The economic endtimes are nigh!
Vansanity points out an interesting article comparing warning sign of economic downturn in the US and Canada:
Fifty-five thousand jobs disappeared last month. The shockingly large loss was the biggest monthly drop in 17 years. But the employment report shouldn’t be too surprising—warning signs abounded. Now, just like all the people who were partying it up around Noah’s ark when the rain first began to fall, some Canadians are finally beginning to wonder if a flood really is coming.
As Ignatius points out ‘The Trumpet’ is a religious publication, and if there’s one thing housing market bears and certain religious people have in common it’s predicting end-times where the righteous will get their reward and those that have succumbed to the sins of sloth and greed will get thier come-uppance. Of course William Kamm and Nouriel Roubini have dramatically different track records at this point.
Regardless of your opinions on religion this article nicely sums up some recent economic news and may raise some red flags for anyone that believe that faith alone can maintain a market.
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August 19th, 2008 at 10:48 am
“People who had cash in the 1930’s did it too, big time.”
Maybe, if they had all their cash stored in a mattress at home.
Great Depression. People panicked, there was a run on the banks to withdraw savings. You were only allowed to withdraw 10% of your savings. Banks couldn’t give out loans either during that time. Many banks went bankrupt and people lost their savings too.
There has never been a failure of a major bank in Canada, even during the GD.
As for today, we all know that deposits up to 100K per bank are insured by CDIC and under no circumstances whatsoever will the PTB allow insured depositors to lose their money.
Also, you can bet your socks CMHC is going to keep the mortgage wheels turning, albeit with more traditional lending standards.
Bottom line is we are not going to see a return to the Great Depression when you could buy a house for 3x annual rent, but a return to the 80’s when you could buy a house for 10x annual rent is another thing altogether.
August 19th, 2008 at 11:16 am
“U.S. wholesale prices shot up in July at the fastest year-on-year rate since 1981, while home builders cut back on construction as they worked through a glut of unsold homes, government data showed Tuesday.”
Do you want to call that inflation or deflation? It doesn’t matter - it is what it is.
It also means lower house prices whether the Fed decides to get serious about CPI inflation or not.
August 19th, 2008 at 11:38 am
August 19th, 2008 at 11:46 am
I think more like the latter than the former. Our biggest trading partner is in pretty deep right now, some things can be shifted to other markets but with the US doing poorly there’s less of a market for our goods elsewhere too.
I think part of your answer is dependant on what happens in November.
August 19th, 2008 at 12:40 pm
My worst case extends longer than that…credit crunch and current high levels of personal indebtedness will keep consumers from spending their way out of this for many years. I hope not a decade or more…
August 19th, 2008 at 1:02 pm
Minyanville has an interesting take on inflation as it relates to PPI. I LOLed after reading this line:
August 19th, 2008 at 1:16 pm
August 19th, 2008 at 1:18 pm
Athens was and still is a financial disaster and Sydney’s games didn’t really bring any tangible benefits.
August 19th, 2008 at 1:38 pm
“The Montréal Olympics can no more have a deficit than a man can have a baby,” declared Montréal’s then mayor, Jean Drapeau, a prediction that haunts him to this day.
Ooooops!
August 19th, 2008 at 3:34 pm
Although I look forward to a 30-40% correction in housing prices, I do not look forward to the accompanying tough times. I’m thinking 3-5 years of pain at least.
It seems like maybe a not bad idea to leave Vancouver for a couple of years to wait for prices to drop and also avoid the economic fallout. Then come back and buy when prices are low and the economy is starting to pickup.
August 19th, 2008 at 4:07 pm
August 19th, 2008 at 4:29 pm
“leave Vancouver for a couple of years to wait for prices to drop and also avoid the economic fallout.”
Where would you go though? Vancouver will have it’s problems but the rest of Canada will be hit hard too. The grain belt is liable to do OK but I wouldn’t count on things being much better in eastern or central Canada than they are here. The economic problems go way beyond our little housing market.
Outside of Canada, Europe is set to be OK I think, some of the former soviet bloc that have joined the EU are doing very well. Asia is sketchy, though some parts better than others, I think China might see some real problems in the next 10 years.
Maybe you should just move to Afghanistan? I hear the agricultural sector there is booming!
August 19th, 2008 at 4:48 pm
August 19th, 2008 at 4:51 pm
I tink because of the new data that housing is going to go down in Vancouver. I am loving T-dot-0-dot btw, there is tons to do in doowntown T.
August 19th, 2008 at 4:55 pm
the only industry in vancouver is construction, so going anywhere else will be a plus.
