The tightening

Justin Trudeau does not set interest rates. Nor does Chrystia Freeland, the finance ministress. In fact, monetary policy has been divorced from politics since March of 1935 when the Bank of Canada was formed as a standalone agency out of the ashes of the Great Depression, and out of the hands of politicians.

It’s the central bank’s job to keep inflation under control, stabilize the currency and support the economy. The BoC isn’t part of the government. It doesn’t take instructions from the former Langevin Block, where the PM hangs out. One thing politicians learned ninety years ago was just how awesomely they could screw things up in times of a true economic crisis. The 1930s were made far, far worse with policies like easy money followed by harsh protectionism.

The CB drops rates when the economy slumps in order to encourage borrowing, spending, less saving and more activity. It hikes the cost of money when the economy is on fire with prices and inflation romping to cool spending and encourage thrift. Gas and brake. Brake and gas.

As you know, rates crashed in 2008-9 during the credit crisis and had hardly restored to normal levels before the pandemic hit. So for the past dozen years loans and mortgages have been so low people have gorged on them, borrowed up a storm and inflated asset values. Now 90% of us can no longer afford real estate.

Some people (including all the unfortunates who come to this pathetic blog) think it’s impossible for rates to ever rise since families are so indebted ($1.69 trillion in outstanding mortgages). They also believe ‘the government’ will not allow hikes to swell for the same reason.

Here are two facts worth remembering. First, central bankers desperately want and need to up rates. If not, when the next economic mess happens they’ll be out of ammunition to fight it. You can’t drop rates much when they’re already in the ditch. Any recession (or worse) could be seriously elongated.

Second, our CB may be independent from politicians but it sure isn’t divorced from the US Fed. Over the past decades our bank has moved 93% of the time in sync with the Americans. If that didn’t happen, our dollar would be jerked around and the immense cross-border trade whacked.

Will the Fed tighten? Yes, of course. Officially there will be two increases by the end of 2023, but the bond market believes it will be more like eight. In Canada our tightening cycle is expected to begin next year with rates climbing above the previous peak for the first time in many, many years – thanks to a post-Covid economic blow-out.

This comes in no small part because the feds are spending unprecedented amounts, maxing out the maple credit card, running up an historic deficit and pushing the national debt into the red zone. All that money means inflation. It’s the stuff CBers nightmare over.

The market (bonds and swaps) expects the current B0C rate of 0.25% to be 2% within sixty months. That’s seven increases – still well below the average number of increases in a Fed tightening cycle. Previously we told you that major lenders in Canada are anticipating eight.

The ‘first casualty’: housing

“The housing market will probably be the first casualty of higher rates,” says economist Charles St-Arnaud in a new report (he worked at the Bank of Canada and Morgan Stanley). “When rates go up, that affordability will disappear very, very quickly.”

The 2% mark for the bank may be low, since the BoC has said that a ‘neutral’ rate could be as high as 2.75%. Of course eight or ten increases in the benchmark rate would boost the commercial bank prime from 2.45% to at least 4% and could double the cost for five-year mortgages.

Why would this occur when households have taken on historic levels of debt and the real estate market now accounts for a big piece (about 15%) of the GDP?

Simple. If the CB is to maintain its mandate of keeping inflation in check and prevent currency erosion there’s no choice. Government pandemic largesse and excessive deficit spending put more than $100 billion into Canadian bank accounts while Covid lockdowns crashed spending, pushing the savings rate to a multi-decades high. This is about to be unleashed. Already the economy is gushing with a 6% growth rate. Puppies and plywood are premium-priced. Bank profits are massive. We’re only starting the reopening process. When the US border opens, when travel and tourism take off, when 75% of us are fully vaxxed then (a) there’s no need for low rates to add stimulus and (b) the tightening must begin to corral price and asset inflation.

Recall the inverse relationship between real estate and rates? It’s real. Economist St-Arnaud figures if the cost of money rises 2.5% that housing markets in the GTA, Vancouver, Montréal and Ottawa would be at risk of a bust. But he also found if current prices rise another 10% and interest rates increase only 1.5% the result will be the same. Down she goes.

Remember a fifth of all new real estate buyers in the GTA and Van have debt-to-income ratios of 450% or greater. Meanwhile new mortgage borrowing’s been running at $17 billion a month. All this has pushed the national house price up 32% in a year. The savings rate during the pandemic surged to 14%. Incomes barely moved. There are home loans available at less than 1%. None of this is normal. Nor will it last.

So, no, Justin will not save you. Nice socks, though.

About the picture: “A few years back, without a mortgage to worry about,” Santina writes, “I was searching the internet and found The Greater Fool. I’ve haven’t missed a post since. Thank you! I would like to introduce you to Miele. She’s a Shepherd/Akita/Chow mix I’ve shared my life with for the past 10 years. Her sweetness, sass and vocal ways keep me entertained! Without a doubt work from home has been as great as it is because of her. 

149 comments ↓

#1 My Body My Choice on 06.21.21 at 1:42 pm

“It’s the central bank’s job to keep inflation under control, stabilize the currency…”

That obviously doesn’t include keeping housing inflation under control or they would have jacked up rates years ago.

And it also doesn’t seem true when the Canadian dollar drops to .70 US … increasing rates would improve the value of the C$ relative to the US.

#2 Steerage Herstory on 06.21.21 at 1:49 pm

Eh, it’s not called Langevin Block anymore….

https://www.thestar.com/news/canada/2017/06/21/in-deference-to-indigenous-peoples-trudeau-strips-langevin-block-name-from-pms-office.html

Cancel culture. – Garth

#3 My Body My Choice on 06.21.21 at 1:52 pm

The price of oil is almost $75/barrel. Next stop $80.

This will increase inflation on everything.

Even if all passenger vehicles went electric tomorrow, they’d still need oil(asphalt) to pave all the roads, highways and runways. All the cheap goods from China are shipped using diesel ships, loaded to diesel-burning rail cars to Amazon warehouse, then diesel delivery van to your doorstep.
Most farm tractors, mining vehicles, lumber yard trucks, fishing vessels, aircraft are oil/gas burning.
People like talking the green economy but few realize just how the real economy works and how much it still uses and needs oil. Not to mention the tax revenues from all those dirty oil companies.

#4 Adrian Berger on 06.21.21 at 1:56 pm

Don’t believe it – our dog and pony show will continue for many more years….

#5 Summertime on 06.21.21 at 1:58 pm

a few questions bother my central processor/disclosure: with very limited capabilities:

1. If housing increased by 32 % YOY what is the actual annual inflation rate? 3 %? or more like 8 %?

2. How are the central bankers independent as they are appointed by the politicians?

3. How is even a single increase in rates even contemplatable in the next decade, given the current levels of debt? That new debt to pay for the deficit would have to be fully monetized anyway, why bother to increase rates at all?

4. How will the stock and the bond markets stomach such rate increase?

5. What will replace the housing and financial sector in the calculation of GDP/as the debt issuance becomes more limited? Pot is clearly not the answer, nor is oil.

Thank you in advance for any elaboration on the above.

#6 TurnerNation on 06.21.21 at 2:00 pm

What’s really going on in Kanada. Commenters here state ‘when Covid is over’.
I always say this WW3 is for our Minds.
Indeed I know somebody their own parents living in the same city still refuse seeing them in person.
What a tragic loss, families ripped apart by this war. All due to the #s on the telescreens.
It’s a mass psychosis – much like the housing markets

– No this New System will not be going away.
Per a reporter at Global News BC we are looking at permanent hygene camp.

https://twitter.com/richardzussman/status/1405651132131659778
Dr. Henry says COVID-19 safety plans are going to be adjusted to be communicable disease plans. Detailed guidance is coming. Businesses will need to have plans in place into the fall. This is to prevent spread of all viruses, not just COVID. #bcpoli

— Amazon has postponed Prime Day in Canada due to “Covid” – per their website. Is there anything Covid cannot do?

.US extends Covid-19 travel restrictions with Canada and MexicoNews (cnn.com)

— Nova Scotia you get 14 day house arrest because a “Potential” positive’. Oh you are totally healthy and not sick? Maybe even vaxed? And tested negative? TOO BAD. This is Science in Kanada.

https://www.nshealth.ca/news/potential-high-risk-exposure-covid-19-fit4less-halifax

—- Mean while in Singapore. Our tax farmers have found us to be contaminated. Now they must go door to door in search of the Witch who is making us sick using their spells. See everything old is new again.

.Redhill residents in 7 blocks to undergo mandatory Covid-19 testing after viral fragments detected in wastewater (straitstimes.com)

Again it’s been said the world was conquered using only two terms: Mandatory, and Asymptomatic. See in the New System noone gets a free ride. Who will PROFIT from all the CV testing?

.Australia Covid update: masks compulsory indoors in parts of Sydney as cluster grows to Dystopia (theguardian.com)


– Just 28 more days!!

.Canada to extend flight suspension to India for another month (hindustantimes.com)

#7 Prince Polo on 06.21.21 at 2:13 pm

There is no spigot too large for our dear Photo-op Minister (PM) to spray on the masses. Entitled (and equally pathetic) Millennials will decry the interest-rate increases, at which point, another photo-op presents itself: the Mortgage Affordability Act of 2023 where PM Socks gives us the pleasure of 50yr multi-generational mortgages!

What could possibly go wrong with stuffing TNT into this gas bag???

#8 crowdedelevatorfartz on 06.21.21 at 2:15 pm

As much as I loathe the thought of our pompous , lecturing, trust fund, Prime Minister using the Social Justice financial wrecking ball for the next few years after a Fall 2021 election….

He ( and all his smug staffers) will have earned the wrath of millions of Moisters when the inevitable interest rate hikes cause a meltdown of real estate prices, a tightening economy, a possible recession brought on by the increasing bank rates which he cant stop….

#9 valuefanatic on 06.21.21 at 2:16 pm

#218 Sail Away on 06.21.21 at 8:39 am

It appears that if someone had bought ZSP this morning or at close Friday, they would have done quite well. Have there been other times Faron has missed the mark? Just asking, you seem to have good market insight. I’m trying to learn from others.

#10 BoC on 06.21.21 at 2:20 pm

Governor of the Bank of Canada is not that far removed.
Appointed by Directors, who surely have political contacts and potential for potential influence. Nominees must have approval of Cabinet and Governor of the Bank of Canada reports to Finance Minister after all.

Give it up. The government does not set interest rates. – Garth

#11 crowdedelevatorfartz on 06.21.21 at 2:21 pm

@#2 Steerage
“Eh, it’s not called Langevin Block anymore….

https://www.thestar.com/news/canada/2017/06/21/in-deference-to-indigenous-peoples-trudeau-strips-langevin-block-name-from-pms-office.html

++++

Well, at the risk of being called an insensitive redneck.

