News: Ottawa 2009 deficit could hit $14 billion>
In the first two weeks of November, only 800-odd houses sold in Toronto, which was about 50% less than the same time last year. Prices were down and listings were up. At this rate there’s about a 2-year supply of homes for sale, so good luck if you’re trying to flog one.
But that’s just one punch in the gut. The Dow is now at the lowest point in over five years and the TSE’s lost damn near half its value in a few months. Small business people are being told their prime-plus-one lines of credit are now prime-plus-five and Visa card rates have been adjusted upwards to punish those who have trouble paying. That’s a genius move.
The Bank of Canada boss is saying out loud that the economy’s slipping, and interest rates will be coming down again soon – not that anyone will see it. The finance minister said today, “there will be a deficit if there is a deficit” which is not exactly what he said when trying to stay finance minister which was, “there will be no deficit.”
So far Ottawa has given a more massive bailout per capita to the Big Banks than Washington did. And while American politicians debated, agonized over and struggled with their rescue plan, ours never went for a vote in Parliament, was never discussed by a committee and was never even explained to the people, who are not on the hook for $75 billion in high-ratio mortgages. It was a personal disappointment that my former opposition colleagues were mute.
Layoffs are turning into an epidemic, and it’s this fact, not $40 oil (soon to arrive) which will do the most economic harm. Consumer spending is drying up by the hour, a fact you can see in car dealerships, furniture stores or any one of the deserted department stores coast-to-coast. Except Wal-Mart. That place is packed.
A long time ago I said real estate excess would lead us into this swamp, and it has. But the real killer is turning out to be debt. Corporations and families have learned very quickly that deflation knocks down incomes and asset values in just weeks, but that debt is the cockroach which survives every disaster. This means hundreds of thousands of Canadians by the Spring will have negative equity in their homes, with mortgages that exceed their falling property values. It means companies like Canwest can’t service billions in debt once ad revenues disappear. It sure has the entire car business on the edge of oblivion. Toyota, for example, which opens a $1.1 billion car plant in Ontario in a few days, and will then shut it down to decrease inventory.
Some people think a major Canadian bank will fail (not hard to guess which one) before this is over; that real estate in Toronto and Vancouver will decline by about half; and stock markets in T.O. and New York have at least three thousand more points to give up. Without a doubt, the federal government will be in deficit, unemployment will soar and the devil of deflation will be licking our ankles. On Thursday the core inflation rate in the US dropped the most in 61 years. Maybe ever. That’s just when the record-keeping started.
As tough as things feel now, the months to come will be far more intense. If you have not yet started a list of personal and family actions, I urge it. Suggestions will come here in the days ahead. Feel free to ignore them. Most will.
(From GreaterFool.ca)
21 comments ↓
Hi Garth
Thanks for sticking with us. I treasure your commentary; I have little faith in the main news vehicles these days and it is great to read in direct,clear language what makes sense out of events. My dad always refused a reverse mortgage and though he died last year, I am grateful because my mother is more secure. They could have had more time in Florida but she d be a lot worse off now. Keep it coming!
Is this the beginning of the end Garth? I live out here in Saskatchewan where things just seem to be rolling along just fine. I know that no one is immune to this global hiccup, but how much of an effect will I see out here?
Economic crisis? Wot economic crisis?
Political reality check on “At Issue” last night, with Mansbridge asking Dan Leger what he made of the economic crisis. Leger did a near-perfect deadpan, allowing that he was “gobsmacked and shocked” to find out that there was an economic problem, as apparently the PM and whole CPC were too, because “it didn’t exist until October 14th as far as we knew.” The exchange starts at 4:15 time mark at http://www.cbc.ca/national/blog/video/at_issue/throne_speech_2008.html
The political reality is that we have elected these frauds and liars to deal with the crisis they denied. Any bets on how successful they – and we – will be dealing with it?
Coming to a bookstore near you are two of the horror novels of the year.One is by Garth and the other by Stephen King.Don’t know which well sell more but both are predicting doom and gloom.The horor, the horror!
