# Global Financial Crisis 2.0



## m3s (Apr 3, 2010)

The canaries are leaving the coal mine

The premiums for credit default swaps are climbing indicating an increase in default risk to bonds and mortgage backed securities which have been propped up by the central banksters. The average investor seem to assume these assets are low risk because they have been in recent history.

Markets are losing confidence in the house of cards


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## james4beach (Nov 15, 2012)

m3s said:


> Markets are losing confidence in the house of cards


Which house of cards do you mean?


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## cainvest (May 1, 2013)

james4beach said:


> Which house of cards do you mean?


I guess about crypto .. down quite a bit just today.


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## james4beach (Nov 15, 2012)

cainvest said:


> I guess about crypto .. down quite a bit just today.


I'm losing hope that my 0.015 bitcoin are going to allow me to retire early


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## m3s (Apr 3, 2010)

james4beach said:


> Which house of cards do you mean?


Global financial system relies on confidence in a fractional reserve system that is eroding with economic sanctions.

Just when the central banks are supposed to stop expanding this month. Perfect storm is brewing. We are using economic warfare on a globally connected system.

Are we just going to print more fiat? Then what $2M average real estate in Canada



cainvest said:


> I guess about crypto .. down quite a bit just today.


This are the times like 2020 when money is made in crypto. Luckily I scaled out since September and now I can scale back in.

Don't buy at the top like james and then say it is a scam. People always get this backwards. DeFi and yields are booming but far too complicated for this forum

And what happens if Russia defaults on its debt again? Bonds are supposed to be for conservative investors


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## james4beach (Nov 15, 2012)

m3s said:


> Don't buy at the top like james and then say it is a scam after he bought


I didn't say it's a scam because it went down. I knew it was a joke from the moment I bought, I was just having some fun.

As you know I spend most of my time buying GICs


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## Beaver101 (Nov 14, 2011)

^ He's referring to bonds and mortgage-backed securities as crypto is the place to be when the central bank-house of cards collapses. I don't think this will matter any and which way when WW3 breaks out.

Also, I didn't know Virgin Mary (or is it some other religious symbol?) carries a bazooka normally.


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## sags (May 15, 2010)

Forget about crypto.........real estate is the new gold.


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## Zipper (Nov 18, 2015)

sags said:


> Forget about crypto.........real estate is the new gold.


We bought a new house in London in 1983 for $100 000.

For decades it didn't go up much. The mortgage has been long gone.

Prices have gone nuts in the last 2 to 3 years and it is now worth at minimum $800 000.

At our ages it is tempting to cash out.


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## doctrine (Sep 30, 2011)

If you think inflation/crisis this time around means more money printing and inflation for real estate, I am not so sure that is the outcome you might get. When you have to pay more for food and energy to keep the lights and heat (and A/C) on, and much much more for other goods like vehicles, etc, you start to make decisions about how much you will pay for your residence, especially if it isn't going up in price as much as money becomes more expensive. A 10-20% drop in housing prices, combined with a significant rise in interest rates by governments struggling to keep inflation under control could be the end of the seemingly never-ending boom. Perhaps for the economy, and especially those more directly exposed to real estate or depending on it in the next 5 years, we had better hope the war in Russia ends, which would relieve a lot of inflation risk.


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## Spudd (Oct 11, 2011)

My $100 in crypto defi is now up to $57.66 including interest. Woo!

At least my bond fund is doing well lately.


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## m3s (Apr 3, 2010)

Real estate is only keeping up with inflation before property tax and maintenance. Real estate is good starter because you can leverage a little money and you can live in it. It's good for people who enjoy spending all their money on home renos thinking the next buyer will care about their crappy DIY projects

The government is pressured to lower the prices now and the government could do this many ways and they could also mess it up as they often do. Canada has lots of land except for maybe Vancouver. Real estate is not liquid enough and I would rather the government stopped manipulating the free market.

If real estate was the best for wealthy people why are they investing elsewhere. We know rates are going up and this is not good for real estate when all the divorced soccer moms are leveraged to the max living on EI because the pandemic crushed the waitress economy



Spudd said:


> My $100 in crypto defi is now up to $57.66 including interest. Woo!
> 
> At least my bond fund is doing well lately.


You staked $100 worth of crypto for 5% APY but staking is not DeFi. You could stake to a project's pool to fund their development. I got over 100% return doing that over the last 6 months. I gave up 25k staking rewards to the project and received tokens currently worth 250k that are now half staked for 12% APY.

There are sometimes pools that give bonus promo yields which I did recommend (I just harvested a free 10k but it was only available for the last 5 epochs) I also got a free 10k airdrop that is now worth 20k and earning crazy APY paired on a DEX so people could buy it. The more volatility and volume the better for my yields from exchange fees

For $100 it's probably not worth me explaining but there is a new DeFi protocol launching in a few weeks that will have high incentive APY for about 6 months. There is risk in a new protocol, impermanent loss risk, price risk so it's not really the best for someone new. If you'd asked me I would have recommended stablecoins that can earn 19% incentive APY

During the month of Feb I got 400-100% APY and earned more in a month than my salary just by risking those assets to DeFi. The yields are better when the markets is scared because the volume is higher and there is less liquidity which all benefits me greatly. Plus I am involved with the development so I understand the risks.

I don't mind when the markets are down as long as there is still growth and activity. You could buy another $100 or $200 now and be fine. I like volatility and let's me buy when everyone else thinks things are bad. If you missed 2020 well maybe now you have another chance

The global legacy markets don't look good to me. I don't think the central bankers will print their way out of this. This is a perfect time to blame Russia for their own bad policy


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## Spudd (Oct 11, 2011)

Trouble is, I don't know how to do those things, and I'm too lazy to figure it out for $100, and too risk-averse to figure it out for actual amounts of money.


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## Retired Peasant (Apr 22, 2013)

I wonder what you consider was Global financial crisis 1.0 - just curious.


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## james4beach (Nov 15, 2012)

Zipper said:


> At our ages it is tempting to cash out.


Where would you live?


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## m3s (Apr 3, 2010)

Spudd said:


> Trouble is, I don't know how to do those things, and I'm too lazy to figure it out for $100, and too risk-averse to figure it out for actual amounts of money.


Well I am very confident that your $100 will be worth more than $100 again. It's a matter of time

There is an interesting pool NETA that takes your rewards and uses them to DeFi yield farm in exchange for another token. A lot more hands off especially for taxes. The risk is always a rug pull where the person with the keys disappears. I can't vouch for them and I only allocated a relatively small amount there.

There's also some interesting charity oriented pools. BREAK pool I believe gives rewards to kids in Asia (she is in Asia) also MALU pool in Australia benefits West Papau. There's probably +25 pool run by women. On pooltool.io there's over 100 charity pools if you select by the portfolio screener

My favourite project is a yield optimizer which is more what you would want. It automates DeFi yields for you but it is under development for another year


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## m3s (Apr 3, 2010)

Retired Peasant said:


> I wonder what you consider was Global financial crisis 1.0 - just curious.


Honestly?