I plan on purchasing a crispy new Canadian Flag this week and proudly hanging it in my apartment window on Canada Day.

A friend has also given me small Canadian Flags to put on my truck .

I encourage all proud Canadians to do the same.

#12 Bob on 06.21.21 at 2:27 pm

Give it up. The government does not set interest rates. – Garth

“Does not” isn’t the same as “will not.” What’s stopping Ms. Freeland from ordering to bank to freeze interest rates at the present level for the next 5 years? The bank of Canada Act (section 14) seems to explicitly allow this:

(2) If, notwithstanding the consultations provided for in subsection (1), there should emerge a difference of opinion between the Minister and the Bank concerning the monetary policy to be followed, the Minister may, after consultation with the Governor and with the approval of the Governor in Council, give to the Governor a written directive concerning monetary policy, in specific terms and applicable for a specified period, and the Bank shall comply with that directive.

I give up. – Garth

#13 saskatoon on 06.21.21 at 2:28 pm

“First, central bankers desperately want and need to up rates.”

why, garth? debt is their only product.

#14 BoC on 06.21.21 at 2:32 pm

Give it up. The government does not set interest rates. – Garth

——

Come on Garth, we’ve got a Liberal ex-Minister of Finance on the Board of Directors of the Bank of Canada. This is not a black and white issue by any means.

It should absolutely be as you say. But are things really like that? I’m sure there is no absolute influence, but opinions are heard, and likely taken under consideration.

#15 Shakabra on 06.21.21 at 2:34 pm

Honest question:

So if rates increase and RE prices fall, due to the historical inverse relationship, does that not put another kind of major strain on our economy since it’s all we do here in Canada?

Why would house prices going down hurt the economy? – Garth

#16 NSNG on 06.21.21 at 2:37 pm

#3 My Body My Choice on 06.21.21 at 1:52 pm

The price of oil is almost $75/barrel. Next stop $80.

This will increase inflation on everything.

This is true. Just look at the dividend on XEG. 4 cents to 14 cents. That’s my kind of inflation!

Well, lookie here. It seems after all the lies they are starting to lose the kids:

Swiss Reject Climate Change With Zoomers And Millennials Leading The Way

https://www.zerohedge.com/political/swiss-reject-climate-change-zoomers-and-millennials-leading-way

#17 ElGatoNerodeYVR on 06.21.21 at 2:39 pm

My prediction : Rates will go up ,same will the discount to posted rates
so in effect Net mortgage rates adjust much less to something the borrowers can afford.
Worth every penny you paid for it.

#18 Sail Away on 06.21.21 at 2:41 pm

#9 valuefanatic on 06.21.21 at 2:16 pm
#218 Sail Away on 06.21.21 at 8:39 am

It appears that if someone had bought ZSP this morning or at close Friday, they would have done quite well. Have there been other times Faron has missed the mark? Just asking, you seem to have good market insight. I’m trying to learn from others.

——–

Well, thank you. Be very careful before acting on financial advice of any kind from anyone.

#19 Sail Away on 06.21.21 at 2:43 pm

#11 crowdedelevatorfartz on 06.21.21 at 2:21 pm

Well, at the risk of being called an insensitive redneck.

I plan on purchasing a crispy new Canadian Flag this week and proudly hanging it in my apartment window on Canada Day.

———

How about if I call you a needlessly profligate spender?

You probably also buy books that are readily available at the library.

Get your free flag here:

https://www.tpsgc-pwgsc.gc.ca/citeparlementaire-parliamentaryprecinct/decouvrez-discover/drapeaux-demander-flags-request-eng.html

#20 Joe on 06.21.21 at 2:46 pm

I don’t know which statement I find more comical:

– central banks are not political.
– housing prices will go down in Canada enough or go down at all to peril many home owners.
– stock market is not mentioned once as an impacted area of economy if rates go up.
– rates will rise and keep rising even if things start to go south.

I’ll believe these when I see them actually occur.

#21 OriginalAlex on 06.21.21 at 2:46 pm

Garth, what effect will inflation have on the Stock Market? I am thinking positive, but am reading some contradictions on this. I guess as long as it is under control, even over 2-3% for some time, should be good. I am a Buy and Holder of Index funds, so I am happy to let the good times roll…

#22 safe money on 06.21.21 at 2:46 pm

wow. in 60 months we’ll have 2% interest rates and 10% CPI. i’m full of confidence in our central banks.

The BoC rate is not retail. You will be paying more. – Garth

#23 Mike on 06.21.21 at 2:49 pm

.
Have been following this blog for 5 years.

Numbers tell that Real Estate in Canada has given much higher leverage/return compared to Stock market, specially in Lower Brainland.

So what? It’s not a contest. – Garth

#24 Luca on 06.21.21 at 2:54 pm

Garth, you do understand some of our skepticism. This blog along with many other outlets have been predicting rates to go up and real estate to soften for over a decade. Real estate did soften slightly in 2017 but kept increasing not long after. Was merely a blip. You must see why we don’t believe this time is different?

So don’t believe it. If you know more than me and history, knock yourself out. – Garth

#25 kommykim on 06.21.21 at 2:55 pm

RE: Gas and brake. Brake and gas.

That’s the problem. They “drive” like a noob. If only they could figure out how to ease off slowly on the gas and gently apply the brakes. Whiplash is bad.

#26 Humbled ◇ Broke on 06.21.21 at 2:57 pm

The only time I personally experienced a debt to income ratio as extreme as that promolgated by the Ottawa T2 gang was back in the seventies. Back then Jimmi Spliff the local high-school dope dealer offered similiar generous terms for a “fun now, pay layer scheme.” Your intact knees were Jimmi’s collateral. It never ended well.

This time for house punters it is afterall different this time, that is, until it isn’t. Knees beware.

#27 Justin Lead on 06.21.21 at 3:01 pm

Justin always like to be different. Colourful socks when nobody else is doing so. Legs apart when every other G7 leader has legs together. Hugest debt to GDP ratio. Yeah, Justin is special.

#28 Dave on 06.21.21 at 3:02 pm

Gas is at $1.60

Rumors that by summer it will be $2.00

Steak at Costco is $20+

Real Estate…Millions

The central banks need to raise rates so prices can come down

#29 cramar on 06.21.21 at 3:04 pm

I didn’t get a chance to comment on Sean the whiner with a family income to $300k, 6 degrees and no house. Your essay shows that post-secondary education can and does teach you HOW to earn a living. You’re a perfect testimony to this. What current eduction DOES NOT teach is how to live. You are also an example of this.

So you don’t like us boomers, eh? Well one thing they tend to have that you will hopefully learn as you grow older is something called wisdom. So here is a little bit from the boomer demographic:

a) Stop whining! How many people in this world have the wealth, education, and secure future you do? Learn to be thankful for what you have. Which is plenty. So you should be plenty thankful.

b) With 6 degrees between you, you are telling us that you cannot think of any ways you could possibly own a house? This does show the shortcomings of modern eduction. Maybe you should supplement your eduction by learning how to creatively think outside of the box!

c) Truly great people don’t blame their failures and shortcomings on other people or circumstances. They assess the situation realistically and decide on what to do about it. They are people of action! Blaming outside forces is not productive, but taking positive action to address the situation is. This is emotional intelligence and is also something that is obviously not taught in modern eduction.

In conclusion what you need is eduction.

#30 crowdedelevatorfartz on 06.21.21 at 3:06 pm

@#12 Bob

““Does not” isn’t the same as “will not.” What’s stopping Ms. Freeland from ordering to bank to freeze interest rates at the present level for the next 5 years?”

+++

Well she could try but it isnt up to her as much as her self importance would wish it…

It’s our southern trading partner that sets the tone.

Plus the other 1st world countries that raise their rates would put pressure on our country to do the same.
OR
We have a dollar worth less than a Greek Drachma.
Take your pick.

#31 Wrk.dover on 06.21.21 at 3:08 pm

#206 VicPaul on 06.21.21 at 12:59 am

…with a chain saw…niiice!

___________________________

On a glancing angle, not cut through, then flipped and repeated at full rpm, you will see very small difference from circular saw cuts. I cut to the line and force fit everything. Cutting plywood takes extra finesse.

If you are not born with tactile talent, you can drill a hole through the bar, hinge/bolt it to a post, making a chop saw out of a chainsaw too.

Not a wealthy Prima Donna, but a humble innovator.

drag racers motto: Run what you brung!

#32 crowdedelevatorfartz on 06.21.21 at 3:10 pm

@#19 Sail Away

“Get your free flag here:”

++++

Free?
How many govt bureaucrats in meetings did it take to create THAT site, the shipping costs, etc.

Nah.
I’ll buy my own thanks and proudly display it on Canada Day….apologists be damned.

#33 Keith on 06.21.21 at 3:10 pm

@ #5 Summertime

I understand the mandate of the BOC is to keep inflation within a target zone, without killing employment. It’s a tricky balance.

Problem #1 – the stated inflation rate is clearly a scam
Problem #2 – the stated unemployment rate is also a scam

Therefore, the BOC interest rate is artificially low which has manifested in very high prices for assets, and making mockery of cash holdings. Good news for investors, bad news for cash savers. Garth has the balanced strategy.

#34 Dolce Vita on 06.21.21 at 3:11 pm

I agree, there will be splurge-athon by the Cdn consumer come late Summer, maybe earlier if Canada can maintain its vax pace.

#6 TurnerNation

Today and tomorrow Amazon Prime Day in Italia, UK, Deutschland, France…

—————

Canada will be fine as long as no new variants and 2 dose vax’d.

Don’t forget to come visit Italia* Canada and spend some of that hard earned Pandemic cash from Gov’s Canada.

90% of your 32.4M doses came from the European Union who had your back since late last year.

Recall European’s like me waited longer for their jabs so you all can be protected from Covid and its spawn.

*sound proof your luggage wheels, ditch the Tilley Hats and add at least 5 deg C to the high temp forecast by Meteo Italia, for example high stated as 35 deg C last Summer and what it was from my balcony:

https://i.imgur.com/dD6TvQG.png

Had my instant thermometer outside and ya, that was the high.

So Canada, Italia will lie to you about forecast highs so not to scare you Snow and Rain Peoples.

Ciao, ‘gotta watch Belgium vs. Finland.

Oh and:

Italia Reserves 1 – Wales Premier League 0

#35 vanreal on 06.21.21 at 3:11 pm

I’ve read that the BoC sees the current spike in CPI as a blip in relation to the drop at the beginning of the pandemic and is not a true increase in CPI. Also if interest rates do increase which puts new home owners in a position to sell and therefore tanks prices will that not result in a pull back of spending in the economy and reduce CPI and therefore rates?

