What comes next?

Tomorrow: Vote here for America's next President. 

shark

RYAN  By Guest Blogger Ryan Lewenza

For deficit hawks like us, the late 1990s and 2000s were a great period with the Canadian Federal government posting surpluses for 11 consecutive years. However this ended with the 2008/09 financial crisis, and we now expect a sea of red for years to come under the Trudeau Liberals. While weaker economic growth is definitely a factor behind the deficits, the main driver is the massive increase in infrastructure spending. Is this the right direction for Canada to be taking?

We believe it is, as we see a number of supports for a major investment in our aging infrastructure.

First, we believe that the monetary policies of global central banks have largely run their course, and are beginning to lose their efficacy in stimulating economic growth.

To help combat the effects of the worst financial downturn since the Great Depression, central banks around the world responded by lowering interest rates to record low levels. When this failed to engender a robust recovery, central banks resorted to new “unconventional” monetary policies by purchasing massive sums of bonds in an effort to drive interest rates even lower. Known as Quantitative Easing (QE), this has become the go-to tool for central banks to help stimulate growth.

Below we illustrate the result of these policies with the combined balance sheets of the US Federal Reserve (Fed), European Central Bank (ECB), and Bank of Japan (BoJ) increasing by US$9 trillion since 2007 to a staggering US$12.7 trillion today. That’s trillion with a T!

And what have do we have to show for this central bank largesse?

Central Bank Balance Sheets At Historic Levels

ryan-1

Source: Bloomberg, Turner Investments

Yes the equity markets have clearly benefited from these monetary policies, but the impact on the global economy has been much more muted. Take a look at Canadian GDP growth for example. In the decade before the financial crisis, the Canadian economy grew at an average rate of 3.2% Y/Y. In the years following the financial crisis, when central banks threw everything but the kitchen sink at the global economy, our economy has averaged only 1.4% Y/Y.

Quite frankly if we want to see the Canadian (and global) economy strengthen then something different will have to be done to achieve this. Quoting Albert Einstein “Insanity is doing the same thing over and over and expecting different results.” If monetary policy is losing its effectiveness then maybe we should try something else.

Canada’s Economy Has Downshifted into Second Gear

ryan-2

Source: Bloomberg, Turner Investments

At the same time that our economy remains stuck in second gear, there is a large need to invest in our aging infrastructure. Following WW2, there were large investments in infrastructure but this slowed during the 1970s and 1980s as the Federal and Provincial governments deferred spending on much needed investment. According to the Federation of Canadian Municipalities, the cost of this deferred investment is a major infrastructure deficit that they estimate at $123 billion. And according to the Canadian Infrastructure Report Card, roughly 37% of our roads and 43% of our public transit are rated “fair” to “very poor”. Anyone driving the streets of Toronto or on the crumbling Gardiner Expressway can attest to this.

Condition Ratings by Replacement Value of Canadian Roads

ryan-3

Source: Canadian Infrastructure Report Card

Finally, I believe current conditions are ideal for a major investment spend in our economy. Our Federal debt is relatively low at roughly $600 billion, equating to a debt-to-GDP level of just over 30%. Compare that to the US at over 100%, Germany at 80%, Italy at 130% or Japan at 220% for example. While it’s paramount that the Federal government has a plan to get us back to a balanced budget following this period of investment, we do currently have the room to increase debt as we make these much needed investments. Moreover, with interest rates at historic lows, now is the time to issue debt and make these investments. The question then is, where to invest?

We believe the focus has to be on stimulating economic growth and increasing productivity. A bridge to nowhere is not the solution. The government should be focusing its efforts on improving roads, public transit, communications and utilities and water which help lower business costs and increase corporate profits.

If you’re not already asleep by now, I recognize this is not the most exciting of topics, but this is probably one of the most important issues facing Canada today. By investing in smart infrastructure programs that stimulate economic growth (Conference Board of Canada estimates that every $1 billion spent creates 16,700 jobs) and improve productivity, this is how we can get our economy humming again and get back to those good old days of 3%+ GDP growth.

Ryan Lewenza, CFA,CMT is a Partner and Portfolio Manager with Turner Investments, and a Senior Vice President, Private Client Group, of Raymond James Ltd.

172 comments ↓

#1 bdwy sktrn on 11.05.16 at 2:56 pm

so early!

***van crash report*** 11/05/16

finally got a new listing in the hood – 4th time for this place since 09.

https://www.realtor.ca/Residential/Single-Family/17550722/2016-GRAVELEY-STREET-Vancouver-British-Columbia-V5L3B7

wonder if it’s a flipper bailing out?

it sold in march for a whopping 1.7m

history
2009 – 875k (new reno here, no improvments since)
2011 – 1.06
2016 – 1.7 (spring ’16 , the ‘top’)

2016 – ask 1.7 sell ?????

#2 Context on 11.05.16 at 2:57 pm

Thank you Sir Lew with your very informative essay. It took me back in time to listen to a tune by Peggy Lee called, ” Is That All There Is? ” Thanks for the memory!

#3 bdwy sktrn on 11.05.16 at 3:07 pm

sold report for same – another slow week here, just one sale

1969 E 5TH AVENUE ask $1,298,000 sell $1,300,000
DOM 5

Over ask price sold in 5 days – PEAK PRICING there. it’s a damn duplex for 1.3 – peak, zenith, apex – higher than the spring.

oh, the misery and destruction!!!! priced right it could take a whole week to unload some dirt around here.

#4 bdwy sktrn on 11.05.16 at 3:09 pm

going back 2 weeks there are 4 sales.

1 was at ask
3 were over ask
0 were below ask

dom were 1,3,5,6

i think the freeze is starting to lift, look out for the next wave of Chinese money , even with the tax it’s coming.
oh, the horror!

#5 Damifino on 11.05.16 at 3:10 pm

“Conference Board of Canada estimates that every $1 billion spent creates 16,700 jobs”
——————————-

Good, I suppose, but that’s $60,000 per job. One would hope those jobs have staying power beyond a few years.

#6 TurnerNation on 11.05.16 at 3:14 pm

I saw Lamb at Design Exchange party last night. A few years old kando of his near mine is under scaffolding for repairs. They make em like they used to.

#7 BS on 11.05.16 at 3:30 pm

Our Federal debt is relatively low at roughly $600 billion, equating to a debt-to-GDP level of just over 30%. Compare that to the US at over 100%, Germany at 80%, Italy at 130% or Japan at 220% for example.

Okay so other countries borrowed and spent way more than Canada did. How did that work out for their GDP growth?

By investing in smart infrastructure programs that stimulate economic growth (Conference Board of Canada estimates that every $1 billion spent creates 16,700 jobs) and improve productivity, this is how we can get our economy humming again and get back to those good old days of 3%+ GDP growth.

Now you think if Canada does what the other countries did we will get a different result? Why didn’t their GDP return to 3%+ when they binged on government debt?

The solution for a debt bubble is not more debt. See your Einstein quote.

#8 Henry Morgan on 11.05.16 at 3:32 pm

Trump is going to win!

Brace your selves for the The Establishment’s hissy fit driven market crash.

#9 Metaxa on 11.05.16 at 3:33 pm

Ryan,
Agreed.
Metaxa

I personally know two electricians who have been called back to AB to work. The one told me that their company is calling back almost 600 skilled trades over the next short while.

Merry Christmas for them, eh?

#10 Jungle on 11.05.16 at 3:35 pm

What about innovation? Are we forgetting about that?
Are bridges and roads enough enough for the new future economy?

#11 Metaxa on 11.05.16 at 3:39 pm

Tomorrow: Vote here for America’s next President.

Have we not better things to do?
between Smoking Man peddling that so-called book and this Trump crap the entire enterprise has moved away from why I started participating/reading in the first place.

#12 X on 11.05.16 at 3:43 pm

Not boring at all. That was a good read.

Thanks for the insight.

#13 mike from mtl on 11.05.16 at 4:02 pm

Sadly any funds sent QC will be squandered by the same crooks as been the case for the last 40 years.

Regarding roads and bridges you folks in Ontario have nothing to complain about, come out east and see what ‘bad’ really means.

#14 Millenial falcon on 11.05.16 at 4:15 pm

Good post Ryan. I totally agree with you, we need some major spending to upgrade our horrible transit and roadways. That’s horrible with a H.
On another topic…can anyone on this pathetic blog explain how the Canadian 5 year note affects our mortgage rates? I’ve heard Garth mention this before but never really understood how this happens.
Just thought I’d try you blog dogs first before hitting Wikipedia.
Thanks

#15 Fzzzz on 11.05.16 at 4:36 pm

Excellent article!

#16 Andrew Woburn on 11.05.16 at 4:43 pm

Not only do I agree with you, Ryan, but I see an opportunity for the feds to use the promise of serious infrastructure bucks as a bribe to erode inter-provincial trade barriers.

For example, the TransCanada Highway should have one set of federally mandated rules regulating truck load limits etc. Most people will not know that truckers can be required to get a separate permit in each province for oversize/overweight loads and in the worst case,may have to transfer the load to another truck. A consistent federal policy for the TransCanada would provide for traffic that simply using the highway as a pass-through to other provinces. Provinces could still set their own internal standards once off a federalized highway to protect their roads from excessive wear and tear, but at least east-west through traffic would not have to worry about them.

For another example, if you have ever driven from Ontario to BC you will know that our country’s major road and trade link is a joke compared to US highways and is wholly inadequate to the coming automation of trucking because there should be at least four lanes or at least adequate and frequent passing lanes to allow slow robot trucks to coexist with passenger autos. There will also likely be a need for sensors along the highway to keep automated trucks on track in bad weather. Anything that lowers the cost of trade between Eastern and Western Canada should help protect us against a future Trump riding in on protectionist policies.

#17 Derek R on 11.05.16 at 4:44 pm

Sensible stuff, Ryan. I hope that the government is onboard with that. Money for workers and small-to-medium-sized businesses has to come from somewhere: foreigners, the government or the banks. And since bank loans need to be paid back and foreigners can’t afford too many of our exports right now, government spending is the only money source left.

If that means they have to run a deficit, so be it. The government’s deficit is our profit. Which is why the deficit is needed at the moment to keep Canadian businesses afloat, Canadian workers employed and Canadian dividends up until we can run an export surplus again.

#18 don on 11.05.16 at 4:49 pm

NO infrastructure spending. Pls just sit back and accept the depression we deserve. When asset values are low enough and the debt levels are truly written off we can begin to have actual growth. We seem to want any kind of growth. Debt growth is like a tumor. It is growting but it will eventually kill the host

#19 straight six on 11.05.16 at 4:49 pm

DELETED

#20 Herb on 11.05.16 at 4:55 pm

Er, didn’t we just have an “Economic Action Plan” with “shovel-ready projects”, or was that intended only to boost the advertising industry?

#21 Sydneysider on 11.05.16 at 4:55 pm

One has to question the wisdom of an economic policy that demands constant economic growth (beyond the level of population growth). What exactly is the point of this, and more to the point, when did we agree to this?

At this stage of Canada’s development, increases in the quality of life must come from sources other than material consumption. I would prefer a 1% increase in the education level each year. Currently, we seem to have a recession in that area.

#22 astronaft on 11.05.16 at 4:56 pm

Humanity develops towards no inflation and no economic growth. Rather a redistribution of wealth. Inflation is borrowing from the future. I think time will come we won’t be able to borrow any longer. We live in finite world with finite resources.

Developments in artificial intelligence in the next decade, further automation will dramatically change landscape of economics and life.

Investment in Science and technology is the way to go.

