The bad omen

Remember when we all knew Americans were hedonistic, debt-lapping, financially crippled, amusing profligates? Well, maybe not. Or could be we’re just way worse.

First, consider borrowing. Households in both countries have been intemperate. In fact, when it comes to snorfling loans, Canadians have no equal. US families sharply reduced their appetite for mortgages after the housing market blew up in the mid-2000s, resulting in the credit crisis. But not us. We’ve continued to borrow like there’s no tomorrow (and there may not be), so that total household debt of $2.2 trillion now eclipses the size of the entire domestic economy.

Look at this. Tsk, tsk.

Of course most of this borrowing has gone into mortgages, helping inflate real estate values while deflating savings and investments. Apparently the Bank of Canada and all those one-paycheque-from-disaster surveys were correct. When the virus hit, personal finances disintegrated. The central bank’s latest report finds about a quarter of all families with mortgages were able to make two monthly payments, or less, before exhausting their resources.

Did they buy too much house and take on excess debt? Were lenders remiss and irresponsible in handing out all those loans? Did politicians screw up with all their pro-house-borrowing policies like RRSP loans, newbie tax credits and the shared-equity mortgage? Have we lost the culture of saving and self-reliance? Are these rhetorical questions?

Anyway, here we are. Virus world. Millions temporarily jobless. Mortgages going unpaid. It’s interesting that (at last count) 16% of Canadian owners had asked for payment deferrals, while in the US it’s half the number – 7.9%. Here over 720,000 are deferring and in the States (ten times the pop) the number is four million.

Last week some posters didn’t like the message that asking for a deferral might have consequences. But it’s true. And why not? If you miss payments, it’s noticed. The assumption is you were unable to make them. That doesn’t say anything good about your overall financial condition. If you were a lender, well, you’d make a note of that since staying in business means containing risk and shedding customers who can’t meet their obligations.

As reported. CHMC has been rejecting apps from people looking for refinancing after asking for a deferral. It just makes sense that any household not making payments during Covid will have more hoops to clear post-pandemic when a mortgage comes up for renewal. Is your job secure? What kind of job? How long? What employer? What salary? What’s your net worth? And if you’re self-employed, expect a full body cavity search.

Will a deferral affect your credit score?

Maybe. Deferred payments could end up marked as late or missed on your Equifax tab, which is based on the automated credit reporting system. One black mark like that is enough for a mortgage to be declined, so make sure you check. As a back-up, get a letter from your lender stating deferring payments were approved.

By the way, US virus law prevents lenders from reporting deferred payments to credit bureaus, but only temporarily. “Regardless, the resulting void in your credit history could be a signal to future lenders that you were having trouble,” Americans are being told. “That’s because creditors generally report “on-time” payments as they’re made for credit cards, auto loans, mortgages and so on. Even though your credit scores may not be negatively affected, those missing payments will very likely affect your ability to get a new mortgage in the future.”

So, use common sense. If you don’t need to defer, don’t. The consequences of doing so are unclear. But the statement this sends is not: you can’t pay. Is that really what you want the guys giving you money to think?

Finally remember that deferring a mortgage payment is not the same as having it waived. You still owe the money. It will end up increasing your debt and hiking monthly payment amounts, as well as (maybe) affecting a renewal.

Perhaps this is also a wake-up call. You borrowed too much. Or you saved too little. By the way, if this peckerish virus comes back for a second time, robbing jobs, don’t expect another deferral.

Having said all this, if you can’t make the monthly because you have no money, so be it. The shoe’s on the other foot. Now the bank has a problem.

About the picture: ” I saw this down the road from me in Dunbar on Westside Vancouver,” says our blog dog. “There is a hole where the leg should come out of the hull so should sink pretty fast. As per the economy, no matter much you spend, it’ll still be crap.”

 

180 comments ↓

#1 Ankushnr on 05.19.20 at 3:45 pm

#1….horray

#2 FreeBird on 05.19.20 at 3:46 pm

Deferment period: an agreed-upon time during which a borrower does not have to pay the lender interest or principal on a loan. Depending on the loan, interest may accrue during a deferment period, which means the interest is added to the amount due at the end of the deferment period.

https://www.cmhc-schl.gc.ca/en/finance-and-investing/mortgage-loan-insurance/the-resource/covid19-understanding-mortgage-payment-deferral

Deferral is a debt bubble not forgiveness. Think carefully.

#3 Sold Out on 05.19.20 at 3:54 pm

All true. If you truly need to defer mortgage payments, you really should consider selling your home.

The duration of the current deferral period is approximately the same amount of time it will take to sell your sharply priced home in places like GTA, YVR, Vic; apparently this correlation has been missed by the jobless indebted.

Running up a HELOC to pay the monthlies while your equity erodes isn’t sustainable. Unless you’re happy getting out with only your skivvies.

#4 crowdedelevatorfartz on 05.19.20 at 3:54 pm

My My
A scow on the toney side of Vancouver….how dare they…..

#5 Doug t on 05.19.20 at 3:55 pm

if There is a second wave of said virus this country is toast. Canadians forgot where the brake pedal is and have been full throttle spending far too long

#6 FreeBird on 05.19.20 at 3:56 pm

I realize my comment was basically same as Garth’s but sometimes it helps to have a concept said diff ways. This one s/b pretty clear now. Yes? I read Equifax and Transunion are advising those deferring any loan pyts to check w/lender. I’d go one step more and get copy of credit report online (or free by snail mail) to be sure. We do ours one a year to make sure there’s no errors. We’ve caught a few. Wait 30 days after first missed pyt.

#7 BAC on 05.19.20 at 3:57 pm

Hmmm … according to this WebMD article, research shows that those who had COVID19 have a STRONG immunity to the virus and in fact, the more common colds you’ve survived over your lifetime, the less severe this new coronavirus is for the individual:
https://www.webmd.com/lung/news/20200518/people-mount-strong-immune-responses-to-covid-19?ecd=wnl_day_051820&ctr=wnl-day-051820_RSSFEED1&mb=rTgDQ%2fnlAB4TMW9haz2s81ILWgnMJQ2fSS22r57cYHs%3d#1

This would explain the variances we see in severity of the virus in different populations. For example, homeless shelters have been tested and found to have 100% exposure and yet everyone is asymptomatic. This group of individuals have strong immune systems because they have built up their immunity through repeated exposure in close confined situations.

Fancy that.

#8 Ed McNeil on 05.19.20 at 4:06 pm

This is a sad picture for Canadians. The only way we can rapidly regenerate a recovering economy is by mass personal spending. If credit is curtailed there is no quick way out of this quagmire. A real catch-22 type situation.

#9 baloney Sandwitch on 05.19.20 at 4:10 pm

10% Covid-19 discount on houses in Toronto in April compared to Feb. The debt chickens are coming to roost.
https://www.thestar.com/business/real_estate/2020/05/18/is-covid-19-an-unexpected-shot-at-home-ownership-for-first-time-gta-buyers.html

#10 espressobob on 05.19.20 at 4:13 pm

The value of a buck?

Debt sucks for those that are slaves to their masters pulling the strings.

I prefer a set of scissors.

#11 Koan on 05.19.20 at 4:13 pm

Of course there are consequences when requesting deferrals. Not only will lenders care, but you can be sure that all those bank shareholders will be paying very close attention as to the bank lent money to so many people who needed so many deferrals so quickly.

#12 Linda on 05.19.20 at 4:14 pm

I’d like to believe most of those who asked for deferrals did so because they truly needed to, not because they thought this would be a payment ‘holiday’ with no credit consequences down the road. Thing is, I’m not so sure that is the case. Given that at least some of the government/taxpayer largesse has been used for items that are not necessities I think that the unintended consequence of providing relief is that folks see no reason to change their spending habits, because they expect the bailouts will continue. Forget about the Bank of Mom/Pop. The Bank of Canada will provide!

#13 The West on 05.19.20 at 4:17 pm

So essentially, we have backed ourselves into the dilemma that England found itself in circa 1960s. We have a financial system that has extended fraudulent wealth to the masses, that drives up the price of real assets until no one can conceivably afford them and then either the financial class OR the working class have to lose.

I know how this plays out. Congrats Canada, the future has been stolen from you.

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

#14 Lost...but not leased on 05.19.20 at 4:19 pm

Trump for PM !

#15 SunShowers on 05.19.20 at 4:26 pm

“Have we lost the culture of saving and self-reliance?”

No, we’ve lost the culture of good paying jobs.

Reliance on debt is what happens when costs of living outstrip median wages.

You mean spending more than you earn? – Garth

#16 Dutchy on 05.19.20 at 4:28 pm

Could WestJet buy Air Canada ?
(at a bargain price, with backing from the Feds)

Alberta would have a major national company
well into the long term future and be committed part of
our Confederation.

Better than a “dead” duck ??? (May be !!)

#17 Ronaldo on 05.19.20 at 4:35 pm

Don’t know if this is a bad omen or not but I’ve noticed in recent times that at the closing, huge volume of trading occurs which is related to MOC trades as you can see in the example below with this particular stock. In this case it is CIBC as seller and National Bank as buyer. Would any of the blog dogs know what this may be all about. Just havn’t noticed it before in such large volumes.

https://web.tmxmoney.com/quote.php?qm_symbol=wef

#18 Faron on 05.19.20 at 4:40 pm

7 BAC on 05.19.20 at 3:57 pm

I’ve similarly heard that one of the reasons kids are least effected is that their naive immune systems are constantly bombarded by non SARS-CoV-2 corona viruses so their immune response is keyed into such critters. There must be an expiry on the effect given that the older one is, the worse one fares.

One could imagine a world where Avery 5 or 10 years you gat the SARS2 until a vaccine comes along or all of the susceptible die off.

#19 Don Guillermo on 05.19.20 at 4:42 pm

#16 Dutchy on 05.19.20 at 4:28 pm
Could WestJet buy Air Canada ?
(at a bargain price, with backing from the Feds
**************************************

This government backing a Calgary based company??? Hahahahah very funny

#20 Ronaldo on 05.19.20 at 4:46 pm

#12 Linda on 05.19.20 at 4:14 pm
I’d like to believe most of those who asked for deferrals did so because they truly needed to, not because they thought this would be a payment ‘holiday’ with no credit consequences down the road. Thing is, I’m not so sure that is the case. Given that at least some of the government/taxpayer largesse has been used for items that are not necessities I think that the unintended consequence of providing relief is that folks see no reason to change their spending habits, because they expect the bailouts will continue. Forget about the Bank of Mom/Pop. The Bank of Canada will provide!
—————————————————————-
Well Linda, consequences don’t seem to make a heck of a difference nowadays. People will take whatever is thrown at them. Our PM has been dishing out cash left and right with little to no conditions eg: the $300 gift that my wife and I are going to be getting on our OAS cheques this month. Money we do not need or asked for. We will accept it but it will be donated to causes that require it more than we do so the gift will be put to good use at the local food bank. I hope that others in similar situation will do the same.

#21 Newcomer (orignal) on 05.19.20 at 4:48 pm

“Are these rhetorical questions?” That actually made me laugh out loud.

I have to agree about the deferrals. Curious thing. I have a credit card that I have had for 20 years. Rarely use it. Never has a balance. Yesterday it was cancelled. Fair enough, I wasn’t using it. But then I haven’t used it much for the past decade. Why now? I’d guess that the bank didn’t want the exposure anymore, even to someone with perfect credit. If you owe money at the moment (as anyone with a mortgage does) it would seem to be a poor time to being doing things that could make you less attractive to lenders.

#22 Sail away on 05.19.20 at 4:48 pm

#16 Dutchy on 05.19.20 at 4:28 pm

Could WestJet buy Air Canada ?
(at a bargain price, with backing from the Feds)
Alberta would have a major national company
well into the long term future and be committed part of
our Confederation.

Better than a “dead” duck ??? (May be !!)

————–

Too late, that duck is already dead. Onex of Ontario bought WestJet last year and took it private.

#23 SunShowers on 05.19.20 at 4:50 pm

“You mean spending more than you earn? – Garth”

Depends on how you want to define ‘earn.’

Canadians are about 50% more productive than they were 40 years ago, and yet real median hourly wages are about the same as they were back then.

If that 50% difference wages EARNED by the workers were actually being paid to them instead of to shareholders and company elites, then I don’t think we’d see much of a debt problem in Canada!

#24 Oakville Sucks on 05.19.20 at 4:54 pm

Covid 19 is just a fancy flu. This pandemic response has been in the blueprints for 25 years at least and timed perfectly for the indebted. They’ve done nothing but create a mountain out of a molehill to create financial chaos. Order out of chaos as they say.

Debt suckers will pay. Freedom fighters will be the targets.

#25 PBrasseur on 05.19.20 at 5:02 pm

Credit will flow in Canada until it doesn’t. I don’t know when it will happen but I’m pretty sure government will do everything in its power to keep it going as long as it can, that’s just how the Canadian economy works these days. Don’t expect government to kill the credit bubble, just the opposit it is now enhancing it to finance public debt like never before.

What will kill this bubble is the loss of investors confidence, and who knows when that might happen.

#26 renter in Surrey on 05.19.20 at 5:05 pm

…about a quarter of all families with mortgages were able to make two monthly payments…

..16% of Canadian owners had asked for payment deferrals…

If 75% were not able to make payments why only 16% asked for deferrals?