#36 Ponzius Pilatus on 06.21.21 at 3:13 pm

#233 IHCTD9 on 06.21.21 at 1:01 pm
I had to google up “Oak Bay” MLS, with all the references made. A decent looking place there runs about 3.5 mil. That’s over 14k/mo. at 1.6%, and over 18k/mo. at 4%.

This does not look like a good place for a first time buyer to shop.
—————
When the Brits colonialized about 3/4 of the planet, they always kept the choicest bits of RE for themselves.
Nowadays, they are places that Schmucks like you and I can only dream of living in.
I was told that initially the Lions Gate bridge was restricted to British subjects living in the British  Properties in what is now West Vancouver.
Ironically, many rich Iranians are now calling the “British Properties” home.

#37 SoggyShorts on 06.21.21 at 3:14 pm

#23 Mike on 06.21.21 at 2:49 pm
.
Have been following this blog for 5 years.
Numbers tell that Real Estate in Canada

****************************
False. Only in very select neighborhoods is this even a little bit true.

The S&P 500 is up 107% plus divs over 5 years.
Good luck finding a house between the rockies and Ontario that doubled in price.

If you want to cherry-pick returns on housing by selecting very specific markets then compare them to cherry picked stocks as well:
How many houses out-performed Nvidia’s 1,500% returns?

#38 Editrix on 06.21.21 at 3:16 pm

Sorry, Garth, but salaries are beginning to edge upwards. I just signed a contract to do the exact same job at a different company. Same job title and a bit less responibility. They’re going to pay me 15% above my asking price. Boy, was I gobsmacked.

#39 Billy Buoy on 06.21.21 at 3:17 pm

Tighten?

Did you again say something about rates going UP?

We saw the hissy fit at the mere mention of that word Friday on the markets.

Today was the bounce, realizing just how crazy it was that the FED even mentioned that word…if the markets should fall 2% tomorrow, the rest of the week will be a parade of FED thiefs err experts walking back that misuse of that word.

They can tighten (my god that’s so funny to read in print) and crash everything OR not tighten and eventually inflation will be the last spike to kill off the middle class and poor.

Which choice will they make? That’s all they have.

Tighten? LOLOLOLOLOLOLOLOLOLOLOL

Is this a comedy blog now? If so, It’s even better. Thx.

#40 Shakabra on 06.21.21 at 3:18 pm

Why would house prices going down hurt the economy? – Garth

Because RE, unfortunately, has been our largest economic sector. So really my questions is centred around the large loss of disposable income.

– more money going into mortgage payments than into goods and services

– home equity decline leading to less spending for goods and services.

– corporations spending less on R&D, hiring, etc. to service high debt load at a now higher interest.

– major cuts to gov’t services and funding, or maybe not with this Liberal government who seem to quadruple down.

Residential RE is not the largest economic sector. Houses do not generate disposable income, they suck it off. Lower house prices would benefit all segments of society and lead to a more diversified, healthier economy. You have no idea what you are talking about. So stop. It’s embarrassing. – Garth

#41 Millennial 1%er on 06.21.21 at 3:25 pm

t w e n t y p e r c e n t b o n d s
e i g h t y p e r c e n t e q u i t y

Can’t wait for the housing market to crash with no survivors. That way I can deploy my capital and finally achieve my dream of having a lawn measured in acres & not yards

#42 Jenna on 06.21.21 at 3:31 pm

If only the interest rates would increase.

I don’t see it happening. BOC and Politicians would be horrified of impact.

The savings rate increase does not apply to all. The working class…minimum wage group are on the ropes. Not all are richer than they think due to covid.

The vaccine and roaring back economy…verdict still out.

No one is discussing the Delta strain and the real possibility of a 4th wave lockdown.

Economic recovery is a myth. Inflation a long term reality !

#43 Linda on 06.21.21 at 3:34 pm

Today’s pup looks like she’d be great in stealth work!

I’m a bit stunned by the comment that ‘affordability will disappear’. Seems to me that with the possible exception of the Prairie provinces affordability went walkabout quite some time ago. I do understand that crazy low rates allowed folks to borrow ‘more’ but once RE climbed past the $500K mark just about everywhere I was of the opinion that the average Canadian household couldn’t afford to buy. As for the ‘hot’ markets, eek! When dilapidated garages are being sold for over $1 million past time to head for the exits.

#44 Quintilian on 06.21.21 at 3:41 pm

” In fact, monetary policy has been divorced from politics since March of 1935 when the Bank of Canada was formed as a standalone agency out of the ashes of the Great Depression, and out of the hands of politicians.”

That’s what the text book says, but it’s not true.

Dogs don’t have to be told to wag their tail when they see their master.

Mr. Turner, with all due respects, you under state the impact of criminals and politicians have on the economy, especially on housing.

#45 No Left Turn on 06.21.21 at 3:41 pm

#16 NSNG on 06.21.21 at 2:37 pm

They didn’t reject Climate Change. The rejected the radical leftists that introduced the proposals. The proposals, like leftism, we’re/are absurd. More interesting is that they overwhelmingly upheld the Emergency Covid-19 Laws that give the National Assembly sweeping powers. Government quickly announced an end to all restrictions by the end of June. Faith in government, something you get when your vote actually counts.

Canada has an absurdity problem. Switzerland it seems does not.

#46 PastThePeak on 06.21.21 at 3:44 pm

As mentioned, the BoC will not move far from the US Fed.

Back in Q4 of 2018, the Fed was on a mission to raise rates for the same reasons stated in the article. The last raise to 2.5% was already too much, and the market (then economy) started to role over. Long before COVID was escaping the lab in Wuhan the Fed started to cut rates and were back to 1.75% before the pandemic.

The point is that the max upper limit Fed Funds rate the US economy & markets could tolerate then was maybe 2%.

That was 2 years and $10T in debt ago. Good luck on the Fed getting anywhere near there without a market tantrum to beat all hell.

The max the Fed could raise rates to is maybe 1%, and if inflation hasn’t backed off enough by then, it will finally be clear to all that the Eccles Building does indeed have a problem…

#47 Leftover on 06.21.21 at 3:46 pm

Mike on 06.21.21 at 2:49 pm

Have been following this blog for 5 years.

Numbers tell that Real Estate in Canada has given much higher leverage/return compared to Stock market, specially in Lower Brainland.

So what? It’s not a contest. – Garth

———————————————–

Well, if it was a contest, the 75% total return we’ve made on the proceeds of selling our house a couple of years ago sure beats gains made on YVR real estate.

Nothing sexy, just banks & utilities.

#48 BoC on 06.21.21 at 3:53 pm

#46 PastThePeak

The last raise to 2.5% was already too much, and the market (then economy) started to role over.

———-

So how much interest can the market tolerate now that the debt levels have increased so much? Certainly not 2.5%.

Hence why the VIG from your friendly loanshark (BoC) is staying low. At most it will be a bunch of cheap talk and maybe 1% more interest, no more.

They’ll find some creative way to do things. You’ll see.

Look at the stress-test as example.

Is it a hurdle to qualify borrowers? Sure.

Is it also an attempt to decouple real estate from BoC set interest rates? I would argue it does attempt to pull off that trick indeed.

Government could easily put out the fire that is Canadian real estate bubble. But they aren’t going to do something that dumb. They’ll just blow some hot air at it with their most breaths of warnings and empty threats.

#49 Mattl on 06.21.21 at 3:54 pm

Why would house prices going down hurt the economy? – Garth

————————————————————-

Lots of reasons. New builds will grind to a halt, reno’s will be put on hold. Boat, RV, ATV sales are all being driven by increases in home equity, which is over 7 trillion right now. Higher interest rates will mean more money directed towards mortgage payments – the banks will do well but this will impact consumer spending on retail, hospitality.

How could higher interest rates and lower home prices not be a huge drain on the economy? Housing is 25% of GDP, when the big correction finally comes, and it will, I fully expect it to take out the economy with it.

Then you will be disappointed. – Garth

#50 crowdedelevatorfartz on 06.21.21 at 3:56 pm

@#36 Ponzies Persian Pals
“Ironically, many rich Iranians are now calling the “British Properties” home.”

++++

Tut tut Ponzie.
How dare you refer to Persians as Iranians ( even though Persia is no where to be found on a map)
I do believe the Brits invaded Persia many many moons ago and then carved it up with the French and the US and created the middle east chaos we have today…..
Turn back the clock, rewrite history.
Its the Canadian way.

#51 Rainman on 06.21.21 at 3:57 pm

Why would house prices going down hurt the economy? – Garth

Because RE, unfortunately, has been our largest economic sector. So really my questions is centred around the large loss of disposable income.

– more money going into mortgage payments than into goods and services

– home equity decline leading to less spending for goods and services.

– corporations spending less on R&D, hiring, etc. to service high debt load at a now higher interest.

– major cuts to gov’t services and funding, or maybe not with this Liberal government who seem to quadruple down.

Residential RE is not the largest economic sector. Houses do not generate disposable income, they suck it off. Lower house prices would benefit all segments of society and lead to a more diversified, healthier economy. You have no idea what you are talking about. So stop. It’s embarrassing. – Garth

More money going into house payments and less into the economy is not that hard to understand?

#52 He who goes BOOM on 06.21.21 at 4:00 pm

Thanks for trying, Mr. Turner.

I think the part that needs more clarification and reinforcement is that monetary policy is international in scope.

Canada has limited latitude and can not set rates arbitrarily or independently.

People do not understand or believe that fact.

Rates will absolutely increase, people will scream bloody murder, maybe Trudeau will lose an election, but the fact is, there will be serious pain, especially for the over leveraged who don’t understand or believe.

#53 zxcvbnm on 06.21.21 at 4:06 pm

Respectfully disagree, Garth. While your assessment is logical and reasoned, that’s its failure. We live in clown-world. We’ll just declare raising interest rates another form of white supremacy (it is, if you think about it) and cancel it.

And rumour has it that the world has already been flooded with super dollars, and the Fed is just playing catch up. They’re saying one thing and doing another. Feds actions imply they want more inflation. Probably to usher in a collapse and then some form of cryptocurrency that can’t be printed by foreign governments gets ushered in. Manufacture crisis -> pre-decided solution. American Judo!

#54 IHCTD9 on 06.21.21 at 4:09 pm

#32 crowdedelevatorfartz on 06.21.21 at 3:10 pm
@#19 Sail Away

“Get your free flag here:”

++++

Free?
How many govt bureaucrats in meetings did it take to create THAT site, the shipping costs, etc.

