cold comfort

From the Gloom and Mentira

Canada's stock market plunge... contributed to a 3.2 per cent drop in household net worth in the third quarter of this year, equivalent to ...$191-billion, Stats Can said Tuesday.

Stock prices were down by 18 per cent in the third quarter,...

“The...loss in... equities, combined with the related loss in the value of pension and life insurance assets..., was the principal factor “Also contributing were slower growth in residential real estate values and continued household borrowing. Total household assets fell 2.2 per cent in the third quarter of 2008.”

(slower growth? Hah!)

...the largest percentage drop in household net worth (in ten years)...

The numbers for the final quarter will almost certainly be worse, Patricia Croft... said....

Gosh! It is all happening so fast! Who'da thunk it?

I heard some bobble-head or another say last night that Vancouver RE prices will decline by 15%-20% in 2009. That would be on top of the ~15% haircut in 2008, I presume. Another fella said that price retreats will be in the same % as sales declines. That would be about 70% for Vancouver. 2010 will see another 30% off RE, and 2011, another 12%. Dare to Dream!

It is all happening so fast! Who'da thunk it?

Our fearless leader, who was so nonchalant about the economy until last week some time, had this to say today -

PM's economic flip: 'I've never seen such uncertainty'

Globe and Mail

OTTAWA — Stephen Harper has delivered his bleakest forecast yet for the Canadian economy, warning yesterday the future is increasingly hard to read and conceding the possibility of a depression.

"I'm very worried about the Canadian economy."

When asked whether a depression might be possible,...‘The truth is, I've never seen such uncertainty in terms of looking forward to the future,’ ...Harper says.

"It could be, but I think we've learned enough about depression; we've learned enough from the 1930s to avoid some of the mistakes that caused a recession in 1929 to become a depression in the 1930s." (emboldening mine)

This guy is so full of CRAP. Are you not thankful that it is his "hand on the tiller"? Garf. I really don't think that any lessons have been learned from the Depression - except how to better swindle people.

It is all happening so fast! Who'da thunk it?

Are you ready? Things are melting down faster than the Arctic.

Meanwhile, some Antarctic snow birds are having problems of their own. It seems that someone decided that two penguins are gay, and protested that they be given eggs of their own to hatch, as they have been stealing eggs of other penguins at the zoo in China.



Gay penguins... Who'da thunk it?

Oh, and I almost forgot, the Fed cut interest rates to between 0%-.25% today. The only route to kick-starting the economy now is lots and lots of overtime for the printers. Free money for everyone! (except in Delaware, New Hampshire, Massachusetts, New Mexico, Nevada, Iowa, Indiana, Idaho, Omaha, and The Big Island, and anywhere prohibited by local statute. Some restrictions may apply.)

fool on the hill

(Globe) Ottawa bled $1.7-billion in red ink in August, offering the latest sign that Canada is in serious economic turmoil and that balancing the federal books will be a tricky challenge this year.

“We’re in for rough times. These are difficult times. Canadians should not underestimate what we’re facing. We’re not an island. We’re a trading nation,” Finance Minister Jim Flaherty said yesterday.

From Garth Turner's blog. (he apparently lifted it from the G&M).

When you have the Finance Minister making dire warnings, it is time to head for the hills. I know that he is incompetent, but still, he should be whispering sweet nothings in Canadians' ears to keep them from panicking. The point is, it is always much worse than is officially revealed. It was just a couple of weeks ago, during the election campaign, when we heard such things as "Canada is insulated", "We have planned for this", "We will not run deficits", and so on. Then it is revealed that there was a $1.7 Billion deficit in August, and that was before this melt-down got under way.

There has been trillions of dollars pumped into banks world wide, and Canada has probably pumped in 100 billion or more by now. Businesses still have trouble getting credit for inventory and operating expenses. I am not sure about mortgages right now, I won't bother thinking about that for some time to come. We hear that the problem is with liquidity, but the real problem is debt. The whole world is up to its eyeballs in it, and now the money tap is turned off. I've always called it "The Big Grab". "They" use the peons to generate vast wealth, and then "They" take it all back. It's just a huge shell game. My question is, why are we pumping money in to create more debt? How does this address the sea of debt that we are drowning in? How will that debt be reconciled when nobody has a job? It's too late to go back to basics, nobody knows them anymore.

I caught a bit of the Senatorial Inquisition into this sub-prime debacle - featuring Alan Greenspan. A Democrat by the name of Waxman (supposedly widely feared) was grilling Greenspan, who ended up having to admit that his whole ideology was fatally flawed, and that the whole economic structure of the global economy is a house of cards. My first thought on hearing that was that it was deliberate, and calculated - a conspiracy on an unbelievable scale. Derivatives, and all of the other legerdemain that is pulled off. Layers upon layers of pyramidal rip-offs. How could any body, in its right mind, allow banks and markets to regulate themselves? Why bother having transportation safety agencies, food inspection agencies, medical and drug standards, workplace safety standards?

This is going to be wild.

crash of the titans

This pic has been used beyond redemption...

...so, I redeemed it

Slow motion train wrecks and all...

I'm still digesting the last weeks, and there is ever-more to digest. It is difficult (for me) to look at markets, bail-outs, etc., without getting into politics, but I'll do my best.