Eleven million people are still working. – Garth

#27 45north on 05.19.20 at 5:05 pm

Ed McNeil

This is a sad picture for Canadians. The only way we can rapidly regenerate a recovering economy is by mass personal spending. If credit is curtailed there is no quick way out of this quagmire. A real catch-22 type situation.

yeah, it’s pretty clear credit is going to be curtailed – the consumer is not going to save the country

my idea is to invest in the oil sands – including pipelines and refineries. My idea is to have a reliable source of energy for Ontario – make hay while the sun shines.

#28 under the radar on 05.19.20 at 5:06 pm

No doubt, come renewal time many will be punted to B lenders or sub prime lenders. I have already picked up a few nice private deals that could not get financed at a bank.

#29 Re-Cowtown on 05.19.20 at 5:07 pm

#16 Dutchy on 05.19.20 at 4:28 pm
Could WestJet buy Air Canada ?
(at a bargain price, with backing from the Feds)

Alberta would have a major national company
well into the long term future and be committed part of
our Confederation.

Better than a “dead” duck ??? (May be !!)

++++++++++++++++++++++++++++++++

If Alberta based Westjet bought Air Canada, Trudeau would ban flying.

#30 DownToFinance on 05.19.20 at 5:11 pm

#3 Sold Out on 05.19.20 at 3:54 pm
All true. If you truly need to defer mortgage payments, you really should consider selling your home.

^ This!

If you take a deferral you’re basically admitting you don’t save a dime when really you should be forced to sell your house instead.

The deferrals and bailouts are yet another giant middle finger to the savers who have responsibly waited on the sidelines for years.

Unfortunately though I don’t see any way out for the Canadian economy without extending deferrals and CERB.

#31 Armpit on 05.19.20 at 5:17 pm

T2 has avoided Responsible Government. He manages to give away money like Robin Hood without any accountability how it is to be repaid.

His popularity vote has skyrocketed as he shovels the money to people indiscriminately .

Even the Blog Dogs here have admitted in accepting the funding or delaying their mortgage payments even though not meeting the criteria in the true sense…saying, it’s my money…why not ?

T2 should have insured “we all feel the pain”, by implementing a 5-10% “covid tax NOW “on wages above $20/hr on all working people during the funding.

This way…the working people will certainly be asking questions right away….why are you giving all this money without the checks and balances implemented??

However…he knows this would ruin his popularity at this time AND the pending election.

Instead…when Morneau was asked about the costs (possibly running up to $1 trillion dollar… he rebuffed the question.

It’s only a matter of time, Folks. Financially, this will blow up real bad.

#32 Tim123 on 05.19.20 at 5:19 pm

This tells me a few things. The Canadian real estate market did not correct that severely during the great recession which means that the impending real estate crash after the mortgage holiday is over is going to be severe. The important thing for people who realize that they probably will not be able to last throughout the coronavirus recession which will be until a vaccine is found in the optimistic time frame of 12 to 18 months is to sell their house NOW. Don’t wait until the mortgage holiday is over. There are many people who will not realize that the best time to sell is before the impending crash which is all but inevitable. Even though you may not get peak profit it is better than losing your home and going bankrupt. The banks are not your friend, they will do what is best for them and that is to stay solvent

#33 Stoph on 05.19.20 at 5:20 pm

#15 SunShowers on 05.19.20 at 4:26 pm

“Have we lost the culture of saving and self-reliance?”

No, we’ve lost the culture of good paying jobs.

Reliance on debt is what happens when costs of living outstrip median wages.

—————————————————————–

… then start a business and make use of the available cheap labour.

#34 Reximus on 05.19.20 at 5:21 pm

#9…good luck getting that 10% discount. The only thing changed (so far) is the tier of properties actually selling at these much lower transaction volumes has gravitated to lower valued properties

#35 NEVER GIVE UP on 05.19.20 at 5:21 pm

I wonder if you removed the top 10% earners GDP and debt levels from both countries would it not be much more equal?

#36 Gulf Breeze on 05.19.20 at 5:22 pm

When children get colds, they usually get chest colds. Adults are more prone to head and sinus colds. Known fact. Think back to when you were a child and how many coughing colds you had and contrast what you experience now, as an adult.

It could be that kid’s immune systems revolving around viral lung issues are more primed due to viruses they have recently fought off.

The Covid 19 virus belongs to the same family as the common cold, not the flu.

#37 broader mind on 05.19.20 at 5:23 pm

I would not consider that paying 600k for a 500 sq. ft. condo is buying to much house. It is simply paying way to much for something worth very little. Our government / financial institutions play along when in fact it is very irresponsible to lend these amounts for something worth so little. As for deferrals,the bank should love all the extra mortgage debt occurring without paying sales commission . Mortgage and interest bonanza for free. Banks smiling when this is over.

#38 Dolce Vita on 05.19.20 at 5:23 pm

That boat, it needs portholes…so they can be polished.

Debt. Miss payments. Consequences.

#39 Howard on 05.19.20 at 5:35 pm

I remember how smug I felt in 2008. Not a proud moment, looking back.

“Oh those silly Americans, up to their eyeballs in debt. They don’t even know the difference between principal and interest! We Canadians are frugal by nature, this kind of disaster will never happen here.”

Well, to put it mildly, I have been schooled. I actually have very little regard for the country of my birth anymore.

#40 Freedom First on 05.19.20 at 5:37 pm

It is easy to see that the people who have followed the advice of our host with the steel abs have fared well in life, and the people who have not learned from Garth over the years are not doing well at all.

That is, if you have been paying attention and have been a long time reader of this #1 Canadian Financial Blog, as I and many others have been.

Freedom First

#41 Joseph R. on 05.19.20 at 5:40 pm

#29 Re-Cowtown on 05.19.20 at 5:07 pm

Why would Trudeau ban flying?

Weather will not be allowed to buy Air Canada due to the monopolistic situation it would create.

That said, flying would still be legal.

#42 Attrition on 05.19.20 at 5:43 pm

Watching the list of businesses ‘allowed’ to open in BC today should have made it clear how much of a socialist’s wet dream this virus scare is.

Seating limits in restaurants, ’cause ya the virus is only contagious if any restaurant is over half capacity. Smart virus, I guess. The government telling businesses how much money they’re allowed to make…wow.

A virus that was dangerous yesterday, suddenly safer today…because the frumpy un-elected lady from the government proclaimed it so. Suddenly now, the risk is acceptable…to her.

That fact that so few find all of this a shocking slap in the face is…shocking.

Your government and their un-elected appointees are dictating what you can and can’t do with your life, and there are no alarm bells? Nothing? Just the collective bleating of thanks from the masses, I guess.

Screw the economy–that pales in comparison to what this so-called country has lost: it’s citizenry.

If only Trump would annex the western half of this land, and turn it into something of value, to believe in, and not a glorified wood lot, warehouse and retirement community.

#43 akashic record on 05.19.20 at 6:00 pm

#15 SunShowers on 05.19.20 at 4:26 pm

“Have we lost the culture of saving and self-reliance?”

No, we’ve lost the culture of good paying jobs.

Reliance on debt is what happens when costs of living outstrip median wages.

You mean spending more than you earn? – Garth

You like to side-step the facts of macro-economy, like stagnating wages, what the comment was referring to. You make it sound like people on a large scale are individually responsible that their earnings or the value of their earning is not higher as it is. Individual efforts, abilities play important role, of course, but they are taking place in a larger economic environment, like the impact of globalization. Which happens to benefit more investors with capital than worker bees with their own labour. If by the beginning of globalization you managed to save some capital to invest, you are considerably better off than people who try to do the same after the effects of globalization on wages took place.

On the individual level, according to studies, “culture of savings” effectively does not exist when the earning does not afford meaningful savings. At that point individuals spend the for all practical purposes non-meaningful savable amount on small luxuries, like clothing, which gives the illusion and impression of social status.

If low-earning people (statistically substantial segment of Canadian population) have savings at the end of the month to buy half of an Apple share, they are more likely to not do that. Even if they did, and at the end of the year they owned 6 Apple shares, it would not be a meaningful saving.

Not even a decade, although the ROI on APPL was good, if you had 600 shares. Darn good if you had 6000, juicy if you had 60000.

With 60 shares… not so much.

That’s why good earning is the most important basis for the “culture of savings”.

#44 Yukon Elvis on 05.19.20 at 6:02 pm

About the picture: ” I saw this down the road from me in Dunbar on Westside Vancouver,” says our blog dog. “There is a hole where the leg should come out of the hull so should sink pretty fast. As per the economy, no matter much you spend, it’ll still be crap.”
…………………………….

Avast ya swab. That is a picture of the stern not the hull. The hull is in front. Shiver me timbers…….

#45 Reality is stark on 05.19.20 at 6:08 pm

Keep the party going.
Defer. Take the CERB since T2 has extended it.
You likely know there is no job waiting for you at the end of the rainbow.
Max the cards and then hand over the keys when the party ends.
Declare bankruptcy and vote for UBI like every other good Canadian socialist because after all some government agency owes you something.
Give it a few months folks. Once the rubber meets the road the party is over.
The government is trying to get CMHC to backstop the whole economy which is all housing anyway. It’s just one big dice roll.
The reality is that as long as housing flatlines or recedes the gig is up. It’s all over.
The bankruptcies will be epic. No one can float this level of debt when salaries are cut by 25% (other than the public sector).
Good luck.

#46 Re-Cowtown on 05.19.20 at 6:08 pm

#41 Joseph R. on 05.19.20 at 5:40 pm
#29 Re-Cowtown on 05.19.20 at 5:07 pm

Why would Trudeau ban flying?

++++++++++++++++++++++++++++++

Because Albertans would make a living. That is a non-starter for any Liberal government.

#47 Sail away on 05.19.20 at 6:10 pm

#33 Stoph on 05.19.20 at 5:20 pm
#15 SunShowers on 05.19.20 at 4:26 pm

“Have we lost the culture of saving and self-reliance?”
No, we’ve lost the culture of good paying jobs.

Reliance on debt is what happens when costs of living outstrip median wages.

————-

… then start a business and make use of the available cheap labour.

————-

No, no: Then start a business and pay them what you think they should be paid.

After you go bankrupt, recalibrate.

#48 Headhunter on 05.19.20 at 6:11 pm

I would say a vast majority is deferring cause that have too.. and its would be wise to hedge your bets.

Most are a paycheck away from a sh*tstorm.
Popular Martial Arts place in town has eviction notice (yes landlord cant evict yet but can post notice… I think) Anyhoo guy owes 2 coming on 3 months rent $40k.

How can you pay that with no customers? multiply that by the 1000’s. Homes is the least of our worries moving forward.

#49 Sail away on 05.19.20 at 6:11 pm

And another Canadian staple goes bankrupt.

Reitman’s has filed for creditor protection

#50 Grossman on 05.19.20 at 6:12 pm

TRESPASSING IS ILLEGAL:

https://www.blogto.com/real-estate-toronto/2020/05/toronto-tenants-staged-protests-outside-mansions-their-landlord-over-rent/

#51 Penny Henny on 05.19.20 at 6:15 pm

#79 John in Mtl on 05.16.20 at 7:39 pm
@ #1 TurnerNation on 05.16.20 at 12:26 pm

Seriously? Get a life, man!

You remind me of this girl who works in a store nearby; at the beginning of the shutdowns she had her hair on fire: “we’re going to be like Italy, just watch! Dead bodies everywhere, people dying in the streets, it’ll be hell!”
///////////

Are ya sure it wasn’t Dolce?

#52 Howard on 05.19.20 at 6:18 pm

Perhaps this is also a wake-up call. You borrowed too much. Or you saved too little. By the way, if this peckerish virus comes back for a second time, robbing jobs, don’t expect another deferral.

——————————-

Why not? Wouldn’t T2 simply pass a law mandating a year-long mortgage deferral or even pay for people’s mortgages directly from the federal treasury?

Garth I don’t know why you underestimate this government’s commitment to bailing out the irresponsible at the expense of the frugal.

#53 sailedaway on 05.19.20 at 6:22 pm

#33 Stoph on 05.19.20 at 5:20 pm

… then start a business and make use of the available cheap labour.

—————————————————————–

Yup, freelancers overseas are pretty cheap, work hard, aren’t unionized don’t think they are the centre of the universe and don’t complain all bloody day.

And you can get rid of them in a few clicks.

#54 You know val on 05.19.20 at 6:26 pm

Vote says BO….Open says DT….we are here for you and we are all in this together Says Everyone . THE NUMBERS GOOD! THE NUMBERS ARE BAD! This is all of us saying it ? !! Now what Dr. GT.?. This is what Sulu said this is the mathematics of the situation no smoke no mirrors…ya. ..its huge said the dealer….COME ON DOWN.da…com

#55 akashic record on 05.19.20 at 6:27 pm

#33 Stoph on 05.19.20 at 5:20 pm

#15 SunShowers on 05.19.20 at 4:26 pm

“Have we lost the culture of saving and self-reliance?”

No, we’ve lost the culture of good paying jobs.

Reliance on debt is what happens when costs of living outstrip median wages.

—————————————————————–

… then start a business and make use of the available cheap labour.