#23 For those about to flop... on 11.05.16 at 5:00 pm

A map of every power plant in the U.S…

M42BC

http://m.imgur.com/gallery/LjYIH

#24 Derek R on 11.05.16 at 5:00 pm

#7 BS on 11.05.16 at 3:30 pm wrote:
The solution for a debt bubble is not more debt.

Almost right. The solution for a private debt bubble is not more private debt. However the solution for a private debt bubble is more public debt: they are not the same thing. Mostly because it’s the government’s money, not the private citizens. That means the government is allowed to print more whenever it needs to pay its debts; the private citizen is not.

Canada’s major problem is too many private citizens with huge debts which they are finding more and more difficult to pay off because of job losses, overtime cuts and so on. If government spending can ensure that more money finds its way into private hands, it will prevent a private debt problem from becoming a private debt catastrophe.

And if that means that public debt rises? Too bad. The government has got in and out of debt before without collapsing or driving private citizens into poverty. No doubt it can do that again.

#25 Mark M. on 11.05.16 at 5:09 pm

Imagine getting this far with failed central bank policy in Canada, the US and around the world and thinking the solution now is for governments to incur more debt?

Really outside the box thinking there Ryan.

I’m surprised you think there’s a problem? It’s simple, just ask your boss who thinks the US recovery is right on track. Let’s do what they did. Crank up the printing press, prosperity for all! It’s worked so well they’re raising rates, right?

This Ponzi monetary scheme is coming unglued. You folks are trying desperately to cling to it so you can sell clients a 6% return.

Truly pathetic.

#26 conan on 11.05.16 at 5:11 pm

Any road or any bridge that makes total sense to refurbish or build is going to have a $%@! toll. Its 401 meets the 407, but its everywhere.

Heck, Cities could create a multi services app that pops up on your dashboard display when you are stopped at a red light.

1) squeegee kid (BA education level guaranteed!)
2) food (McDonalds)
3) coffee (Tims)
4) Divorce lawyer (Lionel Hutz)
5) 311
*6) 911

I want a piece of the Gordie Howe bridge myself, but its probably already been scooped up by an army of salivating pension funds.

#27 Larry B on 11.05.16 at 5:13 pm

Well, I am not sure how spending our future can improve our present. JT and gang claim to be feminist yet spending on infrastructure primarily benefits males. I have not seen too many female construction workers. The dichotomy of interests is tragic. No to national daycare but yes to building roads and transit. No wonder Ryan approves, it benefits HIM, I hope his ride on the QEW gets better. I hope the female gender isn’t fooled by JT’s shirtless antics.

#28 mouldyinYVR on 11.05.16 at 5:14 pm

Thanks for the above.
Meanwhile in YVR ‘for rent’ signs are sprouting left and right. Drove through Kitsilano (my old ‘hood) and could not believe the number of ‘for rent’ signs on every block. I can’t remember the last time they were so plentiful – decades ago??
Also checked out my local r. estate agent in Yaletown – 1/4 ‘for sale’ signs posted in their window 3/4 ‘for rent’ signs. I have never seen that before. It’s going down baby!

#29 cloudy on 11.05.16 at 5:15 pm

Careful there bdwy sktrn, releasing the board’s precious data will get you black balled, disbarred, waterboarded and dismembered. Maybe they’ll make an exception for using it to show everyone there’s still endless money to make flipping.

#30 For those about to flop... on 11.05.16 at 5:19 pm

InfLewenza,question for ya,do you only read the comments section on the day you post?

Or are you a sucker for punishment…

M42BC

#31 Matt Caffrey on 11.05.16 at 5:24 pm

That all makes sense Ryan. However, with regards to resurrecting the Canadian cadaver (sorry, I meant economy) the Energy east Pipeline is THE most important project/issue on the table. One million barrels of Alberta crude, pumped daily, to Eastern Canadian refineries would create wealth, jobs and investment such as we can, currently, only pipedream about. Its time to do what’s right for Canada, develop our natural resources, get our goods to market, and get PAID!

#32 Polls R Phake on 11.05.16 at 5:28 pm

Spend money on infrastructure when Canada is broke? Wow…

#33 Setting the Record Straight on 11.05.16 at 5:32 pm

Build more roads! seriously?

All the Eco fascists want to put cars in the museum. What will you need roads for?

Airports? Hey the only airports you will need is for planes to carry govt bureaucrats and NGOs to warmer climes to combat global warming.

Pipelines? Even when they are privately financed we don’t want them. They just transport CARBON– sign of the Cross here.

Think again.

#34 Dan on 11.05.16 at 5:35 pm

Smoking Man is a real face of Canada. P2 is a fake.

#35 Dan on 11.05.16 at 5:38 pm

And what you’ll do when oil peaks and some outside power ,ban money laundering through inflated real estate prices? Will you go home?

#36 Bytor the Snow Dog on 11.05.16 at 5:40 pm

@127 Mark sez:

Its the “public servants” that should be subjected to term limits, IMHO. Not the politicians. The whole idea of someone being a ‘career public servant’ is rather offensive to democracy. Public servants should be limited to 10 years of total lifetime service, after which, the only option for the government to re-employ a public servant be through an order-in-council appointment. Too many public servants spend their entire careers in the public service, and worse, they tend to manipulate elected politicians.

Wow. Congrats! This is the stupidest thing you’ve ever posted.

Where do you come up with this stuff?

#37 The Mom on 11.05.16 at 5:49 pm

You want growth? Enforce anti-dumping, and restrict TEMPORARY foreign workers to absolute necessity.

Make companies forward-looking by making them TRAIN people for positions they know are upcoming. Kids these days have no flippin’ idea what jobs to train for, and they can’t all be engineers. If you can train em, no TFW for you!

#38 Bytor the Snow Dog on 11.05.16 at 5:51 pm

@27 Larry B.

I love it when women post with men’s names.

Cute dear.

#39 Ret on 11.05.16 at 5:59 pm

“much needed investments”…
that will be decided by us to help us buy your vote in the next election with your money. Brilliant!

No thank you. Governments make political decisions which are rarely good decisions for taxpayers who ultimately get stuck paying the bills.

#40 Realtors are scum on 11.05.16 at 5:59 pm

#3 and 4 bdwy sktrn

Enough your cherry picked sales. The market is crashing hard. You can chirp on this blog and it won’t change a thing. Enjoy the downturn it’s going to be a bad one.

#41 Hawk on 11.05.16 at 6:08 pm

Using debt financing only works with a proven business model that generates productivity and profits that substantially exceeds the financing cost.

Goverments IN PARTICULAR are spectacular failures in designing and deploying such “successful business models”.

Compounding this is the liberal gooverments even more spectacular track record of corruption.

So I’d say we pass on betting the farmhouse on government sponsored investment initiatives i.e. unless of-course we secretly plan on never paying back the debt or eliminating it with inflationery tactics.

#42 BS on 11.05.16 at 6:08 pm

#24 Derek R on 11.05.16 at 5:00 pm
#7 BS on 11.05.16 at 3:30 pm wrote:
The solution for a debt bubble is not more debt.

Almost right. The solution for a private debt bubble is not more private debt. However the solution for a private debt bubble is more public debt

Nice theory. Why didn’t it work for every other country that tried it?

#43 Ryan Lewenza on 11.05.16 at 6:15 pm

BS “Okay so other countries borrowed and spent way more than Canada did. How did that work out for their GDP growth?”

A couple of differences. First the increase in gov’t spending should be focused on infrastructure spending which has a larger multiplier effect and improves productivity. This should provide a boost to economic growth and corporate profits. This type of government spending has a larger impact then just say adding a new government department to oversee new regulations. Second much of that high debt for the other nations I cited was done at higher interest rates then today, so the cost of that debt is higher than it will be for us. We should see a higher return on this investment/debt since its at a much lower interest rate. Third because we (Liberals under Martin and Conservatives under Harper) were fiscally prudent in years past we now have the room to invest and add some debt. But for this to be effective longer term we have to stick to a targeted plan and then return back to a balanced budget in say 5 years. – Ryan L

#44 AB Boxster on 11.05.16 at 6:22 pm

Government cannot solve this problem.
You cannot spend your way to prosperity and growth.
Youn cannot borrow your way to wealth.

Government intervention only serves to distort the economy and delay the changes that must occur.

Keynsian economics is a failure throughout the world.
More Keynsian nonsense is not the answer.

#45 Old Dog on 11.05.16 at 6:25 pm

“Our Federal debt is relatively low at roughly $600 billion, equating to a debt-to-GDP level of just over 30%. ” You seem to have forgotten the provincial debt and underfunded pensions, Ryan.
Trouble with borrowing when interest rates are low is you usually have to pay it back when interest rates are higher. Your grandchildren will still be trying to pay this back. And what is the forecast for the GDP in the next few years, abysmal is the word. You’re simply just not going to stimulate the Canadian economy by borrowing a few billion dollars and spending it on make work projects. Good article but I disagree with you, Ryan.

#46 Ryan Lewenza on 11.05.16 at 6:29 pm

Polls R Phake “Spend money on infrastructure when Canada is broke? Wow…”

How are we “broke”? We are a very wealthy nation with an abundance of natural resources, land and water, strong institutions, highly educated population, strong rule of law etc. Sure Canadians are overleveraged and our economy is struggling with low commodity prices, but to say our economy is broke is not based on reality or fact. – Ryan L

#47 Snowboid on 11.05.16 at 6:32 pm

#11 Metaxa on 11.05.16 at 3:39 pm…

Amen!

We have a bottle of champagne ready for next Wednesday to celebrate the end of the first (and last) season of “The Presidential Apprentice” when Hillary wins!

#48 Brian on 11.05.16 at 6:33 pm

For every $1000 the gov spends on infrastructure projects how much of that cash trickles right back into gov coffers via taxes? I bet a fair percentage.

#49 TraderX on 11.05.16 at 6:35 pm

If I recall, most of those huge infrastructure projects were 0% loans from the Bank of Canada to the province, etc. to see it accomplished. St. Laurence Seaway comes to mind.

I agree though… lets do something that isn’t housing related.

#50 odious herodias on 11.05.16 at 6:35 pm

Adding debt to these already reckless levels is irresponsible – eventually the piper must be paid. Currency debasement must follow. All these wonderful equity market gains sucked away.

Apply the same rationale to your household financing and see how long that’ll last.

Amazing how uncommon sense is among the financial types.

#51 Snowboid on 11.05.16 at 6:39 pm

#36 Bytor the Snow Dog on 11.05.16 at 5:40 pm…

I agree with your comments.

I spent most of my career in the public service, with a few years spent interacting directly with elected officials and the only manipulation (if you can call it that) was under Vander Zalm – and that was because he was a tad eccentric (okay he was a nutter)!

#52 Kilt on 11.05.16 at 6:40 pm

Government spending on infrastructure really needs to be planned better. Sure you create jobs, but most temporary ones and you often steal people from the industries that are continually complaining about a lack of people. You also provide many people with large short term paychecks. Unfortunately these people are often the ones who don’t think about what they are doing two years from now. You are better off having a steady stream of infrastructure spending that way provinces and municipalities are not competing over the limited number of resources available to them.

Kilt.

#53 BS on 11.05.16 at 6:42 pm

#43 Ryan Lewenza on 11.05.16 at 6:15 pm

This type of government spending has a larger impact then just say adding a new government department to oversee new regulations.

Which country had “new government departments” as their spending plan to start a debt binge? None. They all start out as infrastructure or what ever but end up as bigger government, projects that go way over budget and poor returns.

Second much of that high debt for the other nations I cited was done at higher interest rates then today, so the cost of that debt is higher than it will be for us. We should see a higher return on this investment/debt since its at a much lower interest rate.

Some may have been done at higher interest rates but it was also done at much lower construction costs. The much, much higher construction costs of today more than offset the interest rate savings. Construction costs have easily doubled in the past 10 years.

