Pfft. Over.

Nobody expected the big poohbahs in Ottawa to jack rates this week. And they didn’t. But everyone in a land where mortgages increase by $400 million a week should pay attention. The times, they are changing. And the central bank just caved.

So the big immediate news is an abrupt, shocking, unexpected halt to that crazy bond-buying. A cut of 50% was expected. But we got 100%. This means the active, ongoing federal suppression of yields now ends. Mr. Market will determine what the cost of money should be, based on supply, demand and (most of all) inflation. The more the cost of stuff rises, the more value money loses and the more protection investors want in the form of higher yields.

As this pathetic blog has been trying to point out (in vain), this process has been ongoing for months. The yield on a five-year Canada bond has essentially doubled. Inflation is sitting at an 18-year high. The supply chain has two broken legs. Consumer demand is outstripping supply. We’re back at pre-slimy-pathogen employment levels. Dishwashers are getting signing bonuses. Wage pressures are mounting. There aren’t enough cars to sell. And Chrystia is getting tax increases ready. Meanwhile Dog knows what new overhead the Greenpeacey federal environment minister will bring back from the land of Scotch.

In short, inflation is not temporary as the Bank of Canada boss once believed. And admits it. The road is leading us to higher interest rates, maybe starting in the spring. For sure by summer. Five-year mortgages now at 2.5% may be 1% higher by this time in 2022 and at least another 1% above that when all the buyers in 2020 and 2021 renew.

Alas, this is no longer just the yammering of some anon, canine-addled (but manly) Internet dude. Economists now agree. Mortgage guys are witnessing it. The CB confirms it. The stimulus spigot has closed after gushing for almost two years.

Says the bank: we anticipated higher inflation months ago, “but the main forces pushing up prices – higher energy prices and pandemic-related supply bottlenecks – now appear to be stronger and more persistent than expected. Core measures of inflation have also risen, but by less than the CPI. The Bank now expects CPI inflation to be elevated into next year.”

The CB agrees about wages and jobs, too: “As the economy reopens, it is taking time for workers to find the right jobs and for employers to hire people with the right skills. This is contributing to labour shortages in certain sectors, even as slack remains in the overall labour market.”

And ditto for the supply chain: “In the face of strong global demand for goods, pandemic-related disruptions to production and transportation are constraining growth.  Inflation rates have increased in many countries, boosted by these supply bottlenecks and by higher energy prices.”

This is a big day. Quantitative easing kaput. The inflation threat confirmed. An admission rates will rise in 2022. Plus the bank says it misjudged rising costs as we move into a period of huge growth – 6.5% globally and 5% here in the land of maple and Tim’s.

Immediately after the announcement, by the way, the yield on five-year Canada bonds jumped almost 10 basis points, to 1.502%. And while that sounds puny, it’s not. That is a 12% surge and it’s a harbinger every borrower should heed.

To wit…

Source: Investing.com; GreaterFool Research Dept.

It’s all over but the wailing and gnashing. Remember the inverse correlation between real estate values and interest rates. It should now be obvious what lies ahead.

About the picture: “The blog posts are top notch as always and getting better all the time. Hard to believe it’s been over 10 years and the stories, ideas, and messages stay fresh and interesting.
Anyway, here’s a picture of “Louie”, a 2 year old Chihuahua rescue that my daughter and son-in-law adopted. He appears harmless but is a viscous, barking, growling, territorial junkyard watch dog!
Thanks again for everything.”

157 comments ↓

#1 short horses on 10.27.21 at 10:57 am

“This means the active, ongoing federal suppression of yields now ends.”

It looks like Santa came early this year!

#2 Arctic Gringo: Qalunaaq on 10.27.21 at 10:58 am

“As this pathetic blog has been trying to point out (in vain…”

Not in vain. Those of us who listened will be rewarded.

#3 Drill Baby Drill on 10.27.21 at 11:07 am

Our new environment minister Guilbault is not to be trusted. How appropriate to bring him out right at Halloween.

#4 Don Guillermo on 10.27.21 at 11:22 am

#3 Drill Baby Drill on 10.27.21 at 11:07 am
Our new environment minister Guilbault is not to be trusted. How appropriate to bring him out right at Halloween.
*************************************
Coincidently, today’s NP is running a photo of him in his Halloween costume.

https://nationalpost.com/opinion/jesse-kline-guilbeaults-move-to-environment-shows-trudeau-plans-to-sacrifice-prosperity

#5 Dogman01 on 10.27.21 at 11:29 am

The Adults in the Room
When Greece reached near economic collapse the “adults had to take over and set the system back to sanity.

Canada will also face the crucible of an economic crisis when Trudeau and his fellow travellers are done with it.
Trudeau’s new cabinet, left wing radical fanatics. Steven Guilbeault a radical infant whom was leading the internet censorship campaign in Canada.
https://nationalpost.com/opinion/jesse-kline-guilbeaults-move-to-environment-shows-trudeau-plans-to-sacrifice-prosperity

Jobs, affordability, and your rights and freedoms are no priority. In fact, they’re getting in the way.

“Lots of times you have to pretend to join a parade in which you’re not really interested in order to get where you’re going.” – Christopher Darlington Morley (1890-1957)

Canada; the parade just turned hard left, Energy Poverty, massive debt, eventual currency devaluation?

#6 earthboundmisfit on 10.27.21 at 11:29 am

…. and the broad market indexes, not surprisingly, immediately “take a deuce”.

#7 Prince Polo on 10.27.21 at 11:31 am

Speaking of banks and rising interest rates, pathetic blog dogs inquiring minds want to know – what do manly moderators prefer:
A) Canadian banks like ZEB
B) US banks like XLF
C) BOTH!

#8 Adrian on 10.27.21 at 11:38 am

Steerage section economist here, but isn’t this more a rock and hard place for central banks: inflation, yes; massive debt, yes; raise rates to protect the currency and trigger a recession, rates fall???

#9 Felix on 10.27.21 at 11:41 am

Compare the cranial capacity ratio of this mutt with the average cat – shows you exactly why this species is so dogawfully dumb.

#10 Sunny Daze on 10.27.21 at 11:53 am

Like the tone and willingness by the BOC. But the long bond is a yawning Mastiff today and not a barking chihuahua.

#11 Evict Load on 10.27.21 at 12:02 pm

#57 Dolce Vita on 10.26.21 at 5:15 pm

“Christmas will be a retail orgy.”

— Garth

I ‘dunno Garth.

————-

I have to agree.

It’s not a bad thing if there isn’t one. Not at all.

Spend time with family. Talk. Have a slow meal together that you cooked together. Look each other in the eyes. Hugs…they are free. Woke green liberals are not the only ones who enjoy hugs. Sit down and listen to music together – something that is not blinking lights.

All of these things are surely better than a piece of retail good that required 4 clicks and some underpaid lad to sweat to deliver to you home, pre-wrapped and that you’ll play with for 6 minutes.

#12 Chameleon on 10.27.21 at 12:04 pm

#9 Felix

Compare the cranial capacity ratio of this mutt with the average cat – shows you exactly why this species is so dogawfully dumb.

Felix, I’d like you to meet “In Dog we Trust”

#13 Dan in Nanaimo on 10.27.21 at 12:04 pm

It’s about time some grown-ups came to the party

#14 Do we have all the facts on 10.27.21 at 12:05 pm

Best not to forget that the ‘core’ inflation the Bank of Canada keeps referring to excludes food and energy from their basket of goods and services. Might as well exclude shelter to keep inflation within a discretionary target range.

How can the exclusion of food and energy costs from the CPI basket make any sense. Just another way of fitting the data to targets that have little, if any, connection to reality.

#15 TurnerNation on 10.27.21 at 12:06 pm

#126 Ponzius Pilatus on 10.26.21 at 11:15 pm
Now you see it. The Global plan. Crowd everyone into cities, ban SFH , and as per communism you we will be living in an Apartment Bloc. It’s all happening so fast and *co-ordinated* isn’t it?
The hint was the during the Economic Shutdowns the new condo construction never was shut down.

From May 6th 2020. How close are we 1.5 years later?

#201 TurnerNation on 05.07.20 at 8:55 am
The new life in Kanada 2020:
– Wake up in your 350 squarefoot “Smart Condo”
– Eat your delivered breakfast ration and watch the State AM news update.
– You work at home of the banks, one of the few employers remaining.
– Your job there involves garnishing the wages of debtors. Initially you were apprehensive, one garnashee lives in your building even. But as time went on you become quite good at your job; achieving the most files handled per day. Your boss rewards you greatly.
– The corner of your PC screen has the live Covid numbers score. Win-Lost-Tied. You are pleased your Prefecture is keeping its numbers down.
– Evening is your delivered dinner; watching the State news PM update.

Full post: https://www.greaterfool.ca/2020/05/06/eating-risk/#comment-710151
—————————-

—————————–
USA: the bastion of freedom, free enterprise. It must be toppled. Only the large global Corps will be allowed.
First take out small business. Shutdowns, debt, mandated. Done and done.
Next take out the salaried middle class. “You will own nothing be happy”

https://www.businessinsider.in/international/news/heres-how-janet-yellens-proposed-tax-on-unrealised-capital-gains-may-work/articleshow/87249423.cms
“Here’s how Janet Yellen’s proposed tax on unrealised capital gains may work”

.With the vaccination deadline approaching, NYC’s largest police union is suing for unvaccinated officers to continue working (news.yahoo.com)

#16 TiffTheMan on 10.27.21 at 12:13 pm

See I told ya so!
https://www.reuters.com/article/canada-cenbank-idUSKBN2HH1WC

#17 Habitt on 10.27.21 at 12:21 pm

Thanks for the post. Please consider doing one on the equalization program and how it could be altered to keep the richer provinces happier.

Pass. – Garth

#18 NoName on 10.27.21 at 12:24 pm

#150 Faron on 10.27.21 at 10:55 am
#121 Sail Away on 10.26.21 at 10:30 pm

#100 NoName on 10.26.21 at 8:18 pm
#88 Faron on 10.26.21 at 7:21 pm
#76 Sail Away on 10.26.21 at 6:15 pm

There is lots of videos where people are standing on deck and recording 50+kn wind on sailboat and doesnt look that balance demanding to do that, noone is holding for railing so it doesnt gets blown to water. But on a another hand i never put foot on sail bot so…

#19 Jack up the carbon tax on 10.27.21 at 12:32 pm

Good to see an environmentalist as environmental minister.

Why? We are on the RCP8.5 trajectory according to the UN IPCC. Every update they publish puts us on this worst case track for carbon emissions. That means an average of 4.5 degC temp rise by 2100. It is less of a rise over oceans, and more over land masses, which means it could be 8degC hotter at times over the prairies.

We hit 41degC this summer in Saskatoon. At 49degC, do you think we are going to be able to grow any food for you?

#20 Joseph R. on 10.27.21 at 12:34 pm

#13 Do we have all the facts on 10.27.21 at 12:05 pm
Best not to forget that the ‘core’ inflation the Bank of Canada keeps referring to excludes food and energy from their basket of goods and services. Might as well exclude shelter to keep inflation within a discretionary target range.

How can the exclusion of food and energy costs from the CPI basket make any sense. Just another way of fitting the data to targets that have little, if any, connection to reality.

