Parable of Treeland

In the late 1700s, Europeans first discovered a largely unpopulated area with a temperate climate (although annoyingly rainy) and rich in resources of lumber, copper, gold, zinc, coal, petroleum, natural gas and fish. Reflecting that forests covered more than half its area, they named the broader area “Treeland” and it’s major city “Racoover.”

In the mid-1800’s, news broke out that there was gold on the banks of the Fraser River and over 25,000 prospectors swarmed in, hungry for instant wealth. Several towns instantly sprang up. To help maintain law and order, the government incorporated the colony of Treeland. But within a few short years, the frenzy of the gold rush fizzled out.

When Racoover officially became a city, it had 1,000 people. The first mayor was Realtor® McLean. One summer day, a brush fire got away and burnt the city to the ground in less than 30 minutes. McLean, knowing the value of real estate, got rebuilding going in a matter of days.

With its rich resources, Treeland was rapidly developing into a great province. The economy was based primarily on forestry, nicknamed “green gold”, and accounted for over one-third of export earnings. Mining and fishing were also major contributors to the GDP. These export earnings were used to build infrastructure using very little debt. New public facilities included the CP railway line, Granville Bridge, electric streetcars and the first skyscraper. The world’s largest indoor ice rink was built for the Racoover Millionaires, the city’s first hockey team. Beaver Place Stadium inflated up and became the world’s largest air-supported bubble.

Treeland had very little debt and banks prudently provided secured, low leverage, tight amortization, fixed-rate loans on sound homes and vehicles to be used by industrious citizens who lived within their means. There was no speculation flipping in highly leveraged investments.

But even a province as sound as Treeland could come to ruin if it failed to address the dangers that can be caused by the ordinary accidents of life. These dangers were significant when Treeland’s forestry industry got hit with multiple problems. First started the rampant forest fires and pine beetle epidemic, spreading over 15 million hectares. Then came rising energy prices and exchange rate with Eagleland, Treeland’s main trading partner. Times suddenly changed and forestry jobs started disappearing fast. Tens of thousands of jobs vaporized and it became hard to keep track of the mill closures.

In Sep 2001, Eagleland suffered a tragic foreign attack. In response, Chairman Greyspan sought to stimulate the economy and ordered banks to give away gambling chips at low interest rates. Treeland quickly followed suit with this plan. As their affluence and leisure time grew, Treeland’s citizens more and more whiled away their time in the excitement of casino gambling. With the low interest rates, low down payments, long amortizations, gambling chips insured through CHMC, and an obscene amount of chips created thanks to fractional reserve banking, the banks flooded the economy with chips and made all gamblers steadily and increasingly rich.

The winnings of the casinos eventually amounted to 40% of Treeland’s GDP, while 10% of the gambling profits were paid to persons employed by the casinos (many of whom were needed elsewhere in more productive jobs). So much time was spent at casinos that it amounted to an average of several hours daily for every citizen of Treeland. To satisfy the gambler’s addiction and to create new gamblers, the HGTV television network was formed. Social gatherings were alive with feverish, eye-popping discussion about how much winnings were made that week in the casinos. Many of the gamblers started placing bets with a new product called presale assignments, similar to the reckless leveraged futures contracts used in Eagleland.

In 2004, Racoover was selected to host the biggest circus in the world. This fuelled the casinos even more. Soon, there were three-day line-ups just to get into the casinos. Some visited three casinos per night while sending their spouses to a different three. Some speculated that even foreigners were participating in Treeland’s roulette wheels. The gamblers all religiously chanted the three tenets of gambling: “Everyone wants to gamble here,” “Casino winnings always go up,” and “Treeland is the best place on earth.”

A few unspoiled souls, the Savers, regarded this situation as disgraceful. After all, they reasoned, it was just common sense for lenders and citizens to avoid gambling addicts. They cried desperately for the madness to end. Their reasoning was echoed by international reports which showed the world how irrational Treeland’s behaviour had become.

Then in late 2008, all of Eagleland’s gamblers suddenly went bankrupt within weeks and caused a viscous downward spiral that permeated around the world. No one could foresee (so the media said) that Eagleland’s economy was a house of cards that eventually bust, severing Treeland’s exports and economic engine. The Savers, who had been patiently waiting for the madness to end, finally got their break. The stats showed a plunge in casino visitors and the Savers celebrated wildly each time another 10 casino halls became empty. But after a few short months of healing, the governments slammed interest rates to the floor. Gambling activity roared back but the resource industry dwindled and unemployment still remained at record highs. The winnings of the casinos eventually accounted for every single penny of real GDP. How was Treeland supposed to adjust to this brutal new reality?

The circus came to Racoover the following year but the circus folk, puzzled by the madness of the locals, did not participate in the casinos as the gamblers had hoped. The exorbitantly priced Circus Village that was built for the circus clowns could not be sold and went into receivership.

Then the Good Father sounded the alarm bells that Treeland’s gambling chips exceeded those in Eagleland, which was now on life support. He strongly urged Treeland’s citizens to stop their casino gambling and began reinstating shorter amortizations and higher interest rates. He knew this change was sure to induce vomiting and hallucinations in the addicts and suggested that citizens cheerfully embrace their fate. And sure enough, the casino owners and employees (“pimps”), who strongly believed in the beneficence of hyper-gambling, were hostile to change. They petitioned to the Good Father to make gambling easier. However, the pimps’ efforts failed and gambling restrictions became tighter.

By 2010, the gamblers stopped making profits no matter how hard they tried cranking the slot machines. Even some players of the Racoover Millionaires (now renamed Canucks) got caught in the casino mess and suffered heavy losses. By 2013, roughly half the gamblers went bankrupt. The remainder were wiped out by 2017. Much counterproductive governmental action was taken, and the land’s credit was reduced to tatters. Treeland is now under new management and has been renamed: Brokeland.

