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
Boombust
6 years 4 months ago

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
6 years 4 months ago

@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
realpaul
6 years 4 months ago

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
realpaul
6 years 4 months ago
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
nonymouse
6 years 4 months ago

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
jiming
6 years 4 months ago

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
White Payer
6 years 4 months ago

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

Clique
Guest
Clique
6 years 4 months ago

@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
6 years 4 months ago

@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
No Longer Looking
6 years 4 months ago

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
gork
6 years 4 months ago

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

buff_butler
Guest
buff_butler
6 years 4 months ago

@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
Anonymous
6 years 4 months ago

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
6 years 4 months ago

@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
VRENGD
6 years 4 months ago
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
FORREST
6 years 4 months ago

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

Loud Speaker
Guest
Loud Speaker
6 years 4 months ago

@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
Boombust
6 years 4 months ago

"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
6 years 4 months ago

@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
gah
6 years 4 months ago

@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
realpaul
6 years 4 months ago
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
6 years 4 months ago

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
6 years 4 months ago

@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
patriotzed
6 years 4 months ago
@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
Chincy
6 years 4 months ago

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…??

bums up2
Guest
bums up2
6 years 4 months ago

VRENGD

[alberta bubble flipping scheme]

I honestly wish I had thought of this.

Keep Trying
Guest
Keep Trying
6 years 4 months ago

[alberta bubble flipping scheme]

Please…its just a bitter bear pretending to act on his bubble knowledge….

It is the same as all the bears that have supposedly made tons off the stock market and the same ones that sit with tons of cash…it is all smoke and mirrors designed to make them feel good about missing the largest run-up in RE history….

betamax
Guest
betamax
6 years 4 months ago

Aside from the general: "this time it's different", let's not forget the specific:

"South Florida is working off of a totally new economic model than any of us have ever experienced in the past."

We all saw how that turned out.

realpaul
Guest
realpaul
6 years 4 months ago
US FED looking to put ‘signifigant upward pressure’ on short term rates” Is this why Flaherty is chirping up lately? “The central bank has created more than $1 trillion in excess reserves in the banking system through its purchases of $300 billion of Treasury debt and $1.25 trillion of mortgage- backed securities. To put upward pressure on the federal funds rate, the Fed may need to drain as much as $800 billion, Abate estimates. One potential tightening tool is the interest rate on reserves that commercial banks keep on deposit at the Fed. By raising that rate, the central bank… Read more »
Zowie
Member
Zowie
6 years 4 months ago

News flash! The Vancouver Sun says there is no bubble:

http://tiny.cc/ddxoH

And if you believe that…I've got a bridge I'd like to sell you…

Dave
Member
6 years 4 months ago
@patriotzed: BC and Alberta are probably the last two Provinces to worry about the future. I think Ontario and Quebec have far greater problems with a weak US dollar (likely to continue) and outsourcing of manufacturing. BC has a very diversified economy and we are well positioned for the future. We have absolutely EVERYTHING here. We are and will continue to be North America's Gateway to Asia. We not only have geographic connections but significant immigrant connections. BC has a very skilled workforce and great universities. We have plenty of resources including lumber, minerals and oil. And in the future,… Read more »
Dave
Member
6 years 4 months ago

@Dave:

Oh ya, we have great food, woman and weed as well.

VRENGD
Guest
VRENGD
6 years 4 months ago

"Please…its just a bitter bear pretending to act on his bubble knowledge…."

Funny! Just because you are unsophisticated, don't assume others are. There are sophisticated business people who can make money from bubbles by limiting risk and playing the most advantageous markets.

And then there are fools. These, mostly buy at the top in rediculous places like Vancouver and expose themselves to bankruptcy.

Which one are you?

Drachen
Member
6 years 4 months ago
@Dave: Wow, what's with the sales pitch? You're starting to sound like Bob Rennie. All those things are true, sure. But, you say we're right next to the world's largest economy. An economy that was devastated by it's own Real Estate bubble, a bubble which was about half the size (or less) of BC's bubble. If the largest economy in the world can't ride out the fallout from a comparatively minor real estate bubble what chance does our little backwater have? Sure forestry and mining and such will keep us alive but the economic engine for the past ten years… Read more »
BB
Guest
BB
6 years 4 months ago
@Dave: ……very diversified economy and we are well positioned for the future. We have absolutely EVERYTHING here. We are and will continue to be North America’s Gateway to Asia. We not only have geographic connections but significant immigrant connections. …. a very skilled workforce and great universities. We have plenty of resources including lumber, minerals and oil. And in the future, we are going to be a major source of fresh water for the US market. We have the ability to generate all sorts of clean energy from new large scale hydroelectric dams to run of the river power projects.… Read more »
anonymousAA
Guest
anonymousAA
6 years 4 months ago

Just because BC is a great place to live with great opportunities for the future doesn't mean there isn't a real estate bubble.