Third because we (Liberals under Martin and Conservatives under Harper) were fiscally prudent in years past we now have the room to invest and add some debt. But for this to be effective longer term we have to stick to a targeted plan and then return back to a balanced budget in say 5 years.

The old balanced budget in 5 years thing. Debt becomes an addiction. Which of the countries that debt binged in the past are now balancing their budgets?

#54 Ryan Lewenza on 11.05.16 at 6:45 pm

Mark M “This Ponzi monetary scheme is coming unglued. You folks are trying desperately to cling to it so you can sell clients a 6% return. Truly pathetic.”

First, if you think we’re pathetic why are you reading and commenting on this blog? Second, we acknowledged that monetary policies have run their course. They did help us avoid a depression so they were initially useful, but they are losing their effectiveness hence why we need to do something else. If we do nothing, then we’re likely in for a decade of no growth like Japan has seen since the 1990s. Third, we don’t sell anything to clients. We provide a service at a low cost of 1%, and we try to achieve a 6% long-term return. We believe this is achievable as 40% is in fixed income which we believe can return 3% over the long run and 60% in equities which we believe can return 8% over the long-run. Combine those two estimates and you get 6%. Year to date most of our clients are up around 5%, and we see a year end rally playing out, which could result in our 6% targeted return being achieved. Not sure why were “pathetic” for offering our insights/research for free and providing an important service for Canadians. – Ryan L

#55 InvestorsFriend on 11.05.16 at 6:46 pm

Why Governments Use Debt

Imagine some new government spending is needed. Could be for bridges, roads, ports, the army whatever.

And imagine it is over and above current government revenues.

I believe the only choices are to wait, to borrow or to increases taxes. Imagine waiting is just not a good option.

So it’s more taxes or more debt.

Imagine most tax payers are already tapped out and have debt and so any new taxes will just add to personal debt (this is easy to imagine). That personal debt is at a higher interest rate than the government can get.

Which option probably makes more sense and will certainly be more popular?

Have the population pay taxes of say $100 million right now. Most of which will add to personal debt at interest rates that might average at least 5%. Or have the population pay more like $2 million per year in interest PERMANENTLY to fund the debt of $100 million which will never be repaid (It will be rolled over at maturity).

Which would you readers vote for? Which do you think most people would vote for?

#56 bigtowne on 11.05.16 at 6:53 pm

When Canada entered the 20th century after completing the railroad in the 1870’s it fulfilled the narrative of Canada as an independent country giving us the achievement to succeed from our now former British Empire.

In the 1930’s the two rail companies came back to haunt us in the failure of “too much empire; two railroads; too much debt” qualifying Ottawa as the only sensible solution to the two railroads’ debt payments. Ottawa paid the interest payments on the two railroads and many of you know about the bums who rode the rails in the dirty 30’s.

In that era it was common to hear a knock at your back door from some starving hobo in need of a crust of bread. Things got better with WWII but the 30’s was a decade cemented into that generation about the value of rationing and being thrifty.

Snowbirds are readying for their trek south to our American’s sunny states. Arizona represents an unheard of example of excellent roads. Phoenix has the most beautiful; well organized; scenic and unburdened traffic and no toll roads. Driving in Phoenix for a Canadian is our idea of heaven. The beauty is nonstop. The folks are demonstrably friendly. You can sit at the Starbucks and get a head’s up on the local news. The Scottsdale library is very arty. All the parks in Phoenix are FREE; Free parking; Free washrooms; free tables; free water and friendly park rangers.

#57 Mark on 11.05.16 at 6:53 pm

Infrastructure such as the railways and communications is almost entirely held in Canada’s private sector. At the moment, stocks of the firms that hold those assets are trading at beneath replacement cost, and at fairly low P/E multiples. Instead of re-investment of cashflows into significantly updated plant and equipment, firms such as Bell/Telus, the CPR and CNR, have felt it most expedient to pay dividends and buy back their stock.

And why not? The stock market’s average P/E ratio of 15 means that stock is relatively cheap compared to most other investment alternatives. Canada’s housing market, in contrast, has a P/E ratio in excess of 35, and that’s using a $400k average house price. Some people even insist the average house price in Canada is considerably higher!

So the trick for government is to create policy that will elevate the stock market, particularly for those infrastructure-heavy companies, so their internal “hurdle rates” fall.

Some of this can be accomplished by, for example, letting the air out of the housing market by cracking down additionally on the CMHC and subprime credit. The government, starting with Minister Flaherty’s actions in Budget 2013, appeared to be attempting that. But far more aggressive measures are needed. Dare I say that the government needs to foment an entire culture shift. Garth tells us constantly that Canadians basically hate the stock market and hate equity by having 80-90% of their TFSA’s in fixed income. Sure, that’s great for returns of those who do hold equity, but its not the greatest thing for society to have so many people scared of proper portfolio diversification and the sort of returns thus available.

#58 Context on 11.05.16 at 6:53 pm

They brought it back just for Sir Lew on the Canadian Crackle movie channel. Its called Obsessed with two great stars and not to miss. This married man is a financial advisor who is a portfolio VP making deals and in walks a new temp worker for clerical work. She is a bad girl and watch what happens to him in time; this is a movie made for men and it could happen to you with no way out.

#59 crowdedelevatorfartz on 11.05.16 at 6:57 pm

@#11 Metaxa
“the entire enterprise has moved away from why I started participating/reading in the first place.”
*******************************************
Would you like some cheese with that whine?

You could always ask Garth for a refund.

#60 crowdedelevatorfartz on 11.05.16 at 7:00 pm

@#16 Andrew Woah-burn
“our country’s major road and trade link is a joke compared to US highways”
*******************************************
You neglected to mention their population (tax base) is 10 times Canada’s and our country is bigger…amoung other things.
A little perspective please

#61 Larry B on 11.05.16 at 7:02 pm

@ Bytor the Snow Dog

Sorry dude, I have been a male all my life but JT declared himself a feminist…now the Liberal government is pouring untold billions into infrastructure that benefits mainly men. I am calling him a hypocrite.

#62 Fish on 11.05.16 at 7:06 pm

Ok red or blue, I’m doing my nails purple

#63 crowdedelevatorfartz on 11.05.16 at 7:08 pm

Total agreement Mr Lewenza .
Our infrastructure desperately needs upgrading….if past experience with most govt projects is any indication.
I fully expect the companies that helped the ruling govt of the day to get elected will snuffle up to the govt trough for their payback.
And not to be outdone will be the Legions of govt beaurocrats that will shuffle paper endlessly back and forth back and forth until the next election ( which , of course will create govt “decision paralysis” until the Federal worker bees know who their new Mandarins are).
Mark my words( no Mark, this is not a request for you to speak).
If the Federal military procurement program for Helicopters, jets, tanks, whatever is any indication….
We will all be talking about “infrastructure upgrades” in the 2023 Federal election.
All, while govt employees and corporate sponsers have grown obese off the taxpayer trough….

And the elitists wonder why Trump is so popular.

#64 Sadaka on 11.05.16 at 7:11 pm

Toronto is one of the richest cities in the world. Our city yearly income is on the median scale $85,000.

Poverty and crime must be eliminated in Toronto. I propose that more policing and arrests be made in the crime ridden neighbourhoods, because I do not feel comfortable with driving in a run-down shanty town in Toronto. Our city is great and I am an example of success in Toronto as a woman.

#65 The real Kip on 11.05.16 at 7:12 pm

Ok now for an informal poll on the election that really matters. Who is hotter? Melania Trump (R) or Huma Abadin (D)

http://www.gettyimages.ca/license/100491213

http://www.gettyimages.ca/license/527359724

I say Huma all the way so that’s one vote for Dems.

#66 Julie K. on 11.05.16 at 7:22 pm

Yup. The future IS new bridges and roads.

Especially the one(s) linking VancouverSunshine Coast!

;)

#67 Mark on 11.05.16 at 7:32 pm

“What about innovation? Are we forgetting about that?
Are bridges and roads enough enough for the new future economy?”

We only use roughly 30% of the engineering talent that’s in Canada. An innovation agenda and a reduction in the cost of, and increases to the availability of capital to the innovation sectors (and even firms that engage in embedded innovation) is desperately needed.

Again, the solution, in a commercial context, is to drive the speculators away from housing. Canada generates so much capital every year, the result of economic vibrance. But there’s been so much CMHC-induced malinvestment.

RIMM crashed because its owners didn’t feel the environment existed to invest heavily in updated product when it mattered the most. Bombardier almost collapsed despite having an industry-leading product which has nothing even remotely closely competitive available in the marketplace. Smaller R&D companies in Calgary went out of business left and right over the past number of years for lack of access to capital. An economy where nobody wants to take risk, and the brightest graduates mostly queue up to become civil servants (or quasi civil servants in the government-protected financial services sector), is not a particularly viable nor significantly capable of growth economy.

#68 Sideshow Rob on 11.05.16 at 7:43 pm

We are are the end of a debt cycle. Slapping more debt on the pile and then upping taxes on a taxed out and debt saturated public won’t lead to growth. But doubling down on that stupidity will lead to economic disaster. If money printing, interest rate cuts and deficit spending actually worked then why is the US mired in the worst “recovery” in it’s history? Obama deficit spent more than all other presidents before him combined. Why are Japan, France, Argentina, Brazil, Venezuela, Zimbabwe and on and on, all economic disasters? They should be shining beacons of hope. Of course they are just the leading edge of the coming debt reset. Keynesian quackery won’t work. It was a BS theory easily sold to politicians to justify more central planning. The sad part is when it all fails, and it will , capitalism will be blamed for yet another central planning disaster. The western banks were and are reckless and they need to eat their own cooking. Losses have to be taken and they will. One way or another. It’s either going to be a depression or a world war. Hopefully not both.
Please stop with the endorsement of Trudeau’s spending plans. You are just showing your complete ignorance.

#69 tb on 11.05.16 at 7:44 pm

Bravo!
Agree 100%

#70 TurnerNation on 11.05.16 at 7:44 pm

Who would even pay $700,000 for a house at the end of its service life in this 2nd world country?

http://www.cbc.ca/news/canada/toronto/this-neighbourhood-might-just-be-one-of-the-last-remaining-affordable-areas-to-buy-a-home-in-toronto-1.3835895

“But real estate agent Richard Silver says homes under $700,000 indeed still exist, and Dufferin Grove Park is one area where they do.”

#71 Self Directed on 11.05.16 at 7:45 pm

#1 bdwy sktrn on 11.05.16 at 2:56 pm

RE: 2016-GRAVELEY-STREET

There are many sketchy houses being sold right now in the GVRD. Remember, the BC courts have always maintained a “Buyer Beware” policy. (i.e. you buy it, you’re stuck with it). Garth ran a post recently about this: http://www.greaterfool.ca/2016/07/20/realtor-101/

Always check if the seller has provided a PDS (Property Disclosure Statement). EVEN IF they signed one, it STILL means nothing with questions like “To the best of my knowledge…”, it is the full responsibility of the buyer to do a proper inspection. I bet this seller didn’t sign one.

It’s VERY different in Ontario, where the seller can be sued by the buyer, even if the seller truly had no knowledge of problems and defects.

If I were shopping to buy a house in today’s market, I would be VERY VERY concerned about mold under the laminate, critters in the attic, what type(s) of plumbing (lead), age of the drywall/linoleum (asbestos in the 60’s and 70’s), foundation cracks, etc…

As for 2016 GRAVELEY, it looks like a lot of lipstick on an old pig. Built in 1910? Huge Red Flag. I bet they bought it with ZERO SUBJECTS and they found a bunch of things wrong with it after they moved in. Well, good luck finding another zero subject buyer today.