“Some people think a major Canadian bank will fail (not hard to guess which one) ”
Ok, well for those of us who don’t follow the fortunes of banks, anyone care to enlighten us?
Also, Comrade Herb. Cash is good. Got Rope?? Might need some before this is done.
CF, you live in Oz too?
Let’s fire the cockroach (Dim Jim) and let an HONEST Professional manage Canada’s economy. Here is The Man!
Tories blamed for coming deficits
OTTAWA – Parliamentary budget officer Kevin Page told MPs Thursday that Canada’s deficit next year could be as high as $13 billion and that Conservative government decisions to cut the GST and raise government spending are to blame, not global economic events.
“The weak fiscal performance to date is largely attributable to previous policy decisions as opposed to weakened economic conditions,” Page wrote in his first report to parliamentarians on the government’s economic and fiscal position.
more…
Garth, I can feel your smile (The all time Classic ‘I Told You So!’) here!
Now that Tony Clement is the industry minister he should speak up on the industries on the other side of the great lakes. Ya that’s right there is according to the Munk Center and globe and mail there is 17 I repeat 17 oil refiners and petro chemical plants slotted and okayed to go ahead to start to build and process bitmam from the tar sands there . right across from the town he is supposed to represent, Parry Sound. The weather patterns drop it right here and we end up with more smog days that Toronto. According to a doc on CBC last week the one petro chemical plant in Sarnia puffs out over 126 thousand tons of petro chemicals a year. Tony Clement has no comment on this . there is going to be 17 of them puffing out this stuff towards this town and Tony keeps his mouth shut on this.Plus there are going to polute a lot of great lake’s water
TD scales back house-price decline
JOHN PARTRIDGE – Globe and Mail – November 20, 2008
Canadian housing prices have not fallen nearly as steeply as conventional measures indicate, Toronto-Dominion Bank said Thursday.
According to a new TD Home Price Index, which the bank unveiled Thursday, average major market home prices in October were down just 4.6 per cent from a year earlier, rather than the 10.9 per cent cited in a news release Nov. 14 by the Canadian Real Estate Association (CREA).
The difference stems from the fact that while CREA has traditionally weighted its average price figure based on relative sales volumes, TD is weighting it based on the outstanding stock of homes in a given region.
The bank acknowledged, however, that CREA recently began using a “more accurate stock-weighted method.”
In fact, in its Nov. 14 news release, the association also said that using a stock-based calculation, the weighted national average price “eased by 5 per cent” in October, year-over-year. However, this number appears to have received little media attention.
Bob Linney, a spokesman for the Ottawa-based association, said CREA chief economist Gregory Klump developed the methodology and has been using it for two months.
More at: http://tinyurl.com/67m8dj
Comments, Garth …???
I don’t know much about stock markets and I remember that Stephen Harper dismissed the fall in the TSX as having something to do with personal greed.
However, if the stock market investor has so little confidence in a company to devalue its stocks the way they have been devalued, how can that company remain viable? For example, what financial institution would loan it money.
The Canadian stocks falling faster (it is close to 10 per cent today alone) than the stocks in most global countries, what will this mean for the Canadian economy? Can these companies survive if they do not have high levels of cash?
[...] efforts of Central Bankers is — merely makes it worse.) Now that our old fearless pundit, Garth Turner, is talking clearly for himself rather than trying to straddle the requirements of being a party [...]
Bob Linney, a spokesman for the Ottawa-based association, said CREA chief economist Gregory Klump developed the methodology and has been using it for two months.
More at: http://tinyurl.com/67m8dj
Comments, Garth …???
By HARRY S on 11.20.08 4:48 pm
Ooooooo there must be a new Witch Doctor on the scene with the ‘New, Revised, Better Than Ever’ VooDoo Economics to make the CREA look and feel good?
Break out the Brie and Champaigne…it’s Party Time in T.O.!
Watcha think Garth? Especially with the massive verification period of TWO MONTHS! WOWSERS!
Hey, wait a minute! Is the same guy who wrote the Climate Change Denial software? Oh, darn, I almost forgot…If a computer tells you it is true then we KNOW it must be!
As this crash has only just begun, this is how Canada could end up (all figures rounded of) . . .
