The pendulum

A frequent lament from the wrinklies posting here is that their bank accounts and GICs no longer pay 8%. Or even half that. So a whole generation of people who lived off interest, never took an investment risk, and are running out of income, are pissed.

Let’s talk about interest. What is it?

Interest is rent. You rent money in order to use it, or rent money out to someone else. Thus we pay or earn interest, as borrower or lender. Most Boomers grew up during go-go years of economic growth, inflation and high rates. The first mortgage Dorothy and I had in the mid-70s was 12%. We were thrilled, since home loans had just declined from 14%. In fact, mortgages went on to pass 21% in 1981. Banks even stopped loaning five-year money. Things got totally out of control.

Canada Savings Bonds (they no longer exist) paid 19% interest. In 1981 the Bank of Canada rate was spiking past 18%. Savings accounts returned 13%. Inflation was 12.5%. It was a joyous time to have money. An ugly time to rent it. But the astonishing cost of funds (interest) kept home prices low, since mortgage payments were crippling for everyone. In fact, the housing market collapsed and desperation was visited upon those with mortgages.

At the time I was a hairy, young, crusading tabloid newspaper editor and daily columnist. In a media conference I challenged then-Bank of Canada governor Gerald Bouey about the spiralling central bank rate. “How do you justify this?” I stood and asked. He turned red and called me a troublemaker. It was briefly scandalous. It was also motivating.

  In September of that year I used my column to motivate folks, urging them to take the message of destructive mortgage lending directly to Parliament Hill. I grandly named it ‘The Convoy of Anger.’ This is how the wire service, United Press International, reported it:

TORONTO — A convoy of buses, fueled with the energy of irate homeowners facing high mortgage renewal rates, left Toronto today for a planned confrontation with members of Parliament. Many homeowners had taken a day off work, losing pay to take their protest personally to the nation’s capital and Prime Minister Pierre Trudeau.

‘If I lose my home, one’s day pay isn’t going to make any difference,’ said Fernie Brunetti, a steelworker from Mississauga, Ont., as he prepared along with several hundred others to board a convoy of buses. ‘If rates keep going like they are, then I’m going to lose my home anyway. There’s no way I can keep up,’ said Brunetti, who was carrying a petition with 300 names on it from residents in his area who shared his anger over rising rates…

On hand to see the convoy off was Conservative MP David Crombie, a former mayor of Toronto, who told reporters he expected the protest would have impact on a meeting today of the Liberal caucus. “I have had discussions with some members of the caucus. I have the feeling they know what is going on. Even if the cabinet doesn’t know, many of the Liberal MPS do.’

After scheduled stops in the Ontario communities of Richmond Hill, Newmarket, Pickering, Oshawa, Midland, Peterborough, Niagara Falls, London and Woodstock, the buses were to stop in Carleton Place, 40 minutes from the capital, before converging on Parliament Hill.

Prime Minister Pierre Trudeau had a caucus meeting scheduled for today and it was not known whether he would meet with the protesters. Federal Housing Minister Paul Cosgrove was expected to meet the group, as was Conservative leader Joe Clark and Hamilton New Democratic Party MP Ian Deans.

More than 1,000 bus seats had been reserved for the trip to Ottawa by late Monday and Garth Turner, business editor of the Toronto Sun, said it was impossible to predict how many demonstrators would join the protest.

‘The buses leaving from Toronto are only half the convoy,’ he said. ‘There are three rally points and the protest will be growing into a convoy before we get to Ottawa.’ Turner said the cavalcade was to be joined on Parliament Hill by buses from New Brunswick and Quebec and by the mayor of Saint John, N.B., who had planned to fly to Ottawa. Turner said the response to the Sun-inspired protest had been ‘phenomenal.’ Plans for the convoy were announced Aug. 31, when about 1,000 angry homeowners attended a rally to voice their complaints about high mortgage rates.

Well, you can see I’ve been a pain in the ass for the past forty years. However on this day in 1981 I met with the federal housing minister (Paul Cosgrove) after rabble-rousing on the front steps of Parliament, and the federal government declared a foreclosure moratorium. The banks were told that nobody was to lose their home when facing a renewal at those insane rates. A year later they had started to topple.

This little jaunt into history is to remind the kiddos what interest means, and does. For the last 25 years inflation’s been subdued and the cost of money has steadily decreased. The 2008-9 credit crisis then the 2020 pandemic crushed rates to new levels as CBs struggled to keep the economy alive. Home loans at less than 2% were directly responsible for regular houses in the GTA and YVR flying to $2 million with seven-figure averages common in the burbs and hick hinterland cities. They’ve given us $1.8 trillion in collective mortgage borrowings, and debt-to-income ratios of 500% in the big cities. Now it takes 27 years of savings for a couple with a $200,000 income to cobble together a down payment. We don’t have a payment crisis now. Instead it’s a housing disaster.

Well, the pendulum is about to swing. Nah, mortgages won’t be twenty per cent again. But they’ll double from today’s level. Maybe triple. Real estate will respond. The wrinklies may see 5% GICs again in their lifetime, and a lot of people who borrowed from the future will be shocked when it arrives.

But you’ll survive.

About the picture: “Hi Garth,” writes Kerri,  “this is my buddy – a 6yr old Bouvier des Flanders, Lincoln. An absolute gentle giant. My shadow. 32” at the shoulders 145lbs. Long time reader. Thanks for everything you do.”

108 comments ↓

#1 Prince Polo on 11.21.21 at 2:35 pm

The next housing-inspired convoy to Ottawa will probably end in Fuddle Duddle Jr agreeing to take over all payments for underwater mortgage holders!

#2 SW on 11.21.21 at 2:44 pm

#13 the Jaguar on 11.20.21 at 10:48 am
“Full page add taken out by donors of the WE charity in today’s NP. What appears to be a ‘plea to the CBC’ to kill a story the Fifth Estate is about to broadcast. Incredible…”

Interesting. So…how does all this benefit someone enough to fool around like this? What’s the motivation? Could it be that there’s some kind of money laundering aspect to all this? Say it ain’t so!

Let’s say a rich person gives money to a charity or foundation and gets a tax receipt. The money, including a decent top up from a plausible organisation (perhaps a government), goes off to some place with very loose accounting rules (to say the least). Some is creamed off by local administrators and contractors, some is used to build a few fig leaves, and some more gets fed back to the donors as consulting fees, salaries, property and so on. Surely not?

I’m not saying all donors are doing this. Just that it is suspiciously like we need an audit and public inquiry into this business. I will be asking my MP to press for this.

This, Conservatives, is why we need you to get your nutjobs under control so you can appear to be a potential government.

#3 Linda on 11.21.21 at 2:51 pm

Gorgeous Bouvier!

Todays column makes me wonder how demographics affect interest rates. While the wrinklies are dying off, for now there are more joining the group than leaving it. Yes, the Millennials now are the largest cohort, but just like everyone else they are getting older. Does an aging population affect rates & if so, what is the balance point or tipping point regarding percentage of aged in the population vis a vis interest rates?

#4 Dave on 11.21.21 at 2:53 pm

If Interest rate go UP won’t crystia freeland’s (Tax Land) extreme spending and deficit blow up the Fed’s finances, or will they just print more money to fund the debt. Causing the Canadian dollar to go the way of the Peso. $1000 bills will be the new looney.

#5 Dolce Vita on 11.21.21 at 3:02 pm

…ahhh the good ‘ole days.

Garth:

Never, say never on inflation and rates.

If anything we have learned during this pandemic over the past 2 years is this:

Expect the unexpected.

—————-

You had me flashing back the whole time reading the Blog today. Nicely written My Liege, indeed.

#6 crowdedelevatorfartz on 11.21.21 at 3:03 pm

Ahhh rising interest rates.
The old Chinese curse comes to mind.
May you live in “interesting” times…..

A co worker owns one of those Bouvier Beasts.
Eats like lion.
Craps like a whale.
Doesn’t like strangers.

#7 Dogman01 on 11.21.21 at 3:05 pm

It occurs to me what is different today.

Governments have enormous debt and plan on racking up more.
Home buyers have also racked up enormous debt.

So perhaps on this occasion the interest of the massively indebted Home buyer and the massively indebted government is one and the same, …keep interest rates very low for as long as possible.

Call Inflation “TRANSITORY” , strive to downplay the real rate with official statistics manipulation. Blame it on the “rain” in BC, the supply chain crisis, Climate Change, Murder Hornets….whatever.
Extend and Pretend.

#8 DON on 11.21.21 at 3:06 pm

Nice Garth. A man of principle.
Much Respect.