BC Buyer BEWARE!

#72 Mark on 11.05.16 at 7:49 pm

“Which would you readers vote for? Which do you think most people would vote for?”

I have no problem with government debt and government spending if they’re doing it efficiently, and for things that are legitimately needed by the population.

The big elephant in the room is that government is usually so mismanaged by civil servants who have never spent a day in the private sector that efficient spending is non-existent. And compensation, for jobs equivalent to the private sector, is at a significant and increasingly dramatic premium.

I think we’re all tired of opening the “Sunshine pages” and seeing such crazy salaries paid to government workers. Positions that, if properly advertised, could be filled with a plethora of qualified people (if the ‘qualifications’ themselves aren’t rigged far in excess of legitimate requirements, particularly with respect to ‘experience’) at a fraction of the price.

That is why I suggested public servant term limits. It eliminates the whole problem of severance for public servants. It eliminates entrenchment. And it forces public servants to spend some of their careers in the private sector. The public sector, really, should be an “employer of last resort”, rather than the preferred option for college graduates these days.

#73 nonplused on 11.05.16 at 7:52 pm

Ryan,

While I agree a good transport infrastructure is essential and our infrastructure has been neglected (as has much of the US infrastructure), how Trudeau actually spends the money will make all the difference. We are probably already past “peak car” due to the “office of the future”. We are probably moving towards and past “peak downtown” too.

The advantages to working from home for anybody who spends all day on a computer like I and my wife do are very compelling, both for the employee and the employer.

The effect on infrastructure requirements has already been conducted recently in Calgary. With our now sky high unemployment rate, the rush hour commute has improved significantly. (It wasn’t bad before, nothing like Toronto, but it’s a noticeable improvement. Deerfoot trail is still bad but you are through it in less than 20 minutes. Even parking rates are dropping.

Anyway, they have to very carefully look at where they spend this money. The more condo towers that go up, the right response is mass transit, not roads. The more people work from home, the right response is fiber optics, not roads.

It reminds me of this dumb idea they have in Calgary to build a new stadium for both hockey and football. For football we have what? 14 home games a year or something? It doesn’t sell out now and they are proposing 2500 less seats. Ok so a new hockey arena? Ya the Saddle Dome is kind of crowded but it also doesn’t sell out very often and they are only proposing a few thousand extra seats there too. So where are the economics of pumping $500 million or whatever they are asking of government money into this project? There are none. And then what do they do with the Saddle Dome and McMahon Stadium? Turn them into amateur facilities? They already get used plenty for that.

Building the CPR using money from the land sales was a great idea because it provided the infrastructure necessary to transport goods and people to and from the newly established farms. But that doesn’t mean everyone needs a gold plated train track right to their door.

#74 Self Directed on 11.05.16 at 7:58 pm

#66 Julie K. on 11.05.16 at 7:22 pm

Yup. The future IS new bridges and roads.
Especially the one(s) linking VancouverSunshine Coast!

OMG! Wouldn’t that be a slap in the face. BC Ferry Exec’s getting 6 figure bonuses, only to have Gov’t build a bridge because they still can’t provide decent ferry service.

The other day in Coquitlam, I overheard a lady at the grocery store. “We’re selling in 2 years” she says to the cashier. “once the last 2 kids leave.” The cashier asks “Oh yeah, where are you going?”… she responds as if she was expecting the question “Oh we already have a place on the sunshine coast!”. :)

So there is one smart boomer. Selling the house soon, already bought the retirement property before everyone catches on… AND, they will probably get their new bridge too.

#75 Bytor the Snow Dog on 11.05.16 at 8:00 pm

Ryan- Keynes would be proud!

#76 Andrew Woburn on 11.05.16 at 8:06 pm

#60 crowdedelevatorfartz on 11.05.16 at 7:00 pm
@#16 Andrew Woah-burn
You neglected to mention their population (tax base) is 10 times Canada’s and our country is bigger…amoung other things.
A little perspective please
=======================

What perspective? Per capita, we are one of the richest nations on earth. We don’t have to spend our tax base on ruling the world. The US still finds the way to support many national freeways which help drive its economy. We only have to manage one national freeway and we’re not doing it well. Parts of it are indeed a joke and we could and should be doing a lot better.

#77 Steerage Bilge on 11.05.16 at 8:07 pm

Hopefully there is a pet on the ballot tomorrow…

#78 Bytor the Snow Dog on 11.05.16 at 8:07 pm

@61 Larry B-

Point taken. My bad.

@65 Real Kip- re: Huma Abadin- but her face….

@All- Infrastructure should include internet upgrades and money for the provinces to modernize the power grid.

#79 OttawaMike on 11.05.16 at 8:10 pm

#20 Herb on 11.05.16 at 4:55 pm

It’s OK Herb. The bad man is gone now. You can stop talking about him.

#80 Keynesian Economics on 11.05.16 at 8:13 pm

Ryan, again, very good as usual.

All you describe is Keynesian Economics, pure and simple.

QE and T2 infrastructure spending are forms of this and do not or will not work.

T2 spending trying to bridge aggregate demand shortfall with infrastructure spending since the economy is sputtering – not producing enough aggregate demand to grow wealth, jobs etc.

T2 will get a short term GDP boost which fizzles out after spending done.

Does not encourage business to invest in new products or new hiring or productivity advances.

QE injects money into the economy and hoping it is used to boost GDP and fill the aggregate demand shortfall.

“Their ain’t no such thing as a free lunch,” Milton Friedman said.

QE buying back of bonds increases price, lowers yields and dollar loses value but you get cheap money. Next, will be inflation (still to come in Canada).

Sound familiar?

Businesses are not borrowing cheap money, people are and creating huge asset bubbles that burst and then billions of wealth lost, what is happening in YVR now and will eventually in 416.

This happens because aggregate demand is where it should be to produce necessary GDP, wealth, jobs etc. – not sustainable. Why asset bubbles burst.

I like your GDP chart since it shows the above to be true and that QE does not work.

Nor will T2 infrastructure spending.

They are new words for the generally discredited Keynesian Economics.

There are better ways to spend money, infrastructure spending is not it.

Why I post every so often that Poloz should be fired as his low interest rate policy has done nothing for the Canadian GDP in the past 3 years other than create asset bubbles and your charts prove it.

bsant

#81 Andrew Woburn on 11.05.16 at 8:13 pm

A classic example of why investors should always dig beneath the headlines. This is just like the recent spurt in US GDP that turned out to be mainly a one-time sale of soybeans.

– How a single vessel sunk Canada’s trade balance into the depths of the record red

“Canada posted its largest trade deficit on record in September, a whopping $4.1 billion — and a single piece of equipment is to blame.”

“The arrival of this module pushed the imports of industrial machinery, equipment and parts up to $2.9-billion in September, according to Statistics Canada, meaning the nation’s trade deficit excluding this category would have totalled $1.2 billion for the month — an even smaller gap than the $1.7 billion deficit that economists had been estimating.”

http://business.financialpost.com/news/economy/how-a-single-vessel-sunk-canadas-trade-balance-in-the-record-red

#82 NoName on 11.05.16 at 8:14 pm

#16 Andrew Woburn on 11.05.16 at 4:43 pm

Truck is very inefficient way of moving stuff around, if we move towards self driving trucks maybe we should reconsider whole concept truck trailer, especially when you consider that same length buss in theory could swallow same load and have 50% less air drag coefficient. so basicly you could move goods around lets say 5-10%, not sure for correct math, but i am sure that would fit between those two number, probably closer to 10 than 5, faster without loosing on a gas milage.

http://development.part20.eu/en/wp-content/uploads/2009/08/aerodynamics2.jpg

Maybe we should re think all that tractor trailer thingie, make the more like bus. Two different units tightly joined together, and let warehouse jockeying be done by regular style truck, so we dont have to re think loading dock. Or hybrid transport bus, pack batteries bellow load floor in between axles. if you standardise length and make the stackable you can also move by rail as we do containers.

rail moves 400 tons-mile per gallon, truck does 130-300, depends on a truck and load, Every truck driver loves cut flowers loads from florida.

If robots take over trucking industry whats next robot streepers… We are doomed.

Mark as a robot representative what say you?

#83 OttawaMike on 11.05.16 at 8:16 pm

#54 Ryan Lewenza on 11.05.16 at 6:45 pm

Ryan,
Are your 6% returns net of the 1% fees?

Fees can be tax-deductible, so nobody actually pays one per cent. Many people pay half, so returns are always expressed before management cost. — Garth

#84 rory on 11.05.16 at 8:21 pm

#43 Ryan …

First thing, governments have no skin ($$$$) in the game and have no consistent record of accountability or effectiveness or efficiency.

Second, .gov should be doing things like reducing regulations (red tape) to encourage private enterprise everywhere. At least make it local vs federal.

Third, repeat 1 & 2 over and over again. Remember the .gov has no money. The money comes from taxpayers. Make the individual responsible again.

Insanity is trusting the .gov to do the right thing.

#85 Derek R on 11.05.16 at 8:26 pm

#42 BS on 11.05.16 at 6:08 pm asked:
Nice theory. Why didn’t it work for every other country that tried it?

Worked just fine for the US after the Great Depression of the 1930s. In fact it allowed them to pay for one of the biggest wars ever in the 1940s and reset private debt so low that their economy grew throughout the 1950s and 60s.

You must be thinking of countries like Argentina which were crazy enough to run up public debt in gold or in US dollars instead of their own currencies. Canada isn’t doing that.

#86 Hotdogs from Heaven on 11.05.16 at 8:30 pm

#24 Derek R on 11.05.16 at 5:00 pm

#7 BS on 11.05.16 at 3:30 pm wrote:
The solution for a debt bubble is not more debt.

Almost right. The solution for a private debt bubble is not more private debt. However the solution for a private debt bubble is more public debt: they are not the same thing. Mostly because it’s the government’s money, not the private citizens. That means the government is allowed to print more whenever it needs to pay its debts; the private citizen is not.
———————————————-

Wrong Derek!

The government has NO money. None. Everything they have is taken from the people, occasionally voluntarily (lotteries) but mostly involuntarily through taxes.

This country’s greatest folly is that few people understand this and mostly accept the BS that you stated.

#87 Re: Keynesian Economics on 11.05.16 at 8:33 pm

Forgot to say:

When government chooses what gets developed in the economy rather than the free market of businesses and consumers, this results in resources being misallocated.

Just look at the Hoover and FDR failures (both increased top bracket income tax) and boosted government spending. Unemployment remained high.

Sound a lot like what T2 is doing?

It ought to, because that is exactly what he is doing, raising upper bracket taxes and spending a lot on pet projects that do not sustain GDP growth – in his case, projects that lull Canadians into thinking they make sense.

They make no sense. They do not sustain GDP growth or curb systemic unemployment.

FDRs New Deal did not work, what saved him in terms of unemployment was a world war, sorry, but true.

bsant

#88 bdwy sktrn post all the sales data.... on 11.05.16 at 8:49 pm

Zolo.ca Burnaby latest unit sales shows that 170 Detached sold with unit sales volumes continuing to nose dive.

Garth, in a previous post, stated that about 10% of YVR RE sales are over list price, the remaining 90% are below list price.

Simple math, 17 properties ought to have sold over list.

You show 3.

Show us the other 14 or hold your piece.

Better yet, provide the 153 sales that undoubtedly sold well under list price.