—————————————————————–

Statistics Canada, not the Bank of Canada, is in charge of calculating the official CPI numbers.

However, the Bank of Canada chooses not to consider the 8-most volatile items. It has been so since 2001 (20 years ago):

https://www.statcan.gc.ca/en/statistical-programs/document/2301_D64_T9_V2

You can see what the All-CPI pyramid contains:

https://www150.statcan.gc.ca/n1/pub/62f0014m/62f0014m2021011-eng.htm

#21 Wrk.dover on 10.27.21 at 12:36 pm

Meanwhile Dog knows what new overhead the Greenpeacey federal environment minister will bring back from the land of Scotch.
______________________________________

I call dibs on being the 1st to coin the expression “Drank the Scotch” to replace “Drank the Koolaide”, when referring to what some may well say in future discussion, over what ever new policy(s) our Govt. promotes and or adapts from the Kilt Costume Party for our PM and his activist.

#22 Hi there Bank of Canada on 10.27.21 at 12:38 pm

This message is to the Bank of Canada and all it’s policymakers. It is too late, no matter what you do, the Canadian dollar is going down and you caused it. W are not stupid Canadians as you think.

#23 Sail Away on 10.27.21 at 12:41 pm

Is it better to realize capital gains now, expecting the CG inclusion rate will increase, or just let it ride?

Every situation varies, but here’s one scenario:

Time period: 10 years
Capital gains: $10M
Nominal tax rate: 50%
Capital gains inclusion now: 50%
Capital gains inclusion in 10 years: 75%
Rate of return: 10%

Option 1:
Realize capital gains now, pay 50% CG, let the remaining $7.5M compound and realize additional gains in 10 years. Total = $19.5M, $12M taxable at 75% CG because of previous realization. After-tax total: $15M.

Option 2:
Do nothing now, leave the entire $10M to compound, and realize gains in 10 years. Total = $26M, all taxable at 75% CG. After-tax total: $16.2M

So… over 10 years, it appears 8.3% better to realize nothing now and let it ride. The longer the timeframe, the more beneficial doing nothing gets because of larger principal and compounding.

Only short-term scenarios of 6 years or less show a benefit to realizing gains now at the lower CG rate.

So let it ride. Maybe rates won’t increase. Or maybe if they do increase, a future gov’t will decrease them before gains need to be realized.

#24 Wrk.dover on 10.27.21 at 12:45 pm

#4 Don Guillermo on 10.27.21 at 11:22 am

Coincidently, today’s NP is running a photo of him in his Halloween costume.
___________________________________

link deleted by me-I can’t brace myself to look!

#25 IHCTD9 on 10.27.21 at 12:46 pm

#6 earthboundmisfit on 10.27.21 at 11:29 am

…. and the broad market indexes, not surprisingly, immediately “take a deuce”.
_____

“You know your Man is workin’ hard, he’s worth a deuce”

https://www.youtube.com/watch?v=rEV9lW0lBL8

#26 Habitt on 10.27.21 at 12:46 pm

Thanks for the response Garth.

#27 Sail Away on 10.27.21 at 12:48 pm

#18 NoName on 10.27.21 at 12:24 pm
#150 Faron on 10.27.21 at 10:55 am
#121 Sail Away on 10.26.21 at 10:30 pm

There is lots of videos where people are standing on deck and recording 50+kn wind on sailboat and doesnt look that balance demanding to do that, noone is holding for railing so it doesnt gets blown to water. But on a another hand i never put foot on sail bot so…

——-

Haha. Anybody who can ‘no-hands’ it in 50 knots can almost certainly also stand aboard a galloping horse. Talent.

#28 kommykim on 10.27.21 at 12:48 pm

RE: #17 Habitt on 10.27.21 at 12:21 pm
Thanks for the post. Please consider doing one on the equalization program and how it could be altered to keep the richer provinces happier.

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

Ontario contributed THREE TIMES as much to “equalization” than Alberta did. (apx $9B vs 3B). I think it’s time for the so called “West” to stop flogging that dead horse.

#29 alexinvestor on 10.27.21 at 12:51 pm

BOC had already slowed their buying based on weekly published balance sheets. During the pandemic they had to step up to buy newly issued provincial bonds. Let’s see what happens when those scream higher.

#30 Mattl on 10.27.21 at 12:53 pm

Remember the inverse correlation between real estate values and interest rates. It should now be obvious what lies ahead.

——————————————————-

When you factor inflation into the mix, how does it all play out. Average mortgage is something like 300K. And extra 2 points on that is 300 a month. Are the additional borrowing costs offset by increased wages, employment, etc?

Don’t disagree that RE will correct / soften, whatever. As it should. But how does increased prosperity play a role here?

#31 Joseph R. on 10.27.21 at 12:55 pm

#17 Habitt on 10.27.21 at 12:21 pm
Thanks for the post. Please consider doing one on the equalization program and how it could be altered to keep the richer provinces happier.

——————————————————-

Only ideology prevents Alberta from introducing a sales taxes.

#32 Philco on 10.27.21 at 12:58 pm

#134 crowdedelevatorfartz on 10.27.21 at 8:07 am
@#133 Biden is a one term wonder

“Trump doesn’t stand a chance.”
+++

As much as I loathe the Orange Cheeto.
Trump could run for office again in 2024.

Unless he’s in jail.

One wonders when the US will place age limits on Presidents.
These geriatric candidates are getting a bit long in the tooth.
————————————————–
He ain’t going to jail.
Can someone list Biden’s accomplishment’s? I mean the last 30 years. ZERO.
But he’s got a few. Afghanistan just wonderful (CNN say good job for ending the war lol) and a border disaster.
Trumps first order of Biz was to fire up Keystone Biden’s was to Kill it.
Now they have energy issues. No energy securety….no country.
If I’m hiring a guy to run my business the last clown it would be is Biden.
FYI Biden’s not making any decisions anyway….at least Trump could and would.
Trump hated nation state building. That’s something I can get behind.
I met a pile of supporters (Mexicans in Arizona) You’ll here stuff from them that’s not on the tube.
Uncheck boarder mean more problems…They want that boarder checked!
Enjoy your day on da ferry heading home a lovely day!

#33 Quintilian on 10.27.21 at 12:59 pm

I don’t go for all that M2, QE, Yield curve thingy.

I think Chrystia let Tiff know she will be taking over the job of stimulating the economy through fiscal stimulus, and will keeping inflation under control through taxes.

And in all fairness, that is the job of those who have to face the electorate, rather than the momma’s boys at the central bank.

#34 Faron on 10.27.21 at 1:01 pm

#18 NoName on 10.27.21 at 12:24 pm

#150 Faron on 10.27.21 at 10:55 am
#121 Sail Away on 10.26.21 at 10:30 pm

#100 NoName on 10.26.21 at 8:18 pm
#88 Faron on 10.26.21 at 7:21 pm
#76 Sail Away on 10.26.21 at 6:15 pm

There is lots of videos where people are standing on deck and recording 50+kn wind on sailboat and doesnt look that balance demanding to do that, noone is holding for railing so it doesnt gets blown to water. But on a another hand i never put foot on sail bot so…

I’m assuming we are talking smallish sloop/ketch/yawl rigs here. Sub 50′. I doubt your claim. Show me a video where they have spliced in the simultaneous anemometer readings and I’ll believe you. If it’s 50kt sustained with higher gusts, the person on deck would be continually doused in spray and the camera’s lens would be awash. At those speeds people are also too busy attending the boat or holding on to film. People always overestimate wind. People always tack 5-10 kts onto windspeeds when back at the bar or on their youtube channel.

#35 Wrk.dover on 10.27.21 at 1:11 pm

#148 IHCTD9 on 10.27.21 at 10:49 am
Err, – so you’re thinking I’m planning on driving around everyday with hundreds of litres of extra fuel onboard?
____________________________

It will be there until it isn’t, plus your load.

I carried 1/2 a ton on a dry hwy. yesterday in my 3/4 ton ‘Hotel Interstate Hammer Lane’ with fresh tires, brakes and shocks, and it certainly did have my attention.

I’d jettison that fuel at home immediately post purchase, but no, I’d assumed you wouldn’t, because of Diesel think.

#36 Sail Away on 10.27.21 at 1:11 pm

Here’s some heavy sailing weather. These sailors are holding on… and tethered. Sissies.

https://youtu.be/LzSwhaECG28

#37 Don M on 10.27.21 at 1:12 pm

#19 Jack in the Carbon tax

We hit 41degC this summer in Saskatoon. At 49degC, do you think we are going to be able to grow any food for you?

AS the earth warms, the arable land heads north. It is not rocket science. FYI the Antarctic experienced its coldest winter ever and the ice shelf is growing.

Humans have zero control of Mother Nature.

#38 Shawn Allen on 10.27.21 at 1:35 pm

Answer to Commuted Value Pension Question

#156 Brian on 10.27.21 at 12:03 pm asked:

Hi all,
Anybody know if the inflation rate has any relation to an inflation indexed DB pension and its current commuted value?(taking it out before maturity)
I am aware low interest rates have an inverse relation but not sure if inflation rate is used in calculation.

**********************
Inflation is there but only indirectly.

Keep in mind the rules to commute a DB pension vary and the formula for the commuted value may vary (I believe there are some regulations around the interest rates used but I am not sure if the regulations always apply.)

In some (many?) cases you can only commute before age 55 and only if you retire/quit then. That’s a non-starter for most people. That is the rule for the Alberta government pension plans (LAPP, PSPP – not sure about the police and fireman plans which are more generous).

The interest rate used in commuting can be related to bond yields and those are AFFECTED by inflation. In theory a low inflation means lower bond yields but as we know central banks have been pushing interest rates down (at least until today).

Someone recently posted that the commuted value in his plan would be changing from based on low bond rates to the higher expected return on plan assets. That meant a substantially lower commuted value.

In any case once your commuted value is decided, you are at risk for the investment. Inflation will likely increase. It’s up to you to invest accordingly. The future is never known with certainty.

Seek unbiased expert advice.

Always timid. – Garth

#39 IHCTD9 on 10.27.21 at 1:37 pm

#30 Mattl on 10.27.21 at 12:53 pm

Don’t disagree that RE will correct / soften, whatever. As it should. But how does increased prosperity play a role here?
___

The hard numbers and Professional opinion don’t matter, it’s all emotion driven.

Like paying 1 million over asking for a house, and selling out and going to cash last March. It’s fear pulling the strings.

If home owners/buyers get shook over current events, their personal financial situation won’t matter any more than it did when they drove house prices through the roof in the middle of a pandemic.

#40 Jane on 10.27.21 at 1:39 pm

Get ready for all your 80%+ gains in the stock market to become worthless in purchasing power and value of your currency. The Bank of Canada is a joke. Venezuela, Argentina, here we come. Russia raised their interest rates 3.25% in just 6 months.

Why does everyone here speak in extremes? Then look like idiots? What the heck are you reading? – Garth

#41 crowdedelevatorfartz on 10.27.21 at 1:49 pm

@#154 IHCTD9
“I hope rates soar, RE crashes, and the whole country gets a long extended round of shock therapy. ”

++++

Yep.
Its coming.
Hopefully the “Wokester” voters will ….wake up.
But I doubt it.