Trillions of dollars lost in the stock markets, and governments pumping trillions into the banks to "save" them, but who, and what, is being saved? Those trillions (or, in the case of Canada, billions), are not magic dollars pulled out of a hat, they are dollars from central banks, and have interest attached to them. We, or more accurately, our children and grandchildren, will be on the hook for that. Who benefits? It could be said that we benefit; by not having bank failures (yet), by not having our economies wiped out (yet), by saving jobs (so far), by propping up RE markets, and businesses that have made record billions (and collectively, trillions) in profits. Nobody "knows" if these cash infusions are going to make any real difference (well, I know that they won't), but what the heck, eh? It's just Other People's Money. My own feeling is that it is just delaying the inevitable, and we are still going to have a global recession, or worse (worse is my feeling). It's a bit like the guy who is over-leveraged, and keeps borrowing more to make the payments on what is already borrowed. It just can't end well.

85% of Canadians' wealth is in their homes, and those homes have fallen almost 7% in value nationally, and 8% in Vancouver since May. And it has just begun. American RE is still falling. But, it's different here, right? Then there are all of those hedge funds and mutual funds and such that make up the rest of the wealth. That has only fallen 40% since July. Oil has fallen 50% since July, and with all of that, a large chunk of government revenues. Just wait for the lay-offs, when even more tax revenues will be lost, and unemployment benefits, welfare benefits, CMHC insured mortgages go belly-up, etc., start to suck evermore money. Then there are the consumer goods that will not be purchased, leading to even more tax revenues foregone, plus more unemployment.

The only prediction that I can make right now, is that it is going to get very ugly, soon. I know that my predictions are worthless - I am not an expert, or highly educated and paid economist, but were they not the ones talking about slowing appreciation in the housing markets that would be confined to single digits? Were they not the ones saying that oil was going to $300/bbl within a year? That the Canadian economy was as "solid as the Canadian Shield"? That the government would never run deficits? Insert your own platitudinous reassurances here ___________.

I've got more to say on this, but have not the time right now. I'll be back.

थे gleaners

The Gleaners - by Millet

There is weird stuff happening with Blogger these days. I keep getting Sanskrit-like font, and I don't know why. I kind of dig it though.

So yeah, here we are - back in much the same position (politically) that we were 5 weeks ago. A record low participation rate, which is very sad. I put that down principally (and ironically) to a lack of civics education in schools, and a break-down of the family structure. I really sound like a Conservative in writing that, wot? But I think that it is at least partly true. I gained an interest in Canadian politics by spending a lot of quality time with my Grandmother. We were "ideologically" opposed, but had great, respectful discussions and debates about those differences. In the long run, we agreed on the same principles of fiscal conservatism, and social progressiveness.

Another problem is the lack of proportional representation. The Conservatives won the Government with 20% of the votes of eligible voters. Some 10 million people chose not to vote. Why? Is it because people don't believe that their voices count? (they do, and they don't, but...) To put that 20% into perspective, the Greens got ~20% of the votes that the Cons got.

It was an election about "leadership", and then, by default, became about leadership/economy. The Conservatives knew that this shit storm was coming, and that is why they triggered the election (well, plus the Cadman thing coming to a head, the In-and-Out scam coming to a head, the Couillard book coming out - what a flop - etc.), but they had no plan. Sadly, ironically, Harper's plan is Dion's plan - to call together the Premiers, heads of banks, have meetings with global leaders... - which Harper dismissed as "a plan to make a plan". Dion is a singularly decent man, in the words of Rex Murphy, and that is a rarity these days. He had a vision for something new, but was unable to articulate it to Canadians. It was not just the accent, but he had a battle against the impression that two years of Harper's negative advertising cemented into peoples minds, and he does not have the support of the Liberal old boys' club. That is too bad, in my view. He reminds me of Joe Clark in 1979 in some ways (decency, sincerity, etc.) - just before we ended up with Trudeau, who paved the way for Mulroney. That was a grim decade and a half.

Just a week ago, Harper was saying that everything was a-ok, and that there would be no "bail-outs" for banks. Then, we "found out" that everything is not a-ok, and that the guv was pumping $25 Billion into the economy (banks). That does not instill confidence into me.

I have read most saying that Dion is finished, and that the knives are out for him. He has done nothing to dispel that rumour. The thing is, who will replace him as leader? Ignatieff? He does not have the party, or Parliamentary experience. Plus, he is a goof. Rae? Too much baggage, too old, and he is creepy in the same way that Clinton is creepy. It seems to be a common trait amongst Rhodes Scholars. Manley, in a come-back? No thanks. Frank McKenna. Frank McKenna. Wherefore art thou, Frank McKenna? I'm not holding my breath.

I don't think that there can be a coalition betwixt the Libs and NDP. Jack wants to be PM, and would settle for nothing less. The ideologies are a fair bit different too. Further, it looks as if the Liberals are going to be in a mess for a while. Harper doesn't really need a majority, he will continue to stress the Liberals, and will continue with his incremental dismantling, and sale, of Canada. We will wake up some day 10 years from now, and wonder WTF happened while we were watching American Idol, American politics, and whinging about those damned Americans. We will be those damned Americans. (Disclosure; I have American uncles, aunts, cousins, and friends. They are all good people, just like us.) Harper said that we "won't recognize Canada when (he is) done with it", and it is true. I already don't recognize it.