You must think we are stupid, have a short memory and cannot do basic math.

bsant

#89 Kam on 11.05.16 at 8:53 pm

Government should ensure that ONLY CANADIAN/US COMPANIES allowed to work on Infrastructure projects. It will ensure that money is not flowing to China. Temporary Foreign Trained Worker program should be banned as it is being used to discriminate against aged Canadian workers. Young workers at cheap rates are being imported to Canada to boost the profits of big organizations. Even fresh Canadian graduates are finding it hard to get a decent job.
Only Canadian Citizens or Permanent residents should be allowed to work on infrastructure projects. This will ensure that tax payers money will stay in Canada and people of Canada will have more money in their hands. Spending rate within Canada will increase that will help economic growth of the country.

#90 Self Directed on 11.05.16 at 8:56 pm

#31 Matt Caffrey on 11.05.16 at 5:24 pm

I concur. Canada’s trade deficit has been negative since 2008. Canada doesn’t make anything. We just export our raw materials. Canada has so much potential…. we are all to blame for electing our Government. Trump, if you are available on Nov 9th, we’ll take you!

#91 Yuus bin Haad on 11.05.16 at 9:10 pm

“shovel ready” is the new “green shoots”.

#92 WalMark of sadkatoon on 11.05.16 at 9:33 pm

You guys who think trump will win

You guys are all crazy

#93 Heather Beth Scheinder on 11.05.16 at 9:37 pm

Response to #70

Toronto is the greatest city in the world. There is a demand for real estate in Toronto because millions of people love to move to our multi-cultural, tolerant, gender equality and pro-LGBT friendly city.

Our city is richer than NYC. I earn $147,650 as a secondary school administrator in Toronto, and my job is great.

I would never earn that much money in the States as a school Vice-Principal, and I would be forced to conform to medieval and sexist dress codes because the lower classes of students don’t know how to respect a woman. I don’t blame them, but Justin Trudeau will help spread gender equality to the world, that one day, a child will not judge a teacher on the way she dresses.

I dress in armless clothing and low necklines because the weather is hot. I do not look to be sexually harassed or body-shamed for dressing appropriately for the weather in our poorly funded Canadian education system.

It’s not my fault that the weather is hot outside during the Spring and Summer in Canada. In Toronto, I am not treated like a sexual object in my workplace. When any student or parent starts a problem with how I dress in school, I order the guidance counsels to refer the student to a nearest family doctors for ADHD medication and sedative medication.

I love Toronto because I am respected as a woman in a rich city like Toronto. The city of Toronto is the best city in the world.

World-class trolls, too. — Garth

#94 Nero on 11.05.16 at 9:44 pm

….Move to a Ferry dependent community….complain and whine about the Ferries….
Keep that in mind before you pull the pin and retire there…oh.. and good luck finding a doctor.
Eh Metaxa! born in CR here,,long time away though…rain water in my veins!

Pass me my fiddle…

#95 Barb on 11.05.16 at 9:54 pm

“Conference Board of Canada estimates that every $1 billion spent creates 16,700 jobs”

Whatever happened to the tenet that it’s not government’s duty to CREATE jobs; rather, to provide an economic CLIMATE in which industry can thrive, creating jobs.

Small business overhead has increased nearly 300% in 15 years in B.C.

No matter how many extra hours the owner works, it’s impossible to increase revenue to that degree over that short time. Fees/licenses/property taxes/hydro 5% increases every April/water costs up 400% in 15 years, etc. etc.

I’m not comfortable with government “creating” jobs.
After all, they spend $400 on a hammer.

T2’s infrastructure renewal is monumental debt onto taxpayers’ shoulders. And for those of us in areas that voted Conservative, payback likely equates to Zilch. But we’ll still have to pay for it.

#96 TurnerNation on 11.05.16 at 9:55 pm

Investors Friend good analysis of KEG.UN’s Gaap earnings. I did smell a rat and went looking for something like FX adjustments but didn’t look hard.
Lest we forget Enron had covenants tied to the price of its stock, too – which triggered on the downside.

#97 Moss Patri on 11.05.16 at 9:57 pm

Canada weathered the 2008-09 recession, and our dollar was valued 1.10 times above the US dollar for five years 07-12.

House prices in world class cities namely Toronto will never go down. Prices will only go up, up, up, and now it is the right time to purchase a home in Toronto when your foreign dollars make it more cheaper to purchase homes in our strategically priced Canadian dollar.

The future of Canada is in Toronto where we respect each other regardless of race, gender and sexuality.

#98 NEVER GIVE UP on 11.05.16 at 9:59 pm

#36 Bytor the Snow Dog on 11.05.16 at 5:40 pm
@127 Mark sez:
Too many public servants spend their entire careers in the public service, and worse, they tend to manipulate elected politicians.
—————————————————–
Bytor: It may very well be a good idea! Thinking out of the box.

Sorry if you may be a public servant.
The idea deserves discussion.

Look at the salaries of Public Servants in Ontario. WOW!

All I can say is how can you afford it?

#99 meslippery on 11.05.16 at 10:01 pm

Hi Ryan made this point here before but would like your
think on it.
1981 Girl friend 20 no high school working factory job
@$9.87 per hour.
2016 Grand daughter no high school yet making $11.40
I think $1.53 raise in 35 years. Well Now thats why the Trump has legs.

#100 NEVER GIVE UP on 11.05.16 at 10:02 pm

#27 Larry B on 11.05.16 at 5:13 pm

Now lets not get our panties in a knot!

#101 Barb on 11.05.16 at 10:03 pm

Sorry, forgot the link to the Debt Clock:

http://www.debtclock.ca/

#102 BS on 11.05.16 at 10:03 pm

#85 Derek R on 11.05.16 at 8:26 pm

Worked just fine for the US after the Great Depression of the 1930s.

Hugh? The only example you can come up with massive government spending/debt working is the Great Depression? That proves it didn’t work. The 10 years that followed 1930 you cite were the worst in US history. Hence the name the Great Depression. Without WWII who knows how long the depression would have went on.

#103 Minimum Wage Canadian on 11.05.16 at 10:09 pm

Mr. Andrew Woburn,

Canada is not the richest per capita when comparing it to the true figures.

I am a Canadian who never earned above $45,000 per annum gross even though I am working in a trades field. The exception of tradesmen earning higher than 100k a year could be in Fort Mac during the oil boom, but they work longer hours in dangerous oil tundras which a liberal socialite would turn their noses on such as Notley’s NDP party in Alberta.

Public sector workers and government bureaucrats do make more money than the private sector, and their entitlement and elitist behaviour is a hallmark of the hidden economic caste system in Canada.

I don’t know how can an average Canadian afford to buy a million dollar overpriced home in Toronto or Vancouver without either borrowing huge sums of money or following the path of the foreign laundered money.

#104 Smoking Man on 11.05.16 at 10:15 pm

Canada is doomed with T2 at the controls

#105 NEVER GIVE UP on 11.05.16 at 10:17 pm

#67 Mark on 11.05.16 at 7:32 pm
“What about innovation? Are we forgetting about that?
Are bridges and roads enough enough for the new future economy?”

We only use roughly 30% of the engineering talent that’s in Canada. An innovation agenda and a reduction in the cost of, and increases to the availability of capital to the innovation sectors (and even firms that engage in embedded innovation) is desperately needed.

Again, the solution, in a commercial context, is to drive the speculators away from housing. Canada generates so much capital every year, the result of economic vibrance. But there’s been so much CMHC-induced malinvestment.

RIMM crashed because its owners didn’t feel the environment existed to invest heavily in updated product when it mattered the most. Bombardier almost collapsed despite having an industry-leading product which has nothing even remotely closely competitive available in the marketplace. Smaller R&D companies in Calgary went out of business left and right over the past number of years for lack of access to capital. An economy where nobody wants to take risk, and the brightest graduates mostly queue up to become civil servants (or quasi civil servants in the government-protected financial services sector), is not a particularly viable nor significantly capable of growth economy.
———————————————————–
No truer words were ever spoke!
It is shameful how our markets have been distorted towards real estate and against business.
Kill the CMHC!

#106 Julia Tinderman on 11.05.16 at 10:18 pm

Toronto is a REAL city with loads of character. Very few souvenir stores and tourist traps.

Home prices in Toronto are cheap compared to other cities mainly, Shanghai, Los Angeles, San Francisco and Paris.

House prices in Toronto are a bargain. Our city is stable, developed, world class, safe and rated #1 in the Economist magazine for the title of best city in the world.

In the East of Toronto you have the Danforth, the emerging Leslieville and the Beaches, all excellent neighbourhoods with cool and vibrant bars and restaurants. There’s also Cabbagetown, if one includes that as “East”. The West has its charms to be sure, but I think I’d call it a draw when comparing Toronto to Los Angeles.

Toronto is more lively than Los Angeles IMO.

#107 Ronan Smotely on 11.05.16 at 10:23 pm

How many years before an algorithm runs (99% of all personal portfolios, or institutional for that matter) this country instead of people? For the skeptics out there, realize it can’t be too long. Horse and buggy got replaced by the automobile. This US Election is a prime example. Couldn’t an algorithm do a better job than Trump or Hillary? With candidates like this, how long unitil Google runs for President and who could compete?

#108 InvestorsFriend on 11.05.16 at 10:28 pm

The Productivity Paradox

Increased wealth per capita stems from increased productivity. But meanwhile it takes away jobs.

It’s good for society but often terrible for the affected workers.

#109 NEVER GIVE UP on 11.05.16 at 10:30 pm

#93 Heather Beth Scheinder on 11.05.16 at 9:37 pm
Response to #70

Toronto is the greatest city in the world. There is a demand for real estate in Toronto because millions of people love to move to our multi-cultural, tolerant, gender equality and pro-LGBT friendly city.

Our city is richer than NYC. I earn $147,650 as a secondary school administrator in Toronto, and my job is great.

I would never earn that much money in the States as a school Vice-Principal, and I would be forced to conform to medieval and sexist dress codes because the lower classes of students don’t know how to respect a woman. I don’t blame them, but Justin Trudeau will help spread gender equality to the world, that one day, a child will not judge a teacher on the way she dresses.

I dress in armless clothing and low necklines because the weather is hot. I do not look to be sexually harassed or body-shamed for dressing appropriately for the weather in our poorly funded Canadian education system.

It’s not my fault that the weather is hot outside during the Spring and Summer in Canada. In Toronto, I am not treated like a sexual object in my workplace. When any student or parent starts a problem with how I dress in school, I order the guidance counsels to refer the student to a nearest family doctors for ADHD medication and sedative medication.

I love Toronto because I am respected as a woman in a rich city like Toronto. The city of Toronto is the best city in the world.

World-class trolls, too. — Garth
————————————————————-

I doubt that the above post is for real but if it was this person would be a danger to society. Using her power to refer kids to a doctor because she has an issue with people who don’t agree with her dress code.

Hey, I do have a problem however with the skanky look of Lululemon everywhere. It looks like these women just rolled out of bed in there underwear and hit the streets.

We can’t even comment on it. Now that”s Progress!

Vancouver is the worst offender whereby 60% of the average pedestrian is wearing the same Black tights!
Now that’s innovative fashion! Looks so trailer trash.

#110 Smoking Man on 11.05.16 at 10:30 pm

When the class grows a brain and let’s the teacher have it.

The future has arrived. T2 Wynee, Notarly, your next

https://youtu.be/NcbElUsLBNo

#111 NEVER GIVE UP on 11.05.16 at 10:33 pm

I forgot to say High Marks to Montreal where the women care what they look like when they get dressed!

#112 meslippery on 11.05.16 at 10:46 pm

Here,s more 1980s wages.
http://www.indeed.ca/cmp/UXBRIDGE-AUTO-CENTRE-INC/jobs/Automotive-Technician-614d891f7f8af43e?q=automotive

#113 Derek R on 11.05.16 at 10:49 pm

#86 Hotdogs from Heaven on 11.05.16 at 8:30 pm wrote:
Wrong Derek!

