Mark Carney, we hardly knew ye’

Can you believe this?

Mark Carney is leaving us for the Bank of England!

Carney said he and Flaherty had enjoyed an effective partnership and added he will miss the camaraderie and clear sense of purpose he experienced with the finance minister. He praised the strength of the central bank and reiterated his confidence in it.

A smiling Flaherty said this moment is “bittersweet,” and that the loss of Carney will be felt in Canada.

Carney’s rumoured appointment to the Bank of England was the source of published reports last spring, and at the time he and the Bank of Canada denied the reports.

“I’m totally focused on my two responsibilities: as governor of the Bank of Canada, and the Financial Stability Board,” Carney told reporters on April 18. “I can assure you they add up to more than every waking hour of the day.”

I’d leave a job that added up to more than ‘every waking hour of the day’ as well.

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VMD
Member
3 years 8 months ago

For those interested in Toronto daily individual property sale prices, check out http://tosolds.ca/?cat=3
(Apparently it’s “sourced manually”, so probably doesn’t violate MLS usage rules)

Hope similar sites will spring up for Vancouver (and hope Competition Bureau triumphs over TREB in early 2013)
Still miss that short-lived “olvius” site, but at least we still have VancouverPriceDrop and the forums.

grant
Member
grant
3 years 8 months ago

Dunno how you think “Toronto daily individual property sale prices” is relevant to this story…

As far as I’m concerned, Carney did a good job here- he fulfilled the BOC’s mandate and our banking sector is secure. UK was smart to poach him. I hope his replacement at the BOC can fill his shoes.

patriotz
Member
3 years 8 months ago

Not interested in knocking or defending Carney personally. But I would ask those who disagree with the BoC’s policies to say what it should have done differently, given that the BoC has a legal mandate to target CPI inflation at 2%.

trash crash alert
Guest
trash crash alert
3 years 8 months ago
Contrary to what the mass media and his global banker buddies convey, Carney will go down in history as the absolute worst central banker in Canadian history. Hundreds of thousands of middle class families in Toronto and Vancouver are on the verge of being decimated financially. What we have is a 40 year amortization & zero down legacy coupled with the highest consumer debt in Canadian history all supported by emergency interest rates that are the new norm. We have seen this movie before in Spain, etc. The good news for Mr. Carney is that he will be sipping champagne… Read more »
jesse
Member
3 years 8 months ago
@patriotz: ” But I would ask those who disagree with the BoC’s policies to say what it should have done differently” Had this convo last night as well. The Bank has a mandate beyond the basic tenet of inflation targeting, they are also responsible for advising the government on appropriate fiscal policy so as to ensure economic growth in the medium and long terms. The Bank, I think, advised to open up the fire hose on household spending and construction as a method of producing rapid GDP growth, which was successful. Some of that ended up getting siphoned into land… Read more »
RaggedyRenter
Guest
RaggedyRenter
3 years 8 months ago
He was vocal about the household debt and RE market. He made it clear it is in trouble and change won’t come from his office because he doesn’t have the mandate. It had to come from Flaherty’s. He made it very clear the fault lies with the government, not BOC. His frequent public jawboning must have forced Flaherty’s hands and rollback the prolonged mortgage term and other mortgage tightening measure Not sure if we are going to get a replacement with the same spirit. I’m sure the govt would like someone with less affinity to public statements and rethoric now.
real_professional
Member
3 years 8 months ago
Yes, the Bank of Canada use of interest rates to deflate an asset bubble would have been wrong. The first thing you learn about Central Banks is that in a free floating currency economy the use of interest rates to stimulate or retard the economy is at the best of times only a crude lever. However, we were seeing prints on headline inflation above 2% up until this summer. Fortunately, core inflation was muted so I give Carney the thumbs up. The asset bubble should have been dealt with by the Finance minister years ago. It has been such a… Read more »
Extend and Pretend
Guest
Extend and Pretend
3 years 8 months ago

@patriotz: re: BoC, “what it should have done differently”

For one thing each time YoY CPI crept into the 2.5-3% range, the rate could have been temporarily hiked by a 1/4 point. It happened several times and Carney blew it off like some drunk frat boy. This would have tested the waters on unemployment effects and would have provided vital information about sectors of the economy in need of improved economic productivity relative to otherwise free money.