About the pic.
I’m sure a gentle giant but Holy Dog. What size is the feeding bowl. Beautiful Dog.

#9 ogdoad on 11.21.21 at 3:07 pm

My grandfather used to teach me the ins and outs of interest when I was a kid. He had 7% GIC’s that were staggered in maturity and would provide his income stream during retirement (which was early) – never depleting the principal. That, was important…

So much so as learning to live within your means…ignore the noise and the rest is quality…

Enjoy your Sunday.

Og

#10 the Jaguar on 11.21.21 at 3:10 pm

My goodness. Appears a few chairs and heads got broken last night in the bar fight. Chin up CEF. There are still some who value loyalty and a sense of humour.

I remember 1981. I was packing my bags for Toronto. Garth what’s that peeking over your shoulder behind your left ear? Did you have a mullet in those days? Of course what followed 1981 wasn’t very pleasant, especially for the province I live in.

‘Within two years, mirroring trends elsewhere in the country, unemployment in the province rose from 4 to 10 per cent. For the first time in more than a decade, Alberta had more people leaving the province than coming in. The province led the nation in housing foreclosures, bankruptcies and suicides.’ (CBC article).

Everyone knows what ‘jingle mail’ means. Of course unlike Alberta, neither of the places where current housing price escalation has occurred are ‘non recourse’ provinces. It would unfold in a different way.

Well, speaking of packing bags, I better get busy doing that for my upcoming beach vacation and trip to Ontario. The usual struggle about how many bathing suits to pack begins. Maybe a little packing music will help. What a great time to be alive.

https://www.youtube.com/watch?v=ToxC1c2nhgw

#11 JSS on 11.21.21 at 3:13 pm

If and when interest rates do rise, enough that housing prices begin to drop noticeably, causing panic among banks and government, then banks can increase the length of amortization to keep the party going. I do recall 40 year long amortization periods for housing around a decade ago (?).

#12 The West on 11.21.21 at 3:16 pm

It never repeats…but it rhymes.

Solid entry today!

#13 UTS Parent on 11.21.21 at 3:19 pm

Man, did you go from being University of Toronto Schools alumni to an employee of Toronto Sun? Has your life been really messed up all the time? Was the Toronto Sun a different organization back then?

In the 1980s Sun Media was a force. And it was a blast to work there. Moreover, if the goal is to help average folks with words, then write what they read. – Garth

#14 Dogman01 on 11.21.21 at 3:19 pm

#2 SW on 11.21.21 at 2:44 pm

https://www.cbc.ca/news/editorsblog/editors-blog-we-charity-investigation-behind-the-scenes-1.6256936

I recall in 2016 when my organization had to ensure mandatory viewing for over 100,000 K-12 students to the “WE Day Programming”.

As I was monitoring bandwidth I got to view the content. A progressive agenda of left wing ideology delivered by various “celebrities” tailored for the young and malleable.

It was just so much like Komsomol, or other such organizations getting at them when they are young. As we know when you are young “Tomorrow belongs to me!”
https://www.youtube.com/watch?v=SDuHXTG3uyY

No wonder Trudeau supported them, the left hand washes the right.

#15 rk n usa on 11.21.21 at 3:26 pm

Re: after rabble-rousing on the front steps of Parliament, and the federal government declared a foreclosure moratorium. The banks were told that nobody was to lose their home when facing a renewal at those insane rates.

I hope you do not advocate a moratorium on foreclosures if rates creep up today

#16 Joe on 11.21.21 at 3:27 pm

If they purchased real estate they would’ve seen extreme return in their home so that more than makes up for savings account interest rate being 0 (although you can get 2% at Tangerine).

#17 rk n usa on 11.21.21 at 3:31 pm

#10 the Jaguar

re: Everyone knows what ‘jingle mail’ means. Of course unlike Alberta, neither of the places where current housing price escalation has occurred are ‘non recourse’ provinces. It would unfold in a different way.

the only difference would be declaring bankruptcy vs leaving the keys on the table, if you have no assets you simply walk too (after declaring bankruptcy) in a recourse province which I am sure is the case for many recent house poor home buyers

#18 Dave from St.Thomas on 11.21.21 at 3:31 pm

Hi Garth.

Thanks for the reminders!

We bought our first house in the early 1980’s, possibly ’82 or ’83…a 2 bedroom bungalow in the country on a huge lot, north of London, for $32,000…interest rate was a whopping 14.75%….late 80’s, moved next door to a much larger house for an extra 10K, but the interest rate had dropped to between 11-12%…

We thought we’d died and gone to Heaven with the lower rate, payments were just about the same!

We cashed in some of those Canada Savings Bonds, and at the time were rewarded with a 17% interest payment….

Time to stop….my eyes are watering already at the thought!……

#19 Cowtown Cowboy on 11.21.21 at 3:32 pm

Wow, more rain on the way for BC, I don’t know why they don’t just have a conference and limit the amount of rain that is allowed to fall on???

#20 David McDonald on 11.21.21 at 3:46 pm

I was on the hill at Garth’s rally protesting the inhumaine foreclosure policy of the banks. The policy of decimation was originally the punishment of rebellious Roman legions; one soldier in ten was executed. The modern version was one homeowner in ten; i.e. those unlucky homeowners whose mortgage came due during that period of exceptionally high interest rates imposed by the Fed to stifle inflation.
I managed to get a one year commercial loan at 20% to bridge that horrible period. Rates dropped to manageable levels in that time. Many were not as fortunate. I saw husbands looking grim and wives weeping in mortgage brokers’ offices when they couldn’t qualify for a mortgage renewal. That meant selling the family home in a severely depressed market. It was cruel and unnecessary given rates normalized so quickly.

#21 Warren-the-lagging_indicator on 11.21.21 at 3:51 pm

DELETED (Anti-vax)

#22 mike from mtl on 11.21.21 at 3:54 pm

By the same token, knee-jerk sky-high rates of the late 70s early 80s were also a complete fluke. The BoC has changed their rate scheme (e.g. no fixed, float 25bps above 3mo) a few times since the dirty 30s.

Boomers love that canard, which was a unique time and perfect position for the coming 3 decade falling rate environment. Hardly anyone still living with memory of mortgages in say 1948.

Plus we’ve just kept papering over the GFC and now Corona – yeah we will never see 5% in our lifetimes. A bit more than today probably yes but nowhere near as drastic.

Given what the kiddos have done to house prices in the past 5 or 7 years, mortgages at 6% would be ‘drastic’ and life-altering. How can you not see that? – Garth

#23 espressobob on 11.21.21 at 4:10 pm

That little paper that grew. I remember those times well. Actually a friend of mine worked there and gave me the grand tour including the photo room with infinity corners for the sunshine girls.

Humble beginnings usually lead to greater things. No shame in that.

Most of Us evolve sort of?

#24 mike from mtl on 11.21.21 at 4:16 pm

Given what the kiddos have done to house prices in the past 5 or 7 years, mortgages at 6% would be ‘drastic’ and life-altering. How can you not see that? – Garth
//////////////////////////////////////////////////////////

Yes absolutely, many would be put underwater quickly.

Should clarify I meant BoC overnight rate of 5% which as you know has a lot of trickledown effects.

#25 TurnerNation on 11.21.21 at 4:18 pm

Found some Slanty Semis in the wild. The slant is a design feature. Note the CN Tower tip in top right.

https://goo.gl/maps/zd2goECp7pvnYZUs5



@Dolce you probably don’t want to read this new study.

https://www.ahajournals.org/doi/10.1161/circ.144.suppl_1.10712

Or this report:
https://www.thecardiologyadvisor.com/home/topics/acs/acute-coronary-syndrome-acs-biomarkers-mrna-covid19-vaccine/

—–
— World update. We are SO Close to being normal – in the Former First World Counties!

.UK must be ready to impose Covid restrictions this winter, expert warns (theguardian.com)

.Europe is learning a crucial lesson — vaccines work, but they alone won’t stop Covid now (cnn.com)

.Unrest Is Spreading in Europe as Coronavirus Lockdowns Return (bloomberg.com)


— Looks like the globalists are fast working to take out Western Canada. Natural causes you know.

.Toronto Star – If and when a permafrost slump reaches the Alaska Highway, many of the Yukon’s northern communities will be cut off from Whitehorse, as will that city’s only connection to neighbouring Alaska.

#26 Quintilian on 11.21.21 at 4:20 pm

JSS on 11.21.21 at 3:13 pm:

“I do recall 40 year long amortization periods for housing around a decade ago (?)”

I like reminding the blog , that was the work of the Cons.

Although, the Liberals and NDP would have done the same.