August 19th, 2008 at 4:58 pm
In an ominous warning, he added: “We’re not just going to see mid-sized banks go under in the next few months, we’re going to see a whopper, we’re going to see a big one — one of the big investment banks or big banks,” he said.
http://business.timesonline.co.....563171.ece
August 19th, 2008 at 7:17 pm
It’s a sliver in the brain of West Coasters that “Canadian” policies are geared towards central Canada. This is a huge country and what works for ‘the centre of the universe’ ie; Ontario and Quebec, doesn’t apply to the west coast. Bank of Canada tweaking of the economy sometimes works like a sledge-hammer out west.
August 19th, 2008 at 8:34 pm
August 19th, 2008 at 8:55 pm
We have lots of condos for sale, lots more being built, and no more buyers. Macroeconomic conditions notwithstanding, there will be downward pressure on rents just due to supply.
August 19th, 2008 at 9:43 pm
What part of Toronto are you living in ?
August 19th, 2008 at 11:49 pm
August 20th, 2008 at 12:43 am
Yeah I thought so, too.
Hey Rob A.: If you’re there, just call it the T-dot. It’s kind of funny how fast he changed his mind about Vancouver.
August 20th, 2008 at 7:16 am
Right now you get subtle & not so subtle messages about how great you’d be if you bought 500 sq ft of ‘lifestyle’ in SOMA, NOMA, Flagship, Nuovo, HH etc.
Perhaps in the future we’ll have something a bit more honest. Here are my suggestions:
- The quality & craftsmanship is…SOSO
- The value of this property is going…SOLO
- Can you afford not to buy right now…HOHO
- Should you buy a pre-build assignment…NONO
- If you buy this you’re like a…DODO
Those are just the ones the popped into my head while I was writing so I’m sure you clever creative people will be able to come up with much funnier ones than that.
I hope things change because at the moment the whole industry stinks like POPO.
August 20th, 2008 at 7:21 am
August 20th, 2008 at 7:38 am
August 20th, 2008 at 7:48 am
Note that the current RENT level of Metro Vancouver is based on extremely strong economic activity. Given the huge supply coming online and moderation of employment, we can expect rent to come down significantly. If current home values are ridiculous compared to rent, it will only look more outrageous once rent starts falling.
August 20th, 2008 at 9:14 am
Maybe but I’m not so sure. “Significantly” can mean so many things. The spot price of rent is not measured, only the average, which is a major difference between house prices. The average is not significantly increasing in real terms.
Note other markets (in the US) where there has been oversupply have seen downwards pressure on rents but not necessarily “significantly” falling rents.
August 20th, 2008 at 9:19 am
http://www.theglobeandmail.com....._mostemail
August 20th, 2008 at 9:56 am
http://www.theonion.com/conten.....ay_contain
August 20th, 2008 at 10:20 am
I just hope politically BC doesn’t go back into the dumpster. If the NDP or green party manage to capitalize on the economic collapse we could be in for some serious trouble in BC.
August 20th, 2008 at 10:38 am
The downturn in new construction will last through to the Olympics, and housing prices, down marginally from their peaks early this year, are likely to drop by 10 per cent before the market rebounds, he said.
i’d say that 10% is already “in the bag” with no bottom in sight….
August 20th, 2008 at 10:55 am
We all know the “stopped clock is right twice a day” thing. A slow clock? Pretty much never right.
August 20th, 2008 at 11:15 am
And who has been running the province since 2001? Gordo has been putting all our money on the global RE bubble and has finally rolled snake eyes.
The NDP will not win the 2009 election, which means nobody will be able to blame them for the upcoming debacle.
August 20th, 2008 at 11:34 am
The NDP would just excersperate the problems to come. Just look at the proposed speculator tax and all the other loony tune ideas. I think you might be wrong about their fortunes though. It was close last time and it could very well be an NDP victory next May. I hope they don’t win but who knows.
August 20th, 2008 at 11:38 am
If there is one thing that may limit unemployment this time, its retiring boomers. Some jobs may be made redundant, but large employers will still need to maintain a skilled workforce. In the 80s, boomers were midway through their careers.
August 20th, 2008 at 12:02 pm
Whats so fun about young families going into crippling debt?
August 20th, 2008 at 12:12 pm
August 20th, 2008 at 12:23 pm
He doesn’t, but his public pronouncement of the by-now-obvious is going to be a hard pill to swallow for bulls who’ve used his prior guesstimates to substantiate their wish-fulfillment beliefs.
Denial becomes harder to maintain when your heroes have already capitulated.
