Entries from June 2008 ↓

I’m looking for ideas. Should I sue the Conservative Party of Canada?

Two days ago I wrote an article for this blog called “A time for caution.” In it I referenced the catapulting price of oil, and some of the impacts higher energy prices will have on our society, namely real estate. (By the way, on Friday a major Bay Street economist endorsed the conclusion reached in my current book, that Canada’s real estate market is about to repeat the US experience.)

Nowhere in the story did I mention politics, political parties, leaders or even the federal government. I didn’t mention that under Mr. Harper’s watch the price of gasoline has raced to an historic high. I did not mention his former election promise to lower gasoline taxes if the cost were to exceed 85 cents a litre. I didn’t mention the Tories had killed off the gas monitoring agency the Libs legislated. None of it. The point was not to point the flaming finger of blame, but to offer some tips on how to cope.

And, nah, I didn’t mention Stephane Dion or his carbon tax, either. After all, he’s not prime minister, and the Green Shift is but an idea. Liberals have nothing to do with gas being $1.40 a litre or hundred-dollar fill-ups for the minivan.

Unless, of course, you’re a Conservative. Then, it’s not your fault. Blame Dion. And drag Turner into it.

So the Con party web site featured a big story Friday, saying “MP Garth Turner, Stephane Dion’s communications guru, has added to Mr. Dion’s woes by writing an alarmist blog post predicting that higher gas prices would drive Canada to its economic doom.” Well, actually I did not say that. But Conservatives are poor readers. I liked the guru part, though.

However, check this out. Here’s what I wrote regarding the impact of $130 oil:

The economy grows ever weaker. Oil at $130 and gas at $1.40 will have a serious effect on everything over the coming months. The new cost of energy saps cash flow and consumer confidence. It is a death knell to the sale of suburban houses on distant crescents and cul-de-sacs. It is killing off export, tourist, automotive and manufacturing jobs.

And here’s what Conservative.ca said I wrote:

Mr. Turner must therefore try and explain why he is trying to trick Canadians into paying a new tax that will, in his own words, “sap cash flow and consumer confidence,” provide a “death knell” to the sale of new homes and end up “killing off export, tourist, automotive and manufacturing jobs.”

Hey, kids, can you spot the differences? So, should I sue? It’ll be fun. Send money.

BTW, some wag sent me site traffic numbers a few hours ago. Seems garth.ca and conservative.ca have about the same traffic, but the reach of this site is greater.

I’d hate me, too.

“Hey, brother, wassup?” Habitually perched on the edge of a couch in the government lobby during QP, she flipped her blond hair and looked indifferent. It was an act. Sandra Buckler, the media animal, was anything but.

As Stephen Harper’s communications director for 28 months, it was Buckler who was responsible for scrubbing impromptu press conferences following cabinet meetings. Where cameras and reporters once camped out at the stop of the stairs on the third floor of Centre Block, there’s now only a small phalanx of armed House of Commons security forces standing outside the PM’s door.

It was Buckler who told both MPs and ministers when they could, and could not, speak. It was her initiative to give caucus members plasticized wallet cards with weird rules to follow should a dreaded reporter call. It was she who decided who did Duffy, Newman or CPAC each night in the foyer of the House of Commons.

And it was Buckler who walked into national caucus each Wednesday morning, took the podium and told MPs how not to communicate. The rules, she said, are simple. When you leave this room, don’t speak. If you don’t talk, they don’t get a story. And remember, the media is the enemy.

Three feet away, on the stage overlooking the caucus, nodding, was Harper. Buckler’s words were taken as the leader’s and the message was clear – this government has but one voice. It is his.

As you might imagine, Sandra Buckler said no to me a lot. I was warned about speaking out on a weak environment plan, on my campaign for income-splitting, or gay marriage. I was told to shut down this blog. I was ordered not to do radio and television interviews. I played along as much as I was able, but drew the line when I could no longer do my job. An MP is an advocate for the people, not an adjunct of a political party. Communicating with constituents and Canadians is a key part of fighting for change and mobilizing opinion. Without that, the wrong people – unelected ones – get to make the decisions.

You might think I disliked this woman, but far from it. In fact, Buckler – who announced her resignation Thursday evening – was extremely effective and competent in her role. She was able to water down a caucus with far too many former small-town municipal councilors and far too little legislative experience. She kept hidden a social conservative agenda brought to Ottawa by a caucus heavily populated with evangelicals. She managed on most days to manipulate, massage and deliver a message right out of the PMO.

In Buckler’s Ottawa, Conservative MPs represented ridings where every voter supported their member and the member’s government; where caucus was of one mind; where debate equaled division; and where team trumped all. Quite the feat. The purposeful suppression of both democracy, and a free press.

