The false flag

Is a recession coming?

In the comments section of this pathetic blog, there’s no question. Things are bad. People are morose, pessimistic and doomy. Stocks are crashing. Putin’s gassing up the nukes. Central bankers are numbnuts. Biden and Trudeau are vacuous. The economy is phoney and shredding. Stats are cooked. We’re doomed.

But, wait. What’s actually going on?

Whether the steerage section likes it or not, reasons abound why things are actually pretty ducky in this favoured land, far away from Europe’s tribalism and conflict.

First, our economy is growing. Stable. Solid.

Friday’s numbers were positive, showing a 1.1% jump in Canada’s GDP in February and more encouraging signs from March. The estimate for first-quarter growth is an annualized 5.6%. Woohoo! That beats the pants off the forecast of 3% by the BoC. And it came despite (a) Omicron, (b) truckers, (c) Ukraine, (d) a wonky supply chain and (d) Millennial moaning over houses.

Why the spurt?

Commodity prices jumped, helping Canada. Post-pandemic consumer spending shot higher, helping the job market. Average wages went up. We achieved full employment. Restaurants, travel, sporting events blossomed while WFH morphed into RTO. Economists at BMO now estimate growth for 2022 will be more than 4%. That’s a far cry from the negative numbers needed for a recession, and a good reason to stay invested in maple.

Second, the US is fine. Never bet against America.

The contraction of 1.4% which made headlines a few days ago was probably a false indicator. It had a lot to do with a high dollar hurting US exports, the romping price of oil (good for Canada, not so good for America) and weakness in stay-at-home companies (Netflix, Amazon, Alphabet) as workplaces reopened, post-Covid.

The positives swamp the negatives. Sure, there’s lots of inflation and interest rates will rise to deal with that, but never forget these are the creations of an economy that’s expanding, not contracting. The American trade deficit is a drag but domestic demand is hot. Disposable income’s up almost 5%. The jobless rate is down in the 3% range. There are way more jobs available than people to fill them. Consumer spending is shooting higher. In short, there’s no slowdown starting. Equity markets have been grinding through a correction – and that’s a good thing. Without pullbacks we don’t get periods of sustained growth and expansion.

But wait. What about the impact of these rising rates?

Never before have central bankers telegraphed so clearly and forcefully that the cost of money would rise. Stock markets have known it for months. So have you. So should every kiddo out there shopping for a house. Or  each family renewing a mortgage. Or HELOC borrowers ($2 billion a month lately) getting cash to spec on real estate.

The Fed will jump its key rate next week. Our guys will do it again June 1st – by at least a half point. Inflation is now over 8% in the US and likely over 7% here. Consumer spending is surging. The virus is receding. The war will eventually (like all wars) end. Armageddon is highly unlikely.

Scotiabank economists say despite the swelling central bank rate, “we think the risk of recession remains low at present, as we expect strong growth this year and next.” If a recession were to occur in the second half of 2023 (unlikely) then rates would moderate. But if inflation zips past 7%, Canadians can look forward to a bank rate that soars from 1% now to 4.25%. That would take the chartered prime to almost 6.5%, push mortgages into the 6% or 7% range, and blow up the real estate market.

But wouldn’t that cause a recession?

Nope. Falling house prices would not stop construction, change demographics nor blunt the need for more real estate supply. The plunge in equity would wipe out billions in recent windfall gains, strip the net worth of buyers who paid top dollar in 2020, 2021 and earlier this year and kick a lot of investors to the curb. But this is not the stuff that hollows out the GDP of a nation. It merely punishes those who succumbed to FOMO or avarice.

Here is the Scotia economic analysis, in one para:

The Canadian economy is strong. Fundamentals remain solid, reflected in part by very favourable terms of trade, very high levels of pent-up demand, strong household balance sheets, historically tight labour markets, and still remarkably stimulative policy settings. Reflecting this, the outlook through 2023 is very strong by historical standards. Inflation, on the other hand, is anything but supportive of the outlook. It continues to blow through continuously scaled-up forecasts, and in so doing, is creating uncertainty, reducing purchasing power, and contributing to what is likely to be a rapid normalization of monetary policy in Canada and elsewhere.

You may think you live in an extraordinary time. But you don’t. Major disruptive events (pandemic) lead to predictable outcomes (rapid recovery) with traditional consequences (inflation) and the usual response (higher rates).

More evidence that those who ignore history become its roadkill.

About the picture: “Love your blog, read it nightly,” writes Lin in the 905. “Just wanted to send you a picture of our newest family member, Jovi, who lives in Pickering along with a couple cats.”

156 comments ↓

#1 Yur Neighbor on 04.29.22 at 1:12 pm

My body is ready. Bring the pain.

#2 None on 04.29.22 at 1:21 pm

What is a correction vs. a crash? How bad would either be?

It’s weird – depending on the market but it really seems like a 50%+ decline in housing prices SHOULD be in the cards but a decline to such a level seem unthinkable…

but… that’s kind of the definition of a bubble isn’t it?

#3 DON on 04.29.22 at 1:22 pm

Garth, in one post you managed to address two weeks of disinformation by a bunch of sources.

@flop or anyone. how do i check on, how much a house recently sold for?

#4 Quintilian on 04.29.22 at 1:23 pm

“Never before have central bankers telegraphed so clearly and forcefully that the cost of money would rise.”

I believe the incessant telegraphing by the girlie men is in hopes to slow down the binge debtors without actually turning off the spigot and risk a recession.

#5 Scott in Gibsons on 04.29.22 at 1:27 pm

Don’t spiking energy costs and recessions go hand in hand? Why is it different this time?

#6 Felix on 04.29.22 at 1:30 pm

Happy Feline Friday!

Did you know:

Cats make very little noise when they walk around. The thick, soft pads on their paws allow them to sneak up on their prey — or you!

Cats’ rough tongues can lick a bone clean of any shred of meat.

Cats use their long tails to balance themselves when they’re jumping or walking along narrow ledges.

Cats use their whiskers to “feel” the world around them in an effort to determine which small spaces they can fit into. A cat’s whiskers are generally about the same width as its body. (This is why you should never, EVER cut their whiskers.)

Cats walk like camels and giraffes: They move both of their right feet first, then move both of their left feet. No other animals walk this way.

#7 The Regulator on 04.29.22 at 1:31 pm

So Netflix, Amazon, and Alphabet are hurting? Boo hoo, cry me a river. Does Bezos remind anyone of Dr. Evil? Without Dr. Evils’ intelligence and coolness? The gold/commodity backed $ ruble $ is up 2.95% today, now 70.60 to the mighty dollah. On dropping exports no less. Why is this? Please explain this to me, Ukkie Elvis, I await your knowledgeable answer.

#8 Ponzius Pilatus on 04.29.22 at 1:31 pm

I just read an article about how MacDonalds is getting push back on price increases.
And that consumers are adjusting for inflation, and either substituting for cheaper goods, or eliminating them.
Appears that any more price increases will come out of the pockets of the Corporations rather then Consumers.
As I posted the other day, minimum wage is no longer enough to attract workers in the service industry.
And any wage increases will probably have to be eaten by the companies.
At least that seems to be the situation in the Lower Mainland, where living in the 2nd best place on earth comes at a price.

#9 Frank Fred on 04.29.22 at 1:34 pm

Those who ignore history become roadkill-?? Please rebut that every fiat currency in the history of the world(There has been OVER 5000) has gone to 0. Russia just announced their currency with gold and commodities and anyone that wants their NG has to pay in rubles(essentially the entire EU)- the US dollar is done and Canada will follow. Very sad that you continue to mislead your readers of what is actually going on. Be ashamed. Golden Rule- Those that own the gold make the rules.

#10 Flop… on 04.29.22 at 1:48 pm

#3 DON on 04.29.22 at 1:22 pm
Garth, in one post you managed to address two weeks of disinformation by a bunch of sources.

@flop or anyone. how do i check on, how much a house recently sold for?

///:///////////

Go to Zealty.

Sign up and you can see what a house for as recently as yesterday.

Cough up the address if you have trouble and I’ll try and find out.

I’m on break, going to go back to work and practice my pronouns…

M47BC

#11 JEFF13 on 04.29.22 at 1:48 pm

Scotia lives in lalaland…strong “household balance sheets”.
Canadian households are amongst the most indebted in the world, especially if you remove their paper wealth gain. And even if it is probably slightly exaggerated, a few weeks ago, another survey came out saying that half of Canadians are 200$ away from not being able to pay all their monthly bills. To paraphrase their own ad…”Scotia thinks you are richer than you are!”

#12 Drew on 04.29.22 at 1:50 pm

So many comments here that are completely detached from reality. Stunning really. Worst part is the ones furthest out to lunch are the same ones most adamant that they are right.

#13 The Regulator on 04.29.22 at 1:56 pm

Oh my, Catherine Woods’ ARK is down 27% on April. And 70% down from its peak. Guess she’s not as SMRT as we thought. Meanwhile, China has begun to pay for Russian coal and oil in Yuan. That’s not very nice of them! America and N.A.T.O. have apparently exhausted their “stinger” supplies. War stocks should do well going forward. Yay.

#14 mj on 04.29.22 at 1:58 pm

when interest rates rise, it will effect the price of homes. That will make people feel less wealthy. Then people will spend less. When the housing market drops, it will take down so many different parts of the economy. Real estate agent will make less, mortgage brokers will lose jobs, the moving companies, furniture stores. Just to name a few, but the ripple effect will go on more than just the few I named. I do see a recession if the bank of Canada goes too high. But they have to kill the economy if they want to bring down inflation. Things will get bad, but after that you will have another great boom

#15 Prince Polo on 04.29.22 at 1:59 pm

In the end, we’re all roadkill, except some of us have more pristine personal balance sheets! Happy weekend, everyone!

#16 Concerned Citizen on 04.29.22 at 1:59 pm

Young people are morose because they don’t own homes (affordability is a distant possibility) and they don’t have stable jobs (so many modern-day careers are gig jobs). Even those with a good work ethic have no hope of a quality of life their parents had, unless they pull up stakes and move away from their family and friend network half way across the country or abroad.

Add to these economic challenges the COVID lockdowns, environmental dread, and social media angst, is it any wonder why surveys show young folks are in a bad state? And that’s what the surveys clearly show.

But hey, in Canada we don’t care about our young people. They exist simply to pay for health care and retirement benefits for older folks, and to serve them coffee at the local Starbucks. How dare they expect to afford a home and a family. Get back to work, peons!

#17 Marxist on 04.29.22 at 2:05 pm

Will the government cut social assistance and pensions to give to the indebted FOMO class to save their mortgage payments from attracting a $20 late penalty?

When you own property in Canada, you have more rights than the working class.

#18 Brett in Calgary on 04.29.22 at 2:05 pm

I agree. There has never been a better time to be diversified, and I include a bit of gold and cash in that definition. Everyone should read Ray Dalio’s new book.
——————
#8 Ponzius Pilatus on 04.29.22 at 1:31 pm
And that consumers are adjusting for inflation, and either substituting for cheaper goods, or eliminating them. Appears that any more price increases will come out of the pockets of the Corporations rather then Consumers.

#19 Mike in Airdrie on 04.29.22 at 2:06 pm

So which is it..Canadians have strong balance sheets or they are $200 from living under the bridge?

