forever transformed reading your blog.
suede
Well said and with on hell of a re post thread!
You called it with the hockey stick year, new price levels soaring high.
Problem is no one is building houses anymore only town homes and condo and high rises.
Land, homes will probably continue to raise, maybe not at crazy levels.
If you were ever thinking of buying a home, you have the cash, no point waiting, as garth said today “a darker day likely lies around the bend” before it was next year, or for sure. Wven the Greaterfool cant predict this situation right anymore!
Damned if you do or dont!
Chris in Nanaimo on 01.27.16 at 8:10 pm
==========================================
FF?
“The new government in Ottawa is about to plunge us into deficit financing”
Well yes. That’s what national governments are supposed to do in recession times. The problem comes when lunatic decisions are made to borrow (nationally) from (a) private banks. The BOC should be financing all this itself. A Liberal government made this mistake decades ago, maybe (we can hope) the SCC is about to fix it. (google BIS and COMER)
There is nothing to fix. If the Bank of Canada printed $50 billion to hand over to the government, the money supply would dilute and discipline would vanish. COMER is a collection of nutbars. — Garth
#166 maxx
“It’s starting to crumble. How could it not? Just looking around at the state of employment and debt, there is no denial that re is not the holy grail that it was.”
_________________
You and your ilk have been saying that for a decade plus. There’s just as many, and probably more leading indicators pointing to further growth in the housing market.
Employment, productivity and the size of the labour force have all increased 7 years running. Likewise, incomes and consumption have all gained every single year since the financial crisis. As has the population and household formation- both through natural increases and immigration. I could go on…
Anyone looking to short oil try around noon tomorrow as talks of any cuts fizzle out. A very good chance oil will test the 25 dollar U.S. level in February.
common sense on 01.27.16 at 9:02 pm
Is it just me but do you think China may be in a wee bit of trouble when they inject 150 BILLION Yuan into their
currency to keep it up?
150 BILLION in 2 weeks…
===========================================
that’s only 22.8 billion US$ out of a total of 3.65 TRILLION US$ reserves (or about one half of one percent)
bombardier and barrick gold are forever turds. facebook crushes it.
http://www.forbes.com/sites/briansolomon/2016/01/28/how-facebook-turned-its-greatest-weakness-into-its-greatest-strength/
This is the new reality of how much we are paying in federal and BC taxes and fees for 2016.
This information came from January 2016 BC Retired Teachers Association (BCRTA) Teachers received a 1% increase on their pensions. CPP and OAS are receiving 1.1%. We are not keeping up overall increases
Tax and Fee Increases for 2016 By Ken Kuhn, Liaison Priorities Newsletter Editor Several new laws, government policies, and modifications to existing laws came into effect on January 1, 2016, so here’s a rundown of the provincial and federal changes likely to impact your life—in a large or small way—this 2016 year.
Justin Trudeau’s promised federal tax cut for the middle class (and tax hike for top earners) came into effect on January 1. The income tax rate will drop to 20.5 per cent, down from 22 per cent, for taxable earnings between $45,282 and $90,563.
At the same time, the rate on all income earned beyond $200,000 will rise from 29 per cent to 33 per cent. An estimated 319,000 Canadians will fall into this upper tax bracket.
The federal limit for Tax-Free Savings Accounts (TFSA) will be rolled back from $10,000 to $5,500, and will be indexed to inflation, as part of the Liberals’ new budget.
Starting January 1, 2016, the monthly BC MSP health-care premiums tax increased by 4%. Monthly premiums for an individual will now be $75. A family of two will pay $136 monthly and a family of three will pay $150 monthly. There seems to be discussion by political parties to tie this regressive tax to income levels…we’ll see.
The Pacific Blue Cross Extended Health Care (EHC) premiums have increased 8.15%.
BC Hydro is also expected to raise rates this year, by four per cent.
FortisBC have increased their rates by 2.96% as of January 1. This increase will be approximately $3.81 per month more for the average residential electricity customer.
