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patriotz
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PM preparing Canadians for possibility of another recession

Stephen Harper’s warnings that Europe needs to get its house in order, and not look to Canada for help, was mostly intended for folks back home.

The Prime Minister is preparing Canadians for the possibility of another recession, while insisting that it’s the Europeans, not his government, who will be to blame.

The blunt truth, however, is that it doesn’t matter who is to blame. If recession comes, this time there will be very little that any Canadian politician can do about it.

Told you so. In particular, there is very little that the government will be able to do about the coming nationwide RE bust. Steve’s house of cards is coming down, soon.

registered
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registered

1 patriotz Says: ..”this time there will be very little that any Canadian politician can do about it.”

There was much they could have done, instead they chose the absolute worst possible route of stimulating consumer spending to the brink of ruin for no other purpose than political. The spending explosion started in 2006 (see Teranet) when those who called for an American collapse were still laughed off as crazy. Harper will change the face of Canada and we’ll be much poorer for it. On the positive side when he’s done immigration pressure will certainly go down.

Anonymous
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Anonymous

I am not seeing signs of a US recession; certainly risks but the exposure to the ROW isn’t insane. Am I missing something?

patriotz
Member

@Anonymous:
“Am I missing something?”

Yes. We weren’t talking about a US recession. Not to say there won’t be one.

Anonymous
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Anonymous

patriots this post is talking global econ. All this doom needs context.

YLTNboomerang
Member

Hah, check this article out! I thought it was pretty balanced on the foreign ownership question but then they threw this editorial gem in at the end:

“From all appearances, the allure of condos in multicultural Toronto – where half the population was born outside of Canada – may come down to price. With an average price of $368,000, Toronto offer a reasonably low entry point to a market that still offers more long-term return than stocks or bonds.”

Gord, maybe another letter is due:

http://business.financialpost.com/2012/06/11/foreign-investment-cuts-both-ways-in-toronto-condo-market/

Alan
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Alan

@Anonymous:

Isnt it a common sense? UK in double dip,, most of euro countries under water, australia expecting one soon, china technically no but another quarter rate fall below expected then yes, am I missing something?
Yes, Canada is different!

Anonymous
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Anonymous

@Anonymous: “I am not seeing signs of a US recession; certainly risks but the exposure to the ROW isn’t insane. Am I missing something?”

1. Contagion when the European banks fail.
2. The US deficit cannot continue as is forever. There is no reasonable way for them to get out of it other than Greek like austerity which would mean riots in the streets. Its coming at some point.

Bull! Bull! Bull!
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Bull! Bull! Bull!

When exactly is the realestate going to pop. We are well into june and the world hasnt ended.

specialfx3000
Member
specialfx3000

(Posted on a old thrread by accident. Reposting here)

Re: 3243 33 ave VANCOUVER BC http://vancouver.en.craigslist.ca/van/reo/3055404572.html

This was previously discussed on VREAA: (Sorry don’t know how to shorten the link)

https://vreaa.wordpress.com/2012/05/21/urgent-to-return-china-in-the-vancouver-west-very-expensive-premium-real-estate-is-very-difficult-to-find-such-a-cheap-price-there-are-a-lot-of-room-for-negotiation-a-total-of-nearly-200-000/

Then, it was asking $2,480,000. Also hi-lighting a bunch of perks to hope for a quick sale. (including a free piano that the satellite son probably refused to play but they forced him into lessons anyways).

Now it’s $2,280,000.

This will definitely be a good one to continue watching.

AG Sage
Member
@YLTNboomerang: I addressed this today. http://worldhousingbubble.blogspot.com/ Anyone have any comments about my calculations, I’d love to hear them. The average immigrant is making 60% of what a native born is making. (source). The median household income in Toronto is $78,000 (source). Assuming the same rate of multiple income households (which would be a generous assumption given cultural differences) then the immigrant household median is $42,000. Assuming a high downpayment of $20,000 the TD mortgage calculator says the median immigrant household can afford $150,000. Based on the TREB May 2012 stats, there were 18 condo apartments sold under 100k and 272 sold between 100 and 200k. Given the skew is upward (700+ were sold in the next two ranges) we’ll say 1/3 of those were under 150k. That means that in the month of May, 100 or so condos were sold… Read more »
AG Sage
Member

@Bull! Bull! Bull!: Shouldn’t you be out buying another house or two?

patriotz
Member

@Anonymous:
“There is no reasonable way for them (US) to get out of it other than Greek like austerity”