The government has NO money. None. Everything they have is taken from the people, occasionally voluntarily (lotteries) but mostly involuntarily through taxes.

Yeah, right. So you’re one of the people. Why don’t you try printing some money? See whether the government will be happy to take it from you to pay your taxes.

Maybe that works in your country. Here in Canada the only money the government will accept for tax payment has the Queen’s head on it. That’s a hint that it’s Government Money, printed by the government. I don’t get to print it and neither do you.

We can use it for sure but when the government wants it back, we better hand it over.

#114 A belieber on 11.05.16 at 10:52 pm

Why can’t the government employ twice as many people but at half the salaries? Wouldn’t that make more sense for spurring growth?

Instead we have a smaller number of people saving their excessive salaries, basically encouraging these people to “hoard” money. Don’t we have enough boomers doing that already?

I really don’t see the point of a 6-figure bylaw officer who sleeps most of the day. Or the 90k “IT professional” that just tells people how to plug in keyboards.

#115 Context on 11.05.16 at 10:55 pm

#99 meslippery:- 1974 small town Ontario factory workers, male and female with no high school education making $13.00 per hour plus full benefits and there were 1,300 on the payroll. I had access to all the company computer sheets for earnings and this was not auto related.

#116 wtfman on 11.05.16 at 11:03 pm

First of all the 600 billion dollar debt Ryan mentions is only the federal debt..you need to add provincial debt on top to get a realistic comparison to other countries. Hence our 30 percent GDP ratio is much higher than Ryan is implying. We also have some pretty hefty municipal debt and other obligations.
This infrastructure orgy is not such a bad idea if it was spent wisely but we all know how this will work in the end. Construction companies will rip off the government to the tune of billions..the government will likely overpay by 20-30 percent because they never do any proper insight. On top of it just the announcement of the massive money for this program will ensure that these companies overcharge for everything.
We also have a massive housing bubble..the CMHC will be on the hook for billions in bad mortgages once this bubble bursts. Interest rates are as low as they ever will be..they are going higher which means the interest charges on the debt will skyrocket in a few years. We have record household debt..another bubble waiting to pop.
But lets just borrow tons of money and spend like drunken sailors on new projects. Insanity is doing the same thing we have been doing and expecting a different result..adding massive amounts of debt to a system overloaded with debt will not help..more Keynesian economics here..

#117 GL on 11.05.16 at 11:09 pm

“Our Federal debt is relatively low at roughly $600 billion, equating to a debt-to-GDP level of just over 30%. ”

That is a misleading assessment of our debt level since it does not include the provincial debt.

Also, I am not convinced that increasing our debt load just when our healthcare cost are about to explode due to an aging population is wise.

#118 Polls R Phake on 11.05.16 at 11:11 pm

#46 Ryan Lewenza on 11.05.16 at 6:29 pm
Polls R Phake “Spend money on infrastructure when Canada is broke? Wow…”

How are we “broke”? We are a very wealthy nation with an abundance of natural resources, land and water, strong institutions, highly educated population, strong rule of law etc. Sure Canadians are overleveraged and our economy is struggling with low commodity prices, but to say our economy is broke is not based on reality or fact. – Ryan L

_________________________________________

If we are so rich why do we pay some of the highest taxes in the world yet healthcare services continue to fail. They keep cutting and cutting what is covered. My wife and I were forced to take our son to Shiners in Oregon or risk permanent disfigurement because its a TWO YEAR wait in Canada. And our young people go deeply into debt to go to school where countries in Europe have free short healthcare and free university and pay similar taxes as Canada.

We have 500 billion of debt and this does not include the 500 billion of unfunded public sector debt. Plus who knows what else.

And lastly commodities are on their way out. Technology is making things much more efficient and we rely less and less on natural resources. When was the last time a semi-conductor plant was built in Canada. Not everyone can be a programmer.

We are not rich we are very very broke. Looking forward to you trying to spin this Mr Lewenza.

#119 meslippery on 11.05.16 at 11:16 pm

#115 Free trade not working for a lot of us.

#120 crowdedelevatorfartz on 11.05.16 at 11:26 pm

@#64, 93 & 106 The Spice Girls

“Our city is great and I am an example of success in Toronto as a woman….”

“I love Toronto because I am respected as a woman in a rich city like Toronto. The city of Toronto is the best city in the world.”

“Our city is stable, developed, world class, safe and rated #1…..”
********************************************

Now if only you could do something about all those irritating mensch…….50% of the condos would be vacant for the taking…..but then.

Who would be left to blame for all the worlds ills?

“Sigh”
Back to the misandrist drawing board m’ladies

#121 The Spectre on 11.05.16 at 11:28 pm

The Veteran’s Food Bank in Calgary is out of food.

@WUL,
Much appreciated comment. Mind sharing their website?

http://www.canadianlegacy.org ?

Best.

#122 DON on 11.05.16 at 11:29 pm

#98 NEVER GIVE UP on 11.05.16 at 9:59 pm

#36 Bytor the Snow Dog on 11.05.16 at 5:40 pm
@127 Mark sez:
Too many public servants spend their entire careers in the public service, and worse, they tend to manipulate elected politicians.
—————————————————–
Bytor: It may very well be a good idea! Thinking out of the box.

Sorry if you may be a public servant.
The idea deserves discussion.

Look at the salaries of Public Servants in Ontario. WOW!

All I can say is how can you afford it?
**********************

Bytor…the public service may not be what you remember it to be, things are bad due to mismanagement. Perhaps you were the last of the good ones.

#123 jay on 11.05.16 at 11:31 pm

This is how you build up the economy in BC . http://vancouversun.com/opinion/columnists/douglas-todd-australias-foreign-political-donations-storm-cautionary-for-b-c

#124 Smoking Man on 11.05.16 at 11:33 pm

Up at the bro in laws place tonight with 4 lbs worth of Sofie and 6 lbs of the autistic beauty Wyatt.

Wyatt scared of his own shadow. Runs away from fire yellow hydrants.

They meet Willy tonight. A beast of a dog. 150 lbs.

I’m feeling real guilty for lopping of Wyatt’s nuts. No way at first glance we are letting him breed with anything.

Willy wagging his tale was trying to do a dog wrestle with Wyatt.

Wyatt shows some teeth, Willy 20 times the isn’t botherd. Whatt freeks, plants a set of tiny teeth on Willy’s beak.

Willy almost does a summersault and freeks runs to his bed crying….

Feel bad for that gental giant. But hell, who saw that coming.

The unpredictable world we live in.

#125 Karl hungus on 11.05.16 at 11:34 pm

Are you suggesting that the lack of infrastructure spending in the 70s and 80s was to blame for poor economic performance? I’m surprised you would come to this conclusion. The reason for tge roaring economy in the 60s and early 70s is becUse baby boomers were in their prime spending years

#126 meslippery on 11.05.16 at 11:37 pm

#115

Equivalent of $13 in 1974
1975
$14.60
1976
$15.62
1977
$16.38
1978
$17.47
1979
$19.05
1980
$21.58
1981
$24.28
1982
$26.45
1983
$27.46
1984
$28.50
1985
$29.63
1986
$30.76
1987
$31.09
1988
$32.47
1989
$33.91
1990
$35.48
1991
$37.65
1992
$38.80
1993
$39.93
1994
$41.03
1995
$42.12
1996
$43.19
1997
$44.63
1998
$45.39
1999
$46.12
2000
$47.36
2001
$48.96
2002
$49.72
2003
$50.90
2004
$51.86
2005
$53.55
2006
$55.38
2007
$56.78
2008
$59.10
2009
$59.16
2010
$60.76
2011
$61.67
2012
$63.50
2013
$64.61
2014
$65.58
2015
$66.07
2016
$66.55
http://www.dollartimes.com/inflation/inflation.php?amount=13&year=1974

#127 Snowboid on 11.05.16 at 11:50 pm

#76 Andrew Woburn on 11.05.16 at 8:06 pm…

Agreed, we put on about 10,000 km a year on US roads and their secondary roads are better than our Trans-Canada.

There is no excuse for our roads being so poorly maintained and upgraded in Canada.

#128 WalMark of Sadkatoon on 11.05.16 at 11:59 pm

Kill the CMHC!

The CMHC is here to stay.

Get used to it.

You’ll feel better

#129 Smoking Man on 11.06.16 at 12:06 am

Wow just found the director for when my book gets turned into a movie..

This guy has it figured out. UCC bitches.

https://youtu.be/z2UHLMVr4vg

#130 meslippery on 11.06.16 at 12:09 am

So using that Calculator my Girlfriends wage should be
over $50.00 per hour. So Trump /Free trade well see
what happens when you shaft your citizens.
Think Rome.

#131 WalMark of Sadkatoon on 11.06.16 at 12:10 am

Canada weathered the 2008-09 recession, and our dollar was valued 1.10 times above the US dollar for five years 07-12.

Ah the good ol days when Canadians could buy US real estate for a pittance.

House prices in world class cities namely Toronto will never go down. Prices will only go up, up, up, and now it is the right time to purchase a home in Toronto when your foreign dollars make it more cheaper to purchase homes in our strategically priced Canadian dollar.

This call has been right for a long time. And now that Wynne has refused to implement a tax on foreign buyers it seems like the party will go on. Pun intended.

The future of Canada is in Toronto where we respect each other regardless of race, gender and sexuality.

All the jobs are in BC and Ontario

#132 CT on 11.06.16 at 12:22 am

What’s with the sudden surge of feminist real estate agents pumping Toronto?

#133 meslippery on 11.06.16 at 12:24 am

After all the old farts die the young will think $13.00 per hour is ahsome.

#134 Socialist Femmy Nauseum Sucks! Vote Trump on 11.06.16 at 12:30 am

^

The “greatest” thing about Toronto is watching it from a rear view mirror and escaping the Chanty Binxes, Smugglypuffs and politically correct lefties to rot in their socialist utopia.

#135 meslippery on 11.06.16 at 12:35 am

So lets think. Here in Canada we can do almost everything. Maybe not grow $8.00 cauliflower.
But imports ?? what beside climate (some foods) can we not do or live with out. (Free trade) or race to the bottom.

#136 Smoking Man on 11.06.16 at 12:37 am

When you find your voice. When give no shit. When the demon looks you in the eye and you flip the bird like Wyatt did tonight.

You’ve made it. Don’t matter on how many books you sell.

What a glorious feeling…

Again the song. It inspired me. Can not push it enough.

https://youtu.be/Tj75Arhq5ho

#137 Ace Goodheart on 11.06.16 at 1:18 am

I see they’ve started bringing our transit into the 21st century. Up until recently, to board a subway in Toronto you had to fish out spare change and pay into a box, while a person earning 90K per year sat on a stool and watched you.

Now apparently they are going electronic. I actually found a machine which sells TTC passes and takes credit cards!!!!!!

#138 Koshy Alex on 11.06.16 at 1:42 am

Sir, what do you think about the oil price crash last week, do you still think oil will be at 70 by mid 2017.

#139 Peter on 11.06.16 at 1:45 am

RE: # 109 NEVER GIVE UP

If a 19-year-old man was to purchase alcohol for 18-year-old “minors”, he could be charged for a slew of offences, but overpaid government teachers like Heather obtain the authority to drug students with stimulants.

Google “ADHD drugs addiction” and you will find this:
https://www.drugabuse.gov/publications/drugfacts/stimulant-adhd-medications-methylphenidate-amphetamines

Read the article. Is it odd how the teacher unions support forced medication on children because the teacher wants to flaunt her milk sacs without people complaining on her?

LCBO becomes anal retentive when 30-year-old people don’t have their ID on them to purchase 5% alcohol beer, but the school system in Canada sends these kids to be drugged with stimulants because the teacher wants to dress sexy in the classroom.