> The financial crisis of 2008, or *Global Financial Crisis (GFC)*, was a severe worldwide economic crisis that occurred in the late 2000s. It was the most serious financial crisis since the Great Depression (1929). Predatory lending targeting low-income homebuyers, excessive risk-taking by global financial institutions, and the bursting of the United States housing bubble culminated in a "perfect storm." Mortgage-backed securities (MBS) tied to American real estate, as well as a vast web of derivatives linked to those MBS, collapsed in value. Financial institutions worldwide suffered severe damage, reaching a climax with the bankruptcy of Lehman Brothers on September 15, 2008, and a subsequent international banking crisis.


The Global Financial Crisis was averted by printing copious amounts of money to bail out the banksters.



> After the onset of the crisis, governments deployed massive bail-outs of financial institutions and other palliative monetary and fiscal policies to prevent a collapse of the global financial system. The crisis sparked the Great Recession which resulted in increases in unemployment and suicide and decreases in institutional trust and fertility, among other metrics. The recession was a significant precondition for the European debt crisis.


Problem is we just kicked the ball down the road and we never stopped printing money. That seemed to work fine as long as productivity improved but we also got addicted to the easy money

Then the pandemic came and monetary stimulus skyrocketed which is why we have inflation. Now we absolutely need to raise rates to control the inflation but we also need to avoid WW3 somehow. Putin knows this. There are videos of him talking about how the US is destroying its reserve currency status. He knew very well there would be economic sanctions

Now go look at credit default swaps. The market is pricing in another crisis


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## Zipper (Nov 18, 2015)

james4beach said:


> Where would you live?


Probably in a nice 2 bedroom apartment for ~$2500 a month.


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## james4beach (Nov 15, 2012)

Zipper said:


> Probably in a nice 2 bedroom apartment for ~$2500 a month.


I see, so maybe cash out the property, roll the money into a nice balanced fund or something like that, and then rent.

But I wonder, when retired, what's the process like for renting an apartment? Every place I've been to has wanted proof of my income, name of employer, etc.

Is it still possible to rent if you're living off a retirement portfolio? How does a person prove to the property manager that you can afford to pay the rent? I'm considering early retirement and am really wondering about this myself.


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## KaeJS (Sep 28, 2010)

james4beach said:


> I see, so maybe cash out the property, roll the money into a nice balanced fund or something like that, and then rent.
> 
> But I wonder, when retired, what's the process like for renting an apartment? Every place I've been to has wanted proof of my income, name of employer, etc.
> 
> Is it still possible to rent if you're living off a retirement portfolio? How does a person prove to the property manager that you can afford to pay the rent? I'm considering early retirement and am really wondering about this myself.


You show them your portfolio.


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## m3s (Apr 3, 2010)

$2500/month goes a long ways closer to the equator

Proof of income helps obtain a longer stay visa but not really required


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## Zipper (Nov 18, 2015)

Maybe we could go to Puerto Vallarta and be neighbours with KCowan?🌞🌵🌴


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## afulldeck (Mar 28, 2012)

m3s said:


> Now go look at credit default swaps. The market is pricing in another crisis


So how did you come to that conclusion?


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## afulldeck (Mar 28, 2012)

james4beach said:


> Is it still possible to rent if you're living off a retirement portfolio? How does a person prove to the property manager that you can afford to pay the rent? I'm considering early retirement and am really wondering about this myself.


Yes. It is possible to rent living of a portfolio. 

Actually, I've run into this problem before and its comical. Best bets: get references from your previous landlord, bank and keep your credit score high & only deal with either someone you trust or a larger corporation. Most of the people in the middle are mainly rule followers, who are not allowed to use judgement (typically not good anyway) and who do not understand money. The middle is completely confused if you have money and don't own a home........why would person, family live like that.......your paying someone else's mortgage.....


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## kcowan2000 (Mar 24, 2020)

Zipper said:


> Maybe we could go to Puerto Vallarta and be neighbours with KCowan?🌞🌵🌴


We got our permanent resident cards by writing a letter to the minister of admissions in Spanish declaring a monthly income of $3300/mo. No proof needed.

The amount increases each year and sometimes proof is needed but they will accept online statements from your bank. Some people have shown their income tax filings.
(We rent our penthouse in Vancouver.)


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## MrMatt (Dec 21, 2011)

m3s said:


> Global financial system relies on confidence in a fractional reserve system that is eroding with economic sanctions.


Can you explain how banking and loans would work without a fractional reserve system?

Like if I put $100 in the bank, they need to loan at least some fraction of that out to make money on it, if only for the bookkeeping of it.



> And what happens if Russia defaults on its debt again? Bonds are supposed to be for conservative investors


The people that lend money to those with high credit risk should charge a premium to compensate.

High quality bonds are for conservative investors, junk bonds are not.


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## MrMatt (Dec 21, 2011)

m3s said:


> The government is pressured to lower the prices now and the government could do this many ways and they could also mess it up as they often do.


Nope, real estate/housing is a supply problem.
The only way to lower prices is increase supply.

Or they could decrease demand but with plans for massive immigration I don't see how that would work.


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## Beaver101 (Nov 14, 2011)

Zipper said:


> Maybe we could go to Puerto Vallarta and be neighbours with KCowan?🌞🌵🌴


 ... just be prepared to miss everything "Canadian-smelling" ... weather, friends, doctor, dentist, whatever you love about Canada. But then you have an aromatic ex-pat-Canadian for a neighbour.


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## Beaver101 (Nov 14, 2011)

MrMatt said:


> Nope, real estate/housing is a supply problem.
> The only way to lower prices is increase supply.
> 
> Or they could decrease demand but with plans for massive immigration I don't see how that would work.


 ... a simpler solution - jack up the rates sky-high like back in the 80s will do it. The "housing" market is nothing but speculation now in lieu of the stock-market, including cryptos.


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## nobleea (Oct 11, 2013)

MrMatt said:


> Or they could decrease demand but with plans for massive immigration I don't see how that would work.


I don't think immigration, on a percentage level, is any different than it has been in the past 70 years. Even with the plans which say to triple our population in 50 years or whatever it was.


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## james4beach (Nov 15, 2012)

nobleea said:


> I don't think immigration, on a percentage level, is any different than it has been in the past 70 years. Even with the plans which say to triple our population in 50 years or whatever it was.


It's remained about the same. If you look at Canadian immigration numbers, normalized to population, it's actually been pretty consistent through all recent governments. Immigration levels under Trudeau were similar to levels under Harper. We might have even had less immigration during the pandemic, not sure as I haven't looked recently.


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## m3s (Apr 3, 2010)

Beaver101 said:


> ... a simpler solution - jack up the rates sky-high like back in the 80s will do it. The "housing" market is nothing but speculation now in lieu of the stock-market, including cryptos.


The problem is the unit of account

You get less for your fiat unit of account so it appears like everything is going up. The value of fiat is declining not the other way around.

Hold RE. Hold oil. Hold gold. Hodl crypto. Hold anything BUT fiat


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## MrMatt (Dec 21, 2011)

nobleea said:


> I don't think immigration, on a percentage level, is any different than it has been in the past 70 years. Even with the plans which say to triple our population in 50 years or whatever it was.


That misses the point, we've been underbuilding housing for decades, we have an acute housing shortage, and increasing numbers of people are going to be looking for housing.

If we want to fix the housing problem, we need to dramatically increase the amount of housing we're building.