#42 Soviet Capitalist on 10.27.21 at 1:50 pm

Very good blog post.
Is my understanding correct that the expectation is for higher rates to last for a few years?
Is it possible that higher rates will trigger a market correction in the next few months leading to lower yields?

Yes, for years. No, historically higher rates have not led to equity declines since they usually telegraph a growing economy and better profits. Yields are linked to inflation and inflation expectations, not stock values. – Garth

#43 NoName on 10.27.21 at 1:55 pm

#34 Faron on 10.27.21 at 1:01 pm
#18 NoName on 10.27.21 at 12:24 pm

#150 Faron on 10.27.21 at 10:55 am
#121 Sail Away on 10.26.21 at 10:30 pm

#100 NoName on 10.26.21 at 8:18 pm
#88 Faron on 10.26.21 at 7:21 pm
#76 Sail Away on 10.26.21 at 6:15 pm

There is lots of videos where people are standing on deck and recording 50+kn wind on sailboat and doesnt look that balance demanding to do that, noone is holding for railing so it doesnt gets blown to water. But on a another hand i never put foot on sail bot so…

I’m assuming we are talking smallish sloop/ketch/yawl rigs here. Sub 50′. I doubt your claim. Show me a video where they have spliced in the simultaneous anemometer readings and I’ll believe you. If it’s 50kt sustained with higher gusts, the person on deck would be continually doused in spray and the camera’s lens would be awash. At those speeds people are also too busy attending the boat or holding on to film. People always overestimate wind. People always tack 5-10 kts onto windspeeds when back at the bar or on their youtube channel.

I have no claim i just depict in my english what i see and and read on YouTube video description. If someone puts xx kn wind i just take as it is because i cant know and most definetly don’t know difference. Luckily for me i have two of you.

#44 IHCTD9 on 10.27.21 at 1:58 pm

#35 Wrk.dover on 10.27.21 at 1:11 pm
#148 IHCTD9 on 10.27.21 at 10:49 am
Err, – so you’re thinking I’m planning on driving around everyday with hundreds of litres of extra fuel onboard?
____________________________

It will be there until it isn’t, plus your load.

I carried 1/2 a ton on a dry hwy. yesterday in my 3/4 ton ‘Hotel Interstate Hammer Lane’ with fresh tires, brakes and shocks, and it certainly did have my attention.

I’d jettison that fuel at home immediately post purchase, but no, I’d assumed you wouldn’t, because of Diesel think.
___

“Diesel think”?

Half a ton is peanuts – the Griz weighs almost that much loaded up and I don’t even notice it back there.

#45 willworkforpickles on 10.27.21 at 1:59 pm

The 5 year will more than double in half that time on the road to historical normalized rates.

#46 Immigrant man on 10.27.21 at 2:06 pm

Meanwhile Dog knows what new overhead the Greenpeacey federal environment minister will bring back from the land of Scotch.
—————-
Invest in foreign oil production? Cuz somebody has to produce that oil if AB won’t (be allowed to).

#47 Tony on 10.27.21 at 2:10 pm

Jane, right on, this is a big mess the Bank of Canada and it’s policymakers, government friends created. A $1 trillion dollars in 18 months from Trudeau Liberals and Bank of Canada creating money out of nothing is not extremes. They can not talk down this one like they did in the past. This is all a bunch of BS. 0.25% Bank of Canada rate and 4.4% inflation, come on, I was not born yesterday.

#48 Philco on 10.27.21 at 2:13 pm

#41 crowdedelevatorfartz on 10.27.21 at 1:49 pm
@#154 IHCTD9
“I hope rates soar, RE crashes, and the whole country gets a long extended round of shock therapy. ”
++++
Yep.
Its coming.
Hopefully the “Wokester” voters will ….wake up.
But I doubt it.
————————-
Then its shopping time.

#49 Dolce Vita on 10.27.21 at 2:15 pm

I ‘dunno Garth. I want to believe the inverse rate vs. price relationship…

https://i.imgur.com/2yQToUH.png

Basically, you have to CLUB the disease out of them.

Even then, it takes about 1-2 years worth of BEATINGS before they get it.

————————

Rates from:
https://www.superbrokers.ca/tools/mortgage-rate-history

Index numbers from*:
https://fred.stlouisfed.org/series/QCAR628BIS

* Not so easy to find from Cdn sources. Good Old Uncle Sam. Just like in the movie Battleship:

“In God we trust, all others we track.”

#50 Randy on 10.27.21 at 2:20 pm

1.5% for 5 year Canada bond yield. This is so low. This is what all the hoopala is all about. I remember back in 2000, they were 6%. Inflation was alot lower too. Maybe 3% at that time. The Bank of Canada is really doing a bad job on this one.

#51 NoName on 10.27.21 at 2:23 pm

#36 Sail Away on 10.27.21 at 1:11 pm
Here’s some heavy sailing weather. These sailors are holding on… and tethered. Sissies.

https://youtu.be/LzSwhaECG28

Damn wright. Here is dude with no legs no hands on top of the mast in middle of the storm.

https://youtu.be/WyEmNlYL6qE

#52 Rita on 10.27.21 at 2:27 pm

It is a joke, these very low interest rates. a 1.5% 5 year Canada bond rate. In the late 90’s and early 2000’s, 5.75% to 6.5% GIC rates were the norm and inflation rates were in the 3% to 3.5% range. Now, we have 4%+ inflation rates and 2.25% to 2.60% 5 year GIC rates.

Even if we see, 3.5% mortgage rates, this is still a joke. Alot of people in debt need to lose their houses, condos, cars to learn that borrowing too much money is serious and is not a game.What is wrong with people today?

#53 IHCTD9 on 10.27.21 at 2:37 pm

#48 Philco on 10.27.21 at 2:13 pm
#41 crowdedelevatorfartz on 10.27.21 at 1:49 pm
@#154 IHCTD9
“I hope rates soar, RE crashes, and the whole country gets a long extended round of shock therapy. ”
++++
Yep.
Its coming.
Hopefully the “Wokester” voters will ….wake up.
But I doubt it.
————————-
Then its shopping time.
___

Back up the DirtyMax.

#54 Dolce Vita on 10.27.21 at 2:40 pm

On the RE vs. Rates chart:

https://i.imgur.com/2yQToUH.png

The Compound Average Annual Growth Rates CDN RE, various periods:

1975-Jan 1, 2021 2.32%
1980-Jan 1, 2021 2.58%
1990-Jan 1, 2021 2.83%
2000-Jan 1, 2021 4.39%
2010-Jan 1, 2021 3.46%
2015-Jan 1, 2021 4.22%
2020-Jan 1, 2021 7.11%

S&P 500

1991-2020 = 10.7%

https://www.fool.com/investing/how-to-invest/index-funds/average-return/

———————

You really ‘gotta love dirt.

#55 willworkforpickles on 10.27.21 at 2:48 pm

Quantitative Easing has reduced interest rates in the short and medium term.
Few if any listen when you tell them over the long haul that it will do the exact opposite.
I’ve lost count the times and the ways i have gone on about this point in how ever expansionary QE will come to this.
People want to hear what suits them best always.
There is always a shelf life to much of that

#56 Barb on 10.27.21 at 2:58 pm

Missing in cabinet appointments? T2’s typical apology.

At least that they’re the best the country has to offer.
And don’t we know it.

#57 Uninterested on 10.27.21 at 3:02 pm

Interest rates are a scam.

What if it’s not just the Chinese who lie about growth?

What if the west lies too?

What if we’re just like Japan – stuck in mud or going backwards? Hence the crazy rates for past 12 years and no end in sight.

#58 Dolce Vita on 10.27.21 at 3:05 pm

On the RE vs. Rates chart, clearer version with shading that shades when mortgage rates increased:

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

[Snip & Sketch on the fritz vs. Google Sheets, miraculously captures the shading an hour later, Microsoft Win10 Lunch Break?]

It’s really a mixed bag this RE price vs. Mortgage Rates inverse relationship.

Works most of the time, but not always (e.g., 1997-00, 2005-07):

1977-80 ✓ +7% rate increase, peak Variable Rate = 19.2%
1987-90 ✓ +5%, 13.95%
1997-00 ☓ +3.5%, 7.2% – no price drop as rates increased
2005-07 — +3%, 5.7% – slight drop 2 yrs after peak rate
2017-19 ✓ +1.5%, 3.65%

—————–

It’s a disease.

#59 mark on 10.27.21 at 3:24 pm

More noise, people with mortgages have been stress tested for 2x or more than what they locked in several years ago, the world is too debt ridden, sure rates will rise a bit but they are NOT going to the moon, global economy everywhere can not handle excessive high rates the house of cards will fall if that happens.

This is a lot to do about nothing……….again. If you think interest rates will go back to 6,7,8+ percent that is just plain wrong IMO and we we likely see them hike and capitulate before they even get close to 5 percent unless the countries want their stock markets to utterly crash……….possible who know what’s rolling around between their ears.

There is no reason to believe stocks will ‘crash’ if rates normalize. You just made that up. History says otherwise. – Garth

#60 crowdedelevatorfartz on 10.27.21 at 3:25 pm

Anyone want some slightly soggy Christmas decorations, Sofas, car parts and paddle Boards?

Somewhere off the northern tip on Vancouver Island….

https://theprovince.com/news/local-news/coast-guard-says-106-containers-not-40-fell-off-cargo-ship-near-victoria

#61 Billy Buoy on 10.27.21 at 3:25 pm

Let’s see the duration of those hikes and amount.

9 months and 1%.

Max.

#62 Shawn Allen on 10.27.21 at 3:35 pm

Dolce please check your figures.

#54 Dolce Vita on 10.27.21 at 2:40 pm
On the RE vs. Rates chart:

https://i.imgur.com/2yQToUH.png

The Compound Average Annual Growth Rates CDN RE, various periods:

1975-Jan 1, 2021 2.32%

************************************
Please, that can’t be right. The chart shows a $50k house in 1975 is worth about $150k today.

Also $50k times 1.0232 ^46 = $143,600 so call it about $150k

That has to be in real dollars inflation adjusted. In 1975 you had to be in a City to pay $50k for a house and it would be a nice one in a good location. We all know you cannot buy that same house today even if it is original unrenovated with the old shag carpets for anything close to $150k

I would suggest that that your S&P number may not be in real dollars. You say S&P 500 1991-2020 = 10.7%.

You may be quite correct that the S&P 500 has spanked houses as an investment. But to suggest that house prices have compounded up at at only 2.32% in nominal dollars since 1975 is not credible.

Am I wrong?

I am not saying houses were a fantastic investment. They were a place to live. But I KNOW the gain was a lot more than 2.32% compounded since 1975 in nominal dollars.

#63 GARY SMITH on 10.27.21 at 3:38 pm

Oh boy….wonder what happens to the Vancouver and Toronto RE Markets. Prices only go up !

#64 Alberta Ed on 10.27.21 at 3:41 pm

Mr. Socks just named a new, expanded federal cabinet, which is a committee of his most loyal sycophants. The IQ of a committee is equal to the IQ of the dumbest member divided by the number of people on the committee, in this case, 39.