ICBC is also expected to raise basic insurance rates in 2016. The corporation has submitted an application for a 5.5 per cent increase. If approved, this will mean an average increase of $3.70 per month for customers’ basic insurance coverage.
BC Ferries could also raise fees by 1.9 per cent in 2016, although that has not been announced at this time. It has been applied for and more schedule changes are in the planning stages.
Municipalities across B.C. are also expected to raise property taxes for homeowners.
The Canadian Taxpayer Federation (CTF) also looked at the 2016 federal tax impact for families in 34 hypothetical Canadian households and it’s not all bad news. The Family Tax Cut has been eliminated, meaning couples with children under 18 cannot split their income to benefit from the tax credit. The Universal Child Care Benefit (UCCB) will also be replaced with the Canada Child Benefit (CCB), starting in July 2016. The CCB is tax-free and it appears larger payouts will be going to lower-income households. “The range varies widely, from a few hundred to about $2,000 in savings, but it’s clear that most Canadian families will have more money in their pockets as a result of these tax changes,” said CTF Federal Director Aaron Wudrick, in a release. “Dual-income households with children, where each spouse earns a relatively equal amount, will benefit most.”
And if you are headed across the border or purchasing goods or services from the states, our Canadian dollar has slipped below 69 cents compared to the US dollar.
And the increase in your pension for this last year was 1.0%. Seems we are not keeping up to the increases we are facing. I thought I would share these changes for 2016 as if affects all of our budgets…didn’t mean to bring negative news—just reality. BCRTA Pensions & Benefits Committee Report
I remember those days well, Garth. The recession of 1982 still has the worst unemployment of almost 13% in recent history. That should have taught us a lesson, but everyone I knew piled into the real estate bubble by the late 1980s.
True, nominal values including inflation broke even around 2005. But I have read that if you count commissions and fees, that is closer to 2010.
Add in money for repairs not invested and opportunity costs on the down payments, then you could say that buyers in 1989 still have yet to break even on their “investments”.
Yet all this remains invisible or just ignored to all the real estate believers out there.
Unbelievable, when you think of this rampant financial illiteracy and the damage it is about to cause once again.
This time, however, the bubble seems so much bigger, and the economy has lost its diversity and flexibility, so I greatly fear a much more damaging and prolonged melt. Something like Japan’s 25 year recession is on the way, I am afraid, for Canada.
speaking of deja vu…
The UN’s efforts to establish a New International Economic Order (NIEO) in the 1960s and 1970s and its current focus on “saving” the planet now gives that disturbing feeling of been there, done that.
Hold onto your wallets when they freshly toss around phrases like income redistribution and sustainable development. Although it is difficult to focus their scopes on the top 1%, the middle class is an easy target.
#198 Herb on 01.27.16 at 2:53 pm
#165 (and 177) IHCTD9,
tap me gently with a 2×4, but the fact that Harper HIMSELF created the deficit he subsequently reduced did not sink into your creative mind. Perhaps it was too hard to reconcile with your job of writing paeans for the CPC and its former leader. Anyway, the crayon version is here for you – http://www.cbc.ca/news/multimedia/canada-s-deficits-and-surpluses-1963-to-2015-1.3042571
Are you suggesting that Harper’s deficit was forced upon his minority government by the Opposition majority? I don’t recall him being held to ransom in Parliament, but do tell. As to the quality of Trudeau’s cabinet, do you remember the Harper round table of bobbleheads? Surely you jest, Sir!
Trudeau hasn’t been in office long enough to send any billions “down the shitter”, so don’t count his wasted billions until they’re spent, or at least allocated. You can always resurrect Harper to unseat him. You’ll have to wait four years, but you might find Harper still unoccupying an MP’s desk in the Commons.
Don’t know if being a fiction writer for the CPC is lucrative enough to permit early retirement, but I’m rooting for you.
____________________________________________
I agree, Harper borrowed and created a deficit, and then proceeded to pay it down less 941 Million prior to getting voted out. This is not something that needs to be pointed out.
Justin promised to balance the budget in 4 years – you think that’s going to happen?
Harper came pretty damn close at -941 Million – you think Justin will finish better than that?
