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Friday Free-for-all!

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142 Comments

What’s that up ahead?  Could it be.. Yes, I think it is.. The weekend!  Let’s do our regular end of the week news round-up and open topic economic discussion.  Here are a few stories I’ve noticed lately:

–Dubai debt trouble hits Canadian markets
–BC Home affordability takes a hit as prices rise
–Will Vancouver experience the post-game blahs?
–Housing Bubble: Is the market overpriced?
–Border braced for thousands on Black Friday
–Call for sponsors to save conservatory & farmyard
–GM Canada dealers sue to stay open
–Hope is not a debt reduction plan

So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!

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[…] Yalie at vancouvercondo.info 29 Nov 2009 3:59 pm & 4:13 pm responds to the statements made by wannabe flippers at the recent release of presales for ‘The Mark’ condo complex – […]

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Anon

@patriotz:

There is a fundamental difference between bubbles and what is going on today. If people want to overprice an asset and pay for it with real money that is fine, let them go crazy because they are limited by their wealth anyway. The folks buying condos today are not paying with real money- they are paying with artificially unlimited future money lent to them at artificially low interest and with artificial risk assessment. This is not a natural bubble, this is artificially created madness.

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asalvari1

@realpaul: @realpaul: just came back from shopping in a supermarket that was offering a head of lettuce for 8.75 Euro or about $14. Can you imagine?

Yes SIR, I CAN!

How do you like that part of the globe? I remember being pissed out completely in Brussels, when I purchased hamburger (approx double the price here) and was asked to pay 1 euro for ketchup bag.

And its even getting better with the prices there…

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realpaul

Keynsian theory was the holy grail for governments as it proposed an expanding revenue base ad perpetuum through guaranteed incremental tax increases on rising values. It looks like the opposition was right and Keynsian economics is nothing but a pyramid scheme that fell flat when it reached the inflection point. As we see all things consumable have reached untenable values so that affordability has been reduced to a payment as opposed to a purchase. The Keynsians will have us believe that houses, automobiles and washing machines can continue to appreciate ad nauseum as long as you are drawing a wage. But its the old story "when the last person to have a penny left after taxes please turn out the lights. Sadly the last people to get this are the governments who have forecast thier wage agreement budgets on the… Read more »

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patriotz

@Anon:

The real issue is our government. If they did not manipulate our money we would not have these problems.

Do note that bubbles have been around a lot longer than fiat money, from the tulip mania to the US stock market bubble of the 1920's (when the US was still on the full gold standard). In RE, you can look at the massive Florida bubble in the 1920's and right here in Vancouver in the early 1900's, among others.

These were regional bubbles though, I don't think a global RE bubble would have been possible without fiat money.

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patriotz

@domus:

: the government guarantee has the complicity of the Central Bank… Right now BoC and government are exactly on the same page, hard to draw a line.

Well yes. the BoC is a Crown Corporation, i.e. it's part of the government, although it's supposed to be independent of cabinet control in its operations. But the BoC has an explicit mandate to preserve the integrity of the banking system, which means supporting Crown guarantees on debt, which means increasing the money supply if need be. It's not some conspiracy, it's supposed to work that way. The real issue is the the government's fiscal irresponsibility.

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realpaul

Maxed out Canadians forced to choose between having a life and paying nothing but mortgages and condo fees for the rest of thier lives. Even at that there is zero left for savings in reitrement. So the choice is now 'to condo at the risk of all else?" Nice. http://www.theglobeandmail.com/globe-investor/per… This can't be a good scenario for any other retail sector, even the credit card companies can't be happy about watching the sky high real estate prices sucking every penny out of the economy. We see by this article that even singles and dinks have nothing left but debt at the end of every month. When the debt gets maxed out it doesn't leave anything for lifestyle. Canada is becoming a slave country where people will travel less, have fewer children and be forced to feed, cloth and recreate those… Read more »

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Anon

Yalie, you are right, too much speculation, not enough focus on creating value. But don't blame the morons- they are innocent in their desire to live better and have more stuff. The real issue is our government. If they did not manipulate our money we would not have these problems. Of course our government is not special in this, they are racing with the rest of the world. but still it is them who are directly responsible for the mess, not the speculators who are simply weak, confused and opportunistic.

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other ted

game_over its pretty scary. I think this climate scam if it goes through will make the housing bubble look like nothing. The only inconvenient truth about al gores inconvenient truth movie was that it was completely ficticuous.

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domus

@patriotz: the government guarantee has the complicity of the Central Bank. If the government had no leverage on them, and could not print money indirectly thorugh them, they would be much more careful with the fiscal stance. It's a game of 'roles'. Right now BoC and government are exactly on the same page, hard to draw a line.

You have been informed, now it is uo to you what you do with that info.

