Wednesday, June 16, 2010

Bits and Pieces...

So, as expected (by fish10) Carney backs away from further rate hikes. They are not a foregone conclusion..which means I am already pissing in my pants about the 0.25% we just did, the dollar is getting too strong again and I have received some nasty phone-calls from my buddies on Bay Street.

My Carney Goes To Charlottetown

If our economy is so weak that it can only survive by keeping rates at less than 1% and forcing the prudent to abandon their ways, and join the speculators then we have really got ourselves in a mess. There is nothing else left in the bag of tricks.

That could be it for a while.

Low rates are theft. Plain and simple. It goes from savers who get nothing from their hard earned savings except devaluation, and is a gift to speculators and banks.

Meanwhile the Government is fretting about how little Canadians save for their retirement. is it any wonder?? When all they can get in a secure investment is a fraction of 1%?

The solution??? Increase CPP payments! And guess who is going to pay for that? You and I. So smoke, buy a gas guzzling truck, booze away to your hearts content..don't bother saving because the next generation, already encumbered by huge debts will carry your ass too!

Now in case you think I am just attacking working class free-loaders, here's some balance. One wealthy family moved $2 Billion out of the country in 1996, with the knowledge of the then Government who closed the loop-hole after it was done.

That's a Billion loonies they saved, and we lost, when a Billion loonies meant something. Anyone know who the family was?

Meanwhile News1130 was touting an economist who said BC may experience stronger growth than the rest of Canada...I missed his/her name.

That would not be good for the bears. Interest rates are set based on what happens in central Canada. BC is seen as a boom or bust outlier and so weaker growth there and stronger growth here will NOT strengthen our cause.


All is not lost bears. We have weakening house sales, rising inventory and flattening of prices. If this was a normal market-place...when inventory rises and sales goes down..what happens? Things go on sale! Not in the manipulated, CMHC, cash-back mortgages, zero rates world of housing.

This is the most manipulated market in the world. Unfortunately, we have not learnt from the US experience...Despite Greenspan and Bernanke's assurances that there was no housing bubble (didn't the B of C just say that too).. the bubble burst and the result was carnage. We are all destined to follow the American Experience it seems.

BTW some real estate bozo on the radio 'blamed' the drop in sales on the following:

1) Changing mortgage rules
2) Fear about rising rates

Like somehow, the Government did something wrong by trying (even now when the horse has bolted) to close the gate on excess.

No mention of lack of affordability and wages not keeping up with home prices.

Schiller, the God of RE, says wages and RE have to get back into historic line, which means another 10% drop in prices in the US. Where it puts us, I have no clue.

Lower sales, higher inventory, flat prices = 5th wave divergence in my book.


  1. That was the Bronfmans, as I recall.

    Seeing some downward price action recently. Most stuff remains uncompetitively priced (sometimes laughably so) but it is the most sharply priced properties that will sell and set the next benchmarks.

  2. Rates being held low is not good news. It means high unemployment and little to no wage growth. I love it how some economists claim North American economies are fundamentally different from Japan's but, man, those low interest rates look mighty similar!

    Think of low interest rates as a form of catch-up logic for the rest of the world.

  3. Patience Fish. The market will play out with dramatic consquences. It isn't about a Bull or Bear cause, there is a tremendous amout of pain coming and we really don't want to be in a hurry to see it play out. It will come soon enough.

  4. Abnormally low rates indicate failure. The correct course of action was to nuke the speculators and then use stimulus to boost investment. We skipped that first part, and now we're locked in a cycle of attrition where the savings of the prudent are eroded to sustain bad investments.

    Congratulations, we fucked up the free market to save the idiots. Next stop: Japan, where 90% of people under 40 have only ever had temporary jobs and nobody starts a family. When everyone's dead we can start again, assuming our society doesn't collapse. I guess they'll just let more immigrants in.

  5. Lots of complaining about Chinese investor immigrants. But we bring our money INTO Canada, you all forget that.

    Bronfman family take money out and you lose one billion tax. Bronfman Jewsih, but no complaining about rich Jewish people.

    Why not? Too powerful, or pick one easy target.

  6. C.S. Maybe you missed my last post.

    The truth is, most of us are all immigrants or one or two generation removed in this City (and Province), since it is so young, so no one can whine too much about anyone else.

    And as for bringing money in, I agree better to bring money in than take it out!

    A Chinese investor built Yaletown (though many say Li Kai Shing got a VERY good deal on the Expo lands). A Japanese investor built the Coal Habour Bayshore development and an Iranian investor (the founder of Future Shop) built Westwood Plateau.

    they all did these projects when the economy and RE were a lot weaker, and so risked a lot and provided thousands of jobs (and on-going)

    So point taken.

  7. Jesse- remember how Greenspan used to lecture the Japanese (or maybe you are too young)?

    He flew over with Robert Rubin, the then Treasury Secretary and (of course ) ex-Goldman Sach's alumni, (like our own Mark Carney) and they wagged their fingers at the Japanese and told them they should not prop up their banks, they should make them write off the bad loans and take the pain and purge the system quickly and move on.


  8. On a related note, gold is at a near record high. It's not too late! lol