Carney is a punk. He could have done more than jawbone.

Extend and Pretend
Guest
Extend and Pretend
3 years 8 months ago
@patriotz: re: BoC, “what it should have done differently” For another, within the resources of his office Carney and Statistics Canada, could have pioneered a new consumer price series designed to examine the tenants and assumptions of the fixed basket CPI statistics. Call it a Consumer Expenditure Index, CEI. The CEI could measure the percentage of individual consumer expenditure on each CPI component instead of simply assuming consumer expenditures on the various CPI components are the same as they were in 1970 and 1950. It is clear that Carney was targeting the price of eggs when most household income was… Read more »
Googley
Guest
Googley
3 years 8 months ago

I was on backpage.come and the whore index is creeping up. Lots of inventory especially downtown/westend/kits/burnaby.

Some Guy
Guest
Some Guy
3 years 8 months ago
What Carney should have done is the same thing other central bankers should have done and still need to do: Print money and keep interest rates higher. Higher interest rates would contract the money supply by causing defaults and discouraging new borrowing. This contractionary effect would be offset by the printing of new money, leading to an outcome with stronger growth and less debt overall. However, this solution is so far outside of the mainstream, inflation-paranoid, consensus (folks like ‘Extend and Pretend’) that it is hard to blame Carney in particular for failing to apply it. Operating within the mainstream… Read more »
Extend and Pretend
Guest
Extend and Pretend
3 years 8 months ago
@Some Guy: Inflation paranoid consensus folks? Really? Did you read my post? I said (1) raise rates at every opportunity. (2) Find out why CPI isn’t tracking fraction of income actually spent on what is measured. Read my post. Carney is to blame. He is to blame because he is the typical frat boy elite finance guy. If he was at all exceptional beyond simply playing his cards for a long political careeer, he would have picked up the new skills and sensibilities needed to change things for the better instead of trotting out 50 year old mantra in his… Read more »
Anonymous
Guest
Anonymous
3 years 8 months ago

@trash crash alert: “. Hundreds of thousands of middle class families in Toronto and Vancouver are on the verge of being decimated financially. ”

Oh, so those families played no part in getting themselves into trouble? Give me a break! It’s fair enough to criticize gov policies, but we all know who the blame really lies with in this mess. I’m tired of all this ‘I’m a victim’ bullshit.

yvr2zrh
Member
3 years 8 months ago
@trash crash alert: Not to lose sympathy – but frankly, nobody put the gun to their head. . . . . If they bought and overpaid (like most “Joe Howmuchamonths do)” – I frankly don’t care. . and Frankly – I made my own decision all along the way not to play the game. I paid my “subsidized rent” which amounted to the tune of $3,000 per month below cost of ownership, saved my excess, invested and had an increase and ultimately did leave to be part of a different game outside of Canada. I feel very sorry for those… Read more »
Some Guy
Guest
Some Guy
3 years 8 months ago

“Did you read my post?”

Sure I read it, you were advocating raising interest rates to fight inflation in an environment where the economy was below capacity and there was little or no upward pressure on wages. That’s exactly what I mean by inflation-paranoia.

Interest rates shold be higher because negative real rates are directing resources toward anything that involves borrowing (speculation and housing primarily) and away from everything else – not because inflation is out of control and we just don’t realize it because it’s not being measured right.

yvr2zrh
Member
3 years 8 months ago
@jesse: I think what you say makes sense. What would have been helpful however is if they opened the fire hose slower as the rapid release of credit meant that the economy could not respond to the increased demand fast enough without causing a massive run up in prices. We would be much better off now if they had not reduced rates and changed amortization rules. But then again, we perhaps would not have a convservative government. Who will end up paying in the end is not known but at the end of the day, those who are hurt the… Read more »
Anonymous
Guest
Anonymous
3 years 8 months ago