#65 AM in MN on 10.27.21 at 3:52 pm

#33 Quintilian on 10.27.21 at 12:59 pm
I don’t go for all that M2, QE, Yield curve thingy.

I think Chrystia let Tiff know she will be taking over the job of stimulating the economy through fiscal stimulus, and will keeping inflation under control through taxes.

——————————————————–

Not going for all the M2, QE etc. is part of why we’re in such a mess going forward. Making a mess of monetary policy causes wars and revolutions when the masses finally feel the pain…. and they will.

More taxes won’t keep inflation down.

We’re heading for that ’70’s show, as I’ve said many times before, and nothing I’m seeing now changes my mind.

That means rising interest rates into a slowing economy…. stagflation, and misery for many.

Wait until the large public sector strikes start up. They’ll want to catch up to the inflation caused by all the money printing, which the government will be hard pressed to do because of even higher payments on the accrued debt, so more money printing to pay the bills.

All fiat currencies in history have failed, no exceptions, and it’s not likely that it’s different this time. It takes a while, and this will as well, but the direction is not in dispute, only the timing.

I’ve mentioned before that at some point Garth will recommend some BTC as part of a B/D portfolio, just a matter of time.

It is an unregistered (if you know how), liquid store of value, backed up by the largest computer network in the world. Not sure why people think a software company or video game company that produces only software has value, but the immense and growing blockchain of the BTC network is useless?

By choosing to destroy the production of energy and minerals, but not the consumption, Canada and the rest of the western world’s economies are unsustainable. At some point, rebalance comes, prepare for it.

#66 Do we have all the facts on 10.27.21 at 3:59 pm

#20 Joseph R.

The Bank of Canada sets their monetary policy target rates based on ‘core’ inflation so I don’t see what your point was.

It is the Bank of Canada that will adjust interest rates when they feel inflation has become a concern not Statistics Canada.

I know what the basket of goods used by Statistics Canada contains and how their CPI is applied by the Government of Canada. For the record the way weighting within the CPI basket has been adjusted recently bears further scrutiny.

My primary concern is that the Bank of Canada may delay increasing the overnight rate in in the belief that ‘core’ inflation is under control. This mistake was made by the Federal Reserve in the 1970’s with rather interesting consequences for the US economy.

In closing I must point out that a few weeks ago the Bank of Canada was insisting that inflation was transitory. I guess they meant it was on its way up!

Hopefully a responsible change in direction is afoot!

#67 Phylis on 10.27.21 at 4:09 pm

For you truck nuts.
https://chevroletforum.com/articles/squirrel-stashes-180-pounds-of-nuts-in-chevrolet-avalanche-in-just-four-days/

#68 When the Whip Comes Down on 10.27.21 at 4:13 pm

5 yrs from now will be interesting to see the landscape. I’m not betting either way but a fixed 5er at 4.5% in 2025 or 2026 would be a tough one coming off sub 2% if they chose another fixed term at renewal. Wonder what lies ahead in this crazy economic world. Hard to make a call 5 yrs out.

#69 zxcvbnm on 10.27.21 at 4:32 pm

here’s some financial advice: don’t buy a dog.

Ours just blew its ACL. It’s going to be just under $10k surgery.
I’m sure the other leg goes next too.

Didn’t expect to have to buy my dog a car and then burn it. But such is life!

This blog is about dogs and money. Pick one. You can’t have both.

Cheers

#70 Outrage on 10.27.21 at 4:32 pm

Its funny when some people think interests rates will go up over a point. They may rise 0.5 % and that’s it.No need to worry the 21 year real estate bubble will continue until wages can’t support it anymore. I feel for new Canadians trying to buy a house or condo without funding from Mum and Dad. There in for a real grind of hand to month way of living for many years. I guess its the Canadian way.

Mortgage rates have already risen a half point. So much for your theory. – Garth

#71 Squire on 10.27.21 at 4:40 pm

#9 Felix on 10.27.21 at 11:41 am
Compare the cranial capacity ratio of this mutt with the average cat – shows you exactly why this species is so dogawfully dumb.
———————
Cat’s are sneaky and only a friend in need

#72 1st world problems on 10.27.21 at 4:43 pm

When I lose more money in one day than most people make in a year, where is the justice in that?

#73 Linda on 10.27.21 at 4:47 pm

And the message of today’s blog as per ‘Louie’ is this: small doesn’t mean it won’t bite:) So those ‘small’ increases in interest rates etc. are going to bite like a Rottweiler down the road. Ay-yi-yi!

#74 What the fork? on 10.27.21 at 4:48 pm

DELETED

#75 Barb on 10.27.21 at 4:51 pm

#64
“The IQ of a committee is equal to the IQ of the dumbest member divided by the number of people on the committee, in this case, 39.

Well said.

#76 cramar on 10.27.21 at 4:53 pm

#23 Sail Away on 10.27.21 at 12:41 pm

———–

Interesting if simplistic comparison. In real world, not too many have presently $10m invested, and 10% annual return is not realistic. But you did raise the flag. Anyone with investments is likely to run it by their accountant. Given their own numbers, tax bracket, realistic 7% return, it would be worth doing the comparison to find out what course of action is best.

#77 Do we have all the facts on 10.27.21 at 4:54 pm

#28 Kommykin

The initial concept of equalization payments was based on the ability of each Provincial government to generate revenue from all sources.

Over the years the Federal government tinkered with the formula by neglecting revenues generated by the sale of hydro electricity but considering a portion of the revenues generated by the development of hydrocarbons.

The end result was that prior to 2O18/19 the Province of Ontario received an equalization payment while the revenue generated in the Province of Alberta was the major source of equalization payments to six Provinces including Ontario.

The decline in the value of hydrocarbons between 2016 and 2021 placed the Government of Canada in a position where a portion of their total taxation revenues had to be used to support equalization.

Prior to 2016/17 over $10 billion of the revenues generated in the Province of Alberta were used to support equalization. In 2020/21 it was projected that the Province of Alberta might become a recipient of an equalization grant. Stay tuned for further news.

The reality in 2021/22 is that revenues collected within Ontario by the Province of Ontario are not sufficient to address the services provided to Ontario residents. Hence the generation of substantial budget deficits.

All government are running significant deficits in 2021/22 so the distribution of equalization payments has become political instead of an honest assessment of the capacity of each Province to deliver services to all Canadian citizens in an equitable manner.

This is definitely not the right forum for addressing such a complicated and politically driven issue as equalization or for an examination of future Federal/Provincial relations.

#78 Jack up the carbon tax on 10.27.21 at 4:55 pm

#37 Don M on 10.27.21 at 1:12 pm
#19 Jack in the Carbon tax

We hit 41degC this summer in Saskatoon. At 49degC, do you think we are going to be able to grow any food for you?

AS the earth warms, the arable land heads north. It is not rocket science. FYI the Antarctic experienced its coldest winter ever and the ice shelf is growing.

Humans have zero control of Mother Nature.

——

Any argument that tries to use a regional phenomenon to disprove a global trend is dead in the water. Anthropogenic global warming theory does not predict uniform warming throughout the globe. We need to assess the balance of the evidence.

In the case of this particular region, there is actually very little data about the changes in the ice sheets. The growth in the East Antarctic ice sheet indicated by some evidence is so small, and the evidence itself so uncertain, the sheet may well be shrinking.

But even this weak piece of evidence may no longer be current. Some recent results from NASA’s GRACE experiment, measuring the gravitational pull of the massive Antarctic ice sheets, have indicated that on the whole, ice mass is being lost.

Second, ice-sheet thickening is not inconsistent with warming! Warmer climates tend toward more precipitation. The Antarctic is one of the most extreme deserts on the planet. As it warms, we would expect it to receive more snow. But even a whopping warming of 20 degrees — say, from -50 degrees C to -30 degrees C — would still leave it below freezing, so the snow wouldn’t melt. Thus, an increase in ice mass.

While on the subject of ice sheets: Greenland is also growing ice in the center, for the same reasons described above. But it is melting on the exterior regions, on the whole losing approximately 200 km3 of ice annually, doubled from just a decade ago. This is a huge amount compared to changes in the Antarctic — around three orders of magnitude larger. So in terms of sea-level rise, any potential mitigation due to East Antarctic Ice Sheet growth is wiped out many times over by Greenland’s melting.

Overall, it is true that sea ice in the Antarctic is increasing.

Around the peninsula, where there is a lot of warming [PDF], the ice is retreating. This is the area of the recent and dramatic Larsen B and Ross ice shelf breakups.

But the rest of the continent has not shown any clear warming or cooling and sea ice has increased over the last decade or so.

This is not actually a big surprise.

In fact, it is completely in line with model expectations that CO2-dominated forcing will have a disproportionately large effect in the north. The reasons lie in the much larger amount of land in the northern hemisphere and the fact that the ocean’s thermal inertia and ability to mix delay any temperature signal from the ongoing absorption of heat. The local geography also plays a dominating role. The circumpolar current acts as a buffer preventing warm water from the tropics from transporting heat to the South Pole, a buffer that does not exist in the north. You can read some more details about that here.

Does it “balance out” in the end? Not really. Sea ice in the Arctic is reaching dramatic record lows. There are other components of the cryosphere that we can look at as well, permafrost, the Greenland ice sheet, global glacier mass, and these all carry the Global Warming signal.

One must look at the balance of evidence, not just those bits one likes. And this balance is clearly in agreement with all other indicators that warming is real and rapid.

#79 TurnerNation on 10.27.21 at 4:55 pm

Keep an eye on the food supply. This maybe how they end meat. Increase the input costs. Disclosure: long CORN.US
Real simple this global New System. Control over our Feeding, Breeding and Travel/Movements.

https://www.bnnbloomberg.ca/u-s-dairy-cows-too-expensive-to-feed-causing-herd-to-plummet-1.1671649
“U.S. dairy cows too expensive to feed, causing herd to plummet”

….
———
Guys can you imagine this life? A 24hr livestream street Cam from Vietnam. Very different to the Former First World Countries. Freedom, living life. People having fun!
https://www.youtube.com/watch?v=fgtHOSMwasU

————-
From the Killing us Softly Dept. But trust the big corps!

https://www.dailymail.co.uk/sciencetech/article-10136675/Chemicals-used-make-plastics-soft-McDonalds-Chipotle-Pizza-Hut-food.html
” Toxic compounds used to make industrial tubing and rubber gloves are found in 80% of McDonald’s, Burger King and Pizza Hut food”


Yes this New System is being run by Big Tech and Big Pharma; government is there merely to facilitate. Electronic Lockdown of the globe. Let’s hand them more power and control. You see this WW3 is for our minds:

.Tech CEOs ‘have a moral responsibility’ to protect people from misinformation: US Surgeon General (finance.yahoo.com)

#80 Yuus bin Haad on 10.27.21 at 5:01 pm

This is going to be fun – pay attention kids

#81 Stone on 10.27.21 at 5:08 pm

Interesting article on mortgage refinancing for our neighbours in the United States. Per the 3 key points of the article:

“The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances increased to 3.30% from 3.23%.

Refinance demand fell 2% week to week, seasonally adjusted. Volume was 26% lower than the same week one year ago.

Mortgage applications to purchase a home increased 4% for the week but were 9% lower than the same week one year ago.”