I read someone - whom I have great trust in - that we will live in totalitarianism for the next 200 years, and I think that he was correct. "We" "have given" Harper a "new, stronger mandate" to "implement his agenda". Some 20% of eligible voters have, anyhow. His agenda is in the public domain, although not enunciated at any point during the campaign, and it is tragic. Codex Alimentarus (control of your food). North American Union. Supplantation of our sovereign dollar with the Amero (some day - I predict just months before the Olympics, we will have 60 days to trade in all of our dollars for Ameros.) We will have American military providing security in Vancouver and Whistler during the Olympics. Even though we have a decent copy right law, and a levy on all blank DVDs, CDs, cassette tapes, etc. that goes to the recording industry, it must be harmonized with the American laws. We will have more pesticides as we lower our standards to the US's, we will be de-regulated left, right and centre. Prisons will be privatized to meet the demand as our drug laws are harmonized, and we import the war on teen-agers, hippies, people with chronic diseases, etc. who smoke a little weed. We will have wistful memories of a publicly funded health care system.

They say that you get the government that you deserve, but I have to wonder - what did I, or my 19 month-old son do to deserve this?

I have much more ranting to do, but it is fruitless, and pointless. And, I am trying to keep my screeds to under 10,000 words.

There is a lot of ill wind coming. House prices are down ~6.5% nationally, and "the most expensive markets" (like Vancouver) are faring worse. The Infinity project sounds as if it is dead. The stock market rallies of the last couple of days were suckers' rallies - as I suspected. The global economy is totally flacked, no matter what we do. All of those billions - nay, trillions - that the governments are pumping in is just a huge theft from us all. Last week's bail-outs put every single Canadian some $3,600 further into debt. Your Social Insurance Number is a chit for that (and all) government debt. I heard today that the Finance Department is forecasting a $10 Billion deficit at year-end March 2009. That is 5 months from now, so are they going to be borrowing $2Bill/month, or have we been in deficit all along? (as I forecast last week) Inquiring minds (mine, at least) would like to know.

Did you get what you voted for?

not pretty

original image

Yikes! That picture is horrible, but man, the meltdown.

TSX closed below 10K, and so did Dow Jones. The $850 Billion is now a trillion, with much more to come. It's all over for the US. We are not insulated, and all of our banks are exposed to sub-prime (probably even the co-op banks). Thanks to Paul Martin (and others before them) our banks don't have the reserves to cover their er, assets. There is always the CDIC, but what happens when they don't have the cash? And what happens when the guv doesn't have the funds to back CDIC? Ask Iceland. Their guv was on the verge of bankruptcy today, until the Russians helped them out. (I know, Iceland is Iceland, but they have great hot springs, Bjork, and some high-powered, but otherwise unintelligible, bands.) A while ago I revised my TSX forecast to 6,000 from a previous forecast (Jan. 2008) of 8,500. I am wondering if that was too generous.

Mansbridge did a wicked interview with Harper tonight. He's (Harper) goin' back to the NCC next month. Christmas in a condo in Calgary. Comfy with a nice cerulean cardigan.

Building permits are down 18%+ in Vancouver. That is about $650 million out of the local economy. Things are unwinding fast, and big. I have more to rant about, but it's past my bedtime, and I'm tired and grouchy, and want my blankie. Manana.


search for Nancy W.

bleak monday

Yikes! Ouch! The TSX gave up 840 points today, DJ took it's biggest single-day loss ever. Tokyo closed down 340-something just a bit ago, Hang Seng down over 400 with an hour or so to go. Stephen Harper said today that the Canadian economy has "good fundamentals", and that what is happening down south, well, we are insulated. It's different here. Jeebies, doesn't that sound familiar? I might have felt better had he been wearing a cardigan when he said it.

The TSX is down 9% today, and my memory bank echoes with the words that the losses were $104 B-B-B-Billion - out of Grampa's retirement pension fund. Out of those Mutual Funds that were sold to you so adroitly. Market-linked GIC's? They did not sound good to me, and I didn't buy 'em. Oil down 10 and a half bucks on the day. What else?

The meltdown is upon us. I made sure today that all of our cash holdings were spread out to be covered by CDIC. I would advise you to do the same. I have to say though, that I do not even trust CDIC solvency if this keeps going. This is historic. Remember it. Oh, never mind my admonition, you will remember it. Alberta's boom may be on hold for a while if this continues (and I am sure that it will).

I'm looking forward to buying a house in Shaughnessy for $300K when this is over.

Still want a Harper majority? A Dion majority? Forget it. The only hope we have is for coalition gov't. A co-operative government, where decisions are made by consensus amongst the parties that represent the majority of Canadians. Don't want to see Young People Fucking? How about All of Us are Fucked? Pardon the vulgarity, but it is that stark.

There are those who say that this is a manufactured crisis, and I lean toward that. Here we have right-wing governments - under Bush and Harper gutting our treasuries, cutting taxes while increasing spending. Harper's gov't has turned a 14 billion $ surplus into a near deficit in 2.5 years. Some say that the only reason we are not in deficit, is the sale of frequencies to cell phone companies (reaped about $3.4 billion, if I remember correctly. We would be a billion-seven in the red else). That was a one time deal. Kinda like when Campbell sold BC Rail, and tallied a surplus. And look where that got us. 400,000 jobs have disappeared under Harper's regime, with plenty more to be lost.

Watch The National on CBC tonight. It is worth the watch. There is a very good interview with Elizabeth May. The Greens are the most centrist party of all of them, but they don't have the vicious experience of the House. I think that May could tame the Liberals, and pull them back to the centre in a coalition. That is what Canadians really are. We also pull together in difficult times.

Here are some vids to relieve you from my rantings - which will continue manana. Some of the vids are amusing, some stark. A good few have tunes. I hope you like at least one. There is some really heavy schtuff to come.

funny

amero

joking?

alliteration under the volcano

Vesuvius 1822

Wow, the shite is hitting the fan. Lots of talk about 1929, global depression, doom, gloom, and despair - and that is just the MSM! The commentary runs from the apoplectic, to the apocalyptic, to the apathetic, to the apologetic - and that is just the A's! I thought that I ought to add to the mix with some brimstone, bitter nettle, bone heads, and just a little braying.