Here’s a good clip for understanding Carney/Goldman and banking in general.

http://www.youtube.com/watch?v=lsmbWBpnCNk

Aleksey
Guest
Aleksey
3 years 8 months ago

@Anonymous:

There will be a time when we can make a list like Americans did after their crash:
http://www.time.com/time/specials/packages/article/0,28804,1877351_1877350_1877339,00.html
And American consumers are #5 on that list. They should be like #2 IMHO and MSM should be #1, but you wouldn’t find MSM in the list because it’s Time’s website =)

Extend and Pretend
Guest
Extend and Pretend
3 years 8 months ago
@Some Guy: re: “where the economy was below capacity” Says who or what? Relative to the US, in the present economic environment, it is above capacity. Unemployment should be higher in historical terms relative to the US. It all goes to antiquated measurement, which was my point. I am not paranoid for inflation, I just want to make sure the Bank is measuring inflation as it is, rather than as it was. There would be no need to for discretionary money supply tinkering if the effect of prices on income buying power was measured in relation to what most income… Read more »
boogeybear
Guest
boogeybear
3 years 8 months ago

@yvr2zrh: I don’t buy that the home owner is completely to blame. It isn’t the person that recently bought their home that is in difficulty. It’s the misused home equity lines of credit that are the problem. The lenders, CMHC and the government were predators on those that where easy victims. This was a confidence game, backed and insured by our government.

Anonymous
Guest
Anonymous
3 years 8 months ago
@RaggedyRenter: And just who do you think was advising the government the whole time on what it should do to stimulate the economy. Carney has been playing nothing more than a blame game with his comments on household spending, etc. Same goes for Flaherty and his comments. This spreading around of the blame does nothing but confuse people ahead of time so that when the SHTF nobody is culpable. All you need to know is that Flaherty wants votes and Carney works for Goldman. Stop fooling yourself, you sound like you are gushing when you allow Carney to hide behind… Read more »
Anonymous
Guest
Anonymous
3 years 8 months ago

@Extend and Pretend: Carney could also have:

1. Been more critical of US monetary policy and its effects on the Canadian economy, particularly those who save.

2. Been more critical of the EU’s insistence of propping up a failed economy.

3. Been more critical of the Chinese/US Dollar peg.

I suppose that you can replace ‘more critical’ with ‘more vocal’, especially in regard to how it effects the Canadian dollar and economy as a whole.

RealityCheck
Guest
RealityCheck
3 years 8 months ago
How is the Tolling on the Port Mann going to affect RE prices (relatively speaking)? Comments? I noticed that the Golden Ears bridge tolls resulted in less demand north of the Fraser. Prices never really went up in Maple Ridge since 2008. Less immigrants locating there. Also, Tolls on new bridges are a given. We have two and added to that list will Patullo. These are a given. Any future new bridges will be tolled as well. Now, Translink will get more money…past experience has shown this. Question is, what happens to existing bridges with respect to tolls? The RFID… Read more »
Many Franks
Guest
Many Franks
3 years 8 months ago

OECD warns Canada about consumer debt:

The two big domestic risks, the OECD says, are the record level of debt Canadian families hold and their dependence on house prices remaining firm.

“Continuing high household debt levels could lead to a sharp deceleration in household spending, while a sudden weakening of the housing market could have sizable negative spillover effects,” the OECD says.

Hey, almost sounds like they’ve been hanging around here too long.

RaggedyRenter
Guest
RaggedyRenter
3 years 8 months ago

@Anonymous:

“And just who do you think was advising the government the whole time on what it should do to stimulate the economy. ”

Why do you think Carney had to go public? You don’t air out problems (especially at the federal government level) unless it’s the last resort

Anonymous
Guest
Anonymous
3 years 8 months ago

@RaggedyRenter: “Why do you think Carney had to go public? You don’t air out problems (especially at the federal government level) unless it’s the last resort”

So you are saying that he couldn’t have started warning Canadians earlier? Like maybe in 2008/2009? Sure took him a long time to ‘go public’.

