The R-word

Yes, recession.

The household debt service ratio is just under 15%. That may sound manageable – the proportion of gross income dedicated to paying back debts – but it’s a zinger number. The highest ever, which is pretty staggering considering interest rates are near historic lows. Just imagine, for example, if mortgages averaged 8% as they did two decades ago.

So collectively Canadian families paid $202 billion in debt payments in the first quarter of 2019. That’s $67 billion a month. About half was for mortgages, the rest for HELOCs, credit cards, cars and tat financing.

Creeping rates helped push the number up, but mostly it was because we can’t stop borrowing. Worse – for the first time in six years we’re spending more on the interest on debts than we are on paying those debts down.

Chew on that.

More money thrown out the window on interest means less available for important stuff like dog food and a new car. The economy takes a hit as billions a year are transferred from the paycheques of employees to the coffers of lenders.

Plus, following up on yesterday’s much-maligned high-income moisters with latent house lust, this news should make you wonder why owning is better than renting. In the absence of capital appreciation on residential real estate, how is spending $100 billion every 90 days on mortgage interest payments (collectively) better than throwing your money out the window on rent? Add in property taxes, strata fees, insurance payments, hot tubs, shrubs, utilities, repairs and kitchen renos and a shocking amount of after-tax income is sucked up by a house. No wonder the majority of people have stuff, but no money.

Last month we borrowed another $20 billion – thirteen of that for new mortgages. In total we now owe $2,230,000,000,000 (that’s trillions). That pile of dough is bigger than the country’s entire economy ($1.9 trillion). It dwarfs the amount of money spent by the federal government ($330 billion a year).

Most significantly, however, it will destroy a lot of people when the next recession arrives. Already the little hairs on the necks of people who bought into Vancouver real estate two or three years ago are bristling as property values fade and yet the debt remains constant. Just imagine if a 30% further decline hit here, as it did nation-wide in the US during that recession-fueled housing correction. (Actually the hottest real estate hoods there – Phoenix, Vegas, parts of Florida – ended up losing 70% of their value.)

Recession, you say? What recession?

Well, one is inevitable. It’s been a 10-year expansion and recovery so far since the abyss of 2009, and we’re due. The bond market has been rumbling about this for a few months, and now that we’re into a full-blown trade war between the world’s two biggest economies, the timing of the next slowdown is being advanced.

Tariff Man might correctly gamble that the US can power its way through a recession, and his political base will stick with him. Despite higher costs, more unemployment and leaner times, Trump supporters will probably support their guy because he’s sticking it to the Chinese. It’s Politics 101. Us vs Them. People will put up with a surprising amount of grief it they believe in vengeance.

But in Canada? Yikes. We need more China trade, not less. More importantly, our capacity to withstand a storm has been seriously compromised by our piggy attitude towards borrowing. We owe more than families in any other developed nation. Our savings rate is almost down to zero. We continue to buy houses that cost ten or twelve times what we earn and will require decades to pay off. Most TFSAs are filled with junk. Retirement accounts are shriveled. And the borrowing continues.

Yes it’s depressing. How can the next, inevitable, recession not result in lower house prices and higher family stress?

Therefore do not pursue a strategy which will put all or most of your net worth in one asset. Your house. Use the Rule of 90 as a guideline. (Ninety less your age should approximate the max amount of total net worth that’s in real estate.)

Remember that in recessions, assets shed value as economies weaken and jobs are punted. It’s been so long since the last one (a decade) that many have forgotten. Prior to that, we fell into tough times in the mid-Eighties, then again in the early 1990s. The average dip lasts about 11 months, and governments try to shorten them by doing two things: (a) spending a ton more money to stimulate activity and (b) lowering interest rates to encourage borrowing.

Well, guess what.  We’re coming off ten years of recovery and the feds are already in deficit. The kitty is bare. And, second, the Bank of Canada benchmark rate is still at 1.75% – less than the inflation rate. The tool box is almost empty.

The good news?

There’s time for you to prepare. To get balanced, diversified, de-risked and de-leveraged. Tick tock.

130 comments ↓

#1 Party on Garth on 06.13.19 at 4:40 pm

The borrowing and spending binge by Canadian households, businesses and governments (all levels) continues unabated. Growing the debt in the economy significantly faster than the economy itself grows seems to have developed into a way of life in Canada.

At the end of March, 2019 the total debt outstanding in Canada (bottom line of the Statistics Canada credit market summary data table) was $8.165 trillion. At the end of March, 2018 the total debt outstanding was $7.785 trillion. In the 1 year period from the end of March, 2018 to the end of March, 2019 it increased by $379.7 billion. This is an increase of 4.8%.

Canadian total (household, business, and all levels of government) debt numbers as of the end of March, 2019

https://owecanada.blogspot.com/2019/06/canadian-total-household-business-and.html

#2 Jimmy on 06.13.19 at 4:51 pm

Ke$ha TiK ToK is a great song!

#3 Smartalox on 06.13.19 at 4:55 pm

I thought that the ‘Rule of 90’ was that “Ninety minus your age should be the maximum percent of your net worth in Real Estate”.

That is, if you were 45 years old, and had 33% of your net worth in RE – and the rest balanced, diversified, low-cost etc. – then you’re sitting pretty.

#4 Captain Uppa on 06.13.19 at 5:02 pm

“We continue to buy houses that cost ten or twelve times what we earn – Garth”

We do?! So you’re saying people who bring in 200K household income yearly are buying homes for 2-2.5M?

Again, this is anecdotal evidence, but everyone I know in that income bracket are buying in the 850K range or just a smidge over 4x income.

So I would agree if what you say is true; people are digging their own holes.

#5 Hawk on 06.13.19 at 5:07 pm

Poloz & Power that be will in the next 12 months have to choose between saving

(a) Our Housing Market
(b) Our currency

My gut feel tells me they’ll cave and save the housing market (lower rates) even though that’s the wrong choice.

I don’t believe that at this point both can be saved simultaneously.

#6 Dave on 06.13.19 at 5:13 pm

Should Oil prices shoot up regardless of reason – is Alberta back in boom town? Or is the pipeline capacity going to keep from reaping the rewards?

#7 Figure it Out on 06.13.19 at 5:14 pm

“We need more China trade, not less.”

You and Chrétien, eh? Tell ya what. Just sell yourself to the Chinese Communist Party for whatever they’ll give, and remit the proceeds to the Receiver General of Canada.

See ya. Thank you for your service. No need to provide a snappy rejoinder.

#8 The Wet One on 06.13.19 at 5:16 pm

So you’re saying I should go long on cat food, right?

I can do that Garth.

That I can do!

:-)

#9 Thomas on 06.13.19 at 5:20 pm

The war drums keeping getting louder – USA is gearing up for battle before the next election. Donald Trump know this, start a war and guaranteed to get re-elected.

Is WCS going to shoot up dramatically?

#10 Ardy on 06.13.19 at 5:22 pm

Garth,

You wrote, “More money thrown out the window on interest means less available for important stuff like dog food and a new car. The economy takes a hit as billions a year are transferred from the paycheques of employees to the coffers of lenders.

But doesn’t the interest translate to bank/lender profits; that to paychecks for their employees and interest/dividend payments for us. Those original interest payments make it back to the economy in one way or another.

I’m clearly missing why this indirect avenue is worse for the economy.

-RD

#11 PastThePeak on 06.13.19 at 5:24 pm

Garth, you *almost* sound like you are coming around to what those of us who are…more concerned…about the economy have been saying for awhile. That a recession (for Canada) is closer than most think, and that it will be a doozy when it hits.

But then I hear the Canadian Fed govt, and BoC, and US Fed, and CBC, and everybody on CNBC – all talk about how things are doing well and going to get better.

Anyways, here is my portfolio advice for the Mills and those who think things are going great. Invest in:
– GTA RE
– US high yield corporate bonds
– Weed stocks
– Crypto
– Facebook
– Tesla

…what could go wrong…?

#12 Yanniel on 06.13.19 at 5:28 pm

“The economy takes a hit as billions a year are transferred from the paycheques of employees to the coffers of lenders.”

And from there to investors in the form of dividends. Sweet.

#13 Dolce Vita on 06.13.19 at 5:30 pm

Oh Garth, yet another VICTIM of StatCan Seasonal Adjusting.