Sure there is. Simply going back to the level of taxation under Reagan would go a long way towards fixing it, even without cutting their absurd expenditures on the military and prisons.

jesse
Member

@patriotz: “Simply going back to the level of taxation under Reagan would go a long way”

The ability to effectively tax the populace is one of the reasons the US yields are not out of control. The endgame of taxing everyone, not just the rich, is one thing the populace does not want to hear, just like Canada actually.

registered
Member
registered

9 Bull! Bull! Bull! Says: “When exactly is the realestate going to pop. We are well into june…”

Good question, one that highlights again how the real estate market is distorted by the federal government. Before the OSFI’s attempts to bring responsible lending standards to the industry were stymied I would guessed the fall, but who can predict a politician’s base self-interest? All but the most backward should be aware by now that the brightest, most prescient predictors of the American crash rightfully wouldn’t call dates and times on a distorted market, so some possible scenarios are:

– near enough the next election that the blame can be passed off
– the moment any foreign event creates the slightest possibility of pointing at Greece, Spain, the Germans, China troubles. (see patriotz post 1)

Al
Guest
Al

@specialfx3000:
“Then, it was asking $2,480,000. Also hi-lighting a bunch of perks to hope for a quick sale. (including a free piano that the satellite son probably refused to play but they forced him into lessons anyways).
Now it’s $2,280,000.”

Did i read it right? 2 extra bedrooms with 200k less!?

patriotz
Member

@fixie guy:
“All but the most backward should be aware by now that the brightest, most prescient predictors of the American crash rightfully wouldn’t call dates and times on a distorted market”

Actually some called the top quite accurately:

http://globaleconomicanalysis.blogspot.ca/2005/12/its-too-late.html

http://www.nytimes.com/2005/08/08/opinion/08krugman.html

One thing I’ve found: when Mish and Krugman agree on something – which rarely happens – they’re almost always right.

Dave
Member

@jesse:

Yields are low because the US is the largest economy and the most powerful country in the World. Taxation has nothing to do with it. It has everything to do with safety and preservation of capital.

Dave
Member

@jesse:

Having a monetary printing press and 3,000 nuclear warheads doesn’t hurt either.

WFT?
Guest
WFT?

@Dave:

Yeah, so if investors demand to be repaid or demand a halt to dollar depriciation, the US will nuke them?

Joe_Blown_Away_By_High_Housing_Costs
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Joe_Blown_Away_By_High_Housing_Costs
Dave
Member

@WFT?:

The dollar is headed up. The Euro and Yen are headed down.

The US won’t default because they can’t default. They will always have the ability to print money and nobody can call them on it, at least not in the near future.

The only test of this that you need know is what happens during a crisis. Look where the money goes.

registered
Member
registered

17 patriotz Says: “Actually some called the top quite accurately…”

The Case Shiller Composite 10 and 20 HPI both peaked in July/Aug of 2006, a full year after Krugman’s article. I didn’t see a prediction on the Mish link. No commentator I’m aware made the kind of “it’s June already” call demanded here.
Quite the opposite, those who did the core research like the Berkeley School of Economics and Shiller refused to guess at all, the former equating it to predicting the next action of a crazy person. “If I could do that, they wouldn’t be crazy.”

Not much of a name...
Member
Not much of a name...
Weekend Anecdote #1 – Was at a dinner function on Saturday night where it was announced that a young lady of 25 was the proud new owner of a sub-500 square foot condo in the West development. Dad is a real estate agent and had been pressuring her to take the plunge for some time. She purchased one of the entry level units that were priced just below $300k. She was paying the first of her three payments for the down payment on Sunday which was about $15k. She was worried because she wasn’t sure where the money for the other two payments were going to come from. “Luckily” for her, her dad was able to negotiate a great deal and have the two subsequent deposits delayed. While some where very excited for her purchase, there was a lone voice… Read more »
patriotz
Member

@Joe_Blown_Away_By_High_Housing_Costs:
Gotta love it:

Mr. Burleton and Ms. Preston expect a price decline of that size over the next two to three years as neither market shows “bubble-like symptoms” akin to the U.S. market before its crash

Obviously their “bubble-like symptoms” don’t include:
– record price/rent
– record price/income
– record debt/income
– record RE sector/GDP

Moreover, even if the rental market benefits from a softer home-ownership market, weaker property valuations would likely put a damper on investor returns, hence leading to a softening in investor demand.

They are saying that even with higher earnings demand to buy will fall because it is based only on expectations of price increases. Which is – drum roll – the definition of a bubble.

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