Nah.
I’ll buy my own thanks and proudly display it on Canada Day….apologists be damned.
—— –

Fartz, just call your local MP and ask for a flag. I did this aft, and they say it’ll be in the mail tomorrow. My MP’S office is like 20 minutes away, and they even offered to chuck one out the door for me if I wanted to show up in person.

That link above is to get a peace tower flag, and the wait time is over 100 years.

#55 Soviet Capitalist on 06.21.21 at 4:12 pm

When will the rates rise?! The answer is always next year… :)

#56 Sail Away on 06.21.21 at 4:14 pm

#41 Millennial 1%er on 06.21.21 at 3:25 pm

Can’t wait for the housing market to crash with no survivors. That way I can deploy my capital and finally achieve my dream of having a lawn measured in acres & not yards

———

Both those units of measure are used in the US, where your real estate dreams can already come true without dooming others.

#57 Sunshowers on 06.21.21 at 4:14 pm

#8 crowdedelevatorfartz on 06.21.21 at 2:15 pm
Trudeau (and all his smug staffers) will have earned the wrath of millions of Moisters when the inevitable interest rate hikes cause a meltdown of real estate prices, a tightening economy, a possible recession brought on by the increasing bank rates which he cant stop….

Just because Trudeau can’t unilaterally keep interest rates in the ditch doesn’t mean he won’t leverage whatever federal power he can to keep his voting base happy.

Think CERB, but for newly underwater/insolvent mortgage holders. It wouldn’t really be unprecedented.

#58 Trojan House on 06.21.21 at 4:17 pm

While it is true that the BoC isn’t part of the government, the two are closely entwined since fiscal deficit financing operations affect the Bank of Canada’s monetary policy.

#59 IHCTD9 on 06.21.21 at 4:17 pm

#31 Wrk.dover on 06.21.21 at 3:08 pm

drag racers motto: Run what you brung!
— — —-

“…and hope you brought enough!”

#60 Mosey on 06.21.21 at 4:22 pm

Not possible for interest rate hikes by the fed. They have no dry powder left. Remember when they tried and got a taper tantrum in ‘18? Epic inflation is brewing. If fed raises rates even the tiniest little bit US gov would not be able to service the debt can you imagine the states being bankrupt well it’s happening. It’s either leave the interest rates alone and pray the spiralling debt can be paid by “transitional inflation “ , hoping like hell it is controllable and does not become hyper inflation, or raise the rates and crash the market. Gold, anyone?

#61 baloney Sandwitch on 06.21.21 at 4:44 pm

Ridiculous. 10 year TIPs are yield -0.8 %.
https://www.cnbc.com/quotes/US10YTIP

Its still TINA – There Is No Alternative to stocks. I continue to sell puts on dividend paying US stocks. My only fear is the govt is going to remove the cap gains tax discount, next year.

#62 IHCTD9 on 06.21.21 at 4:45 pm

Making a call on future rates is tough to hang my hat on. I wonder if the globalization of everything is/will have an unforeseen affect on the validity of historical metrics. People and money are shooting every which way, all over the globe, consumer goods never so cheap, and only going down more, the rise of long dormant economies, loss of human labour requirements like we’ve never seen before, to be soon followed by loss of human brainpower requirements. So much wealth in the world compared to even just 100 years ago. Disruptive game changing technologies waiting in the wings that will flip the established hierarchies on their collective ears.

All I feel can be done, is roll with the punches and try to get in a few yourself. I got a feeling the future will be good, but it’s us in the here and now dealing with the upheaval of change.

#63 $FromA$ia on 06.21.21 at 4:50 pm

No, Justin can’t save us with forcing the bank to rate hike, nor can he introduce new measures to slow or stop the crazy advance in home prices. The minority gov will not rock the boat with the voters and that’s what I was getting at!

Keep the cowboy boots and swap up to bear mace!

#64 Ponzius Pilatus on 06.21.21 at 4:56 pm

#226 Esquaumpton on 06.21.21 at 11:17 am
Little sympathy here for this guy, I am a 29 yr old millennial and purchased a beautiful 3 bed 3 bath strata townhome this year across the bridge in quiet Esquimalt for $615k, away from Lisa Help’s “unhoused” utopia, yet still within walking distance of downtown Victoria. People with six degrees like to live behind the “Tweed Curtain” of Oak Bay here in YYJ though. I only have two myself so I stay in the hood. Increase your scope and you can find something, instead of blaming the world for your problems.
——————
With due respect, but you’re typical of the new home buyer.
Shelling out 615k for a townhouse, without batting an eye.
Monthly dues on Townhouses are between 300 and 500.
Even with 20% down, the mortgage would still be around 500k.
It just boggles the mind.

#65 IHCTD9 on 06.21.21 at 5:00 pm

#36 Ponzius Pilatus on 06.21.21 at 3:13 pm

When the Brits colonialized about 3/4 of the planet, they always kept the choicest bits of RE for themselves.
Nowadays, they are places that Schmucks like you and I can only dream of living in.
———-

When I dream of a place I’d love to live, an enclave of rich pompous materialistic dbags ain’t it :).

A couple hours north of where I am now would do nicely. Small efficient house on the edge of a lake, dock and fishing boat, lots of bug spray…

#66 FerrisWheel on 06.21.21 at 5:08 pm

Garth, I respect your thoughts but the BOC Goldman Sachs boys don’t concern themselves too much with Inflation. How could they have left house prices appreciate as they have.

#67 Armpit on 06.21.21 at 5:14 pm

Comparison of house prices.

In 1979, Earned $21,000. After income tax – net was $17,500. Purchased house for $50,000. 10% down. $45,000 Mtg at 10% = $4836/yr. Property tax $1000. Total Payments $5836/yr. That is 34% of Net Income.

2021, same job pays $110,000. After income tax , net is $78,315. House purchase is $800,000 (same area). 10% down. $720,000 mortgage at 1.9 percent = $36,166/yr. Property tax $6000. Total Payments $42,166/yr. That is 53% of Net Income.

Something is going to happen. Salaries must go higher, house prices go down, or a combination of both.

BTW – in 1984, I couldn’t sell the house at $50,000 as interest rates skyrocketed to 16%.

Something to think about for those looking at buying a house today.

#68 Ponzius Pilatus on 06.21.21 at 5:18 pm

#65 IHCTD9 on 06.21.21 at 5:00 pm
#36 Ponzius Pilatus on 06.21.21 at 3:13 pm

When the Brits colonialized about 3/4 of the planet, they always kept the choicest bits of RE for themselves.
Nowadays, they are places that Schmucks like you and I can only dream of living in.
———-

When I dream of a place I’d love to live, an enclave of rich pompous materialistic dbags ain’t it :).

A couple hours north of where I am now would do nicely. Small efficient house on the edge of a lake, dock and fishing boat, lots of bug spray…
————
I understand.
You’re Frisean, not Persian.

#69 Ken on 06.21.21 at 5:20 pm

I here tulips are making a big comeback, Garth!

#70 crowdedelevatorfartz on 06.21.21 at 5:28 pm

Its gonna be a long hot Summer in Canada.

https://www.cbc.ca/news/canada/british-columbia/catholic-churches-burned-osoyoos-penticton-1.6073976

I’m sure these aren’t the last to burn on the Reserves.

Arson, say the firefighters who responded. Disgusting. – Garth

#71 willworkforpickles on 06.21.21 at 5:31 pm

Garth…re: rates to go up…i for one have got your back unwavering so.
Do the research and see what a mess this world is in. It becomes quite clear in what’s soon coming.
I too have gone over why rates have been so low for so many years and why that will all end soon. (many times in the past several months).
Selective hearing for the most part just filters it out.
Its not a smooth reality that many want to face.
Smooth talk is more…much more preferred…as if better to sleep at night than worry in the mean time of facing the guillotine before facing the guillotine.

#72 Slava on 06.21.21 at 5:36 pm

Garth, you are not making case for raising interest rate, at all.

1. >> BOC will follow Fed because otherwise $CDN will suffer.
So? It will make our exports more profitable and stimulate economy.

2. BOC will only raise rate if and when the economy will start to ACTUALLY grow, that is, per capita GDP will go up, salaries go up. If that actually happens, nobody will complain about raising mortgage rates. Alas, that is not likely to happen.

3. Nobody expects BOC rate above 2% for the next few years, which is relatively speaking still very very low, and thus is a non-issue.

#73 soggy analysis on 06.21.21 at 5:38 pm

#37 Soggy Shorts

Please leave analysis to the big boys.

Show me 1,000 people in all of Canada who had $1M invested in stocks with $800k of that borrowed.

Then show me even 10 people in the country who had that same leveraged portfolio in Nvidia (talk about cherry picking).

I can show you at least a million Canadians who had ‘house portfolio’ worth at least $1M who watched their houses go up in value all the while sleeping soundly even during spring of 2020 when stocks crapped 40% and panic was everywhere, and people decided….to buy more houses.

I have owned stocks and houses. Right now I own zero real estate and lots of stocks. Nice safe bank stocks, index ETFs (US and a few Canadian) and the like.

I feel far more worried about my future than when I owned RE.

#74 BoJo the British PM clown IN CHIEF on 06.21.21 at 5:41 pm

I have absolutely no idea what’s illegal/iegal in Ontario anymore, all I know is I just had my legs waxed in someones garage.

We’re living in clown world, open ontario
@fordnation

#firefordopenontario #onpoli

Black market economy of 80% that’s what Canada deserves, Loooool…

#75 Graeme on 06.21.21 at 5:43 pm

Real rates can only fall or everything dies. CB independence is a complete farce–The previous Fed Chair is secretary of the treasury for crying out loud. In 2019 (pre-covid) they started cutting out of nowhere because markets wobbled. So much for watching paint dry. The system couldn’t even handle 2.5% and now I doubt even 2%, who knows. Forget it, put these pieces together and there ain’t no rate hikes of substance coming. Inflation will continue to rip. I’m keeping my variable rate and buying commodity producers.

#76 soggy analysis on 06.21.21 at 5:45 pm

p.s. The house I just sold in Ontario (rural) doubled in price in the last 12 months. I know as I had thought about listing it a year ago. The same realtor advised me to list it 80% higher than he said it could sell for last year. It went 100% higher.

And it was, get this, a TAX FREE gain.

Plug that into your ‘analysis’.