Sure, it makes perfect sense, on the individual level and lots of people are taking advantage of this opportunity. Good for them, wishing them the greatest success.

On the other hand, it does not solve the problem for people on a macro level, since we all know that for all practical purposes it is impossible for everyone to run a business.

There should be a viable solution for these people too, unless we are happy with all the consequences that come with this economically, politically.

#56 Brett on 05.19.20 at 6:29 pm

What are your thoughts on the $40K interest free business loan with $10K forgivable and no questions asked?

We are fortunate that we don’t need it but when our fellow comrades put $10K in our hand….do we close our hand? Or could this negatively impact us down the road? We’ve never needed a business loan, are debt free, and knew that we were at the tail end of the business cycle so were stashing away like prudent little beavers informed by best blog on the planet.

My thought is to use this for payroll as there are some very talented individuals looking for work. Our work is tied to housing but a specialized type which we feel the demand will only be increased due to COVID as people are reconsidering what it means to be resilient, independent, and sustainable.

#57 sailedaway on 05.19.20 at 6:32 pm

#27 45north on 05.19.20 at 5:05 pm

my idea is to invest in the oil sands – including pipelines and refineries. My idea is to have a reliable source of energy for Ontario – make hay while the sun shines.

—————————————————————–

*Biden would cancel the keystone XL permit if elected.

*Trump is more concerned about US based oil production

Some people say America will always block the oil sands as they consider it to be the final oil reserve of north America, which they’d like to keep, for themselves.

Other options:

Maybe just maybe we could reboot Canada by lowering corporate tax rate fed and provincial combined to 12% ? You know, like Ireland, Singapore, places like that.

Maybe we could encourage wealth builders instead of wasting fortunes on subsidies?

Maybe we could boost IP holding in Canada?

Maybe we could open up to competition, survival of the fittest, real capitalism not the same telecom/bank/supermarket “competition” but actual capitalism?

Maybe we should ask ourselves why the second biggest country on earth isn’t doing better? And then remove the shackles?

Maybe this country needs to hit bottom again as in the 90’s to relaunch itself?

Or will it choose to stagnate in the filthy waters of socialism?

#58 NFN_NLN on 05.19.20 at 6:33 pm

DOLCE VITA – DOLCE VITA – DOLCE VITA

https://www.youtube.com/watch?v=p1zkhSPwuMY

This contradicts the narrative you’ve been spreading.

#59 Ace Goodheart on 05.19.20 at 6:34 pm

It’s funny to watch the housing market where we live in Toronto.

The nearest I could explain it is watching minnows.

If you put the bait close enough, you have a feeding frenzy.

Put it just a little out of the water and all the activity stops.

The cap here seems to be just under 1.3 million.

If you list at around or slightly over a mil, you get this wave of activity with the top being just under 1.3 mil.

Anything above that, crickets. The houses just sit.

Trouble is, this time last year people were engaging in “from the curb” blind auctions for these houses and they were paying about 1.8 mil for a nice one.

The result is, only crappy ones are selling. Mostly semis with half a$$ reno jobs.

The nice ones just sit.

#60 Phylis on 05.19.20 at 6:37 pm

https://etcanada.com/news/645959/grimes-mother-blasts-elon-musk-over-his-red-pill-tweet/

Gerald Butts told to take the red pill by Elon Musk.
Hmmm, two degrees of separation.

#61 CJohnC on 05.19.20 at 6:38 pm

The Toronto based Onex buying WestJet last year is almost funny. Gerald Schwartz (Onex) has wanted an airline so bad for years. He was behind struggling Canadian Airlines trying to buy out Air Canada in 1999. Of course that didn’t work out well. Air Canada turned the tables and bought out Canadian.

Now he finally gets his airline last year only to get burned again because of the pandemic. You gotta feel for the guy.

#62 will on 05.19.20 at 6:38 pm

#16 Dutchy

Could WestJet buy Air Canada?

I think WestJet is owned by Onex. Pretty sure owning Air Canada as well would not be allowed.

#63 Lost...but not leased on 05.19.20 at 6:38 pm

Here in BC

I did NOT vote for Dr. Bonnie Henry to be de fact/de jure absolute dictator….

Sorry….while the internet is still around…average Joe and Jane(except Planet Phartzy) has a vast amount of info whereby they can make a INFORMED DECISIONS…I repeat INFORMED DECISIONS.

At minimum..GOOGLE how BAD wearing face masks are….especially when driving.

EPITAPH of this era:

…..” The operation was a success..but the patient/s died “

#64 NFN_NLN on 05.19.20 at 6:38 pm

DOLCE VITA – DOLCE VITA – DOLCE VITA

English subs for everyone else:

https://www.youtube.com/watch?v=pYB0FrPthts

Comments Dolce Vita?

#65 will on 05.19.20 at 6:40 pm

#7 BAC

Regarding immunity. Hundred percent agree.

#66 april on 05.19.20 at 6:52 pm

#32- and how many are going to be foolish enough to buy these extremely over priced homes……

#67 Do we have all the facts on 05.19.20 at 7:00 pm

Canadians have incurred a tremendous amount of debt and this debt has been bundled up, sliced into tranches, and sold through a wide range of collateralized debts obligations.

These CDO’s in turn encouraged the sale of derivatives such a credit default swaps to offset potential risk. Kind of a put or call option for securitized assets.

Recently the Bank of Canada has developed a pretty big appetite for CDO’s in the belief that the cash used to buy these asset backed securities will stimulate the Canadian economy.

I have not seen any activity by the Bank of Canada to purchase CDO’s based on credit card debt, car loans, aircraft and equipment leases etc. yet but I am keeping one eye focussed on the coming attractions page.

Given the expanding amount of Canadian debt being consumed by the Bank of Canada I can’t help asking who is actually holding the risk associated with the all that debt incurred by Canadian citizens.

Something is going on these days and I think it might be time for a truthful explanation of where the Bank of Canada is headed. Just saying!!!

#68 You know val on 05.19.20 at 7:01 pm

It’s all over but the screaming

#69 Captain Uppa on 05.19.20 at 7:01 pm

And yet the GTA housing market remains balanced, even in the Covid 19 era.

#70 Nonplused on 05.19.20 at 7:03 pm

The same sort of karma will be coming for the KeepYourRent crowd once this is all over. If it ever is that is. Cottage Karen is probably in for some karma too, as she isn’t going to be too popular in the future either. I hope she isn’t invested in an ice-cream shop.

———————–

Strange things are happening in the financial world with all this money printing that is going on. (What else can you call it at this point?) It seems we as a society have forgotten what money even is. And the slope seems slippery. If the US government can borrow 3 trillion a year (does anyone even know what a trillion is?) why can’t they borrow that much every year? And now Pelosi wants another 3 trillion because she doesn’t want to be out done by Trump. Heck why not print another 3 trillion and reduce taxes to zero? The so-called Modern Monetary Theory says this would work out just fine. This theory suggests the only limit on government spending is inflation. No inflation, no problem.

The problem is that things don’t work that way. Money isn’t a thing in and of itself any more than an inch is. To get your head around it, remember that a US dollar is defined as 360 grain (about 1 ounce) of silver. And indeed in those past times dollars were actually made of silver. Of course those times are long past, but it is useful to consider that relationship to conceptualize the fact that for money to be useful it has to be a measure of real things that have real value. You can’t just print it or soon it becomes worth less than the value of the wheelbarrow you need to carry it around. That is why central banks hold other assets (including gold) to back their paper. These assets in modern times are usually government bonds, which makes the link to things of value a little more stretched but the idea is that when the government pays the bond they are doing it with cash that could otherwise be exchanged for real goods and services. Therefore the total amount of “cash” in circulation, whether it be cash, bank deposits, bonds, what have you, needs to be in proportion to the amount of real goods and services circulating in the economy. The Federal Reserve and other central banks typically monitor inflation to gauge whether the amount of money in circulation is growing too fast. Whether this is the best way to do it I don’t know but I don’t have a better idea. It’s probably better than monitoring gold prices because gold is scarce and production doesn’t keep up for the demand for money in our industrial and high tech society. And silver isn’t the right metal either because it has become an industrial metal which it wasn’t in the 1700’s. So inflation and interest rates it now is.

Understanding the nature of money as a unit of measurement like an inch or an ounce and not a real thing in and of itself is important to understand why the government can’t just print it. It’s value is in relationship to real goods and services. So they borrow it.

But borrow it from whom? They have to borrow it from some entity that already has it (except the Federal Reserve who can print it to buy bonds and other assets). So when the US government attempts to borrow $3 trillion dollars for the covid panic that means the money is coming from somewhere else. Well most of it, the Federal Reserve will buy some of the debt with new money, but as discussed before their ability to do so is constrained by inflation remaining acceptable.

So that is the conundrum. Government borrowing is actually deflationary as it hoovers money out of the economy that might otherwise be invested or spent on other things. Taxes have to rise to cover the growing interest expense and that means less disposable income and less investment. People can’t save because there is too much month left at the end of the money they earn. Government borrowing is only inflationary to those sections of the economy it is spending the money on, it causes deflation in the sectors it competes with for investment capital or discretionary spending.

So how do we get investment advice out of this? Well, that is the hard part, but my guess would be that because the government is basically paying people not to work, staples will be very inflationary and Walmart and Costco are going to come out winners. Retailers of discretionary goods are going to get creamed, as will commercial real estate. Energy prices will take a long time to rebound because the morning commute is a thing of the past. Labor costs are going to go way up because nobody currently on CERB is going to go back to work until the government cuts them off, which we are going to discover is a hard thing to do in a democracy especially with a minority government. Get this straight, the people currently on CERB do not and will not see why the arrangement can’t be permanent. If they can do it once, why can’t they always do it? UBI is here to stay folks.

So that was pretty long winded but there was a lot to cover. To sum it up if you got this far, what lies ahead is a stagflationary recession or depression of inconceivable magnitude. There will be winners and losers. Collapse is not out of the question. The government borrowing is simply redistributing real assets, so the areas where they are spending money will do well whereas the areas they are starving of income and capital will wither and die. You want to be in groceries and pharmaceuticals. Don’t just shop at Costco, own it.

The good news is that prices will go up for your junk if you have a garage sale. In the past a garage sale was the process of basically giving a pair of roller-blades you haven’t used in 10 years to a complete stranger for pennies on the dollar even though they are in good shape. The only reason we did it was because it seems such a waste to send them to the land fill. Well, that will be no more as there won’t be anybody making roller-blades anymore because people can’t afford to buy them new in amounts that would warrant a factory. So now you might get a few pennies more for them used. I marveled one year as my wife was getting $0.25 for a partially used bottle of shampoo that she didn’t like because I thought “who would buy that?” That was when times were good. Next summer she’ll probably get $2.50 because the shampoo will be affordable in the store.

#71 Nonplused on 05.19.20 at 7:04 pm

*unaffordable

#72 MF on 05.19.20 at 7:06 pm

7 BAC on 05.19.20 at 3:57

Yeahhh, that article doesn’t really say that at all.

It says:

-a referenced “study” of a whole 20 individuals who got over covid19 showed “strong” signals of immunity afterwards.
-some populations “could” have better immunity towards covid19 than others, possibly due to pre exposure to other corona viruses currently circulating…but that is unclear.
-the potential immune response is positive news for a potential vaccine.

There’s little in statistical significance in a study with 20 people. That’s in addition to knowing nothing about that “study” that was referenced.

Moreover, there will always be a segment of the population that is immune to any new virus for whatever reason. People who suffer from sickle cell anemia have some protection against malaria as an example.

Plus what if covid19 mutates? How long does immunity last? If at all?

Fancy that.

MF

#73 NFN_NLN on 05.19.20 at 7:07 pm

#42 Attrition on 05.19.20 at 5:43 pm
Watching the list of businesses ‘allowed’ to open in BC today should have made it clear how much of a socialist’s wet dream this virus scare is.

Seating limits in restaurants, ’cause ya the virus is only contagious if any restaurant is over half capacity. Smart virus, I guess. The government telling businesses how much money they’re allowed to make…wow.

Some day (probably soon so they can turn it into a Netflix series) documentary film makers and psychologists will turn this into a case study for mass hysteria.

It happened because people wanted it to happen. Some profited off of it, some were cheering the demise of western society and some were such failures in life that this gave them someone to obsess over. Hell, we’ve got tools from Italy whoring themselves on this site for their 15 minutes.

The virus was real, the reaction was absolutely insane. Idiots creating mass hysteria for bigger idiots.

#74 MF on 05.19.20 at 7:14 pm

Of course those requesting deferrals are upset and surprised there will be negative repercussions.

They have been lied to for decades about how special they were for “buying” real estate.

Real estate only goes up is the best investment!

MF

#75 the Jaguar on 05.19.20 at 7:16 pm

In addition to Equifax there is also Trans Union.

“Perhaps this is also a wake-up call. You borrowed too much. Or you saved too little. By the way, if this peckerish virus comes back for a second time, robbing jobs, don’t expect another deferral.- Garth”

There is no question many borrowed too much, but the mystery ( at least for me ) was why people were unable to see that the climb in prices was a detachment from reality. Just because the entry point for a detached home in a place like the lower mainland rose as an example to 800m and by some means or other the 20% down payment was coughed up, it should have been obvious that carrying a mortgage for 640m was suicidal when income levels had not kept up. Like that old politician once said, ” A million here, a million there and pretty soon we’re talkin’ real money”.