****************************************
We are in trouble
The population of this country is 30 million.
16 million are retired.
That leaves 14 million to do the work.
There are 8.5 million in school.
Which leaves 5.5 million to do the work.
Of this there are 4 million employed by the federal government.
Leaving 1.5 million to do the work.
200,000 are in the armed forces.
Which leaves 1.3 million to do the work.
Take from that total the 1,160,000 people who work for province and city governments, and that leaves 140,000 to do the work.
At any given time there are 39,800 people in hospitals.
Leaving 100,200 to do the work.
Now, there are 100,198 people in prisons.
That leaves just two people to do the work.
You and me.
And there you are, sitting on your ass,
At your computer, reading jokes.
Nice. Real nice.
– OR –
Helpful Old Geezers . . .
I was in Home Depot the other day pushing my cart around when I collided with a young guy pushing his cart.
I said to him, ‘Sorry about that. I’m looking for my wife, and I guess I wasn’t paying attention to where I was going’.
The young man said, “That’s OK. It’s a coincidence.
“I’m looking for my wife, too. I can’t find her and I’m getting a little desperate.
‘Well, maybe we can help each other. What does your wife look like?
He said, “Well, she is 24 years old, tall, with blonde hair, big blue eyes, long legs and she’s wearing tight white shorts, a halter top and no bra. What does your wife look like?”
I said, “Doesn’t matter, let’s look for yours. I need to do a good turn today anyway!”
Most geezers are helpful like that.
****************************************
Weird coincidence. There was a report yesterday which said “. . . investors are turning to gold, but where did the bullion go? . . . ”
In today’s Money&Markets.com, there is a pic. with the cutline:
“. . . an Executive Order on April 5, 1933, President Franklin Roosevelt confiscated all gold, which led to a devaluation of the U.S. dollar.”
In the report, ” . . . have been times when exchange rate policy has been an effective weapon against deflation. A striking example from U.S. history is Franklin Roosevelt’s 40 percent devaluation of the dollar against gold in 1933-34, enforced by a program of gold purchases and domestic money creation. The devaluation and the rapid increase in money supply it permitted ended the U.S. deflation remarkably quickly . . .”
Gold, silver and platinum are all very good hedges, but this plays along with George Soros’ statement of a new financial structure for the world, which is talk for now.
Consider: “. . . Soros’ recent proposal for a new monetary system involving the Special Drawing Rights, or SDRs, at the IMF: Currencies would be devalued … then repegged to each other and to SDRs … and then SDRs would be circulated as an international currency.
“For Soros’ proposal to work, though, . . . gold would have to play some sort of role.”
Notice it says “Currencies”, which is plural and that means a whole bunch of countries would have to be involved.
Whether folk realize it or not, we really are living in interesting times, and I would love to have a crystal ball to see six months to one year as to what actually develops.
There is nothing I would be able to do, but it would nice to have a portent of the near future.
BTW, for Cdn. banks taking a hit: CIBC took a US$10 bln. hit a few months ago on sub-primes and other bad investments, and now TD is starting to cry the blues.
Didn’t banks make billions in net profits on a yearly basis, due to excessive fees, laying staff off those at the top reaping all the benefits?
Now The Piper has come calling, and most of us will suffer for others’ greed.
By tim pellett on 11.20.08 4:44 pm
TTTC is not authorized to comment…remember Tim?
It’d be interesting to see whats happening to real estate prices across the spectrum if the impact of the massive increases and crashing in the overheated markets, Toronto, Vancouver and Alberta weren’t distorting the numbers.
I don’t really follow the stock market – not smart enough. But, I think I’m savy enough to know that, contrary to this government’s denials during the election, we are in deept sh**t. I just have to look at my latest quartely investment statements. Mind you, they arrived about about a month and a half late. I know why.
We’ll survive as we have cash and other assets and don’t owe anything.
Gee, Harper appointed a Budget Officer, IIRC, and now that he has basically blamed the Harper Govt. for our dismal situation, I wonder how lng he’ll be around. Stevie’s laissez faire ideology & gutting the $13B surplus, plus his GST cuts, are coming home to roost. Yep, tory times are hard times indeed.