Compare the StatCan numbers you used (National balance sheet and financial flow accounts, first quarter 2019) to those of the Bank of Canada:

https://credit.bankofcanada.ca/householdcredit#1

Yes, yes, numbers that big are like splitting hairs still here are the comparisons where BoC is as of April 2019, StatCan is Jan. to Mar. 2019 or 1st Qtr. (StatCan vs. BoC, $Billions):

Total Household Debt………………………$2,230.6 vs. $2,177
Mortgage Debt………………………………..$1,454.2 vs. $1,555
Consumer Credit …………………………….$776.4 vs. $622
1st Qtr 2019 Borrowing Change…………$20.2 billion vs. $69.9 (Last 12 months)

Capt. Obvious: How does Consumer Credit go down by about $150 MM and Total Household Debt by abut $50 MM with an extra month of data from BoC?

SEASONAL ADJUSTING.

Hopefully now you will see the lunacy of StatCan and their ARIMA Seasonal Adjusting and Massage Parlor.

————————————————

Still, sad numbers whether they be from StatCan Fantasy Land or the Bank of Canada.

BoC Household Credit Page, to April 2019:

https://credit.bankofcanada.ca/householdcredit#1

Statistics“R”Us, Jan. to Mar. 2019 Report:

https://www150.statcan.gc.ca/n1/daily-quotidien/190613/dq190613a-eng.htm

#14 Democracy Is Mob Rule on 06.13.19 at 5:33 pm

#6 Dave on 06.13.19 at 5:13 pm
Should Oil prices shoot up regardless of reason – is Alberta back in boom town?
_______________________________________________

Oil prices and other commodities follow a thirty year cycle. The next peak is due somewhere around 2038. That is when Alberta will boom again.

#15 yorkville renter on 06.13.19 at 5:37 pm

what to do with all this free time? I’m already balanced, diversified, de-risked and de-leveraged.

time to vacation I guess

#16 HT on 06.13.19 at 5:38 pm

Is the Trudeau government negligent for squandering an opportunity to prepare for this recession? Will Sheer be able to remedy this, or is it too late?

Aside from my single vote, it’s pretty out of my control. Time to cut spending and clearing off personal debt. It’s hard!

#17 jess on 06.13.19 at 5:39 pm

…but they beat the crap out of him. he better watch out for the poison
Russian authorities have dropped a criminal case against investigative reporter Ivan Golunov, according to state media, after a fierce backlash that appeared to catch the Kremlin off guard.

hard brexit with johnson
Suspending parliament to allow no-deal Brexit unconstitutional, says ex-PM Major
Boris Johnson, the leading contender to replace Theresa May, has refused to rule out the idea of proroguing parliament
==================
is trump encouraging interference into usa elections
impeach & imprison the 2 i’s

Trump begs Sarah Sanders to run for Governor of Arkansas as she departs the White House

=part three
By David Cay Johnston, DCReport Editor-in-Chief

David Cay Johnston

Two years after a whistleblower first alerted the IRS to William Ingraham Koch’s dodgy tax behavior, the same insider told the IRS about even more efforts by the billionaire to skirt America’s tax laws.

In the first and second installments in this series, we looked at some the tax practices detailed in The Koch Papers, nearly a thousand pages of documents provided to the IRS Whistleblower Office by Charles Middleton, the former chief tax executive at Koch’s Oxbow carbon companies, and obtained by DCReport.

https://www.dcreport.org/2019/06/13/the-irs-ignores-another-whistleblower-complaint/

#18 DantheMechanic on 06.13.19 at 5:41 pm

I have a mortgage on variable rates (prime-1%) so that now it’s 2.95%.

I could lock in fixed at no penalty for 3 year (2.71%), 4 year (2.74%), and 5 year (2.89%). I originally chose variable because a year ago it was a full percentage spread between fixed and variable and fixed was quite a bit higher. But all this doom and gloom makes me wonder a) will BOC cut and how many cuts and b) these are still good fixed rates that are currently below my variable rate. Risk aversion says lock in, but the other part of me says let it ride as the storm unfolds and likely you’ll see lower BOC rates OR even lower 5 year yields which will bring down fixed mortgages even more so.

If a recession is truly on the horizon, staying variable seems like a smarter (but slightly riskier) move. Thoughts? And no, my mortgage is relatively low to our family income, and in one of the less extremely priced markets. So no selling for us

#19 Dolce Vita on 06.13.19 at 5:46 pm

#10 Ardy

I’m clearly missing why this indirect avenue is worse for the economy.

——————————-

That interest money is taken out of the Broader Economy that could be better spent on things such as:

-R&D
-Increased Productivity
-Increased Efficiency
-Entrepreneurial Start Ups

etc.

Things that the Big 5 Banks are not synonymous with unless you put in $2 for every $1 they put in and they get 1st charge on all assets (even before the Undertaker if they could). After all, they are the reason Venture Capitalists exist.

And, notwithstanding more money for Retirement Savings/Investment, Paying the Monthly Bills, Kids College Education, and so forth, …

#20 TRUMP on 06.13.19 at 5:49 pm

And at the end of the day the RICH will get richer and the POOR will get poorer.

Doesn’t matter if you buy, rent, lease, whatever. NO Matter the situation.

Smoke weed and be happy. The Lord put that on the earth for me and you…. take advantage of it man, take advantage of it.

#21 WelcometoSlurrey on 06.13.19 at 5:50 pm

Buy to Rent …… and Rent to Live……

Just wanted everyone’s thoughts on this subject or if any implores this strategy when it comes to home ownership. The idea is , buy a home to rent it out because it brings in a good cashflow ( ie: A multi family home – home with one suite or more) .

But rent out the home/neighbourhood you want to live in.

The idea being that in places yvr like Kits/Van/NorthVan , the “CAP” rates on these homes are very small, it is much cheaper to rent them. But if you want to own a home, go buy a rental property in the burbs/other cities with a better CAP rate.

This way you get to live where you want and own at the same time. This is nothing new, just wondering what everyones thoughts are on this. Possible pros ( ie: you can deduct taxes and expenses on your purchased rental home) and cons ( ie: Capital gains tax on rental houses vs no capital gains on your primary residence.

#22 Damifino on 06.13.19 at 5:51 pm

There are days when I think it would have been best to let Meng what’s-her-name just get on that connector flight to Mexico. It’s what Trump would have done in similar circumstances. He cares nothing for international law and no doubt figures we’re chumps. Is he right? If not, please tell me why.

#23 waiting on the westcoast on 06.13.19 at 6:00 pm

Buddy of mine (in the land development industry) was at an event for National Bank. It seems that National Bank thinks the US is pooched and not Canada. Seems absurd to me but there you have it…

#24 Dolce Vita on 06.13.19 at 6:01 pm

The “R” Word.

I told you so. I’ve telling you so for past year. Though, now I think a mild but lingering, on again, off again, “R” Word.

It will take the Conservative Gov. (Oct. onward) many years to dig Canada and Canadians out this Debt Mess.

It took Chrétien from 1993 to 2004 (11 years) to dig Gov. out of the -$38.5 Billion Mulroney & Trudeau Sr. left him and turn that into +$10.6 Billion.

Famous Words:

“There’s time for you to prepare.”

Yup, like about 10 years worth and back then Canadians weren’t personally up to their gills in debt.

——————————–

Buonanotte e Ciao d’Italia.

Something more cheery tomorrow Garth…

#25 Sask to AB on 06.13.19 at 6:02 pm

Thank you for warning us AGAIN, Garth. Let us hope that people listen to you this time.

F56AB

#26 jess on 06.13.19 at 6:09 pm

S corporations interesting indeed

In Part 4 of The Koch Papers, we will look at a Massachusetts vacation home Bill Koch owns, the place where he hosted a fundraiser for candidate Trump, and how he arranged to take a $20 million tax deduction that the whistleblower says was illegal.

https://www.dcreport.org/2019/06/13/the-irs-ignores-another-whistleblower-complaint/

#27 Dolce Vita on 06.13.19 at 6:12 pm

#22 Damfino

Is he right?

————————–

You have to ask?

Look who’s leading Canada. You know, detain Huawei while trying to let SNC-Lavalin off the hook (already convicted for their work on World Bank projects).

PM Machiavelli.

Pierre should never have let Jr. read his PMO credenza copy of “The Prince”.

Jr. must have loved the “Divine Right of Kings” parts.

#28 Mike in cowtown on 06.13.19 at 6:13 pm

“There’s time for you to prepare. To get balanced, diversified, de-risked and de-leveraged. ”

Isn’t a mortgage leverage? I get why you say keep your money invested and don’t pay down the cheap mortgage but your closing comment today feels like “suck and blow”. ;)

#29 marcus on 06.13.19 at 6:14 pm

“We need more China trade, not less.” Canada is lost. Marxist light. Canada needs to trade with the Red Chinese and their concentration/reeducation camps. With their jump nets around 10 story production facilities for phones where young workers try to kill themselves by jumping out the windows. Yup …… Canada needs more of this type of trade partner. What’s that sound? It is the sound of your soul descending to the netherworld at about Mach 9. Good luck Canada …….. your Goose is cooked.