Hopefully you are more intelligent than your question. – Garth

#20 Shawn on 04.29.22 at 2:07 pm

Thank you for subsidising my Tesla

Jess at 110 yesterday complained or wished to whistle blow that:

Here’s a look at some of the federal and state-level government subsidies that have contributed to building Musk’s empire.

*******************************
Great, hopefully it means I am getting my Tesla below its full unsubsidized cost.

#21 dave on 04.29.22 at 2:09 pm

Inflation is out of control and prices are skyrocketing.

Im looking to fill a few professional white collar jobs…Cant not get past 10 seconds of engaging with a candidate where they bluntly don’t ask whats the PAY? 10 seconds and we hit a mandatory requirement – that is a go or no go moment. Dont care about role, company culture, deliverables….just PAY.

Job market is screaming hot = no employee loyalty. $5 an hour more and they are gone to a new job.

Thanks BOC for now noticing inflation might be a problem.

#22 crowdedelevatorfartz on 04.29.22 at 2:14 pm

@#111 Quintillian
“CEF added the two-spirit part. He drinks Rum and Whiskey.”
Too too funny.
But I picture Crowdie as a groovy kinda guy, with a hash pipe, a bag of shrooms.”

+++
Alas.
Those daze are long, long past.
Last time I smoked or ate something….
Put me to sleep.

To forget about depressing recessions…
Rum or Whiskey it is.
Dark rum and Coke.
Or
Single malt on the rocks.
With the odd beer chaser to cleanse the palate.

#23 MD on 04.29.22 at 2:20 pm

FED is going to announce their tapering plan on Wednesday, let’s see if there will be another taper tantrum from the market. Another 20% drop from here for S&P is on the cards and if FED stays on course of tightening as planned we will see how strong the actual balance sheet of companies are as they have been borrowing at artificially low interest rate since 2009. Only time will tell and if FED steps back than they will be exposed that they are trapped in this game of rigging the market. 9 trillion will blow to 20 trillion in no time to support the market if this happens.

#24 Moose on 04.29.22 at 2:23 pm

#9 Frank Fred.
You fail to mention that the EU is refusing to pay in Rubles and are actively seeking alternate sources of energy and target to be off Russian energy by next year. I think Putin will regret his Ruble payment requirement.

#25 The Regulator on 04.29.22 at 2:25 pm

# 6 – Felix : Don’t forget that cats also murder/death/kill MILLIONS of innocent songbirds every year. Dogs don’t do that. What is the point of your post here?

#26 The Regulator on 04.29.22 at 2:29 pm

And now a quote from John Adams :

“We have no Constitution which functions in the absence of a moral people”.

#27 Ballingsford on 04.29.22 at 2:37 pm

How do we have more disposable income? Mine is about the same, my wages didnt go up. I sure know that I get disposed of it quicker.

#28 Søren Angst on 04.29.22 at 2:40 pm

To all the

Don’t Know Sh!t from Clay Crowd Ruble lovers

here and I say that based on the Cdn MSM news you get:

The EU is paying in €’s not the soon to be 3rd World currency of Russia for their gas.

EU paying €’s and the Gazprom bank converts them into the Russian state phony currency.

All that so megalomaniac Putin can have his hollow victory.

By the end of the year, the EU will have cut gas supply from Rogue Nation Russia by 67%. End of 2nd paragraph.

https://ec.europa.eu/commission/presscorner/detail/en/ip_22_1511

Expect an embargo by the EU on Russian oil soon. Very soon.

https://www.nytimes.com/2022/04/14/world/europe/european-union-oil-embargo-russia-ukraine.html

——————-

Russia, by the end of the year, will be reduced to a Hermit Kingdom with a leader about as useful as North Korea’s (and dumb).

There is a WILL in the EU to put that petty dictator in his place once and for all. And it will happen.

#29 ElGatoNeroYVR on 04.29.22 at 2:43 pm

Blog reader asks yesterday of Garth to stop with the RE negativity posts ,result Garth doubles down :-)

Joke aside Garth has never been against buying RE , his message was always buy it if you can afford it without overextending yourselfand be mindful where the market is. He even has a rule of how much RE should be as % of your net worth based on age.

I do not alwasy agree with our hostˋs take on RE but I stronlgy agree with the fundamental message of this blog as outlined above and in todayˋs blog post.

#30 Ballingsford on 04.29.22 at 2:44 pm

#25 The Regulator on 04.29.22 at 2:25 pm
# 6 – Felix : Don’t forget that cats also murder/death/kill MILLIONS of innocent songbirds every year. Dogs don’t do that. What is the point of your post here?
*****
It’s Feelgood Feline Felix Friday. She always posts such nonsense on Fridays after eating her Whiskas and before going for a nap.

#31 Grumpy Panda on 04.29.22 at 2:48 pm

#9 Frank Fred. Sometimes I question my own sanity. It’s nice to read comments like yours to realize I’m actually doing quite well.

#32 Søren Angst on 04.29.22 at 2:58 pm

Canada’s economy is fine. USA’s is fine. For all the reasons you said Garth.

Agreed.

Higher rates will hurt many that acted foolishly thinking that the future is certain with lower rates when historically that is a myth, an aberration in time. Scroll to chart:

https://wowa.ca/banks/prime-rates-canada

Not realizing or forgetting that in 2007 the World financial centres near imploded. If it were not for the American’s and other rich countries pumping low cost dollars into their economies, a Depression would have resulted.

It has taken 13 years to come out of that, but come out of that Western economies have.

And yes a Depression. 13 years to get back to normal financially – the Great Depression took 25 years. That tells you it was bad.

Covid extended the low rate period for a few more years. Still 10-11 years to recover from 2007.

Recessions do not take that long to recover from.

——————–

Expect higher rates. Cdn RE prices to fall. Speculators to get theirs without Gov’t intervention thanks to Mr. Market and economies that have healed.

The recent years of “on paper millionaires” thanks to Cdn RE being goosed by cheap money are OVER. And those that borrowed against that and speculated, well, no sympathy from me. They made homes unaffordable for the young.

What comes around, goes around.

Greed. Avarice. Never end well.

#33 Expert on 04.29.22 at 3:01 pm

You know times are hard when Marxist’s are allowed to post on here lol
Income inequality is a huge issue in Canada for sure. Those who bought homes for a cent in 1700 or took it by force through colonization are bragging that their net worth has quadrupled in less than a year of the money printer go brrrr.
The Dog coin millionaire smiling at the bag holders who took payday loans because a billionaire tweeted them to buy the coin lol

#34 Habitt on 04.29.22 at 3:05 pm

All is good then. Life long savers have lost 10% to the markets and another 10% to inflation in what 4 months. Full steam ahead to be sure. But it’ll come back strong. Tell it to seniors that built this country and made average wages. What a load of c….

#35 T Rex and the dinosaur clique on 04.29.22 at 3:05 pm

RE: #88 Sail Away on 04.28.22 at 11:37 pm

Here’s what $285k gets you in Omaha:

https://www.zillow.com/homedetails/19351-X-St-Omaha-NE-68135/180952725_zpid/

Who would anyone live somewhere that would cost over a mil? It’s just a house. Geez. It provides normal house stuff like they all do.

///////////////////////////////////////////

It’s like that all over the USA. You could sell your falling down POS semi with no parking and a leaky roof and crumbling foundation in Toronto, and purchase four really nice houses down there, in States which have much better weather than Toronto will ever have (even with climate change).

Look at Arizona for example. Or Texas. Or even California.

Two months of crappy summer per year, most of the time it is raining or stormy, then winters where you are engulfed in snow and cannot get any outside activity.

Move down to Arizona, and enjoy life the way it is supposed to be lived, for the the same price as a parking spot in Toronto, here:

https://www.zillow.com/homedetails/2200-E-Emerald-River-Way-Fort-Mohave-AZ-86426/63494528_zpid/

#36 Don on 04.29.22 at 3:10 pm

Respectfully disagree

#37 Barb on 04.29.22 at 3:28 pm

“There are way more jobs available than people to fill them.”

———————-
But where have all the workers gone?
Home? The beach?

In B.C.’s Interior Health region, a $10,000 signing bonus is being offered to prospective medical lab technicians.
The lineups of wrinklies waiting to get into medical labs for blood tests, etc. are 10 to 12 people long, from 7 am right until closing time.

Inflation? Yup, what hasn’t shot up in price! Combine that with a shortage of stuff. A friend looking to do a small reno complained that a 10-foot 2×6 is $23.00. But the siding he prefers isn’t available “until next year”.

#38 Observer on 04.29.22 at 3:30 pm

#25 The Regulator on 04.29.22 at 2:25 pm
# 6 – Felix : Don’t forget that cats also murder/death/kill MILLIONS of innocent songbirds every year. Dogs don’t do that. What is the point of your post here?

^^^^^^^^^^^^
Responsible owners don’t allow that to happen. Blame the human, not the cat acting on instinct.

#39 Shawn on 04.29.22 at 3:31 pm

Why the Spurt in GDP?

Garth noted Canadian GDP is up and asks: “Why the spurt?”

Well, that would be due to stimulation of course.

#40 Observer on 04.29.22 at 3:32 pm

#37 Observer on 04.29.22 at 3:30 pm
#25 The Regulator on 04.29.22 at 2:25 pm
# 6 – Felix : Don’t forget that cats also murder/death/kill MILLIONS of innocent songbirds every year. Dogs don’t do that. What is the point of your post here?

^^^^^^^^^^^^
Responsible owners don’t allow that to happen. Blame the human, not the cat acting on instinct.

^^^^^^^^^^^^
And dogs do kill small animals. Squirrels and bunnies come to mind. Once again, not the dog’s fault, but the owner’s.

#41 Shawn on 04.29.22 at 3:33 pm

#19 Mike in Airdrie on 04.29.22 at 2:06 pm

So which is it..Canadians have strong balance sheets or they are $200 from living under the bridge?

Hopefully you are more intelligent than your question. – Garth

*******************************
Great question from Mike actually. Well played.

#42 John on 04.29.22 at 3:40 pm

Hopefully you are more intelligent than your question. – Garth

The question is very valid. Some sources say that 50% of Canadians are just $200 away from being unable to pay their bills, and the Scotia economist says “Fundamentals remain strong” like “strong household balance sheets”.
So which one is it? And what’s wrong with the question?

Research what a balance sheet is. – Garth

#43 Shawn on 04.29.22 at 3:43 pm

No, every fiat currency has not gone to zero:

#9 Frank Fred on 04.29.22 at 1:34 pm

Those who ignore history become roadkill-?? Please rebut that every fiat currency in the history of the world(There has been OVER 5000) has gone to 0.

********************************
Easy rebuttal. Perhaps you meant that every fiat currency that HAS gone to zero has gone to zero? A Sherlock Holms moment?

Did you forget that every fiat currency currently in use has NOT gone to zero? At least not yet.

The British pound has been around for several hundred years at least and has not gone to zero.

Neither has the U.S. dollar nor the Canadian dollar.

Yes they have all devalued with inflation. But that was easily overcome by investing the currency rather than letting it rot under a mattress.

If a currency is down 99% in purchasing power over a couple hundred years how much further does it have to go from there to get to zero? Sorry, doomers, the answer is not 1% but rather it is 100%. Not happening to the three currencies I mentioned. Not in your lifetime at least.