Younger buyers in particular were unable to grasp this fact and entitlement seems to have been the driving force behind their desperation to own real estate.
Seems like many from that generation who were raised to believe that bad things happen to other people, nobody gets to fail at anything, etc., are going to crash into a wall with no seat belt. They won’t be alone, but some of the others have seen that movie before. Repeat offenders.

#76 Nixter on 05.19.20 at 7:17 pm

Fear and stupidity from the masses seem to go hand in hand, as the self anointed Neil Ferguson and his cohorts laughingly lounge in their Imperial College ivory towers.
I can see it now, we will all have our own little plexiglass vertical coffins, with sanitizer, mask, gloves ,as we move around in this now gutted country.

The housing debt was foreseeable, low interest rates, and the constant bombardment from an overabundance of home decorating, construction and renovation programs on television.
Creating the I want it now fever.

Almost like it was planned.

#77 Frequent Flyer on 05.19.20 at 7:21 pm

#16 Dutchy on 05.19.20 at 4:28 pm
Could WestJet buy Air Canada ?
(at a bargain price, with backing from the Feds)

I hope not. Air Canada’s service has improved considerably with the competition from West Jet (although it still isn’t great), so I do not favor another monopoly. The reason McDonald’s now has so many tasty items on the menu at reasonable prices is because there is a Wendy’s and a Subway right next door. Monopolies are only useful to society when “scale” is required, as in say a public utility. Even then they need to be regulated and still end up costing too much. Remember, ATCO made the Southerns kind of rich, but it was their purchase of the natural gas utilities that gave them the money and influence to fund Spruce Meadows.

How the economics of horse jumping work I don’t really understand. It must be done at a great loss. Nobody actually buys a ticket to watch that. World cup soccer, ok, most of the people who watch that have played soccer before. That’s how the fan base works for most sports. People are interested in MLB because they are reliving that time in minor baseball their team made it to the city finals when they were ten. Or they remember that time when their high school football team made a great come from behind win against an opposing high school. But who has a $1,000,000 dollar horse and a riding arena? Even most rich people don’t bother.

#78 Lost...but not leased on 05.19.20 at 7:21 pm

#73 NFN_NLN on 05.19.20 at 7:07 pm
#42 Attrition on 05.19.20 at 5:43 pm
Watching the list of businesses ‘allowed’ to open in BC today should have made it clear how much of a socialist’s wet dream this virus scare is.

Seating limits in restaurants, ’cause ya the virus is only contagious if any restaurant is over half capacity. Smart virus, I guess. The government telling businesses how much money they’re allowed to make…wow.

======

Baiting RATS…

According to our LowCull NOOz….if you want to dine out in BC

—-MAX 6 people per group

—-Social Distance

and…drum roll

—–ONE member of the party has to submit “contact info”.

Solution?
Hello KD !!!!

#79 Rico on 05.19.20 at 7:22 pm

“In fact, when it comes to snorfling loans, Canadians have no equal.”
Canada is in 5th place. Switzerland, Australia, Denmark, and Norway are higher in debt to GDP ratio.
Are those countries also going down?
Which countries are not going down?

https://tradingeconomics.com/country-list/households-debt-to-gdp

#80 David Pylyp on 05.19.20 at 7:25 pm

The Tone has changed!

Great to Hang on [#AginginPlace] to your house when appreciation is 10% plus per year… But when it planks…
Then the NEW property tax bills come in….

Where would you rather live?
This is how we show your place http://Bit.Ly/LuxuryVT

David Pylyp
Toronto

#81 Ponzius Pilatus on 05.19.20 at 7:26 pm

#44 Yukon Elvis on 05.19.20 at 6:02 pm
About the picture: ” I saw this down the road from me in Dunbar on Westside Vancouver,” says our blog dog. “There is a hole where the leg should come out of the hull so should sink pretty fast. As per the economy, no matter much you spend, it’ll still be crap.”
…………………………….

Avast ya swab. That is a picture of the stern not the hull. The hull is in front. Shiver
——————————-
Saila boy,
How come you did not notice that?

#82 Sail Away on 05.19.20 at 7:27 pm

#56 Brett on 05.19.20 at 6:29 pm

What are your thoughts on the $40K interest free business loan with $10K forgivable and no questions asked?

——————-

Brett, free money never passes me by. We applied instantly and received the funds in 3-4 days.

If my competitors have an interest-free loan and I don’t, that tilts the competitive odds in their favour. Can’t have that. Same with wage subsidy.

#83 Paul on 05.19.20 at 7:37 pm

#69 Captain Uppa on 05.19.20 at 7:01 pm
And yet the GTA housing market remains balanced, even in the Covid 19 era.
————————————————————————————————
The GTA housing market is like is the Queen Mary, you don’t it starts turn around till you are going South instead of North.

#84 Joneses on 05.19.20 at 7:41 pm

#15 SunShowers on 05.19.20 at 4:26 pm
“Have we lost the culture of saving and self-reliance?”

No, we’ve lost the culture of good paying jobs.

Reliance on debt is what happens when costs of living outstrip median wages.

You mean spending more than you earn? – Garth

————————————————

When I was growing up we were always on the boundary of the poverty line, but we had food on the table, a roof over our heads, and a car to drive. The food was never in a restaurant, the roof was simple, and the car was 15 years old when it was new to us. Vacations were a weekend at a local campground. But we never felt lacking. My parents taught me that anyone/everyone can afford to save money. And donate money to worthy causes too. It’s simply about not trying to keep up with the Joneses. Consider a ladder of 10 households, bringing home $60K, $70K, … up to $150K. If each of these families spends to keep up with the family above them, they will outspend their income by $10K, accumulating debt, saving nothing, and giving nothing. If they spend at their level, no debt, but still no saving or giving. But if they lower their standard of living to a rung or two below their income, they have extra money to save and give. Can’t survive while spending as if two rungs down? Just observe the person three rungs down, they manage to do it.

#85 Shirl Clarts on 05.19.20 at 7:42 pm

About the picture: An upside down flag? Disparaging comments about the economy? A joke that makes no sense to 98% of us? Pfft.

In the USA, this would all be considered high crimes and treason!

#86 Ustabe on 05.19.20 at 7:47 pm

Avast ya swab. That is a picture of the stern not the hull. The hull is in front. Shiver me timbers…….

If you are to correct someone, try and get it right.

The hull is the entirety of the thing. The stern or transom in this case is the back end. The front as you put it is the bow.

#87 Nonplused on 05.19.20 at 7:54 pm

#23 SunShowers on 05.19.20 at 4:50 pm
“You mean spending more than you earn? – Garth”

Depends on how you want to define ‘earn.’

Canadians are about 50% more productive than they were 40 years ago, and yet real median hourly wages are about the same as they were back then.

If that 50% difference wages EARNED by the workers were actually being paid to them instead of to shareholders and company elites, then I don’t think we’d see much of a debt problem in Canada!

——————————-

The productivity increases are reflected in what you get for the buck, not income. Everyone’s productivity has gone up, so referring to my post above that means the relative value of one person’s labor as compared to another has not in dollar terms. But now you can get a 52 inch smart TV for $600.

Remember, what you earn per hour is a measurement of what you produce per hour compared to what other people earn and produce per hour, it is not some sort of mystical property that can be conjured from the depths. When you get more productive that offers you no competitive advantage if everyone else is also getting more productive. It just means we have more stuff at lower prices. That, my friend, is the good side of deflation. We don’t need raises if the cost of living keeps going down. And it has. By a lot. We live like kings of 200 years ago. Even our poorest have at least a tent or a car to live in. Not so 200 years ago. It is our expectations that have run rampant.

Here is an experiment I challenge you to. Build a replica of the original model T Ford from scratch in your garage. You can hire as many people as you need and also build whatever equipment you need, but you have to build it yourself. What do you think it will cost you to build that replica? I’m going to guess about $8,000,000. But if you think you and your labor is the reason productivity is on the up and up you should be able to do it for less than the price of a new Corolla. Still won’t be as good of a car though. And no stereo with blue tooth. I don’t think you could possibly build that radio no matter how productive you now are.

Capital requires a return on investment. Period. End stop. No return, no capital. Call me selfish, but I would rather spend my money on whiskey and women than subsidizing your wages. I’ll certainly pay you a fair price, but not more than your neighbor’s kid will do the same job for just as well. That, folks, is how price discovery works. If there is a kid in the neighborhood willing to and good at mowing lawns, it caps the price other people can charge. I’ve found the difficulty here is in agreeing to who pays for the gas and wear on equipment, not the labor. They are perfectly willing to pay my son $20 to mow an acre, which is a decent labor rate, but then they want me to provide the tractor and the gas. I say we can’t do it for less than $60 an hour if I am providing the tractor and fuel. Can you understand from that the role of capital? That tractor isn’t free and neither is the maintenance.

#88 JBL on 05.19.20 at 7:57 pm

If you have good credit history and take a few months of deferral I don’t see any scenario where you get trouble down the road. This deferral program was/is offered by the very lender looking at renewing or approving a new mortgage down the road. When you cite the numbers as 16% of people requesting them, that’s a HUGE number. No way the banks choose to decline applications of that many people especially when it was put forth by the Government in the first place. With quantative easing, perhaps the risk will be exponential.

One should be diligent enough to keep a record of the approved deferral and offer from your lender stating there were no fees or adverse affect on your credit rating for taking the deferral during a pandemic, regardless if you could pay it or not. This was a time of major uncertainty, and taking this offer was the prudent choice for most. No one knew what the next day would bring, let alone the next few months.

I for one have taken the few months deferral and invested it into my TFSA for the remainder of the year (where it will grow tax free and remain liquid), then it will be transferred to my RRSP for some further tax savings as I am in the top tax bracket. This will outweigh the added interest charges I will be on the hook for at renewal time two years from now. To each their own, but again, I simply do not see a scenario where people are penalized down the road by way of loan declines for taking an offer in a time of uncertainty. The herd is just too large…

Maybe I’m wrong and you’re a lot smarter than me, but we’ll see ;)

You earn over $250,000 a year and deferred your mortgage payments? Interesting. Must be a big mother. – Garth

#89 MF on 05.19.20 at 7:58 pm

5 the Jaguar on 05.19.20 at 7:16

Young people buying is Entitlement?

Oh please.

A lot of us are doing the right thing and saving and investing. But guess what? When the real estate market is continuously manipulated upwards (we are on what year 12?) you get left behind and it’s natural to question your strategy.

It should have been clear in 2014 when interest rates should have risen substantially -but they didn’t- that this broken system was being kept alive …at all costs.

Guess what the biggest one of those costs was? You got it. The same young people you just called entitled, who now have little choice but to jump in big debt if they ever want to own a home.

MF

#90 conan on 05.19.20 at 8:00 pm

If you miss payments, it’s noticed.- Garth

If one restarts payment by June or July, I can’t see the banks going nutty. It defeats the whole purpose of giving the break in the first place.

The people who lose their jobs and never make it back…..well they are baked Alaska.

#91 Nitpicky on 05.19.20 at 8:08 pm

#86 Ustabe on 05.19.20 at 7:47 pm
Avast ya swab. That is a picture of the stern not the hull. The hull is in front. Shiver me timbers…….

If you are to correct someone, try and get it right.

The hull is the entirety of the thing. The stern or transom in this case is the back end. The front as you put it is the bow.

————————-

Um, is not most of the hull in front of the stern even by your definition?

#92 Mr Canada on 05.19.20 at 8:14 pm

T2 borrowed $90 Billion up to the pandemic, so why bother saving when the government will “have your back”? Reported in the Sun Today – “The National Capital Commission is spending more than $8.6 million in taxpayers’ money to renovate just one of Harrington Lake’s buildings and another $2.5 million stealthily relocating the guest cottage on the Gatineau Park property. They’re planning on blowing more than $17 million in taxpayers’ money in total to finish renovation at Harrington Lake” Last time I checked, you can build a nice new place for $17 million vs a renovation. The swamp is alive and well in Ottawa.

#93 JBL on 05.19.20 at 8:20 pm

#88 JBL

You earn over $250,000 a year and deferred your mortgage payments? Interesting. Must be a big mother. – Garth

Not at all. I think you’re missing the point.

#94 Faron on 05.19.20 at 8:20 pm

#4 crowdedelevatorfartz on 05.19.20 at 3:54 pm

My My
A scow on the toney side of Vancouver….how dare they…..

———-

While we pedants are mincing words for no purpose, a scow is a flat bottomed craft, often with a snub bow. And not all scows are slow, but most are pretty ugly.

#95 down and out on 05.19.20 at 8:21 pm

Oh when will it all end ,not covid 19 but daily updates by the PM I bet even his mother doesn’t tune in anymore . I had too stop watching it because I too end up adding too many adjectives unconsciously to a simple sentence turning into a long story .

#96 Wrk.dover on 05.19.20 at 8:21 pm

#171 Yvrmc on 05.18.20 at 10:57 pm
#128 wkd.over ….. does Flop know what his new duties are going to be ?

———————————————————

She has him muzzled!