Unbelievable. – Garth

#30 not 1st on 06.13.19 at 6:26 pm

Why always the little dig at trump every post? Like Trudeau has nothing to do with Canada predicament? He is spending like a drunken sailor. A $15B pharmacare program is next up. Who will pay for these luxuries while people are shelling out billions a month to keep the carbon taxed heat and lights on?

#31 Captain Uppa on 06.13.19 at 6:27 pm

Recession = opportunity.

#32 Rule of ninety on 06.13.19 at 6:32 pm

“Use the Rule of 90 as a guideline. (Ninety less your age should approximate the max amount of total net worth that’s in real estate.)”

I am 93 years olf. How do I shove -3 percent of my net worth into real estate?

#33 Bob Dog on 06.13.19 at 6:35 pm

“Canadian families paid $202 billion in debt payments in the first quarter of 2019. That’s $67 billion a month.”

Im no financial expert but maybe someone here is. I understand the process where banks create money from nothing and lend it at interest. Of course that money has to be repaid at some point otherwise inflation will be like it is in Venezuela. The system is based on faith that the banker are not crooks.

In Canada we nationalized the health care system and everybody seems to like that it’s not run for massive profits like it is in the USA.

My question is this. Why cant we nationalize the banking system in the same way and pay interest to the shareholders of the bank where everyone is Canada is a shareholder.

#34 FreeBird on 06.13.19 at 6:45 pm

#24 Dolce Vita on 06.13.19 at 6:01 pm
Something more cheery tomorrow Garth…
———————-
This might help…
https://youtu.be/yruXA_AX7gk

Ciao

#35 Long-Time Lurker on 06.13.19 at 6:54 pm

Million-man (person) protest marches in Hong Kong and two oil tankers exploding in the Strait of Hormuz off of Iran and the stock markets just fizzle a bit. Oh well, I’ve still got two weeks of June left.

#36 Stan Brooks on 06.13.19 at 7:03 pm

#32 Rule of ninety on 06.13.19 at 6:32 pm
“Use the Rule of 90 as a guideline. (Ninety less your age should approximate the max amount of total net worth that’s in real estate.)”

I am 93 years olf. How do I shove -3 percent of my net worth into real estate?

Sell short Genworth and the banks for 3 % of your net worth?

#33 Bob Dog on 06.13.19 at 6:35 pm
My question is this. Why cant we nationalize the banking system in the same way and pay interest to the shareholders of the bank where everyone is Canada is a shareholder.

What an ignorance. The banks own this place. ‘We’ are just the sheeple temporary inhabiting their land. The politicians are just dumb sheppards.

You are on the hook (the man) for all sort of taxes, fees, expensive but substandard oligopoly services, are hit by inflation, automation and outsourcing and still are expected to support the budget and the needs of all old timers, poor etc.

This is the purpose of debt that individuals like Shawn Allen love, to hook you up and then beat you up to pay it back in non existent interest money. The more you pay the deeper in debt you go.

Beautiful perpetum mobile that requires significant degree of brainwashing/called democracy and freedoms.

If you disagree, you are an outlaw.

#37 Oakville Rocks! on 06.13.19 at 7:20 pm

The R-word? Thought you were going to talk about RAIN. Damn we have got a lot of rain in paradise this year. When is summer going to start?

Better yet, you could have mentioned the RAPTORS. LETS GO RAPTORS, summer arrives after a win!

#38 AK on 06.13.19 at 7:23 pm

“Recession, you say? What recession?”
=====================================

Have we ever had a recession with unemployment @ 3.6% and interest rates near zero. ?

#39 GF Westcoast Correspondent on 06.13.19 at 7:30 pm

Bringing you the straight goods at the top of the golden shower hour.

Did everybody catch the slug fest in the house of commons? What were they fighting about? Yaaaassss, that dirty money problem Canada has including some questionable MP washing straight out of Steveston.

Well, now a law to reveal hidden ownership is at the hands of the Feds and if put through Canadian real estate is dead, particularly in BC.

Foreclosures are happening in Vancouver condos right now and not even being reported as to hide it from the public. A friend just picked one up. Congratulated him for being a moron. Banks want to keep this hush, hush. Market is already in bad shape – don’t scare anymore while trying to pass along the hot potato.

I am renting for life and investing my money to sustain a reserve to draw down on the number one future need: food.

#40 ImGonnaBeSick on 06.13.19 at 7:34 pm

#33 Bob Dog on 06.13.19 at 6:35 pm

What are you talking about?? Nationalize nothing… It turns everything it touches into a dysfunctional, bloated turd. You want bank dividends? Just buy the freakin’ bank stocks. Here’s a little tip, anytime one of starts yielding over 5%, buy that one…

#41 Gummy on 06.13.19 at 7:44 pm

Hi garth, 2 bed 2 bath condo down town van is 1.4-2 million for a nice 1200-1400 sq ft box in sky. U think they will ever be under 1 millions? I just can’t see it
Thx
Gummy

#42 Bdog on 06.13.19 at 7:56 pm

Low interest rates have ruined real estate.

#43 Flop... on 06.13.19 at 7:59 pm

Billionaire?

I’m a little bit short.

Well about 999 million and some pocket change.

As long as the pocket belongs to a millionaire.

Not what I’m striving for in life.

Hoping to be crowned World Champion Ice-cream eater in 2020

Trump will be tough competition…

M44BC

“Visualizing the Wealthiest Billionaires Around the World in 2019.

Becoming a billionaire is about as probable as being struck by lightning (i.e. NOT likely). If you live in North America your odds of becoming a billionaire are one in 785,166. Your oddsof being hit by a lightning bolt are one in 750,000. If you defy the odds, you become a member of an elite club with less than 3000 members worldwide. While there are thousands of billionaires, each country has just 1 richest billionaire.

The average net worth of the 73 listed billionaires is $14.8 billion
Jeff Bezos, wealthiest billionaire in the world, has a net worth over 10x the average at $149.7 billion
Most common sources of wealth: Banking/Finance/Investments, Diversified (large conglomerates with multiple divisions) and real estate
5 of the 73 listed are women

Our graphic takes data from the most recent Forbes billionaire list. The graphic shows the one richest person from the 73 countries listed. The image further groups the billionaires by their respective region (Americas, Asia, Europe, Africa), highlights the source of their wealth (i.e. Banking, Diversified, Mining etc) and their estimated net worth figure. Find out who your country’s richest person is below.

Top 5 Richest Billionaires By Wealth and Country

1. Jeff Bezos – $149.7B, U.S.
2. Bernard Arnault – $89.3B, France
3. Amancio Ortega- $63.7B, Spain
4. Carlos Slim Helu- $60B, Mexico
5. Mukesh Ambani – $52.9B India

The list of billionaires is impressive with many of them touting international celebrity status. Looking at the makeup of these individuals based on their geographic location also highlights some interesting takeaways. Here is a breakdown of what industries created the most wealth in each region:

Americas – Banking is the dominant player for wealth creation with over $306 billion of wealth created

Europe – Retail focused with many iconic brands (Nutella, RedBull, LVMH, ZARA etc) with $433.7 billion of wealth

Asia – Real estate is the wealth creator of choice with $271 billion of wealth

Africa – Commodities (Cement, Foodstuff, Diamonds etc) with $43 billion of wealth

While knowing how billionaires become rich is interesting, knowing how they spend their wealth is more insightful. Philanthropy of the world’s wealthiest is big business. Some have been generous giving away nearly 1% to 2% of their net worth to date. The most generous are committing to giving half, if not all away.

The Giving Pledge founded by Bill and Melinda Gates, is an organization that seeks to convince the world’s wealthiest people to give away half of their wealth to philanthropic endeavors. To date, 204 people have signed the pledge from 22 countries. Notable signers include Richard Branson, Warren Buffet, Bill Gates, Mark Zuckerberg and others. In terms of the wealthiest from each country, none are on the list with the notable exception of Mackenzie Bezos. Bezos, the ex-wife of Jeff Bezos, has a net worth of $36 billion and has committed to the Giving Pledge.

The Giving Pledge has notable billionaires but none that top the wealthiest list from their respective countries. The pledgers tend to be couples and from North America which has the greatest concentration of billionaires in the world. The U.S. has more billionaires than China, India and Germany combined. As the world’s billionaire population becomes more global, one would hope that philanthropy also follows suit.”