I just threw that minority/majority distinction in there to rile you up :). I will point out the Libs supported the spending that did the most damage (GM etc) 110%.
Harper’s round table of bobble heads could at least submit a routine money bill without screwing it up no? Not to mention it was one of those bobble headed conservative senators that caught the mistake – AFTER the Libs submitted it.
So Herb, I’m thinking JT will create a massive deficit even without the help of a GFC – same thing as Harper did. But I’m thinking JT will NOT be knocking it down before he’s booted, quite the opposite of Harper.
Here’s a few undeniable numbers for you to tuck away for the next 4 years:
1. Harper left us with a 941 million deficit in October 2015.
2. Justin promised no more than 10 Billion in deficit spending during his campaign (per year!)
The Parliamentary Budget Officer is already crowing that the Liberal spending projections are off – not by a few million here or there – but by BILLIONS.
No fiction here at all – you can look it up :)
Fed’s December hike was a major mistake, former Bank of England official says. Fed will have to reverse course.
http://www.marketwatch.com/story/feds-december-hike-was-a-major-mistake-former-bank-of-england-official-says-2016-01-28
It won’t. — Garth
Money Thoughts
Some people on this blog worry about money creation and inflation and government conspiracies.
Most of the worry is unfounded.
In any case, a wiser approach would be to work on increasing your own net worth whether measured in Canadian dollars of 2015 or U.S. dollars of 1940 or barrels of oil. Increasing your net worth as measured in ounces of gold need not involve owning any gold.
Just work to increase your own net worth.
Railing against fractional reserve banking is a complete and total waste of energy in addition to be wrong-headed.
#125 Smoking Man on 01.27.16 at 11:04 pm
I have no idea why the Nectonites flew over my long branch bungalow In an orange plazma flyer, and sent a truth ray into my head. Forgot the year, it was the month of May. Thats all I remember.
Its in the archives her somewhere, let the historian’s figure it out.
But since that day, I started my book, and it’s going slow. Why they would chose such an illiterate drunck to get the message out, I have no idea.
Don’t know where the story ends, only know where it started.
I do know this, when I drink, the hold and power these pricks have over me is in a weakend state.
Shit I scarafice for humanity. My liver will be the first casualty.
Judging by episode 1 of the x files, Chris Carter is a Smoking Man Fan..
………………………………………………………………….
I would suppose that the Nectonites were slumming?
Also it is spelled plasma.
https://www.youtube.com/watch?v=J225NWLurS0
#176 Noel on 01.28.16 at 11:00 am
Then if you and “your” ilk are correct about productivity and workforce participation, stocks should be a great investment going forward. Actually far better than the way over valued, way over speculated, garbage RE at peak cycle in this country.
MF
#183 IHCTD9 on 01.28.16 at 11:53 am
#198 Herb on 01.27.16 at 2:53 pm
#165 (and 177) IHCTD9,
tap me gently with a 2×4, but the fact that Harper HIMSELF created the deficit he subsequently reduced did not sink into your creative mind. Perhaps it was too hard to reconcile with your job of writing paeans for the CPC and its former leader. Anyway, the crayon version is here for you – http://www.cbc.ca/news/multimedia/canada-s-deficits-and-surpluses-1963-to-2015-1.3042571
Are you suggesting that Harper’s deficit was forced upon his minority government by the Opposition majority? I don’t recall him being held to ransom in Parliament, but do tell. As to the quality of Trudeau’s cabinet, do you remember the Harper round table of bobbleheads? Surely you jest, Sir!
Trudeau hasn’t been in office long enough to send any billions “down the shitter”, so don’t count his wasted billions until they’re spent, or at least allocated. You can always resurrect Harper to unseat him. You’ll have to wait four years, but you might find Harper still unoccupying an MP’s desk in the Commons.
Don’t know if being a fiction writer for the CPC is lucrative enough to permit early retirement, but I’m rooting for you.
____________________________________________
I agree, Harper borrowed and created a deficit, and then proceeded to pay it down less 941 Million prior to getting voted out. This is not something that needs to be pointed out.