Vet appt. tomorrow…

#97 45north on 05.19.20 at 8:21 pm

sailed away

talking about my idea is to invest in the oil sands

Biden would cancel the keystone XL permit if elected.
Trump is more concerned about US based oil production
Some people say America will always block the oil sands as they consider it to be the final oil reserve of North America, which they’d like to keep, for themselves.
Other options:
Maybe just maybe we could reboot Canada by lowering corporate tax rate ?
Maybe we could encourage wealth builders ?
Maybe we could boost intellectual property holding in Canada?
Maybe we could open up to competition?
Maybe this
Maybe that

the oil sands is the final oil reserve of North America and it is Canada’s to lose. Use it or lose it.

#98 crowdedelevatorfartz on 05.19.20 at 8:24 pm

@#95 Pedantic Faron
” And not all scows are slow, but most are pretty ugly.”

++++
Speaking from personal dating experience are we?

#99 N on 05.19.20 at 8:28 pm

As much as one fifth of all mortgages could be in arrears if our economy has not recovered sufficiently.
We feel we need to avoid exposing young people (and through CMHC, Canadian taxpayers) to the amplified losses that result from falling house prices. Unless we act, a first time homebuyer purchasing a $300,000 home with a 5 per cent down payment stands to lose over $45,000 on their $15,000 investment if prices fall by 10 per cent. (Our calculations include the mortgage insurance premium and the costs of selling the home if forced to do so because of unemployment or any other reason.) In comparison, a 10 per cent down payment offers more of a cushion against possible losses.
If there is an insurance claim, CMHC will be called upon to cover these losses. We are therefore evaluating whether we should change our underwriting policies in light of these market conditions

https://www.cmhc-schl.gc.ca/en/media-newsroom/speeches/2020/supporting-financial-stability-during-covid19-pandemic

#100 Bytor the Snow Dog on 05.19.20 at 8:29 pm

Garth sez:

“Remember when we all knew Americans were hedonistic, debt-lapping, financially crippled, amusing profligates? ”
———————————-
You missed the perfect opportunity to use the word “snorfling”. As in debt-snorfling.

You’re off your game. Damn virus.

#101 Andrew on 05.19.20 at 8:35 pm

https://twitter.com/rudyhavenstein/status/1262884645848440835?s=21

found a big dog riding the subway maybe can be used for an article

Not a chance. – Garth

#102 will on 05.19.20 at 8:39 pm

ok i’ll join in the “scow” debate. i think that boat is a skiff.

#103 Hotboxin' with Mike Tyson on 05.19.20 at 8:42 pm

Price of homes in BC = uppa.

Increase in house price plus job losses = 10x harder to land that dream property now.

Never put your life of hold to play the game of property price roulette. The gov has it backed.

#104 Alan Greenspan on 05.19.20 at 8:51 pm

Having said all this, if you can’t make the monthly because you have no money, so be it. The shoe’s on the other foot. Now the bank has a problem.
—————————————————————

Reminds me of the old saying, “if you owe a million to the bank you have a big problem, if you owe a billion to the bank, it has a big problem.” Looks like the banks are collectively owed billions so who has the problem…

#105 jess on 05.19.20 at 8:54 pm

Money isn’t a thing in and of itself any more than an inch is.

payswaysion?

Jane Roe made ‘deathbed confession’ that she was paid to …
AKA Jane Roe includes an interview with … which she admits to being paid by evangelicals to become an anti-abortion …

5 hours ago – In an upcoming FX documentary “AKA Jane Roe,” McCorvey, who died in 2017, said she was coached and paid to promote anti-abortion talking points. .

#106 Stone on 05.19.20 at 8:55 pm

#23 SunShowers on 05.19.20 at 4:50 pm
“You mean spending more than you earn? – Garth”

Depends on how you want to define ‘earn.’

Canadians are about 50% more productive than they were 40 years ago, and yet real median hourly wages are about the same as they were back then.

If that 50% difference wages EARNED by the workers were actually being paid to them instead of to shareholders and company elites, then I don’t think we’d see much of a debt problem in Canada!

———

Well, that’s all a matter of value. You think you bring lots of value. Someone else (let’s say everybody else), says you don’t.

It doesn’t matter how much value you think you bring to the table if everyone else thinks all you bring is shit.

Ultimately, you get paid what you can convince others you’re worth which means ALL the fault falls on your shoulders if you don’t get enough.

#107 Bill Grable on 05.19.20 at 9:02 pm

Things are brutal in Vancouver.

The Mayor said we need a 20% Real Estate tax increase, or a ton of money from the Feds, or this City is BROKE. *City charter forbids running deficits.

If this doesn’t kill R/E in this silly burg, nothing will.

Took my first drive in 6 weeks….with mask on, of course, and the City is well, sad….it’s palpable. There is a taste of fear in the wind.

Many of my friends are out of work and they are TERRIFIED. They have kids and bills and are used to great paychecks. Savings, yeah, maybe some RRSPS. Yipes.

Gosh, Mr. Turner, I have a feeling this is going to be a long slog.

Ugly.

#108 joblo on 05.19.20 at 9:05 pm

“A bad omen”?

Don’t look now but Butts in back:

https://www.cbc.ca/news/politics/wherry-green-economy-recovery-1.5574533

#109 not 1st on 05.19.20 at 9:07 pm

Not gonna happen Garth.

FIRE is 30% of our economy and if there are some horny moisters ready to jump into the fray post virus, Trudeau and crew will clear the way for them. Canada has nothing else to bring us out of this except burying another layer of naïve canucks in generational debt.

#110 AACI Homedog on 05.19.20 at 9:10 pm

Thanks again, Garth. Adding to my vocabulary. Profligate, or wasteful persons. They are way behind us in their recycling efforts in WA state, but I still am hoping to windsurf there in July and/or August. Cheers !

#111 Sold Out on 05.19.20 at 9:13 pm

I’m guessing that 10% down will soon be the minimum for CMHC insurance?

I imagine banks are also reassessing the percentage of rental income that can be used to justify mtg amounts.

Both would add to downward pressure on home prices.

#112 Stone on 05.19.20 at 9:14 pm

#80 David Pylyp on 05.19.20 at 7:25 pm
The Tone has changed!

Great to Hang on [#AginginPlace] to your house when appreciation is 10% plus per year… But when it planks…
Then the NEW property tax bills come in….

Where would you rather live?
This is how we show your place http://Bit.Ly/LuxuryVT

David Pylyp
Toronto

———

Didn’t realize greaterfool.ca was now realtor.ca.

He won’t do that again. Trust me. – Garth

#113 binky barnes on 05.19.20 at 9:19 pm

It happened because people wanted it to happen. Some profited off of it, some were cheering the demise of western society and some were such failures in life that this gave them someone to obsess over. Hell, we’ve got tools from Italy whoring themselves on this site for their 15 minutes.

—————————————————-

Agree with most of this.

BB

#114 SimplyPut7 on 05.19.20 at 9:20 pm

I noticed there are now lines outside of the dollar stores in the greater Toronto area. Either people didn’t know they were open during the lockdown in Ontario or they are starting to realize they may not have a job to go back to once the lockdown period is over, and should start cutting back on household expenses.

#115 Franco on 05.19.20 at 9:28 pm

What is with the upside Canadian Flag these days? Someone please explain to me what the flag that represents our country that we supposed to all love be so treated with so much disrespect. I wasn’t even born here and it makes me sick to see it displayed in such a manner.

#116 Drill Baby Drill on 05.19.20 at 9:38 pm

Canadians really do not understand finance or economics. Watch for the next wave of requests for the government to help them pay for their mortgages. Bet money on it.

#117 PBrasseur on 05.19.20 at 9:39 pm

Very important fact about the Canadian debt binge is that it has not yielded better growth than the USA. This means we have a productivity problem, a big one, or in other words we are poorer than we think.

#118 Yukon Elvis on 05.19.20 at 9:51 pm

#86 Ustabe on 05.19.20 at 7:47 pm
Avast ya swab. That is a picture of the stern not the hull. The hull is in front. Shiver me timbers…….

If you are to correct someone, try and get it right.

The hull is the entirety of the thing. The stern or transom in this case is the back end. The front as you put it is the bow.
………………………

Think v-shaped hull or deep-v hull as in the front of the boat. The ass end is the stern. Down to the poop deck for you Gilligan.

#119 Toni on 05.19.20 at 9:58 pm

Soon DND may see a peak in enrolment applications.

#120 Faron on 05.19.20 at 10:08 pm

#88 JBL on 05.19.20 at 7:57 pm

“(where it will grow tax free and remain liquid)”

Grow is the operative word here. Is the opportunity cost of putting the payment toward your mortgage really high enough over a 1/2 year timeframe to offset the interest you will be accumulating during forbearance and a potential credit hit and any potential market risks? Have you noticed that the market is quite volatile?

If liquidity is what you are after, at least put the deferred payments into a money market fund or some other guaranteed and fully liquid instrument.

What am I missing?

#121 Ronaldo on 05.19.20 at 10:10 pm

#78 Lost but not leased

Baiting RATS…

According to our LowCull NOOz….if you want to dine out in BC

—-MAX 6 people per group

—-Social Distance

and…drum roll

—–ONE member of the party has to submit “contact info”.

Solution?
Hello KD !!!!
————————————————————
Methinks we will be doing most of our dining at home. I refuse to buy into this stupidity. #42 Attrition has said it like it is.

#122 Dr V on 05.19.20 at 10:20 pm

I don’t have a mortgage

I feel left out

I liked yesterday’s blog better.

#123 PetertheSeparatistfromCalgary on 05.19.20 at 10:20 pm

It does not help the economy that our infantile Prime Minister hates the citizens of Alberta and Canada’s biggest export industry which is oil.

This despite the fact that on a per capita basis Alberta pays the most taxes.

#124 okotoksmatt on 05.19.20 at 10:36 pm

Nice work Canada. We deserve to have this country collapse. In good times we ramped up spending with massive new entitlement programs. At the same time we chased out business. We could have had two pipelines built and many LNG plants but we had to try and save the world instead. This would have paid for much of it. The Saudis just turned up the taps and sold us more oil. Canada loses, Saudi wins, environment worse.
Now that we have gutted an industry worth 10% of GDP and we have to try and fight an expensive pandemic. We created massive inefficiencies in this Canada. We allowed our cities’ real estate inflate to unreasonable levels and now we are at risk of crashing prices, foreclosures, and bank stability. We have large areas of Canada that are dependent on federal transfers to keep afloat. Now our first province is going into receivership (Newfoundland).
Luckily we have proven business star, Bill Morneau, as our finance minister to lead us out of trouble. His business acumen consists of inheriting a large company from his dad and marrying a McCain. He has opened the vault and will double our federal debt in two years. We will struggle to crawl out of this mess. Prior to Covid-19 Morneau pounded on small business with extra taxes, harming their ability to weather this. Someone forgot to tell them they create 60% of all jobs.
I give up. I think I may move east, work 12 weeks a year, and collect EI the rest of the year. I will enjoy the 40 weeks of hobbies and maybe will take up art. The main thing stopping me from moving east though is my house in Calgary has plummeted in value. The Liberal voters pounded our economy so hard I won’t have any equity left to buy a place in Nova Scotia.

#125 Dr V on 05.19.20 at 10:36 pm

21 newcomer

“But then I haven’t used it much for the past decade. Why now? I’d guess that the bank didn’t want the exposure anymore, even to someone with perfect credit.”

If you don’t use your card, you may not have a credit score.

My wife had a higher credit score than me, even though I paid the mortgage. I made more money, and had several credit cards with low or no balances.

my mortgage broker told me that was a red-flag to lenders. I had too much credit available.

#126 Stinky the Fish on 05.19.20 at 10:39 pm

It’s me. Stinky the fish! And I’m back, JACK!!!

I am trying to make my glorius comeback… and be the first one to post a comment for your blog post. But unfortunately, there are 119 more pathetic people than me. How is this pissible All starting with the most pathetic of them all…. Ankushnr

It doesn’t get any worse than this. I’m here to say it’s go time. Housing sales are down. It’s over. Nobody expected it to take this long or a global pandemic to do it

Stinks (points finger like a gun and blows it)…….. McGavin!!!!

#127 Russ on 05.19.20 at 10:48 pm

Yukon Elvis on 05.19.20 at 9:51 pm

#86 Ustabe on 05.19.20 at 7:47 pm
Avast ya swab. That is a picture of the stern not the hull. The hull is in front. Shiver me timbers…….

If you are to correct someone, try and get it right.

The hull is the entirety of the thing. The stern or transom in this case is the back end. The front as you put it is the bow.
………………………

Think v-shaped hull or deep-v hull as in the front of the boat. The ass end is the stern. Down to the poop deck for you Gilligan.
================================

Listen up swabs.

To clarify a few things for the ‘lubbers out there:
– the hull includes the portion of a boat that runs from the gunwale to garboard
– the hull runs bow to stern
– the stern may include a transom
– the bow includes a stem
– the v-shape part of the hull, under the waterline, is deadrise (a scow may have little or no deadrise)
– vessels have buttocks, and similarly to what we know, some look better than others
– buttocks are an integral feature of the design
– it is possible for a scow to have good looking buttocks as in the Y – Flyer
https://www.yflyer.org/

One last thing… if you wish to save money then co not own a boat.
BOAT = bring on another thousand
the 3 Ts: if it has tits, tires or a transom… it’s gonna give ya trouble.