Where do these teachers who drug their students eventually end up in? Can’t say “drugged”, per se, because ADHD drugs are authorized medication, but they still have the effects of illegal substances like MDMA and crack cocaine.

Drugging minor students against their will could be the norm in many Canadian schools, but how will any parent know about what goes on in their schools when their son or daughter is taking the legal form of MDMA and crack cocaine “ADHD drugs” because their provocatively dressed teacher instructed a state doctor to medicate them against their will?

If that isn’t Sunny Ways tyranny, then I don’t know what to call it.

A teacher should dress professional in their job, and if they are drawing attention from students and parents, it is taxpayers who should complain on that teacher if she drugs the students for her own autocratic agenda in the school. It isn’t about feminism or misogyny; it’s about taxpayer monies.

A Mc Donalds manager would fire an employee if they wore a speedo or bikini as cashier, then what gives the teacher union rights to flaunt their intimate parts in revealing clothing while drugging students who complain with stimulant drugs? It doesn’t sound right.

#140 Bday sktn on 11.06.16 at 1:59 am

88 bsant

Good evening to you too.

Perhaps you have not noticed that for the past six years I have been presenting info for a specific subarea of grandview woodlands, that being the blocks and houses I see when walking the pup. Re reading today’s posts it is less clear that I was speaking about my local hood, but I was.

Flop lives a 5 min drive from here, i don’t do reports on his hood, not Fairview nor kits nor anywhere else.

My area… north of Broadway Stn to about Hastings . Sfh are generally west of comm Dr to about renfrew.

Call any Realtor, ask him for all solds for a 1km radius centered at 1St and Vic last 14 days. When he gives the same data it’s probably because he read it here first :)

I have been reporting All sales for this area, every one.

That graveley place will likely go for under. Overpriced places are sitting long time. Priced right selling fast for full ask plus tip. over bid is 2 to 50k, not 250k+ like it was recently.

#141 Tom from Mississauga on 11.06.16 at 2:18 am

Bridge to nowhere? I think you meant to say UP Express.

#142 Bday sktn on 11.06.16 at 2:31 am

#99 meslippery on 11.05.16 at 10:01 pm
Hi Ryan made this point here before but would like your
think on it.
1981 Girl friend 20 no high school working factory job
@$9.87 per hour.
……………..
From 86 thru 89 I worked part time at the local lumberyard in London while doing Eng at uwo.
I was the senior guy for the evening shift in the warehouse/yard with 1 or 2 high school kids to babysit. I. Was pulling in a full 4.50 per hr, but I could study and smoke pot while there so it was ok.

#143 So true #104 Smoking Man on 11.06.16 at 2:58 am

Could not agree more with you Smoking Man and not only T2, but Poloz as well.

Ryan’s GDP chart looks like a Fibonacci Series plot asymptoting its way to ZERO.

We have “Infrastructure Spending”, QE which are new names for Keynesian Economics aggregate demand pumping and, it is being thrust down our throats.

Aggregate demand pumping by Government has not worked and will not work. It diverts resources away from business and consumers for pet Government projects.

Again, we are kickiing the can down the road as a nation and hoping for some kind of economic miracle turnaround in the short term.

I cannot believe the “Conservatives” cannot see the “big picture” in economic terms as to what the Libs are doing. I suppose, we deserve the good Government we have voted for.

Promise Canadians to fix a few potholes on their street and they will happily yield to a planned economy.

And we are supposed to be the most educated country on Earth…

bsant

#144 Not a Realtor, Happy in TO on 11.06.16 at 4:24 am

Toronto is God’s chosen city. Our city is the best in the world. There are no more land to build houses. House prices will never decline. It’s better to buy a house now in Toronto before it’s too late for a bargain.

#145 BillyBob on 11.06.16 at 4:32 am

Hey look! That shark has something caught in its canine!

The insanity quote is so often improperly attributed to Einstein even though there is no solid record of him saying it. But hey it SOUNDS like something he’d say and the sentiment is valid so, whatevers…

As far as the infrastructure spending, I think it’s a good idea – it needs to be replaced/upgraded, whether with borrowed money or not. It will only cost more, not less, the longer it’s deferred.

The real issue will be not the spending but the corruption and waste. Canada is far more corrupt than everyone likes to tell themselves. It may be more subtle than places we typically associate with corruption like South America and Africa but it’s really no better. Only a small fraction of that 80 billion in spending will actually be put to productive use.

#146 Mark M. on 11.06.16 at 5:58 am

“First, if you think we’re pathetic why are you reading and commenting on this blog? Second, we acknowledged that monetary policies have run their course. They did help us avoid a depression so they were initially useful, but they are losing their effectiveness hence why we need to do something else. If we do nothing, then we’re likely in for a decade of no growth like Japan has seen since the 1990s. Third, we don’t sell anything to clients. We provide a service at a low cost of 1%, and we try to achieve a 6% long-term return.” – Ryan

First, your boss calls the blog pathetic several times a week.

Second, if you still think monetary policies worked then you haven’t been paying attention. It’s clear, they’ve simply delayed the day of reckoning. Truly, where did the problems of 2008 go? How can a debt problem be solved by more debt?

This seems so obvious at this point. Some weeks back your colleague Doug was asking me whether I would have rather not had several years of “strongly positive returns?” Implying that but for central bank intervention all this equity growth wouldn’t have occurred.

He’s right, it wouldn’t have, so it’s phony. Destined to disappear when the crutches are removed. It’s easy enough to see, look at a chart of the Dow since 2009, it nearly tripled. From November 2014 to now the difference in the highs is hundreds of points. Virtually no movement since tapering ended.

For two years we’ve been promised a normalization of interest rates that everyone now knows isn’t coming. Even the Fed now says rather than 5% the “new normal” might be 2.5-3%. There is no way we’re even getting there before the next recession, which will be many orders of magnitude worse than 2008.

Third, you’re splitting hairs. You sell a service to clients with the goal of a 6% return. Nothing wrong with that, except it’s predicated on the lies that sovereign debt never has to be repaid, infinite growth is possible on a finite planet, and dollar bills are money while gold is a pet rock.

Reality is going to set in fairly soon, we might as well become acquainted with it.

#147 Wrk.dover on 11.06.16 at 7:14 am

By all means, borrow your way out of debt! But be sure to borrow money that is just a digital entry on a statement so I can get ten more years of no return on my savings.

This elitist stock broker BS is just the kind of drivel that is going to put Trump in the big white house!

Borrow (print ) money so the corporations can ‘build’ infastructure, sure Mack. I would like to punch your nose.

Just once, I would like to see the ruling class stand in line at DMV to renew their plates rather than have a grunt bring them a fresh car every so often, before the plates run out.

#148 Newcomer on 11.06.16 at 7:47 am

My area… north of Broadway Stn to about Hastings . Sfh are generally west of comm Dr to about renfrew
—————-

It’s hard to see your analysis as reliable, given that Renfrew is east of Commercial Drive. If you mix up east and west, what else are you getting wrong?

#149 cto on 11.06.16 at 7:50 am

Toronto?
Most of this City is an over developed dump, void of decent transportation, ugly highrise hells, poorly build condos, rotting centry homes and cornflake shacks.
downtown is full of want to be’s all trying there hardest to be someone their not. they will spend, spend, spend money they do not have and just around the corner…bam! pay back time! then they will whine like little spoiled children.

#150 Context on 11.06.16 at 8:33 am

#138 Peter: – Never had a problem in grade school with any teacher as they were all dressed in appropriate attire. In grade 7 had a problem with a female student instead. Her name was Lois who had eyes for me and intentionally showed me too much leg with a smile day after day.

#151 jess on 11.06.16 at 8:48 am

Bilking investors, taxpayers and voters

voluntary, market-based standards and codes of conduct

…with the right regulation and transparency disclosure of revenue payments etc
create public registries of the real owners of companies and trusts, so that law enforcement, businesses, NGOs and ordinary citizens know who they’re dealing with.

“transfer pricing,”
http://thestarphoenix.com/business/mining/camecos-multibillion-dollar-tax-trial-primer

======
The report shows how weak U.S. laws enabled criminals to set up American companies with anonymous owners to rip us all off. For example

Stealing from the young, the old and the faithful

An Ohio school district employee used a web of fake companies to abuse his position and bill for millions of dollars’ worth of services that school kids never received;
Texas lawyers used sham companies from Delaware and Nevada to trick elderly people into investing their life savings in worthless enterprises;
Con artists, nicknamed the “Three Hebrew Boys” tricked churchgoers and military personnel into investing millions in a South Carolina company that turned out to be a Ponzi scheme.

Bilking investors, taxpayers and voters

A Russian crime boss described by the FBI as the “most dangerous mobster in the world” allegedly set up a network of anonymous companies stretching from Eastern Pennsylvania to the United Kingdom to cheat the stock market and steal over $150 million from investors in the United States and overseas;
Convicted fraudsters set up ghost companies in South Dakota to swindle aspiring American entrepreneurs out of their capital by offering high return investments in imaginary biofuel projects;
A Louisiana Congressman used anonymous companies from Delaware and Louisiana to take almost half a million dollars in bribes.

“Anonymous companies are getaway cars for the world’s criminal and corrupt – we must take away the keys. We’re pushing governments to change laws and bring business into the open. R
/https://www.globalwitness.org/en/campaigns/corruption-and-money-laundering/

rubber barons
Deutsche Bank, for example, was a major investor in Vietnamese rubber companies responsible for a wave of land grabs, human rights violations, illegal logging and the loss of local people’s food supply in Laos and Cambodia. Deutsche Bank is a signatory to the UN Principles of Responsible Investment, the UN Global Compact and the Banking Environment Initiative.
https://www.globalwitness.org/en/blog/how-stop-european-money-fuelling-land-grabbing-overseas/

Selling ways to shield wealth from tax authorities
https://www.icij.org/project/swiss-leaks/new-law-new-loophole-new-business-giant-global-bank-hsbc

#152 West Of The Six on 11.06.16 at 8:57 am

Canada investing 80 billion into a Canadian made sovereign innovation fund in order to purchase major additive manufacturing, new materials & robotics/automation companies, and bring them to here Canada and create a new Canadian economy wear profits are made in Canada and come to Canada. Spending on Bridges, transit & roads is a necessity, not a great future economic plan.

#153 Ryan Lewenza on 11.06.16 at 9:03 am

wtfman “First of all the 600 billion dollar debt Ryan mentions is only the federal debt..you need to add provincial debt on top to get a realistic comparison to other countries. Hence our 30 percent GDP ratio is much higher than Ryan is implying.”

I don’t believe that to be the case. I’m comparing Federal government debt to GDP for all the nations. For example, the US Federal debt is roughly $19 trillion. This does not include state and municipal debt. Their GDP is roughly $19 trillion hence why their debt to GDP is 100%. So I’m comparing apples to apples. When you add in provincial and municipal debt your comparing apples to oranges. When adding in provincial and municipal debt in Canada we get closer to 80-90% to GDP. But that’s not the correct comparison to the US since their 100% debt to GDP ratio doesn’t include state and local. I stand by the numbers I referenced. – Ryan L

#154 wait there on 11.06.16 at 9:12 am

Why do we leave infrastructure spending to do when everything is all broken up. Governments mandate that funds be set aside for condos to ensure funds are there when repairs are needed. Why can’t they impose this on the infrastructure themselves????? Come on Ryan…care to comment on that?

Charts are one thing but knowing the context is equally as important. I’ve mentioned this over and over.