#77 NOSTRADAMUS on 06.21.21 at 5:49 pm

MATH QUESTION!
Would you take $10,000.00 cash today, or 1cent that doubles every day for 30 days? And your answer is— ?
The unfortunate reality is that personal finance is not a required curriculum in the public education system. As a result, we have entire generations of people who don’t know the first thing about finance or economics and it shows.
We’re severely underestimating and underutilizing the power of personal financial education in this country and it’s time to change things for the better.
THE BASICS OF FINANCIAL LITERACY.
(1) BUDGETING. You make $3,000.00 per month. Can you afford to move to an apartment that costs $2500.00 in rent? This should be a simple question, but there are many adults in this country who won’t be able to give you a straight answer. Budgeting is a fundamental skill that allows people to live within their means, and plan for a better future.
(2) The POWER OF COMPOUND INTEREST. Back to the Math question. Compound interest can be dramatically beneficial or dramatically harmful, depending on the context. In just a few years, even a small amount of credit card debt can spiral out of your control- or a smart investment could make you wealthy- all thanks to the power of compound interest
(3) LONG-TERM FINANCIAL THINKING. Too many people think about finances only in the short term, how much money do I have today and what can I spend it on? Better personal financial education should include illustrations of long-term effective decision-making. For example, if I save $5 dollars a day, every day, how much extra money will I have at the end of the year? At the end of a decade?
(4) INVESTING. Investing should be for everyone, whether you favor stocks, bonds, real estate, or other alternative investments. As Garth has been heard to say, it’s the pathway to financial independence and, eventually retirement, but it’s neglected by a startling percentage of the population.
The consequences of leaving these topics untouched in school and in a persons childhood can be devastating. That’s all I have to say on that for now.

#78 soggy analysis on 06.21.21 at 5:50 pm

Just realized my last line might have sounded like a double entendre, it was not, I am not that clever.

#79 Slava on 06.21.21 at 5:56 pm

#52 He who goes BOOM on 06.21.21 at 4:00 pm

>> I think the part that needs more clarification and reinforcement is that monetary policy is international in scope.

Oh we fully realize that. The part that you seem to ignore is that ALL countries loaded up on debt last year, so every other CB in the same position where they can’t raise rates.

#80 Don Guillermo on 06.21.21 at 6:13 pm

#187 millmech on 06.20.21 at 9:05 pm
No more need for degrees now to feel included, everyone gets one, lol!!
https://www.msn.com/en-ca/lifestyle/smart-living/rex-murphy-cutting-honours-programs-and-keeping-smart-kids-down-proves-the-silliness-of-inclusivity/ar-AALd7El?ocid=msedgntp
********************************************
Forgot to comment on this yesterday. Poor honors kids will be held back, wealthy honors will be sent to the best private schools. Another win for the rich. Priceless.

**************************************
This was priceless too!

#223 crowdedelevatorfartz on 06.21.21 at 10:00 am
Boomers gave us the internet.
Millenials gave us Door Dash.

#81 Vacuum cleaner on 06.21.21 at 6:15 pm

I would like to introduce you to Miele. She’s half Shepherd/Akita/Chow and half vacuum cleaner. Don’t leave your socks lying around!

#82 SW on 06.21.21 at 6:16 pm

#160 VladTor on 06.20.21 at 6:42 pm
Impact of COVID Vaccinations on Mortality:
Watch Canada 5:21 (we are one of the best around the world!)
https://www.youtube.com/watch?v=xSrc_s2Gqfw
====

Interesting video, thanks Vlad!

#83 Concerned Citizen on 06.21.21 at 6:26 pm

I don’t share Garth’s confidence that the Bank of Canada will raise rates meaningfully any time in the next few years. Wasn’t there a report just the other day that the Tiffster was trying to convince senators of adopting an employment mandate to go along with the inflation rate target? They know that if they fight inflation, the everything bubble will tank, and they have zero appetite for this. They’ll do everything they can to avoid raising rates – including calling inflation transitory, changing their mandate, etc. – and Canadians will see their standard of living continue to decline as a result.

It seems obvious now that The Bank of Canada’s unofficial mandate now is to maintain and further inflate asset bubbles. The official inflation mandate is just for show at this point. And while the Tiffster is not a politician, he is a political appointee, and I’m sure he knows where his bread is buttered.

#84 avocado on 06.21.21 at 6:29 pm

“You can’t drop rates much when they’re already in the ditch”

The IMF has a interesting theoretical response to this question: “Decoupling Cash from Electronic Money”.

https://www.imf.org/en/Publications/WP/Issues/2018/08/27/Monetary-Policy-with-Negative-Interest-Rates-Decoupling-Cash-from-Electronic-Money-46076

#85 Wrk.dover on 06.21.21 at 6:33 pm

These comments look like beat up on Garth day!

Instead of Lunenburg fireworks on Canada Day, how about a dunk tank with Garth hovering above a pool of sharks?

All proceeds to the liberal party….

#86 Cto on 06.21.21 at 6:34 pm

Back in 2008 the fed dropped rates 0.
They left them there until 2018,…10years, 1 decade…at basically 0.
They finally, …finally started raising them to 2% and then stopped, scared to proceed! This was Trillions of $ of debt ago…and you think they are going to raise in any “meaningful” way? The ony thing all this generation of useless C.Bs have ever known is down, down, down. Sadly that is the case.

#87 BillyBob on 06.21.21 at 6:35 pm

#50 crowdedelevatorfartz on 06.21.21 at 3:56 pm
@#36 Ponzies Persian Pals
“Ironically, many rich Iranians are now calling the “British Properties” home.”

++++

Tut tut Ponzie.
How dare you refer to Persians as Iranians ( even though Persia is no where to be found on a map)
I do believe the Brits invaded Persia many many moons ago and then carved it up with the French and the US and created the middle east chaos we have today…..
Turn back the clock, rewrite history.
Its the Canadian way.

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

heheh

When I operated flights out of Dubai to Tehran, I had to be careful on the PA to only use the term “The Gulf” to refer to the body of water we were flying over, as per company directive.

Of course the Arabs wanted it referred to as the Arabian Gulf, and the Iranians as the Persian Gulf. But it got to the point where Iran threatened to withdraw the UAE’s overflight permissions if they referred to it as the Arabian Gulf in commercial literature or onboard announcements.

Diverting all flights around Iran would be insanely costly for any the ME3 airlines’ route structures.

So “The Gulf” it is. Squabbling children, all of them.

Incidentally I side completely with the Iranians…Persia predates any modern Arab state by centuries, it’s a no-brainer.

But you have to see the transformation to believe it, when a planeload of full covered-in-black women board a plane in Tehran, and a planeload of incredibly beautiful, expensively and modernly-dressed women disembark in Dubai. Reverse going the other way.

#88 IHCTD9 on 06.21.21 at 6:41 pm

#70 crowdedelevatorfartz on 06.21.21 at 5:28 pm
Its gonna be a long hot Summer in Canada.

https://www.cbc.ca/news/canada/british-columbia/catholic-churches-burned-osoyoos-penticton-1.6073976

I’m sure these aren’t the last to burn on the Reserves.

Arson, say the firefighters who responded. Disgusting. – Garth
———-

I’m sure Father Obi Ibekwe and his undoubtedly 99% aboriginal congregation were thrilled to have the activists burn their Church to ash.

This a good example of why I think extreme activism is carried out by the absolute dumbest fraction of any society.

#89 Penny Henny on 06.21.21 at 6:47 pm

#149 Faron on 06.20.21 at 6:00 pm
Enough. Take it offline. – Garth

You know I’ve tried Garth

///////

Wah, wah!
No one wants to talk with me.

#90 Sail Away on 06.21.21 at 7:00 pm

#54 IHCTD9 on 06.21.21 at 4:09 pm

That link above is to get a peace tower flag, and the wait time is over 100 years.

——–

Man, my investments will be off the charts by the time the flag arrives.

If I allocate $100k assuming 5% for 100 years = $13M!

If the flag takes 200 years, my portfolio will be $1.7B.

#91 Cj on 06.21.21 at 7:04 pm

While the CB might not be tied to government I think your first assumption is wrong. What might happen in the future is anyone’s guess but what we know for sure is rising rates kills a government and its citizens when they are heavily in debt…ie Canada. No way they are in a hurry to raise rates. Which also makes assumption 2 wrong. The US like The Canadian government has mucho debt. The US is going to raise rates at an extremely slow rate.

#92 Nonplused on 06.21.21 at 7:06 pm

“Things are very hard to predict, especially the future.”

All the arguments in today’s post seem sensible and obvious, but “best laid plans of mice an men”, as the saying goes.

I see a somewhat more tumultuous 5 years ahead that involves a lot more than a few basis points here and there. We are going to get inflation. A lot of it. 5-10% for a few years in a row. The Fed will be reluctant to raise rates into it, because they see it as “transitory” and caused by supply chain problems that will resolve themselves over time and that rising rates would exacerbate. “1/3 of the farmers in the US just lost their crop due to drought? Let’s raise their mortgage rates!” I don’t think so.

Once the supply chains start functioning again, the drought ends, unemployment falls and wages rise, and the chip manufacturers catch up, then and only then IMHO will anything drastic be done about rates. But it is coming. Rates will rise. But it could be a late as 2023 before they start moving. There is a lot of crap to clear up, and it isn’t just covid.

So we get a huge increase in the cost of living first, then hopefully rising wages, and then rising rates.

The unemployment rate and averages wages are the key things to watch I believe, as I don’t think the Fed will act to ward off what they see as a transitory supply chain driven problem.

Don’t look at the crazy price of houses, because I don’t think the US Fed gives a rat’s arse what happens in YYZ or YVR. Those are only 2 largely inconsequential airport service areas from the US point of view.

Also don’t look at all the fantastical notional wealth accumulating to billionaires as the Robinhood crowd bids up their share prices. The Fed realizes this isn’t real money, it is a mark to market delusion. Even the IRS can’t figure out how to translate the share prices into money to tax until the shares are sold. The Fed hasn’t interfered with “irrational exuberance” for a long time and I don’t expect them to start now. Greenspan warned about it once but he made it clear it was outside the Fed’s purview what people were bidding for Pets.com. Stock prices are not included in the CPI. That tells you something.

So watch the unemployment rate. The “full employment” mandate is IMHO going to dictate the size and timing of rate increases. Once all the loggers and mill operators get back to work lumber prices will stabilize and unemployment will go down. Once it starts to rain again food prices will stabilize. That is when the Fed will feel free to act.

Unfortunately, all this cheap money in the meantime means it is a great time for companies like Blackrock and home buyers in general to load up on cheap debt and bid up housing prices. There is not going to be any meaningful correction in Victoria home prices while Sean is looking around with his $300,000/year income, $900,000 in the bank, and 2% 5-ers. He’ll get through his “5 stages of grief” and arrive at “acceptance” sooner or later. His note, from a psychological perspective, has the 5 stages all through it. I predict “acceptance” and “purchase” within the year. You can sense through his angry words that he just can’t hold out much longer.

#93 Ustabe on 06.21.21 at 7:08 pm

#65 IHCTD9 on 06.21.21 at 5:00 pm

A couple hours north of where I am now would do nicely. Small efficient house on the edge of a lake, dock and fishing boat, lots of bug spray…

Don’t need bug spray, just a vacation to Morocco and get yourself into any of the traditional pharmacies in the old town parts of say Tangier.