On top all that, even if you think the U.S. dollar is going to zero what strategy of investing does that call for besides not holding actual U.S. cash for a long time?

#44 ElGatoNeroYVR on 04.29.22 at 3:44 pm

#33 Expert on 04.29.22 at 3:01 pm
=========
I am confused about the point of your post ,granted it doesn’t take much to get me confused !
Was this a rant about income inequality in general or a post in support of more governement intervention to save people from themselves ?

While I do agree that income inequality is a big problem it will only get solved by creating more wealth not redistributing the existing one.
What the goal of the government should be IMHO is to ensure equality of oportunity (education , investments in R&D ,infrastructure ) and not of outcome.
I lived in a country governed by Marxist principles and it never works as intended on the long run for people are people and a corrupt rulling class supported by an even more corrupt bureaucracy always rises where there is no freedom of speech to keep them in check and there is no enforcement of laws or they are applied selectively.

#45 Adam on 04.29.22 at 3:50 pm

>>> when interest rates rise….. it will effect the price of homes. That will make people feel less wealthy. Then people will spend less. When the housing market drops, it will take down so many different parts of the economy. Real estate agent will make less, mortgage brokers will lose jobs, the moving companies, furniture stores. Just to name a few, but the ripple effect will go on more than just the few I named. I do see a recession if the bank of Canada goes too high. But they have to kill the economy if they ….want to bring down inflation. Things will get bad, but after that you will have another great boom <<<

———–

Exactly! This is what some people fail to understand. Like Frank Sinatra said, "You can't have one without the other!". Garth is preaching a housing price crash here of epic proportions, but with that will come reduced spending and reduced growth. Talk to anyone and it is obvious… people feel less wealthy and won't be buying those fancy iphones or big screen TV's or $150,000 tesla's. If housing market goes down in Canada, it takes everything else with it.

Nowhere am I suggesting a housing price crash of epic proportions, nor will a real estate correction bring down the economy. Very naive. – Garth

#46 Ambi and Vasu on 04.29.22 at 3:52 pm

#19 Mike in Airdrie on 04.29.22 at 2:06 pm
So which is it..Canadians have strong balance sheets or they are $200 from living under the bridge?

Hopefully you are more intelligent than your question. – Garth

We think he is much more intelligent!!!!!!!

Statistics Canada says the overall GDP growth in Canada was driven by mining, quarrying, and oil and gas extraction sector which grew by 3.4%. Now think about how many jobs does these sectors create????? Especially in non resource provinces????

Overall growth in Canada is pretty much lopsided with lots and lots of people in non resource provinces who are $200 from living under the bridge!!!!! For them GDP growth contributed zilch.

And there are lots of people in resource heavy provinces too, who are $200 from living under the bridge.

#47 pPrasseur on 04.29.22 at 3:53 pm

Never underestimate the ability of a Torontonian to overestimate the greatness of his or her country!

Overestimate being a euphemism in this case…

Socialism has consequences, if you don’t know that by now it’s hopeless.

#48 Jillian on 04.29.22 at 3:55 pm

The rates are going up -> the assets are going down.
Look at the DJIA is down 6% and S&P500 is down 10% this month only…
The equity markets reflect the emotions almost instantly vs the RE is a little bit slow.
Let’s see that the RE will indeed go down at least the same amount the markets went this month.

#49 Shirl Clarts on 04.29.22 at 4:00 pm

But wouldn’t that cause a recession? Nope.

Economists at BMO now estimate growth for 2022 will be more than 4%

I’d put a pin in these. Consumer spending is at the peak on everything, from housing, fuel, insurance, groceries. Even streaming Netflix – our ‘goto’ cheap entertainment – is about to go up (and get worse with ads). And, household HELOC borrowing requires higher servicing costs on a variable rate. So even less monthly nut for discretionary spend.

Yes, average wages went up, but still outpaced by inflation by a large margin. We started the year off making less money.

Municipal governments are going to goose assessments in 2023 as high as they can to reap higher property taxes, as they did already for 2022. More spending to look forward to, this year and next.

GDP will need to be saved largely by higher discretionary spending by those with paid-off houses. You know, the boomers? Hopefully, there are still a few left that didn’t HELOC their kids first house, or sell in February to move up or down the property ladder. But they are also retiring and therefore reigning in spending.

People are going to have to do ALOT more than just cutting back on Tim’s drive thru, to stop the bleeding of household finances. I don’t see fun times ahead.

#50 Love_The_Cottage on 04.29.22 at 4:01 pm

Major disruptive events (pandemic) lead to predictable outcomes (rapid recovery) with traditional consequences (inflation) and the usual response (higher rates).

More evidence that those who ignore history become its roadkill.
___________
And 11 of the past 14 times rates have increased a recession followed.

https://financialpost.com/investing/david-rosenberg-the-fed-is-tightening-and-that-usually-means-recession-no-matter-what-they-say

#51 VladTor on 04.29.22 at 4:03 pm

Garth …
That would take the chartered prime to almost 6.5%, push mortgages into the 6% or 7% range, and blow up the real estate market.

****************
Desjardin has forecast for 7% by next year.

Desjardins’ latest consumer interest rate forecast shows the 5-year fixed rate mortgage climbing — a lot. Over the next few quarters, it can hit up to 7%

My (non professional!) forecast is range 7% to 9%. And it will be best scenario for Canada.

#52 Overheardyou on 04.29.22 at 4:06 pm

Scotia confuses me, how can Canadians have strong balance sheets when a few weeks ago almost 50% of us are $200 away from being in the ditch?

Why do so many not understand the difference between a balance sheet and an income statement? – Garth

#53 Steven on 04.29.22 at 4:08 pm

Oops…

CPI will print positive 2x going into the midterms so Joe and gang can show they turned the eCONomy around…

#54 VladTor on 04.29.22 at 4:08 pm

#9 Frank Fred on 04.29.22 at 1:34 pm

Very sad that you continue to mislead your readers of what is actually going on.

***********

There is a simple explanation for this. It is known that generals are always preparing for the last war.

#55 Puzni on 04.29.22 at 4:08 pm

RE:
#21 dave on 04.29.22 at 2:09 pm
Inflation is out of control and prices are skyrocketing.

Im looking to fill a few professional white collar jobs…Cant not get past 10 seconds of engaging with a candidate where they bluntly don’t ask whats the PAY? 10 seconds and we hit a mandatory requirement – that is a go or no go moment. Dont care about role, company culture, deliverables….just PAY.

Job market is screaming hot = no employee loyalty. $5 an hour more and they are gone to a new job.

Thanks BOC for now noticing inflation might be a problem.

———————————

Dave, a lot of companies make a lot of promises, tell you that ” we are like a family” , ” great corporate culture” , ” your role is important” and as the business grows they pretty much all become the same. Bottom line is the business! Some younger people seek development with the company but I have seen when they are not given the right opportunities. I have seen it myself where business seem to care only about the bottom line. The question about pay is a valid one, it lets to establish that both parties are within the same range, otherwise no point of going through the interview. I know market is hot, have friends who seen their equals score jobs 30K more for similar roles with less headaches than them. Finally yes BOC is well behind the curve but everyone has enjoyed the easy ride including business.

#56 dragonfly58 on 04.29.22 at 4:08 pm

I think it really depends where on the career and income spectrum you are. Lots of middle class and lower households slowly but surely sinking. And I suspect quite a few upper middle class and higher doing quite the opposite.
A rising tide does not lift all boats in twenty first century Canada.

#57 Adam on 04.29.22 at 4:10 pm

Nowhere am I suggesting a housing price crash of epic proportions, nor will a real estate correction bring down the economy. Very naive. – Garth

———

I respectfully disagree. Time will tell.

Nope. You’re wrong. Own it. – Garth

#58 VladTor on 04.29.22 at 4:11 pm

#11 JEFF13 on 04.29.22 at 1:48 pm

…To paraphrase their own ad…”Scotia thinks you are richer than you are!”

***********
Best comment for the April!

Applause turning into a standing ovation!

#59 John on 04.29.22 at 4:13 pm

Research what a balance sheet is. – Garth

Right.. so it’s a statement of the net worth.. And as I understand, that means the households are doing just fine in terms of assets vs liabilities, but that doesn’t mean they have enough disposable cash at the end of the month from their current income… hence the 50% and the $200 away from being unable to pay.

I guess the balance sheets of the overstretched youngsters who bought a house with 5% down and these 5% was all they’ve got, would be a crappy balance sheet especially if their house drops more than 5%

#60 Bob Loblaw on 04.29.22 at 4:19 pm

Sorry Garth if the Nasdaq drops 50% and home prices drop 50% it doesn’t exactly instill confidence in consumers. There will be one hell of a recession coming our way.

The Nasdaq has corrected from its historic peak by 28%, not 50%. Most Canadians have little exposure to this index, which is historically far more volatile than the S&P 500. It also has zero connection to Canadian real estate values. There is no massive recession on the horizon. Go walk the dog. – Garth

#61 IHCTD9 on 04.29.22 at 4:22 pm

#6 Felix on 04.29.22 at 1:30 pm
Happy Feline Friday!

Did you know:

Cats make very little noise when they walk around. The thick, soft pads on their paws allow them to sneak up on their prey — or you!

Cats’ rough tongues can lick a bone clean of any shred of meat.

Cats use their long tails to balance themselves when they’re jumping or walking along narrow ledges.

Cats use their whiskers to “feel” the world around them in an effort to determine which small spaces they can fit into. A cat’s whiskers are generally about the same width as its body. (This is why you should never, EVER cut their whiskers.)

Cats walk like camels and giraffes: They move both of their right feet first, then move both of their left feet. No other animals walk this way
——-

Aye, Cats are awesome. When you see walking Cat tracks in the snow, it looks like a two legged beast created them. That’s because their rear paw steps precisely into the print left by their front paw on the same side.

Whiskers are important for Cats for multiple reasons. They just can’t see for crap up close, so the whiskers take over. Anyone who’s lived with a Cat already knows this. They’ll eat some treats on the floor, leave a couple and look up at you for more – totally oblivious to the 2-3 kibbles laying there right in front of them. Yet, no struggling prey escapes their clutches once they’re on top of them.

If you watch a barn Cat on the prowl, you realize they nail prey they can’t see all the time. They must use sound. I’ve watched feral Cats jump several feet to catch a mouse in 2-3’+ tall grass. No sight involved. Two times our house Cats have taken prey from under a man door, and behind a cabinet door – sight unseen.

Cats are also great at math. Open a high window, and it won’t be long before your house Cat is bobbing it’s head up and down working out the trajectory to jump up there and listen (and smell) the outdoors.

We once had a big brown bat get into the house. It was circling the living room while I vainly attempted to swat it down with a hockey stick. It’s flight path was unpredictable, and evasive manoeuvres to avoid my Titan Pro were effected instantaneously, and with razor precision. Ms. IH and were so focused on this (15.25” wingspan) beast, that we did not even notice “Molly” (our Cat at the time) also taking an interest in our unwelcome furry visitor. The Bat made the unfortunate decision to swing into the kitchen where Molly was already cranked up to “11”. She launched herself over 5 feet straight up in the air and one-timed that big-brown onto the floor with a single swat. Once on the floor, the Big Brown could not take flight again (I read later that they can’t take off from the ground). The Bat was super aggressive once downed, and Molly would do no more, but no problem – the hockey stick was adequate at finishing off the hissing fang sporting freak in the downed position. It was amazing how she managed to pull this off given how evasive the bat was, and how high she had to jump. She had to have been a mathematical genius, and quick as lightning to make it happen. I failed 10 times or more, even with no jumping required.