13 June 2019

Visualization

https://howmuch.net/articles/richest-billionaires-by-country-2019

#44 TurnerNation on 06.13.19 at 8:16 pm

Got Gold? Gap up and go. Uuuuup.

#45 Sail away on 06.13.19 at 8:23 pm

#22 Damifino on 06.13.19 at 5:51 pm

There are days when I think it would have been best to let Meng what’s-her-name just get on that connector flight to Mexico. It’s what Trump would have done in similar circumstances. He cares nothing for international law and no doubt figures we’re chumps. Is he right? If not, please tell me why.

——————————————-

Chumps? Us and our illustrious leader Justin? No, couldn’t be…

I’m just sitting here smoking a fattie and drinking water from my paper box water bottle sort of thing reviewing all the foreign investment that has fled Canada and wondering how anyone could think we’re chumps.

#46 Nonplused on 06.13.19 at 8:25 pm

You can finance a tattoo? Anyway I don’t want one I see tattoos as a primitive way of “over-posting” on Facebook. Nobody really wants to know that much about you. And we all know the tattoo is a reflection of how you would like to be seen, not who you are. You aren’t a serpent dragon, sorry. Bad choice. And a skull? Are you a purveyor of death or a suicide risk? Either way the rest of us think it’s gross and a classic case of “over-sharing”. I do find the gross tattoos helpful though, it helps me instantly know whom I should avoid, for both personal and business ventures. Anyone who has modified their skin to make them look like a psychopathic killer should be treated as if they potentially are a psychopathic killer. Keep them away from your kids. Keep them away from everything actually. You don’t even want them mowing your lawn unless you are watching on the deck with a shotgun. These people are self-declared antisocial. Avoid them. Artwork belongs on a canvas.

——————-

The debt situation is perilous indeed, but it will not be the debtors who suffer anymore than they already do, because they have nothing left to lose. Never a debtor nor a lender be. But the lenders are about to find out that you can’t get blood from a stone. You can throw a debtor in prison, but that actually costs more money that somebody has to pay than just forgiving the loan and stealing the assets. I have no sympathy for the lenders, loaning money to people who can’t pay it back is an immoral act. First, it destroys the borrower, then it destroys the lender.

When the Canadian government either defaults on its’ debt or resorts to inflation, I will have no sympathy for those who foolishly lent it money in the first place. What you did was immoral, lending money to a corrupt government with the hopes you could get a stream of revenue from taxation applied to you neighbors. Karma is a real bitch, and you are already getting your just rewards with yields below inflation and then taxed. It will get worse. Much worse. You aren’t getting any of that money back in purchasing power. And you deserve it. It’s like you lent money to a drug addict and expected his burglaries to cover both the loan and his continuing addiction.

Never lend your government any money. If everybody followed this commandment we wouldn’t be in this spot. If they need the money we can vote on it and pay it as a tax we all agree on, but don’t ever lend them a penny. And don’t ever think anything the government proposes is for your own good. If the government is doing it, it is most likely a bad idea. Sort of like Turdeau’s “um, er, paper like, drinking box water bottles”. Idiot. I love that video though because there is no way Turdeau could beat a wet poodle now that it’s gone viral. Even the leftist of the lefties have to admit they don’t have a candidate.

#47 TurnerNation on 06.13.19 at 8:25 pm

Smoking man’s Rule of 90 ?
90 minus your age is how many $ you should spend on boze that night? Else sobar :)

#48 Old Dog New Tricks on 06.13.19 at 8:30 pm

Garth,

You wrote, “More money thrown out the window on interest means less available for important stuff like dog food and a new car. The economy takes a hit as billions a year are transferred from the paycheques of employees to the coffers of lenders.”

But doesn’t the interest translate to bank/lender profits; that to paychecks for their employees and interest/dividend payments for us. Those original interest payments make it back to the economy in one way or another.

I’m clearly missing why this indirect avenue is worse for the economy.

-RD

—————-

I was thinking the same thing. It seems to me that most people have a “choice” to own the banks instead of letting the banks own you. Even in Garth approved BD portfolio you indirectly own them. Choose well my friends.

#49 Deplorable Dude on 06.13.19 at 9:15 pm

I love it that all these morons max out their LOCs trying to keep up with the Jones’s…pays my juicy bank dividends every quarter.

Hard to see how the US is heading to recession….basically more jobs than people looking currently.

All that fretting last week over Mexican tariffs….what a big stick that turned out to be…..Mexico folded like a cheap suite. They know if they screw up…in 90 days they get hit with 25%….

Looks like they both folded. – Garth

#50 Ace Goodheart on 06.13.19 at 9:20 pm

Keynesian economics doesn’t really work anymore because interest rates can’t be put up anywhere near the point that they would actually start to effect economic activity. This is due to excessive debt, both government and private.

All we have now is a situation where rates must stay low otherwise both public and private debt would become unservicable.

Playing with rates just controls how much more people can borrow. It has no effect on economic activity.

For a healthy Keynesian economic recession/ expansion economy to work, we’d need to be able to shift interest rates from between around 2% to 10%.

As it is, there is no way we can even get them to 2%.

So we’re below the bottom rung of the scale in functionality.

If we were flying an air plane our location would be referred to as “the back end of the power curve” where everything you thought you knew is reversed.

In our situation, low rates lead to economic stagnation and recession, and high rates lead to bankruptcies and insolvent governments.

We can’t get to the point where playing with interest rates would have a predictable and positive effect on the economy.

#51 Karlhungus on 06.13.19 at 9:28 pm

Meanwhile, in Alberta, it’s been a 10 year long recession.

#52 DON on 06.13.19 at 9:31 pm

I’m sure this it just an isolated incident…but. This happened last summer as the slowdown started to set in.

“A North Vancouver real estate agent who fudged an offer on a home in an attempt to get a higher purchase price has been suspended for nine months and ordered to pay more than $46,500.

Last summer, the Real Estate Council of B.C. found that Trevor Inglis had committed professional misconduct by forging or altering the offer and then denying he’d done it. He also committed conduct unbecoming of a realtor when he threatened his co-listing agent on the house.”

https://www.cbc.ca/news/canada/british-columbia/b-c-realtor-who-faked-an-offer-and-threatened-a-colleague-has-licence-suspended-1.5174654

#53 Reality is stark on 06.13.19 at 9:43 pm

It’s only a recession to real people. The government is still committed to raising your property taxes oblivious to your conundrum.
Your poverty is real and your debts will overwhelm you and you likely have no company pension plan. The risk averse will be rewarded as they have no accountability.
The truth of the matter is simple. Add up all public sector costs in 2008 from all levels of government. Add up all those costs in 2018. The 2018 number should be 90% of the 2008 number.
Instead we reward the risk averse and create a no growth economy.
Every young person with a brain is scrambling to work in health care where you don’t need to sweat to get customers. A lot of them tried the private sector but didn’t enjoy being whipped.
Somehow the public sector has convinced the Canadian people that it makes sense to send a greater share of resources to the risk averse and to do this into perpetuity. Prosperity will be the result.
The reality is recession, poverty and suicide.

#54 DON on 06.13.19 at 9:48 pm

The R word.

There’s a good chunk of working adults that have yet to experience a recession. And I bet there is a large number of folks who forgot what recessions were like.

Recessions suck!

Like a bad hangover and the smell of puke in the morning.

Financial stress leads to divorce or hunkering down and giving up all the frills, more stay vacations and debt repayment. The Grind!

So…if we are now discussing the R word the next questions are magnitude and impact. Will it interrupt retirement plans leading to less job replacements? I guess we will find out in the next while. Debt saturation is definitely a risk.

One more thing…our dollar sucks at the moment – car parts are that much more expensive. Has the US increased there prices? Hmmm! Will have to watch that.

#55 DON on 06.13.19 at 10:02 pm

Garth

The local Vancouver newspapers have news stories on millenials only able to pay $250k for a house on average salaries. Then your favourite Vancouver Sun columnist has an article (today) on mansions in West Vancouver and Richmond that are reporting poverty level incomes, quite a few according to the article. The pot is being stirred.

Do you think the Millennials will sway the vote if a ban on foreign ownership is offered by a federal political party?

#56 the Jaguar on 06.13.19 at 10:20 pm

@#22 Damifino on 06.13.19 at 5:51 pm
There are days when I think it would have been best to let Meng what’s-her-name just get on that connector flight to Mexico. It’s what Trump would have done in similar circumstances. He cares nothing for international law and no doubt figures we’re chumps. Is he right? If not, please tell me why.

