Chinese Homebuyers Spreading Wealth Make Vancouver Pricier Than Manhattan

nuclear launch detected Friday 7 Oct 2011

I'm seeing this first hand myself. Guys at my gym driving brand new bmw m3s and audi s5s. They're in their mid 20s, working some low level job like bank teller and barely making the payments on the interest. On top of that they have $40,000+ in student loans. All this with a historically low interest rates that they think will stay low .

Broseph Thursday 17 Nov 2011

Team Zissou Saturday 19 Nov 2011

One job loss, one pay cut, one serious illness, one family emergency - and they are toast. Then their other cash-rich buddies will stop talking to them and they'll drop into a different socio-economic strata.

Broseph Sunday 11 Mar 2012

Time to panic about the housing market

Why is everyone ignoring this unfolding disaster?

Home sales had started showing their first signs of slowing that year, but that didn’t sway the National Association of Realtors from its persistently sunny view of the country’s housing market. “We’re confident that housing is landing softly,” David Lereah, the association’s chief economist, wrote in a November 2005 report just before house prices started a descent that would eventually wipe out nearly $30 trillion in global wealth.

...

Since 2008, Canada’s ratio of debt to after-tax income has exploded. By the third quarter of 2011, Canadians owed an average of $1.53 for every dollar they brought in, up 40 per cent in the past 10 years and just below where the U.S. was before its housing crash. By the end of 2010, the average homeowner had just 34.3 per cent equity in their home, the lowest level in two decades and a 20 per cent drop in just four years.

“Everybody points out the differences in the U.S., about financial regulations and subprime mortgages,” said David Madani, a former Bank of Canada analyst now with Capital Economics. “But to me this is all a borderline attempt to misdirect the whole debate because we’re engaging in that type of discussion and only that discussion. It ignores the big elephants in the room.”

The elephants Madani sees include a sharp run-up in house prices compared to income: the average Canadian home now costs five times the average income, well above the multiple of three that is considered affordable. There’s also a sharp rise in home ownership rates, which at about 68 per cent of Canadians mirrors closely the 69 per cent at the top of the U.S. bubble. Madani also points to continued overbuilding and Canada’s still healthy construction industry. New building permits reached $6.8 billion in December, a 4.5-year high.

Read the rest here:
http://www2.macleans.ca/2012/02/28/youre-about-to-get-burned/

Broseph Thursday 22 Mar 2012

Great post by Garth today with some charts: http://www.greaterfool.ca/2012/03/22/moral-hazard/

In allowing this to happen, [Flaherty] is moving us down precisely the same path that creamed America. Only faster. The collapse of Fannie and Freddie cost Washington $1 trillion, gutted the middle class and eviscerated the economy. Yet those quasi-government agencies guaranteed only 25% of US mortgages. CMHC guarantees 90% of ours. Fannie disintegrated because it had barely a dollar to cover every $50 in mortgage guarantees. CMHC has only a buck to cover twice that – $100.

“If the Canadian housing market ever took a dive,” says [Dan Simon], “the CMHC would be bankrupt in the blink of an eye.” And how many tens, or hundreds of billions, would it cost the nation to prevent a full-on real estate meltdown?

Alex Thursday 22 Mar 2012

YouTube: https://www.youtube.com/embed/Dc3sKwwAaCU

Have you ever watched Money as Debt ? It gives a good explanation of the home buying hocus pocus.

Broseph Thursday 22 Mar 2012

I have, and I used to believe it. He lies at about the 13:40 mark about how fractional reserve works. The bank doesn't "conjure money into existence". It actually uses money from it's reserves. The bank can only loan out money that's been deposited with it, or money which they own proper. He's correct that the money you give to a bank is loaned out, but that's about it. It's kind of crazy that he made a whole video about banking and misses how fractional reserve works.

Only central banks conjure up money.

Alex Thursday 22 Mar 2012

I heard central banks can stretch out their reserve to 30:1 even 50:1 before the goyim get wise and there is a run. I think the central bank of Canada has unlimited reserve ratio. So the central bank can even lend 100 dollars for every dollar deposited.

Broseph Thursday 22 Mar 2012

Central banks don't have/don't need a real or even suggested reserve ratio. They literally "print" money and buy Gov't bonds from the chartered banks. Chartered banks have reserve ratios. It's 42:1 in the US, and Canada doesn't have a strictly defined reserve ratio, but other reserve requirements.

The way the central bank lowers interest rates is by buying gov't bonds from banks with new money. This lowers the interest rate on gov't bonds, because they are effectively increasing the demand for gov't bonds by purchasing them. (more demand for bonds -> higher price of bonds -> lower interest rate on bonds) There is also an "overnight rate" which is dictated by the central bank. This is the minimum interest rate that banks may loan money to each other.

Overall, this benefits banks, bankers, and federal governments at the cost of everyone else. They print money and use it to acquire wealth. Everyone else works for this money. By the time they get it, the value has diminished.

Alex Thursday 22 Mar 2012

Why don't you like Social Credit Josip? They have some great cartoons.

Chinese Homebuyers Spreading Wealth Make Vancouver Pricier Than Manhattan

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