On YouTube, there are folks in other countries with smaller Wildcats as pets. Cheetahs, Jaguars, and American Lions. Yes, they act just like domestic house Cats. They purr, and love being pet, but there’s no way I’d have a 200 lb freaking Cat as a pet. I’ve learned they kill 100% on instinct. They’ll turn on you unpredictability. They’re not a pack animal. It’s funny and endearing when your 15 lb tabby has had enough attention for now, and let’s you know it. Not funny when the thing is almost as big as you are. Has anyone ever owned a domestic Cat that has never made you bleed at least once?

I love Cats, but I fully understand they see you as equals to them. Not subservient. Best keep ‘em at under 20 lbs :)

#62 TheDood on 04.29.22 at 4:22 pm

#76 Lee on 04.28.22 at 9:15 pm
#35 Inflation

Nobody is leaving Canada. Except for vacation.
________________________________

Both of my university educated offspring accepted job offers south of the border in the not too distant past, neither have plans to come back. We actively pushed them to explore opportunities outside Canada and couldn’t be happier that we did.

Reasoning is simple – better long term opportunities, better pay, better weather, lower cost of living.

Cost of living in Canada is much too high given what you get in return.

I don’t think there’s going to be a mass exodus to leave, but I think the gig is up for a lot of our best and brightest. Moving/living/working outside our border has never been easier.

#63 VladTor on 04.29.22 at 4:23 pm

#20 Shawn on 04.29.22 at 2:07 pm
Thank you for subsidizing my Tesla

**********

Tesla’s subsidies should be declared illegal and repealed. A democratic country with a market economy should not give anyone an advantage.

Well, if they subsidize Tesla, then they should subsidize my purchase of an electric kettle instead of a gas-heated kettle, or subsidize the installation of an electrically heated boiler in the house instead of a gas boiler.

The country has a very weak political system and politicians are afraid to even discuss these ideas imposed by liberal professors, which are absolutely wrong. Did you know that in the production of Tesla
(more precisely, its parts – batteries, etc.) emit more greenhouse gases than it saves over its entire service life.

Do you know that there is still no technology for recycling spent solar panels or wind turbine blades!

#64 Ponnaps on 04.29.22 at 4:26 pm

Granted all indications are that everything has begun to revert to their historical mean .. everything except the stock market.. its way off .. this breathless growth was fully fueled by volumes and cheap money.. much like real estate (WFH ensured volumes).. now that RE is reverting why not stocks? surely valuation means something, more so in the stock market…

Stocks feed on corporate profits and cheap money. Real estate feeds on FOMO and cheap money. Can you spot the difference? – Garth

#65 Sovavia on 04.29.22 at 4:36 pm

Real disposable personal income fell 2% in the USA.

Per capita real household income is barely above the pre-pandemic level (1st quarter of 2020).

Inflation bites off the kitchen table, for the vast majority of households.

#66 Valleyboy on 04.29.22 at 4:37 pm

Great article. I agree that this recession talk everywhere is so wrong. The economy is firing. Unfortunately higher rates will just bring higher inflation thou. Venezuela 2.0 here we come. Business charge more to service the debt, and the bond holders get paid more. Money moves not disappears.

#67 Summertime on 04.29.22 at 4:41 pm

Our economy is strong.

This is precisely what Hank Poulsen said in 2008 just before the housing collapse.

Actually, he didn’t. “The underlying weakness in our financial system today is the illiquid mortgage assets that have lost value as the housing correction has proceeded. The federal government must implement a program to remove these illiquid assets that are weighing down our financial institutions and threatening our economy.” Poulsen, in September, 2008. By the way, US housing peaked in late 2005. The 2008 fallout was on Wall Street, resulting from the crash in certain securities which do not exist in Canada. But, nice try. – Garth

#68 NOSTRADAMUS on 04.29.22 at 4:45 pm

NEVER BET AGAINST THE US!
MMMM… It is no secret that economic conditions are somewhat troubling to say the least. So are bright sun shiny days just around the bend? That is what some media bulls seem to think. “All this negativism is just noise, and the economy is not falling into a recession.” Maybe they will be right. But if the economy is so strong, and I look to the US for a sense of monetary direction, then why are the number of housing foreclosures running so high? The following sobering US statistics are the proverbial canary in the coal mine for the direction the Canadian Real Estate is heading. Last month 33,333 properties across the US faced foreclosure, A 181% jump from March 2021, according to a report by foreclosure tracker Atom. The first quarter saw 78,271 properties with a foreclosure filing, a 39% increase from the previous quarter and a 132% from last year. Now, now, I can almost hear the nay Sayers, this is Canada not the US, we are not cowboys. Here in Canada we are much more responsible, it is in our DNA. The logic behind my prediction, The up tic, US mortgage rates bolted out of the barn months ago. There is always a delay before the consequences, meaning, higher monthly payments hit the main street pocket books. As we all realize, the Canadian mortgage rates are just starting to gain upward traction. Logic would strongly indicate, that before too long, the number of Canadian insolvencies will lift off and head for outer space. Hold on, someone at the door.

#69 Midnight’s on 04.29.22 at 4:47 pm

To all the

Don’t Know Sh!t from Clay Crowd Ruble lovers

here and I say that based on the Cdn MSM news you get:

The EU is paying in €’s not the soon to be 3rd World currency of Russia for their gas.

EU paying €’s and the Gazprom bank converts them into the Russian state phony currency.

All that so megalomaniac Putin can have his hollow victory.

By the end of the year, the EU will have cut gas supply from Rogue Nation Russia by 67%. End of 2nd paragraph.

https://ec.europa.eu/commission/presscorner/detail/en/ip_22_1511

Expect an embargo by the EU on Russian oil soon. Very soon.

https://www.nytimes.com/2022/04/14/world/europe/european-union-oil-embargo-russia-ukraine.html

——————-

Russia, by the end of the year, will be reduced to a Hermit Kingdom with a leader about as useful as North Korea’s (and dumb).

There is a WILL in the EU to put that petty dictator in his place once and for all. And it will happen.

Lmbo…WRONG!!!!

#70 Big Bucks on 04.29.22 at 4:47 pm

The market is making it pretty clear to me that it feels a recession is coming.Rtaes will still go up to try and contain inflation so the saying “sell in May and go away”has never been more poignant than in 2022.This summer is going to be a doozy.Feel sorry for the restaurants as so many will go belly up by Fall.

#71 Wallflower on 04.29.22 at 4:47 pm

What does it mean if cat moves its left feet first?
Cats walk like camels and giraffes: They move both of their right feet first, then move both of their left feet.

#72 don't poke the bear on 04.29.22 at 4:51 pm

An imaginary coin is worth 38K

A car company that makes 1/100 of what the largest car manufacturer makes is worth all car companies combined

A company that sells used cars out of a vending machine is worth 10B and considered a technology company.

the coming collapse will be epic

#73 Zealty fealty on 04.29.22 at 4:54 pm

#10 Flop… on 04.29.22 at 1:48 pm
#3 DON on 04.29.22 at 1:22 pm
Garth, in one post you managed to address two weeks of disinformation by a bunch of sources.

@flop or anyone. how do i check on, how much a house recently sold for?

///:///////////

Go to Zealty.

Sign up and you can see what a house for as recently as yesterday.

Cough up the address if you have trouble and I’ll try and find out.

I’m on break, going to go back to work and practice my pronouns…

M47BC

________________

Garbage web site. Looks like grade 2 designed it. Search is broken. Try searching solds or expired. No worky.

#74 TurnerNation on 04.29.22 at 4:57 pm

War on SFH. Comrade do not be selfish, share your land for the good of your prefecture. Your Block Captain will be monitoring your compliance.

https://www.cbc.ca/news/science/what-on-earth-yard-sharing-1.6434216
“Love gardening? Hate gardening? Either way, yard sharing could be the solution”

…because, this is the future. Crowded, fetid UN Smart Cities. It’s moving really fast now.
Your hint was that new condo construction never got shut down, during the Economic Lockdowns.
Look at this thing. One of so many. Comrade, the State will house you cradle-to-grave in an apartment Bloc.

“Car dealerships north of Toronto to be replaced by 18-building megacomplex”
https://www.blogto.com/real-estate-toronto/2022/04/car-dealerships-north-toronto-18-building-megacomplex/



Seen on an internet forum “From Health Canada, in Alberta, CV data over two and a half years: 558k cases, 4,190 deaths, average age 78 years. With an Alberta population of 4.46 million this equates to 12.5 % testing positive for the virus over 2.5 years, .037% deaths of total population per year, average age 78. No information regarding deaths that were due solely to Cov2 as opposed to with the virus and several serious co-morbidities”

#75 The Regulator on 04.29.22 at 5:00 pm

# 28 – Sorun Agast : The E. U. just announced a breakthrough in Unicorn Fart technology! Soon biodegraders will harness said flatulence from wild herds of unicorns which roam the vast northern regions of Sweden and Finland! Also, studies are being commissioned to explore using the hot air coming from European politicians’ winded speeches in Brussels. Ruble$$$$$$$$$$$$$

#76 Linda on 04.29.22 at 5:06 pm

Doing the weekly run to the farmer’s market. Things I noticed in no particular order: 1) lots of customers, more vehicles in the parking lot very shortly after the market opened at 9 a.m. 2) lots of trucks making deliveries. Not just food, but supplies for gardening, building, road construction etc. 3) increased traffic in general, up even from a week or two ago. 4) much more morning traffic, as folks zoom out of the neighborhood. I strongly suspect RTW is the reason. 5) locally, a lot of houses that went up for sale in the past couple of weeks have all of them sold or have C/S (conditional sale) stickers on the signs. Most are selling within a week to 10 days of the sign going up. So I’d say locally that the economy is doing just fine, market fluctuations, inflation or fears of recession be damned.

#77 crowdedelevatorfartz on 04.29.22 at 5:07 pm

Hmmmm
Vancouver’s “Non emergency” Police line ( broken car windows, thefts, graffiti, etc) had
18,680 UNANSWERED calls in the first 3 months of this year.

https://www.burnabynow.com/local-news/vancouver-police-say-18680-non-emergency-calls-went-unanswered-in-first-three-months-of-2022-e-comm-crime-5284697

The 18,680 unanswered non emergency calls represent approx. 40% of the total non emergency calls received in the first quarter of 2022.
“People don’t have the time to spend 90 minutes on hold to speak to an operator……”

There are now also 6 random( stranger on stranger) assaults in Vancouver PER DAY in 2022.

The Nov election to boot out the Mayor and his wokester cabal ….can’t come soon enough in the Best Place on Erf.

#78 crowdedelevatorfartz on 04.29.22 at 5:14 pm

@#61 IHCTD9
” It’s funny and endearing when your 15 lb tabby has had enough attention for now, and let’s you know it. Not funny when the thing is almost as big as you are. Has anyone ever owned a domestic Cat that has never made you bleed at least once?”
+++

Yep.
An elderly relative once laughed as we little kids were horrified watching his barnyard cat kill and eat a rat and said, “That thing would kill and eat us if it was big enough….”