Justin promised to balance the budget in 4 years – you think that’s going to happen?
Harper came pretty damn close at -941 Million – you think Justin will finish better than that?
I just threw that minority/majority distinction in there to rile you up :). I will point out the Libs supported the spending that did the most damage (GM etc) 110%.
Harper’s round table of bobble heads could at least submit a routine money bill without screwing it up no? Not to mention it was one of those bobble headed conservative senators that caught the mistake – AFTER the Libs submitted it.
So Herb, I’m thinking JT will create a massive deficit even without the help of a GFC – same thing as Harper did. But I’m thinking JT will NOT be knocking it down before he’s booted, quite the opposite of Harper.
Here’s a few undeniable numbers for you to tuck away for the next 4 years:
1. Harper left us with a 941 million deficit in October 2015.
2. Justin promised no more than 10 Billion in deficit spending during his campaign (per year!)
The Parliamentary Budget Officer is already crowing that the Liberal spending projections are off – not by a few million here or there – but by BILLIONS.
No fiction here at all – you can look it up :)
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Oh how I wish Justin (Bieber) Trudeau was fiction and I could wake up to a world where we would be free of his shirtless selfie image. This guy has his head up his rear end. Check back in four years when Canada is broke, over taxed, and full of foreign freeloaders.
I was a toddler in 1981, watching Thundercats and G.I. Joe on tv, while my financially illiterate parents had no clue how to take advantage of the bonanza Garth describes.
Fast forward to present times and in response to Freedom First:
I learned the same lesson recently when a friend CAME TO ME (that’s an important detail) for financial advice. I made the mistake of telling her that the divvies + capital gains from our investment portfolio not only pays our rent and all our bills, but it actually pays us almost an equal amount on top of that.
You’d think she’d be happy for us and for the gift of knowledge I bestowed on her. Instead, she looked shocked, almost hurt. Later in the same conversation she made a snarky remark about how we don’t know what she goes through because we are DINKs.
Never again will I share with friends the full extent of the beauty of being a savvy renter-investor. Too much jealousy and bitterness around. In a country brain washed by the daily filth of realtors and their ilk, what else can one expect?
Definition of Delusion.
It’s name, John McCain.
http://www.breitbart.com/big-journalism/2016/01/28/why-we-lose-john-mccain-blasts-trump-for-destruction-of-the-press/
“I agree, Harper borrowed and created a deficit, and then proceeded to pay it down less 941 Million prior to getting voted out. This is not something that needs to be pointed out.”
The debt of Canada increased well over $10B in 2015 (think it was closer to $17B), and by over $260B during Harper’s decade in power. To call Harper fiscally austere, or even to claim that the Harper government was a responsible steward of the public’s money simply isn’t supported by the massive expansion in government debt.
GoC debt outstanding can be viewed in the tables on the Bank of Canada website. A much better “bottom line” analysis of the real (deteriorating) fiscal position of the Government than merely politically manipulated “deficit” figures.
Additionally, if anything, the damage of the Harper reign is understated, as we know that a significant amount of CMHC’s off-balance-sheet guarantees of Canadian subprime mortgages under their guarantee will eventually have pretty significant balance sheet consequences.
Will Trudeau end up being better? I don’t know. So far, I have my doubts. But at least he’s set the bar pretty high with his promise to only run $10B deficits. Which, compared to Harper, and accounting for inflation, would require significant government austerity, and/or significant growth in the Canadian economy.
A coworker was telling me the other day that his kid is thinking of buying a third student rental. I have no idea what the kid does, but know his girlfriend is still studying. Evidently, they have been introduced to a mortgage broker who will get it done insured with Genworth on a 5% down payment, though the kid has to say it’s his principal residence.
Maybe it’s still a good idea for him personally, but it’s fraudulent on the part of the broker. An acquaintance of mine laughingly told me a few weeks ago that he bought a rental and the broker used his, the buyer’s, estimated market rents, and didn’t want to hear about the actual rents being paid by the existing tenants- who have security of tenancy and can probably not be evicted here in Ontario.