Man, I just don’t get these people who defend those who played key roles in bringing the entire world into this greatest of financial messes!

C.Junta
Guest
C.Junta
3 years 8 months ago

Consider an article in Wikipedia:

Carney, Mark:
Canadian executive with the compensation of ~400K in 2009 (http://bit.ly/jV60Ja) who was one of the key figures among those who installed the time bomb under Canadian budget by approving the silent bank bailout of 2008 (http://bit.ly/JluyQG) and got his golden parachute in November 2012 before the bomb detonated in…

Have I missed something?

Vote Down The Facts
Guest
Vote Down The Facts
3 years 8 months ago

@Anonymous: “All you need to know is that Flaherty wants votes”

That’s exactly how a democracy works. Doing whatever is necessary to get votes is in effect responding to the wishes of the people.

gokou3
Guest
gokou3
3 years 8 months ago

@Anonymous: Ultimately, if the people are stupid, there’s nothing a government can do to prevent disasters.

Not much of a name...
Member
Not much of a name...
3 years 8 months ago

@Vote Down The Facts:

That’s exactly how a democracy works. Doing whatever is necessary to get votes is in effect responding to the wishes of the people.

Which in itself is a definite flaw in the system. The wishes of the people are not always what is in their own best interest.

painted turtle
Guest
painted turtle
3 years 8 months ago
One can find victims on both sides. What about families who have been bringing up children (now teens) in tiny condos because they could not afford anything else? What about people who immigrated in their 40s and are now close to 50, still renting, very poor pension plans, will never be able to buy and use this investment to finance retirement? What about the people who cannot get a downpayment from Mom and Dad, nor Granny? We can find excuses, or blame, whiners on both sides. But at the end of the day, we are all adults making decisions. With… Read more »
chilled
Member
chilled
3 years 8 months ago

You’ll easily spot Carney and Gordon Campbell wandering the streets of London; they’ll be the only ones with good teeth.

Anonymous
Guest
Anonymous
3 years 8 months ago

@Vote Down The Facts: “That’s exactly how a democracy works. Doing whatever is necessary to get votes is in effect responding to the wishes of the people.”

Read the context. You will find that your comment says nothing that isn’t already inferred.

Flaherty is deflecting blame to save votes…

Jason
Guest
Jason
3 years 8 months ago

A site worth quick perusal is Reed Construction Daily Commercial News. They have a link for daily Top 10 projects, divided up by region. I check the Western one about once a week. They mention cancelled/deferred projects in these lists as well. See: http://www.dcnonl.com/top10projects1

Vote Down The Facts
Guest
Vote Down The Facts
3 years 8 months ago

@Not much of a name…: “Which in itself is a definite flaw in the system. The wishes of the people are not always what is in their own best interest.”

The important part is that people get to choose. If they don’t want to engage in the system or educate themselves as to what the options available to them are, then that’s their choice too. Going against peoples’ wishes based on what somebody else thinks “is in their best interest” isn’t a democracy.

Loon
Guest
Loon
3 years 8 months ago

@Many Franks:
The only real question is what will bring it all down, record debt or high house prices ?
Carney is analogous to a fat rat leaving a sinking ship, swimming across the sea to take his seat next to the queen.

Anonymous
Guest
Anonymous
3 years 8 months ago

@gokou3: “Ultimately, if the people are stupid, there’s nothing a government can do to prevent disasters.”

Good point. Mind you the public education system which the government is responsible for isn’t exactly a model for pumping out financially intelligent people. In fact it’s quite the opposite. Consumer Ed doesn’t teach much about money… but that’s another topic.

gokou3
Guest
gokou3
3 years 8 months ago

@Anonymous: Exactly. Don’t get me started on the education system. It’s so detached from the needs of the real world.

Some people don’t know what they don’t know, that’s the gist of the problem. Without basic economic knowledge, for example, they would think it’s normal for home prices to go up 10% a year forever when inflation is only ~2% per annum.

Still, this is not an excuse for getting oneself into financial or other kinds of disasters. As someone else said, with internet nowadays it’s hard to excuse oneself for being ignorant.