#79 Ponnaps on 04.29.22 at 5:15 pm

Stocks feed on corporate profits and cheap money. Real estate feeds on FOMO and cheap money. Can you spot the difference? – Garth

True true..but cheap money.. is being removed.. should expect meaningful correction.. not as much as real estate..but reversion nonetheless is due..

#80 Joseph R on 04.29.22 at 5:17 pm

#12 Drew on 04.29.22 at 1:50 pm
” Worst part is the ones furthest out to lunch are the same ones most adamant that they are right.”

You summed up any all comments section on the Internet.

Well done!

#81 Concerned Citizen on 04.29.22 at 5:19 pm

“‘Jeopardy!’ champ Mattea Roach says buying a home in Canada in her 20s only realistic because of game show windfall”

https://www.thestar.com/news/canada/2022/04/26/jeopardy-champ-mattea-roach-says-buying-a-home-in-canada-in-her-20s-only-realistic-because-of-game-show-windfall.html

“it’s a little bit grim that I had to go on a game show — and not just appear on a game show but be one of literally the top contestants to ever be on that show — to feel like I have now some chance at like having financial security”

I hate to break it to her, but even with $400,000 USD in winnings so far, she’ll be lucky to get more than a 1-bedroom condo in Toronto – assuming she qualifies for a decent-sized mortgage with her student loans.

But her example has inspired with a new idea. Let’s have every Canadian under the age of 30 go on Jeopardy and win $400,000 USD. That will give them at least a fighting chance to own a shoebox in the sky of their very own.

#82 an investor on 04.29.22 at 5:20 pm

“More evidence that those who ignore history become its roadkill.”

Like Venezuelan history? Cuban history? The American Revolution? I know my history.

This is all planned and it won’t end well. Our own PM has even quoted Schwab’s book on the Fourth Industrial Revolution.

btw, a couple of weeks ago you concluded one blog by writing “it will be epic” … what will be epic?

And today the DOW lost another 1,000 points. Epic.

#83 Free cash flow on 04.29.22 at 5:20 pm

#52 Overheardyou on 04.29.22 at 4:06 pm
Scotia confuses me, how can Canadians have strong balance sheets when a few weeks ago almost 50% of us are $200 away from being in the ditch?

Why do so many not understand the difference between a balance sheet and an income statement? – Garth

_________

Or even “free cash flow” for that matter!

For example, when you find a 20 dollar bill in your jeans after you wash them. Your wife doesn’t know about this cash so it’s “free”. So take it down to your local pub and make the beer “flow”!

Free cash flow.

#84 Wallflower on 04.29.22 at 5:27 pm

Agree re:
I don’t think there’s going to be a mass exodus to leave, but I think the gig is up for a lot of our best and brightest. Moving/living/working outside our border has never been easier.

In my start up years nobody was relocating to countries like Bulgaria, Portugal, USA.
They are now.
The immigrants shall inherit the debt and the wrinklies.

#85 Shawn on 04.29.22 at 5:28 pm

Balance Sheet versus Income and bankrupcy

#52 Overheardyou on 04.29.22 at 4:06 pm
Scotia confuses me, how can Canadians have strong balance sheets when a few weeks ago almost 50% of us are $200 away from being in the ditch?

Why do so many not understand the difference between a balance sheet and an income statement? – Garth

**************************
Couple things:

When the scare mongers were out so many times with the “$200 away from can’t pay the bills” didn’t they describe it as $200 away from broke? In any case I don’t remember the surveyors of that saying, don’t worry those same people still have bet worth.

And is the following valid:

Hey Finance Minister: “The people have no cash”

Is a valid response: “Then let them spend capital”.

#86 Barb on 04.29.22 at 5:31 pm

“6 magnificent waterfront properties” reads the listing:

https://havenlifestyles.com/6-magnificent-waterfront-properties-on-the-market-3/

Wowsers.

#87 Overheardyou on 04.29.22 at 5:46 pm

My apologies for being naiive, I did not know an income statement existed for individuals. Personally I use a budgeting spreadsheet off Google. And the fact the $200 from insolvency meant Canadians can sell their assets to cover their obligations was not in my calculations.

#88 Al on 04.29.22 at 5:56 pm

I like this comment in the Globe and Mail:” I’m thankful that I’m in my early 60’s and have lived through 15% mortgage rates, the Arab oil embargo, two Gulf wars, the Great Recession of 2008/2009, the dot.com bust, the stock market crash in 1987, the Covid pandemic, and now the Russian attack on Ukraine.  What have I learned?  This too shall pass.
If you can’t afford to lose money in the short term in the stock market, you shouldn’t be in the stock market.  Long term, those that stay invested and ignore the wails of gloom and doom do well.  Similarly, I’ve lived through several major housing corrections…and each time house prices have recovered and hit new highs.  
Asset prices fluctuate.  Long term, housing and the stock market have proven to be the best investments.  It’s not different this time.”

#89 VladTor on 04.29.22 at 6:12 pm

Garth…
The 2008 fallout was on Wall Street, resulting from the crash in certain securities which do not exist in Canada.

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

Garth, please, can you do short explanation (short list) which “certain securities” not exist in Canada but exist in USA to understand nature USA 2008 crash

Good to know for self education.

#90 Ustabe on 04.29.22 at 6:16 pm

This may get a bit long but despite some folks misgivings about the veracity of my stories I will say this: I’m not much of an investor hence my hiring a firm to look after planning/purchase/tending/taxes, etc. but I was and remain a pretty good businessman.

So, recall the big dot com melt down? My brother was with Investors back then and basically lost it all. A few months later he gets in touch, a co-worker of his has two rental trailers on the outskirts of Calgary he has to sell, fire sale, divorce, RevCan (in those days), all the things.

Only trouble is my brother doesn’t have any cash to buy these things. No one is loaning on this slum lord stuff. So I partner up with him and that was the start of a 35+ year accumulation of rental housing in Calgary. Fast forward and my brother passes, I engage the services of a property management company while I sort stuff out. Property management company is a sub of a large Calgary real estate outfit, build malls, apartments, accumulate land, run rental housing, have their own REIT, big development stuff.

Get a call from them asking if their acquisitions team can look over the portfolio, say yes. Enough time passes with no further response such that I assume they are not moving forward when, whammo, a formal offer is presented. They will purchase all the assets and liabilities of our holding company for x dollars. Divide that figure by the number of properties we held and no-brainier, they were so close to retail even a lawyer couldn’t argue. About a year later CRA finally capitulates and issues a clearance letter, a few weeks after that I have a shit ton of money.

My point on this one is if your income is majority represented on a T4 slip or your pension is with Nortel you need to worry during times like this but if you have started/bought/built your own business, retained earnings, and can take back shareholder loans, etc times like now are almost fun.

Get a side hustle going, one that depends on you making choices, not a boss or a committee. Its not easy in the beginning, man I hated having to drop my life, fly into Calgary and spend a weekend replacing a roof or painting a new acquisition or whatever. The first ten years were hard on us physically, financially, emotionally but the next ten were OK, cash positive, managed to hire handymen for the ruff stuff. The last ten were gravy, fat cat landlord stuff.

I’m not saying that today you can do what I did, I’m long retired and the real estate/landlord game has significantly changed. (there are real reasons we confined ourselves to Alberta for instance) Still at least monthly something perks my interest or is brought to my attention.

OK, long enough, I’ll re-tell the Turkey Saga another time, very germane to the ongoing angst evidenced here of late.

#91 WTF on 04.29.22 at 6:18 pm

Good one Flop, thanks for the chuckle

“I’m on break, going to go back to work and practice my pronouns…

Gonna use that in certain circles if you don’t mind:-)

#92 Flop… on 04.29.22 at 6:34 pm

#73 Zealty fealty on 04.29.22 at 4:54 pm
#10 Flop… on 04.29.22 at 1:48 pm
#3 DON on 04.29.22 at 1:22 pm
Garth, in one post you managed to address two weeks of disinformation by a bunch of sources.

@flop or anyone. how do i check on, how much a house recently sold for?

///:///////////

Go to Zealty.

Sign up and you can see what a house for as recently as yesterday.

Cough up the address if you have trouble and I’ll try and find out.

I’m on break, going to go back to work and practice my pronouns…

M47BC

________________

Garbage web site. Looks like grade 2 designed it. Search is broken. Try searching solds or expired. No worky.

///////////////////

Designed by former blog alumni Adam Major.

You have to sign in to get full use of this website.

If you are lazy, which I had to guess I’d say yes, click on map and zoom into the property you want the information on.

Don’t be just another lazy victim…

M47BC

#93 The Regulator on 04.29.22 at 6:51 pm

# 63 – VladTor : Well said!
# 69 – Midnights : Good answer!
# 72 – Don’t Poke the Bear : True!
# 74 – Turner Nation : Lol, dead on!
# 78 – Crowdedelevatorfartz : More truth!

#94 toronto1 on 04.29.22 at 6:53 pm

#28 Søren Angst on 04.29.22 at 2:40 pm

Expect an embargo by the EU on Russian oil soon. Very soon.

not going to happen…….. simply there is no equivalent available at a competitive price.

The biggest advocate for the embargo is ….drum roll….. France

coincidentally France number one competition is Germany, who also would be hurt the most via embargo.

The Germans are not going to commit suicide to their economy just because France and Belgium want them too and besides, Germany neighbours, Austria,Slovika, Hungary (basically cheap labour vassal states of Germany) would also veto it as well.

What’s the EU going to do? sanction Germany? kick out Austria or Slovakia or Hungary?

not happening just more talk….

there are literally billions of dollars in GDP and earnings at stake for Germany—- there not going to fold on this

#95 pPrasseur on 04.29.22 at 6:56 pm

Why the Spurt in GDP?
Garth noted Canadian GDP is up and asks: “Why the spurt?”
Well, that would be due to stimulation of course.

Obviously, and stimulation (as opposed to real productivity growth) leads to inflation and inflation will eventually bring higher rates and/or choke everyone’s purchasing power. A recession or recessions is just a matter of time, we will then see what is really left of the Canadian economy and I think it will be a shock to many.

“HELOC heaven” Canada where everyone is a millionaire is one of the most “stimulated” countries in the world, as shown by it’s off the charts total debt level, it should be eventually one of the most severely corrected.

#96 AK on 04.29.22 at 7:03 pm

“#3 DON on 04.29.22 at 1:22 pm
Garth, in one post you managed to address two weeks of disinformation by a bunch of sources.

@flop or anyone. how do i check on, how much a house recently sold for?”
====================================

https://www.zoocasa.com/

You will just need to sign up with your email…

#97 Penny Henny on 04.29.22 at 7:04 pm

#57 Adam on 04.29.22 at 4:10 pm
Nowhere am I suggesting a housing price crash of epic proportions, nor will a real estate correction bring down the economy. Very naive. – Garth

———

I respectfully disagree. Time will tell.

Nope. You’re wrong. Own it.- The Amazing Kreskin

#98 Two-thirds on 04.29.22 at 7:11 pm

So… economic indicators for the previous months are positive, and therefore, future economic indicators will continue to be so?

And, central banks (who failed to prevent the current situation) will be able to manage a soft-landing of the economy and surgically cool the RE market but avoid hurting the economy at large?

If Scotia says so, it must be true. What must also be true then is that “we are richer than we think.”

So YAY! Everything is awesome!

