We are so screwed.

Don sent in this bit of bear food from Business Insider in case you’re running out of things to worry about in the global economy:  We are so screwed.

“Our immersion in the details of crises that have arisen over the past eight centuries and in data on them has led us to conclude that the most commonly repeated and most expensive investment advice ever given in the boom just before a financial crisis stems from the perception that ‘this time is different.’

“That advice, that the old rules of valuation no longer apply, is usually followed up with vigor. Financial professionals and, all too often, government leaders explain that we are doing things better than before, we are smarter, and we have learned from past mistakes. Each time, society convinces itself that the current boom, unlike the many booms that preceded catastrophic collapses in the past, is built on sound fundamentals, structural reforms, technological innovation, and good policy.”

This Time is Different (Carmen M. Reinhart and Kenneth Rogoff)

For more crisis fear read the whole article here.

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Boombust
Guest

It's "different this time" alright.

What IS different, is the intensity and duration of this RE boom.

What WILL be different is the intensity and duration of the collapse.

patriotz
Member

@Boombust:

Yep. You thought the 80's were bad – stay tuned.

And the irony of it. Expo 86 led BC (whether or not it deserved the credit) out of the bust.

But the Olympics are going to lead us into this bust. And there's nothing coming down the road to pull us out of it.

realpaul
Guest

Oh, there just getting it now….bullshit.

"Cue the anxiety about a real estate bubble. The ultimate nightmare is that when interest rates rise, maxed-out home buyers will default on their mortgages and other debts. Next step: The housing market plunges, taking the economy down with it."

http://www.theglobeandmail.com/globe-investor/per

http://www.theglobeandmail.com/report-on-business

"It's all the buyers fault?" C'mon Flaherty. Of course the people buying will be underwater if rates aren't kept at zero. The only way they got the mortgage was because they could only meet the payments at zero intrest. Who do these guys think they're kidding?

realpaul
Guest
This is another fallacy "But Ottawa does not believe that there is a housing bubble at the moment and, having done some analysis to determine the impact that higher down payments and shorter amortizations would have, the Finance Minister believes that such moves would take too much heat out of the market and damage the economic recovery, according to sources." There is no 'economic recovery' there is only a housing bubble. Unemployment keeps going up (although the CDN papers haven't been allowed to print the story) and Corporate profits etc continue to slide. Mr Flaherty , a housing bubble is… Read more »
nonymouse
Guest

I learned something this morning. The term "argumentum ad consequentiam"

Thought I'd share as it's probably what we'll hear more of in the next bit.

http://en.wikipedia.org/wiki/Appeal_to_consequenc

jiming
Guest

Are you guys all just bitter that you didn't buy or something? The market is headed higher and will continue higher for at least another 6 months to a year, after that I'll re-visit the numbers but right now this ship is not turning any time soon.

White Payer
Guest

@jiming: jiming, Would that ship's name be Titanic, by any chance???

Clique
Guest

@jiming:

Are you guys all just bitter that you didn’t buy or something? The market is headed higher and will continue higher for at least another 6 months to a year, after that I’ll re-visit the numbers but right now this ship is not turning any time soon.

——-

I'm not bitter, but it makes me laugh that you will be. Haha.

patriotz
Member

@jiming:

Are you guys all just bitter that you didn’t buy or something?

Oh I did buy. For example BMO @ $25 a year ago, which I sold for $46.

Who's bitter?

No Longer Looking
Member

Things could get ugly tomorrow if Dussault indeed has a goon squad to battle the anti-Olympics anarchists. Read the comments on this article.

"The duelling rallies begin at 3 p.m. at the Vancouver Art Gallery"

http://www.theprovince.com/technology/anti+Olympi

gork
Guest

jiming, @jiming: @jiming: care backing your statement up with…you know some facts or something?

buff_butler
Guest

@patriotz: Ya BMO was a good one. I didn't get in that low but 10.5% div is a good deal on low risk. Manulife was another good one, esp with options.

Anonymous
Guest

I strongly believe in fact that it is different this time especially since following this blog. Privilege to read iconoclasts like Dave, Supra, SATV, richasian, and lately jiming opened my eyes and made me stronger, smarter, richer, better and better looking, basically made me capable to feel like being important player in this world-upper-class city. I look forward to the day where we get a chance to meet in person and I can shake your hands for everything you said, thank you.