By Charles Oxley on 11.20.08 6:34 pm
Charles – I adore your sense of humour – I literally LMAO. I als appreciate your serious, and to me anyway, very wise commentary.
I note that there are nore connents onb Garth;’s Greater Fool’s blog than here – but there are as`many, or more ‘trolls. Even someone questioning Garth’s relationship to the author of that article in that political journal. Just shows how low neocon trolls will go to discredit those that do not agree with their ultra right wing ideology.
“gobsmacked and shocked” to find out that there was an economic problem, as apparently the PM and whole CPC were too, because “it didn’t exist until October 14th as far as we knew.”
The political reality is that we have elected these frauds and liars to deal with the crisis they denied.
By Herb on 11.20.08 1:56 pm
Odd the Liberals election plan was to increase costs to consumers with the Green ST rather than deal with any impending economic crisis, guess they didn`t know either. Layton wanted to retool factories in the shade of green and sell new, improved and more expensive product to an already over spent, over mortgaged, and under saved consumer. All this in a know global slowdown, how`s that for distract dismiss deny.
As I said many months ago none of them have a plan to deal with it so they all distract, dismiss, deny until it gets to ugly to ignore. That`s the system we have Herb, changing one bunch of `frauds` for another won`t change anything, sry bud but don`t blame me, I never voted.
btw do you think Garth is `over the top` with this thread? lol, I don`t but if you want over the top how about a 40 cent Cdn dollar.
I don’t really follow the stock market – not smart enough. But, I think I’m savy enough to know that, contrary to this government’s denials during the election, we are in deept sh**t. ………..
By Go Green on 11.20.08 7:07 pm
We had a grade ten math teacher back in Sask. who had taken an extension course from Queen’s on investing in the stock market. One of the exercises in it he told us was to take a deck or doble deck of cards, write the name of every listed company on a card then shuffle the deck thoroughly and deal your self a hand. Invest “theoretically” in that deal plus set out another theoretical slate of investments using your best training in the fundamentals of good investment practices. Time and time again it has been proven that random deck of cards hand investments frequently have beaten the best choice practices slate over a five year period. Another maxim has been that you are far more likely to win at the race track than the stock market.
I wonder in this current sharp downturn if careful handicapping at the betting parlors is far ahead of the stock market. I know very little about handicapping but there were 2 or 3 guys in the steel mill who made out like bandits at the races. They might only bet one or two races, but they knew what, when, and where to bet from following the racing form papers every week.
“Coming to a bookstore near you are two of the horror novels of the year.One is by Garth and the other by Stephen King.Don’t know which well sell more but both are predicting doom and gloom.The horor, the horror!
By cf on 11.20.08 3:02 pm”
I don’t know what is more pitiful…your apparent lack of intelligence or the fact that you seem to be completely out of touch with reality.
Almost two years ago Garth made predictions that the events we are now seeing would occur. I suggest you pay some attention, rather than simply slagging Garth.
My wife and I did pay attention and including yesterday’s stock market noze dive our prudence has saved our retirement portfolios over $127,000. The way I see it, reading Garth’s postings is one of the most prudent and profitable things we can do.
I wonder in this current sharp downturn if careful handicapping at the betting parlors is far ahead of the stock market. I know very little about handicapping but there were 2 or 3 guys in the steel mill who made out like bandits at the races. They might only bet one or two races, but they knew what, when, and where to bet from following the racing form papers every week.
By Truth B Told on 11.21.08 12:06 am
Maybe this exemplar will help?
The Contest
Sister Mary burst into the principal’s office and cried, “Father, just wait until you hear this!”
“Calm down, Sister Mary. Now tell me what has you so excited?”
“Well, Father, I was on my way to chapel when I heard some of the older boys wagering!”
“A serious infraction, indeed!” said the priest.
“But that’s not what made me so excited, Father. It was what they were wagering on! They were betting to see who could pee the highest on the wall!”
“Incredible!” exclaimed the priest, “What did you do?”
She said, “Father, I hit the ceiling!”
He mused, “So how much did you win?”