Looks like increasing rates in the US are dampening mortgage refinancing demand as well as general mortgage application demand. And this is only the beginning.

https://www.cnbc.com/2021/10/27/mortgage-rates-rise-to-an-8-month-high-tanking-refinance-demand.html

#82 T on 10.27.21 at 5:12 pm

I have nagged, poked and generally bugged you for years Garth.

But now you are correct. What is coming rate wise is going to wipe out housing quick. Of course the rates will rise and cause the home values to drop. Usual reason.

But the second feedback loop to this machine is energy. The $550 billion that wasn’t invested to simply maintain the heat and the lights-to appease the new enviroment minister (and his elk) will cause oil and energy to move off the chart.

Believe me on this one. We make the stuff that goes into the equipment for all forms of energy extraction. The capex (and people cut) cannot be reversed.

If you think it was hard finding a dishwasher–try a non destructive testing engineer who moved on/retired. They are long gone.

Mission accomplished. Now we will see what real inflation looks like–not just homes.

#83 Cici on 10.27.21 at 5:13 pm

Dishwashers are getting signing bonuses. Wage pressures are mounting.
____________________________________________

The problem with this is that to my knowledge, only the minimum wage crowd are getting significant wage inflation and the rest of us are paying for it.

My salary hasn’t increased at all in the past two years. And from what I hear from people in my profession (in government and private sectors), their wages haven’t gone up either. Maybe if we apply to different companies and agencies we’ll see an increase… although somehow I highly doubt it.

All I can say is that it’s highly demotivating for those of us who devoted years to getting educated on our dime and at our expense only to watch minimum wage earners climbing exponentially to the point they’ll soon have caught up to our salaries because apparently 15$ wasn’t enough… it had to be $20 and now they want $25 per hour for work that requires no specific skillset and is way less complicated, stressful and time-consuming than anything any professional has to deal with.

When minimum wage hits $30 an hour, I’m gonna start washing dishes baby!

#84 BC Renovator on 10.27.21 at 5:14 pm

How does Gold Preform in a rising rate environment? As I read Commodity values rise withe rates; does this include Precious Medals?

Not lately. – Garth

#85 Ponnaps on 10.27.21 at 5:25 pm

Nothing changes. People will resort to renting their basement to make up for any increment in monthly mortgage. This has already been happening.

Furthermore consider this… Upgrade from a semi to a big enough detached. Rent the basement. Actually end up with more cash flow than when you owned the semi..

People are resilient and will find a way..

#86 Cici on 10.27.21 at 5:31 pm

“The blog posts are top notch as always and getting better all the time. Hard to believe it’s been over 10 years and the stories, ideas, and messages stay fresh and interesting.”
_____________________________________________

I was thinking just that the other day. I see Garth as my second Dad: smart, funny, honest and constantly setting the record straight/keeping me and the other children in line, whether we like it or not (it goes either way).

Huge thanks to Garth for keeping it fresh and real, every single day.

#87 Ballingsford on 10.27.21 at 5:49 pm

We just took possession of our newly built home. We didnt sacrifice the kiddos RESP or anything along the way, but coming up with the downpayment is one thing, closing costs are another thing you need to have extra cash on hand for. And then the options, expect another 60 grand for that. Appliance upgrades, movers window dressings, etc.
I’m going to be broke for a few months. Still need to get the 75″ TV though and then I’m done spending money for a while.

#88 NOSTRADAMUS on 10.27.21 at 6:02 pm

INFLATION, JUST A MOMENT IN TIME.
Garth, once again we drift apart. There is no way on God’s green earth that the current economy can stand, let alone walk on it’s own two feet, especially with inflation temporarily surging. The Federal Reserve has blown through every Red Light at every intersection and now find itself, painted itself into a dark, dark corner. Inflationist, joy the moment— your time is almost up. Crashing demand will see to that. Without revenue, even the supposedly, too big to fail companies can bleed out pretty fast. They have a ton of fixed costs to keep the lights on. Grand mother had a lot of of old fashioned good advise, ” It is easier to spend money than it is to make it. When there is no money coming in the door “Love” flies out the window.” Amen Brother.

#89 Felix on 10.27.21 at 6:09 pm

#69 zxcvbnm on 10.27.21 at 4:32 pm

here’s some financial advice: don’t buy a dog.

Ours just blew its ACL. It’s going to be just under $10k surgery.

I’m sure the other leg goes next too.

Didn’t expect to have to buy my dog a car and then burn it. But such is life!

This blog is about dogs and money. Pick one. You can’t have both.

Cheers

________________________

Brilliant advice. Anyone listening?

#90 Doug t on 10.27.21 at 6:46 pm

Where do you see Canada in 5 years, 10 years ? Strap on your seat belts for a future full of pot holes

#91 Ponzius Pilatus on 10.27.21 at 6:49 pm

Just got a flyer from Toys ar Us.
It’s addressed to Ponzie.
CEF most have given them my address.
He knows I love crappy  plastic toys made in the Middle Kingdom.
Thanks pal.
51 pages full of crap.
But attention, bargain hunters:
Most items are reduced up to 40%.
So dont be left out, get them while they last.
Christmas will be an orgy, for sure

#92 crowdedelevatorfartz on 10.27.21 at 6:55 pm

@#151 IHCTD9
“Poor paper pushing Ponzie pursues plugged plumbing plunging.”

++++
Perfect

#93 Ed on 10.27.21 at 6:57 pm

I actually own a 50′ sailboat and have sailed 20k miles offshore… All the posts about dealing with 50 kn winds are BS.
Stop watching the internet!

#94 JSS on 10.27.21 at 6:58 pm

Oil price goes up, everything else goes up, including interest rates. Called inflation. Unfortunately, wages are the last thing to go up. Not everyone is getting a wage increase. Just because a dishwasher is getting paid more, doesn’t mean every one is making more. As living costs rapidly exceed stagnant real wages for the middle class, the damn will ultimately break. Another recession will come, maybe 2024 or 2025 (?). The interest rate increases over the next year or two will provide some float for the interest rates to get cut again in the future.

I’ve seen this movie before.

#95 Nonplused on 10.27.21 at 7:11 pm

#28 kommykim on 10.27.21 at 12:48 pm
RE: #17 Habitt on 10.27.21 at 12:21 pm
Thanks for the post. Please consider doing one on the equalization program and how it could be altered to keep the richer provinces happier.

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

Ontario contributed THREE TIMES as much to “equalization” than Alberta did. (apx $9B vs 3B). I think it’s time for the so called “West” to stop flogging that dead horse.

——————————-

Try running your numbers per capita and stop being so intentionally deceitful. That sort of deceit cannot even be called disingenuous because it it too blatant for even harsh words such as that.

Anyway it took 0.000003 seconds for Google to find this:

https://www.canada.ca/en/department-finance/programs/federal-transfers/equalization.html

This article covers some of the issues as well:

https://c2cjournal.ca/2021/04/equalizing-canadas-equalization/

By and large, equalization payments are simply a bribe to keep our estranged wife Quebec from filing for divorce. They should be scrapped. They may have made some sense when Alberta and other “have” provinces had greater fiscal resources but with resource prices recently in the tank (although that seems to be changing at least in the short term) and Trudeau’s declared war on resource industries, the current equalization program is unsustainable and outdated.

#96 Drinking on 10.27.21 at 7:12 pm

It’s about fricken time!

#97 Nonplused on 10.27.21 at 7:22 pm

#31 Joseph R. on 10.27.21 at 12:55 pm
#17 Habitt on 10.27.21 at 12:21 pm
Thanks for the post. Please consider doing one on the equalization program and how it could be altered to keep the richer provinces happier.

——————————————————-

Only ideology prevents Alberta from introducing a sales taxes.

————————————–

Cheese and crackers folks, equalization payments are calculated as if Alberta had a sales tax:

https://www.canada.ca/en/department-finance/programs/federal-transfers/equalization.html

“Fiscal capacity” is another one of those sausages that you don’t want to see being made, but it is meant to neutralize specific monetary policies between the provinces. In other words if Alberta had a sales tax it would make no difference.

To be clear, equalization payments do not directly take money from one province and give it to another. Instead, the federal government collects all the federal taxes available from all provinces, and then decides how much of a confederation bonus Quebec should get. (And yes some other provinces but the amounts are small.) To figure out how much Alberta and Ontario pay in you have to do some fancy calculations regarding total taxes collected per capita in each province as compared to others. Alberta has lead the pack here for years, but does no more. But Quebec still receives the payments.

Anyway, if current trends continue, in some not too distant future Alberta won’t be carrying the load because our economy is being intentionally strangled by the Liberals and NDP, so Ontario will be left to pick up the whole slack. Problem solved.

#98 Drinking More on 10.27.21 at 7:32 pm

Drinking, no it is isn’t, 8.75% GIC rates, 10% mortgage rates and then it’s about frinken time!

#99 Albertastrophe on 10.27.21 at 7:37 pm

Alberta’s status quo economy is about to collapse.

COP26 is the beginning of the end for this wistful province, which has failed to invest in its own non-carbon future, for the last 50 years.

https://www.economist.com/the-economist-explains/2021/10/13/what-to-look-out-for-at-cop26?gclid=EAIaIQobChMIoZnXuODr8wIV9G1vBB0JowugEAAYAiAAEgK9pPD_BwE&gclsrc=aw.ds

If anyone can sell their house in Calgary in the next 4 days, it would be very smart to do so.

#100 Nonplused on 10.27.21 at 7:38 pm

#60 crowdedelevatorfartz on 10.27.21 at 3:25 pm
Anyone want some slightly soggy Christmas decorations, Sofas, car parts and paddle Boards?

Somewhere off the northern tip on Vancouver Island….

https://theprovince.com/news/local-news/coast-guard-says-106-containers-not-40-fell-off-cargo-ship-near-victoria

———————————–

The doublespeak is impressive. Let me translate for you:

“Fell off” = “on fire and pushed off”

Still it was the right thing to do or they could have lost the whole boat.

(No, I can’t prove that’s what happened but am connecting the dots. If I had a boat like that with hazardous chemicals on board that were on fire or at risk of catching fire I might think about pushing them off too. But they say the fire was after the containers “fell off”. Ya right. the two were close enough together to assume that the falling off may have started the fire or the fire may have started the “falling off”. Or they need to reinforce the no smoking policy.)

#101 Nonplused on 10.27.21 at 7:41 pm

#67 Phylis on 10.27.21 at 4:09 pm
For you truck nuts.
https://chevroletforum.com/articles/squirrel-stashes-180-pounds-of-nuts-in-chevrolet-avalanche-in-just-four-days/

——————————

Duh, squirrels aren’t eligible for CERB.

#102 45north on 10.27.21 at 7:42 pm

Don Guillermo
and
Dogman01

Steven Guilbeault has been appointed Environment Minister.

from the National Post article

Guilbeault was a radical environmentalist who has spent his career trying to shut down the oilsands and derail Canadian energy projects.

I’m afraid we are in an era of energy shortage. The appointment of Steven Guilbeault makes a bad situation worse. Hostility to Canada’s energy industry will lead to shortages, higher prices and hardship.

#103 IHCTD9 on 10.27.21 at 7:44 pm

#85 Ponnaps on 10.27.21 at 5:25 pm
Nothing changes. People will resort to renting their basement to make up for any increment in monthly mortgage. This has already been happening.