Everyday I see millions of cars caught in traffic tie ups, I keep seeing more tieups because of an infrastructure repair and I hardly see work being carried out. If I count the wasted hours of the drivers it certainly would exceed the GDP created by the infrastructure spending. In the 80s and 90s major work on the highway was considered a priority and it was carried out expeditiously. Today is the opposite..I will say even thrid world countries carry road construction out much faster. Been there my friends. It’s a joke what they are doing. Worse yet is the quality of the work being carried out. Substandard paving,,,anybody else experience the crap paving you see on repaired roads?
The GTA has grown too large for increased traditional productivity. The sheer number of people and how it is laid out forces traffic through and increasing density. This is like putting a finer filter on a system that needs higher flow. Not going to work. Take off the financial chart glasses and think about it. The GTA is headed for lower productivity and no amount of spending will fix that. There are too few major highways to service what we have..the lakes do not help. It is time some technical people get into politics and propose some serious planning.
Finally, the government is clueless about building jobs. New jobs come from small business and the infrastructure to assist that is missing completely in Canada. New immigrants coming to Canada intent on building a new enterprise have come to the wrong country. Line up and go to the USA. Or jump the wall and hope to get amnesty. Canada is not the place for future prosperity for aspiring entrepreneurs. It is the place to be a government employee. period.

#155 vatodeth on 11.06.16 at 9:20 am

Great post with interesting insight! Thanks Ryan!

#156 Ace Goodheart on 11.06.16 at 9:21 am

Question for you:

I will reach the limit in terms of how much I can hold in RRSPs (mine and wife’s) and TFSAs this year. I do also have other holdings but they are all stock.

Was considering holding ETFs outside of tax sheltered vehicles, but I am wondering, ETFs don’t qualify for the dividend tax credit do they?

#157 jess on 11.06.16 at 9:42 am

“formulary apportionment” where companies are taxed on the basis of their economic activity and income within a particular geographic jurisdiction rather than arbitrary allocation of costs to geographical areas.

Examples of Abnormal Prices in Trade
Trade mispricing & Capital Movement
What Causes Trade Mispricing?

…”Companies should be required to publish a table showing their sales, purchases, profits, assets, liabilities, taxes and employees in each country of their operations. Upon seeing that there are substantial sales and little profit, or large profit and very few employees in a jurisdiction, the public would know that some transfer pricing games have been played. Corporate tax returns should be publicly available. Companies should publish details of transfer prices actually used. The public may be horrified to learn that companies have priced flash bulbs at $321.90 each, pillow cases at $909.29 each and a ton of sand at $1993.67, when the average world trade price was 66 cents, 62 cents and $11.20 respectively. abusive pricing structures should be held personally liable”
see more examples and why this is here
http://visar.csustan.edu/aaba/Pak2006.pdf
https://www.theguardian.com/commentisfree/2009/feb/11/taxavoidance-tax

#158 The Nature Boy on 11.06.16 at 9:44 am

#93
#143

They sound like David Miller to me…

#159 Ryan Lewenza on 11.06.16 at 9:51 am

Mark M. “First, your boss calls the blog pathetic several times a week. Second, if you still think monetary policies worked then you haven’t been paying attention. It’s clear, they’ve simply delayed the day of reckoning. Truly, where did the problems of 2008 go? How can a debt problem be solved by more debt?”

Fair point, but I believe Garth is being self deprecating and funny about it, rather than being nasty. And yes I do believe the coordinated monetary policies by central banks worked as without them we would likely have endured a depression with breadlines versus a half-speed recovery. Both the US government’s TARP and auto bailouts, along with the Fed lowering rates and QE policies, helped the US avoid a 1930s depression, so yes I believe they worked. I agree central banks have gone too far with these policies, which I specifically cited, and that they could result in continued subpar economic growth but I don’t believe we are all “doomed”. Sounds like someone is loaded up with gold, and didn’t benefit from rising financial asset prices since the 2008/09 lows. – Ryan L

#160 maxx on 11.06.16 at 9:52 am

…”By investing in smart infrastructure programs that stimulate economic growth (Conference Board of Canada estimates that every $1 billion spent creates 16,700 jobs) and improve productivity, this is how we can get our economy humming again and get back to those good old days of 3%+ GDP growth.”

I respect and value your opinions Ryan, however on this point I have to disagree somewhat. The conference board, as do many supervisory organizations, love to play with stats and formulae. I agree that this spend will circulate in the economy at large, however not in the healthiest of ways.

Let’s play with the Conf. Board’s pronunciation for a minute. The average construction worker’s salary in Canada is around $17.50 per hour. Let’s make that $30.00 to include the entire construction industry’s salary spectrum. Let’s also say that each and every worker puts in 250 days a year (and we all know that simply doesn’t happen) at 7.5 hours a day. That gross salary is $56,250.00 for a grand total of $939,375,000.00, based upon the forecast of 16,700 jobs. Ignoring a potential loss of 60MM+, what then is the spending profile of the disposable income portion of blue-collar salaries likely to resemble?
My guess is that a healthy portion of that would go to debt (which for most continues to grow) which won’t produce much positive knock-on effect in the economy at all.
There is undoubtedly a frilly component to this analysis which consists of a few sexy jobs, at, say PPP Canada, but overall, my lay skepticism feels justified.

A large portion of this tax deployment imho, is a junk spend.

#161 Ryan Lewenza on 11.06.16 at 10:05 am

Karl Hungus “Are you suggesting that the lack of infrastructure spending in the 70s and 80s was to blame for poor economic performance? I’m surprised you would come to this conclusion.”

No that’s not my conclusion. I was just saying that due to the lack of investment during those decades that it’s led to our aging infrastructure and deficit. – Ryan L

#162 Ryan Lewenza on 11.06.16 at 10:08 am

Ace Goodheart “Was considering holding ETFs outside of tax sheltered vehicles, but I am wondering, ETFs don’t qualify for the dividend tax credit do they?”

Sure they do. It doesn’t matter if you get the dividend by owning Royal Bank directly or if you own RY through an ETF. If it’s recorded as a dividend you get the dividend tax credit. – Ryan L

#163 Doug in London on 11.06.16 at 10:21 am

Whether you like this new Liberal government or not, this is one thing they’ve got right if the money for infrastructure is spent where it’s needed the most. Yes, it requires more borrowing to pay for it, but now is the time while interest rates are still low. Add to that the fact that the longer these expenditures are delayed the more costly they will be. Some of this upgrading, such as to storm sewers, should be upgraded to better handle the extreme weather events which will be more common in the years to come.

#164 InvestorsFriend on 11.06.16 at 10:28 am

Money versus Real Wealth

Money is an intangible claim check on real goods and services.

Money is a concept we use to facilitate and incentivise all players in the economy to work hard and produce valuable goods and services. It is the infrastructure, the goods and the services that have the real value, not money. We could replace the dollar with a new currency and the real wealth of individuals businesses and governments would not be much affected if it were done properly.

The vast majority of money is created by bank lending not by government printing or other central bank money creation. And, that is a very good thing.

An example:

If you have two houses with no debt on either, one can be converted into money when someone borrows money from a bank to buy it. The loan and money creation does not change the wealth of the bank, the seller or the buyer at the outset. But it does facilitate the transaction. The seller gets money to spend. (You can’t spend a house.) The buyer gets a house. The bank gets a promise from the buyer to repay the loan with interest. All three parties benefit.

Money is wonderful. It is a unit of measure of wealth. It facilitates the transfer of goods and services, which is the very essence of the economy. It is also a short-term store of value.

Note that the amount of wealth in any geographic area vastly exceeds the money in that area. All money represents a claim on wealth. But most wealth, by far, is not in the form of money as such (Infrastructure, art, houses, buildings, roads, stocks – none of these are money as such, just measured in units of money).

If you had all the money in the world you could not buy probably 5% of all the valuable things in the world.

#165 maxx on 11.06.16 at 12:16 pm

#43 Ryan Lewenza on 11.05.16 at 6:15 pm

…”we (Liberals under Martin and Conservatives under Harper) were fiscally prudent in years past we now have the room to invest and add some debt. But for this to be effective longer term we have to stick to a targeted plan and then return back to a balanced budget in say 5 years. – Ryan L”

Don’t hold your breath. With increasing pressure on social programs, not only due to an ageing population but because of the stability fallout (compounding new debt from shadow lenders, substance abuse, family problems, people just giving up…) of a job-thin economy and enormous personal debt, a 5-year horizon for a balanced budget is a joke. Not going to happen. What I see is much more debt all around, at which time government will once again pin its hopes on a one-trick pony- this time entreating the fiscal deities to inflate debt away, given that near-ZIRP is a dismal failure.
But it will be too late.

#166 maxx on 11.06.16 at 12:21 pm

#44 AB Boxster on 11.05.16 at 6:22 pm

Completely agree, but it does make for a lovely fount of future bs election promises.

#167 maxx on 11.06.16 at 1:03 pm

#56 bigtowne on 11.05.16 at 6:53 pm

No country on earth knows how to roll out the welcome mat for travelers like the US does. Not even close….

#168 maxx on 11.06.16 at 2:03 pm

…”we have a smaller number of people saving their excessive salaries, basically encouraging these people to “hoard” money. Don’t we have enough boomers doing that already?”

People that can hoard do so because they are $hit scared of idiotic government policy and how that will likely impact their futures.
More importantly, why are the rich hoarding money? If ever there was an early warning signal that all is not well, it certainly emanates from that which has money and fully intends to keep it.

#169 Ace Goodheart on 11.06.16 at 2:08 pm

RE: #153 Wait there:

“The GTA is headed for lower productivity and no amount of spending will fix that. There are too few major highways to service what we have..the lakes do not help. It is time some technical people get into politics and propose some serious planning.”

I saw a similar comment on Garth’s post I believe either yesterday or the day before, indicating that $350.00 per month to pay for Go train service in and out of Toronto to commute was “expensive”.

I believe the general idea is we need more highways and everyone should drive to work…..

I have to tell you that this general idea is completely bonkers.

First people have to understand how much a car actually costs. You are not just paying for gasoline. You also pay insurance and depreciation and mechanical repairs. Most people don’t keep track. Your average new car will cost the owner over $150,000 by the time it is five years old.

This taking into account that most cars become scrap metal at around 300,000km, require constant expensive repairs and upkeep, that it is no longer possible to do maintenance yourself due to everything being computerized and that insurance for one vehicle in the GTA for one year is around $2500.00 to $3000.00. That and of course gasoline…..

I think we need a massive mind-shift in terms of how we think about moving people around. The single occupant, internal combustion engine car is a really big problem and the solution is not to build more roads. The solution (unfortunately for motor-heads out there) is to gradually get rid of the car. Most people simply do not need one. I think the younger generation understands this and the older generation never will.

Rather than new highways, we need more and more transit. And also different ways of thinking about transit. It is not an expense that we can’t afford. Cars and highways are that expense. Transit is a must have, necessity that we cannot do without. The more the better.

It is really time to forget about cars and move towards a mass transit oriented society.

#170 Linda on 11.06.16 at 7:02 pm

Investing in infrastructure is good; maintenance only goes so far before replacement is required. In a country the size of Canada, it is vitally important that our services continue to be up to par.

Regarding the surplus of the 1990’s/2000’s – 9 years of consecutive surplus under the ‘tax & spend’ Liberals. The Conservatives claimed to have the same surplus the Liberals did (counted the year they were elected so they could claim the title) but by the ‘second’ year the surplus was just barely there & by year three? Nada. Deficit, deficit, deficit right up to the day they were voted out. Yet somehow they have the reputation as being fiscally sound & running surplus budgets…..

#171 Sean on 11.07.16 at 11:29 am

Any tips on some companies to invest in related to all this infrastructure spending?

#172 Bark on 11.07.16 at 12:13 pm

I’d be interested to see how our debt to GDP ratio would look if we included provincial debt.