:(

#99 Quintilian on 04.29.22 at 7:12 pm

Finally the gamblers opps I mean “investors” are starting to believe that Powell is seriously doing away with the Greenspan Put.

#100 crowdedelevatorfartz on 04.29.22 at 7:17 pm

@#86 Barb

https://havenlifestyles.com/6-magnificent-waterfront-properties-on-the-market-3/

++++

Hilarious!
They mispelled “gorgeous”….
Unless the house overlooked a Gogeous gorge….?

Oh well.
Who needs a formal education when you’re a Realtor.

#101 Philco on 04.29.22 at 7:33 pm

#57 Adam on 04.29.22 at 4:10 pm
Nowhere am I suggesting a housing price crash of epic proportions, nor will a real estate correction bring down the economy. Very naive. – Garth

———
I respectfully disagree. Time will tell.

Nope. You’re wrong. Own it. – Garth
———————————-
Chance of a major RE wipe out…..not happening.
It would require major selling. Markets are tight a a bulls butt. Demands there. Shortages for places to live abound. A lot of folks own their homes.
Go see what it took to take down the US RE. They were giving mortgages to homeless. Appraiser where jacking appraisals to evade the money down policy. It was super corrupt.
We have no hallmarks of that. Its not overpriced where we are.
A $800k house cost that to build. SunShine coast Ocean views.
What the hell where peeps thinking paying 4-5mil for teardown crap in the big smokies. Those dudes will take a hit. They bought a postage stamp lot and have to pay to have the house demolished. That’s funny.
Know your market know your value.

#102 Midnight’s on 04.29.22 at 7:33 pm

Socialism at its finest…
https://ottawacitizen.com/news/local-news/fewer-than-half-of-students-in-ontario-psw-pilot-working-six-months-after-graduation

#103 Okotoks Matt on 04.29.22 at 7:34 pm

Things are looking great in Alberta and Sask. We have natural gas, oil, potash, nitrates, hydrogen, and reasonable real estate. Alberta will have a surplus over $10 Billion+ this year. Thanks to Freeland/Trudeau’sreckless debt and spending, Canada will be desperate for pipelines and resource development.

#104 TurnerNation on 04.29.22 at 7:36 pm

____ In May and Go ____?

—-

Supply Chain. For their health guys! Normalcy is like this close.

.Pot-banging Shanghai residents protest Covid rules (bbc.co.uk)

.Beijing halts weddings and funerals and closes schools in Covid fightback (theguardian.com)

.Japan Government Advisor to Propose Letting in Tourists (bloomberg.com)

.’Entry only. No exit:’ Beijing sees more COVID closures as anger grows in Shanghai (reuters.com)


— Life in Kanada/Republic of Fizer. See how happy and satisfied everyone is?

.Hamilton will move ahead with plans to terminate unvaccinated employees next month (www.cp24.com)
““It is irresponsible for this city council to cast a vote to terminate hard working employees, who have served on the front lines for the last two years during COVID-19, especially during times without any protection,” Amalgamated Transit Union Local 107, which represents Hamilton Street Railway employees, said
in a statement issued on Thursday. “To come to this conclusion now is disrespectful and completely unfair to all frontline city and transit workers who continue to work and serve this community daily.””

https://www.blogto.com/city/2022/04/toronto-police-warn-traffic-chaos-14-protests-weekend/
“Expect to see plenty of cops, and probably a whole lot of brake lights in snarled traffic this weekend, with a whopping 14 different protests set to take place in the heart of the city, all within the span of two days.”

#105 Shawn on 04.29.22 at 7:40 pm

Tesla is bad?

#63 VladTor on 04.29.22 at 4:23 pm
#20 Shawn on 04.29.22 at 2:07 pm
Thank you for subsidizing my Tesla

**********

Tesla’s subsidies should be declared illegal and repealed.

Did you know that in the production of Tesla
(more precisely, its parts – batteries, etc.) emit more greenhouse gases than it saves over its entire service life.

Do you know that there is still no technology for recycling spent solar panels or wind turbine blades!

**********************
Most of the subsidies are from the U.S. government.

But I don’t care about any of this.

If Tesla batteries and green power are bad then I should be charges an environmental fee on my Tesla purchase and power purchases.

I’m happy to pay the Carbon tax on gasoline and natural gas. I always said if my driving causes pollution then don’t ask me not to drive or not to idle my car. Instead charge me a “fully compensatory” rate for my energy and then I will drive and idle to my hearts content having compensated the world.

Bring on the Tesla environmental fee and the green power fee if it can be justified.

Market signals work.

#106 crowdedelevatorfartz on 04.29.22 at 7:44 pm

More Vancouver voters expressing their displeasure at the Vancouver City Clowncil.

https://vancouver.citynews.ca/2022/04/29/vancouver-public-safety-meeting-concerns/

Vancouver Municipal election mid Oct 2022.
Stay tuned.

#107 yvr_lurker on 04.29.22 at 8:38 pm

You may think you live in an extraordinary time. But you don’t. Major disruptive events (pandemic) lead to predictable outcomes (rapid recovery) with traditional consequences (inflation) and the usual response (higher rates).
————————-
I don’t think we are entering a recession. However, I do believe that we have lived in rather extraordinary times. Never has there been a pandemic this large in the jet age when people are so mobile, spreading one variant after the next around the globe so fast (and likely more to come). All this at a time where Putin is getting increasingly desperate and with a non-zero chance that he will hit the small-scale nuclear button when he is cornered (like the rat he is). The reaction from the West if this occurs; who knows? I was a grad student in California during the mid-80s with all the rhetoric between the US and the Soviet Union (with Star Wars defence of Regan). The situation then did not feel nearly as precarious as it does now. Very few who are alive now have lived through WWII, and these battles in Ukraine may send us over the edge. So yes, I do think that these are rather extraordinary times, and who knows what will happen over the next few months.

#108 Flop… on 04.29.22 at 8:39 pm

#91 WTF on 04.29.22 at 6:18 pm
Good one Flop, thanks for the chuckle

“I’m on break, going to go back to work and practice my pronouns…

Gonna use that in certain circles if you don’t mind:-)

/////////////////////////

No problem, use away.

I’m at the bottom of the government gravel pit, so everyone is my boss.

These are my favourite pronouns.

She Boss, He Boss, They Boss…

M47BC

#109 Ponzius Pilatus on 04.29.22 at 8:44 pm

#106 crowdedelevatorfartz on 04.29.22 at 7:44 pm
More Vancouver voters expressing their displeasure at the Vancouver City Clowncil.

https://vancouver.citynews.ca/2022/04/29/vancouver-public-safety-meeting-concerns/

Vancouver Municipal election mid Oct 2022.
Stay tuned.
————-
Go out canvass and vote.
Ranting here ain’t gonna amount to a hill of beans.
Remember:
Be the change you wanna be.

#110 Cici on 04.29.22 at 8:53 pm

#25 The Regulator on 04.29.22 at 2:25 pm
# 6 – Felix : Don’t forget that cats also murder/death/kill MILLIONS of innocent songbirds every year. Dogs don’t do that. What is the point of your post here?
_____________________________________________

Mr. Regulator, don’t forget that dogs attack MILLIONS of innocent people (including children) every year, some of which are fatal. Cats don’t do that.

In the US alone: https://en.wikipedia.org/wiki/List_of_fatal_dog_attacks_in_the_United_States

That said, most dogs are great. But you did open that can of worms.

#111 Observer on 04.29.22 at 8:54 pm

So it looks like the Rolling Thunder event in Ottawa is not going too peacefully. And it has barely started. Maybe it will get better when Chris Sky (holocaust denier amongst other attributes) makes his scheduled speech later this weekend.

#112 Dr V on 04.29.22 at 8:55 pm

90 Ustabe – good read. Thanks for sharing.

Only question – dot com buat was only 20 years ago, not
35. Did you mean early 80s recession? Oil bust?

#113 Dr V on 04.29.22 at 8:56 pm

gaaa “bust” not “buat”

#114 Flop… on 04.29.22 at 8:59 pm

When I’m sitting at a bus stop in Texas, sometimes I grab a realtor mag out of the bin and have a laugh what you can get for your money down there.

Glanced at this article last night, median house price nationwide is $337k.

The ten town they chose, can’t say I’ve been to any of them, doesn’t sound like they are in the best place regarding natural disasters.

I think most of the houses the showed as examples were in between 100-175k.

I tell myself each night it’s a good thing that half of Vancouver is not built on a flood plain.

It’s easy to look down on these towns, but people with too many glass condos shouldn’t throw stones…

https://www.msn.com/en-ca/money/finance-real-estate/americas-top-10-most-affordable-metros-to-buy-real-estate/ss-AAWzaEJ?li=AAggNb9#interstitial=1

#115 yvr_lurker on 04.29.22 at 9:00 pm

#77
The Nov election to boot out the Mayor and his wokester cabal ….can’t come soon enough in the Best Place on Erf.
——-
We agree here. I have never voted right of center for anyone, but have been watching with disgust what many on vancouver city council think are high priorities over the past 4 years (mobility pricing, parking permits everywhere, stalling on everything (False Creek), giving $$$ to help with lawsuits in Quebec against the head-scarf… reminder to self: stay in your ^*&^& lane…). Many of them have to go, and I am supporting Ken Sim and his group…. I met Ken over a coffee and really liked him…

#116 VladTor on 04.29.22 at 9:01 pm

#105 Shawn on 04.29.22 at 7:40 pm

….Most of the subsidies are from the U.S. government.

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

You probably don’t know that Canada start doing same – $5000 refund for Tesla.

Now explain me, please, from where this money going? Who will pay for Tesla party?
Why we should subsidize NOT a Canadian company?

Sorry, but I see here corruption elements.

#117 THE DANDADA on 04.29.22 at 9:06 pm

Garth – your just totally out of touch with the 99%.

Those who are lower and middle class with fixed incomes are getting smashed.

Quality of life for so many has been sinking like never before.

Stats don’t matter much until you actually get out and meet the suffering.

This is a free blog of curated advice. Buzz off. – Garth

#118 Cici on 04.29.22 at 9:07 pm

#31 Grumpy Panda on 04.29.22 at 2:48 pm
#9 Frank Fred. Sometimes I question my own sanity. It’s nice to read comments like yours to realize I’m actually doing quite well.
____________________________________________

Awesome retorque, Grumpy Panda!

#119 VladTor on 04.29.22 at 9:11 pm

#105 Shawn on 04.29.22 at 7:40 pm

….I’m happy to pay the Carbon tax on gasoline and natural gas.

*********

Personally me and a lot of Canadians NOT HAPPY.

Just turn on (sorry for question which can hurt your refined green brain) and think bout next. Canada has after Russia biggest in the planet forests. Do you remember school biology lessons – forests absorb carbons. Now ask himself – Why we have to pay carbon tax.

All countries should pay to us for our forests ANTICARBON tax b’s we keep our forest in good shape.

For instance – Brazil destroys the rain forests!

#120 The Regulator on 04.29.22 at 9:12 pm

# 40 – Observer : Riiiight…, dogs kill millions and millions of squirrels and bunny wabbits annually. And the odd richardsons’s ground squirrel. Pssst : ( that’s a gopher).

#121 FO on 04.29.22 at 9:34 pm

Feels like echos of ‘00 Dot Com. Ignore the drinking buddies offer to jump ship to form a start up and position ones self as close as possible to the main revenue stream of the employer. We’re likely in for some chop.

