Saturday, October 16, 2010


Was going to put up a tax post- but gotta answer Chad's points-Chad's comments and mine below in green. I will put up the tax post in the next few days.

ChadMPNP said...

The last post is full of a ton of incorrect hyperbole's.

We are at 10% unemployment in the US. That isn't hyperbole it is real especially in a country with limited social safety nets and the number one cause of bankruptcy is medical bills. Losing your job (and hence your medical coverage) is a disaster.

I can list many individuals and firms that predicted and profited from the US crash.

Please list them. Not hedge funds please. We know some of those scum-bags made money, most of it by forcing the tax-payer to pay AIG's bad debts.

I know many people that bought into the correction of 2008 in Vancouver and have sold for a handsome profit during the snapback to new highs in 2010.

They did in indeed. No argument there.

I have an issue with Canadian bears always saying the Govt and BoC came in and artificially pumped up the markets to new highs.

Some simple internet searching would have made you think twice about that statement. The CMHC borrowing ability was tripled between 2007 and the end of 2009. Some of that may come to bite us in the future. In total the CMHC has over $500 Billion in liabilities. The CHMC has insured 90% of all insured (and therefore high risk) mortgages. So the tax-payer is holding the crappiest paper of all, and lost of it.

Then the Bank of Canada cuts rates so that mortgage payments drop by 25% or more.

You dont think these actions saved the market from a well-deserved correction??

The market goes where it's going to go, stimulus is very short term in nature, you can't whine about a market that has gone up for 2 years and blame the govt because even more stimulus was given in the US and their markets are still making new lows. Why when they've done pretty much everything Canada has done and then some in the US is their housing market still at lows?

The reason for this is obvious. The US RE industry is BK. We were just over-priced. The US hits the fan and our dumb politicians - who, BTW hated the Socialist CMHC and Wheat Board and EDC and WEDC when they were in opposition- do the simplest most brain-dead thing they can to stimulate the economy. They lower rates and let people who-really-cannot-afford-to-buy into the market, insured by you and I.

Result: we go where the US WAS before their debacle.

They should have sat back and thought about the right move, but instead like deer in head-lights they jumped on trusty old RE to pull them out of the hole. Yup it did that all right. Instead Canadians put themselves into the hole with debt, but the pols could say they staved off a recession and BTW they get to boast that our banks are so solid..


The banks are lending it out at 4% and paying savers ZERO. That's a good scam. Meanwhile the riskiest stuff is being insured by they just get to clip coupons. Take away the risk. Have a steady Eddy 4% spread - which is historically very high- NICE!

But even they are getting worried about this madness and every week another bank is coming out with reports warning that RE is grossly over-priced especially in this fine town.