Submitted by: Crashcow

Reference & inspiration: Basically, It’s Over

86 Comments
newest
oldest most voted
Inline Feedbacks
View all comments
fixie guy
fixie guy
9 years ago

#84 Troll Says:"But any doomer bear on this blog will swear up and down that flat prices are not possible. "

No need, Teranet doesn't support the flat prices BS.

Troll
Troll
9 years ago

@Joshua:

So this is the new bull mantra – “prices are flat!”

How does that qualify as a bull mantra? Do you even know what the definition of a bull is? Please go back to lurking.

Troll
Troll
9 years ago

@Joshua:

Hey dummies, flat prices means price erosion vs. inflation.

Exactly Einstein, you're a sharp one aren't you? But any doomer bear on this blog will swear up and down that flat prices are not possible. Yet here we are.

Joshua
Joshua
9 years ago

So this is the new bull mantra – "prices are flat!" LOL…

Hey dummies, flat prices means price erosion vs. inflation.

IT__Pro
IT__Pro
9 years ago

@Troll:
"prices aren't supposed to be flat"
…and the REA's aren't supposed to control the media.

Renting
Renting
9 years ago

You didn’t have to buy a house to get laid

That was the idea, but he is still waiting for it to happen.

Prca
Prca
9 years ago

@Bear BS:

no women will ever want to be with your…

You didn't have to buy a house to get laid. You should just rent a hooker for a few hours and save a tons of money dumbass.

Renting
Renting
9 years ago

@Bear BS:

I guess this is what it looks like when self esteem hits rock bottom.

Better buy more real estate you might feel better about your self.

Bear BS
Bear BS
9 years ago

Talking about grasping at straws bears. Sales of almost 1800 is just below the median of 1925 for the past 8 years. This is hardly a resounding bearish month. Seems pretty flat to me (or anybody analyzing the data) And troll is right – prices have been flat for almost a year. Remember, prices can only go up or down, never sideways in bubbles according to all the bear experts here. I guess its time to cue the crash of 2012 not 2011, because if January is anything to go by, its going to be another year of flat prices. Oh well bears, I guess 2011 will be another year of justifying your poor decisions of the past years, and extolling the virtues of renting over homeownership. After several years of proclaiming the end is near, living in hovels, and… Read more »

Renting
Renting
9 years ago

@Supraboy: @Troll: @Vanrod:

What's wrong boys another zero commission month?

PS

Troll I have a well paying job for you. Bring the ass wipe.

Homophobic Trolls
Homophobic Trolls
9 years ago

@Vanrod: "while I agree with your sediments"

Sediments come from an eroded brain.

Vanrod
Vanrod
9 years ago

@Supraboy: while I agree with your sediments homophobic slurs should not be part of our discourse

Troll
Troll
9 years ago

Another flat month.

Do none of the buyers and sellers in Vancouver understand how 'bubbles' are supposed to work? Prices aren't supposed to be flat for almost a year, what's going on bears? Maybe the theory needs some work.

Joshua
Joshua
9 years ago

@Vanrod: the median sales since 2002 is 1925/month. We are definitely below that. With tons of inventory coming online. Keep trying.

Best place on meth
Best place on meth
9 years ago

@Supraboy:

Actually you fucking moron, prices are lower.

Inventory and MOI are high for January and sales are lower than average.

Supraboy
Supraboy
9 years ago

One year after the olympics, property prices are higher. Go argue with that, fools!

Supraboy
Supraboy
9 years ago

So funny to see you faggots still in denial. Stupid bears, give it up.

jesse
9 years ago

@Vanrod: "above average sales for the month on January"

…and lots of inventory! I shall make a bold and daring prediction: sales will be consecutively higher in February, March, and April, with MOI perpetually falling into "buyer's market" territory during these months as well.

Does this mean we're entering a bull market? For those who are lucky enough to sell… yes it is!!! For those who can't…

Vanrod
Vanrod
9 years ago

@VHB: Look at that, above average sales for the month on January. Never would have imagined that half way through the month 😉

fixie guy
fixie guy
9 years ago

#58 oneangryslav2 Says: Your claim that “almost 75% [of B.C.'s population lives] in cities of 50K or more is entirely consistent with Say What’s claim that half of B.C.’s communities have populations fewer than 5000 souls. Think about it."

I realize that. Did I write otherwise? The "#48 Say What?" post was implying something about BC's population distribution. Think about it.

VHB
VHB
9 years ago

January 2011 month-end projections

Days elapsed so far 20

Days remaining 0

Average Sales this month 94

Average Listings this month 241

Projected sell/list 38.9%

SALES

Projected month end total 1740 +/- 0

95% Conf Interval lower bound 1740

95% Conf Interval upper bound 1740

NEW LISTINGS

Projected month end total 4547 +/- 0

95% Conf Interval lower bound 4547

95% Conf Interval upper bound 4547

MONTHS OF INVENTORY

Inventory as of January 28, 2011 11255

MoI at this sales pace 6.47

jesse
9 years ago

@Anonymouse: You need CMHC insurance approved by Mar 18, no 90 day extension.

Happy Renting
Happy Renting
9 years ago

In the late 1700's, what is now BC was largely de-populated, due to those dirty European diseases.

Same thing happened in most of the Americas, Europeans arrived to find empty towns and infrastructure and farms. Only a few orphans left, and they were easy to ship to reeducation centers.

Re speculators are a
Re speculators are a
9 years ago

The re pumpers are going to get nasty, the end is so near,so near they can smell it.

I can feel the despiration.

Dave
9 years ago

@Dave:

Why did my throwing star change shape and colour? This new one looks like a doily.