I won’t be surprised if we eventually learn that the deceit here was every bit as bad as it was in the States before their bubble burst.
Question:
If one borrows 20,000$ from the HELOC at (3%) to top up the TFSA investments.
Can they claim the (3%) from the taxes?
If yes, how do you do it?
Nope. Not unless you first use the funds to invest in a non-registered account, then subsequently make a transfer or contribution in kind to the TFSA. — Garth
A sign of the times…
http://www.news1130.com/2016/01/28/british-columbians-payday-loans/
Many are living hand to mouth.
Meanwhile detached house prices in Burnaby are increasing $250,000 a year.
Now trending in Alberta….
Past 2 days me herd of 2 pickmeup trucks needed to be toad.
Seems theys gold, well no, but Catalyst Converters have
a mix of precious metals. Platinum, Palladium and rhodium.
So Trucks, SUV’s easy targits, a few minutes thiefs have the exhaust system cut. Scrap metal dealers payin $50 – $250 each. Victims pay deductable to get replaced, Watch out fella’s, insurance rates goin up.
For the poster that wrote their home insurance is going up 35% this year, shop around but I highly doubt you will only pay 2% inflation as StatsCan says it is.
Most insurance policies are going up anywhere from 5% to 40% depending how unlucky you are. By the way, the lower interest rates more specifically longer term interest rates go, the more insurance companies will be adding increases on Canadian’s insurance policies.
As for Uber being legalized in Edmonton. Now they got them and us. They will soon be taxing every kilometer of distance for Uber and other driving services.
There will not be real savings for anyone and then they will tax everyone by the kilometer. Wait until you can’t use cash to pay anymore. The banks and financial institutions will be charging $5 to $10 surcharges on everything you buy from groceries to gas to driving services. Less choice and freedom means more picking of all our pockets.
The $1,000 in tax free interest in 1981 would be probably about $3,000 interest today. This means $3,000 for each spouse and say $3,000 for each adult child means some real taxes we are overpaying.
Regarding a family of four adults, $12,000 a year taxed at an average 35% rate would result in $4,200 in overpaying taxes. This just makes Canadians in a more tighter spot.
canada will have had better fiscal results under harper compared to justine. thats obvious. libs to be painted w destruction of canadian economy. just the way it will b. it is what it is
#187 MF
Everyone else is stupid but you right?
Interesting that you can’t come up with any factual information, or even anything that hints at a point. Just impotent attacks on the government and talking points not backed up by anything.
Please tell me, using any sort of data or facts, why you believe RE is ‘over speculated’ (whatever that means) or ‘over valued’ (another meaningless term) or ‘garbage’ (that’s a technical term right)?
#189 Ogopogo on 01.28.16 at 12:51 pm
I made the mistake of telling her that the divvies + capital gains from our investment portfolio not only pays our rent and all our bills, but it actually pays us almost an equal amount on top of that.
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This is the mindset I need to get into. I keep thinking that house prices are going to come down quickly within a couple years. But really it could be a slow descent over 7-8 years. Need to embrace this lifestyle but the indoctrination is deep.
“Oh how I wish Justin (Bieber) Trudeau was fiction and I could wake up to a world where we would be free of his shirtless selfie image. This guy has his head up his rear end. Check back in four years when Canada is broke, over taxed, and full of foreign freeloaders.”
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Yep. I’d love to be wrong, but from the looks of things so far, I’m not going to be..
#191 Mark on 01.28.16 at 1:03 pm
The debt of Canada increased well over $10B in 2015 (think it was closer to $17B), and by over $260B during Harper’s…[etc…]
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Mark my good man, I’m not saying Harper was gold with avoiding debt (although he only had one term where he could actually do what he wanted to do, had the GFC to deal with etc..).
I’m saying Harper will prove to be much better than T2 when it comes to debt and deficit.
If you disagree, just go ahead and clearly state in as few words as possible that I’m wrong :).
#195 Notley’s nitemare on 01.28.16 at 2:29 pm
Now trending in Alberta….
Past 2 days me herd of 2 pickmeup trucks needed to be toad.