'Nough said.

Dave
Member
6 years 4 months ago

@BB:

I agree. They share many similarities and they are going to have a bright future as well. Definitely two of the best places in the World for opportunity.

Dave
Member
6 years 4 months ago

@anonymousAA:

Likewise, it follows that high prices do not imply a bubble because our real estate in underpinned by future economic expectations.

neighbour
Guest
neighbour
6 years 4 months ago

@Dave: BC has a very diversified economy and we are well positioned for the future. We have absolutely EVERYTHING here.

Dave, Dave, Dave, what a talent you are? Keep pretending to be mentally ill… Washington has it all you said + MSFT + Boeing + Costco + Amazon + American Seafoods Group + Jacobs + Nordstrom… list goes on and on… and they worry, they really worry about their future.

nero
Guest
nero
6 years 4 months ago

@Zowie:

What a shocker – an article from the local rag that "debunks" the notion that there is a bubble here.

Note that there is no author, nor any contact info to whomever wrote it.

This anonymous author is somehow perplexed as to why the Big Six banks would press Flaherty to contain the "bubble" when there obviously is none.

And people wonder why we get our news and facts from blogs these days – "journalism" just isn't what it used to be.

patriotz
Member
6 years 4 months ago

@taylor192:

I wonder why the bank is asking them to so drastically reduce their amortization period… we the tax payer are on the hook for their CMHC backed mortgage.

Connect the dots, it's clearly not a CMHC insured mortgage but one of our homegrown subprime mortgages. Banks are quite happy to keep insured mortgages on their books because they can't lose.

Similar things have been happening with customers of Xceed Mortgage, which is calling loans because it's having trouble borrowing itself (gee I wonder why).

jiming
Guest
jiming
6 years 4 months ago

The bears get more pathetic by the day.

bestplaceonmeth
Guest
bestplaceonmeth
6 years 4 months ago

@Dave:

STFU, Dave.

Nobody is asking you why you're cheerleading, so don't ask people why they're protesting.

Boombust
Guest
Boombust
6 years 4 months ago

"I think it’s going to take years just to figure out what, if anything, is going to carry this province forward in the future. No other province has seen its industry wither to such an extent in the last decade." -Patriotz

Oh, absolutely! I couldn't agree more.

Boombust
Guest
Boombust
6 years 4 months ago

@Dave: BC has a very diversified economy and we are well positioned for the future.

You must be off your rocker.

tincup
Guest
tincup
6 years 4 months ago

@Zowie: re:VanSun "no bubble here" article.

Oh, that is so sweet. I love how there is no author credited. I guess that is understandable, since it reads like a grade 8 english essay.

To paraphrase: "high prices aren't the problem, low incomes are! And they are low because there is too much tax!"

What an embarrassment that newspaper is.

bestplaceonmeth
Guest
bestplaceonmeth
6 years 4 months ago

BC's "well diversified" economy consists of pulling shit out of the ground and selling weed & real estate.

The real estate part will be history shortly.

That leaves weed and the shit in the ground.

pricedoutfornow
Guest
pricedoutfornow
6 years 4 months ago
@taylor192: Oh noooo…this couple has a mortgage of a whopping $135k and are facing losing the house!!! My oh my…what will happen when people have mortgages of $700k and face the same thing? You know, I had the chance to watch some satellite tv last week, and I noticed that shows like "Till Debt Do Us Part" and other financial shows appear regularly on Global-Saskatchewan and Global-Alberta but are not to be found on Global-BC. Why? Because it would actually ASTOUND people in BC to realize that having a mortgage of $300k is actually a HUGE amount, nevermind $700k. It's… Read more »
taylor192
Member
6 years 4 months ago

@Drachen

Or you could just read the article and do the math:

$135K mortgage
@ 8% over 35yrs == $944 (from article)
@ 14% over 35yrs == $1545
@ 14% over 13yrs == $1858 (from article)

I wonder why the bank is asking them to so drastically reduce their amortization period. Something doesn’t make sense.

Oh wait, something does make sense – people with bad credit should not be given $100Ks – look at the terrible decisions they make – and we the tax payer are on the hook for their CMHC backed mortgage.

rp
Member
rp
6 years 4 months ago

The Vancouver Sun editorial is by this guy:

http://communities.canada.com/vancouversun/blogs/

wpDiscuz