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## afulldeck (Mar 28, 2012)

MrMatt said:


> That misses the point, we've been underbuilding housing for decades, we have an acute housing shortage, and increasing numbers of people are going to be looking for housing.
> 
> If we want to fix the housing problem, we need to dramatically increase the amount of housing we're building.


This is indeed the problem and nimbyism is the criminal...


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## nobleea (Oct 11, 2013)

I don't disagree with the supply side of house building. Nimbyism is a problem and everyone thinks developers are crooks.
I was merely pointing out that some yell at the crazy high population growth from immigration is actually just the historical norm.


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## sags (May 15, 2010)

You can't really build more houses where there is no land to build on. Commuting in Ontario has become a dysfunctional way to spend your days.

We need to spread business and commerce out a bit more. When the Honda car assembly plant opened up in rural Ontario it attracted a lot of suppliers and workers. The town grew and flourished. It isn't recognizable today to the small hamlet it used to be.

The government can help attract businesses to smaller communities, but too many people want to live in the GTA or other major urban areas.

My advice to young people is get a trade or profession that allows them to live anywhere in Canada they want. Housing isn't expensive everywhere.

But times have changed and it isn't like the olden days when kids took flight and moved all over the place. They are too tied to their parents to move.

_Go west young man_ today means.....buy a home on the west side of the city.


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## nathan79 (Feb 21, 2011)

Lack of supply is a bit overrated as an issue. Although we've been underbuilding for many years, the ratio of housing units to population has been fairly steady for quite a while. Household sizes have remained steady as well. Low interest rates and speculation are what's driving the market since COVID.

I think the tide is about to turn, if it hasn't done so already. I'm hearing from a few people in the industry that the Vancouver market peaked in mid-late February. The was also a record number of new listings in the Fraser Valley in February.


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## MrMatt (Dec 21, 2011)

nathan79 said:


> Lack of supply is a bit overrated as an issue. Although we've been underbuilding for many years, the ratio of housing units to population has been fairly steady for quite a while. Household sizes have remained steady as well. Low interest rates and speculation are what's driving the market since COVID.
> 
> I think the tide is about to turn, if it hasn't done so already. I'm hearing from a few people in the industry that the Vancouver market peaked in mid-late February. The was also a record number of new listings in the Fraser Valley in February.


We have one of the lowest rates of housing per capita in the G7, and it's decreasing.









Ontario housing shortage is worst in the country and threatens to exacerbate affordability woes


Ontario would need to build 650,000 more homes just to get to the national average




financialpost.com





We're also slowing down

__
https://www.reddit.com/r/canadahousing/comments/r03yz0

This is as family sizes shrink


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## nathan79 (Feb 21, 2011)

MrMatt said:


> We have one of the lowest rates of housing per capita in the G7, and it's decreasing.
> 
> 
> 
> ...


Starts per person have been going up since 2008 (and actually since 1996 according to that graph, if you filter out the noise).

Household size has been flat since 2004: Average number of people per family in Canada 2019 | Statista

I don't see that changing anytime soon since more people are buying with family and young people are living with parents longer than ever before.

Yes, we have an under-supply of housing. I completely agree with you. But it's nothing new and certainly not responsible for the price increases since COVID.


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## afulldeck (Mar 28, 2012)

nathan79 said:


> Starts per person have been going up since 2008 (and actually since 1996 according to that graph, if you filter out the noise).
> 
> Household size has been flat since 2004: Average number of people per family in Canada 2019 | Statista
> 
> ...


So what is the reason?


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## MrMatt (Dec 21, 2011)

nathan79 said:


> Yes, we have an under-supply of housing. I completely agree with you. But it's nothing new and certainly not responsible for the price increases since COVID.


I think part of the inflation for COVID and earlier is a desire to get out of the city.

Add declining interest rates, and we've seen house prices increase as people budget the mortgage payment.

So with the increase I think people are holding onto their in city property because real estate has "done well".
My house value has almost tripled in a decade, I understand the emotional desire to hold on

Also we've been underbuilding for decades, so there isn't much slack to pick up the variations in demand.


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## james4beach (Nov 15, 2012)

The price increases since Covid seem pretty straightforward to me: super low interest rates, plus stimulus. A combination of regular home buyers, plus real estate investors who want to add to their portfolios for "rental income".

People decide to buy houses based on the mortgage payments. When people can suddenly get 0.99% mortgages, they pursue buying home that they previously could not. That additional buying pressure drives prices up.

Add to this all the real estate investors who greedily buy up homes to rent out to others. The zero rate environment created by the Bank of Canada encourages this as well, due to yield-chasing. People figure they can get a rental income (yield) with super cheap mortgages.

I have a solution for sky high home prices. Jack up interest rates to at least 3% and dramatically scale back the CMHC program.


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## KaeJS (Sep 28, 2010)

james4beach said:


> I have a solution for sky high home prices. Jack up interest rates to at least 3% and dramatically scale back the CMHC program.


Sounds like a fantastic way to crush the Canadian economy.


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## andrewf (Mar 1, 2010)

james4beach said:


> The price increases since Covid seem pretty straightforward to me: super low interest rates, plus stimulus. A combination of regular home buyers, plus real estate investors who want to add to their portfolios for "rental income".
> 
> People decide to buy houses based on the mortgage payments. When people can suddenly get 0.99% mortgages, they pursue buying home that they previously could not. That additional buying pressure drives prices up.
> 
> ...


There is supply and demand side policies that need to change. Making it easier to leverage up to buy property seems pro-cyclical. When housing is stretched, we should be making it harder to lever. We also need to make it easier to build smaller scale (low/mid-rise) higher density housing in traditionally SFH neighbourhoods. That means making it legal to build triplex, quadplex, etc. housing. These neighbourhoods are typically very inefficient to service and are a burden unless they can be densified. Density doesn't need to mean 50 story condos. It also doesn't mean we can't have SFH, but there should be affordable choices other than SFH in each neighbourhood.


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## sags (May 15, 2010)

I took a drive around our city last night, and there is building going on everywhere.

Single family homes, condos, townhouses, rental apartments, high rises.

The problem isn't building homes. It is building homes that are affordable for "average income" folks.

Garth Turner did the numbers on his blog and it requires a $250K income to buy an average home, which is about 1% of the population.

Today our city and just around the edges of it has 417 listings for sale, so it isn't like there are no homes for sale.


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## Beaver101 (Nov 14, 2011)

^ Ie. be on the Sunshine List before you can consider purchasing an "average" home. 

Look at the city of glass (Toronto), the "average" "condo" (not a "house") hovers around $500K for 1,000 square feet or less. I would say more than half of them are not home-owners considered - they're either rentals, AirBnB or basically a speculative-based "investment". 

No wonder the prices go insane on houses since a 'fancy apartment" can cost $500K (if not more) already.


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## sags (May 15, 2010)

I was shocked at how many listings are for homes listed for $1.5 million to $2.5 million and up.

I watched them build those homes just up the road from us and they originally cost $350K 15 years ago.

Who the heck in our city is buying all these multi-million dollar homes ? It must be people selling for $4 million in Toronto and moving here.

Or.....when I was delivering I went to huge mansions that had expensive cars in the driveway and young people living in the homes.