Among other neat things they sell little brownish cubes of “stuff” compressed into 1x1x1 cubes. You rub this across any exposed skin, just a line, you don’t have to cover everything.

You smell like a hippie but we have tested ours in the wilds of northern Ontario, Northwest Territories, Yukon and the interior of northern BC. Stuff works.

We were told a cube should last 3-4 years with almost daily use…we bought 4 and are still on our first one almost 5 years later and it looks to be the same size still.

(Don’t pull out any large denomination Euros on the street or you will quickly find out how the wasp feels when he gets swarmed by the bees.)

#94 SoggyShorts on 06.21.21 at 7:19 pm

#76 soggy analysis on 06.21.21 at 5:45 pm
p.s. The house I just sold in Ontario (rural) doubled in price in the last 12 months.
**************
Again, even if true, that’s Ontario.
This might come as a shock to you, but most Canadians don’t live there.

#95 Scott Linden on 06.21.21 at 7:28 pm

Armpit, Billy Buoy has to talk to my brother who in 1970 got a 5.12% 5 year fixed rate mortgage when he thought he could pay off the rest of the mortgage within 5 to 10 years as half his mortgage was paid off, bang, mortgage rates hit 22% in 1981. Never say never.

#96 sean on 06.21.21 at 7:30 pm

While complete central bank independence is nice in theory, in reality (as usual) things are quite a bit murkier. Look up the “Coyne Affair” for a previous dust-up between the BOC and government of the day.

If only we had BOC staff today with Coyne’s gumption!

I’m sure more recent BOC governors have been fully aware that Coyne ended up having to resign, and no doubt this has affected their willingness to go head-to-head with profligate governments.

#97 ogdoad on 06.21.21 at 7:33 pm

Garth, ‘The frightening’ would’ve been much more dramatic. Lol.

Og

#98 Nonplused on 06.21.21 at 7:36 pm

A note on the so-called “intergenerational wealth transfer”.

First of all I always exclude the YYZ and YVR service areas because they are relatively small, localized bubbles. Nothing of the sort is happening in Texas or Alberta, and we have the oil.

So my house was built in 1996 for $400,000. Back then land out here was practically free, the 2 acre plot probably went for $100,000. I bought it in 2012 for $900,000. That’s pretty big inflation for only 16 years! But on the other hand you could retire in 1996 with $400,000 in the bank. In 2012 you could not.

Houses do go up in “value” as they become scarce near the downtown core and new infrastructure is built like freeways. The land in particular goes up in value, due to locational scarcity. But in general it is the value of the dollar that is falling. You can’t compare housing prices in 1996 without comparing wages in 1996. Houses should be priced in “man-hours”. (Sorry “people-hours”.) You also have to compare all the freeways, Costcos, and light rail transit that is now right at my door that wasn’t there in 1996.

The “intergenerational wealth transfer” is largely a myth, because the dollar is not a fixed measure like a yardstick. The dollar always gets smaller. These so-called “rich” boomers who supposedly made a fortune by owning a house for 30 years can’t actually buy more goods and services upon selling the house today than they would have if they sold the house 30 years ago. YYZ and YVR excepted, they didn’t even keep up with the price of a new car.

So as Garth always says, buy a house if you need one and can afford it. The house will always be a house until it rots away, but a dollar will always get smaller.

Sean, I’m talking to you. Your labor isn’t probably worth anymore in man-hours to build a house than it was 30 years ago. You just get paid in little tiny dollars. Years ago a penny meant something and people would “watch their pennies” because you could actually buy things with them. Now they are considered rounding errors. The Nickle will be next.

#99 crowdedelevatorfartz on 06.21.21 at 7:43 pm

@#87 Billybob
“But you have to see the transformation to believe it, when a planeload of full covered-in-black women board a plane in Tehran, and a planeload of incredibly beautiful, expensively and modernly-dressed women disembark in Dubai. Reverse going the other way.”

+++

Yep.
I worked with a coupla Persian “Divas” in Vancouver.
Absolutely stunning but unless you oozed cash from every pore….Fuggeddaboutit.

#100 crowdedelevatorfartz on 06.21.21 at 7:45 pm

@#88 IHCTD9
“This a good example of why I think extreme activism is carried out by the absolute dumbest fraction of any society.”

+++

Yep.
No shortage of idiots on all sides.
I suspect copycats all over Canada will “keep the fires burning”.

#101 IHCTD9 on 06.21.21 at 7:49 pm

#90 Sail Away on 06.21.21 at 7:00 pm
#54 IHCTD9 on 06.21.21 at 4:09 pm

That link above is to get a peace tower flag, and the wait time is over 100 years.

——–

Man, my investments will be off the charts by the time the flag arrives.

If I allocate $100k assuming 5% for 100 years = $13M!

If the flag takes 200 years, my portfolio will be $1.7B.
———

Maybe in 300 years, you can just buy the whole peace tower :)

#102 crowdedelevatorfartz on 06.21.21 at 7:50 pm

@#74 BoJo
“………., all I know is I just had my legs waxed in someones garage.”

++++

I see potential for a new TV series here!

“Real Husbands of Hamtown Hair waxers!

#103 Water Issues on 06.21.21 at 7:53 pm

BC renters/landlords:

Can a landlord turn the water off in a rental “sub-building”. The tenants are compliant with the lease, and are fully paid up.

The landlord is claiming “water pump issues” but the main building (where landlord lives) has water coming from garden hoses. The main house and sub-house are on the same well.

Anyone with an opinion?

#104 Under the radar on 06.21.21 at 8:10 pm

41 – my lawn is measured in acres – it’s most of the day to cut with a zero turn , trimming around the trees and shrubs , add another 2 hours . That does not include the gardens . I do it myself because I can , paying gardeners would be a couple thousand per month. I thought you might like to know as you plan your move to paradise.

#105 IHCTD9 on 06.21.21 at 8:20 pm

#93 Ustabe on 06.21.21 at 7:08 pm
#65 IHCTD9 on 06.21.21 at 5:00 pm

A couple hours north of where I am now would do nicely. Small efficient house on the edge of a lake, dock and fishing boat, lots of bug spray…

Don’t need bug spray, just a vacation to Morocco and get yourself into any of the traditional pharmacies in the old town parts of say Tangier.

Among other neat things they sell little brownish cubes of “stuff” compressed into 1x1x1 cubes. You rub this across any exposed skin, just a line, you don’t have to cover everything.

You smell like a hippie but we have tested ours in the wilds of northern Ontario, Northwest Territories, Yukon and the interior of northern BC. Stuff works.

We were told a cube should last 3-4 years with almost daily use…we bought 4 and are still on our first one almost 5 years later and it looks to be the same size still.

——-

I wonder what’s in those cubes… I’ve read a few 100-200 year old home recipes for bug repellent, and I’d rather not walk around that… uh, flammable :)

I actually hate everything about spraying bug repellent all over myself, but I’m one that the bugs just seem to find extra tasty. Mosquitoes I can usually handle most times without repellent – but the black flies are too much. I can’t feel them land on me like a mosquito, and their bite irritates for a week instead of a day.

“The black fly song” makes reference to “bacon grease and balsam gum” as a bug repellent. It would suck being lathered up in that stuff, but at least I’d have some assurance I’m not walking around all hosed down in chemicals.

I’ve read eating 4-5 cloves of garlic per day is supposed to work, also not bathing for a couple weeks… In the end, if those black flies are heavy enough, I know I will run to douse myself in DEET and worry about it later…

#106 Nonplused on 06.21.21 at 8:27 pm

#32 crowdedelevatorfartz on 06.21.21 at 3:10 pm
@#19 Sail Away

“Get your free flag here:”

++++

Free?
How many govt bureaucrats in meetings did it take to create THAT site, the shipping costs, etc.

Nah.
I’ll buy my own thanks and proudly display it on Canada Day….apologists be damned.

——————————–

All I know is I won the birth lottery just for being born here. Even when I look around the reserves, there are ATV’s, pickup trucks, and riffles everywhere. You don’t get that in Africa. Well, except the riffles. But they use them to kill people, not deer. Well they kill deer and hippos too. Never mind. I like living in Canada where probably my biggest problem is if my toes are getting too cold when I am skiing.

#107 DON on 06.21.21 at 8:39 pm

#71 willworkforpickles on 06.21.21 at 5:31 pm
Garth…re: rates to go up…i for one have got your back unwavering so.
Do the research and see what a mess this world is in. It becomes quite clear in what’s soon coming.
I too have gone over why rates have been so low for so many years and why that will all end soon. (many times in the past several months).
Selective hearing for the most part just filters it out.
Its not a smooth reality that many want to face.
Smooth talk is more…much more preferred…as if better to sleep at night than worry in the mean time of facing the guillotine before facing the guillotine.

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

Yup cognitive dissonance in over drive. Shouting at Garth won’t change anything. Risks/consequences getting people all riled up. Does the herd have their ears up?

#108 Nonplused on 06.21.21 at 8:40 pm

#33 Keith on 06.21.21 at 3:10 pm
@ #5 Summertime

I understand the mandate of the BOC is to keep inflation within a target zone, without killing employment. It’s a tricky balance.

Problem #1 – the stated inflation rate is clearly a scam
Problem #2 – the stated unemployment rate is also a scam

Therefore, the BOC interest rate is artificially low which has manifested in very high prices for assets, and making mockery of cash holdings. Good news for investors, bad news for cash savers. Garth has the balanced strategy.

———————————-

I think a major mistake people make when thinking about things is to assume the people that “scam” CPI and unemployment don’t know the real numbers.

I don’t know if there are or ever have been any “scammers” that don’t know what is really going on.

The CPI, to be sure, doesn’t really reflect anything. It is meant for public consumption, sort of like when BP first said the gulf blowout was only leaking 5,000 barrels a day. They knew better and were lying their asses off. But remember, 50% of the population is below average IQ. The PTB (powers that be) know a good lie can prevent riots and revolution.

#109 Ponzius Pilatus on 06.21.21 at 8:40 pm

#99 crowdedelevatorfartz on 06.21.21 at 7:43 pm
@#87 Billybob
“But you have to see the transformation to believe it, when a planeload of full covered-in-black women board a plane in Tehran, and a planeload of incredibly beautiful, expensively and modernly-dressed women disembark in Dubai. Reverse going the other way.”

+++

Yep.
I worked with a coupla Persian “Divas” in Vancouver.
Absolutely stunning but unless you oozed cash from every pore….Fuggeddaboutit.
————————–
Sure,
Maybe it was something else that oozed from your pores.