Seems theys gold, well no, but Catalyst Converters have
a mix of precious metals. Platinum, Palladium and rhodium.
So Trucks, SUV’s easy targits, a few minutes thiefs have the exhaust system cut. Scrap metal dealers payin $50 – $250 each. Victims pay deductable to get replaced, Watch out fella’s, insurance rates goin up.
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That is interesting information and a sign of the times. Like Americans stripping copper pipe out of their houses that were being repossessed a few years back.
But I cannot resist…
you must have attended the same school as Smoking Man. Didn’t realize that you could get a herd of toads in Alberta in winter.
#186 James on 01.28.16 at 12:37 pm
#125 Smoking Man on 01.27.16 at 11:04 pm
I have no idea why the Nectonites flew over my long branch bungalow In an orange plazma flyer, and sent a truth ray into my head. Forgot the year, it was the month of May. Thats all I remember.
Its in the archives her somewhere, let the historian’s figure it out.
But since that day, I started my book, and it’s going slow. Why they would chose such an illiterate drunck to get the message out, I have no idea.
Don’t know where the story ends, only know where it started.
I do know this, when I drink, the hold and power these pricks have over me is in a weakend state.
Shit I scarafice for humanity. My liver will be the first casualty.
Judging by episode 1 of the x files, Chris Carter is a Smoking Man Fan..
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I would suppose that the Nectonites were slumming?
Also it is spelled plasma.
https://www.youtube.com/watch?v=J225NWLurS0
……
Sorry my key board setting are set to:
Nectonite Englush
Check google translate for Nectononian.
#198 Noel on 01.28.16 at 2:40 pm
Amount of fluffs given from your little personal attack: zero.
We are given daily reminders on this blog of how the market is completely out of touch with reality. Price: income, price: rent, historical evaluation, interest rates, realtor tactics, general economy etc.
MF
“If you disagree, just go ahead and clearly state in as few words as possible that I’m wrong :).”
I don’t know if you’re wrong. I am hoping you are, that Trudeau realizes that the path to meaningful growth in Canada is a strong private sector, and a significantly weakened public sector. But early signs are not at all encouraging and are in fact downright discouraging.
There’s not a lot of precedent for one-term PM’s in Canada, but I’m actually leaning towards actually agreeing with Troll for once in his claims that the Libs (and Alberta NDP) are going to wear the economic mess if they can’t right the ship quickly.
Well thanks for nothing to all the idiots over pricing houses so I can’t even afford to live in my home province anymore! I’m talking about Alberta, it was a wonderful place till all the idiots arrived now it’s ruined forever! It’s All about greed, now it’s overbuilt and depressing. When the housing crash takes out all the got to have it now players it will look good on them! I won’t feel the least bit sorry for any of you that lose it all!
You’re Welcome
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\#206 Thanks for Nothing on 01.28.16 at 3:32 pm said:
Well thanks for nothing to all the idiots over pricing houses so I can’t even afford to live in my home province anymore! I’m talking about Alberta, it was a wonderful place till all the idiots arrived now it’s ruined forever! It’s All about greed, now it’s overbuilt and depressing. When the housing crash takes out all the got to have it now players it will look good on them! I won’t feel the least bit sorry for any of you that lose it all!
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You’re welcome!
Though I moved to Edmonton in ’89 and bought a house for $63k and later bought in St. Albert for $135 in ’95 and still live in (with probably about $135 renovations to date) so not sure I was the problem. But if I was I owe you no apologies.
Also, you say that like greed is a bad thing instead of a universal and motivating emotion that leads to bettering oneself.
If Alberta is in fact over-built then you should soon find cheap houses, you’re welcome.
#175 Michael
“The new government in Ottawa is about to plunge us into deficit financing”
Well yes. That’s what national governments are supposed to do in recession times. The problem comes when lunatic decisions are made to borrow (nationally) from (a) private banks. The BOC should be financing all this itself. A Liberal government made this mistake decades ago, maybe (we can hope) the SCC is about to fix it. (google BIS and COMER)
There is nothing to fix. If the Bank of Canada printed $50 billion to hand over to the government, the money supply would dilute and discipline would vanish. COMER is a collection of nutbars. — Garth
Any proof to back up that statement Garth?