Those amortizations were available for little more than one year. A mistake, but a nothingburger. – Garth

#27 Ponzius Pilatus on 11.21.21 at 4:24 pm

Well, the pendulum is about to swing. Nah, mortgages won’t be twenty per cent again. But they’ll double from today’s level. Maybe triple. Real estate will respond. The wrinklies may see 5% GICs again in their lifetime, and a lot of people who borrowed from the future will be shocked when it arrives.

But you’ll survive.
———————
I agree.
I remember paying about 20% on my mortgage in the early 80s.
But it’s not something that makes me wake up in the middle of the night, screaming.
But CEF’s posts do that to me.

#28 Bezengy on 11.21.21 at 4:25 pm

The pendulum certainly does swing both ways, and once it changes direction it has long way to swing back with respect to housing. It reaches full momentum at the half way point but swings a lot further. Actually I would liken it to a wreaking ball.

#29 crowdedelevatorfartz on 11.21.21 at 4:32 pm

@#13 Dogman

https://www.cbc.ca/news/editorsblog/editors-blog-we-charity-investigation-behind-the-scenes-1.6256936

My my my.
Hell hath no fury like a WE Charity scorned.

#30 Flop… on 11.21.21 at 4:32 pm

Like all my posts, no one asked for a follow-up but I’ll do it anyway, because I like to annoy myself.

So, when I went to the gas station yesterday, to fill the jerry can, I was told by the cashier that there was no limits despite seeing all the posted signs and partial closures on the news.

I didn’t even take my vehicle, I’ve only got half a tank at the moment, that’s good enough for 3 or 4 days probably, the other reason I went was to escort my elderly father in law and to make sure his tank was topped off as he’s got a few important medical appointments coming up and I can’t escort him like I used to, as I don’t have any accrued vacation time to take off from my new job.

There was 2 or 3 cars lined up at each petrol bowser, nothing crazy but things are just starting to unfold.

I saw an announcement the other day about one of the gas stations shutting on the Westside,because condos are more important, and starting was to remember why I don’t miss some of the problems on the moneyed side of town.

I’ve documented on here that every since I arrived here pretty much certain items on the Westside are getting more of a pain in the bum to acquire.

Closures of Hardware stores, Equipment rental, Mechanics, Gas Stations and the like, meant that it was heading towards having everything you needed before heading over to where the tall hedges grow to keep the riff-raff out.

The latest gas station on the Westside, where the land value outweighs the value of slowly ripping people off on gas is the Esso at 16th Ave.

According to google maps if we eliminate that one there is 7 west of Granville, the Chevron at McDonald and even the Shell at 41st and Dunbar could go in the next few years.New condominiums slated to be built across from this location in the next year or so.

If they go, there’s only 2 gas stations left west of Arbutus.

To my knowledge, only one gas station remains downtown, so before all this gas shortage kicked off, there was already a bunch of people driving around just to fill up.

To put that dwindling number of gas stations downtown and on the Westside into context, on the Eastside where people still talk to each other, the number of gas stations once again according to google maps is nudging 30.

I’ve lived here for close to 20 years, I’ve never been to half of the gas stations on the Eastside, no need to, as I wrote yesterday I can walk to 3 stations from my house in less than 15 minutes.

Places to grab a cold beer have been dwindling in my hood, I’ll gladly swap one of our excess gas stations for a cool place to grab a pint.

Maybe I’ll even take a clean jerry can to the pub and ask them to put beer in it for the walk home…

M47BC

#31 crowdedelevatorfartz on 11.21.21 at 4:38 pm

@#26 Posttraumatic Ponzies’ pithy protestations

” But it’s not something that makes me wake up in the middle of the night, screaming.
But CEF’s posts do that to me.”

+++

Glad I could help.

#32 OK, Doomer on 11.21.21 at 4:45 pm

One thing Mills don’t realize is that the 24% interest rates on credit cards were a direct result of the sky-high interest rates in the early 80’s. Before that, credit card rates were a bit above prime, but not massively.

When interest rates spiked in the early 80’s credit card rates spiked also, but they never came down. they just stuck there.

So the question is:

“What would house payments be if you had to put them on your credit card?”

Think about that one a bit Mills. That was the Boomer’s life. Still think all Boomers were luck sacks?

#33 NOSTRADAMUS on 11.21.21 at 4:48 pm

“BEWARE THE IDES OF NOVEMBER AT YOUR PERIL.”
Over the past six months I have submitted 25+ articles with the sign off comment, “Beware the Ides Of November At Your Peril.” Well the Ides Of November are upon us, below you will find 10 points that I feel support my prophecy with accuracy.
(!) Covid has reared its ugly head with a vengeance, it is now spreading world wide.
(2) China’s Evergrande, the largest Real Estate conglomerate in history is now in the process of declaring bankruptcy. The tentacles of this destruction will spread worldwide.
(3) Interest rates are on the rise, for the overindebted speculators, say hello to your own personal hell.
(4) The withdrawal of Liquidity, it will become harder, if not impossible for the overindebted to roll over their debt. Black Friday sales will be every day sales.
(5) The residential Real Estate has topped out and the prices in all markets are in decline. The Real Estate cartel and their well paid media allies are in full denial.(6) Commercial Real Estate is on its Death Bed. The bricks and mortar shopping malls are closing in record numbers. Downtown Ontario is starting to resemble Detroit City with see through shop windows everywhere.
(7) Mortgage fraud is rampant. The epicenter will turn out to be, Big Rock Candy Mountain just a little north of Toronto the good.
(8) The social fabric is broken as evidenced by 4 million people electing to not go back to work. I suggest they are tired of being taxed to death in order to support the unbelievable social program they have no say in.
(9) The Police have been told to stand down by their political overlords, which has disrupted the lives of the Wee Little People, blockades, sit ins, on and on we go.
(10) The stock market, which has defied all financial logic, is finally rolling over. The Wee Little People who came to the party late, along with their dreams, will be crushed in the stampede for the exists.
(11) Charities, you know, the ones that make you feel really good are all struggling big time The tell, even the well fed C.E.O’s are at their wits end and begging for more coin .
(12) Speculation, Crypto currencies. Wall Street buy backs, etc. are all beyond earthly reason.
(13) Trustees and lawyers specializing in bankruptcy are hiring like crazy, getting ready for the flood of insolvencies coming down the pipe.
(14) Pension funds are under water on their future commitments. They too have gone all in on the stock market. Not the place to be for the Wee Little People.
(15) The Back Breaker, “PEOPLE HAVE BECOME RISK ADVERSE” They are hunkering down, not spending. When the herd hunkers down, you know the game is up, Not even, all the cattle prodders in the world will turn this herd around. Like a broken record, caught in a groove, I repeated the same old message, None are so deaf as those who will not hear. Amen Brother

#34 Wrk.dover on 11.21.21 at 5:00 pm

I remember 1981 fondly! Summer wedding.

Moved into our new 900sq ft. build 11/11/81, on LOC awaiting dept. of housing mortgage. Also had a different payment every 7 days on land, van, business building also under construction, engagement ring.

December and January interest alone exceeded our combined monthly net! Building supply store collection departments phoned regularly, we had paid them 90 cents on the dollar already, but they were in deeper trouble than us.

Then we got the 11% open 25yr mortgage.

By September 1982, never had to kite another cheque ever again.

June 1983, I took six months off to build the massive garage, almost all pre-paid. That was when I could do twenty one handed pushups, either hand and would do both to just prove it for beer. By July 1987 we became debt free for life.

I’d like a turn collecting interest from young men now, they are too limp to pay it though.

#35 Wrk.dover on 11.21.21 at 5:01 pm

Bank of Mom hadn’t been invented either.

#36 Ponzius Pilatus on 11.21.21 at 5:10 pm

92 IHTCD9

Some great footage of the damage in BC, and some video from a few months back when he was visiting and half the province was on fire. Big extremes in a short period of time.

It’s going to be a scary big bill to fix all those roads and bridges…
—————
taxes will be going up for sure. Richmond dodged the bullet, as the Sumas dike breeched first. That would have been a real disaster, shutting down YVR. Avg. Cost of house in Richmond is 2.3 Mill.
Talking about cost of infrastructure.
Watched Fareed Zakaria reporting on the failing infrastructure in the US.
And why the need for infrastructure spending is now more important than ever, to sustain our standard of living.
In the 50’s and 60’s , 1.3% of the federal spending went towards infrastructure. By 2019 is was down to 0.2%.
I’m pretty sure, Canada’s numbers follow a similar trend.
As the car mechanic in an old commercial said “you can pay me now, or you can pay me later”.
Same goes for infrastructure and your house.
Any repair or upgrade will cost you more the longer you neglect it. I’m sure CEF could tell you stories.
BTW, Richmond City Councel just approved a budget to increase the height of the Dike by 1 meter in the next 20 years.
Climate change, here we come.
 