They were primarily from Arab countries and I asked a guy who owned a favored Arab restaurant they hung around and ordered from...where these kids got the money to be living in these homes and driving exotic cars. He laughed and said......drug money.

These young guys don't go to school. They don't work. They just live in big homes, drive around in expensive cars and order takeout Arabian food.

They are just placeholders of real estate for their parents back home, who probably own homes all over the place.


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## james4beach (Nov 15, 2012)

KaeJS said:


> Sounds like a fantastic way to crush the Canadian economy.


Exactly, which is why nobody thinks it's going to happen. Real estate speculators know that too, so they also don't think the BoC won't dare raise rates that high.


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## andrewf (Mar 1, 2010)

sags said:


> I took a drive around our city last night, and there is building going on everywhere.
> 
> Single family homes, condos, townhouses, rental apartments, high rises.
> 
> ...


The fact that there is more demand than supply drives up prices. Building more housing and expanding supply will help to suppress prices. Canada has very high household growth, we need to build a lot of units.


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## andrewf (Mar 1, 2010)

Beaver101 said:


> ^ Ie. be on the Sunshine List before you can consider purchasing an "average" home.
> 
> Look at the city of glass (Toronto), the "average" "condo" (not a "house") hovers around $500K for 1,000 square feet or less. I would say more than half of them are not home-owners considered - they're either rentals, AirBnB or basically a speculative-based "investment".
> 
> No wonder the prices go insane on houses since a 'fancy apartment" can cost $500K (if not more) already.


Condos in Toronto are now well over $1000 psf. So a 1000 sqft condo is 1M+.


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## james4beach (Nov 15, 2012)

andrewf said:


> Condos in Toronto are now well over $1000 psf. So a 1000 sqft condo is 1M+.


I never understood the logic of buying a massive condo. I like living in a city (living in both central Toronto and Vancouver have been great) but to me, the whole idea was a lean city lifestyle.

I have a small apartment. But if I wanted a ton of space (and I might some day), wouldn't it be much nicer to live in a house, somewhere outside a city center? I can think of plenty of locations in Canada where I could happily live.

But I don't understand the appeal of buying a huge condo in a place like Toronto or Vancouver. Just seems like poor value to me. Not only is it over a million bucks, but you're also going to pay a few thousand bucks in *monthly* condo fees.


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## afulldeck (Mar 28, 2012)

james4beach said:


> Exactly, which is why nobody thinks it's going to happen. Real estate speculators know that too, so they also don't think the BoC won't dare raise rates that high.


I hope they are all wrong. RE needs to come back to earth...


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## james4beach (Nov 15, 2012)

afulldeck said:


> I hope they are all wrong. RE needs to come back to earth...


Yeah I also hope the BoC raises rates enough to normalize real estate. This has gotten beyond ridiculous.

Just because something is painful doesn't mean we should avoid it. Sometimes pain is educational.


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## sags (May 15, 2010)

There is a similar problem for renters, that there are rental units and more being built, but they are luxury units with high monthly rental fees.

The key word in these stories is "affordable" for people with "low or average incomes". That puts a one bedroom unit at around $750 a month, which are few and far between.

Landlords are skirting around rental laws by performing minor "upgrades" and then jacking the rent up forever. Another is move in to boot out tenants and then rent for a higher amount.

The rental problem is caused by the lack of home ownership at the low end of housing. We need a lot more affordable homes.........not million dollar homes or pricey luxury rentals.

Where do they think we are.........Miami Beach oceanfront ?

This is Canada and we have vacant land up the wazoo. The only reason for high prices is greed.


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## sags (May 15, 2010)

The solution is time tested and simple.

Use the CMHC to buy land, service land, place factory built homes on concrete basements on land, sell units online, provide mortgage guarantees with 0% down and low interest rates.

Voila....problem solved. People get an affordable home and the government gets their money back. Cut out all the land speculators, builders, real estate agents, and other costs.

Relieve the pressure on rental units.

MPs should get off their lazy butts and get it done.









Photostory #463: Aluminum Houses Rolling Off Production Line


Taking a futuristic, but solid approach to the urgent problem of housing Canada's growing millions, one of the nation's major aluminum companies has borrowed the production-line techniques of the automobile industry. Recently coming into production at Woodstock, Ontario, the Alcan Universal...




photostories.ca


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## andrewf (Mar 1, 2010)

james4beach said:


> I never understood the logic of buying a massive condo. I like living in a city (living in both central Toronto and Vancouver have been great) but to me, the whole idea was a lean city lifestyle.
> 
> I have a small apartment. But if I wanted a ton of space (and I might some day), wouldn't it be much nicer to live in a house, somewhere outside a city center? I can think of plenty of locations in Canada where I could happily live.
> 
> But I don't understand the appeal of buying a huge condo in a place like Toronto or Vancouver. Just seems like poor value to me. Not only is it over a million bucks, but you're also going to pay a few thousand bucks in *monthly* condo fees.


You can't buy a detached house anywhere in the GTA for 1M.


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## andrewf (Mar 1, 2010)

sags said:


> The solution is time tested and simple.
> 
> Use the CMHC to buy land, service land, place factory built homes on concrete basements on land, sell units online, provide mortgage guarantees with 0% down and low interest rates.
> 
> ...


Sprawl is not the answer. Go move to 1980s USSR.


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## kcowan2000 (Mar 24, 2020)

andrewf said:


> Condos in Toronto are now well over $1000 psf. So a 1000 sqft condo is 1M+.


So they have caught up to the Vancouver of four years ago! There is plenty of room to grow as long as our economy is so skewed.


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## scorpion_ca (Nov 3, 2014)

Calgary housing prices are going crazy lately. We saw a house in 2019 and asking was $375k and they were willing to sell for $365k. However, nobody bought it at that time. Just one washroom in 1,100 sqft house and very old carpet. 

They haven't done any work since then and now that house is sold for $480k this week. Not sure who is buying those houses and how are they going make any money in the near future since the interest rate is going up?


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## sags (May 15, 2010)

In our city you can drive in any direction 5 minutes and be in vacant land or a hundred miles.

Most Canadian cities are similar with a couple of exceptions like Toronto and Vancouver.


----------



## m3s (Apr 3, 2010)

Yield curves are inverting

30-5 year yields inverted for the first time since 2006 and 10-2 yield curves are less than a few basis points from inverting

Long term trends are being tested in both yields and fx rates


----------



## KaeJS (Sep 28, 2010)

It's "probably nothing".

😉


----------



## james4beach (Nov 15, 2012)

If one thinks the market is about to crack, then risk assets (stocks) are not the place to be.

By the way, there are several different versions of the "inversion" measure. The 3 month versus 10 year is another popular measure, and it's not inverted. Looking pretty normal there.


----------



## m3s (Apr 3, 2010)

james4beach said:


> If one thinks the market is about to crack, then risk assets (stocks) are not the place to be.
> 
> By the way, there are several different versions of the "inversion" measure. The 3 month versus 10 year is another popular measure, and it's not inverted. Looking pretty normal there.