Cheers, R

#128 Ustabe on 05.19.20 at 10:53 pm

hull1
/həl/
noun
noun: hull; plural noun: hulls

the main body of a ship or other vessel, including the bottom, sides, and deck but not the masts, superstructure, rigging, engines, and other fittings

#118 Yukon Elvis on 05.19.20 at 9:51 pm

…blah, blah, bunch of stuff…

Think v-shaped hull or deep-v hull as in the front of the boat. The ass end is the stern. Down to the poop deck for you Gilligan.

The front of a boat is the bow. The rear of a boat is the stern. They along with the decks (forward deck, aft deck) and the sides (port side, starboard side) make up the hull. You are mixing your nautical terms which is why you remain a cabin boy.

Ask Garth, he actually owns a boat, he’ll tell you.

#129 Dr V on 05.19.20 at 11:18 pm

118 Yukon

I gotta give this one to Ustabe

https://www.boaterexam.com/boating-resources/boat-terminology.aspx

I’m feeling better now. Thanks.

#130 Rita Katz on 05.19.20 at 11:20 pm

DELETED

#131 Debt free on 05.19.20 at 11:25 pm

I can’t believe how dumb people are
You make 5k take home per month, that’s all u get!
Only spend 4k, no rocket science. Go with out!
Save your &$&?/@ money!!

#132 Mortgage Payment on 05.20.20 at 12:00 am

First just a comment about deferring. Or can I say skip a payment. My mortgage I am allowed to skip a payment I believe it’s once a year.

Here’s my question I have $15,000 don’t want to invest in the stock market as I will need the money less than two years. Markets cannot make up their minds.

What do you thing putting it on the mortgage for two years then take it out again, I save 2.5 percent On my mortgage interest and I don’t pay tax on interest saved
Seems like a win win.
Blog dog thoughts?

#133 SunShowers on 05.20.20 at 12:01 am

#87 Nonplused on 05.19.20 at 7:54 pm
Aside from the fact that the cost of living DOES increase (how often does the CPI go down?), the fact we can get shinier baubles for the same price we paid decades ago isn’t all that helpful.

Using your Model T example, it would cost about $4,400 new adjusted for inflation ($300 in 1925). While it would obviously lack many bells and whistles that a 2020 Mazda 3 would have, it’s fourteen thousand dollars less!

Yeah, TVs are bigger now, but bigger TVs don’t pay the mortgage. Cars have Bluetooth now, but Bluetooth doesn’t top up the RRSP. If some tradeoff exists between wages and product quality as you assert (I don’t believe one does), then give people the wages so they can ACTUALLY CHOOSE whether they want to spend a fortune on a 2020 Mazda 3, or whether they want to max out their investments and buy a clunky Model T instead.

#106 Stone on 05.19.20 at 8:55 pm
“Well, that’s all a matter of value.”

Maybe you missed the part about productivity. As I said, worker productivity has increased 50% in the last 40 years. That means either workers produce 50% more VALUE with the same inputs (or produce the same value with 50% less inputs, or some combination thereof).

So, why haven’t workers paychecks gone up 50%? Prior to 40 years ago, productivity and wages tended to rise in lockstep.

It’s also very weird for you to try to make this about me specifically, when I clearly wrote “real median hourly wages”, which covers the overwhelming majority of Canadians.

If you think the overwhelming majority of Canadians “bring shit to the table,” well…then there’s nothing I could really say about you that you haven’t already said about yourself.

(Sorry if this double posts Garth, I got a HTTP 405 error the first time, not sure if it went through.)

#134 Midnights on 05.20.20 at 12:04 am

https://www.cmhc-schl.gc.ca/en/media-newsroom/speeches/2020/supporting-financial-stability-during-covid19-pandemic

#135 Stoph on 05.20.20 at 12:16 am

#55 akashic record on 05.19.20 at 6:27 pm

#33 Stoph on 05.19.20 at 5:20 pm

#15 SunShowers on 05.19.20 at 4:26 pm

“Have we lost the culture of saving and self-reliance?”

No, we’ve lost the culture of good paying jobs.

Reliance on debt is what happens when costs of living outstrip median wages.

—————————————————————–

… then start a business and make use of the available cheap labour.

Sure, it makes perfect sense, on the individual level and lots of people are taking advantage of this opportunity. Good for them, wishing them the greatest success.

On the other hand, it does not solve the problem for people on a macro level, since we all know that for all practical purposes it is impossible for everyone to run a business.

There should be a viable solution for these people too, unless we are happy with all the consequences that come with this economically, politically.

—————————————————————–

I agree that there are societal consequences for the lack of good paying jobs. What’s the solution though?

My post was prompted as I was irked by the sentiment of the initial poster’s comment suggesting it’s someone else’s fault and responsibility to fix their problem.

Good paying jobs are still out there, even if the pay may not be what it used to be. A degree helps, depending on the degree.

Changes to regulations may encourage the creation of better paying jobs, but implement the wrong regulations and skilled people, capital and investment will leave Canada.

#136 Shirl Clarts on 05.20.20 at 12:20 am

#40 Freedom First on 05.19.20 at 5:37 pm
It is easy to see that the people who have followed the advice of our host with the steel abs have fared well in life, and the people who have not learned from Garth over the years are not doing well at all.

^^^^^^

Too many here think those with mortgage debt had a choice.

What about those that sold a house during peak, and bought down the property ladder? They still removed risk.

Feel sorry for families with kids, with one property, one income, and too much debt. They are likely just doing their best with what they have and rent is not an option for their income level.

Dont feel sorry for those that lied, flipped and specuvested. Especially multiple properties.

In particular the DINKS (dual income no kids) on this site have very big mouths, and could probably be doing even better if Garth took over.

#137 GRG on 05.20.20 at 1:38 am

#4 crowdedelevatorfartz on 05.19.20 at 3:54 pm
My My
A scow on the toney side of Vancouver….how dare they…..

Somebody is probably renting it for living space.
For $1400 per month

#138 BAC on 05.20.20 at 2:38 am

#72 MF on 05.19.20 at 7:06 pm

LOL! Your interpretation is precisely what I said the study said.

Study subjects exhibited a STRONG immune response to the virus and previous exposure to earlier coronavirus iterations may provide some immunity to this newest coronavirus mutation.

You ask “Plus what if covid19 mutates? How long does immunity last? If at all?”.

Clearly, this research shows that all previous coronavirus exposure may, as the article says, “have a substantial impact on the overall course of the pandemic”. So those who are exposed to a variety of coronaviruses are better equipped to deal with future mutations than those who are not.

#139 Nonplused on 05.20.20 at 3:07 am

#105 jess on 05.19.20 at 8:54 pm
Money isn’t a thing in and of itself any more than an inch is.

payswaysion?

Jane Roe made ‘deathbed confession’ that she was paid to …
AKA Jane Roe includes an interview with … which she admits to being paid by evangelicals to become an anti-abortion …

5 hours ago – In an upcoming FX documentary “AKA Jane Roe,” McCorvey, who died in 2017, said she was coached and paid to promote anti-abortion talking points. .

———————-

I am going to assume that was directed at me because I am the only person in this steerage section stating that “Money isn’t a thing in and of itself any more than an inch is.”

Yes, paying someone to tout your point of view or propagandize can be viewed as a service, no matter how much you personally might dislike the message. It’s no different really than an actress getting paid to flog GM products. Why people want to pay for these things is yet to be determined but that they transferred spending power from themselves to someone else remains the same. A lot of what we do seems silly, really. Like buying lift tickets. If you want some exercise, walk up the hill. But we pay for lift tickets. A lot.

#140 Nonplused on 05.20.20 at 3:10 am

#115 Franco on 05.19.20 at 9:28 pm
What is with the upside Canadian Flag these days? Someone please explain to me what the flag that represents our country that we supposed to all love be so treated with so much disrespect. I wasn’t even born here and it makes me sick to see it displayed in such a manner.

———————-

I think it was a statement about the economy, not a disrespect of the economy. It’s the same as saying “tits up” means the dog has died.

#141 Nonplused on 05.20.20 at 3:11 am

*country

#142 happygolucky on 05.20.20 at 3:22 am

if There is a second wave of said virus this country is toast. Canadians forgot where the brake pedal is and have been full throttle spending far too long
——————————————————–

Then we are toast, as third wave is almost confirmed and by then we won’t need brakes, we will cease to move.

BTW looking for good car mechanic

#143 happygolucky on 05.20.20 at 3:40 am

#27 45north on 05.19.20

Ed McNeil

This is a sad picture for Canadians. The only way we can rapidly regenerate a recovering economy is by mass personal spending. If credit is curtailed there is no quick way out of this quagmire. A real catch-22 type situation.
yeah, it’s pretty clear credit is going to be curtailed – the consumer is not going to save the country
my idea is to invest in the oil sands – including pipelines and refineries. My idea is to have a reliable source of energy for Ontario – make hay while the sun shines.
————————————————————–

I do support oil, pipelines, refineries, common sense, sound economy, and good people…
So my idea is: Let’s make hay rain or shine

#144 Howard on 05.20.20 at 4:11 am

#99 N on 05.19.20 at 8:28 pm
As much as one fifth of all mortgages could be in arrears if our economy has not recovered sufficiently.
We feel we need to avoid exposing young people (and through CMHC, Canadian taxpayers) to the amplified losses that result from falling house prices. Unless we act, a first time homebuyer purchasing a $300,000 home with a 5 per cent down payment stands to lose over $45,000 on their $15,000 investment if prices fall by 10 per cent. (Our calculations include the mortgage insurance premium and the costs of selling the home if forced to do so because of unemployment or any other reason.) In comparison, a 10 per cent down payment offers more of a cushion against possible losses.
If there is an insurance claim, CMHC will be called upon to cover these losses. We are therefore evaluating whether we should change our underwriting policies in light of these market conditions

https://www.cmhc-schl.gc.ca/en/media-newsroom/speeches/2020/supporting-financial-stability-during-covid19-pandemic

———————————–

This despicable, market-meddling, anti-taxpayer organization shouldn’t exist in the first place.

But upping the down payment requirement from 5% to 10% would be a good move. Should really be 20%.

#145 happygolucky on 05.20.20 at 4:16 am

Just wonder, there is quite a preoccupation if not obsession with “communism” here.
And “wake up ”calls, well, if we do collectively “wake up” tomorrow, where do we go from there, what’s the alternative? Revolution, that might be beyond scope of this blog…
Actually, some have quite vivid and futuristic visions, so I am looking forward to be amused again.

#146 Stan Brooks on 05.20.20 at 4:43 am

67 Do we have all the facts on 05.19.20 at 7:00 pm

The ‘central bank’ will ‘buy’ all substandard crappy debt that should have never be issued in first place in order to save the ‘most prudent’ lenders who are ‘insured’ against losses at the expense of the borrowers and the taxpayers.

In the process the currency will tank and the savers and retirees will be crushed as the interest ‘rates’ on the currency stays at zero.

Classical ‘socialize the losses’, ‘privatize the profits’ strategy.

The ‘beauty’ of it is that people will have less money with increasing prices of food and essentials and exactly zero chance to pay back the debt or find a good paying /or any job after the virus.

The virus is just exposing a critical fault in the financial sector profit churning machine and it’s perpetual debt increase/falling rates trend that is now coming to an abrupt end.

The frightening indicator for what is to come is that debt actually subsidizes consumption, not investment and increase in debt is combined with an actual decline in productivity.

Monetary reset is pretty much in order. Trust the incompetents at your own risk.

The currency is becoming spending coupons/stamps with guaranteed decline in value and an expiration date.

With the virus and globalization/ outsourcing/automaton the downward pressure on wages will be horrific catching the indebted sheeple in a giant debt trap with no escape in sight, resulting in crushed consumption, death spiral of contraction that can only be ‘broken’ with massive inflation that will wipe out any resemblance of a 1st world country standard of living.

Cheers,

#147 Wrk.dover on 05.20.20 at 5:43 am

Over and over and over again, Poloz preached Canada needed low interest to deflate our currency to help our exports thrive.

Garth serves that kool aide too.

After the 08/9 thingy I advocated high interest and Canada having a par dollar so we could afford imports.

But we had to protect exports.

All the Poloz policy has delivered is a debt crisis created by a low interest RE bubble, and no GM cars nor much else of anything being exported besides jobs and assets and raw materials in true third world style.

Next stage is P MacKay delivering us a Duvalier style dictatorship, or is Junior T. already doing that?

#148 Howard on 05.20.20 at 6:01 am

#123 PetertheSeparatistfromCalgary on 05.19.20 at 10:20 pm
It does not help the economy that our infantile Prime Minister hates the citizens of Alberta and Canada’s biggest export industry which is oil.

This despite the fact that on a per capita basis Alberta pays the most taxes.

——————————–

Alberta also has, per capita, the least number of House of Commons seats AND the least number of Senators.

Quebec and Atlantic Canada are the aristocracy. Prairies are the working stiffs required to break their backs to support that aristocracy. Ontario and BC look on in bemusement.