#37 espressobob on 11.21.21 at 5:11 pm

#32 NOSTRADAMUS

These are the end times of civilization?

So much the better for contrarians.

This never gets old.

#38 BC is Drowning! on 11.21.21 at 5:21 pm

Tuesday will be a total catastrophe, with a huge spike in supply chain shortages and inflation from west to east.

https://bc.ctvnews.ca/another-atmospheric-river-expected-to-hit-b-c-as-province-deals-with-flooding-from-1st-1.5675183

#39 Hans on 11.21.21 at 5:28 pm

It should be noted that inflation hit 10% in the early 80s as well. So GIC and mortgage rates take on a different appearance when considering inflation at the time. Even if you were a wrinkly making 10%+ in interest on your savings, prices were also popping so it wasn’t helping you get ahead.

On a different note – with CPI hovering around 5% – housing, cars, fuel, hydro, food are all inflating at a rate north of 5%… so what’s bringing the average down? Is there something in the basket that’s decreasing in price? I can’t think of anything that’s getting cheaper.

#40 Vidal Sassoon on 11.21.21 at 5:30 pm

Does Garth have any chest hair?

Seems all available follicles got used up above the neck.

Total rug. – Garth

#41 AM in MN on 11.21.21 at 5:31 pm

Garth,

You make the ’70’s. early ’80’s interest rates look like getting hit with some natural disaster, as opposed to the man made decision by Western Central Banks to print money once off the gold standard.

These things go in cycles. This one won’t be as bad because of the demand destruction inherent in aging demographics. But it’s still going to bad as the velocity of money already printed runs higher, aided by the fact that THEY’RE STILL PRINTING!

Will there ever be a tightening cycle like Paul Volker or John Crow?

#42 crowdedelevatorfartz on 11.21.21 at 5:36 pm

The Fifth Estate’s We Charity broadcast if you missed it.

https://www.cbc.ca/news/canada/we-charity-misled-donors-records-show-1.6251985

Quite an eye opener.

I wonder if Trudeau’s family are still on the payroll.

#43 Doug t on 11.21.21 at 5:40 pm

Lol this is for the millennials and snowflakes straight from Kid Rock

https://youtu.be/agvibm7Wqy4

#44 Bezengy on 11.21.21 at 5:48 pm

#38 Hans on 11.21.21 at 5:28 pm

I can’t think of anything that’s getting cheaper.

————–

you’re reading it….adjusted for inflation or course!

#45 Common Sense on 11.21.21 at 5:54 pm

Ever see investment bankers at a strip club after year end bonus time? Well, that or a Porsche dealership… but the stop club is more interesting. Stacks of bills flying off as the happy hand slaps it. That will be our PM when he needs to solve the housing crisis to keep votes as the vast majority of Canadians are homeowners. Despite the fact governments don’t controlling interest rates, don’t under estimate our PMs ability to interfere with the housing market.

Sucks to be anyone other than a wrinkly selling the crap shack to move into a retirement home.

#46 BillyBob on 11.21.21 at 6:06 pm

Inflation, lineups for gasoline, ABBA on the radio, and an idiot named Trudeau as PM.

What is this, 1979?

People who don’t learn from history DESERVE to reap the consequences.

What a fascinating time to be alive.

#47 DON on 11.21.21 at 6:08 pm

#37 BC is Drowning! on 11.21.21 at 5:21 pm
Tuesday will be a total catastrophe, with a huge spike in supply chain shortages and inflation from west to east.

https://bc.ctvnews.ca/another-atmospheric-river-expected-to-hit-b-c-as-province-deals-with-flooding-from-1st-1.5675183
******
Last storm hit the south part of BC. The next river is headed to the coastal North. Not sure how far inland they are estimating.

Then again storms can change course. Besutufil sunny day on the South Coast at the moment.

A home owner in Esquimalt was on the local island news in regards to her flood insurance. The policy doesn’t cover ground water runoff. 10 thousand plus worth of damage.

#48 Ponzius Pilatus on 11.21.21 at 6:32 pm

#29 Flop
Good story.
I’m not gonna go out and count all the gas stations in Vancouver (east and west).
You seem like a man of honor, so I take your word for it.
Fewer and fewer gas stations, that seems to be the trend in the Lower Mainland.
Maybe the gas excecutives are reading the message on the subway wall.
Also, many Highrises don’t have parking stalls any more.
That’s why people downtown are usually fitter than in the burbs.
Was in a mall in Langley the other day.
The food court was full of oversized people eating oversized meals..
Never mind Covid, this will be a major health crises in the future.
And Langley is attracting many first timers and families.
This despite house prices approaching 1 mill.

#49 Quintilian on 11.21.21 at 6:35 pm

Regardless of one’s politics, it’s difficult to argue the fact that government meddling created the psychology that fuelled the bubble and continues to support it.

However, for every action there is an equal and opposite reaction.

The wealth effect, has turned into a debt load greater than GDP.

The unscrupulous, and despicable, self-serving politicians, cannot keep the gas bag from exploding; they can only delay it.

Tick Tock, Tick Tock.

#50 cuke and tomato picker on 11.21.21 at 6:41 pm

Easy money when we got 20 per cent on our money and Canada Savings Bonds were 19 and a half per cent you did not have to think the glory days.

#51 Well travelled on 11.21.21 at 6:41 pm

Great column today Garth and it took me back to our first home which we purchased in 1981 at a 21.5% interest rate. As I re-call, we thought it was a “deal” since everyone at the time was predicting that interest rates would continue to rise.

#52 Armpit on 11.21.21 at 6:48 pm

I remember going to the BookMart to purchase a Mortgage monthly Amortization payment booklet to figure out what my mortgage payments would be.

But I couldn’t find such book as none had mortgage amortizations above 10 percent!! The columns were broken down to interest and principal payments.

So, if you had a 14 percent mortgage, you would look at the 7% column, double the interest and add the principle payment to get an idea of your mortgage payment.

(in 10 or less lines)

#53 jimmy zhao on 11.21.21 at 6:51 pm

If you were try a protest like that nowadays, no MP would dare meet with anyone in the group.

Furthermore, the Cops would out busting people’s heads, and Antifa would be there in full force accusing the home protestors of being privileged White Supremacists.

#54 Faron on 11.21.21 at 6:52 pm

#78 BillyBob on 11.21.21 at 10:05 am
Crowdedelevatorfartz:

You two are insane. I’m exploiting nothing. You seem to have forgot that I called out BillyBob for saying that BC “deserved” this disaster and everything that’s come with it. His reputation as anyone even slightly kind or considerate is then on the moral hook for every human death, every failed business and every multi-billion dollar infrastructure. All of these things fall under what BillyBob callously said was “deserved”.

BillyBob then tried to duck it by saying that his screen-name is an avatar not to be taken with any seriousness. And crowdie, you are enabling this kind of garbage. Extremely trashy.

#55 Penny Henny on 11.21.21 at 6:54 pm

#39 Vidal Sassoon on 11.21.21 at 5:30 pm
Does Garth have any chest hair?

Seems all available follicles got used up above the neck.

Total rug. – Garth
/////////////////

TMI

#56 VladTor on 11.21.21 at 6:56 pm

Garth,
Thank you, interesting historical overview today.

In my opinion to return economy (and people) to reality need rate now 8%-12%.

#57 Faron on 11.21.21 at 7:09 pm

#46 DON on 11.21.21 at 6:08 pm

#37 BC is Drowning! on 11.21.21 at 5:21 pm
Tuesday will be a total catastrophe, with a huge spike in supply chain shortages and inflation from west to east.

https://bc.ctvnews.ca/another-atmospheric-river-expected-to-hit-b-c-as-province-deals-with-flooding-from-1st-1.5675183
******
Last storm hit the south part of BC. The next river is headed to the coastal North. Not sure how far inland they are estimating.

There’s one soaking the north coast now. Another is slated to dock down here wednesday night/Thursday. Tentatively looks like the bulk of that one will miss the LML. Another hits Saturday morning. Focused a bit north again. This could all change in coming weeks.

#58 Apocalypse Dude's Drunken BIL on 11.21.21 at 7:09 pm

Bro, where are ya, we need you!

The world is unravelling!

TRILLIONS of Canadians are about to die the floods in British Columbia!

Help us to PREPARE!

I need another drink, bro…….