10-2 yield curve inverted today

Nothing is really safe except for maybe hard assets and essential commodities. Certainly don't want to be in fiat or manipulated bonds

Several states and provinces already proposing stimulus checks again. Save us Pierre P


----------



## Covariance (Oct 20, 2020)

If we are talking US the 10-2 is near but I didn't see it close there? In any case it will widen when the Fed stops buying bonds and market forces take control. Which they will probably announce at their next meeting (if they don't go half point).

Thursday and Friday releases will go a long way to firming up the probabilities around Fed action. quarter & QT or half and QT later. It's one or other.


----------



## scorpion_ca (Nov 3, 2014)

Is there any website where I can get the comparison between the prime interest rates of Canada and USA since 1980?


----------



## m3s (Apr 3, 2010)

scorpion_ca said:


> Is there any website where I can get the comparison between the prime interest rates of Canada and USA since 1980?


I use FRED. You can edit the graph


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## m3s (Apr 3, 2010)

Repo market inversion - last time was 2008

Big market discounts could be coming


----------



## james4beach (Nov 15, 2012)

andrewf said:


> Making it easier to leverage up to buy property seems pro-cyclical. When housing is stretched, we should be making it harder to lever.


Good post here.

Yeah, I think we're causing a lot of harm by making it so easy to leverage in real estate (for example, 5% and 10% down). Those are insanely high leverage multiples.

I agree completely. The easy leverage just enhances and exaggerates the cycles. Making it harder to lever would be an excellent move, though I'm not sure any political party is brave enough to do it. We live in a debt-addicted society where people interpret easy loans as "affordability".

Perversely, the population would interpret reducing leverage as locking them out of home ownership, and killing affordability.


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## m3s (Apr 3, 2010)

We could get a few inflation peaks like in the '70s

If the 10-year keeps going up it will break the downward trend from my lifespan

Western societies didn't have the high debt/GDP ratios back then


----------



## m3s (Apr 3, 2010)

Volume spike not seen since GFC


----------



## Covariance (Oct 20, 2020)

m3s said:


> Volume spike not seen since GFC


Yup. It’s a turning point.


----------



## m3s (Apr 3, 2010)

1 year flipped the 10 year now

3 month is only 10 pts from flipping 10 year? And Biden the boomer of all boomers says we aren't in a recession

Sooner these boomers get out of the way sooner we can start fixing their mess


----------



## KaeJS (Sep 28, 2010)

m3s said:


> Biden the boomer of all boomers says we aren't in a recession


We are definitely in a recession.
If people aren't seeing it by now, they will never see it. The writing was on the wall 3 months ago.


----------



## afulldeck (Mar 28, 2012)

m3s said:


> Sooner these boomers get out of the way sooner we can start fixing their mess


Yes we are in a recession. But its the progressives who believe they don't need to pay that caused this mess.


----------



## m3s (Apr 3, 2010)

afulldeck said:


> Yes we are in a recession. But its the progressives who believe they don't need to pay that caused this mess.


Deflecting is the boomer way

Boomers hold most of the positions of influence both public and private sector

Nature will clear that out soon


----------



## londoncalling (Sep 17, 2011)

m3s said:


> We could get a few inflation peaks like in the '70s
> 
> If the 10-year keeps going up it will break the downward trend from my lifespan
> 
> ...


Based on the chart it looks like there will be an opportunity that we haven' seen in quite a while where yield significantly is above inflation like in the early 80s. This is why I am leaving my cash in shorter term instruments for the time being so that if/when the time comes I can take advantage of the opportunity. I don't plan to wait forever. I do expect there to be further sell off either in equities, or real estate if the inflation yield spread remains. Obviously, there is also a chance that I could be wrong all together.


----------



## m3s (Apr 3, 2010)

londoncalling said:


> Based on the chart it looks like there will be an opportunity that we haven' seen in quite a while where yield significantly is above inflation like in the early 80s. This is why I am leaving my cash in shorter term instruments for the time being so that if/when the time comes I can take advantage of the opportunity. I don't plan to wait forever. I do expect there to be further sell off either in equities, or real estate if the inflation yield spread remains. Obviously, there is also a chance that I could be wrong all together.


That's why I don't like GICs

Very little if any reward during inflation and too much opportunity cost if/when the opportunity presents. These volatile times can present the opportunity of a lifetime and you want to be ready

It's impossible to predict because it depends mostly on when the gray hairs decide to open the fiat liquidity taps


----------



## londoncalling (Sep 17, 2011)

Worst case scenario is that it never materializes. For me it will not likely be an opportunity of a lifetime as I am not willing to hold too much cash for too long and prefer an equity heavy portfolio. I would prefer that inflation subsides before we see double digit interest rates on savings. If we do I will certainly be tilting my portfolio towards long term bonds. I think it is more likely that this is a bear market rally in equities and rate hikes will taper in 2023. Perhaps we will see a normalized inflation rate at some point. I don't want to see decades of way above normalized rates after decades of way below normalized rates. Agree that Fed interference will determine what happens next. No idea when or how they will act but what makes it easy is not to fight the fed.


----------



## james4beach (Nov 15, 2012)

m3s said:


> Sooner these boomers get out of the way sooner we can start fixing their mess


People in our generation are just as addicted to debt and housing as boomers. When I look around, I see my colleagues with expensive homes and huge mortgages. The younger demographic, in their 20s and 30s, rely heavily on loans as well... sometimes just to make ends meet.

Do you think millennials and gen-x are willing to experience the pain, to normalize the economy and interest rates? Will they cheer on high interest rates that make their mortgages "unaffordable"?

I seriously doubt it. Everyone wants low interest rates and easy-to-obtain mortgages. It's true that Boomers are the ones who brought us QE and a government-subsidized housing market, but I think everyone loves it now.

Think of all the young people who have built careers on this housing bubble, perhaps as contractors or being involved in construction, homebuilding, renovations, and finance. Not to mention all the self employed people and small business owners in Canada who are basically riding this housing bubble.

It's a national sickness. It's not fair to blame the boomers alone for the housing market and government-subsidized economy.


----------



## KaeJS (Sep 28, 2010)

^ I would love to see both my homes get a 50% haircut in value.

I would welcome it. I don't think it's gonna happen, but it would make me happy if it did.


----------



## m3s (Apr 3, 2010)

james4beach said:


> I seriously doubt it. Everyone wants low interest rates and easy-to-obtain mortgages. It's true that Boomers are the ones who brought us QE and a government-subsidized housing market, but I think everyone loves it now.
> 
> Think of all the young people who have built careers on this housing bubble, perhaps as contractors or being involved in construction, homebuilding, renovations, and finance. Not to mention all the self employed people and small business owners in Canada who are basically riding this housing bubble.
> 
> It's a national sickness. It's not fair to blame the boomers alone for the housing market and government-subsidized economy.


I fully agree. You get the hard money thesis.

Economies are currently collapsing around the world due to modern monetary theory. Chinese are rioting in the streets over mortgages and a guy in lebanon held up a bank demanding his own money.

We can hold up longer than most thanks to immigration. Chinese are literally funding new developments of million dollar townhouses in farmer fields around Ottawa. Personally I don't think it's sustainable.

For boomers it is sustainable but I have a much longer time horizon.


----------



## m3s (Apr 3, 2010)

Credit default swaps are spiking to decade highs.