It seems the Bank of Canada was quite capable and competent with issuing currency from its inception in the late 30’s. They snapped the country out of the great depression and funded our Military through WWII and funded massive infrastructure expansion. We never did see any significant inflation until the mid 70’s when T1 decided we as a country would be better off paying interest to private banks.
So unless you can back up your statement with some proof it appears that us nutbar’s seem to be making more sense of the situation
Your ignorance of past monetary policy and federal balance sheets is remarkable. Maybe you should investigate how, for example, WW2 was financed. — Garth
Curious. You’d have the BoC raise interest rates when inflation is already below the target level?
prairie person: One person I know is having her house repossessed by the bank. A second person managed, after four years, to get his house sold. Started at 560,000 asking. Sold for 280,000 two months ago. One on the prairies. The other in BC.
that got my attention. Aggregator said the banks are not going to announce a falling real estate market.
Essentially the banks are in the business of not making announcements. My idea is that CMHC is in the business of not making announcements. Too.
Senior Analyst for Real Estate Investment Network on CBC radio in Calgary.
Turns out Calgary is a good place to invest in real estate right now.
Time to liquidate all, and buy a house or two in Calgary.
Good idea for out of work oil patch workers to buy a couple of homes and rent them out, or maybe flip them in 6 months for a 30-50k profit.
REIN is a cult of aggressive house-pumpers, unregulated and irresponsible in its encouragement of speculative debt. Advising to buy in Calgary now is emblematic. — Garth
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Step 1: Buy a few houses in Calgary
Step 3: Massive profit!
The only problem is I haven’t figured out step 2 yet.
#210 45north on 01.28.16 at 4:31 pm
Essentially the banks are in the business of not making announcements. My idea is that CMHC is in the business of not making announcements. Too.
I’ve linked them a few times before, but if you want data that cannot be fudged: just look at re-sale values as collected by Teranet.
There is no incentive to hide, and even if they wanted, that would be very hard to pull off. The numbers are a cold clean truth.
http://www.housepriceindex.ca/default.aspx
Bram
#44 Dana Stinson on 01.27.16 at 7:25 pm…
I agree, but think it’s closer to 8-10% for most items. Just received notice one of our premiums is going up 22% in April.
In the meantime, despite the MSM in Canada touting high exchange rates as a reason for snowboids staying home, we see the opposite in Arizona.
Gas in Phoenix is down to .55 CAD a litre (.393 US), and taking our latest grocery list total it’s down from last week, overall about 40% less even after taking exchange into account.
While there is obviously more competition in a large area such as Phoenix, there is no excuse for the outrageous prices in Kelowna.
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#126 Okanagan Man on 01.27.16 at 11:06 pm…
While it may be an exaggeration to say 20%, it’s true that there will be a fairly major effect as the Alberta cash runs dry.
From OMREBs own stats, prices haven’t fared all that well since 2008.
When you add inflation in using July 2008 to July 2015 stats as a reference, a SFH should sell for $572,553 but only brought $ 525,845. SFH waterfront should sell at a minimum $ 2,279,842 instead the actual was $ 1,346,167.
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#169 Okanagan Man on 01.28.16 at 10:03 am…
“…some markets are not at 2008 levels…”
Pray tell, where are those markets that did better, links please.
Your ignorance of past monetary policy and federal balance sheets is remarkable. Maybe you should investigate how, for example, WW2 was financed. — Garth
I will be the first to admit that finance and economics is not my specialty, but ignorant I am not.
The simple chart in the link below says a lot while keeping it simple.
http://www.occupyourbank.ca/images/cnb.jpg
Your bias towards real estate boards being unethical, while portraying central and private banks to be saints is astounding
Wow. How many crayons did that take? — Garth
http://www.nytimes.com/2016/01/30/business/international/japan-interest-rate.html?partner=rss&emc=rss
Negative interest rates the new normal…. Normalizing rates my arse….