C.Junta
Guest
C.Junta
3 years 8 months ago
After reading comments, I have an impression that a lot of people at VCI see the coming RE bust as a the biggest event of the nearest future of the Canadian economy. Wrong decisions by irresponsible borrowers, predatory lending practices, the coming wave of foreclosures and so on. I can’t say I really care about the bust: foreign “investors”, local flippers, mortgage brokers, realtors, banks, developers played by the rules (thank CMHC, Flaherty and Carney), pigs got slaughtered. My concern is that, unfortunately, the people who were not directly involved in this bubble mess will be affected as well. My… Read more »
rp1
Guest
rp1
3 years 8 months ago

#14 @yvr2zrh: So what you’re sort of saying is, markets have no victims, only volunteers 😉

rp1
Guest
rp1
3 years 8 months ago

I guess the problem with saying who cares is that the economic bomb will hit all of us, including people who didn’t participate. Many have been responsible, as we must be, but it’s still gonna hurt. What happens when the government starts slashing?

real_professional
Member
3 years 8 months ago
Teranet Data October 2012 available on their website. Vancouver Index is off 2.8% from the highs. September and October Prices are flat but sales-pairs are 19% lower than October 2011. This is actually the worst showing of the major Canadian centres the sales drought in Vancouver isn’t getting any better. Summary, Prices from highs, Monthly Sales Pairs YoY: Vancouver: Prices -2.8% Sales -19.1% Victoria: Prices -5.1% Sales +8.7% Toronto Prices -0.6% Sales -5.7% Remember Teranet data is based on closed deals – so there is about a two month lag in addition to the one month lag (October data). Real… Read more »
Anonymous
Guest
Anonymous
3 years 8 months ago

@C.Junta: “And I can’t see a political force that would have balls to cut this spiral and take proper measures.”

Sad but true. There’s little electability in taking away entitlements.

vangrl
Member
vangrl
3 years 8 months ago
gokou3
Guest
gokou3
3 years 8 months ago

Look at this wonderful collection of new condo units for rent in the Queensborough area:

http://vancouver.en.craigslist.ca/search/apa/bnc?query=MaryEllen&srchType=A

I wonder why the owner didn’t sell them?

HAM Solo
Guest
HAM Solo
3 years 8 months ago

@ real professional

I think the vancouver market is “really” off more like 10% from its peak. Things the official numbers don’t consider.

a) substantial renovations or re-builds in the same property

b) the effect on prices of the drop in volume. If the same level of volume had cleared, the prices would be lower

c) various types of hard to quantify but quite real fudging and finagling by the real estate statistical bodies (only bulls get paid to put together these stats). Would include the exclusion of “outliers”, mix adjustments between SFH and condos etc.

space889
Member
space889
3 years 8 months ago

@Some Guy: Or let the free market determine more of the cost of borrowing and allowing debts to be written off (default) with private investors taking the loss. That might be better than your method of high interest rate and printing money because it’s less likely for the new money to flow to those who don’t need it – eg) banking fat cats or those with the right connections.

data junkie
Guest
data junkie
3 years 8 months ago

Here’s another little anecdote in the ‘shadow inventory’ story:

http://www.6717000.com/mls/V967340-310-36-water-st.html

http://vancouver.en.craigslist.ca/van/apa/3438556390.html

Shadow inventory kind of sounds like schadenfreude, doesn’t it?

data junkie
Guest
data junkie
3 years 8 months ago

I should note that I’ve stumbled across literally dozens of examples of this in my current housing search. A lot of them are ‘furnished’ and have ridiculously optimistic asking rents. Like this one for example:

http://vancouver.en.craigslist.ca/van/apa/3394008064.html

Many Franks
Guest
Many Franks
3 years 8 months ago

The speculation has already started about when Jim Flaherty will jump ship — and whatever your opinion on Carney, I think we can all agree that Flaherty is a bona fide rat. In my opinion he’s the guy carrying the most blame for Canada’s 0/40 excesses, which may become the hallmark of policy mismanagement leading to the crash.

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