#59 VladTor on 11.21.21 at 7:16 pm

Garth, long time ago I’ve read in some article that one of finance minister of Canada(or prime minister???) sharply increase interest rate and says like this – “I don’t care about people who has mortgage – it was their choose”

If it is true, please remind for us who it was and when it happened?

#60 willworkforpickles on 11.21.21 at 7:19 pm

Normal market forces would suggest a rise in interest rates during recessions.
These are not normal times whereby the means to ultimately make use of what once was considered normal with regard to interest rates, now may come more by force than by the artificial means of the last decade.
If the economic survival of country (temporary) proves to be and becomes dependant on immigration, (and its looking that way more and more every week/month what with all the layabouts that don’t want to work… what better way/only way to accommodate several million newcomers is there than to burst the real estate bubble first.
Rising Int. Rates as they historically normalize will create a recession and a real bloodletting in real estate values as defaults gather steam.
Lowering rates then to counter the ill effects of the next recession could/likely would? more than likely will be the catalyst for the ultimate beginning of the end of the US dollar if that were to occur. (not good).
The catalyst for rising rates is going to be steady and incessant rising inflation.
A return to normal standards regarding rates as abnormal as that would be considering the existing norms that created the current economic maelstrom,… may be the course government will endorse and the route the Fed – BoC will eventually take.
National survival via mass immigration is only going to work…come about… in fact only ever become a reality now by way of a massive collapse in real estate values.
Just adding to the national debt to pay for everything as a solution is no longer the solution.
With that you get even more inflation and the quicker yet still and coming demise of the US dollar even national survival.
The implications of the demise of the US dollar are too numerous to list here in one post.
This leaves the immigration alternative as the lesser of the two evils and tough questions to be addressed that lay ahead and is what is just ahead.
Wait for the bombshell/s…tough decisions to be made and relatively soon.

#61 Barb on 11.21.21 at 7:20 pm

Lincoln is so adorable, Kerri.
Bet a 950 has to poop-scoop at your yard *grin*

Garth’s focus on training and helping Canadians to be more fiscally astute, year after year, post after blog post, email after email, book after published book, deserves the Order of Canada.

Qualifications?: “The highest degree of merit, an outstanding level of talent and service, or an exceptional contribution to Canada and humanity.”

In Garth’s case, it’s AND, not OR.

More Canadians thank you, GT, than you will likely ever know.

#62 Time will tell on 11.21.21 at 7:24 pm

“Some expertise is timeless. A few behaviors always repeat. They’re often the most important things to pay attention to.

But most things evolve, and evolve faster than people’s beliefs. It’s a tricky thing that leads to a long history of older generations whose success came from understanding the new rules of their era not recognizing that the rules may have changed again.”

Of course this doesn’t apply to you, Garth! Right?

#63 Faron on 11.21.21 at 7:26 pm

coming *days*, not weeks. Oops.

Here are 180 hour precip totals for NWern US and central west BC:

https://a.atmos.washington.edu/wrfrt/rt/load.cgi?latest+YYYYMMDDHH/images_d2/pcpt.180.0000.gif

Here’s 10-day total from Canadian models:

https://ibb.co/rxKSYM7

Lots of rain, but not looking as focused on southern BC.

#64 The West on 11.21.21 at 7:46 pm

#31 Ok, Doomer

“Still think all Boomers were luck sacks?”

Yes. The asset prices adjusted to their paychecks were far more reasonable. Not only that – but the fiscal policy that has been pursued since the late 70s essentially ensured that their debts would always be covered with inflation dumped further and further into the future. Gas for their vehicles, their groceries, insurance on their assests and taxation were affordable. The half way smart ones didn’t need to live in debt. The average mortgage term was seven to nine years in the 70s….seven to nine years on an asset that would climb nearly 280% to the modern day. Not to mention the inflation on everything else required to live.

“Credit Cards” were the ploy in the early 2000s as a furtherance on economic policy as it was becoming clear average wage earners could no longer make ends meet. Another avenue to choke on debt.

All of these “mortgages for life” are good for the Boomers though. Where do you think the pension hedge fund money is coming from on those monthlies collected from “investments”? Keep that printing press hot….the good times will never end.

#65 Shawn Allen on 11.21.21 at 7:58 pm

Can rates rise?

Those of us who saw nothing but high interest rates during our formative years were glad when rates came back to 11%. Some thought it would never go much lower.

Recency bias… and also there is a bias that what happened during the time we became adults was “normal”.

If you told people in 1981 that in 2021 people would complain bitterly about LOW rates they would have been gobsmacked. Especially if the same Garth Turner was leading the protest against low rates.

Protest? Strange descriptor for a warning. – Garth

#66 tbone on 11.21.21 at 8:21 pm

Bought first house in 1980 with VTB mortgage @ 10.75 %
Made double payments and trashed the mortgage in 3 years . Bought the house i am in now in 1984 with a 20k private loan. Totally debt free in 1985 .
Most people i knew back then were working to eliminate debt , Nobody was saving for retirement . That came after the mortgage was paid in full.

#67 crowdedelevatorfartz on 11.21.21 at 8:21 pm

@#54 Faron
“You two are insane. I’m exploiting nothing.”
+++
I disagree.
Your exploitation of descriptive adjectives leaves much to be desired.
As for Billy Bob’s mental disposition…..I can’t really comment based on random anonymous scraps of discussion gleaned over the past few months.
My mental instability however, is to be determined between me, myself…and
I.

#68 RichardTO on 11.21.21 at 8:27 pm

@Garth
>”A convoy of buses, fueled with the energy of irate homeowners facing high mortgage renewal rates, left Toronto today for a planned confrontation with members of Parliament. Many homeowners had taken a day off work, losing pay to take their protest personally to the nation’s capital and Prime Minister Pierre Trudeau.”

In today’s political atmosphere, you’d be labelled a White supremacist for this stunt, and accused of insurrection like those people that were allowed to walkthough the US Capitol back in January.

We stood outside and said we were annoyed. The numbnuts in Washington broke into and stormed the capital. People died. Dumbest comment of the weekend – big achievement. – Garth

#69 crowdedelevatorfartz on 11.21.21 at 8:40 pm

@#57 Faron’s Forecast
“Focused a bit north again. This could all change in coming weeks.”

+++

Years ago I went hiking on the West Coast trail.
It was pouring rain.
After a few hours of torrential downpour ….
I came upon a group of about six Japanese hikers that were totally out of their element.
They were stopped, by a small stream, trying to start a campfire in a cave. No tents, no hiking gear, one of them had a guitar in a plastic garbage bag….and nothing else. All were wearing sneakers, shorts in cheap plastic ponchos.
A few had what could be charitably described as “Hello Kitty” knapsacks with what one might assume would be inadequate food and gear.
I tried to explain in English that with all the rain the stream would rise into a raging torrent and flood their “cave” .
No luck.
It was getting dark and I had another 45 minutes to the campsite on the beach so I explained how close they were to the beach with my map.
Still no luck. I left.
I arrived at the beach and all the other campers were huddling around a miserable fire down by the water where their tents were pitched.
I pitched my tent up at the forest edge under a large spruce.
I heard some comments about bears and my choice of campsite.
I ate, talked to the others and went to bed.
Middle of the night I heard cursing and shouting so I looked out.
It was still pouring, the tide had come in and the “beach” was gone.
The river was lapping at the edge of the forest.
Amazing how trees know where to grow.
I went back to sleep.
I was dry under the canopy, but all the other campers were a miserable, wet, lot in the morning.
The small river had risen at least 6 ft over night.
I heard from a Parks Warden a few days later that the Japanese hikers had to be rescued, hypothermic and hungry.

It will be interesting to see what happens to the runoff into the Fraser and its tributary’s, the Chilco, Chicotin, Thompson etc ( all three are excellent rafting adventures…but thats another story for Ponzie some day) after this latest deluge.

#70 Inequity on 11.21.21 at 8:45 pm

It’s unfortunate about the flooding in BC and the lives that have been lost. But not very surprising for some of it considering that was a lake…

https://youtu.be/IQdsRd77Gmo

https://dailyhive.com/vancouver/sumas-lake-sumas-prairie-barrowtown-pump-station-abbotsford-flooding

#71 Ponzius Pilatus on 11.21.21 at 9:25 pm

#70 Inequity on 11.21.21 at 8:45 pm
It’s unfortunate about the flooding in BC and the lives that have been lost. But not very surprising for some of it considering that was a lake…

https://youtu.be/IQdsRd77Gmo

https://dailyhive.com/vancouver/sumas-lake-sumas-prairie-barrowtown-pump-station-abbotsford-flooding
——————_
you’re about 6 days late.
Pay attention to the steerage section.
You may learn something.