#122 Observer on 04.29.22 at 9:38 pm

Unbelievable. This is Neil Sheard, organizer of this weekend’s Rolling Thunder tribute to vets. Poor residents of Ottawa having to put up with this guy and fellow cultists this weekend.

https://twitter.com/itsdeanblundell/status/1519837020532654081

#123 Doug t on 04.29.22 at 9:55 pm

#100 crowdy

Who needs a formal education when you’re a Realtor

KABOOM = somebody had to say it lol

#124 VladTor on 04.29.22 at 9:57 pm

#45 Adam on 04.29.22 at 3:50 pm

Talk to anyone and it is obvious… people feel less wealthy and won’t be buying those fancy iphones or big screen TV’s or $150,000 tesla’s. If housing market goes down in Canada, it takes everything else with it.

**********

Wrong conclusion Adam!

If houses will be cheaper people who’s buying them will have more money after pay out monthly mortgage. So they will buy more and more. It will improve economy situation in Canada.

People who bought house for huge unreasonable price have less money after paying what they need to pay mandatory in each month. They just feel them self more reach but in reality they get poorer and don’t have money for staff from your list and this is killing economy.

#125 Steven on 04.29.22 at 9:57 pm

Wait till gas hits over $2 a litre and inflation hits near 10%. Then we will see some survive and many drown. The difference this time is the gap is greater between rich and poor. Back in 1981 the gap was smaller and debt carried by people was less. There will be a huge correction.

#126 CL on 04.29.22 at 10:00 pm

The Fed has already trial ballooned a 75bps raise and the response wasn’t positive. They will raise 50 next week.

The fed gov’t here will eventually bring back 30+year mortgage amorts as a norm and drop the stress test.

Suck. Blow.

#127 IHCTD9 on 04.29.22 at 10:14 pm

A good (and classic) theme song for new Canucks and youth:

https://www.youtube.com/watch?v=Qy01R9CEFFs

Keep up the pace homies, no time to waste!

#128 VladTor on 04.29.22 at 10:43 pm

#60 Bob Loblaw on 04.29.22 at 4:19 pm
Sorry Garth if the Nasdaq drops 50% and home prices drop 50% it doesn’t exactly instill confidence in consumers. There will be one hell of a recession coming our way.

…Go walk the dog. – Garth

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

Garth, you push me laughing! Improved my mood before I go to bed.

What if he don’t have a dog? May be he has parrot or canary in cage!

#129 Cici on 04.29.22 at 10:53 pm

#89 VladTor on 04.29.22 at 6:12 pm
Garth…
The 2008 fallout was on Wall Street, resulting from the crash in certain securities which do not exist in Canada.

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

Garth, please, can you do short explanation (short list) which “certain securities” not exist in Canada but exist in USA to understand nature USA 2008 crash

Good to know for self education.
_____________________________________________

ABS – Asset backed securities

https://www.investopedia.com/ask/answers/041515/what-role-did-securitization-play-us-subprime-mortgage-crisis.asp

#130 Ustabe on 04.29.22 at 11:11 pm

#112 Dr V on 04.29.22 at 8:55 pm

90 Ustabe – good read. Thanks for sharing.

Only question – dot com buat was only 20 years ago, not 35. Did you mean early 80s recession? Oil bust?

Probably…there have been so many of them. I do remember how long I have been married tho, for real.

#131 Observer on 04.29.22 at 11:18 pm

#120 The Regulator on 04.29.22 at 9:12 pm
# 40 – Observer : Riiiight…, dogs kill millions and millions of squirrels and bunny wabbits annually. And the odd richardsons’s ground squirrel. Pssst : ( that’s a gopher).

^^^^^^^^
Where did I write “millions” or use any other adjective referring to the number of small animal deaths due to dogs? Weird how people read stuff into comments. I think you just like to argue.

#132 AM in MN on 04.29.22 at 11:22 pm

#5 Scott in Gibsons on 04.29.22 at 1:27 pm

Don’t spiking energy costs and recessions go hand in hand? Why is it different this time?

————————————————————

What’s different this time is that the spike in energy prices (and many minerals) is self inflicted by the left.

That means that these things can change with an election and policy change.

I disagree with Garth that most of the steerage section is worried over a recession. That term is broad based, but what will be going on is a rotation, from consumer spending on things that are unnecessary (kitchen reno) to workers moving to productive parts of the economy.

Still hasn’t happened yet, worker shortages are everywhere in the industrial sectors. Try buying most industrial products. These backlogs in orders haven’t been seen in anyone’s memory.

Things would need to slow way down for at least a couple years before things get back to normal levels of delivery times for many products, or the price of basic minerals and energy to come down due to supply catching up.

Of course, as the real economy improves, the stock market tanks because it lives of printed money, as does the froth in the real estate market.

Position yourself accordingly.

#133 The Regulator on 04.29.22 at 11:27 pm

# 110 – Cici : But, but, it’s the fur babies owners’ fault. And sharks kill what, 10 people a century? How many people become dinner for lions, tigers, pumas, and cougars ( the cat kind) annually? Or stomped on by elephants, or gored by rhino’s……….
You won’t see a dingo going on a rampage….

#134 Nonplused on 04.29.22 at 11:43 pm

Some food for thought I picked up from Mish:

Of the $3 trillion earmarked for direct covid relief set aside by Trump package 1 and Biden packages 1&2, less than $1 trillion has actually been spent.

So if you though >$1 trillion made a mess of things, wait until the rest of the funds get spent! Which they will. As soon as they can figure out how.

Add to that the fact that many eviction moratoriums remain in place, which is inflationary on the consumer side but probably deflationary to capital, and this thing isn’t over yet. The Fed is way behind, and will have a hard time catching up to current fiscal policy until the $3 trillion finally runs out.

Next up: Fight energy inflation by giving people free money to buy energy. That ought to lower the price.

Buy all the things.

#135 Nonplused on 04.30.22 at 12:01 am

#16 Concerned Citizen on 04.29.22 at 1:59 pm

Young people are morose because they don’t own homes (affordability is a distant possibility) and they don’t have stable jobs (so many modern-day careers are gig jobs).

————————————–

Young people cant afford homes because they are graduating with $70,000 and up in student loans. Most of these loans were unnecessary and arose from living in Vancouver rather than mom’s basement in Regina to get the same damn degree. Tuition in Canada is still dirt cheap. Somewhere along the line we sold the young on the idea that the “experience” was worth far more than the money. Well maybe it was, but it means our hapless couple of university educated professionals walks into the banker’s office with a combined total of over $150,000 in debt, sometimes a lot more. That comes straight off the mortgage amount.

It also doesn’t help that a brand new starter home in Noland Heights for $400,000 isn’t going to cut it. They have to live in something “charming” that is a 15 minute walk from downtown.

So we actually have a weird social split forming. The university crowd cannot afford the homes they want and they whine about it constantly. Meanwhile the plumbers go ahead and buy that starter home in Noland Heights and really don’t think about things or complain about them much. Mike Rowe was right again. We should have listened to Mike.

Unless you are in STEM, quit collage now and get a trade.

#136 Nonplused on 04.30.22 at 12:12 am

#38 Observer on 04.29.22 at 3:30 pm
#25 The Regulator on 04.29.22 at 2:25 pm
# 6 – Felix : Don’t forget that cats also murder/death/kill MILLIONS of innocent songbirds every year. Dogs don’t do that. What is the point of your post here?

^^^^^^^^^^^^
Responsible owners don’t allow that to happen. Blame the human, not the cat acting on instinct.

———————

If we got rid of all the cats the raptor population would just rise, and the same amount of songbirds would be eaten. Nature has a way of keeping populations (except human) in check.

Notable exceptions exist of course, like the way we a gassing all the honey bees. But that ain’t cats, it’s farmers. The oceans are constantly on the verge of collapse as well, but once again that ain’t cats.

#137 canuck on 04.30.22 at 12:37 am

Why do so many not understand the difference between a balance sheet and an income statement? – Garth
____________________________________________

They are not mutually exclusive, especially when the house value declines and the homeowner can’t maintain their level of spending to maintain their lifestyle as a result of increasing inflation. Something has to give.

You’re going to have to lace up your skates this time next year because it will be ugly and you’ll have some serious skating to do. You’re old enough that you’ve been through a few of these recessions. Surely you see the writing on the wall.

#138 Dr V on 04.30.22 at 1:42 am

124 Vlad

“If houses will be cheaper people who’s buying them will have more money after pay out monthly mortgage. So they will buy more and more. It will improve economy situation in Canada.”
—————————————————

The prices may drop but the interest rate increase may keep payments the same.

and….

“People who bought house for huge unreasonable price have less money after paying what they need to pay mandatory in each month. They just feel them self more reach but in reality they get poorer and don’t have money for staff from your list and this is killing economy.”
———————————

It isnt just the people who overpaid Vlad. Anybody with equity who uses their house as an ATM can suffer from
the “wealth effect”. Do not underestimate it.

Similarly, a significant equity markets correction can decrease discretionary spending, though hopefully people with significant holdings have reserves or steady income sources to lessen this effect.

#139 Idiocy on 04.30.22 at 2:14 am

I think that energy and food price increases will consume a lot more discretionary income than most think.
Add increased taxes and fees, negative real wage growth (due to inflation) and higher interest rates.

Then consider the effects on consumer sentiment and realize that non essential spending will be cut from personal budgets.

Do a little research and you may find that oil at US $ 150 and a reduction in food supply may induce a recession.

If so, demand for many things will decline and the standard of living will fall dramatically. By next year , ex energy and food, we could see delationary effects.

All is not rosy – not at all.

#140 Idiocy on 04.30.22 at 2:20 am

That 1.1 % figure for growth in GDP, is that inflation adjusted ?
If not, I would argue that the Cdn economy actually shrank as increased prices paid have actually inflated that number so that actual goods and service received for those prices would have declined.

As to interest rates rising to the levels cited in this posting – well, if you think it will not affect demand, then there really is no basis for discussion until you remove the rose coloured glasses.

#141 Diamond Dog on 04.30.22 at 2:35 am

There are plenty of moving parts to this equation, so lets talk about them.

U.S. GDP shrank by 1.4%. Does this mean a recession in the first half of the year? Likely not. I thought Q1 would break even, but 1.4% isn’t a train wreck. Why did Q1 dip negative? Covid. The U.S. had a flood of people calling in sick. The number is empirical, but basically 10 to 15% of the work force called in sick in the first 6 weeks of the year. This will not repeat in Q2. If Q2 for whatever reason turns negative, the resulting recession will be mild (so far).

Inflation is the elephant in the room. We can talk about supply/demand fundamentals all we want, but what is it that truly crack cokes demand? A rapid increase in the money supply. Where did the housing bubble come from? And the stock market bubble? And the bond market bubble and last but not least the commodity bubble? It sure wasn’t because us masses got off our asses and worked for it, it was a rapid increase in the money supply. After all, as Milton Friedman says, “inflation is always and everywhere, a monetary phenomenon.”

I mean, just look at what the U.S. Fed has done over the last 3 years. Record low interest rates, I mean “record low”. Never had 30 year mortgages been in such a trough in U.S. history. Same could be said for 5’ers in Canada. None of us have ever seen such low mortgage rates before. Naturally real estate prices would respond in kind. What followed? Floods of new debt and by proxy, newly printed money plus the wealth effects sellers and the markets enjoy from such easy credit.