Ms. Buckler leaves her job after a recent brush with cancer. She leaves as her boss brings in a tough new guy to take over the prime minister’s office. Her departure comes just months before the next election, in which a pent-up media may exact revenge for her past actions. This moment may signal a change in communications strategy by a PM acutely aware he will soon need what he’s been unable to buy.

Ms. Buckler would not let me speak. So when I did, the consequences were terrible.

I cannot thank her enough.

Oil shoots above $140 a barrel.
Stocks tumble on a barrage of bad news.
No longer a seller’s housing market: bank
‘Mass exodus’ of cars predicted as gas soars

Signs of the times in a Langley, BC suburb

One day last week I did a radio show with two perky hosts in Vancouver on the topic of real estate. Once we went off air, one of them told me about the woman who cuts his hair – a middle-income, working stiff who, with her similarly-employed boyfriend, lusts after a home.

So, they went to the bank and got pre-approved for a mortgage, but with one major condition. The banker warned them they wouldn’t be able to borrow more than $900,000. But for that, they can buy an average-priced bungalow in Van.

So, this post is for all the hairdressers out there in the Lower Mainland. It’s for the young couples in the Xburbs around Toronto and Calgary (that’s where GenXers go to buy McMansions). It’s for the people with 40-year mortgages financing places in which they have no equity. It’s for those who think there’s actually a reason to shell out more in bank payments, taxes and condo fees than in rent for exactly the same residence. It’s for the Boomers who have trophy houses and no actual money. It’s for those still impressed with granite countertops. It’s for those who haven’t heard the news.

The economy grows ever weaker. Oil at $130 and gas at $1.40 will have a serious effect on everything over the coming months. The new cost of energy saps cash flow and consumer confidence. It is a death knell to the sale of suburban houses on distant crescents and cul-de-sacs. It is killing off export, tourist, automotive and manufacturing jobs.

At the same time, the world’s greatest consumer economy, and our biggest partner, is on the skids. Consumer confidence plunged last month as costs surged, employment fell and real estate collapsed. Home prices have declined for 16 months in a row, and are now 15% below levels of a year ago – and that’s a national average. Properties in some cities have given up a third, or 40%, of their worth since last summer. This has been utterly devastating to the middle class, which is the engine of economic growth.

Consumption is now contracting at the withering rate of 3% a year, despite $100 billion in government cash rebate cheques which have been flowing out of Washington. When that money runs out, economists may be running for cover. Americans have not had this bleak a view of the future since such surveys began almost a half century ago.

In Canada, the real estate bedrock is also cracking. Over 67,000 families listed their homes for sale last month, a 7% increase, despite a massive 17% decline in real estate sales nation-wide. More listings, fewer sales. This means the next big news you hear – three or four months from now – will be US-style price reductions. In some cities, some suburbs, it is already happening. The energy and jobs crisis is just serving to accelerate the process.

In this context, here are some thoughts:

• If prices do fall, even a modest 10%, then recent buyers could find their mortgages exceed the value of their homes. This will be especially true of those who purchased with little or nothing down.

• People with homes to sell, especially retirees who need to cash out, should expect the process to take months, perhaps a year or more. The days of multiple offers and quick sales in all but the most demand neighbourhoods, are over.

• If listing, be realistic. The worst thing possible right now is to misprice the home, ask too much, then have it languish on the market forcing multiple price reductions. In that scenario, you will probably sell for less than market value.

• If you are a first-time buyer, steer clear of zero-down real estate. Despite what the condo salesguy or the builder says, this is akin to buying stocks on 100% margin. You are going to lose.

• Also eschew those 40-year mortgages. They reduce monthly payments a bit, and let you leverage up more debt and buy more house for the same income. But they magnify total repayable debt and add almost nothing each month to your equity.

• Don’t listen to Phil Soper or Gregory Klump or any other of those so-called real estate media experts. While nice guys, they and the bank economists all are in the business of talking up the market and encouraging people to buy, whatever the conditions. Trust me, this is selling time, not buying time.

• Debt kills. Especially when asset values are falling, the economy is losing altitude, jobs are hard to find and willing buyers even scarcer. Never before have Canadians had so much mortgage or household debt, and less in savings. More than 80% of all our net worth is in real estate which – in a word – is scary.

• Therefore, if you have a mortgage, work at making it smaller. Prepayments and VRMs help, but weekly-pay mortgages are the best tool in the shed for shortening the amortization and lopping off interest.

• If you decide to sell, be aggressive. This will mean lowballing the price to gain a quick sale before things get really messy. It’ll mean being willing to take back a mortgage for a year or two. It means painting the house and making it impeccable, along with staging it, working with an experienced agent, using MLS, setting up a sales web site for your property and, above all, not trying to sell it yourself.

• And if you are a flipper who bought five units in a condo building scheduled to be completed in 2010, God rest your soul.