#72 Network Admin on 11.21.21 at 9:56 pm

#52 Armpit

I am pretty sure it didn’t have 1.1% that I am paying currently either.

#73 Wrinkles McGee on 11.21.21 at 10:49 pm

OK, it’s going to swing? When and what are you doing about it?

#74 Ponzius Pilatus on 11.21.21 at 11:18 pm

Weird Headline:

Vietnamese workers plead for help at Chinese factory in Serbia: AP
————————-

#75 Bayview on 11.21.21 at 11:54 pm

Yep. Covid is not “helping” the matters either.
I’m hearing the Canucks are complaining bitterly about the “lack of social life” and especially those of them who’ve squandered their most attractive years on dating apps while trying to score their Prince Billionaires from The Bridle Path, and are about to default on their high five-figure student loans.

“He who laughs last, laughs best” is so true, isn’t it?

#76 BillyBob on 11.22.21 at 12:36 am

#54 Faron on 11.21.21 at 6:52 pm
#78 BillyBob on 11.21.21 at 10:05 am
Crowdedelevatorfartz:

His reputation as anyone even slightly kind or considerate is then on the moral hook for every human death, every failed business and every multi-billion dollar infrastructure. All of these things fall under what BillyBob callously said was “deserved”.

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

Do they? Wow. I had no idea my culpability was so huge. Oh, the huge manatee. Quite an extrapolation there from a random throwaway comment about my home province and it’s silly sense of self-importance that you just Can’t. Stop. Reinforcing. Or more accurately, embodying.

I do enjoy a flourish for rhetoric though, no matter how nonsensical. Since you have no ethical qualms about using tragic deaths to try and score meaningless points in a meaningless war of words with a fictitious character in the comments section of an internet financial blog (yes, read that all slowly, twice, and try to realize how ridiculous you are)…

Have you ever considered running for office? You’d make a great politician. Just latch cynically onto a tragedy and crank up the faux self-righteousness and hilarious thundering over-the-top sermonizing.

Or maybe a fundamentalist preacher. Close second. Probably more appropriate, Oregon roots and whatnot.

Praise the Lord and pass the ammunition. Amen.

#77 westcdn on 11.22.21 at 2:45 am

The most influential person in my life was my mother. Despite descending into poverty, she kept her chin up and never gave up on me. She never excepted welfare and would continue to give. She took a series of menial jobs. I remember one day she returned late from her waitressing job. She had a great day with tips and threw the money around the living room.

I did what I could which seemed to consist of fixing and maintaining things. I did not like most of her choices in men but I went along. She always wanted to be attractive and was afraid of death. I promised to cremate her.

She was not good at teaching me male things but she gave me ethics. I stand by them. She was a former telephone operator. When she got tipsy on wine one night, she decided to call the White House. I was amazed she got through although she get not to talk to the President. I suppose that is why the movie “Cinderella Man” rings so much for me. We went through tough times and came out better.

One thing that hurt me was my wife did not like her. My wife thought her mother was a saint but I had a different opinion.

One thing thing about logging, I made more in one day than I did working a week in crap jobs. Also, my uncles joined the WW2 Canadian Army to get a regulars pay to send home with any loot they gathered. There is saying bought the farm has meaning.

#78 I'm a rich sychophant and really don't care on 11.22.21 at 5:45 am

I heard Greta read a speech that could have been written by either Marc Carney, David Axelrod or any of the Super Geniuses who Gerry Butts says got Trudeau reelected.

” Blah Blah Blah.”

Looks to me like Justin is a heck of a teleprompter operator.

#79 TurnerNation on 11.22.21 at 7:16 am

Last chance to sell hard assets before the T1/T2 Wrecking Crew continues?

The world is being re-made via the PERMANENT CC (‘Climate change’) and CV Rules.

Western Kanada is under attack (Natural Causes you see!) with Wartime food and gas rationing.
– AB O&G is toast. The recent municipal elections confirmed this.
– The Least Coast still has the virtual Berlin Walls and armed checkpoints. You must ask for entry permission.

Elsewhere the Global WW3, unleased that cold winter week March 2020, rages on. Guess who is its target?

https://news.sky.com/story/france-sends-special-forces-to-guadeloupe-amid-riots-over-covid-restrictions-12474759
“Interior minister Gerald Darmanin said 50 officers from police special forces would travel to the French overseas territory, in addition to 200 police officers sent from France’s mainland”

.Violent clashes erupt during anti-lockdown demonstrations in Europe (cnn.com)

..
— War on Small Business rages on.

.With Vaccine Mandate Looming, Business Owners Face Wary Workers; Small-business owners say efforts to prepare for federal rules are meeting resistance among some staffers (wsj.com)

#80 Felix on 11.22.21 at 7:29 am

Take a look at that dogawful pile of mutt.

Then realize what a massive, useless carbon footprint that species puts on the planet.

Want to save the Earth?

Get a cat.

#81 Dharma Bum on 11.22.21 at 8:31 am

In 1989 I leased a Caprice Classic (monster sedan) at 14% interest!

Hahahahaha. It was a beast.

https://www.youtube.com/watch?v=Ij5j1H-JZiA

Same car Arnold drove in Kindergarden Cop.

https://www.youtube.com/watch?v=2UktjAnw5n0

#82 Do we have all the facts on 11.22.21 at 8:31 am

The current hysteria over the increasing value of residential real estate appears to have erased the role played by the Federal and Provincial governments in creating a substantial portion of this value.

The Federal government through CMHC and a variety of initiatives based on the redirection of taxation revenue injected over $40 billion of support into residential real estate between 1950 and 1995.

I remember when the $200 million low cost housing program was introduced in 1970 and when the $100 million Assisted Home Ownership Program (AHOP) was added to the mix in 1971.

In 1973 the National Housing act was amended and resulted in an additional $500 million being invested in AHOP initiatives.

By 1975 AHOP was directing $446 million of CMHC loans and grants and $345 million in private sector funding to support the construction of affordable housing.

The NHA was amended in 1975 to focus on private sector funding of affordable housing through government guarantees of lower interest mortgages and direct subsidies. In 1976 and 1977 the construction of 75,000 units of affordable housing were supported by the Federal and Provincial governments under AHOP.

In 1978 the Federal government shifted their focus from direct financial support for affordable housing to the support of units constructed by the private sector through government insured mortgages. Existing units constructed under AHOP continued to be subsidized based on income of the homeowners.

I could continue listing the wide range of housing related initiatives supported by the Federal and Provincial governments after interest rates hit 20% in 1981, or the tax revenues that were redirected into affordable rental housing through MURBs but I’m sure you get my point.

Hundreds of thousands of existing Canadian homeowners were assisted by the Federal and their Provincial governments in the 1979’s and 1980’s. Today many homeowners who received assistance are sitting in their kitchens and deciding what to do with the equity created through nothing but good fortune.

The “I’m OK Jack” attitude that is exhibited by many contributors to this blog has just a whiff of hypocrisy. The media is virtually silent on the relationship between past government support for affordable housing and the current net worth of many Canadian homeowners.

Can you really blame Generation X for wondering why the financial support provided for affordable housing in the 1970’s and 1980’s is nothing but a memory today.

How soon we forget!!

#83 George S on 11.22.21 at 9:19 am

#52 Armpit wrote
“I remember going to the BookMart to purchase a Mortgage monthly Amortization payment booklet to figure out what my mortgage payments would be.

But I couldn’t find such book as none had mortgage amortizations above 10 percent!! The columns were broken down to interest and principal payments.

So, if you had a 14 percent mortgage, you would look at the 7% column, double the interest and add the principle payment to get an idea of your mortgage payment.”

—————–
I had a mortgage payment book from the mid 1980s that became useless because it only went down to 5% interest.

#84 crowdedelevatorfartz on 11.22.21 at 9:58 am

@#82 How soon we forget
“Can you really blame Generation X for wondering why the financial support provided for affordable housing in the 1970’s and 1980’s is nothing but a memory today.

How soon we forget!!”

+ = –

Odd,
And here I thought the Bank of Canada set interest rates…
Which have been ridiculously low for at least 5 years if not 10.
Greedy mortgage holders taking full advantage of historically low rates have pumped and pumped aaaannnd PUMPED this housing market into the stratosphere.

Rising rates will step on it like a bug.

#85 willworkforpickles on 11.22.21 at 10:14 am

The Fed is leading on frenzied real estate buyers with their misleading interest rate focus.