Allow the Jag to respond to this interesting question:

Ask yourself ” What would Constable Benton Fraser, Royal Canadian Mounted Police do”? It’s a Due South moment. We had to follow the rule of law. We are Canadian after all… China knows it, too. But they have to play every card in their arsenal. Just like we still have the 5G card up our sleeve. They need our support. It’s a game of chicken. I kind of like the idea of looking the other way when the Chinese equivalent of navy seal team springs her from captivity. It’s the romantic in me, I guess. Oh my, I can hear the theme music from the Pink Panther playing in my head….

#57 Scheer Weakness on 06.13.19 at 10:27 pm

And if Canadians are reckless enough to vote in Doug Ford lapdog Andrew Scheer, the recession will be much worse and much longer lasting.

#58 Sam on 06.13.19 at 10:48 pm

Balanced ?

Don’t even smell stocks during a recession , run

The key ? Rental income :)

#59 Renter's Revenge! on 06.13.19 at 10:53 pm

#32 Rule of ninety on 06.13.19 at 6:32 pm

I am 93 years old. How do I shove -3 percent of my net worth into real estate?

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

Short a shed.

#60 The Great Gordonski on 06.13.19 at 10:56 pm

I called the recession of Q4 in Canada alone, six months ago, no recession in the USA. The Trudeau Economy is false, phony, lies and plain bullshit. Businesses are reporting contraction, Trudeau stuffs the ballot box with made up civil related “jobs” in Liberal ridings. The reality is that Canada is falling hard and fast after being pushed over a cliff by Trudeau’s foreign money backers. No country in the world has snarled it’s resources related economy to a screeching halt, only Trudeau’s Canada. The media is complicit, but they have a 600 million dollar guarantee that wages in that sector will remain stable. Canadas big union is neck deep in bribes and couldn’t care less.

#61 MF on 06.13.19 at 10:56 pm

#53 Reality is stark on 06.13.19 at 9:43 pm

Just lol at this guy. Any sources to back up your BS claims? Of course not. You never do.

Anyways,

Let’s not forget the private sector spirit is about risk and reward?

That’s why people go into the private sector. The prospect of ownership + large profit/wealth accumulation is the draw, but like everything else in life this large reward comes with large risk.

So when the natural business cycle moves into recession what do you do? Blame someone else, of course.

Here’s a thought: you made your choices. You are the one responsible for not having pension/savings/customers during lean times. Accept the risks and try to improve your situation instead of blaming everyone else in your nightly complaint fest.

MF

#62 Bob Dog on 06.13.19 at 11:09 pm

The minister of financial terrorism was in Vancouver today to placate his victims regarding government facilitated money laundering. If I had known I would taken the day off to kick him in the nuts so hard his grandparents would have felt it in hell.

#63 Nuke on 06.13.19 at 11:09 pm

I would like to buy another house but I would miss spending 2k a month less on rent than current market rents and 4k less than a mortgage. Not to mention that the maintenance staff show up literally as I get off the phone and over deliver a loose wire on the stove and I get new wiring and burners. This week a checkup gets me a new bathtub, vanity and retiling of the kitchen and bathroom. Having positive cash flow, solid retirement funds and no debt also help. Happy to have sold real estate at overasking.

#64 Coinnut on 06.13.19 at 11:17 pm

That’s full of BS. Most canadians don’t have any money left by the time they retire.

https://business.financialpost.com/personal-finance/retirement/retirees-worldwide-may-run-out-of-money-10-years-before-they-die-report-shows

https://www.bnnbloomberg.ca/retirees-risk-running-out-of-money-a-decade-before-death-1.1272545

#65 Phylis on 06.13.19 at 11:43 pm

.9 on the clock , it is over.

#66 Phylis on 06.13.19 at 11:47 pm

Oh, and queue the sad anti TO complainer guy.

#67 Oakville Rocks! on 06.13.19 at 11:55 pm

Yup – the R-word is RAPTORS! Raptors win! Maple Leafs are next.

#68 Toronto Raptors Are the NBA Champions!!!!! on 06.13.19 at 11:56 pm

The great city of Toronto now has an NBA championship team!!!!!!!!!!!

The Raptors are the champs!!!!!!!!!!!!!!!!

Yes!!!!!!!!!!!!!!

#69 DON on 06.14.19 at 12:04 am

#32 Rule of ninety on 06.13.19 at 6:32 pm

“Use the Rule of 90 as a guideline. (Ninety less your age should approximate the max amount of total net worth that’s in real estate.)”

I am 93 years olf. How do I shove -3 percent of my net worth into real estate?
*****

Good one!

#70 Oakville Sucks on 06.14.19 at 12:45 am

Garth!!!… you finally joined me on the recession side of the fence! Welcome.

#71 Captain Uppa on 06.14.19 at 12:46 am

Raptors win!!

This has gotta be awkward for 50 Years Of Leafs Incompetence.

#72 canuck on 06.14.19 at 12:56 am

The recession isn’t coming… it’s already here. The media just haven’t tripped over it yet. Auto sales are down, boat and RV sales are down and other than earth muffins on the left coast living on helocs, eating sushi, restaurants aren’t filled. People aren’t spending because they’re likely scared of whats ahead.

#73 Shawn Allen on 06.14.19 at 1:15 am

Actually, you don’t undrstand

#33 Bob Dog on 06.13.19 at 6:35 pm

Im no financial expert but maybe someone here is. I understand the process where banks create money from nothing and lend it at interest.

****************************
You are clearly right that you are no financial expert. And you are very wrong to think you have an understanding of how banks create money from nothing and lend it at interest.

But if you think that is true, surely you are all-in on bank shares especially when they are relatively cheap in relation to earnings and book value.

What could be better than the opportunity to grab shares of allegedly perpetual free money machines at like 12 times earnings? Life is indeed grand!

#74 Bob Dog on 06.14.19 at 1:52 am

@ImGonnaBeSick

Sounds great. Let’s privatize healthcare. How do I invest in the pain and suffering of my fellow Canadians. I suspect people will pay anything to live.

#75 Smoking Man on 06.14.19 at 2:21 am

Nice Job Raptors.

Canada finally gets a win. We can forget for a few min about all the debt the govts has and all those helocks taken out by mom a dad so little son Johnny can bost how successful he is owning 500 sqft box in the sky.

Party on kids.

#76 Smoking Man on 06.14.19 at 2:38 am

On the drunken road to becoming white trash in designer flip flops. I will own the trailer park.
This song works for me.

https://youtu.be/xvaEJzoaYZk

#77 Bronzini on 06.14.19 at 4:00 am

Canada doesn’t need more China trade…that’s the most childish thing I heard in a long time..coming from someone like you.

Are people from the China’s people party paying you ??? Are you a commie Garth??

OMG..

#78 John Tory on 06.14.19 at 5:17 am

#71 Captain Uppa on 06.14.19 at 12:46 am
Raptors win!!

“This has gotta be awkward for 50 Years Of Leafs Incompetence.”

The blathering moron tried to mask it with the nonsense that the NBA championship means nothing to Toronto, only the Stanley Cup. Well guess what. The idiot has the truth inverted. The NBA is huge worldwide. Millions in places like China watch the NBA and couldn’t give a damn about the NHL. They couldn’t name one NHL player or team. They air NBA games all over China and couldn’t give a damn about the NHL. Ditto for countries around the world where the NHL doesn’t mean a thing. Winning the NBA title is way greater worldwide that the Stanley Cup. Mr. Incompetence is so filled with jealous rage and blathering lunacy that he can’t see this. Blather on moron while the rest of Canada celebrates!

#79 Howard on 06.14.19 at 5:48 am

#104 IHCTD9 on 06.13.19 at 11:22 am

All those slaves working for a dollar a day, are working for YOU. Every consumer good you purchase is 1/5 the cost that it would be if it had been made in the West. You are likely too young to appreciate this, but I am just old enough to have worked and been a consumer in the 80’s when everyone in the ‘hood mowed their 1-2 acres with a single 20″ push mower.

Trust me – all the middle men in the supply chain between China and you have beaten their competition into the ground – the big winner is the end user who buys 3rd world made goods at big box stores for a price so low it should make you laugh.

How can a 230 pc. Ti coated drill set cross 1 Ocean, and 1 Continent, have made 3-4 organizations some profit, and your price off the shelf is 30.00? It’s mind blowing to those who remember what it used to be like.

—————————————-

I will take 1980s housing prices (adjusted for inflation) in return for much more expensive, but higher quality, consumer goods.