Furthermore consider this… Upgrade from a semi to a big enough detached. Rent the basement. Actually end up with more cash flow than when you owned the semi..

People are resilient and will find a way..

—— –

I could be wrong, but I doubt too many folks will be jonesing to upgrade into a 1.8 million dollar gta shack when rates are rising and prices are (shock!) falling. Or even just not going up anymore.

The entire Canuck re bubble was built on the rock solid faith that housing always, always – goes up. Many folks out there have not lived as adults to see RE falter. When it does, it’s going to feel like Armageddon.

#104 Jake on 10.27.21 at 7:53 pm

Blow off top in RE still to come this Spring. Once the herd sniffs higher rates are on their way, the last bunch of fools will pile in through the door. The only problem is, the other side of that door has no floor.

#105 Richard on 10.27.21 at 7:57 pm

I worked in restaurants all my life, first as a clean up crew and general labour there for 20 years and now a dishwasher for 16 years now.

My starting wage was $6.15 back in 1985 an hour then it went up to $10.15 an hour after 3.5 years, it was flat for about 7 years. It the went up to $11.50 to $13.25 an hour until 2005. I worked for a close friend who owned the restaurant for 20 years which he gave me a free rental unit, 650 square feet above the restaurant. He treated m very fair and good. I worked hard and he treated me with much respect. We were good friends until he passed away. I paid no rent for 20 years but still had to pay income taxes on that benefit. SO really I got 70% of the free rent.

The new owner was not a restaurant so I left and then I found a job as a dishwasher since 2005, $12.75 an hour worked 60 hour weeks, used to work max 48. I took a pay cut but a few years later $14 to $15 my wages went up slowly. It was flat for many years my wage, went up in 2010 to $16 an hour the $17 later few years, flat for another 6 years until 10 months ago, $19.66 an hour. I am now, 56. The only thing is that sucks the last 16 years is that I have to pay rent for many years.

I was smart all the years I did not have to pay rent, I socked away alot of money in my RRSP’s, GIC’s, 8%, 9%, 12% GIC rates even 5.5% to 6.5% GIC rates. The annual tax refunds plus some other extra cash, I got put all that in my Bell, Royal Bank, TD stock for decades and reinvested the dividends. Now, I have $675,000 in RRSP’s and these 3 stocks in cash, non-registered form, TFSA’s. My emergency, reserve account is 30 months of expenses, $60,000.

I will hopefully stop at 60 and get my early CPP and live well off my investments, cash until 65 when I get my OAS.

#106 Quintilian on 10.27.21 at 8:01 pm

I am somewhat surprised that most of you old curmudgeons take the recent action of the BOC as some kind of deflection point.

It isn’t.

The low interest rates are here to stay.

Central Bankers, will not dare make any significant changes, as it would expose their impotence.

They have lost the control they once had which relied heavily on the common belief of the people that money, they printed has value.

Technology changed all that.

They no longer have a monopoly on money creation.
So now a new system will have to be worked out; the new system will have to be based on facts, rather than then beliefs.

The new system will question the divine rights of kings and queens who granted the central banker the right to exist.

As with any reset, and disruption, there will be some sore losers.

#107 slava on 10.27.21 at 8:01 pm

#54 dolce vita

Your numbers are bs. 2010-2021 3%? That implies overall growth of only 1.65 times. In actual reality growth was over 3x times

#108 Hydie on 10.27.21 at 8:12 pm

Don’t worry, nature will take care of Guilbeault.

#109 IHCTD9 on 10.27.21 at 8:16 pm

#71 Squire on 10.27.21 at 4:40 pm
#9 Felix on 10.27.21 at 11:41 am
Compare the cranial capacity ratio of this mutt with the average cat – shows you exactly why this species is so dogawfully dumb.
———————

Cat’s are sneaky and only a friend in need

——-

True, a demanding friend. But if you live out in the sticks they earn their keep. They are killing machines, and can’t control it. That’s why I love ‘em. They have absolutely no choice but to kill and consume any small furry or feathered creature that invades my castle – even if they just finished having supper. Nothing escapes, and little evidence is left to bear witness to the event. They don’t need daylight, they don’t even need to see it, a little rustle or scratch is all it takes to bring death to their doorstep. In fact, if house cats were 40-50 lbs bigger, we’d all be dead too.

#110 Philco on 10.27.21 at 8:26 pm

53 IHCTD9 on 10.27.21 at 2:37 pm
#48 Philco on 10.27.21 at 2:13 pm
#41 crowdedelevatorfartz on 10.27.21 at 1:49 pm
@#154 IHCTD9
“I hope rates soar, RE crashes, and the whole country gets a long extended round of shock therapy. ”
++++
Yep.
Its coming.
Hopefully the “Wokester” voters will ….wake up.
But I doubt it.
————————-
Then its shopping time.
___
Back up the DirtyMax.
————————–
lol
Remove camper first!!!

Speaking of sailing. Sailo…

When I was a kid we went out with out with our 26 ft sloop when it was ugliest.
Thats how we learn. We got a 42 ft custom ketch later.
We sailed to Mexico 1989. We saved a boat off San Fran Bay from the rocks in the middle of the night. Then were moored when the earthquake hit.
We drank beer in Cabo and other places for a year.
I had to head home to work, Dad and my bro sailed to Hawaii and saved another boat and 2 lives from certain death. They lost their mast, power and comm way out.
Finally they left for YVR and a day out, hit a storm with 50+ft wave for 18 solid days!
That will test your mettle in a big way….
They did a great job and glad I wasn’t there!
When they got back to Powell river and your never seen a boat hit the dry dock so fast! lol There it sat for 4 years.
If anyone know anything about sail boats they have a max displacement haul speed. That one was 8.5 knots. They surfed down those huge rollers (6 ft waves in between) at up to 15 knots. You cant even steer because the boat goes ape shit in those conditions.
The Auto Helm 2000 did the job. It kept up and kept her in line.
Top that Sailo!
Gotta go wines calling

#111 Shawn Allen on 10.27.21 at 8:28 pm

Congratulations to Richard

#105 Richard on 10.27.21 at 7:57 pm
I worked in restaurants all my life, first as a clean up crew and general labour there for 20 years and now a dishwasher for 16 years now.

….

I was smart all the years I did not have to pay rent, I socked away alot of money in my RRSP’s, GIC’s, 8%, 9%, 12% GIC rates even 5.5% to 6.5% GIC rates. The annual tax refunds plus some other extra cash, I got put all that in my Bell, Royal Bank, TD stock for decades and reinvested the dividends. Now, I have $675,000 in RRSP’s and these 3 stocks in cash, non-registered form, TFSA’s. My emergency, reserve account is 30 months of expenses, $60,000.

I will hopefully stop at 60 and get my early CPP and live well off my investments, cash until 65 when I get my OAS.

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

THAT is very well done. Your savings are impressive. Don’t ever let anyone tell you different.

As a side point, I hope you shared fairly in the tips. Starting when I was very young I was exposed (for many years) to a restaurant business where all the tips were always shared equally among those who worked. Cash was simply pooled and shared equally.

As a customer it has never been my intention that the server should get more of the tip than the cook or the dishwasher.

To be honest, I think tipping should be done away and menu prices and wages raised accordingly. But as long as there are tips let them be shared equally or at least fairly.

#112 Joseph R. on 10.27.21 at 8:39 pm

#97 Nonplused on 10.27.21 at 7:22 pm
#31 Joseph R. on 10.27.21 at 12:55 pm
#17 Habitt on 10.27.21 at 12:21 pm
Thanks for the post. Please consider doing one on the equalization program and how it could be altered to keep the richer provinces happier.

——————————————————-

Only ideology prevents Alberta from introducing a sales taxes.

————————————–

Cheese and crackers folks, equalization payments are calculated as if Alberta had a sales tax:

https://www.canada.ca/en/department-finance/programs/federal-transfers/equalization.html

“Fiscal capacity” is another one of those sausages that you don’t want to see being made, but it is meant to neutralize specific monetary policies between the provinces. In other words if Alberta had a sales tax it would make no difference.

To be clear, equalization payments do not directly take money from one province and give it to another. Instead, the federal government collects all the federal taxes available from all provinces, and then decides how much of a confederation bonus Quebec should get. (And yes some other provinces but the amounts are small.) To figure out how much Alberta and Ontario pay in you have to do some fancy calculations regarding total taxes collected per capita in each province as compared to others. Alberta has lead the pack here for years, but does no more. But Quebec still receives the payments.

Anyway, if current trends continue, in some not too distant future Alberta won’t be carrying the load because our economy is being intentionally strangled by the Liberals and NDP, so Ontario will be left to pick up the whole slack. Problem solved.

————————————————————–

The issue in Alberta about equalization is the idea that it robs Alberta of truly achieving its potential; that without it, the government in Edmonton would be richer.

that’s how it is sold.

A sales tax will make the provincial government richer, not an abolition of interprovincial equalization.

You can try this equalization simulator from Trevor Tombe, professor of economics at the University of Calgary:

https://financesofthenation.ca/equalization/

#113 Frank B. on 10.27.21 at 8:41 pm

https://nypost.com/2021/10/18/fed-chair-powell-sold-millions-in-stocks-before-october-2020-tank/

Garth, why do the big fish always get away with it?

Sounds like he ‘got away’ with losses. – Garth

#114 DON on 10.27.21 at 8:45 pm

#39 IHCTD9 on 10.27.21 at 1:37 pm
#30 Mattl on 10.27.21 at 12:53 pm

Don’t disagree that RE will correct / soften, whatever. As it should. But how does increased prosperity play a role here?
___

The hard numbers and Professional opinion don’t matter, it’s all emotion driven.

Like paying 1 million over asking for a house, and selling out and going to cash last March. It’s fear pulling the strings.

If home owners/buyers get shook over current events, their personal financial situation won’t matter any more than it did when they drove house prices through the roof in the middle of a pandemic.

*********
Yup and it all starts with the over indebted that reached to far and cannot tread the financial waters, current or to come. Averages don’t tell the whole story when individuals are all emotional.

#115 45north on 10.27.21 at 8:48 pm

IHCTD9

The entire Canuck re bubble was built on the rock solid faith that housing always, always – goes up. Many folks out there have not lived as adults to see RE falter. When it does, it’s going to feel like Armageddon.

yep

#116 willworkforpickles on 10.27.21 at 8:53 pm

How the desperate and not so desperate see the future of interest rates.

Desperation level… Extreme – Mortgages $1.5 million and up: Interest rates will never rise, we owe too much , that would just kill the countries leading market driving GDP.

Desperation level…Very high – Mortgages $1.00 million plus: Interest rates will go up once or twice to .05 points max and that’s it , no more. They will retract quickly as our economy will not tolerate higher int. rates for long.

Desperation level…High – Mortgages $750.000.00 plus:
Interest rates will go up a point but we will pay enough of the principal down in 5 years we won’t feel the difference.

Desperation level…Moderate – Mortgages $500.000.00 plus: Interest rates will rise 2 points in all over the next 5 years. We will have enough of the principal paid down then to not feel much of a difference.

Desperation level… light – Mortgages $250.000.00 plus:
Interest rates will rise 2 and a half points over the next 5 years. Not drastic enough to do us any real harm.