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domus

@ReadyToPop: ditto! Politicians should not decide house prices. This is a joke, and it is going to end badly. People will lose their shirts, both buyers and taxpayers. Most will be worse off. And all because some smart guys in suits have to get re-election. Be vocal! Tell other people! And write to your MPs! And to the BoC! Dropping an email to them is your right and costs nothing to you!

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Logic

"nieites"

128 – wtf?

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GR

I was informed this week that the feds will be cutting off all infrastructure stimulus funding in March 2011, and those provinces and local governments that have not used it by then will be caught holding the bag for uncompleted projects. There will be no extensions in funding!

This announcement means that there is effectively only one building season left for most of the Province, so all projects will be pushed through because no one wants to be left holding the bag. If you couple this drying up of stimulus funding, with the completion of all Olympic venues, the BC construction boom is all but done. All the emergency bullets to keep the construction boom going have now been used up….

Federal austerity measures are just around the corner….1990s, here we come

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ReadyToPop

I stand corrected…they aren't printing money…*yet*. They say they will if they have to. They are almost giving it away though and that is still distorting the market. Not the place to be if you're a value investor.

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game_over

In case anyone out there is still in the dark I will dispell ALL nieites with one major statement.

The man made climate change sewindle had been exposed.

google CLIMATEGATE.

You HAVE been DUPED.

IT IS NOT YOUR FAULT.

Send you representitive info detailing the fat that you do not want him/her to vote for this GLOBAL TREATY.

This is my last email at the 11TH HOUR to you. Time is of the essence and I must move on to get more RELEVANT people involved.

Do not laugh at me until ou have reviewed the evidence….

which will no matter after 7 days from now…or review it and anaylize it and take action.

This is the ENDGAME.

I said my piece.

what did you do?

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Vansanity

Further to the Province article regarding lineups at The Mark, check out the contrasting piece written by the same journalist released on the same day…

http://www.theprovince.com/business/When+paychequ…

What a town!

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Chilled

I'm number 126!!!!

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patriotz

@flip_this:

CMHC is also buying large quantities of mortgage backed securities from the banks. So technically this is creation of money/credit, channeled through the housing market

No it's not. CMHC is not a central bank. The money that CMHC uses to buy mortgages is borrowed on the bond market.

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scullboy

Hey SupraLadyBoy: Yeah those "investors" have the balls to load up all right. If you are still living with Mummy and Daddy, doesn't that mean you have no balls at all? I guess it must be convenient, far less "tucking" needed to get you into those teeny tiny little skirts. Are you lubing your thighs up with coconut oil to help you slither into them? You're funny, dude who looks like a lady. You live at home, you have no skin at all in the game and yet you post lie you're Donald Trump. It's even funnier because I have to point out, the faster prices rise, the faster you yourself are priced out of the market. I'm already priced out of the market, in that I flat out refuse to borrow half a million bucks for a shitty, leaky… Read more »

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flip_this

@patriotz: "The real cause is government guarantees on mortgage lending".

I think that besides guaranteeing mortgages, CMHC is also buying large quantities of mortgage backed securities from the banks. So technically this is creation of money/credit, channeled through the housing market.

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jjss

http://www.guardian.co.uk/commentisfree/2009/nov/…

ditto…

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patriotz

@ReadyToPop:

Yalie…you’re really up against the BoC. They’re the ones generating more cash without generating anything of value. That’s what’s causing these market distortions.

No they're not. Yields on common and preferred shares, and corporate debt are still quite high. If yields on RE were being depressed (i.e. prices inflated) just by an increase in the money supply the yield on all assets would be affected.

The real cause is government guarantees on mortgage lending. If these did not exist lenders would be demanding much higher down payments and interest rates, regardless of the very low rates on deposits and government bonds.

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ReadyToPop

@Yalie

Actually, I take it back. I DO want these guys to get what they deserve. They represent everything that’s wrong with our society lately – basically people trying to generate cash without generating anything of value.

Yalie…you're really up against the BoC. They're the ones generating more cash without generating anything of value. That's what's causing these market distortions. If responsible savers were earning what they deserve, this wouldn't be happening. Write your MP.

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No Money Down

Just got back from looking at rentals downtown.

438 Seymour, 2 bedroom and 2 bathroom $1500.

Sub penthouse unit in 30 year old concrete hi rises,2 bed, 2 bath, 980 sq ft $1400.

Palisades X3 asking $1900 for 900 sq ft, all would negotiate lower for a lease today.

With the Olympics coming you’d think rent would remain flat or even increase and yet rent has dropped as much as 40% since last summer……

Maybe the morons that lined up last night to buy at Mark will rent me a unit for $1100 in 2013.

They can pay the additional $2,000+ to subsidize me while they live with Mommy and I'll go eat dim sum.

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