#80 Howard on 06.14.19 at 5:55 am

Btw did anyone bother to ask Twinkle Toes why he won’t drink tap water? Does he think Canada’s water treatment facilities are inadequate?

I drink nearly ONLY tap water. No bottled water, no juice, no pop. Occasional coffee/tea or beer. I haven’t mutated yet.

Explains much. – Garth

#81 Gravy Train on 06.14.19 at 6:05 am

#50 Ace Goodheart on 06.13.19 at 9:20 pm
“Keynesian economics doesn’t really work anymore because interest rates can’t be put up anywhere near the point that they would actually start to effect economic activity. This is due to excessive debt, both government and private.” Keynesian economics is not limited to just monetary policy; it also includes fiscal policy. :P
https://en.m.wikipedia.org/wiki/Keynesian_economics
https://en.m.wikipedia.org/wiki/Monetary_policy
https://en.m.wikipedia.org/wiki/Fiscal_policy

“For a healthy Keynesian economic recession/ expansion economy to work, we’d need to be able to shift interest rates from between around 2% to 10%. As it is, there is no way we can even get them to 2%. So we’re below the bottom rung of the scale in functionality[…]. We can’t get to the point where playing with interest rates would have a predictable and positive effect on the economy.” You’re describing a liquidity trap. Keynes came up with this idea 83 years ago. You’re a little late to the party! :P
https://en.m.wikipedia.org/wiki/Liquidity_trap

#82 Gravy Train on 06.14.19 at 6:16 am

#77 Bronzini on 06.14.19 at 4:00 am
“Canada doesn’t need more China trade…that’s the most childish thing I heard in a long time..coming from someone like you.”

Please tell me you don’t vote in federal elections. :P

#83 conan on 06.14.19 at 6:19 am

Bad news for American farmers if China never buys their produce again. Trump goes down in history as the worst POTUS ever.

Don’t even get me started on the mess he has created in the M.E.

#84 Howard on 06.14.19 at 7:19 am

#83 conan on 06.14.19 at 6:19 am
Bad news for American farmers if China never buys their produce again. Trump goes down in history as the worst POTUS ever.

Don’t even get me started on the mess he has created in the M.E.

——————————————

Even worse news for China if the US never buys their substandard products ever again and instead sources from Vietnam, Cambodia, Laos, India, or any number of other competitors to China.

You’re dreaming if you think China has the upper hand here. Never bet against America.

And I wonder where Twinkle Toes will rank on the list of Canadian PMs? We’re at 23 PMs in Canada’s history so far but I think it’s safe to put him down around 50 right now as one can reasonably assume it will take centuries for someone even worse to turn up.

#85 Vatvapm on 06.14.19 at 7:51 am

Canadian households are not the most leveraged in the developed world. I believe the Aussies down under beat us by around 20% against GDP. The domestic economy is pooched because the boffins at the RBA allowed the currency to strengthen from 70c to 110c against the USD, hollowing out the economy in the process. Now that the mining boom is fading, the currency is back under 69cents but they no longer have a robust manufacturing or tradables sector to benefit from a weaker currency. And guess what – the RBA just cut rates to 1.25% with another 2-3 to come looking at what the bond market. MSM and the big 4 banks are openly talking about QE and MMT. So load up Canada – we can’t let the Aussies take gold here.

#86 fiscal conservative on 06.14.19 at 7:56 am

Morgan Stanley came out yesterday (cnbc website) with shocking news.
https://www.cnbc.com/2019/06/13/a-morgan-stanley-reading-on-the-economy-collapses-by-the-most-ever.html

US economy collapsing by most ever.

Don’t bet on it. – Garth

#87 MF on 06.14.19 at 8:06 am

Congratulations to the Raptors, to Toronto, and to all the fans across Canada.

Nail biting game. Awesome celebration after.

Feels a little like 92 and 93 with the Jays.

MF

#88 crowdedelevatorfartz on 06.14.19 at 8:11 am

@#32 Rule of Ninety-Three
“I am 93 years olf. How do I shove -3 percent of my net worth into real estate?”

+++++

Actuarially speaking…..You should ( after selling the house) have been relaxing in a Porridgeville Resting Home for the last three years…

#89 50 YEARS OF MAPLE LEAF INCOMPETENCE! on 06.14.19 at 8:12 am

So sad, yet so predictable.

Barely moments after the CRAPtors gave GTAholes a distraction from their terrible quality of life, melting real estate market, horrific commutes and incompetently managed transit system, THIS happens:

https://oaklandnewsnow.com/2019/06/14/did-toronto-raptors-president-masai-ujiri-assault-alameda-sheriffs-deputy-videos-inconclusive/

https://www.cbc.ca/news/canada/toronto/yonge-dundas-square-shooting-raptors-win-celebration-1.5175357

Violent thuggery and murderous rampages are always just around the corner for Toronturds. It’s in their DNA.

How many will be shot between now and the CRAPtors parade on Monday?

#90 thebarold on 06.14.19 at 8:16 am

15%? Why that’s like a second tax. Maybe that’s how we need to think about debt. It’s like a tax that goes on after you die. I may need my head checked but maybe more trade isn’t the answer but a reset of what we really need to be consuming. How much of tomorrow’s income am I committing to today’s consumption? Is the cheap, disposable crap we import from China really worth it?

#91 50 YEARS OF MAPLE LEAF INCOMPETENCE! on 06.14.19 at 8:16 am

To all the members of the CRAPtors and their Rapt Whore fans, please for God’s sake….,

PUT YOUR WEAPONS AWAY AND BE CIVIL!

Your thuggery is SO UN-CANADIAN :(

#92 crowdedelevatorfartz on 06.14.19 at 8:17 am

@#52 Don
“A North Vancouver real estate agent who fudged an offer on a home in an attempt to get a higher purchase price has been suspended for nine months and ordered to pay more than $46,500.”

*****

This is the tip of the iceberg
One can only hope that the judgement sent a chill through the industry.
We can also hope that anyone else who used this realturd is asking questions about their sale and counter offers..

#93 Tater on 06.14.19 at 8:21 am

#4 Captain Uppa on 06.13.19 at 5:02 pm
“We continue to buy houses that cost ten or twelve times what we earn – Garth”

We do?! So you’re saying people who bring in 200K household income yearly are buying homes for 2-2.5M?

Again, this is anecdotal evidence, but everyone I know in that income bracket are buying in the 850K range or just a smidge over 4x income.

So I would agree if what you say is true; people are digging their own holes.
————————————————————–

10-14x definitely happens, but it’s for people who have built up significant equity in a previous property. Their mortgage is closer to 6 or 7x, but they are still exposed to a loss that equals a year’s income for each 10% drop in price.

I’ve talked to people like this, and when I mention the risk, they just sort of shrug. It’s house money to them, in the gambler’s sense.

#94 Tater on 06.14.19 at 8:35 am

#36 Stan Brooks on 06.13.19 at 7:03 pm
#32 Rule of ninety on 06.13.19 at 6:32 pm
“Use the Rule of 90 as a guideline. (Ninety less your age should approximate the max amount of total net worth that’s in real estate.)”

I am 93 years olf. How do I shove -3 percent of my net worth into real estate?

Sell short Genworth and the banks for 3 % of your net worth?

#33 Bob Dog on 06.13.19 at 6:35 pm
My question is this. Why cant we nationalize the banking system in the same way and pay interest to the shareholders of the bank where everyone is Canada is a shareholder.

What an ignorance. The banks own this place. ‘We’ are just the sheeple temporary inhabiting their land. The politicians are just dumb sheppards.

You are on the hook (the man) for all sort of taxes, fees, expensive but substandard oligopoly services, are hit by inflation, automation and outsourcing and still are expected to support the budget and the needs of all old timers, poor etc.

This is the purpose of debt that individuals like Shawn Allen love, to hook you up and then beat you up to pay it back in non existent interest money. The more you pay the deeper in debt you go.

Beautiful perpetum mobile that requires significant degree of brainwashing/called democracy and freedoms.

If you disagree, you are an outlaw.
————————————————————–

How’d you get loose? Perhaps they need to up your Thorazine dose.

And the solution to your alleged problem is simple: buy bank stocks. And even better work for a bank and you’ll get given a bunch of stock every year!

But being a bitter, cranky, old man, seems to be working for you.

#95 TurnerNation on 06.14.19 at 8:38 am

Gartho was smart getting out of this hole city.