Speaking of boneheads;



The picture is from this article - a nice synopsis, and I redact;

Let's take a look at America 's...entire financial system...in the process of blowing up...over $500 billion in bank losses, with over $1 trillion more to come. Over one dozen banks have failed, with hundreds on deck. A handful of large hedge funds have blown up, with hundreds more on the way...over $1 trillion has been transferred from the Fed to the banking cartel...estimate another $1.5 trillion will be needed to maintain liquidity as banks de-leverage over the next few years. Unemployment is now over 6% and inflation is over 5%, even with Washington 's manipulation of the data. Virtually every metric in the housing market is at multi-decade lows, except for foreclosures which are hitting new highs.

Taxpayers are on the hook for billions of dollars of potentially worthless debt held by Fannie and Freddie. It's now official. America 's free market economy is really a socialist system for corporations. One could argue this to be a form of Fascism. My best estimate for losses due to the Fannie and Freddie taxpayer bailout are between $200 to $500 billion. The worst case scenario would be $800 billion. When Superman fails to show up, Washington might consider giving David Copperfield a call. Get the popcorn ready.

Those clowns up there are the architects of all of this, but they won't be affected by it, they have made out like foxes in a hen house. My rough estimate of the debt that 330-odd million people just accrued (whether they wanted to, or not) is tens of thousands of dollars each, and that does not count the wars, and such. All to bail out banks, mortgage companies, and insurance companies whose directors and CEO's collected tens of millions of dollars in bonuses. AIG alone cost $2575 per man, woman and child. Sounds fair to me! Everybody loves an insurance company.

And yet more clowns, chimps, chumps, cheats, whatever (I promise not to go through the whole alphabet).

The mental midget. The picture says it all - RESPONSIBLE. Responsible for 0%/40 year mortgages, responsible for blowing the surplus, and very likely for putting the gov't into a deficit situation. Responsible for leaving a $5-6 billion deficit in Ontario after just one term as provincial finance minister. He is no economist, or financier, he is a lawyer. Let us not see the likes of him return to the finance portfolio.



Heil Harpler. (complete with lip-stick on the pig)



What an unfortunate (if defining) photograph of this clown. I find it hard to believe that he has pulled the wool over so many people's eyes (as evidenced by poll numbers). Have Canadians not been paying attention to the chimps in the first picture these last 8 years? I find that to be very disconcerting, though I ought not to be surprised; after all, so many Canadians drank the RE kool-aid, I really ought to have lower expectations.


The picture above leads right into the photoshop below, though instead of looking like an evil dictator, Harpler ends up looking more like the incompetent Sgt. Shultz from Hogan's Heroes. I really hope that people wake up in the next 3.5 weeks, and get rid of this prick for good.



Things are not looking so good. I predicted back in January that we would see the TSX back at 8,700 before this is all over- I am now revising that to below 7,000. I also predicted that we were heading to a depression (in 2005), and now the MSM is predicting the same thing (that is my braying).

Good luck everyone, I hope that you don't have debt, and do have lots of savings, you are going to need it.

More reads -

The Ultimate Wall Street Nightmare

more gloom

unintended consequences

Vancouver leads fall in house prices

So much to write about, and so little time...

bing bang and the burning ring of fire

Yesterday, they fired up the HADRON super collider in Switzerland. There had been some consternation that they might create a black hole that would swallow up the Earth, and all of us with it. Reportedly, no black hole was created, and so we are all safe...except for RE "investors".

Urban real estate values set to plunge, UBC expert forecasts. Oops. I went down the memory hole because I thought that I remembered that Tsur Somerville was a pumper, in denial. I was wrong about that, this is what I found him saying in 2005:

"It is an issue for the person who says real estate is great and I'm selling all my stocks and buying real estate in the Lower Mainland," said Somerville. "For that person, it's a problem."

And while Somerville is reluctant to make exact predictions about when Vancouver's hot housing market might begin to cool, he can't help himself from making just one.

"You'll know when the market has hit its peak on the day that I buy a house," he said.

I wonder if Somerville has bought, he must have, because we have peaked, and are heading down into a dark hole, perhaps even a Black Hole.

The stock markets are flopping around like a beached cod fish; TSX down almost 1500 points in a week, and then bouncing up by 350 points yesterday. Can you spell v-o-l-a-t-i-l-e? Oil still sinking, even as OPEC cuts production. I guess demand for oil is like demand for housing - fickle, and not nearly as strong as people have claimed. I read again yesterday that the oil prices were driven up by speculators. Hmm. Sounds familiar. I don't know about you, but it irks me that speculators make piles of cash off of our backs, and we pay for it. What a tangled web. Burn babies, burn.

Politics this week? That could be a whole, new blog, but it has been fascinating. I can't wait for the 15th of October, just please, please, let us not have a majority Conservative government...though that would accelerate a return to "fundamentals" (and that is an intended pun, even if it is facile).

I heard talk on CBC yesterday of condohype, and they were quite tickled by our friend's writings - describing them as "very funny". Congratulations on receiving such recognition, condohype! I did not catch the whole piece unfortunately (li'l solipsist keeps me hopping, and has a voice larger than the CBC's). It is great to hear the MSM finally helping us bring down the market.