#110 DON on 06.21.21 at 8:42 pm

#100 crowdedelevatorfartz on 06.21.21 at 7:45 pm
@#88 IHCTD9
“This a good example of why I think extreme activism is carried out by the absolute dumbest fraction of any society.”

+++

Yep.
No shortage of idiots on all sides.
I suspect copycats all over Canada will “keep the fires burning”.

**********

Idiots…burning during fire season on top of it.

#111 BCWally on 06.21.21 at 8:52 pm

I’m curious how all that money creation from the central bank enters the economy. I know the Americans convert T bills in to cash at the banks, which then gets lent out.
Is it the same here with our sovereign bonds?
If it is, does that mean the central bank indirectly created the money supply to make houses completely unaffordable?

#112 Nonplused on 06.21.21 at 8:57 pm

#104 Under the radar on 06.21.21 at 8:10 pm
41 – my lawn is measured in acres – it’s most of the day to cut with a zero turn , trimming around the trees and shrubs , add another 2 hours . That does not include the gardens . I do it myself because I can , paying gardeners would be a couple thousand per month. I thought you might like to know as you plan your move to paradise.

———————————

Sometimes you have too many acres. I have 2, and it is 1 too much.

#113 Winterpeg on 06.21.21 at 9:04 pm

“It’s the central bank’s job to keep inflation under control, stabilize the currency and support the economy. The BoC isn’t part of the government.” GT

Thank you for clarifying this point. (even though several here appear not to agree)

There are other relationships that could require some clarification and review for us. ie Government’s relationship to CMHC?

Is there any influence there ?

#114 crowdedelevatorfartz on 06.21.21 at 9:12 pm

@#109 Pugnacious Ponzie’s Pores
“Sure,
Maybe it was something else that oozed from your pores.”

+++

ladies and gentlemen.
Ponzie sed a funny.

@#110 DON
“Idiots…burning during fire season on top of it.”

+++++

Yeah , and they would be the first ones to call the Canadian Govt for help if the fire spread to their houses…

#115 Ottawan on 06.21.21 at 9:29 pm

My Corolla brakes more aggressively than it accelerates.

#116 IHCTD9 on 06.21.21 at 9:38 pm

#112 Nonplused on 06.21.21 at 8:57 pm
#104 Under the radar on 06.21.21 at 8:10 pm
41 – my lawn is measured in acres – it’s most of the day to cut with a zero turn , trimming around the trees and shrubs , add another 2 hours . That does not include the gardens . I do it myself because I can , paying gardeners would be a couple thousand per month. I thought you might like to know as you plan your move to paradise.

———————————

Sometimes you have too many acres. I have 2, and it is 1 too much.
—- —

Good equipment can make a big difference. I maintain about 2. I got a 61” commercial zero turn last year, and it cut the mowing time to less than half. Everything is hydraulic and it has suspension all the way around, so it’s a lot nicer to run and easier on the aging bod.

All my small equipment is Stihl, so never a headache. Bought a power rake this spring for making quick work of removing stones, dirt, cones, and thatch out of the lawn. Should have bought one years ago. Got a tree branch shear/saw too – no more climbing trees and doing stunts off the end of a ladder.

Whenever you think some yard work is taking too much time, you can bet there is already a tool made for that exact task which will take all the work/headache out of it.

#117 Terry Vinet on 06.21.21 at 9:58 pm

I say that’s a “Dutch Shepherd”.

#118 oh soggy on 06.21.21 at 10:27 pm

Not only is Ontario the MOST populous province by quite a big margin, Ontario and BC, the most house bubbly of all, are certainly where MOST Canadians live, being just over 50% of the population.

Now math is clearly not your strong suit, but Montreal has been on a bit of a housing tear lately, and I believe even places like mighty Moncton have been mentioned here recently.

Something about 30% gains in 12 months.

Now I suppose you think Monctonites were all in on Nvidia and made more on that than they did on their homes, but human nature being what it is, I suspect 99.9% of Monctonites made far more on their homes in the last month than they did on their stock portfolios.

But maybe you can convince them going all in on GME, AMC or some other hot meme stock is really a smarter move.

#119 AM in MN on 06.21.21 at 10:56 pm

#45 No Left Turn on 06.21.21 at 3:41 pm
#16 NSNG on 06.21.21 at 2:37 pm

They didn’t reject Climate Change. The rejected the radical leftists that introduced the proposals. The proposals, like leftism, we’re/are absurd…
———————————————————-

The idea that humans are responsible for the weather and can control it, and need to drive ourselves into self imposed poverty and loss of freedom in order to get the “optimal” earth climate is Leftism in a nutshell, and it was REJECTED by clear thinking people who’ve started to figure out what a scam it was.

Personally I thought it was a scam when I heard about it being discussed at the Earth Summit in Rio in ’92. Just a quick look at who was promoting it convinced me. Nothing has changed my mind since.

Every model and prediction made by these junk scientists has been wrong. Go back and name one that wasn’t!

The author of the hockey stick graph waged a 9 year legal fight in BC against a real climate scientist and lost, and now refuses to pay the court imposed costs.

I work with greenhouses that grow vegetables when its -30C outside, running at 21C and 900-1000PPM of CO2, and the vegetables grow just fine, and you can work in the greenhouse all day at that rate.

The CO2 nonsense needs to end. The Sun drives the climate and CO2 is a lagging indicator, which seems to have stabilized at about 400PPM for the last 10 years or so.

#120 Not So Naive on 06.21.21 at 11:00 pm

“The BoC isn’t part of the government. It doesn’t take instructions from the former Langevin Block, where the PM hangs out.”

I find this view quite naive. It doesn’t take much to change that. I am an immigrant from Venezuela. Venezuela’s Central Bank was and still claims to be independent. Yet, a few bribes from the government paid for a self-induced hyperinflation that forced any citizen with a savings account to pay for the government’s spending (https://en.wikipedia.org/wiki/Nelson_Merentes#Sanctions).

Although we do have a justice system that can prevent this sort of corruption, after a decade in Canada, I am not so sure anymore (https://en.wikipedia.org/wiki/SNC-Lavalin_affair#RCMP_inquiry).

#121 G on 06.21.21 at 11:16 pm

Have you told your MP lately that you want your right to here others and be heard, to not be infringed upon yet! Don’t put it off any longer if you haven’t yet.

2b or not 2b, that is the question.

Join the fight to defend Section 2b of the Charter, freedom of expression:
Pierre Poilievre on the floor today. 10min.
https://www.youtube.com/watch?v=mgo6i_7owQo

#122 Gary C on 06.21.21 at 11:50 pm

Re Interest rates, BOC & the Fed.
Monkey See, Monkey Do, it’s that simple.
All assets that have been inflated stocks, housing, gets
deflated, it’s called a CYCLE, I’m with Garth on this one.

I. Should get my Bear Suit back from the dry cleaner,
it’s been there for 12 years.

#123 Robert Ash on 06.22.21 at 1:03 am

How long before the disinflation sets in ?

#124 TurnerNation on 06.22.21 at 1:44 am

LAND. What wars are fought over. This WW3 kicked off that cold week March 2020.

There’s a reason why for much of the past 15 months you’ve been banned/barred from provincial and national parks; boat launches; campgrounds; playgrounds. To ‘stop the spread’. To our elites humans are the virus you see.
Under the global New Green Deal most access to land will be banned. Get. Off. The. Land.

You will own nothing and be happy


https://www.vancouverislandfreedaily.com/news/lawyer-large-scale-transfer-of-crown-land-to-first-nations-will-shock-b-c-s-system/

British Columbians are in for a big shock when ownership of large parts of the province switches from the Crown to First Nations, says Aboriginal rights and title lawyer Jack Woodward.

“Over the next generation, we’re going to see a replacement of ownership of large parts of the province,” Woodward said during a one-hour presentation hosted by the Campbell River Mirror on Zoom March 18 entitled Understanding Indigenous Rights and Title in Canada.

The shift in ownership will be from what is normally called Crown ownership to Indigenous ownership, “Not for the entire province but…for fairly large chunks of it,” he said.

—-
It’s all here. While you were being distracted with CV…

https://parl.ca/DocumentViewer/en/43-2/bill/C-15/first-reading
SUMMARY
An Act respecting the United Nations Declaration on the Rights of Indigenous Peoples

Whereas the Declaration emphasizes the urgent need to respect and promote the inherent rights of Indigenous peoples of the world which derive from their political, economic and social structures and from their cultures, spiritual traditions, histories, philosophies and legal systems, especially their rights to their lands, territories and resources;

#125 Wrk.dover on 06.22.21 at 7:25 am

#105 IHCTD9 on 06.21.21 at 8:20 pm

actually hate everything about spraying bug repellent all over myself, but I’m one that the bugs just seem to find extra tasty. Mosquitoes I can usually handle most times without repellent – but the black flies are too much. I can’t feel them land on me like a mosquito, and their bite irritates for a week instead of a day.

_____________________________

Same sensitivity with me.

Spray your clothes though. I have learned through working in the woods, plastic ear protectors seem to drastically reduce the attention you draw to B flies!

Nitrile gloves are a must for avoiding knuckle bites.

#126 crowdedelevatorcoughz on 06.22.21 at 7:54 am

Thank you…COUGH! COUGH!..everyone!

I am up to 10% of all …COUGH! COUGH!..comments so far on today’s blog post!

This blog is…COUGH!…mine :)

#127 crowdedelevatorfartz on 06.22.21 at 8:19 am

@#126 CrowdieCough

Imitation.
The peak of flattery
OR
No imagination

Haiku over.
:)

#128 Math is not so hard on 06.22.21 at 8:20 am

Last math lesson of the day, which I never would have thought needed to be explained, but soggy minded thinking abounds.

A 30% return on $1M home is better than a 150% return on a $100,000 stock portfolio is better than a 1,700% return on a $5,000 stock portfolio.

% alone is meaningless.

Only if you sell, paying commission and closing costs, and if it’s a PR. Yes, math is hard. – Garth

#129 crowdedelevatorfartz on 06.22.21 at 8:46 am

Hmmm

One wonders when inflation will constantly be in the Canadian news media Headlines….6 months? 12?

https://nationalpost.com/news/u-k-inflation-could-increase-to-four-per-cent-this-year-resolution-foundation

Inflation up.
Purchasing power down.

No matter how hard PM Stutters wishes otherwise.
The Real Estate “rock” is gonna meet the Interest rate “hard place”.

P.S.
I think I’m almost at 10% of the comments “Coughs”
Thanks for being such an avid fan and keeping track.