#86 Doug in London on 11.22.21 at 10:28 am

Oh, the poor wrinkles with low interest rates. They could have sold their grossly overpriced houses and invested in other assets like the stock market. Failing that idea, they could have borrowed with a HELOC and bought into the stock market when everything was ON SALE in March of last year. Once upon a time I thought the Boomer generation, of which I’m part of, were the most educated in history. It looks like I got that wrong.

#87 the Jaguar on 11.22.21 at 10:53 am

Now ‘shipping’ is being targeted as the newest ‘supervillain’.

“Global talks on how to clean up shipping are set to begin Monday as momentum builds to cut pollution from the sector.

Following the UN’S COP26 climate summit last weekend, the IMO’S chair is challenged with steering as many as 175 member states toward cleaner shipping. The sector, which transports more than 80 per cent of the world’s internationally traded goods, has a carbon footprint bigger than Germany and the Netherlands combined.

A long-standing call for a US$2 a ton levy on fuel oil used by ships, to raise US$5 billion for research and development, is on the agenda.

“Come out with the rules and we will comply,” Svein Steimler, chief executive of NYK Group Europe Ltd., said at an event held during COP26. “You politicians, you need to get your act together and tell us what to do.”

A while back I clipped an article that referenced ‘glass towers’, both commercial and residential as being responsible for approx. 40% of greenhouse gas emissions. Essentially a disaster in terms of energy efficiency and operating costs. Not sure what happended to New York City Mayor Bill de Blasio’s ‘New Green Deal’ which included a de facto ban on glass and steel skyscrapers but it just seems like every week a new ‘culprit’ is identified as responsible for global warming.

Fossil fuels, cows, shipping, glass towers and whatnot. Best snuggle down in your foxhole, because they are coming for you. Keep your powder dry with Garth’s financial recommendations. Your salvation will rely on your ability to outrun them.

#88 yvr_lurker on 11.22.21 at 11:16 am

One in every 12 homes in Canada is vacant according to OECD data (Canada ranks 11th in the world)

https://dailyhive.com/vancouver/canada-over-1-3-million-vacant-homes?fbclid=IwAR3a8yfKjbLIbawbnH-kDIr7h2qCEvem-OtNCUdrt5WdFSNsGLj5tC-AHtw

In an analysis of the data from Better Dwelling Co-Founder Stephen Punwasi, he argues that Canada is ripe for owners to buy up property and let them sit vacantly.

Seems to me that this rather rampant speculation is a key driving factor (together with low rates and low property taxes) in the affordability crisis. Putting in strict measures (i.e. high taxes) to curb the appeal for speculators to buy up multiple properties and wait for price appreciation makes some sense.

#89 Millennial Realist on 11.22.21 at 11:28 am

#82 Do we have all the facts

Some excellent fact-checking and history here.

“Hundreds of thousands of existing Canadian homeowners were assisted by the Federal and their Provincial governments in the 1979’s and 1980’s. Today many homeowners who received assistance are sitting in their kitchens and deciding what to do with the equity created through nothing but good fortune.

The “I’m OK Jack” attitude that is exhibited by many contributors to this blog has just a whiff of hypocrisy. The media is virtually silent on the relationship between past government support for affordable housing and the current net worth of many Canadian homeowners.

Can you really blame Generation X for wondering why the financial support provided for affordable housing in the 1970’s and 1980’s is nothing but a memory today.”

This is why I have tended to be more focused on Baby Boomer privilege than Gen X. The Boomers really were born on third base in this way. Gen Xers were the first to experience what millennials face now.

Through confusion about years for this cohort, Gen Xers are still made largely invisible today, but those born from about 1961 onwards really had a much different experience, and did not get the same kind of government handouts and support like you mentioned as those born between 1946 and 1960. Those benefits and programs almost all went to Boomers.

Some GenXers have been able to get into the property market, albeit late, in the early 2000s, but many had to give up on that possibility and are now very much in line with millennials as they head out of their 50s towards retirement with no sweet home equity, totally by chance, to comfort them.

Boomers had lots of luck, and lots of government handouts. They were not ‘self-made’, by any stretch of imagination. In the 1970s, Boomers of working age with a pulse could basically walk into lots of companies and government offices, and be guaranteed a shot at a management position within months due to the tidal wave of retirements from the “silent” and “greatest” generation types before them. Not so for GenXers entering the workforce in the 1980s, or millennials later.

The disparity in government support for housing then and now is really striking.

#90 Sail Away on 11.22.21 at 11:56 am

#87 the Jaguar on 11.22.21 at 10:53 am

Now ‘shipping’ is being targeted as the newest ‘supervillain’.

“Global talks on how to clean up shipping are set to begin Monday as momentum builds to cut pollution from the sector.

———-

Similar to the innovative windmill power generation, I strongly recommend cargo ships harness the power of the wind. They could put up big panels or something to catch the wind and make them go.

Wonder why nobody ever thought of this throughout the history of human civilization?

#91 crowdedelevatorfartz on 11.22.21 at 12:10 pm

@#89 Millenial Delusionist
“The disparity in government support for housing then and now is really striking.”

+++

Yes.
Interest rates were 22% in 1983.
Today they are 2%

#92 Wrk.dover on 11.22.21 at 12:32 pm

The govt assistance this couple got (us) in 1981 was a NS Housing 11% mortgage for people under a certain income. My teacher wife was single (pending marriage) and had new raise pending, after the application deadline.

She squeaked in at about $12.00 under the maximum income allowed pre raise, then was allowed 90% of the appraised estimated value of the new build. The appraisal guy charged $250.00 to allow her (us) an $18,000 loan on a house with a 25’X25′ dripline, a finished basement, and one level above, far beyond the middle of nowhere.

So what do you youngsters lust for, a three bed room house, or four? And downtown, or in a trending minivan/SUV enclave near everything cool?

#93 Wrk.dover on 11.22.21 at 12:35 pm

And a 500 foot driveway, a drilled well, and a septic tank and field bed were required within that loan.

#94 Wrk.dover on 11.22.21 at 12:40 pm

#90 Sail Away on 11.22.21 at 11:56 am
I strongly recommend cargo ships harness the power of the wind
_________________________________________
https://www.saltwire.com/atlantic-canada/news/plans-to-use-wind-powered-ships-to-sail-cargo-out-of-halifax-making-headway-100603584/

#95 the Jaguar on 11.22.21 at 12:53 pm

@#90 Sail Away on 11.22.21 at 11:56 am
Similar to the innovative windmill power generation, I strongly recommend cargo ships harness the power of the wind. They could put up big panels or something to catch the wind and make them go.
Wonder why nobody ever thought of this throughout the history of human civilization? +++

This is what I love about Sail Away. He’s a ‘glass half full’ kind of guy. Looking to innovation instead of the ‘punitive’ response of all these ‘global talks and summits’. Levy this, tax this, finger wag this and that, all made clean and wholesome by injected the words ‘research and development’.

Mr Google tells me solar power cell technology was first invented in 1839. Seems like a few years have passed to hone in and improve its efficiency. Wassup?

Alberta government began a ‘study’ of highway traffic volume on #2 north from Calgary to Edmonton years ago. One of the busiest corridors in the country. We can fly Captain Kirk into space but we can’t get our poop in a group and build a high speed rail system between these two cities to carry freight and passengers?

Next up, a tax on ideas or free speech. Mercy.

#96 Shawn allen on 11.22.21 at 1:08 pm

President Biden is giving FED chair Jerome Powell an encore. Another term. A “rock on” signal for the stock market? We shall see.

#97 Dogman01 on 11.22.21 at 1:09 pm

#89 Millennial Realist on 11.22.21 at 11:28 am

The media is virtually silent on the relationship between past government support for affordable housing and the current net worth of many Canadian homeowners.

————————————
Being that you are a realist, you do realize that the Media is silent about any economic analyses that tells the true story of declining mass prosperity. The Media’s Job is to obfuscate economic issues, allow the Frog to be boiled and ensure the constructive pattern of prosperity (and Freedom) destruction is not recognized until it is too late.

“One hundred idiots make idiotic plans and carry them out. All but one justly fail. The hundredth idiot, whose plan succeeded through pure luck, is immediately convinced he’s a genius.” – Iain M. Banks

Boomers are the 100 Idiots but they all got to succeed, they are convinced they are better than you and you need to pull up your bootstraps. The Boomers via a chronological Birth Lottery got the golden housing participation medal.

You have been screwed. The System screwed your generation more than the other generations before you. The generation behind you will be screwed even more. That is the Plan.

“Millennials would be fools to expect their lives to unfold as carbon copies of their parents’. No profligate hippiedom, no finding-myself-in-Europe, no sha-na-nah for them. This is Darwin, baby. And you’d best know that now.” – Garth Turner

Find a way forward, it will not be housing, the system will not help you, your generation is screwed and they will remain pacified by our media and political class…. save yourself.