Things have been spotty here vis-a-vis ideas, and posting, and I sense that I am gradually fading away. I hope to be here still to remark on the trough, and to write about a purchase, and the renovations that will ensue, but we will see - unless, of course, the Hadron collider did create a black hole that they have not reported (don't want to panic anyone!), and we are all just goo on a shrinking planet. Kind of the opposite of "making more land"...

888 state

Yesterday I was out and about, and noticed more "For Sale" signs than I have seen for a while. It seems that there are 4 or so on every block. It seems that it is sinking in that it is over.

My neighbour has had open houses the last three week-ends in a row. It seemed that it was mostly Chinese looking (I can tell the difference between Chinese, Japanese, Korean, etc. 19 times out of 20 +/- 3%). No Mercedes, Lexus, BMW, mostly small, less expensive vehicles. Maybe that indicates they are more frugal, and can afford a $900K house on a smallish lot in East Van.? Maybe not. I enjoyed doing yard work while my stereo pumped the Sex Pistols, The Ramones, Forgotten Rebels, etc., out my window. Hey! fore-warned is fore-armed. Right? The asking price is 20% higher than it was bought for last year. And the defects are starting to show. Good luck with that.

So, I was all juiced up, and did some MLS searching. Still no houses in East Van. under $400K. I guess we will have to wait for fall for things to sink in. Prices and quality are all over the map, with tear-downs listed in the same price range as new construction, and big lots in the same range as small lots. A little price compression before the price depression sinks in, me thinks.

What I found interesting was all of the houses listed with a bunch of eights. I counted 10 places (out of 160 or so) that were listed for $888K. That is kind of blatant, and if I were Chinese, I would be somewhat offended. Do the listing agents think that they (Chinese) are that stupid/naive/superstitious? You would not want to mess with over/under bids on a place that was listed for $888,888.00 would you? I'll give you $888,888.88 plus my lucky rabbit foot. No Deal? I'll throw in a four-leaf clover!

Sadly, many who over-extended themselves to buy in the last couple of years - with the hopes of insane appreciation - did not see the credit crisis, doubling of energy costs, accelerating property taxes to pay for Olympic cost over-runs, food inflation of 30%, etc., coming when they factored their top line.

Why don't we just start bidding $300K with a bunch of conditions on these $800K places? Let us bring it down!

There are deals ahead. Keep your powder dry.

n is for neville...

...who died of ennui



I'm getting bored.

When will it start? Where will it end?

Was that "little" stock market stumble of today profit-taking, a small correction, or the beginning of the end? Do you think it will continue tomorrow? Betcha it does.

I liked this line quoted here yesterday - re-born Robber-Barons do not suffer fools or casual opportunists-instead they eat these 'hangers-on' that would have cluttered up their kill. Time to reap the harvest?

Okay, I forgot, Vancouver is...immune, or something. mohican busted the land shortage thing into 5 Easy Pieces. Well, we do have comparatively good weather. The Olympics are likely to be a bust though;

the Olympic Winter Games > Lake Placid, New York, U.S., 1932

The worldwide economic depression cast a shadow over the third Winter Olympics. Only 17 countries attended, represented by some 250 athletes, over half of whom were from Canada and the United States. The Games generated little revenue, and organizers, who had built a new stadium and bobsled run, suffered huge financial losses.

Encyclopedia Britannica

I have heard the words "depression" and "nineteen twenty-nine" quite a bit today - and in the MSM, no less. Weird though, I still see people cruising "For Sale" signs.

I have a feeling that Real Estate is going to be dropped as a topic of polite conversation very soon.

I'll be Blogging the Apocalypse (if I can afford to pay for electricity!).

low-pressure trough

Bear-Stearns price graph.

A low-pressure trough is sometimes called a depression. I have been talking of an impending depression for years (not here, but elsewhere, and verbally). Most people just thought that I was a crank, but it is starting to come to fruition.

Bear-Stearns was trading at around $70/share last week, but today, sold off the whole shebang for $2/unit. I'm sure that a lot of people thought that BS was different. Bear-Stearns is just one banking house in trouble, there are more to come - by all accounts.

I know that a high CDN dollar is problematic for exports to the US, but our dollar slipped below par today. That is bad news for us. We do not want to follow the US to the bottom, but it appears that we will. All those fools that bought RE at exorbitant prices in the last few years are going to be in big trouble when the carbon tax comes in, property taxes sky-rocket to pay for the Olympic scam, TransLink is putting in a new tax, Hydro rates to increase some 25%, job losses coming soon, etc.

Here is an interesting article at rense.com proclaiming that Black Friday is back. The article is a bit long to keep one's attention, and is kind of spectacular in writing style - it is also aimed more at the US reader, but there is some stuff of interest about halfway through.

There is one more player in this quagmire of failure and defeat that has yet to show its face. That is the face of those that have supported all this criminality and horror with their greed and with their interminable silence throughout this most treacherous chapter in all of American history.

These are the would-be emulators of those in power, regardless of how corrupt or jaded the individual criminal-figures might actually be. These are vulture capitalists in-waiting, not yet fully fledged, but still very eager to find a way to get their own piece of the corpse that was the USA. They are the reason that so many have remained silent and complicit with all that has transpired. In reality these seemingly ordinary people, have made it possible for the owners to get this far without a violent public backlash.

Now while the real players have begun to pull their money out of everything, it is these small-time opportunists who will be left with nothing, because they weren't smart enough to get out before the major dominoes began to fall. Now they, along with us, will be left holding the bag and screaming about "what could have been!" Because whenever any major 'bubble' bursts, the key players not only escape, but they always have made huge new fortunes from each new chaos-while the suckers lose it all.