Desperation level…Nil – Mortgages paid off to near paid off: Interest rates going over 2.5 percent in 5 years will bring recession, but we’re not worried.

Desperation level…Wanting to buy – Buy now or miss the lowest rates ever. Depending on what they wind up paying and then owing…pick a level from above.

Desperation level… Wanting to buy but will wait – Interest rates are going up over the next 5 years to 5% plus for sure.

Then there are the very few who see interest rates historically normalizing to 6% plus over the next 5 years. In spite of recession/s. Keeping the debt monster ever inflating to pay for it all (bare necessities)
We’ll see renamed QE having the reverse effect on rates as debt to GDP ratios unforeseen before in history spiral into oblivion.

….End

#117 Philco on 10.27.21 at 8:58 pm

And NOTHING topped Mexico then. Virtually No one in Cabo but a couple small hotels and a couple small boats.
20 cent beers $1 bowls of tortilla soup.
Beaches empty…. we had a 12 ft zodiac with a dive compressor. Diving all the time, all the lobster you could eat…
Be friended a couple Rich young Yanks with a sweet ass fish boat boat. Hauling in 160-250 marlin drinking Pacifico.
And it all cost NOTHING but a bit of gas.
Boy has the world change and not in a good way far as I’m concerned. That was the benchmark….simple….unspoiled and untold!
I’ve got crazy ass stories I cherish….

#118 Ponzius Pilatus on 10.27.21 at 9:08 pm

#115 45north on 10.27.21 at 8:48 pm
IHCTD9

The entire Canuck re bubble was built on the rock solid faith that housing always, always – goes up. Many folks out there have not lived as adults to see RE falter. When it does, it’s going to feel like Armageddon.

yep
——–
Time to take Doomsday show to the next street corner, boys.
All it takes is a 2×4, and a “The End is nigh” cardboard sign.
A beard and a dirty bed sheet is optional.

#119 Tomás de Torquemada on 10.27.21 at 9:10 pm

The history of deterioration of the canadian dream.

From professional success and relatively good life, education for the kids etc. to no-family, no-kids no- house people, trying to make it though retirement and be proud of it.

So sad.

#120 When Will They Raise Rates? on 10.27.21 at 9:14 pm

So the big immediate news is an abrupt, shocking, unexpected halt to that crazy bond-buying. A cut of 50% was expected. But we got 100%.

Well I’ll be damned, they actually ended QE!

Let’s see if they ever follow through with rate hikes… I expect no moves until the Fed goes first… But looking at the 3 month Tbill, I see no hikes in the fed funds rate any time soon.

Fingers crossed…

#121 When Will They Raise Rates? on 10.27.21 at 9:19 pm

Now let’s see where yields go from here without the BoC’s hand on the scale. Also, any word if they are also letting existing bonds expire or are they rolling them over?

#122 John Frick on 10.27.21 at 9:19 pm

One Liberal ( Kinsella) described Trudeaus new cabinet as a “Go to Hell Canada” move by Justin Trudeau. If that wasn’t so accurate you’d have to make the same conclusion. It’s time for those tightly packed GTA seats to be cancelled . We know how effective a tool it is for Liberals to jam a few million hopeful desperate immigrants into a vote bloc and spoon feed them welfare in exchange for votes . Of course it’s paradise compared to Afghanistan and Somalia, Pakistan, Punjab etc. But do they realize that their short term needs are destroying the country that saved them? There 57 GTA seats that need to be gone. I suggest that every province get the same number of seats and that majority votes not seat numbers make up government. Trudeau is speaking his mind clearly. “ FU Canada”, we need to reform quickly before we lose all.

#123 crowdedelevatorfartz on 10.27.21 at 9:24 pm

@#102 North
“Steven Guilbeault has been appointed Environment Minister.
from the National Post article
Guilbeault was a radical environmentalist who has spent his career trying to shut down the oilsands and derail Canadian energy projects.”

+++

Another appointment from PM Breathless to appease his “wokester” voters…

Give it 12-24 months with hairbrained announcements after hair brained announcements as Freeland nods from the sidelines and the economy spirals down, down down……. and PM Apologizer can do nothing to stop it.

#124 45north on 10.27.21 at 9:29 pm

Steve Saretsky

Saretsky says that real mortgage rates in Canada are negative 2.8%. Somebody is desperate to keep the party going. That somebody doesn’t care about the financial well-being of new buyers. He doesn’t care about anything other than keeping the party going.

https://www.howestreet.com/2021/10/the-complicated-path-forward/

#125 I think about monetary policy on 10.27.21 at 9:47 pm

2022 should a beauty of a year….

– continued high inflation above 4%
– higher interest rates
– higher taxes after the federal budget is released

At least T2 is thinking about our families

#126 Ponzius Pilatus on 10.27.21 at 9:47 pm

#123 crowdedelevatorfartz on 10.27.21 at 9:24 pm
@#102 North
“Steven Guilbeault has been appointed Environment Minister.
from the National Post article
Guilbeault was a radical environmentalist who has spent his career trying to shut down the oilsands and derail Canadian energy projects.”

+++

Another appointment from PM Breathless to appease his “wokester” voters…

Give it 12-24 months with hairbrained announcements after hair brained announcements as Freeland nods from the sidelines and the economy spirals down, down down……. and PM Apologizer can do nothing to stop it.
—————–
Well, excuse me.
But, would a Minister of Environment not have the ENVIRONMENT as his priority?

#127 When Will They Raise Rates? on 10.27.21 at 9:49 pm

#124 45north on 10.27.21 at 9:29 pm

Steve Saretsky

Saretsky says that real mortgage rates in Canada are negative 2.8%. Somebody is desperate to keep the party going. That somebody doesn’t care about the financial well-being of new buyers. He doesn’t care about anything other than keeping the party going.

—————-

Real rates have been negative for quite some time and it has accelerated parabolically this year… The only question is how negative are they really and that all depends on what the real inflation number is and clearly that number is ridiculously understated by the government. So it’s probably much larger negative number than a mere 2.8%

#128 Sail Away on 10.27.21 at 10:44 pm

#110 Philco on 10.27.21 at 8:26 pm

Re: sailing

———

Good times, good stories! After long voyages, we kept our sailboat in Ucluelet for years, mounted downriggers and would sail offshore at night through the kaleidoscope of commercial fishing boats, heave to 25-30 miles offshore, drop halibut lines and go to sleep until first light, when the salmon fishing started. Caught lots of halibut and lings at night but never a salmon.

Sailboat fishing is the most relaxing way to troll. We’d usually heave-to and trim the sails to forereach with cut plug herring flipping 100′ down, then snooze until the rods went off. The big August springs were the best. And the salmon are everywhere out there: get 20-30 miles offshore, cruise from Ucluelet to Tofino with a cut plug 100′ down, and fill as many limits as there are people on the boat, spending most of the time stretched in a berth with a good book or asleep. Then return fully rested with many fish.

#129 TJay on 10.27.21 at 10:45 pm

Is the TFSA annual room limit is indexed to inflation, do you envision a much higher contribution room next year?

#130 Jordan on 10.27.21 at 10:54 pm

Shawn Allen, going by what Richard is stating, even assuming half of he $675,000 in those 3 dividend paying stocks at 4.5% plus half in 5 year GIC’s at 2.5%, he is getting 3.375% income close to $23,000 a year. Maybe with his $60,000 in a short term savings account at 1.25% to 1.5%, close to $24,000 a year.

Richard’s comments with 30 months expenses covered in his emergency, reserve account, this figures out to $2,000 a month*30 months=$60,000 total. Basically, his investments, savings is covering his monthly expenses. Yes, he should has done an impressive job saving, investing, reinvesting with his type of modest paying job.

#131 Drinking on 10.27.21 at 11:34 pm

#98 Drinking More

Yep, been there done that; it is what this country needs!

#132 IHCTD9 on 10.27.21 at 11:42 pm

#119 Tomás de Torquemada on 10.27.21 at 9:10 pm
The history of deterioration of the canadian dream.

From professional success and relatively good life, education for the kids etc. to no-family, no-kids no- house people, trying to make it though retirement and be proud of it.

So sad.
— ————

It didn’t have to be this way. 2015 marked the effective end of the Old Canada, and 2020 rolled out the New. Things are really going to hell now with sockhead’s new activist cabinet. What made Canada great was the promise of hard work = reward. House, car or two, retirement, and a good buffet of services to help you through the tough times. Nothing fancy, but more than enough all things considered.

Today in Trudeau’s brave new world, we are already seeing that winning combination getting pile-drove into the dirt. Houses for the rich/privileged only, comfy retirement for same. Services not much longer if rates rise. Now it looks like our assclown goofball leadership in Ottawa wants to really stick it to the natural resource sector – the business that built Canada.

All the more reason to not pay ‘em if you don’t agree. I’m actually doing that. Let the GTA and GVRD foot the bill. I’ll be fine thanks to getting life up and running in the Old Canada. Youth and newcomers won’t really know what they’re in for till later, but it ain’t gonna be good. Not with the troop of monkeys we have in Ottawa right now.

My advice is find a way to be happy renting, while not saving anything either. Ten years from now, the Trudeau legacy will really start to bear down on all the poor saps still slaving away in Canada to fund my CPP/OAS. Better grab all the OT you can, houses are still a 7 figure proposition, and taxes ain’t going down either homies.

55k average individual incomes, 19 million workers, over 2 Trillion in public debt, over 2 Trillion additional mortgage debt, and a 700k+ nation-wide sfd average with urban shacks shooting past 1.7 million. Sounds like a great place to prosper into the future, eh?

Damn, I’m glad I was blessed enough to have got off and running before Trudeau showed up.

#133 zah on 10.28.21 at 12:06 am

No one is worried about a 2-3 rate hikes over 2 years

seen it and heard it before, things are so fragile that a bad winter with less spending and higher heating cost will lead to a lower GDP and the BOC will be talking about lowering rates and QE will be back on…

#134 Nonplused on 10.28.21 at 12:13 am

#112 Joseph R. on 10.27.21 at 8:39 pm

The issue in Alberta about equalization is the idea that it robs Alberta of truly achieving its potential; that without it, the government in Edmonton would be richer.

that’s how it is sold.

A sales tax will make the provincial government richer, not an abolition of interprovincial equalization.

You can try this equalization simulator from Trevor Tombe, professor of economics at the University of Calgary:

https://financesofthenation.ca/equalization/

——————————————–

Ya, no. The idea is that if Alberta and the other provinces that are excluded from receiving transfer payments received the same per capita federal funding that Quebec and the other provinces that receive it do, they would be better off. And that is mathematically correct. Quebec, however, would be worse off, so it won’t fly. The deal we made when Quebec effectively separated was that she gets the house, the car, half the pension, child support and alimony.

If Alberta were to impose a sales tax, the provincial government coffers would be fuller but the personal coffers of all citizens would be drained by a similar amount. The net per capita gain for Alberta citizens is zero. It cannot make up for the fact that Alberta federal income taxes leave for Ottawa and then don’t come back in an equal amount.