Dave
Member

@No Longer Looking:

What's the point of protesting the Olympics at this point? The time to do that was 5 to 10 years ago. Anybody who protests is a dummy and is simply has a grudge against god knows who or what.

VRENGD
Guest
I'm not bitter either. To take advantage of the current Re mini-bubble, I've been flipping houses in Alberta for about a year for a fat, suculent profit. I buy them in the name of my wife and if we are left holding the bag when the bust comes, I'll just walk away and let the taxpayers take the hit. Her credit rating will be toast but we don't care because I still have a credit rating and tons of money in the bank. You see, mortgages in Alberta are limited recourse. They can only go after the house, in which… Read more »
FORREST
Guest

11:24 am – You heard it first. CNN Until recently the sea to sky highway was "one little logging road"

Loud Speaker
Guest

@VRENGD: These following words have no value and it doesn't even sounds funny in Vancouver,Those words are……..

1.Head Offices

2.Bubbles

3.87 billion jobs bill.

These words own a copy rights protection from the Government of United States Of America,Illegal immigrants of Lotto MAX in Usa,Natural disasters of America.

"There is a deep corelation between Usa,illegal immigrants,natural disasters,head offices,jobs,bills,sub-prime and bubbles".-Captain Jack Sparrow.

http://i386.photobucket.com/albums/oo302/amanda_b

Boombust
Guest

"And the irony of it. Expo 86 led BC (whether or not it deserved the credit) out of the bust. -Patriotz

Not so sure about that.

We also had Northeast Coal, The Coquihalla Hwy, Alex Fraser Bridge, Science World, BC Place Stadium the Expo Skytrain Line AND EXPO leading up to the fair.

Drachen
Member

@nonymouse:

That's but one of many fallacies being promoted by the bear side, for a fairly complete list have a look at this fallacy reference.

They are all essentially 'false' debating tactics used when the debater can't or won't provide substantive reasons or cogent arguments for their position. To put it more simply fallacies are tricks used by liars to get away with their lies.

Dave for example loves to bring up fallacies, I'd say about 75% of the stuff he says here is fallacious.

gah
Guest

@jiming:

"The market is headed higher and will continue higher for at least another 6 months to a year, after that I’ll re-visit the numbers"

Wow, you would buy a house by only looking at a 6 month price window?

You have some bigger cojones than I will ever have. Smaller brains, but bigger cojones.

realpaul
Guest
The spin from Ottawa this morning was that the banks may be required to tighten lending practices where FTB's can prove they have the ability to carry a mortgage at 'higher rates'. What that will mean we don't know. I think its just a trial balloon that they have floated to try and manage some of the bad press that is getting out on this issue. They can spin the affordability story by throwing the CREA and the realtors to the dogs and liberalise the MLS system thereby making the commissions go away. They can also do the tax derall… Read more »
taylor192
Member

Mortgage hike threatens N.B. family with loss of home

Coles notes:

– Family owns house for 10 years

– Family refinances house at last renewal, taking out nearly all equity

– Family has bad credit

– Family turned down by conventional lenders, uses Wells Fargo

– Wells Fargo jacks rate from 8% to 14%

– Journalist cannot do math, 8% to 14% interest does not double a mortgage payment.

Another damn sob story about someone losing their house after spending unwisely and using equity as a piggyback.

Expect more of this, and expect less sympathy.

Drachen
Member

@taylor192:

"- Journalist cannot do math, 8% to 14% interest does not double a mortgage payment."

Depending on the terms it could result in the payment nearly doubling. It more than doubles the amount of interest you're paying though, depending on the terms.

40 year loan with monthly payments on 100k.

8% = payments of $695.31

14% = payments of $1,166.67

patriotzed
Guest
@Boombust: Expo 86 led BC (whether or not it deserved the credit) out of the bust. -Patriotz Not so sure about that. We also had Northeast Coal, etc That's what I meant by "whether or not it deserved the credit". I was talking about chronology and psychology, not economic causality. Certainly all of the infrastructure projects which you mentioned kept people working – whether they were all worth the money, such as Northeast Coal which has gone bust, is another question. But what really led to a sustainable recovery in BC was the upswing in demand from the US (housing,… Read more »
Chincy
Guest

So what I don't get is that if there is all this talk about a housing bubble in Toronto and their average house price is around 450K, how the hell is it that these folks don't deduce that Vancouver at 900k and lower average income, is not in the bubble of all housing bubbles…??

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