This time there are literally millions of suckers that did not study the Stock-Market Crash of 1929, so they've just been waiting in the wings to be crushed by this burden: which was always part of this design that was created to insure that this failure will be total!

The lesser beings that sought to profit..."believed implicitly" that they would end up on the winning side with their own smart-money profits as a bonus. But re-born Robber-Barons do not suffer fools or casual opportunists-instead they eat these 'hangers-on' that would have cluttered up their kill. So, once again only the few will profit, while all the rest of us will pay because 'the run on the banks' has begun and the Fed can't print money fast enough to stop this, if it reaches beyond the business class and into the general population. (emboldening and clipping mine)

I think that Rense may be a bit sensationalistic - like Alex Jones, but still speaks to the truth.

Things are going to get nasty. Forget schadenfreude, we are all going to hurt. Get rid of debt, and stash some cash while you can.

good question, and a rant

David sent me the following e-mail:

subject: the elephant in the room

Still trying to puzzle this out.

Banks are failing, not due to lack of regulation (Mish). But the elephant of Fractional reserve lending.

Okay I get that, what I don't get is how can a bank lose liquidity when they never had it in the first place.

They make 'money' by typing it into the computer. Yes, that's simplified, but the money never was there, so how can they lose nothing?

And yet us the 'great unwashed' will 'bail-out' the banks. Would love to see a discussion on your blog around this, maybe someone can enlighten me.

David poses a salient question, that I cannot readily answer - but to say that so much of what we are taught about the world is a bunch of bullshit.

How can a private bank (The Federal Reserve) have such control over Americans' money, and their lives? They just pulled $200 billion out of their asses to "save" the American economy. Where did that $200 bill. come from? That's easy - from interest charged on the (imaginary) trillions that America owes, and so on - back to the days of JC and the boys.

Why did they kill JFK? Maybe because he was going to release America from the strangle-hold of the Fed. Reserve, and re-introduce a government-backed "green back"?

Why is our government - through the Bank of Canada - buying frozen ABCP? I wouldn't buy it, would you? Ah, but we are buying it, and we will be bailing out all the Fucked Buyers, and CIBC, and, and, while we are impolitely raped in many other ways - like carbon taxes, property taxes, and on, and on.

And you thought that feudalism, slavery, oligarchy, and royalty were dead?

Collectively, we are a bunch of under-educated, but over-inculcated idiots. I can never get the image of the deported-to-camps Jews, Communists, Artists, etc. during WWII, who carried their suitcases with them in the belief that everything would be ok.

Man's inhumanity to man has not lessened in any way, and the pendulum is swinging back to very dark days. The Depression was no joke, and we are headed to something much worse.

I hope that people can figure out how to eat granite.

dizzy

These are very strange times. I am concerned.

Today oil spiked above $101/bbl. That in itself does not concern me so much as the reason why.

It seems that traders see oil as a currency hedge. The Fed is speculated to cut rates soon, which will mean a further hit to the US$. That will be a hit on the Americonomy, since it is based on consumption. More expensive goods mean less consumption - cut the rates - dollar drops - everything goes up... in flames.

It's a good article, and there were lots of things that I wanted to quote, but I liked this;

But the prospect that the Fed will reduce rates proved too strong, feeding a new buying frenzy, analysts said.

“This is all about momentum and driving [prices] higher right now,” Mr. Flynn said.

Despite the return of $100 oil, and now $101 oil, there are concerns that high oil prices — and the higher gasoline and heating oil prices they spawn — are sowing the seeds of their own destruction by contributing to the economic slowdown.

“The price gains raise questions about their sustainability in the face of eroding fundamental strength,” said Antoine Halff, an analyst a Newedge USA LLC in a research note.

emboldening mine - ah, just imagine the whole quote is in bold type. It is the same story as RE, just a different product.

So someone else's arbitrage means that your gas costs more (not to mention the 2.8 cents a litre carbon tax coming in July), so does your heating fuel, and food, and building materials, and labour, until no one can afford anything any more.

Still, oil is priced in USD, so a sinking dollar takes some of the edge off for Canada (imagine if our dollar was at $0.65), but that is cold comfort to the laid-off auto worker, or forestry worker, etc.

I don't know about you, but I am getting dizzy as this whole global economy, and beyond, spins ever more out of control.

how low can she go?

I've been up to my arse in alligators, hence the lack of pies.

I stole the image below from Garth Turner's blog posting Pop Heard Around The World. (don't think that he didn't lift it from somewhere) Politically, he's...well anyway, he is telling it like it is vis-a-vis the economy, and some of the comments are good too. It's kind of like wading through comments at Rob Chipman's , but there is stuff worth reading.



Look at that down slope. Pretty steep. And the timeline - aren't we "two years behind the US"?

This is it. The Wile E. Coyote moment has passed. How about that 600 point drop on the TSX today? And the 900 points off last week? That is some 12% down in seven days. My stock list is a sea of red - except for the ones that have Halts on them :[

Oil down below $90. the CAD below .97. Quebecor up shite creek in a lead colander.

Some are talking about TSX below 12,000, try below 10,000. The rout is global. Look for 8700. Then buy. Rinse. Repeat.

Oh, and house prices? How low can she go?

I know that we are immune to everything, elsewhere, but I am in Vancouver, and I'm watching my stocks go down. And I thought that I was different. It's so great to be living down a rabbit hole in The Land of Oz.