However the transfer payment scheme will go away eventually, with or without referendums that mean nothing practical. If Trudeau succeeds in shutting down the fossil fuel industry, the whole country will be too broke to pay attention, but certainly any transfers that would occur will flow from Ontario and maybe Quebec to the western provinces. That’ll be a cold day in hell when that happens. The very year Quebec has to pay in to the program it will be cancelled and they will finally file for divorce. You can thing of transfer payments as the “confederation tax”. It’s what we pay to make it look like Quebec is still a part of Canada.

#135 reddy on 10.28.21 at 12:15 am

I agree with the blog Garth, but I feel that the gov needs to balance inflation to reduce their debt. We’ve taken on soooo much debt – and the easiest way is to inflation-it-away (IMO). Run-away inflation is terrifying, I can only hope they (the gov) try to keep it in check. For those owning inflation-safe assets, we should hopefully look forward to an increase in appreciation – including but not limited to real estate, metals, & various stocks
ty

#136 Tony on 10.28.21 at 1:00 am

The cure for inflation is higher interest rates. The world needs much higher interest rates like Russia. Anyone with money got wealthy during the Volcker era.

#137 Al on 10.28.21 at 3:11 am

1.5% BOC with 5% inflation… yawn.

#138 6uild 6ack 6eavers on 10.28.21 at 4:24 am

Did someone say control over our movements?

Cost of flights to rise as Rishi Sunak prepares to raise air passenger duty

Exclusive: chancellor to boost green credentials by hitting environmentally damaging long-haul flights

https://www.theguardian.com/politics/2021/oct/22/cost-of-flights-to-rise-as-rishi-sunak-prepares-to-raise-air-passenger-duty

#139 crowdedelevatorfartz on 10.28.21 at 8:19 am

@#126 Pedantic Ponzie’s Penultimate Portfolio Predictions
“But, would a Minister of Environment not have the ENVIRONMENT as his priority?”

+++

No one is debating WHAT the Ministers portfolio is.
Just WHO has been chosen.

A rabid, eco nutbar with delusions of Greta will run smack dab into the cold cruel reality of the unemployed.

When it environment vs economy ….the voters want economy created jobs every time.
It’s hard to be an environmentalist on an empty stomach…

I can’t wait to hear the naïve drivel spewing forth from the latest in a long line of Trudeau appointed “Utopians”.
12 months? 18 months before the next election?

#140 crowdedelevatorfartz on 10.28.21 at 8:28 am

@# John Frick

“It’s time for those tightly packed GTA seats to be cancelled . ”

++++

Nah .
We need the “Debt Clock” back .

https://www.debt.ca/debt-clock

Displayed in the Urban centers of Canada where the Lib votes are the strongest.

The Debt Clock touring the major cities across Canada clicking above One TRILLION Dollars with an explanation to everyone how this with affect taxes and expenses for generations.

Rent some floor space in a busy downtown address in each major City where the Libs get votes.
Leave it there for 3 months , then relocate it to another busy part of the same city .

Liberal voters won’t be able to deny what they elected after that.

#141 Dharma Bum on 10.28.21 at 8:29 am

So what’s next?

House prices in Toronto will be UP yet again, come May 2022.

Equity prices will continue to rise steadily into the future.

You see, it really doesn’t matter if inflation is up or down, or if interest rates are up or down, or if the Liberals win or lose, or if there are pandemics, or if unemployment is high or low, or if the supply chain is broken or fixed, or if energy prices are high or low, or who’s on first.

In the long run, your house will be worth more and your liquid assets (stocks, bonds, ETFs, etc.) will be worth more.

Time is your only friend.

Buy when you’re young, hold on, ignore all news, and watch the magic happen.

The decades whip by in a matter of minutes, seems like.

#142 crowdedelevatorfartz on 10.28.21 at 8:31 am

Hmmm
China’s foreign policy comes to slap down Canadian politicians?

https://nationalpost.com/news/politics/chinese-canadian-tories-urge-otoole-to-resign-saying-tough-on-china-platform-alienated-voters

#143 Cici on 10.28.21 at 8:32 am

#105 Richard

Holy wow, that is some kind of success story! I’m thinking you should publish the full version… it should be called: “The Wealthy Dishwasher” (should knock both versions of The Wealthy Barber” right off the shelves).

You had some luck, and a bit of help from a really great friend, but your hard work and savvy were the true key to your success. Just WoW, and good for you friend!

#144 Sunny Daze on 10.28.21 at 9:32 am

Long end inverts. On nobody’s bingo card. Live long enough they say….

It’s a great day to be outdoors. Stay balance stay safe!

#145 crowdedelevatorfartz on 10.28.21 at 9:39 am

@#105 Richard
Yep
I have to agree with #143 Cici .
Well done.
Your financial discipline has literally paid off.
I work with people that make $100,000+ per year for decades and they have no money in the bank, beater cars, they rent, and retirement is staring them in the face in 5 years or less.
Doomed to work until they die.

You have done well.

#146 Sail Away on 10.28.21 at 10:10 am

TSLA. Holy. Factories around the world. Top selling EV worldwide. Consistently profitable. 40% stock jump in last month. Awesome CEO.

Sorry, Elon haters, but this question is settled.

#147 RE_Investor on 10.28.21 at 10:51 am

#146 Sail Away on 10.28.21 at 10:10 am

Congrats on your TSLA investment. EVs for the win! This company and Elon are true disruptors. Doesn’t matter if he got tons of govt support. Wise man for getting it done!

#148 Regina Fast on 10.28.21 at 11:02 am

Chomsky is a leftist God. You could sell his used toilet paper to the leftist extreme. If you were wondering where the hate speech memes promoting the annihilation of non-compliant Canadians originated and are exactly like the same Nazis who saw the murder of gays, the disabled, gypsy rovers etc etc….oh right….the Jewish people…as good and right, the hate originates inside the stinking straightjacket fart bubble of the closely knit leftist academia turds aka, Laurentian Elite….like Chomsky and everyone who agrees with the likes of him.

https://nationalpost.com/news/world/noam-chomsky-says-the-unvaccinated-should-just-remove-themselves-from-society

I’d be proud to wear a yellow star if it dulugferentiates me from turds like Noam Chomsky.

#149 Quintilian on 10.28.21 at 11:11 am

#141 Dharma Bum
“Time is your only friend.

Buy when you’re young, hold on, ignore all news, and watch the magic happen.”

Thoughtless and hollow syllogism.
Do the math.

Assuming that interest rates never go up, and prices continue to increase, as they must to make buying a good investment, at what point does it become a white elephant most people cannot afford?

No customers, no construction, no spin off jobs.
The crash is baked in

#150 Charity on 10.28.21 at 11:39 am

Hey Garth
There is lots of talk about commuting group pensions. Can you do a blog topic on commuting a let’s say $300,000 valued pension right now? Let’s say the lira portion is $140,000.
How does it make a difference if you did it at this exact moment compared to say in two years after 8 quarter point raises in interest rates. I think a Ryan saturday breakdown would be awesome! People may be more inclined to understand the difference?
Thanks for all you do.

#151 millmech on 10.28.21 at 11:54 am

All you need to get ahead in Vancouver is a 40k income, if this guy can do it anyone can!
https://biv.com/article/2021/10/man-making-40kyear-bought-32m-vancouver-real-estate-ccp-linked-offshore-accounts?amp

#152 Jesse on 10.28.21 at 12:15 pm

And yet wages remain stable… how is that goof for the economy?

#153 Philco on 10.28.21 at 12:15 pm

Missing lot here cause i got a life lol.
A quick tea in the hot tub and back to making moola.

Thx Sailo ya cool! Sail trollings the best! Halibut $25lb now. Saw a sockey at Costco was $50. Wow only the wealthy will be eatong Steak and seafood.

Ok the debait on the housing.
A correction or sofening only I think.
5 years ago here I said get in now cause i think we are going to launch.
So look south in the 2009 crash and I warned 6 months prior and was laughed at. Some family down there lost their homes.
It was a real bubble and Bob Black warned of it, the FBI ignored warnings of corruption.
If you could fog a mirror you could get a mortagage.
Homless no problem step right up.
Bank appraiser were jackin up numbers to cover the down. Realators were loving it, the party was on and no one wanted to remove the punch bowl. No lending standards…Unprecedented stuff.
Then the subprime and ponzi scheme showed its ugly head. Very soon people found themselves inverted. Then the stockmarket was mashed to boot.
Sand states RE lost 50%.

We are no where near that. Defaults are at near zero. We have high unreported inflation and some increases are justified. Localized..not overpriced here just at building cost plus a profit.
We have lending standards. ​Old fluffs are handing out dough to their kids. A housing shortage coupled will a resurgence of immigration…
​The economy is expanding and unless the stockmarket crashes wich is highly unlikely. There will be no housing collapse in my view and if there was Id surely buy more.

#154 KLNR on 10.28.21 at 12:17 pm

@#118 Ponzius Pilatus on 10.27.21 at 9:08 pm
#115 45north on 10.27.21 at 8:48 pm
IHCTD9

The entire Canuck re bubble was built on the rock solid faith that housing always, always – goes up. Many folks out there have not lived as adults to see RE falter. When it does, it’s going to feel like Armageddon.

yep
——–
Time to take Doomsday show to the next street corner, boys.
All it takes is a 2×4, and a “The End is nigh” cardboard sign.
A beard and a dirty bed sheet is optional.

lmao

#155 IHCTD9 on 10.28.21 at 12:23 pm

#142 crowdedelevatorfartz on 10.28.21 at 8:31 am
Hmmm
China’s foreign policy comes to slap down Canadian politicians?

https://nationalpost.com/news/politics/chinese-canadian-tories-urge-otoole-to-resign-saying-tough-on-china-platform-alienated-voters
____

Gotta wonder. The CCCA has no website, 3 employees, and a small side street office rental. No real info on the web to be found other than this latest story. Can’t see their Facebook without logging in.

#156 Michael in-north-york on 10.28.21 at 1:16 pm

#122 John Frick on 10.27.21 at 9:19 pm

We know how effective a tool it is for Liberals to jam a few million hopeful desperate immigrants into a vote bloc and spoon feed them welfare in exchange for votes . Of course it’s paradise compared to Afghanistan and Somalia, Pakistan, Punjab etc.
===

That’s a massive overstatement. Many immigrants, including those from the places you mentioned, have jobs and pay quite a bit in taxes. Middle-aged and older immigrants who settled in the suburban parts of GTA often vote for the Cons; they don’t have much trust in the government and prefer to pay less in taxes, rather than have more government handouts that may or may not reach them.

Remember that Canada gets relatively few refugee immigrants; a lot of immigrants are pre-selected based on qualifications.

GTAs left-leaning voters are mostly younger adults, of all ethnic backgrounds but either Canadian-born or Canadian-educated.

#157 Philco on 10.28.21 at 6:34 pm

Two days ago T2 gave his top two priorities for the third Socks Dynasty. First, the climate emergency. Second, reconciliation.
————–
2 ridiculous and virtue signaling ideals.
1) Go get China to shut down coal burning 1st amoung 50 other things.

2) The amount of money pissed down for the drain on water issues for the Natives and many more. Put it this way in a few short years they will immigrate more people into Kanada than there are natives.

Sock the ass kissing fool.
With a ridiculous audit thrust on me I officially DESPISE the government.
Good Night!