#149 BillyBob on 05.20.20 at 7:00 am

Nerdy little ant checking in here to the grasshopper-fest.

I for one welcome anything that helps bring home (see what I did there?) the consequences of being profligate. It would seem that anything less than a 2×4 between the eyes is insufficient to accomplish that with the average Canadian. Well, meet solid lumber people, in the form of a medical crisis. Looks good on ya. I mean, bad things never happen until they do, so why bother living within ones means, right?

I know I’m supposed to say I feel bad about the stress this is causing some people, but I don’t. Painful experience is literally the only thing that changes most people’s behaviour. Time to rip some bandaids off. Coming, this fall.

Although, my actual favourite adjective for the phenomena is “prodigal”. How many people familiar with the fable of The Prodigal Son actually know the word means “wasteful”?

Fascinating to see the contortions made in the comments to justify why everyone must carry so much debt. Always someone or something else’s fault. I think there may be a clue to the problem therein.

One of the ways I knew my current partner was the one for me was when the conversation after a few dates revealed an identical attitude towards money. (Well, and she’s hot). My advice to young men seeking a mate would be 1. don’t; 2. if you must, find one for whom a high credit score is an aphrodisiac. I monitor my credit score in more than one country monthly and yes, take pride in keeping them extremely high. Ironically they can’t go any higher, because the one knock against me is the lack of a mortgage – because we bought our place without one.

Luck always plays a small part in any life, but choices have a far bigger impact. If one can’t adjust their income upwards – and yes, there are macroeconomic reasons why that may be hard – they have to adjust their lifestyle downwards. That’s it, that’s all. Using one’s inability to do the former to justify NOT doing the latter, and then papering over the difference with debt, is the road to well, where we are now.

#150 BillyBob on 05.20.20 at 7:03 am

#115 Franco on 05.19.20 at 9:28 pm
What is with the upside Canadian Flag these days? Someone please explain to me what the flag that represents our country that we supposed to all love be so treated with so much disrespect. I wasn’t even born here and it makes me sick to see it displayed in such a manner.

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

A flag hung upside-down is considered an international signal of an emergency or a state of war. In the US it is considered “a signal of dire distress in instances of extreme danger to life or property”.

Seems about right to me.

#4 crowdedelevatorfartz on 05.19.20 at 3:54 pm
My My
A scow on the toney side of Vancouver….how dare they…..

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

The photo was taken from the dash-cam of a police car, they’re been cited for unforgivable gaucheness.

#151 TurnerNation on 05.20.20 at 7:21 am

How to pay for CERB etc? What if…T2 & the Globalists were to nationalize the oil industry? Their favourite target.

Human behavior never changes. The point of war, is Land. The shut down was an economic hit job.
Below Kanada sits trillions in oil wealth.
Did you believe they’s let us have that money and live in prosperity? Not a chance.
No lads the Crown virus is to take back the land. It all belongs the Crown. Pay your rent.

———————–

An odd topic from US Business channel CNBC
Is it news, opinion or fact? Is this the beginning of a soft sell/predictive programming?
You must realize, this is WW3 the globalist have unleashed. Why? War mean no rules apply. Total chaos. Keep your eyes on the spoils, the Land. The main streets of your town sit empty and darkened. Ready for the taking.

https://www.youtube.com/watch?v=yXRgkyMwR70

#CNBC
What Would It Mean If U.S. States Went Bankrupt?
386,517 views•May 18, 2020

On April 21, Senator Mitch McConnell stated he was in favor of the idea of letting states declare bankruptcy. The statement was met with fierce backlash from several politicians and sparked media commentary. While states cannot currently legally file for bankruptcy, some in the legal and political world are supportive of the idea, as many states are suffering significantly due to the coronavirus pandemic. Allowing states to go bankrupt would be a complex process, and not at all an option without significant risk.

#152 TurnerNation on 05.20.20 at 7:36 am

Yes, every city will be shutting down its streets, more and more, slowly. This part of the agenda and all cities are on board. Watch your travel ability/rights always…

We are told it’s temporary…’distancing’ is the greatest economic tool/weapon ever invented. It can bankrupt airlines, restaurants; it can prevent kids playing with each other. There’s nothing it cannot do. It’s all for our health!!!

@CTVKitchener
· May 20
Cars off King? Kitchener Mayor proposes summer street closures to improve physical distancing http://ctv.news/QmTamnI

#153 TurnerNation on 05.20.20 at 7:53 am

How to know we are at War? Unlimited unchecked government spending; 24/7 propaganda on TV; As in WW2 all sporting and cultural events are shut down; and, severe checks on our rights and travel restrictions.
People are sporting masks outside, in WW2 was gas masks.

How our dictators soft sell us, and people are eating this up, begging for it. I told you from day one our rights and lives will hang on those numbers spat out on the TV. Are the numbers total reality? Who knows, who cares, they are working! Seen elsewhere, how your mind was conquered using faulty logic or no logic at all:

“No one should be allowed to drive again until there are no fatal accidents for 14 consecutive days. Then we can slowly begin to phase in certain classes of people who begin driving again, but at only half the posted speed limit. #safety”

#154 Sail Away on 05.20.20 at 8:16 am

If a bank declares bankruptcy, would it just be called ‘ruptcy’?

#155 crowdedelevatorfartz on 05.20.20 at 8:17 am

@#133 Sunshine always makes me Happy

“…. then give people the wages so they can ACTUALLY CHOOSE whether they want to…..”
++++

So we just pay everyone “big” wages because they “deserve” the “right” to earn big money to choose to buy whatever they like…..no matter how stupid, or lazy they are…..they deserve a nice car and a 50 inch tv.

Sorta like a Universal Income/Basic Wage kinda thing.
Hard work and striving to get ahead is soooo 1980’s maaaaan.
Wouldnt it be easier to just take the cars and tvs right out of the factories and shops? Give them to the people? Save everyone from working? Thats fair right?
Everyone gets a car and a tv?

Utopia….gotta go….I’m outta pot.

#156 TurnerNation on 05.20.20 at 8:22 am

The large labour union LiUNA is adopting Contact Tracing software app for members, ‘for their safety’
Go for a beer after work with the crew? Get an alert locking you down in the house for weeks else face fines/jail and job loss? I don’t see what not Medical martial law in 2 months.

My, complex software like this was rolled our worldwide in only weeks, by the likes of Apple, Google in their operating systems too.
The notoriously slow government was able to roll our CERB in a matter of two weeks;
Education went online in Canada also in a matter of weeks. When was the last time a software project was rolled out this fast and without glitch? Like never?

Some are asking, with non-essential work shut down how then, overnight, were all large chain stores in North America supplied with custom fit plexiglass, custom worded stickers for the Mark on the floor you must stand on to transact commerce; and custom t-shirts for the staff to wear on distancing?
But there was a TP shortage and only meat plants are being shut down…

#157 Sail Away on 05.20.20 at 8:24 am

#149 BillyBob on 05.20.20 at 7:00 am

If one can’t adjust their income upwards – and yes, there are macroeconomic reasons why that may be hard – they have to adjust their lifestyle downwards. That’s it, that’s all.

—————–

Yep. Live debt-free. So nice.

#158 Reality bites on 05.20.20 at 8:35 am

The banks are not going to want a pile of foreclosed houses in their possession. Especially with fewer buyers. If all else is an indicator, those who took the opportunity to keep a cash reserve for an unknown future, or to just survive will do okay. Those who have worked hard all of their lives to better themselves and their families will pick up the tab for those who have not. Justin will see to that.

#159 not 1st on 05.20.20 at 9:06 am

Any PM with an ounce of intelligence would be surveying our economy right now and looking to provide incentives to those industries with global reach that can bring us out of this.

But that cant happen obviously, be cause we have a shut in for a PM hiding from his responsibilities. 50+ days in hiding? There is no other leader on the planet doing this and the MSM pooh poohs him every day at 11:15 for another vote buying, err spending announcement.

Real estate is done in Canada with 7m people out of work. Those businesses who aren’t closing their doors are retooling for a smaller footprint, less employees etc. So a good chunk of those jobs wont come back ever. So that means the consumer is done as well. That’s 50% of our GDP right there. So you don’t want to sell oil either, or support our resource industries. Whats left?

Canada is a hollowed out husk under Trudeau. If this is what progressive govt is we better wake up. What good is having a majority govt to rule over ruin? And who the hll is the voter in Toronto who loves this? Seriously what are you folks, children?

#160 TurnerNation on 05.20.20 at 9:07 am

#152 TurnerNation. Slow day, replying to my own post.
Look I have no problem with globalism. Capital is mobile.
Government is fine, just that they be transparent and open.

The mayor of Kitchener in his Wikipedia photo is wearing a UN Agenda 2030 lapel pin. The round coloured circle.
Google that pin and see it is exactly that.

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

(*everything* I mention here is in the public domain and right in front of our eyes. I have no inside info.)
Fine. Just tell us that is the plan and how it will change our live. Don’t use a crisis to suddenly roll it out. All mayors are on board. Let’s have more openness.

#161 Damifino on 05.20.20 at 9:13 am

#99
Unless we act, a first time homebuyer purchasing a $300,000 home with a 5 per cent down payment stands to lose over $45,000 on their $15,000 investment if prices fall by 10 per cent
—————————————–

The solution is so simple. Simply stop calling it an ‘investment’ and state what it actually is: The purchase of shelter in a free market.

There is risk. If that is not acceptable then one should rent and let others assume the risk (or reward).

The CMHC exists to protect the banks, not you. In the words of Frank Zappa: “You ain’t even number two”.

#162 MF on 05.20.20 at 9:18 am

138 BAC on 05.20.20 at 2:38

Yeah I disagree.

A “study”, not adequately referenced, of 20 people is pretty useless.

That whole article was useless.

That was my point.

MF

#163 Dharma Bum on 05.20.20 at 9:31 am

#95 Down and Out

Oh when will it all end ,not covid 19 but daily updates by the PM
——————————————————————–

Not soon enough.

Totally vomit inducing.

His appearance, his voice, his message.

Utterly sickening. Pathetic and sad.

Hopefully the day will come when this incompetent unqualified bungler is just a bad memory.

#164 crowdedelevatorfartz on 05.20.20 at 9:31 am

Glad I’m not living in Michigan right now…

https://www.cbc.ca/news/world/michigan-dam-flood-1.5576545

#165 not 1st on 05.20.20 at 9:35 am

Here was a nice little post pandemic economic initiative launched by Trump of course to start creating a new partnership of trading nations in the pacific rim and rip supply chains out of china.

Of course, Trudeau has defended china and bashed Trump so Canada was not invited.

https://www.reuters.com/article/us-health-coronavirus-usa-china/trump-administration-pushing-to-rip-global-supply-chains-from-china-officials-idUSKBN22G0BZ

#166 Another Deckchair on 05.20.20 at 10:02 am

@149 BillyBob:

“If one can’t adjust their income upwards – and yes, there are macroeconomic reasons why that may be hard – they have to adjust their lifestyle downwards. That’s it, that’s all. ”

Very well said.

And, my current partner sounds like yours, except I’m likely a lot older. No debt for years in this household. Well done for you and your partner.

#167 Do we have all the facts on 05.20.20 at 10:08 am

#134 midnight

Thank you for drawing the confessions of CMHC to our attention.

CMHC admitted that past actions of the Government of Canada, including increased immigration, over stimulated the demand for housing in Canada and that these actions resulted in a rapid escalation of housing prices across Canada.

This confession exhibited a level of rectitude seldom shown by our government.

CMHC went on to note that the average Canadian homeowners realized a gain of $340,000 over that past 20 years. However $300,000 of this average gain was realized through the acquisition of additional debt.

Policies of the Government of Canada and CMHC
assured that the demand for housing would always exceed the supply of housing. They were well aware that their policies would increase average house prices so they maintained mortgage rates at historically low levels.

In short the Government of Canada hooked Canadians on the use of inexpensive credit to purchase assets whose value had been deliberately inflated by government policies.

CMHC has predicted a substantial correction in the value of assets purchased through the assumption of debt and now I sit waiting for the other shoe to drop.

Having admitted their role in manipulating the demand for housing and the resulting impact on the average cost of purchasing a dwelling the Government of Canada will find it difficult not to introduce policies to deal with the impact that declining house prices will have on Canadian homeowners.

I don’t know what kind of support will emerge in the future but by admitting their role in the upside the Government of Canada has exposed themselves to a measure of liability on the downside.

Stay tuned for the sound of the other shoe dropping.

#168 Sail Away on 05.20.20 at 10:50 am

So Andrew Scheer will not be renouncing his US citizenship. Good choice. Smart man.

#169 IHCTD9 on 05.20.20 at 11:13 am

#149 BillyBob on 05.20.20 at 7:00 am

One of the ways I knew my current partner was the one for me was when the conversation after a few dates revealed an identical attitude towards money. (Well, and she’s hot). My advice to young men seeking a mate would be 1. don’t; 2. if you must, find one for whom a high credit score is an aphrodisiac. I monitor my credit score in more than one country monthly and yes, take pride in keeping them extremely high. Ironically they can’t go any higher, because the one knock against me is the lack of a mortgage – because we bought our place without one.