Here is some light reading at the Gloom and MarketCrash

And just to round things off -

i'm not the only one...

I could not resist, and took drachen's suggestion for the pic'. The original was intentionally boring, but maybe just a bit too much so.



I read a couple of things worth reading over at Garth Turner's blog, which I have redacted below. (some of the commentary is good too - if you can get past the masturbation)

Whatever one might think of Turner the politician, he does know a fair bit about finances.

In any case, don’t let the media fool you. Stock market stories are not about stocks. They’re about the economy. Markets, you see, are harbingers. People who trade on them spend a lot of time betting heavily on what comes next. Right now, they’re worried.

The world economy, dragged down by the States, is slowing. America has never been so in debt, or so long at war, or with such a weak currency. And on a day when realtors in Canada were trumpeting the greatest sales volume ever for residential homes...far too many buyers here could be in as much trouble as a couple of million of Americans who losing their houses. We...categorize the subprime mess as giving loans to people who did not deserve them. But...we are busy selling $400,000 homes to young couples with between 1.5%... and 5% down, and with 40-year mortgages that turn a $300,000 debt into one of $884,000 at current rates.

This is unwise. It’s gambling. Canadian banks have been handing out mortgage loans like candy... offering a zero-down option, asking them to come in with enough money only for closing costs.

No wonder Bay Street’s worried. Nobody in the world of financial securities would extend 98.5% leverage, and yet we are soothing your homebuyers into precisely that. Should the US slowdown affect our economy, which it will, buying an expensive house with no money might not look like such a great idea.

This was worth quoting too;

Like the North Star, we are a bright light for others to follow. Canada has emerged as a shining example in an economic universe of rapid change and uncertainty. We are leading the way with our tax cuts, our debt reduction and our focused and responsible spending. Our fundamentals are strong and we are well positioned to weather any sudden economic storms.
- Jim Flaherty, budget speech, October 30, 2007

“There’s reason for continuing concern about the weakening in the U.S. economy. The subprime reality … continues,” he said. “It’s broader and deeper than originally predicted and it’s reason for caution as we look forward.”
- Jim Flaherty, interviewed in National Post, January 2, 2008

In the sixty-odd days between those two comments, what happened?

The "experts don't know WTF is going on. You and I know better than the Federal Finance Minister. That's what freaks me out...

the quickening

There is a lot going on these days, despite the "roaring silence" that has been for a while. drachen linked to this video over at mohican's place. The collapse of the US dollar and economy, and perhaps US society? They are going down, and we, and a good part of the world will be going down with them.



Mike Mc sent this link from July 28, 2005 warning of a bubble in Vancouver and Victoria (thanks Mike). That was 2 1/2 years ago, and things have continued to inflate since then. It is now so out of whack that it has become like a lost chapter in Through the Looking Glass.

Today we hear that the Provincial Guv'mint is talking about a roughly 14 billion $ transit initiative. Just tack it on to our property taxes on top of the infrastructure costs for the boondoggle. I mean, Olympics.

Meanwhile, Surrey NDP MLA's are calling for Translink to roll back the latest transit fare hike.

"You can't have someone who makes $8 an hour have an increase in a fare and end up paying something like 18 per cent of their income on transportation. It's just not fair."

Too true. After coughing up 71% of income for mortgage payments, and 18% for transit, there will be a scant 11% left for food, entertainment, clothing, retirement savings, property taxes, up-keep, etc. Does anyone know if those percentages are net of tax?

Stephen Harper announced a billion dollar fund to help displaced workers in the manufacturing and forestry industries.

The rising Canadian dollar and an economic slowdown with Canada’s biggest trading partner, the U.S., has forced many mills and factories to either let workers go or shut down completely. In response, the Harper government has announced a plan that is not only ludicrous in its approach but politically underhanded as well.

I guess Stevie is worried. But a billion bucks is not going to cut it once things really get going.

The sell/list ratio over at Rob Chipman's place has gone from 200-odd % before Xmas to 30-odd %, and we are not seeing regular #'s there these days. (some might say that the Chipper is withholding because the #'s are grim. I don't buy that, but if the #'s are grim, who will be surprised - besides the greater fools?) Seasonal, or harbinger?

I had a whole bunch more interesting links, but I will not travail you with them now. The shite is hitting the fan in dribs and drabs, but it is quickening.

canned goods & ammo

I have had a few people write to ask me what I do with my cash while waiting for a correction. Frankly, I do not know what the heck to do with it. Stuff it in my mattress? Hide it in plain sight? Good question.

My response has been that I am very conservative with my capital, and because it is so hard to come by, I keep it in the bank - either in GIC's, or these days, in a "high" interest (4%) savings account at a big bank. I have had the option of putting it into market-linked GIC's, but stayed with the staid old cashable GIC.

So, I am making 4%, but factor in inflation (supposedly ~3%, and income tax on the earned interest, and I am not really getting any further ahead. I could gamble with ABCP, oil futures, pork belly futures, precious metals, the stock market, or the casino, but those are not guaranteed safe havens. I sure could have made money in TSX-linked GIC's, or gold, but I also could have lost money. I could have bought a few pre-sales and made money too (if I bought 3 years ago, and sold this past summer, I would have done well), but I also could have lost it all (I have been expecting a correction for a while...).

What are your safe havens? My 4% earned does not add up to a hill of beans.

bleak friday

At least the weather was not bleak today. In fact, it was another beautiful day on the Lower Mainland. That's why we live here. We can see the mountains on these beautiful days, and dream of the Olympics, and maybe even go up to the mountains, and shout across the whole delta that we are here, and it's the best place in the entire freaking universe. Forget condo appreciation day (kind of like nurse appreciation day), we have condo appreciation years.