Credit default swap premiums is what led me to create this thread and to go risk off months before the market peak









UBS credit default swaps hit decade high after Credit Suisse blow out


The cost of insuring exposure to debt issued by Swiss lender UBS rose to a decade high on Monday after peer Credit Suisse was caught in the market spotlight amid concerns about its ability to revamp its business and bolster its capital.




www.reuters.com


----------



## Covariance (Oct 20, 2020)

m3s said:


> Credit default swaps are spiking to decade highs.
> 
> Credit default swap premiums is what led me to create this thread and to go risk off months before the market peak
> 
> ...


These are single name CDS, ie the cost to insure UBS' debt. Not broad based crisis.

Possible canary, but not as big a deal as the GFC (yet).


----------



## m3s (Apr 3, 2010)

Covariance said:


> These are single name CDS, ie the cost to insure UBS' debt. Not broad based crisis.
> 
> Possible canary, but not as big a deal as the GFC (yet).


From what I'm gathering banks are not the biggest problem as most learned from GFC 1.0

This is shaping up to be a sovereign debt crisis. The cost of debt is rising, meanwhile costs and government expenses are rising. Printing fiat isn't a sustainable solution

People accepted that 40% allocation to bonds is a risk-free no-brainer


----------



## Covariance (Oct 20, 2020)

m3s said:


> From what I'm gathering banks are not the biggest problem as most learned from GFC 1.0
> 
> This is shaping up to be a sovereign debt crisis. The cost of debt is rising, meanwhile costs and government expenses are rising.


Coukd see something break in EM or just about anywhere. As rates go higher and QT tightens, the probability of something breaking somewhere just keeps increasing. Stay vigilant and watch the signals. And of course stay on top of risk.


----------



## Covariance (Oct 20, 2020)

@m3s An ETF you might like 









A new ETF may soon allow investors to bet against the stock picks of market personality Jim Cramer


Tuttle Capital Management also plans to launch the Long Cramer ETF, which would buy the stocks recommended by Cramer.




markets.businessinsider.com


----------



## m3s (Apr 3, 2010)

Covariance said:


> @m3s An ETF you might like


What happens if Cramer recommends the Inverse Cramer?


----------



## m3s (Apr 3, 2010)

GFC 2.0 incoming

"It's ok we have the CDIC" then why do Canadian banks need the option to bail in?




















__ https://twitter.com/i/web/status/1608525116018950144


----------



## Covariance (Oct 20, 2020)

Macroprudential


----------



## m3s (Apr 3, 2010)

Covariance said:


> Macroprudential


$1.7T spending bill is macroprudential?

Nah I'm with @james4beach this is very mixed signals

The gray haired thought leaders have lost the plot


----------



## james4beach (Nov 15, 2012)

m3s said:


> "It's ok we have the CDIC" then why do Canadian banks need the option to bail in?


Bail-in refers to certain measures the banks can take to bolster their capital position if they are under-capitalized.

In that kind of situation, bond and equity holders (including preferred share holders) are in danger since their shares and bonds can be wiped out. When it comes to bonds, not all bank bonds are created equally, and some are subject to bail-in.

*Uninsured deposits* are also at risk of loss. Those would be things like deposits over the 100K limit. CDIC insured deposits, under the 100K limit, are never at risk of being "bailed in".


----------



## m3s (Apr 3, 2010)

james4beach said:


> *Uninsured deposits* are also at risk of loss. Those would be things like deposits over the 100K limit. CDIC insured deposits, under the 100K limit, are never at risk of being "bailed in".


Just read CDICs annual report

Pretty hefty up front on reinforcing ESG, cultural diversity, indigenous reconciliation, LGBTQ+ and how they've adapted to working from home since March 2020. Also claim to be proactive on the digital transformation of finances and financial technology innovation

They now insure $1B deposits (26% of deposits) Talks a lot about risk management and building a perception of trust and awareness. Outlines risks such as monetary policy, geopolitical tensions, climate and cyber, innovation in the financial system. The word "never" is never used.

Unless I read the balance sheets wrong they have far more assets than they insure. So as usual much healthier than the US counterpart


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## james4beach (Nov 15, 2012)

m3s said:


> They now insure $1B deposits


Also remember that the CDIC and FDIC have _unlimited_ resources to make depositors whole. Even if their own insurance fund is depleted (unlikely) the Bank of Canada and/or government will supply unlimited liquidity.

Remember the whole point of bail-in legislation. It's to protect deposits by wiping out all equity holders and most bond holders, if needed, to protect the deposits.

The people who should be afraid are stock holders and those with uninsured deposits. If banks get into big trouble, that's what gets wiped out *to protect insured deposits. *Billions of $ new capital can be created by issuing new equity. They will print tons of new shares (equity) to recapitalize the banks, long before deposits are ever in danger.

More realistically, the banks which are in danger of failing are the smaller, mortgage/real estate bubble focused ones. The big five banks are not going to have problems of this sort.


----------



## m3s (Apr 3, 2010)

james4beach said:


> Also remember that the CDIC and FDIC have _unlimited_ resources to make depositors whole. Even if their own insurance fund is depleted (unlikely) the Bank of Canada and/or government will supply unlimited liquidity.


That's the chart - The lender of last resort has begun lending

Life you said elsewhere there is a lot of inflationary spending going on


----------



## james4beach (Nov 15, 2012)

m3s said:


> Life you said elsewhere there is a lot of inflationary spending going on


Yeah man, I'm genuinely worried about inflation. Notice how the analysts in the media try to get everyone excited by saying "inflation is cooling" or "inflation is coming down". They're trying to give the impression that prices are coming down. They obviously are not.

What they mean is that instead of 9% inflation we're getting towards more like 6% at the current trajectory.

That's still a massive disaster. I'm worried that inflation is going to stay above 4% for many years to come.

Even Fed officials say, in their media interviews, that inflation may come downward but the last few percent may be very sticky. They know it already. For example they get down to something like 6%, maybe 5%, but it's stubborn and just doesn't come lower. That's a huge disaster if it happens.


----------



## m3s (Apr 3, 2010)

james4beach said:


> Even Fed officials say, in their media interviews, that inflation may come downward but the last few percent may be very sticky. They know it already. For example they get down to something like 6%, maybe 5%, but it's stubborn and just doesn't come lower. That's a huge disaster if it happens.


Yes especially because rates aren't above inflation yet

As far as I can tell inflation has never come down until rates are higher than inflation

It's just a matter of letting other countries like Japan break first


----------



## james4beach (Nov 15, 2012)

m3s said:


> Yes especially because rates aren't above inflation yet
> 
> As far as I can tell inflation has never come down until rates are higher than inflation
> 
> It's just a matter of letting other countries like Japan break first


Yeah and I keep wondering, what are they going to do? Is the Fed/BoC rate going to have to go up to 6% ?


----------



## andrewf (Mar 1, 2010)

It would be nice if the government considered raising the insurable deposit limit. $100k is not that much money anymore, and having to play squirrel and hiding nuts in many different FIs is a bit tedious. Having a large part of deposit be uninsured kind of invites bank runs, which insurance was supposed to prevent.


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## Covariance (Oct 20, 2020)

james4beach said:


> Yeah and I keep wondering, what are they going to do? Is the Fed/BoC rate going to have to go up to 6% ?