#98 IHCTD9 on 11.22.21 at 1:19 pm

#89 Millennial Realist on 11.22.21 at 11:28 am

Some GenXers have been able to get into the property market, albeit late, in the early 2000s, but many had to give up on that possibility and are now very much in line with millennials as they head out of their 50s towards retirement with no sweet home equity, totally by chance, to comfort them.
____

You have got to be kidding me bro. I bought in 2001 for 1.37X income and 6.4%. From there, the rates went down, and down, and down. I had a subprime variable at one point that pushed my rates to 2020 levels. My mortgage payment was less than half of rent, and the mortgage was paid off 11 years early just by maintaining my original 2001 payment as rates dropped into oblivion.

While all this great stuff was happening, the value of our house was going up and up and up. The run from 2000 to the GFC was also a great time to be investing – then again from 2009/10 on till today.

Nobody had it easier than Gen X, not even the Boomers. We got the low house prices, then we got the low rates directly thereafter. We got the pre massive-immigration education costs and job market. We got good wages and corner offices before everyone needed 3 degrees to do the same and get paid less. We got the GTA and YVR before they went to shit. We got great returns while China and Tech grew like gangbusters.

In short, Gen X got up and running at the closing of the “Old Canada”. The GFC signaled the reversal, then Covid and then Trudeau made it irrevocable. Today we live in the “New Canada” where global forces and a single braindead politician have created an entirely new reality where most Mils and all Gen Z’s currently live. Everything now is the opposite of what it was 20 years ago.

Today, my mortgage is a distant memory, the house might be +800% since purchase, the B+D steadily chugs towards 7 figures. Zero debt, dual incomes, DBP. Most of my peers and siblings are in exactly the same boat.

Gen X got it all.

#99 Stoph on 11.22.21 at 1:33 pm

#94 Wrk.dover on 11.22.21 at 12:40 pm

#90 Sail Away on 11.22.21 at 11:56 am
I strongly recommend cargo ships harness the power of the wind
_________________________________________
https://www.saltwire.com/atlantic-canada/news/plans-to-use-wind-powered-ships-to-sail-cargo-out-of-halifax-making-headway-100603584/
———————-

Norsepower Rotor Sail:
https://www.youtube.com/watch?v=kDyBrSW1_Og

Oceanbird:
https://www.youtube.com/watch?v=pZVDs4n_a0M

#100 Faron on 11.22.21 at 1:42 pm

#76 BillyBob on 11.22.21 at 12:36 am

BS! The points scoring began when you cynically, callously and disgustingly proclaimed that BC “deserved” to have its citizens die and billions of dollars of infrastructure ruined and millions of farm animals killed and hundreds stranded behind walls of mud. That comment is yours and I will continue to hold your feet to the fire with zero regard for points in a comments section where my point tally will be zero to negative for 95% of commenters anyway. The same idiots who probably also snickered at your stupid effing post. Who the heck do you think I’m scoring points with? I’m calling your crap what it is: crap.

I came to this blog for Garth’s aligning views on real-estate, I got suckered in when really crappy takes on the pandemic started to filter in and hooked by the continual onslaught of garbage like yours that gets doled out on a daily basis. Does it matter what I say? Probably not one iota, but it can be satisfying to take the other side in the abundant nonsense that is dispersed among the odd gem of user input. Occasionally a reader will come out of the woodwork and dare to agree with me. Speaking of abundant nonsense, all you spew is endless griping about how crappy Canada is and how great you and your job is. Full on oblivious snobbery.

#101 Diamond Dog on 11.22.21 at 1:55 pm

#90 Sail Away on 11.22.21 at 11:56 am

Not an entirely new idea. Oceanbird and Cargill Inc. are into it:

https://www.soundingsonline.com/news/modern-cargo-ships-with-sails

Cargo ships in general are responsible for close to 4% of the world’s C02 emissions, so it’s a bigger deal than most think. Canada could lead here with a switch over to a hybrid system of nat gas/diesel/electric or fuel cell/electric from traditional diesel powered ships (Westport Innovations and Ballard come to mind as examples). Where I would like to see cargo ships go is hydrogen/electric powered by this:

https://www.youtube.com/watch?v=Qn7IhGitNE4

Same can be said for hybrid prop planes and hybrid transport in general. Anything hybrid or full electric is the future. This is largely why SPAC’s were so successful over the winter, due to a significant number of SPAC’s in this space (electrified transportation). The question for investors will always be, which stocks will achieve excellence and enjoy the most success?

#102 crowdedelevatorfartz on 11.22.21 at 2:22 pm

@#95 The Jaguar
“build a high speed rail system between these two cities to carry freight and passengers?”

+++

High speed between Calgary and Edmonton?
Wont happen unless fuel reaches $5:00/liter ( and if fuel cars go the way of the Dodo where will all the govt revenue come from? A Provincial Sales tax?)
The cost in time and manpower to load and unload a freight train at either destination ( outside of downtown?) vs large trucks hauling from supplier dock to customer dock would negate the savings.

High speed Passenger trains from downtown to downtown would be appreciated by the legions of govt bureaucrats in either city….but most other Albertans I know would rather you pry their truck keys from their cold dead hands…..

#103 Quintilian on 11.22.21 at 2:33 pm

IHCTD9:

“I bought in 2001 for 1.37X income and 6.4%. From there, the rates went down, and down, and down.”

They say history does not repeat itself, but it does rhyme.

I think that rates are not going down, down, and down.
But prices will go crash, crash and crash.

#104 Sail Away on 11.22.21 at 2:38 pm

#98 IHCTD9 on 11.22.21 at 1:19 pm

Gen X got it all.

——

Absolutely. It’s been wonderful. We bought one house in 2007 and another in 2009, then sold one for good profit in 2020 and continue to live in the other.

There is a pervasive belief floating around that Boomers somehow won a huge RE prize. It’s true in some cases that their RE appreciated very well. However, it’s also true that life is long and you never know what will happen.

I went from normal to army to poor to poor student to advanced-degree engineer, and now engineering company president and not poor at all.

We’ve done significantly better investing and entrepreneur-ing than with RE, but RE is a nice topper.

Work all systems, never complain, learn from those who know… usually experienced Boomers.

#105 OK, Doomer? on 11.22.21 at 2:55 pm

#64 The West on 11.21.21 at 7:46 pm
#31 Ok, Doomer

“Still think all Boomers were luck sacks?”

Yes. The asset prices adjusted to their paychecks were far more reasonable.
+++++++++++++++++++++++++++++++++++
Yes, they were. But in the 70s and 80’s:

Granite was for your tombstone, not your countertop.

An ensuite bath was considered a lavish appointment and it meant that you had a toilet and sink.

The average family home was 1200 square feet with an unfinished basement.

The built-in dishwasher was a shmata hanging on a hook by the sink. If you don’t know what a shmata is Google it.

TV was delivered on three channels, one of which was CBC in French.

And backpacking through Italy was a story that your Uncles told you. But when they did it they were carrying a rifle and people were shooting at them.

And Hawaiian holidays were for people who had a million, not ones who borrowed a million.

#106 Sail Away on 11.22.21 at 3:27 pm

#100 Faron on 11.22.21 at 1:42 pm

——-

Wow, F, after reading your latest diatribe, an image comes to mind of 8 yo Faron marching to the principal’s office to earnestly and forthrightly inform the authorities that little BillyBob is chewing gum on the playground, and ‘that’s against the rules!’

Yes, Faron, yes. BillyBob was slightly edgy. Now try to find someone who will play with you.

Or continue walloping this poor dead horse. Whatever.

#107 crowdedelevatorfartz on 11.22.21 at 3:38 pm

@#100 Faron
“Speaking of abundant nonsense, all you spew is endless griping about how crappy Canada is and how great you and your job is. Full on oblivious snobbery.”

+++
Jealous?

P.S.
Good rant.

#108 Mary on 11.22.21 at 9:42 pm

Our family survived and did well with 5 year GICs and now there are 10 year GICs if we get continued rising rates may make more sense in the future that are CDIC insured. I just buy a bunch of them with a GIC broker and a bunch of credit unions in the 2019 interest rate peek of 3.6% to 3.75%.The annual interest from our RRSPs, TFSAs, regular cash GICs and our CPP, OAS brings in $80,000 a year and we still save, grow our accounts by $38,000 a year. So if we see 4% to 5% GICs it is just a bonus.We never fell for the falling, lower interest rates, debt binge trap and it served us well for decades.