Is it unravelling? Rob Chipman's numbers are all over the place, and other realtors who comment haven't got a clue either. The stock markets are all over the map too, up and down, shaking out, teetering on the brink of collapse. There just has to be trouble when the TSX consistently outpaces DJ. It is like Vancouver holding out in RE when all around is falling.

None of that is real news though, the real news (on CBC, anyhow - which I staunchly defend - for all it's shortcomings) is the border line-ups as Canadians return from pumping 100's of thousands, millions even, of dollars into the American economy on it's biggest shopping day of the year. Christmas shopping early! The sales are fantastic! The coverage is breathless. (where is all this money coming from?) So sorry Vancouver retailers - we don't need you. We are rich on RE, and all we need is a few baristas to make our lattes, and a few pool boys for whatever they do. We'll just drive down to Bellis Fair to do our shopping and turn all the empty retail spaces in Vancouver into store-front condo's.

I've been hearing rumblings too of the BoC dropping rates by as much as 1% over the next year. The principle driver of that outlook is not the high dollar, so much as the economy is flagging, and some say (sorry - no links) already in recession. But is it the dollar that is putting the squeeze on the economy? or flagging exuberance? The end of a bull run? That would, of course, exclude Vancouver, because it's different here, and we have all this construction, and mountains, and the weather.

deceit

On victory born of deceit

I, Virtue, soak the tomb of Ajax with my tears, alas, wretched, having rent my whitening hair. Certainly this matter still remained, that by a Greek judge I should be vanquished: and that deceit should have the stronger defence. link

This is just food for thought. I can't write the situation any better.

It is Amero-centric, and is a departure from Vancouver RE (I seem to be doing that lately), but I think that it is pertinent and applicable to what we are/will be seeing here. (emboldening mine)

How does the government deceive us? Let's count the ways.

Employment/Unemployment: Job hunters vanish without a trace after six months, and ghost jobs are created in the hundreds of thousands by a bogus "birth/death" model.

Inflation: As even the mainstream media is now admitting, official inflation is grossly manipulated to appear half of the true rate (3% vs. 6%). This lowers payments to those costly entitlement retirees and maintains the illusion that interest rates can be kept low because inflation is so low.

GDP: The GDP number always comes in "hot" and is usually revised downward later, when nobody's looking.

Federal Deficit: The Federal deficit contains a huge deception: the Social Security surplus is spent to offset current spending, reducing the "official deficit" by hundreds of billions each and every year. In exchange for these trillions, the Government issues the Social Security fund an IOU. The IOU is now about $4 trillion.

If this fiscal legerdemain were outlawed, then the true Federal deficit would be double or triple the "official" deficit.

"A strong dollar is in the interests of the nation." Hahaha... is that why you've engineered a 33% decline in our buying power since 2002 (the dollar index dropped from 120 to 80 in that time and is currently 78.) I'd hate to see what would happen if a weak dollar were in our interests.

All these accounting tricks serve one purpose: to deceive the citizenry and the world into believing the U.S. economy is stronger than it actually is.

2. The government has opened the floodgates of money and loosened banking regulations to help all those poor investment bankers. Regulators who should have provided oversight of the lending, mortgage and derivative markets have been idling away their time, doing anything but their job. Who's benefitted? Their pals churning all the origination fees, that's who.

3. The banks sold hundreds of billions in "safe investments" to institutions, domestic and foreign alike. Only now are the true risks and illiquidity of these SIVs, MBS, CDOs, etc. being revealed in the grim light of day.

4. Our trading partners who export vast quantities of goods to the U.S. (and who run stupendous trade deficits with the U.S.) have bought trillions in U.S. debt to keep us afloat. Since Americans don't save anything, somebody has to give them a credit card to fund all that spending.

So what's hidden? How utterly dependent the U.S. is on foreign buyers of Treasuries and debt to keep U.S. interest rates low. That's another little wink-wink, of course; when the Fed slashed the Fed Funds rate a half-a percentage point, headlines blared "Fed Cuts Interest Rate." Meanwhile, back at the Long-Term Interest Rate Ranch, 30-year mortgage rates actually went higher after the Fed's cut. Huh? Yes, that's right--because the market sets the long-term interest rates, not the Fed. Not that you'll ever read much about that, though.

So the "debt junkies" in the U.S. get their "fix" of abundant, low-interest debt from the "pushers" who need the junkie to keep buying exports and oil. link

grief in 5 easy stages

Thanks to zed for sending me this link to CBC's story entitled Canadian real estate sales slip. (I have copied their style of a bold red font for the headline. It's like the colour of...blood in the streets. Very provocative.)

There is a lot of blah, blah - pointing out how things are down, but from a giddy escalation. Good news with the bad news, wot?

Vancouver's real estate market once again topped the country's most expensive. The average home sold for $582,354. That's down by about $5,000 from August, but still represents a better than 10 per cent hike in the past year.

"The underlying economic conditions in Canada that affect real estate are still very strong," said CREA president Ann Bosley in a statement. She attributed lower overall sales to the "volume of new listings."

And just what might be driving that "volume of new listings"? Has someone accepted the diagnosis of terminal bubblecoma?

As I read all of this, and along with everything else, I was minded of Kubler-Ross' Five Stages of Grief, and wondered if we were into acceptance yet. The bargaining is yet to come, and then, the depression - in my rosy view.