It only really starts to get hard for the Fed to stop tightening when unemployment increases or something blows up.


----------



## afulldeck (Mar 28, 2012)

james4beach said:


> That's still a massive disaster. I'm worried that inflation is going to stay above 4% for many years to come.


It will. Normal for years was 7% what make folks think it will go back to 2% when we have governments continuing to spend money they don't have.....


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## m3s (Apr 3, 2010)

Nothing to see here 💀


----------



## londoncalling (Sep 17, 2011)

afulldeck said:


> It will. Normal for years was 7% what make folks think it will go back to 2% when we have governments continuing to spend money they don't have.....


I agree that it will be awhile before we see target inflation. It is more likely that they move the target to something they can achieve. It's not just government that is spending money it doesn't have. Consumers too.


----------



## afulldeck (Mar 28, 2012)

londoncalling said:


> I agree that it will be awhile before we see target inflation. It is more likely that they move the target to something they can achieve. It's not just government that is spending money it doesn't have. Consumers too.


Also true. I just can't get over how many folks think there is a magic money tree...


----------



## sags (May 15, 2010)

It is practically impossible for people to stop paying for food, shelter, ....which are the biggest drivers of inflation.

No level of interest rates is going to lower consumer demand sufficient to lower those prices, unless people live in their cars and don't eat.

Greedflation also took root as some landlords and grocers took advantage of the opportunity to raise prices or deploy shrinkflation.

We may end up with "wage and price" controls as PM Pierre Trudeau implemented in the 1970s.


----------



## peterk (May 16, 2010)

m3s said:


> Nothing to see here 💀
> View attachment 24057


What is this graph? I don't get it. What's "remittances due" mean?


----------



## sags (May 15, 2010)

afulldeck said:


> Also true. I just can't get over how many folks think there is a magic money tree...


Back in around 2008, I read the largest group of US bankruptcies was UAW auto workers.

They weren't losing their jobs per se, they were losing their overtime hours. Yea......they depended on overtime money (which had been in place for a long time) to pay their day to day bills.

At the same time, up here in Canada we were fighting against "mandatory" overtime in our unionized GM warehouse. The company got approval from the government to require us to work at least 8 hours a week minimum.......either 2 hours extra per shift for 4 days or an 8 hour shift on Saturdays. We had mandatory overtime in place for years.

It was quite a difference between the US and here, during the 2008 recession.


----------



## m3s (Apr 3, 2010)

peterk said:


> What is this graph? I don't get it. What's "remittances due" mean?


The lender of last resort is lending again

Basically the Fed is quietly bailing out financial institutions while at the same time raising rates to quash demand (which is hurting the financial institutions) So basically hurt the people again but bail out the banks quietly

Normally you don't tighten into a recession. Central banks are just reacting like a game of whack a mole now


----------



## MrMatt (Dec 21, 2011)

sags said:


> At the same time, up here in Canada we were fighting against "mandatory" overtime in our unionized GM warehouse. The company got approval from the government to require us to work at least 8 hours a week minimum.......either 2 hours extra per shift for 4 days or an 8 hour shift on Saturdays. We had mandatory overtime in place for years.


No, the maximum mandatory overtime under Ontario law is 4 hours.
44 hours regular time, 4 hours mandatory overtime. They can't make you work any more than that.









Everything To Know About Overtime Pay In Ontario


All about overtime pay in Ontario. Discover the rights and obligations of employees and employers for everything related to Overtime.




duttonlaw.ca





If the union agreed to something else on your behalf, that's your fault for having a union.


----------



## MrMatt (Dec 21, 2011)

sags said:


> It is practically impossible for people to stop paying for food, shelter, ....which are the biggest drivers of inflation.
> 
> No level of interest rates is going to lower consumer demand sufficient to lower those prices, unless people live in their cars and don't eat.


That's the problem, interest rates are too broad a tool.



> We may end up with "wage and price" controls as PM Pierre Trudeau implemented in the 1970s.


Unfortunately this is likely, because people will call for the government to fix the situation. Unfortunately price controls make things worse.

What is a price control going to do? 
California isn't going to say "well darn, Canada has price controls, I guess we'll sell them lettuce for $1 instead of $2.

If you know that the government is going to limit prices, would you invest in Canada or outside?

Price controls would be a disaster, and exacerbate the problem. No doubt Trudeau is seriously considering this.


----------



## sags (May 15, 2010)

MrMatt said:


> No, the maximum mandatory overtime under Ontario law is 4 hours.
> 44 hours regular time, 4 hours mandatory overtime. They can't make you work any more than that.
> 
> 
> ...


You best read the link that you posted again. Our union was well aware of the labor laws.

_*Yes, an employer can force an employee to work overtime (i.e. more than 44 hours per week) up to a specified maximum. The maximum hours allowed to work in Ontario are 13 hours per day and 48 hours per week, beyond which time an employer cannot force an employee to work. *

However, an employee and employer can agree in writing to exceed the maximum amount of hours per day/week in Ontario.

To that end, any employee can refuse to work more than 13 hours per day and 48 hours per week, *but he or she cannot refuse to work less than 13 hours per day and 48 hours per week. *That is not to say that he or she cannot quit their job if they don’t wont to work so many hours.

Nonetheless, keep in mind that as soon as the employee goes above 44 hours in a week, he or she is entitled to overtime pay._


----------



## sags (May 15, 2010)

Wage and price controls could monitor and adjust greedflation and unreasonable wage increases. It doesn't necessariy have to be a draconian model.

When the government announced they would look into some grocery price hikes, some grocery retailers immediately made announcements of some price freezes.

Some landlords may be asked to justify a 30% year over year increase in their rental rates. The art of persuasion could be modelled into the legislation.


----------



## m3s (Apr 3, 2010)

Markets are based on supply and demand

Landlords don't just raise rent they charge what the market will pay. Any manipulation just causes more issues - like boomers with indexed DB pensions sitting on rent capped at $1k when young productive people (who will never have a DB pension let alone indexed) are paying market rates of $2.5k on average

Print stupid money get stupid results


----------



## MrMatt (Dec 21, 2011)

sags said:


> You best read the link that you posted again. Our union was well aware of the labor laws.
> 
> _*Yes, an employer can force an employee to work overtime (i.e. more than 44 hours per week) up to a specified maximum. The maximum hours allowed to work in Ontario are 13 hours per day and 48 hours per week, beyond which time an employer cannot force an employee to work. *_


That's exactly my point. They can only have 4 hours of mandatory overtime.

You claimed they approved 8 hours of mandatory OT, which we both agree is not a legal requirement under Ontario law.

I do think that if the government approved an exception for 8 hours of mandatory overtime (ie 52 hours/wk), in violation of the law, this would have been exceptional.

Will you substantiate your claim?
I don't believe that the Ontario government made an exception in law for GM, against the will of the union.


----------



## sags (May 15, 2010)

We had a contract with the company.

Our work day was an 8 hour day with a 20 minute paid lunch and two 15 minute breaks plus a 5 minute wash up period at end of shift.

Our work week was 40 hours per week and overtime was paid after 8 hours on a per day basis or 40 hours in aggregate over a week.