A TTC Bus there to protect Raptors fans against “Van attacks” (watch out for those angry vans!) covered in graffiti and used as a giant selfie stick. Let’s call this the T2 generation. I bet most are post secondary students about to take on 50k of debt. I’m sure they’ll be fine:

https://i.redd.it/290gj4pq4a431.jpg

#96 IHCTD9 on 06.14.19 at 8:58 am

When you are reading about Canada’s economy and debt levels, try listening to Holst’s “Mars, Bringer of War” while doing so.

https://www.youtube.com/watch?v=L0bcRCCg01I

A natural fit!

#97 PoorEngineer on 06.14.19 at 9:12 am

#71 Captain Uppa on 06.14.19 at 12:46 am
Raptors win!!

This has gotta be awkward for 50 Years Of Leafs Incompetence.

———————————————-

Maybe he’ll leave and find something better to do with his time instead of wasting Garth’s and our’s.

Congratulations Toronto! You deserve it!!!

(sorry Garth for being off-topic)

#98 The Great Gordonski on 06.14.19 at 9:24 am

DELETED

#99 crowdedelevatorfartz on 06.14.19 at 9:31 am

Yo Blacksheep
Never mind Mental Awareness Month …
Its World Blood Donar Day.

https://www.who.int/campaigns/world-blood-donor-day/2019

Didnt know there was a world Blood Donar Day?
Well, to be honest, neither did I.

Wear a pink shirt and Go spill a little blood while I ride the elevator

#100 Tater on 06.14.19 at 9:35 am

#50 Ace Goodheart on 06.13.19 at 9:20 pm
Keynesian economics doesn’t really work anymore because interest rates can’t be put up anywhere near the point that they would actually start to effect economic activity. This is due to excessive debt, both government and private.

All we have now is a situation where rates must stay low otherwise both public and private debt would become unservicable.

Playing with rates just controls how much more people can borrow. It has no effect on economic activity.

For a healthy Keynesian economic recession/ expansion economy to work, we’d need to be able to shift interest rates from between around 2% to 10%.

As it is, there is no way we can even get them to 2%.

So we’re below the bottom rung of the scale in functionality.

If we were flying an air plane our location would be referred to as “the back end of the power curve” where everything you thought you knew is reversed.

In our situation, low rates lead to economic stagnation and recession, and high rates lead to bankruptcies and insolvent governments.

We can’t get to the point where playing with interest rates would have a predictable and positive effect on the economy.
—————————————————————

Rates will go up when the market gets the sense that our debts aren’t serviceable.

#101 Flop... on 06.14.19 at 9:36 am

On behalf of Justin Trudeau, I would like to apologize to the Golden State Warriors…

M44BC

#102 45north on 06.14.19 at 9:46 am

Wolf Richter says that on average, Americans have less debt than before the Great Financial Crisis and are therefore less vulnerable but the bottom 40% are just as vulnerable as before.

https://www.youtube.com/watch?v=w7ZX0AhbWDU

The Canadian situation is worse. Canadians have way more debt.

Wolf doesn’t actually say what’ll happen to Americans but Garth does say what’ll happen to Canadians:

Most significantly, however, it will destroy a lot of people when the next recession arrives.

We’re coming off ten years of recovery and the feds are already in deficit. The kitty is bare.

In the story of the ant and the grasshopper, Justin Trudeau is the grasshopper.

#103 dharma bum on 06.14.19 at 9:57 am

#89 50 YEARS OF MAPLE LEAF INCOMPETENCE!

Violent thuggery and murderous rampages are always just around the corner for Toronturds. It’s in their DNA.
——————————————————————–
It’s always nice to celebrate a win. We’ll take it. We needed it. Toronto’s self-esteem was on the ropes.

Unfortunately, it had to be a basketball win.

A game of cheaters, actors, whiners, criers, fakers, thugs, hooligans, complainers, and sleazy underhanded opportunists.

Basketball players and fans…all of them deserve each other.

Go Leafs Go.

#104 Remembrancer on 06.14.19 at 10:12 am

#93 Tater on 06.14.19 at 8:21 am
10-14x definitely happens, but it’s for people who have built up significant equity in a previous property. Their mortgage is closer to 6 or 7x, but they are still exposed to a loss that equals a year’s income for each 10% drop in price.
———————————————–
Small quibble – its a current debt ratio, not the equity – so if the current mortgage outstanding is 6x-7x salary then they’re 6x-7x salary, not 10x-14x… Still high, though historically…

#105 oh bouy on 06.14.19 at 10:17 am

@#91 50 YEARS OF MAPLE LEAF INCOMPETENCE! on 06.14.19 at 8:16 am
To all the members of the CRAPtors and their Rapt Whore fans, please for God’s sake….,

PUT YOUR WEAPONS AWAY AND BE CIVIL!

Your thuggery is SO UN-CANADIAN :(
_______________________________

get outta here you racist piece of garbage.

#106 oh bouy on 06.14.19 at 10:23 am

@#66 Phylis on 06.13.19 at 11:47 pm
Oh, and queue the sad anti TO complainer guy.
____________________________

guy(s)

#107 PoorEngineer on 06.14.19 at 10:57 am

Scumbag broker might have to face the law after all.

“The broker, who leads The Bailey Group, one of Waterloo Region’s top selling brokerages, was accused in 2017 of trying to broker a deal for his parents to buy a woman’s Beechwood-area home for about half its market value.

Further complaints followed, one accusing the broker of overseeing a deal that alleged a fake competing offer inflated a home’s selling price. Another formal complaint claimed he oversaw a deal that allowed his mother-in-law to secure a sale for a home for $15,000 less than an offer already on the table.”

https://www.therecord.com/news-story/9435383-cambridge-real-estate-broker-loses-bid-to-stop-disciplinary-hearing/

#108 Howard on 06.14.19 at 11:31 am

#100 Tater on 06.14.19 at 9:35 am

Rates will go up when the market gets the sense that our debts aren’t serviceable.

————————————-

Through what mechanism might this happen though?

Since central banks are now definitively politicized, it means that they will never raise rates since no politician wants to oversee a severe recession. So it’s can-kicking forever.

What could possibly compel the Fed to raise rates if the President forbids it?

#109 Tater on 06.14.19 at 11:39 am

#104 Remembrancer on 06.14.19 at 10:12 am
#93 Tater on 06.14.19 at 8:21 am
10-14x definitely happens, but it’s for people who have built up significant equity in a previous property. Their mortgage is closer to 6 or 7x, but they are still exposed to a loss that equals a year’s income for each 10% drop in price.
———————————————–
Small quibble – its a current debt ratio, not the equity – so if the current mortgage outstanding is 6x-7x salary then they’re 6x-7x salary, not 10x-14x… Still high, though historically…

—————————————————————
Gath wrote: ” We continue to buy houses that cost ten or twelve times what we earn and will require decades to pay off. ”

and that ratio of house price to income is what was being questioned.

I may not have been clear, but what happens is people who are moving up, are able to do so based on the frothy value of their current place. The equity generated gets them into a new place, that costs 10x their salary, but they can only do it because they are putting down 2-4x of that salary from equity and taking on a 6-8x mortgage.

#110 Tater on 06.14.19 at 11:44 am

#108 Howard on 06.14.19 at 11:31 am
#100 Tater on 06.14.19 at 9:35 am

Rates will go up when the market gets the sense that our debts aren’t serviceable.

————————————-

Through what mechanism might this happen though?

Since central banks are now definitively politicized, it means that they will never raise rates since no politician wants to oversee a severe recession. So it’s can-kicking forever.

What could possibly compel the Fed to raise rates if the President forbids it?
—————————————————————

The bond market says hi.

#111 Remembrancer on 06.14.19 at 12:01 pm

#108 Howard on 06.14.19 at 11:31 am
What could possibly compel the Fed to raise rates if the President forbids it?
——————————-
Fed is in theory independent after appointment of members and responsible for the money through rate policy.

By forbids it do you mean by threatening to hold his breath until his face turns blue and he passes out or by suspending the constitution and ordering their arrest for noncompliance of his edict?

#112 SoftBuckleUp on 06.14.19 at 12:13 pm

#19 Dolce Vita on 06.13.19 at 5:46 pm

It’s a guessing game. At some point inflation will rear its head and rage and one of two things will happen (or unpleasant combination of such) 1. inflation will soar 2. rates will soar
Venezuela is an excellent case study of what WILL come. Timing is the only uncertainty

#113 Stan Brooks on 06.14.19 at 12:13 pm

#94 Tater on 06.14.19 at 8:35 am
#36 Stan Brooks on 06.13.19 at 7:03 pm

And the solution to your alleged problem is simple: buy bank stocks. And even better work for a bank and you’ll get given a bunch of stock every year!

But being a bitter, cranky, old man, seems to be working for you.