#130 the Jaguar on 06.22.21 at 8:52 am

Good interview with Marian L. Tupey, interesting guy from the Czech Republic on many of the issues that lit everyones hair on fire these past couple of days on the blog. Link below. ( From May 2021)

You can check out what he says about the housing market at approx 28.00 minutes, and also an interesting point he makes at 32.20 about rising energy costs for households. A reminder that living ‘large’ won’t be sensible going forward unless you can afford it.

The beginning of the podcast is an interesting discussion about which generation had it easy, etc.
He is the author of a book “Ten Global Trends…”.

Spoiler alert: The interview is with Jordan Peterson, so those who are not fans may wish to stay away.

https://www.cato.org/multimedia/media-highlights-tv/marian-l-tupy-discusses-book-ten-global-trends-every-smart-person-0

#131 IHCTD9 on 06.22.21 at 9:16 am

#125 Wrk.dover on 06.22.21 at 7:25 am

Same sensitivity with me.

Spray your clothes though. I have learned through working in the woods, plastic ear protectors seem to drastically reduce the attention you draw to B flies!

Nitrile gloves are a must for avoiding knuckle bites.
——

Maybe a full body suit like this guy:

https://www.vnews.com/Column-In-praise–not!–of-black-flies-34385709#lg=1&slide=0

Deer flies always go for the back of the head. My MIL puts a piece of 2 faced tape on the back of her hat while working in the garden… it actually works!

#132 Love_The_Cottage on 06.22.21 at 9:42 am

Record summer starting for cottage rentals. Get out and enjoy the summer in cottage country.

JUST
GO
TO
COTTAGE
COUNTRY!!!!

https://www.ctvnews.ca/health/coronavirus/summer-travel-demand-so-far-focused-on-driving-and-family-say-travel-agents-1.5479585

#133 Do we have all the facts on 06.22.21 at 10:22 am

Maybe the BOC has control over the setting of interest rates but QE policies are set by the GOC and their policies require the BOC to purchase bonds issued by the GOC in the secondary market to stimulate economic growth.

In March 2021 the BOC held 40% of all outstanding bonds issued by the GOC. The BOC is tapering their purchases in the secondary market but they still hold hundreds of billions of GOC debt.

There is a very obvious relationship between the fiscal policies set by the GOC and the monetary policies controlled by the BOC. This relationship has considerable influence on the future of interest rates in Canada.

Autonomy of the BOC appears to have a number of strings attached.

Quantitative easing policies are not set by the federal government or the Minister of Finance. – Garth

#134 Ponzius Pilatus on 06.22.21 at 10:27 am

131 IHCTD9 on 06.22.21 at 9:16 am
#125 Wrk.dover on 06.22.21 at 7:25 am

Same sensitivity with me.

Spray your clothes though. I have learned through working in the woods, plastic ear protectors seem to drastically reduce the attention you draw to B flies!

Nitrile gloves are a must for avoiding knuckle bites.
——

Maybe a full body suit like this guy:

https://www.vnews.com/Column-In-praise–not!–of-black-flies-34385709#lg=1&slide=0

Deer flies always go for the back of the head. My MIL puts a piece of 2 faced tape on the back of her hat while working in the garden… it actually works!
—————————
Black flies. I heard of them.
Apparently, they made life hell for those building the rail roads.
Guys, why don’t you just move to Vancouver.
As of today, I had not a single mosquito bite yet.
And I did not have to pour poison over all of my body.

#135 bguy1 on 06.22.21 at 10:37 am

@#12 Bob

The Governor will resign before he/she takes that order. Not only that, they will resign in front of the cameras at the national press gallery and state what the MofF just tried to do.

Right after that statement the Cdn Dollar will go into free fall, followed by the TSX, and your standard of living.

You best hope no MofF ever attempts something so stupid.

#136 crowdedelevatorfartz on 06.22.21 at 10:52 am

@#131 IHCTD9
“Deer flies always go for the back of the head.”

+++++

Cutting pulp wood in the mid 1970’s in the backwoods for an entire summer was an experience in the 5th circle of Hell.
Heat, sweat and flies.
Black Flies, Horse Flies, Deer Flies, Mosquitos, all hungry and relentless in their suicidal pursuit of a drink of blood….my blood.
The back of my neck was a raw , blood pulp of bumps and bites….all summer long.

#137 archraver on 06.22.21 at 11:06 am

83 Concerned Citizen on 06.21.21 at 6:26 pm

It seems obvious now that The Bank of Canada’s unofficial mandate now is to maintain and further inflate asset bubbles. The official inflation mandate is just for show at this point. And while the Tiffster is not a politician, he is a political appointee, and I’m sure he knows where his bread is buttered.

Right on…this will all come crashing down, the only question when

#138 :-* on 06.22.21 at 11:08 am

#19 Sail Away

Iol, I looked at the govt site for free flag … literal or liberal promise?
“The waiting period for both Peace Tower and other Parliament Hill flags exceeds 100 years “

#139 willworkforpickles on 06.22.21 at 11:12 am

#105 IHCTD9
I haven’t been north this year yet (June is really bad for bugs) but when i do manage to go, i use listerine mouthwash as a bug repellent. Slap it on my face neck ears back of hands and wrists. I put it all over my dogs belly to protect her. And my wife…she just stays indoors when the bugs are bad. The only issue with listerine is in needing to put on more every hour or so depending on how bad the bugs are. Its cheap and its far better (healthier) than putting that poison all over you (deet). It doesn’t affect the eyes or mouth when you sweat the way deet does on you either.

#140 >:) on 06.22.21 at 11:23 am

Sadly a loaf of bread may hit $30 before rates ever hit 10%… and by that point, the wheels completely come off. Venezuela may soon have nothing on Canada. Viva turdeau! Viva dominion! Cash losing value every year!

#141 NSNG on 06.22.21 at 11:25 am

My friend swore by vitamin B as a repellent. I never tried it but I think it was B1

#142 Do we have all the facts on 06.22.21 at 11:39 am

In theory QE appears to be part of monetary policies used by the BOC. In Canada QE became a combination of fiscal policies by the GOC that increased money supply by issuing bonds and and monetary policies of the BOC the supported the purchase of GOC bonds from financial institutions in the secondary market to suppress interest rates.

It seems pretty clear that both the GOC and the BOC were involved in the implementation of QE in Canada and with settings limits on the extent of their involvement.

Increasing the money supply by generating $400 billion of additional debt required involvement by the BOC to keep interest rates low by purchasing approximately $250 billion of GOV debt in the secondary market.

I do not believe that the GOC and the BOC were acting independently when QE was introduced in Canada.

You said the government set the QE policy. It did not. – Garth

#143 Canuck secrets on 06.22.21 at 11:58 am

#136 crowdedelevatorfartz on 06.22.21 at 10:52 am

@#131 IHCTD9
“Deer flies always go for the back of the head.”

+++++

Cutting pulp wood in the mid 1970’s in the backwoods for an entire summer was an experience in the 5th circle of Hell.
Heat, sweat and flies.
Black Flies, Horse Flies, Deer Flies, Mosquitos, all hungry and relentless in their suicidal pursuit of a drink of blood….my blood.
The back of my neck was a raw , blood pulp of bumps and bites….all summer long.

Smear yerself in bear shit… all problems solved….

#144 NoName on 06.22.21 at 11:59 am

How to fight deer and and horse fly’s. Just need sticky spray old pickup truck and light blue flower pot…

https://www.sciencedaily.com/releases/2002/08/020815072703.htm

The Mizells first tried draping their 1992 Dodge Dakota pickup with white plastic covered with black silhouettes of various shapes painted with Tanglefoot, a commercially available sticky spray for insects. But the deer flies snubbed the silhouettes. Theorizing that three-dimensional shapes would work better because they had more surface area, the Mizells built a test platform on their truck hood that could troll seven different shapes at once. They ambled along in deer fly-infested countryside for set periods of one to five minutes, testing sticky pyramids, squares, balloons, plant containers and other shapes, then counting immobilized prey. They also tried black, tan, blue and shapes of other colors suspended from various heights.

After numerous experiments, the trap that wooed the most deer flies proved to be a 6-inch flowerpot painted bright blue – capturing as many as 30 deer flies in a one-minute test. It worked best when suspended three to six feet above the ground and trolled no faster than 10 feet per second. The capture rate was 35 percent to 50 percent higher than for other shapes, Mizell said.

#145 Wrk.dover on 06.22.21 at 12:31 pm

#144 NoName on 06.22.21 at 11:59 am
How to fight deer and and horse fly’s. Just need sticky spray old pickup truck and light blue flower pot…

https://www.sciencedaily.com/releases/2002/08/020815072703.htm

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Apparently, my head looks like a blue flowerpot!

A dragonfly mobile mounted above the hat works somewhat but not enough for me.

#146 Gen Z on 06.22.21 at 12:57 pm

DELETED

#147 IHCTD9 on 06.22.21 at 1:44 pm

#136 crowdedelevatorfartz on 06.22.21 at 10:52 am

Cutting pulp wood in the mid 1970’s in the backwoods for an entire summer was an experience in the 5th circle of Hell.
Heat, sweat and flies.
Black Flies, Horse Flies, Deer Flies, Mosquitos, all hungry and relentless in their suicidal pursuit of a drink of blood….my blood.
The back of my neck was a raw , blood pulp of bumps and bites….all summer long.
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I like reading about the 1800’s timber harvesting in northern Ontario. I can only imagine how bloody rough it really was. The guys didn’t change their clothes until they wore out, maybe the stench kept the bugs away.

I wonder what they considered better, freezing their butt off in the dark working the cut during wintertime, or running the logs down the rivers in the spring getting slaughtered by trillions of blood sucking insects and stinging plants? I bet freezing in the winter was (much) preferable!

You must have been desperate for $$ to cut wood in the bush during the summertime!

#148 Barb on 06.22.21 at 3:19 pm

Apparently the Avon product “Skin so Soft” repels bugs.

#149 Tudval on 06.22.21 at 4:38 pm

If you buy with 5% down and lock in for 5 year, by the time you renew, you’d have maybe 15% equity or so if prices stay flat. The chance of a 20% decline that will put you in negative equity position and one that also holds for 5 years is so small that it’s not worth talking about. If the market goes up 10% in the next two year, then it’ll have to fall more than 25% to put you in the red. Not likely in any of the major markets, barring a major economic event (happens once every 50 years or so). Of course you may miss buying the illusory dip. Waiting for one and trying to catch it at the bottom is how many get sidelined for decades.

I’m not saying any time is as good as any. Most reliable way to get a discount is to watch for seasonal fluctuations. During the summer months there’s always some inventory left from the spring months and sellers willing to cut a better deal. No bidding wars either. Affordable? Nah. What’s affordable anyway, like $200k for a detached in Leaside? Pretty sure most here would say it’s still too expensive.