What did we see during the pandemic, if not ballistic real estate gains, record stock market gains, bond coupon values peaking and finally inflation and a commodity bubble as profits and excess stimulation hits peoples bank accounts? We saw wealth effects we’ve never seen before save once in the stock market .dot com bubble… but all four (real estate, stocks, bonds, commodities) at once? THIS IS A FIRST.

And that’s the problem. We clearly have an overheated economy. I would say cooked. The jarring evidence is everywhere with bubbles popping all over the place coupled with 8.5% U.S. inflation that followed, an obvious cooked number (CPI’s 70’s comparison is 10.5%, a number also cooked. Add in realistic rents and we are in the teens) with room to go higher. How can anyone with a straight face say this ends well?

On the one hand, there’s a lot of cash out there. On the other hand, it buys less and less with every passing day. On one hand, demand is strong. On the other hand, lots of folks are running out of money and wealth inequality is becoming more and more plain for all to see. On one hand, Canada is commodity laden and feels insular to world events. On the other hand, we are not an island. If/when the U.S. slides into recession (not a mild prelude, the real one), Canada will follow. Pain is coming, and I haven’t even begun to mention the nightmare fiscal side of it. The Fed will see to this pain. The only question that remains is? When:

https://www.youtube.com/watch?v=b25CzGl80Mo

#142 fishman on 04.30.22 at 2:43 am

#89 2008 fallout was on wall Street securities. Please explain for Canada? Ok Vlad, this is how its worked here in Van town. Headquarters for the largest # of mining companies in the world. The “boys” worked a claim in Quebec. That is, they knew there was gold there & spent years drilling & exploring & mapping until they had proven enough tonnage & grade to get listed on TSE. Canacord does the brokerage thing & they raise 600 million. Canacord holds the money in money market funds & releases it in tranches for roads, power lines, bunk houses,mill, crusher, tailing pond & so on. The last 60 million Canacord holds in money market funds which are like cash, but pay a little % more. This last tranch is for rolling stock. Ore trucks, Caterpillars, shovels, the last thing to buy before start up. Bingo! the 2008 credit market collapses in Yankee land & guess what? Canacord can’t get at the 60 mil. The money markets have seized up because Wall Street was selling its phoney paper as legit paper all over the world. Oops, The boys have spent 540 mil & need the last tranch. They need it because penalty non completion clauses start to kick in. Meanwhile Blam Blam’s buddy Paulson is giving billions to his Wall Street friends to bail them out. First thing Black Rock goes after with all his fresh money is a gold mine ready to rock & roll in Quebec for $.10 on the dollar. Its going broke before even starting up because it can’t get at its own money to avoid bankruptcy.
The CEO of Canacord makes 15 mil/year & just happens to be the son of West Van’s windbag MP, the Control Freak’s favourite western rep John Reynolds. Harper had to cough up 40 billion to bail out Canacord & the rest of us rather desperate Canuckleheads. Canacord had its money market funds in the worlds western banks.They had too many people with too many derivatives relying on a big Yankee pile of shit. Once Blam Blam bailed out the greed heads with fresh greenbacks we had to follow with billions of new Queens or the Yanks would buy us up.

#143 under the radar on 04.30.22 at 5:23 am

Clients use their helocs on their primary to buy a second property in conjunction with a mortgage on the second property. 2nd Property is 100% financed. This has been going on for many years. All the regulators know this and just look the other way.

Client closed on a cottage yesterday their debt is over a million, 100% financed, all to rent out in peak summer months to offset the cost of the debt on a lake the size of a giant puddle.

Yesterday, a builder client secured 1.75 in financing for an upcoming purchase/reno at a scary high rate and big fees . I pleaded with him not to. He put it all on the line .

Meanwhile in Mono , today is planting day 100 10 ft cedars get delivered. I have the epsom salt and tiger balm ready.

#144 TMac on 04.30.22 at 7:39 am

According to history and investors like Ray Dalio.
There has never been a time in history with employment numbers this high, coupled with inflation and rising interest rates, that has no resulted in a recession.
So there will be one coming but exactly when is anyone’s guess.

So what? There is always a recession coming. And markets will do what they do, including a huge surge as we pass bottom. It’s the newbie homeowners who will be crying. – Garth

#145 HUNGRY BEAR on 04.30.22 at 8:26 am

This is a free blog of curated advice. Buzz off. – Garth
‐‐—————————

I agree…. but for the 1%.

Dandada must have touched a nerve but she’s right.

Instead of following some statistical government summaries you should actually get out into the “real world” and get a feel for those who actually live on the other side of the spectrum.

After all the 99% pad the pockets for you 1%ers.

Have a heart.

Seven days a week this site provides free, usable advice to people. No advertising. No agenda. No pitch. And I pay for it. You can buzz off, too. – Garth

#146 the Jaguar on 04.30.22 at 8:56 am

@#142 fishman on 04.30.22 at 2:43 am

Fascinating. And a good example that demonstrates democracy is dead and replaced by a western version of oligarchy. We are encircled by them.
‘One ring to rule them all, one ring to find them, One ring to bring them all, and in the darkness bind them; In the Land of Mordor where the shadows lie.’ Oh well.

#147 Sovereign Citizen on 04.30.22 at 9:14 am

The rental portfolio of controlled opposition conseravetives doubled in the pasy year.

I think to myself “am I stuck in this endless loop of working 60 hours a week, paying half of that in rent and the rest for food and car insurance?

what am I even doing without owning a home like every Canadian politician? and what is the point of working 60 hour weeks anyways?” that was the point where I chose to become a sovereign citizen and annoy the hell out of the legal system.

#148 Prince Polo on 04.30.22 at 9:21 am

For the greaterfool geeks out there (0945 EDT):
https://www.cnbc.com/brklive22/

#149 Dharma Bum on 04.30.22 at 10:25 am

#16 Concerned Citizen

Even those with a good work ethic have no hope of a quality of life their parents had, unless they pull up stakes and move away from their family and friend network half way across the country or abroad.
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Sooo….you’re saying that IF they pull up stakes and move to a region that actually has lower cost housing, jobs, and a shot at building a higher standard of living, it’s actually POSSIBLE??

Wow.

What a novel idea.

Moving to where the opportunity is.

But, today, the Snowflake crowd is so sensitive, fickle, and weak, tha the thought of moving away from their perceived comfort zone in unconscionable.

Hah.

Trust me – “friends and family” are overrated.

Just follow the money.

Stop whining.

#150 Dharma Bum on 04.30.22 at 11:05 am

#62 The Dood

I don’t think there’s going to be a mass exodus to leave, but I think the gig is up for a lot of our best and brightest. Moving/living/working outside our border has never been easier.
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Very true.

Opportunities abound for those that are actually smart and possess unique and sought-after skills.

For those that fall into this category (smart, qualified, credentials, skilled) – the world is their oyster.

They will evolve into the ruling class.

The rest of the bums out there? Serfs and social media addicts.

#151 Shawn on 04.30.22 at 11:28 am

Tesla Subsidies?

#116 VladTor on 04.29.22 at 9:01 pm
#105 Shawn on 04.29.22 at 7:40 pm

….Most of the subsidies are from the U.S. government.

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

You probably don’t know that Canada start doing same – $5000 refund for Tesla.

Now explain me, please, from where this money going? Who will pay for Tesla party?
Why we should subsidize NOT a Canadian company?

Sorry, but I see here corruption elements.

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The U.S. apparently directly subsidized the Tesla company.

Yes I know about the federal $5000 subsidy (rebate) of electric vehicles. It is limited to lower priced vehicles. When I ordered in October, only the smallest Tesla with only two wheel drive was eligible. I decided to order the larger Model Y vehicle that I wanted. I sort of hated to give up the $5000 but I also liked the idea that I could say no one (at least in Canada) subsidized my vehicle purchase.

Take a look at the list of vehicles eligible for the $5000 as of 2022. Amazingly there are quite a few dozens. But not a Tesla among them.

I agree, there should not be a subsidy for electric vehicles. Needless government beurocracy. I prefer a higher carbon tax which gives a market price signal. Higher gasoline prices happen to help a lot too and are also great for Alberta and the environment. Win, win.

#152 Shawn on 04.30.22 at 11:36 am

The Carbon Tax and Canada’s trees

#119 VladTor on 04.29.22 at 9:11 pm
#105 Shawn on 04.29.22 at 7:40 pm

….I’m happy to pay the Carbon tax on gasoline and natural gas.

*********

Personally me and a lot of Canadians NOT HAPPY.

Just turn on (sorry for question which can hurt your refined green brain) and think bout next. Canada has after Russia biggest in the planet forests. Do you remember school biology lessons – forests absorb carbons. Now ask himself – Why we have to pay carbon tax.

All countries should pay to us for our forests ANTICARBON tax b’s we keep our forest in good shape.

For instance – Brazil destroys the rain forests!

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I consider that to be a really dumb and self-serving argument. The trees existed before humans started burning fossil fuel and apparently causing too much carbon in the atmosphere.

The self-serving idea that Canadians should be excused from curtailing carbon because they live near trees is very dumb. Almost as dumb as the argument that Canadians should be excused because Canada is 2.5% or whatever of the global emissions. Or becasue others are not doing their part yet. Ask not what others can do, ask what you can and should do personally. And here’s a carbon tax to give you some incentive.

#153 Shawn on 04.30.22 at 11:45 am

GDP Growth and inflation

#140 Idiocy on 04.30.22 at 2:20 am

That 1.1 % figure for growth in GDP, is that inflation adjusted?

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Yes it is. GDP growth rates are virtually ALWAYS stated on a real/constant dollar basis. They are trying to measure economic activity. The media and Statistics Canada could do a better job of pointing that out every time GDP is mentioned.

I do think you are right that inflation will cause a slowdown in activity.

#154 VladTor on 04.30.22 at 12:09 pm

#129 Cici on 04.29.22 at 10:53 pm
*******
Thank you!

If I understand in Canada we don’t have mortgage-backed securities. So we are protected from this side. Right?

#155 Phylis on 04.30.22 at 8:24 pm

#71 Wallflower on 04.29.22 at 4:47 pm
What does it mean if cat moves its left feet first?
Cats walk like camels and giraffes: They move both of their right feet first, then move both of their left feet.
Xxxxxx
Obviously, it’s a south paw.

#156 waggily tail on 05.01.22 at 12:01 am

Idea to make housing more affordable…

I have no idea if this is feasible. I just had a lightbulb moment turning sod and held onto the notion long enough to jot the essence. I know no one else to send it to, so here it is…

Designate areas zoned where property can be purchased but value is pegged to the rate of inflation. There is no speculation. If you buy, it is at the advertised price, which is what the original owners paid plus inflation for those years of ownership. For this concession, the property taxes are reduced. An owner can build equity and if they sell, they have a set price and prospective buyers apply through a waiting list. The cost of the approved housing is reduced, property taxes are reduced, but speculation and bidding is eliminated. These zones can apply to individual properties, communities, and new developments. The strategy lets people build equity through what they pay, not make a profit at sale. Developers can build and sell for reduced taxes with a guaranteed waiting list at a set rate. It would just take a change in zoning to be implemented quickly.