If you think that bank’s ability to extract profits from the bankrupt sheeple could go on like forever, sure, go ahead and load on bank stocks.

Canadian banks have 5 times the total market cap of all German banks, an economy twice that of Canada.

Bitter and cranky? Come on, relax and take it easy, have a shot of quality scotch and enjoy life.
And buy some quality hemorrhoid cream, it seems the current one is not working.

#114 Secret Sally on 06.14.19 at 12:15 pm

#107 PoorEngineer on 06.14.19 at 10:57 am

Inside sources say he already bought a brokerage in Miami so he probably already knows where it is heading

#115 crowdedelevatorfartz on 06.14.19 at 12:26 pm

@#101 Flop
“On behalf of Justin Trudeau, I would like to apologize to the Golden State Warriors…”

*****

An apology from a social justice warrior to a Golden State Warrior.
How ironically appropriate.

#116 Blacksheep on 06.14.19 at 12:30 pm

Crowd # 99,

“Yo Blacksheep

Never mind Mental Awareness Month …
Its World Blood Donar Day.
https://www.who.int/campaigns/world-blood-donor-day/2019

Didnt know there was a world Blood Donar Day?
Well, to be honest, neither did I.

Wear a pink shirt and Go spill a little blood while I ride the elevator”
——————————————
If you want blood, you got it…

https://www.youtube.com/watch?v=6EWqTym2cQU

#117 SoggyShorts on 06.14.19 at 12:35 pm

#79 Howard on 06.14.19 at 5:48 am
#104 IHCTD9 on 06.13.19 at 11:22 am
I will take 1980s housing prices (adjusted for inflation) in return for much more expensive, but higher quality, consumer goods.
*******************
Really? That’s a pretty terrible trade-off. I mean sure you buy a house once for 3x wage but just about everythingelse in your life costs 5-10x more, and the quality doesn’t go up by much. The net loss over your lifetime would be absolutely massive.

#118 IHCTD9 on 06.14.19 at 12:41 pm

#79 Howard on 06.14.19 at 5:48 am
#104 IHCTD9 on 06.13.19 at 11:22 am

All those slaves working for a dollar a day, are working for YOU….
___

I will take 1980s housing prices (adjusted for inflation) in return for much more expensive, but higher quality, consumer goods.
___

House prices are good in some areas, bad in others. You play your hand same as everyone else. I’ve made a decent life where houses were and still are affordable, and did so via the lower wages paid in the area. Nothing stopping you or anyone else from doing it too.

#119 Blacksheep on 06.14.19 at 1:05 pm

And it is not, mental awareness month.

#120 PastThePeak on 06.14.19 at 1:10 pm

#108 Howard on 06.14.19 at 11:31 am
#100 Tater on 06.14.19 at 9:35 am

Rates will go up when the market gets the sense that our debts aren’t serviceable.

————————————-

Through what mechanism might this happen though?

Since central banks are now definitively politicized, it means that they will never raise rates since no politician wants to oversee a severe recession. So it’s can-kicking forever.

What could possibly compel the Fed to raise rates if the President forbids it?
+++++++++++++++++++++++++++++++++

To make it simple, think of bonds (largest form of issuing debt). To get someone to buy your bond (of company X), they have to want to hold it – risk/return. If the coupon rate you are offering no longer entices anyone, then it has to be raised to get buyers. It is why lower rated corp bonds have much higher coupon rates.

This process is independent of central bank rates.

For now, institutional investors have been willing to purchase gov’t debt for very low rates, for safety/stability. But there is no guarantee this happens forever. All it takes is for the demand of new gov’t issues to drop somewhat (foreign investors cool, domestic banks, etc), and the average rate for those bonds will rise.

#121 45north on 06.14.19 at 1:13 pm

Blood Donor Day:

139 donations

it’s better to give than receive

#122 Tater on 06.14.19 at 1:24 pm

#113 Stan Brooks on 06.14.19 at 12:13 pm
#94 Tater on 06.14.19 at 8:35 am
#36 Stan Brooks on 06.13.19 at 7:03 pm

And the solution to your alleged problem is simple: buy bank stocks. And even better work for a bank and you’ll get given a bunch of stock every year!

But being a bitter, cranky, old man, seems to be working for you.

If you think that bank’s ability to extract profits from the bankrupt sheeple could go on like forever, sure, go ahead and load on bank stocks.

Canadian banks have 5 times the total market cap of all German banks, an economy twice that of Canada.

Bitter and cranky? Come on, relax and take it easy, have a shot of quality scotch and enjoy life.
And buy some quality hemorrhoid cream, it seems the current one is not working.
—————————————————————

Hmmm, I wonder if there might be a better metric to evaluate bank worth other than market cap to GDP. I know, how about earnings?

Why don’t you take a look at german bank earnings and see if that might explain their low valuation? If that doesn’t, maybe it has something to do with asset quality. Nah, couldn’t be.

#123 n1tro on 06.14.19 at 1:36 pm

#110 Tater on 06.14.19 at 11:44 am
#108 Howard on 06.14.19 at 11:31 am
#100 Tater on 06.14.19 at 9:35 am
—————————————————————

The bond market says hi.

——————-
Where then in a Joey Tribbiani voice, the Feds on the order of the government says “How you doing?”flashing a QE smile.

#124 Howard on 06.14.19 at 1:51 pm

#110 Tater on 06.14.19 at 11:44 am
#120 PastThePeak on 06.14.19 at 1:10 pm

Okay….but I gather we’ll all be pushing up daisies well before the debt of the world’s #1 economy is high enough to be deemed unserviceable and at risk of default. Surely that was not the reason for high rates in the 1970/80s?

#125 crowdedelevatorfartz on 06.14.19 at 2:05 pm

@#119 Blacksheep
“And it is not, mental awareness month.”
+++

My mistake.
I must be losing my mind…..

#126 Pfft on 06.14.19 at 2:16 pm

@#103 dharma bum on 06.14.19 at 9:57 am
#89 50 YEARS OF MAPLE LEAF INCOMPETENCE!

Violent thuggery and murderous rampages are always just around the corner for Toronturds. It’s in their DNA.
——————————————————————–
It’s always nice to celebrate a win. We’ll take it. We needed it. Toronto’s self-esteem was on the ropes.

Unfortunately, it had to be a basketball win.

A game of cheaters, actors, whiners, criers, fakers, thugs, hooligans, complainers, and sleazy underhanded opportunists.

Basketball players and fans…all of them deserve each other.

Go Leafs Go.
____________________________

enough with the generalizations.
Grow up son.

#127 tccontrarian on 06.14.19 at 2:55 pm

“Recession, you say? What recession?

Well, one is inevitable. It’s been a 10-year expansion and recovery so far since the abyss of 2009, and we’re due.” GT
/ / / /

Funny – I said precisely the same thing a few months ago and you thought it was ridiculous. Nice to see that you’ve come around!
Now, make me an offer I can’t refuse and I will consider working for you (I’m not ‘cheap’!) :)

TCC

#128 PastThePeak on 06.14.19 at 3:29 pm

#124 Howard on 06.14.19 at 1:51 pm
#110 Tater on 06.14.19 at 11:44 am
#120 PastThePeak on 06.14.19 at 1:10 pm

Okay….but I gather we’ll all be pushing up daisies well before the debt of the world’s #1 economy is high enough to be deemed unserviceable and at risk of default. Surely that was not the reason for high rates in the 1970/80s?
++++++++++++++++++++++++++++++++++++

Could be…forecasting is difficult…especially about the future.

The point was that debt yields can rise independently of central bank shenanigans. We are getting into uncharted territory with debt on a global level. The USD is the global reserve for now, but some large countries are trying to reduce dependence on that.

Will people happily buy US bonds for next to nothing when the debt is $40 trillion, and China / Russia and others are doing more transactions outside of USD? Maybe – few people can make those calls years in advance.

#129 Enlightened on 06.14.19 at 6:04 pm

Garth
How does the rule of 90 apply in my situation.
House is worth 1M and we have been mortgage free for over a decade now. I am 57 years old…. so I fail the rule?
Non RE assets are over 2.8M .
If I should abide by the rule, then I need to sell and down size. Not sure I will be doing myself and family a service by moving into a house worth $330 000 here in Montreal. Over head house costs would not be dramatically reduced by downsizing…not sure what my strategy should be here.

#130 Kye Goodwin on 06.15.19 at 6:35 pm

The current private debt situation is the single most important factor determining how well a national economy is doing in the short run. As long as bank debt can be created faster than it is being paid down there is a net addition to demand from lending. If we get into a condition where private debt has to decline overall, then expect a recession.