When the company mandated overtime, many people started taking days off through the week at straight time and were still paid overtime wages for working Saturday.

They earned more money for working the same number of hours in the week.

We were also paid double time for Sundays and triple time for contractual holidays such as the week between Christmas and New Years.

At those times of year, people took a lot of days off during the week at straight time because of the higher rate of income tax from the overtime pay and their Christmas bonus.

I don't think the Employment Act minimums were relevant to us. Maybe you are thinking of Toyota who were non union and didn't have a contract with employees.

Last I heard, Toyota employees rely on the minimum government standards. The rules are different for big unionized workplaces with contracts.


----------



## sags (May 15, 2010)

m3s said:


> Markets are based on supply and demand
> 
> Landlords don't just raise rent they charge what the market will pay. Any manipulation just causes more issues - like boomers with indexed DB pensions sitting on rent capped at $1k when young productive people (who will never have a DB pension let alone indexed) are paying market rates of $2.5k on average
> 
> Print stupid money get stupid results


Whatever the market will bear........is the definition of greedflation.

Apply that philosophy to everyone if it works so well......public service workers, teachers, taxes on the wealthy,....


----------



## MrMatt (Dec 21, 2011)

sags said:


> At the same time, up here in Canada we were fighting against "mandatory" overtime in our unionized GM warehouse. The company got approval from the government to require us to work at least 8 hours a week minimum.......either 2 hours extra per shift for 4 days or an 8 hour shift on Saturdays. We had mandatory overtime in place for years.





sags said:


> We had a contract with the company.


As does everyone who works at a company.



> Our work week was 40 hours per week and overtime was paid after 8 hours on a per day basis or 40 hours in aggregate over a week.


No government approval is required for 48hrs/week. Because that is only 4 hours of Overtime under Ontario law.
Which... again is my point, you don't need special government approval if you remain within the limits of the law. ie 4 hours of mandatory overtime, or 48hours a week.


----------



## nathan79 (Feb 21, 2011)

Interesting. BC does not regulate the amount of overtime that can be required. The only stipulation is that it must be a "safe" amount, and there must be at least 8 hours off between shifts.


----------



## MrMatt (Dec 21, 2011)

sags said:


> It is practically impossible for people to stop paying for food, shelter, ....which are the biggest drivers of inflation.
> 
> No level of interest rates is going to lower consumer demand sufficient to lower those prices, unless people live in their cars and don't eat.


Actually there is. Make them unemployed.
Tiff Macklem is on the record stating he wants to increase the unemployment rate, because it's too low.

Quite simply if you raise rates so high that businesses cut back and people lose their jobs, they will pay less for food and shelter, because they're poor.
This will help cool inflation.

Look back about 2 months ago, I commented that I was shocked he actually said this.


----------



## andrewf (Mar 1, 2010)

I'm surprised you're surprised. That's how monetary policy works.


----------



## MrMatt (Dec 21, 2011)

andrewf said:


> I'm surprised you're surprised. That's how monetary policy works.


Oh I know how it works, I was suprised that the Governor of the Bank of Canada actually stated publicly, in an interview that he wanted higher unemployment.
To be fair, pushing people into poverty is a great way to lower inflationary pressure, but as actual policy it seems heartless.


----------



## Covariance (Oct 20, 2020)

Central Bankers are politely pointing to elected officials. Monetary policy is a blunt instrument. Raising and lowering rates is not a replacement for sound industrial and fiscal policy that creates conditions conducive to a productive society able to pay its bills.


----------



## hfp75 (Mar 15, 2018)

I have read that there are times where the interest rate needed to match or exceed the inflation rate & unemployment needs to rise to kill it. Our interest rate only came half-way and unemployment is not a thing right now as job numbers are still very strong.... lets watch and see.

Glad I don't have a mortgage, or any debt for that matter.


----------



## andrewf (Mar 1, 2010)

hfp75 said:


> I have read that there are times where the interest rate needed to match or exceed the inflation rate & unemployment needs to rise to kill it. Our interest rate only came half-way and unemployment is not a thing right now as job numbers are still very strong.... lets watch and see.
> 
> Glad I don't have a mortgage, or any debt for that matter.


On the flip side, having debt during a time of negative real interest rates is not too bad, as long as you're getting pay rises. I'd hate to own GICs right now. I just wish I had locked in when I renewed a year and a half ago (was on the fence).


----------



## londoncalling (Sep 17, 2011)

andrewf said:


> On the flip side, having debt during a time of negative real interest rates is not too bad, as long as you're getting pay rises. I'd hate to own GICs right now. I just wish I had locked in when I renewed a year and a half ago (was on the fence).


This is a valid point. I am currently getting a return from GICs higher than my fixed rate mortgage but lower than inflation which is better than I would have expected a couple years ago. Devaluing the debt for purchased assets is a win if the value of those assets dos not fall. I agree that debt holders do well in negative real interest rate environments IF wage increases are greater than inflation. I don't believe wage growth has kept up with inflation. Definitely some sectors have seen increases that are greater than inflation while others have not. In aggregate I believe they are trailing. I would love to be corrected on this point. I think current rates are where they should be. It would have been better to get to the current rate with slower increases over a longer time but that was not how it turned out.

I myself, did not see an increase this year and am not expecting any raise to match YOY inflation. In a way I am hoping YOY inflation stays higher until I get my next raise. In the unlikely event that inflation returns to target before then I will see next to nothing. If we see a recession and high unemployment, employers will not need to increase wages as employees will be content to hold on to the jobs they have. If raises are too high, inflation and rates will remain higher than they were before. Only way out of this is real growth which seems difficult in the current environment. 

I am expecting sticky inflation which may provide the best results. A goldilocks scenario if you will. Not too high. Not too low. 3.5 - 4% for 2023 may be just right.


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## andrewf (Mar 1, 2010)

It may take time to flow through, but I find it really hard to believe workers are going to eat a big decrease in real wages. I know a lot of employers are very resistant to capitulating on wage increases, but eventually the pressure is going to be overwhelming if they keep being outbid for workers or experience high turnover. Was just looking at this today, my company's training costs almost doubled in 2022 for certain jobs. All driven by a big increase in turnover due to low unemployment and having to hire more marginal candidates. At some point you're better off paying more for retention than eating low-performing new hires that cycle through rapidly.


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## MrBlackhill (Jun 10, 2020)

Yeah it'll depend on the opportunities to change job. In the cities, it's easier. I definitely don't expect my current employer to offer me a pay raise of 6%+, but even though I wanted to stay with my current employer for a while, I've just seen a job offer paying 15-30% more. I guess I'll have to try my luck.


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## andrewf (Mar 1, 2010)

MrBlackhill said:


> Yeah it'll depend on the opportunities to change job. In the cities, it's easier. I definitely don't expect my current employer to offer me a pay raise of 6%+, but even though I wanted to stay with my current employer for a while, I've just seen a job offer paying 15-30% more. I guess I'll have to try my luck.


You could always try presenting that reality to your manager, let them know that you otherwise like your job, but that compensation has to be competitive. Worst case they do nothing. I have done this myself in the past. Even making a bit of noise when you are a valued employee triggers movement when they are worried about attrition. It just tends to be the squeaky wheel that gets the grease when there is a limited budget for salary increases.


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