August 20th, 2008 at 12:26 pm
Tough call, I’d love to hit Hong Kong or China again, lived in each for short periods. But my better half is not thrilled about the idea.
Back East is not great right now from what I’ve heard, at least in finance jobs, and never been a big fan of anything east of Vancouver anyways.
Was considering London or Sydney, but both have nose-dived as well in the last six months. So it looks like I’m kind of out of options.
August 20th, 2008 at 12:32 pm
[b][i]VANCOUVER — British Columbia’s economy is sputtering as the U.S. housing crisis continues to undermine exports, driving down growth this year to its lowest levels since the Liberals took power in 2001, according to estimates issued yesterday.[/i][/b]
August 20th, 2008 at 12:32 pm
I don’t love the Liberals, but the NDP and Greens are truly scary. Although, I have to say I’m glad the NDP expanded the Skytrain line (notwithstanding they only did it to pay back their union friends).
August 20th, 2008 at 1:02 pm
“If there is one thing that may limit unemployment this time, its retiring boomers.”
Unfortunately those retiring boomers are just going to be a drain on the system because many of them will have lost their life savings and their retirement money to gambling on real estate. I think many of them will have to put off retiring as well so I think they’re more likely to hurt than help (that and the boomers have a knack for being selfish and screwing the next generations over).
August 20th, 2008 at 1:13 pm
August 20th, 2008 at 1:22 pm
I’m not like those people who keep saying “the market is going to crash” and are wrong year, after year, after year. And I don’t say that things are goign to go up forever when I think they aren’t because I’m afraid to change my mind. I deal in facts and reality.
August 20th, 2008 at 1:33 pm
BC was very much on board the tech bubble. Particularly this company, where the grunts became millionaires.
And I don’t see what’s “nice” about being on board the RE bubble, it’s going to cause this province years of economic grief and bankruptcy for many ordinary people, due both to the local bubble and the fallout from south of the border. The tech bubble had no adverse effects on any ordinary BC’er, only stock market punters and some techies who lost their jobs.
August 20th, 2008 at 1:57 pm
Anyway this time around we have a lot more development and infrastructure province wide than we would have if we just decided to stiffle everything with red tape and taxes. There’s been lots of great years of near full employment and high productivity.
Who knows what the future holds for sure. We know that the housing market will tank accross the province. A lot of people will be out of work and a lot of debt is going to be written off (back east remember). I honestly do think that BC will bounce back from this much better than Toronto.
August 20th, 2008 at 2:13 pm
You are wrong. Glenayre, PMC-Sierra, Creo, Hothaus. In the late ’90s it was pretty easy to find a job in tech in Vancouver if you had the skills.
August 20th, 2008 at 2:20 pm
“I’m not like those people who keep saying “the market is going to crash” and are wrong year, after year, after year.”
I know it’s a strain on your mind, but try to remember, I have explained this before. The simplest way to put it is;
If, during the night a man says the sun will rise again he is not wrong at 2:00, 3:00, 4:00 etc. He is right all through the night and he’s proven right when the sun does rise.
“And I don’t say that things are goign (sic) to go up forever when I think they aren’t because I’m afraid to change my mind.”
So you’re predicting a crash now too? You’re catching a little bit of whatever form of verbal diarrhea SATV has.
August 20th, 2008 at 2:52 pm
The Tech market was clearly going to go up forever unless:
“WHAT!! are you saying the internet is going away??”
Luckily Vancouver has since de coupled from the global economy and will continue to rise forever.
Where is SATV anyway? I thought he’d try to dispute that the market was going to drop for decades a bit more, if SATV’s figured it out then the market is hooped because he was the one of the last who believed.
Rob A. is just a joker like John, there is no way he could be as stupid as he pretends.
SATV/Krish/dosh/thumsup/browntown/informer on the other hand seems sincere in the stupidest way.
August 20th, 2008 at 4:22 pm
August 20th, 2008 at 4:22 pm
we need his prognostications of the
RE roadkill entrails to find out about
“the next leg up”
August 20th, 2008 at 4:27 pm
http://tinyurl.com/creditcrunch
But a big crunch is coming - and here’s why. Credit card debt, like mortgage debt, gets bundled, securitized, and sold off by banks.
August 20th, 2008 at 4:30 pm
August 20th, 2008 at 5:11 pm
You’re the one who said Vancouver was just like New York and that Vancouver had decoupled from the Global economy.
August 20th, 2008 at 5:19 pm
August 21st, 2008 at 1:33 pm
way better. we have more rainbow unicorns. we have more fairy dumpling cakes. we have “action”. all we’re missing is a little population, economic infrastructure and concentration of global cultural activity.