Luck always plays a small part in any life, but choices have a far bigger impact. If one can’t adjust their income upwards – and yes, there are macroeconomic reasons why that may be hard – they have to adjust their lifestyle downwards. That’s it, that’s all. Using one’s inability to do the former to justify NOT doing the latter, and then papering over the difference with debt, is the road to well, where we are now.
—— –

Ms. IH is the same as me with money as well. In fact, despite her NDP leaning, SJW loving politics, when it comes to money, she’s a knuckle dragging Harris-esque Conservative. Odd bedfellows (or maybe not).

I got lucky though, we were too young to think much about money (or politics) when we first started going out, so I had no idea we were cut from the same cloth on that front till years later.

Today’s young Men do need to be more careful in a mate though given how things have turned out. A good marriage makes everything in life better (IMHO). A bad one in this day and age – especially for Men – is a life destroyer.

One more thing to add to BB’s excellent post: For some on the lower end of the income scale, there may be an option to savagely cut the costs of living, to reduce financial obligations to government, and to make a little cash on the side from time to time. I don’t make the big bucks, but I sure don’t have big bills to pay either. Plant this package in an area where a decent house can be had for 3-400k, and you’ve got a winner.

In all cases, piling on the debt is for fools.

#170 RyYYZ on 05.20.20 at 11:44 am

#84 Joneses on 05.19.20 at 7:41 pm

It’s simply about not trying to keep up with the Joneses. Consider a ladder of 10 households, bringing home $60K, $70K, … up to $150K. If each of these families spends to keep up with the family above them, they will outspend their income by $10K, accumulating debt, saving nothing, and giving nothing. If they spend at their level, no debt, but still no saving or giving. But if they lower their standard of living to a rung or two below their income, they have extra money to save and give. Can’t survive while spending as if two rungs down? Just observe the person three rungs down, they manage to do it.
====================================

Exactly some here are saying that the level of indebtedness and lack of savings is the result of the poor growth in wages, etc compared to the cost of living etc over the last 30 or 40 years.

That may be true, but nobody’s been holding a gun to anyone’s head forcing to them to mortgage themselves to the eyeballs to buy a house, or to overspend on newer and fancier cars they can afford. If the average Canadian is pretty much broke, it’s because they consistently spend as much or more than they earn, and it’s not all on necessities.

I think long and hard before even spending a few hundred to buy something. I have to be convinced that I will get real use out of it and that it’s good value for the money. I like to drive a reasonably nice car, for my own enjoyment, but I don’t need to consistently have the latest and greatest. 40K for a new car is a big expenditure, and not one that I take lightly.

I have sympathy for those who are truly in dire straits from no real fault of their own, but I have little for those who have dug a huge hole for themselves.

Unfortunately the new was is misplaced sympathy and aid for idiots who screwed themselves, as others have mentioned, at the expense of the thrifty.

And this is why, if I thought I actually qualified for any of the COVID benefits and could keep what I get, I would take them in a second. Yes, even if I don’t need. When the government’s shoveling your money out the door to everyone, you’d be a fool not to take it if you can. You can be sure I’ll be helping to pay for this largess for the rest of my life. Extra, since I’ve actually attempted to provide for myself in retirement.

#171 Faron on 05.20.20 at 11:54 am

For those of you whining about the indebted/struggling poor. Add up the number of times you have gone to Timmies, cdn tire, grocery store, Starbucks, or virtually any other place of business with service workers.

So, now you have a fairly large number on your hands likely 2 or 3 times per day. You could probably say that you are reliant on such stores and the people who work in them and stock the shelves or check out the groceries or remember your coffee order.

Min wage is $13.85. Work 40 hours a week and you gross $2216. Net about $1800 A MONTH. One bedroom apartment here in Vic was going for about $1400 (dropping now). Utils another $100 leaves you $300 for food, savings, gifts, clothing etc.

Either STFU about the poor not saving. Or go to bat for them to be paid more by supporting higher min wages and organized labour. Or the Gov’t needs to get its shit together and fully pop the housing bubble or allow it to deflate in the current recession.

The tropes of low income people being dumb, lazy, greedy, etc. are outdated, false and would be highly offensive if you let that fly on the street and were overheard. In some neighbourhoods you would be lucky to leave with your teeth. You, I, or anyone else is equally dumb, lazy and greedy etc as a composite group.

Low income folks know how to budget, they know how to squeeze every cent of value out of a dollar. And because they continuously flirt with overdraft fees, credit card interest or fees, and other such “poor” taxes, they are being hoovered off of at a very high rate. Meanwhile, the stupid wealth where I live buys carbon fiber bikes and carmelatto lattes and buys cookie cutter shed roof modernist homes and talks smack about the less fortunate or just pities them and wishes it were other.

Minimum wage needs to be commensurate with cost of living or the cost of living needs to come down full stop. Check yourself and how the game is set up before you rip into other humans who have the same wants, needs and dreams you do. I’ve heard more enlightened talk at the yacht club than I’ve read among your posts this morning.

#172 Lambchop on 05.20.20 at 12:04 pm

#169 IHCTD9 on 05.20.20 at 11:13 am

Today’s young Men do need to be more careful in a mate though given how things have turned out. A good marriage makes everything in life better (IMHO). A bad one in this day and age – especially for Men – is a life destroyer.
___________________

I would say a bad marriage can be a life destroyer for Men and Women, children too.
Men don’t hold a monopoly on getting screwed and Women don’t hold a monopoly on digging for gold.

The family court system in this country is severely skewed towards equalizing wealth just for the sake of it, based on nothing concrete or remotely fair.

Everyone should be equally cautious when it comes to marriage.

Now, when is Scheer going to call Trudeau out on his cowardly lack of leadership?

#173 Sail away on 05.20.20 at 12:15 pm

#171 Faron on 05.20.20 at 11:54 am

Re: the poor

Oh, enough whining. The minimum-wagers could always join the military- either here or in the US. They (the military) are begging for recruits.

That was my path and now I’m fantastically well-off.

#174 Sail away on 05.20.20 at 12:44 pm

#171 Faron on 05.20.20 at 11:54 am

…and further, what minimum-wage worker in their right mind would choose to stay in Vancouver?

You do know that minimum wage applies everywhere in this vast country, right? Even the places you can live cheaper.

#175 BAC on 05.20.20 at 12:46 pm

#162 MF on 05.20.20 at 9:18 am

This is not an attitudinal study.

‘Statistical significance’ is determined by the researchers who risk their reputations publishing results based on sample sizes that they deem will hold across the entire population. What’s a ‘representative sample’ when you’re looking at a scientific fact?

Following is the conclusion of that article and I think the credentials of the interviewee and his summation speak for themselves:

‘Dr. Amesh Adalja is senior scholar at the Johns Hopkins Center for Health Security. Reading over the La Jolla findings, he said they “establish that the cell-mediated arm of the immune system does provide substantial immunity after infection.

“It also shows that some of the cells that respond to the other, endemic, coronaviruses have cross-reactive potential against this coronavirus,” Adalja said. “Vaccine studies will have to look at both antibody generation as well as cell-mediated immunity.”

The report was published online May 14 in the journal Cell.’

#176 JonBoy on 05.20.20 at 1:54 pm

#133 SunShowers on 05.20.20 at 12:01 am

Maybe you missed the part about productivity. As I said, worker productivity has increased 50% in the last 40 years. That means either workers produce 50% more VALUE with the same inputs (or produce the same value with 50% less inputs, or some combination thereof).

So, why haven’t workers paychecks gone up 50%? Prior to 40 years ago, productivity and wages tended to rise in lockstep.

Did the workers magically make themselves more productive? Or have they used tools? Taken advantage of new hardware? Software? Information portals?

See, the workers don’t usually add much that is new. Rather, they use something new to increase productivity. Workers that can increase productivity above and beyond the average worker are worth more, whether they do it through sheer skill, hard(er) work/better work ethic or some other means (developing new tools or methods, etc).

New tools require capital to buy them. The money goes into buying technology to increase productivity and efficiency. The workers effectively stay the same while everything else changes.

Run a business some time and then get back to us with your ideas. You have zero concept of the costs of running a business, keeping up with (or passing) the competition, and balancing growth with profit. Investing into the business, whether for hardware (new tools, computers, phones, etc) or software (self explanatory) or worker upgrades (training for aforementioned software and hardware, usually) takes capital. Spending more for people that aren’t changing is wasted money. You spend money for game changers, whether they be better workers or better tools.

I did some training quite some time ago in Cleveland, at Lincoln Electric. They pay people what their worth. How? They pay production workers for every part they build on the assembly line (piece work). If they build something incorrectly, they have to fix it themselves before they can move on to making money again. The more they build, the more they make. The more perfectly they build them, the more they make. They also profit share with employees.

The average line worker there makes $100K a year assembling welding machines. It wasn’t unheard of for employees to receive $100K in bonus at the end of the year. When you pay people what they’re worth based on what they personally produce, you soon realize that most people aren’t worth what they’re being paid. Typical life of a new employee on the line? 3 weeks. Why? Most couldn’t hack it and others were too busy working/making money to try and help them.

You want people to be paid “what their worth”? Start measuring their output, rather than arbitrarily saying “This is what it takes to make a living.” As a business owner, you’re better off paying more money for great workers than average for average workers. It just takes a while to find great workers.

40 years ago, most people were working pretty manually (even in the office). You had to have skill and you had to be fast and capable to do well. You stood out a lot more easily and it was easier to weed people out. Now, the appearance of “being busy” is far more deceptive. Ever notice that you can lay some people off and the business barely hiccups? Why? They weren’t adding value to the business. Most of them are a drain on resources and aren’t worth the money they’re being paid…

#177 IHCTD9 on 05.20.20 at 2:31 pm

#172 Lambchop on 05.20.20 at 12:04 pm

—-

True, but I’m not talking just about marriage when I say mate. I’m primarily comparing today with 20+ years ago as well. You could say Men should be more careful of Women in general all around (and it looks like they are – albeit, slowly).

On top of long paying the price in family court for often being the primary earner, Men can get it up the wazoo in 2020 from their female acquaintances in many new and exiting ways.

For example, false accusations of assault, sexual assault, getting me-too’d Jian Ghomeshi style. Lots of ways to lose your job and reputation for innocent Men these days, and they need not ever step into a court room to be convicted. This is all new from the Millennial Men on down. Brand spanking new in the grand scheme of things.

Historically, Men have cared very little about the education, employment prospects, and incomes of their love interests. In fact, the more of these the Woman possessed, the less likely she was to be married.

This has now changed for the first time in recorded history. Things have got bad enough that Women who are educated and gainfully employed are now MORE likely to be married than their lesser” counterparts.

Women are loath to commit to what they consider an ineligible male, this is the same as it’s always been. As Women move up the socioeconomic ladder, the bar for Male eligibility moves up alongside. But Men, they have actually changed. No longer are smoking hot gr.12 dropout Women female alphas. From here on in, it looks like the Ladies must demonstrate a level of character and integrity which was never much of a concern before.

Two more things to think about. Well educated/earning Men and Women marrying each other is an up and coming trend, and are expected to form a new class of super couples. These couples are showing less of a tendency to divorce. Starting with the millennials, we do indeed see a drop in divorce rates, even though they are marrying much less overall. Self segregation. Part of this is probably “insurance” for both parties, but definitely something Men did not need, nor care about a couple decades ago.

IMHO, the biggest driver of all these changes we see is Men (Western), for the first time ever; are augmenting their long standing carnal drive with a measure of pragmatism. Why? Too much risk involved with commitment any other way. Something I never had to worry about.

#178 Ustabe on 05.20.20 at 2:40 pm

#171 Faron on 05.20.20 at 11:54 am

…The tropes of low income people being dumb, lazy, greedy, etc. are outdated, false and would be highly offensive if you let that fly on the street and were overheard. In some neighbourhoods you would be lucky to leave with your teeth. You, I, or anyone else is equally dumb, lazy and greedy etc as a composite group…

When I worked most folks would have told you I ran restaurants. Except for a couple of excursions into the higher end of things I by and large confined my joints to working class diners and cafes.

So I hired the working poor and served the working poor for 25+/- years out of a 35+ year hospitality career. And some of them still send me Xmas cards to this day. I did quite well in that area of commerce.

When I have counseled someone on their business plan or actually put money into someones dream and given the use of my LLC, etc. it overwhelmingly has been the working poor. From hiring single moms on welfare to spending hours with a kid who has never had any structure in his life, trying to get him to understand the structure needed to turn his mow, blow and go gig work into a true and proper landscape maintenance company I think I have benefited more from serving and working with and hiring the poor.

The reason why is everything has been to benefit them first, me second. The poor, the working poor are a underutilized resource, easy to forget, to overlook but a joy to be associated with.

#179 Tony on 05.20.20 at 5:22 pm

Re: #20 Ronaldo on 05.19.20 at 4:46 pm

If you’re in the financial position where you don’t pay 100 percent of your OAS back in a clawback then you definitely need the money.

#180 Robert Ash on 05.20.20 at 11:46 pm

I just looked at You Tube documenting the Food Bank activity in major US cities. Have a look and these scenes are reminders of Food Lines from 1930’s pictures of the Depression. So many people of all ages, with no means to feed themselves, but driving cars and pickup trucks, to get the donations… Lots of changes coming, for certain. It is hard to understand, Investors, confidence in Markets today.