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January 19, 2016 | Not That Easy

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics. Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.


Will Poodle Poloz rip rates Wednesday morning? Come here at 10:01 am ET and find out. But even he if he does dip a quarter point (the odds seem 50/50), there’s about the same chance as you making out with Amal Clooney that the banks will pass it through.

You might recall the last time this happened, in July. Poloz was selling but the lenders weren’t buying, eventually dropping their primes only a fraction of the amount and leaving home loans intact. This time they’re even more entrenched. Dropping lending rates only squeezes bank margins at a time when crappy financial markets and an oil death spiral are already nibbling away at profitability.

As for mortgages, everybody knows that Canada will eventually be following the US Fed higher once commodities stabilize (Credit Suisse says $70 oil by December). Already the banks have a massive exposure to an inflated housing market, so lending even more to moisters at insane rates – just because the Bank of Canada has no stones – is imprudent. Bankers may be carnivorous, rapacious and omnivorous, but they also know when to pull in the blood funnel.

Bottom line: Wednesday morning may mean little. But come by anyway. We’re having bacon cheese donuts and tummy rubs.


You may have noticed some classic Boomer-baiting going on around this pathetic blog lately, apparently brought on by the deaths of Bowie and Frey. Imagine that. Attacked by people who buy Justin Bieber music or didn’t know Taylor Swift is actually a Japanese robot.

The kids are lefties and think they invented social conscience while we just grabbed the cash. They want that too, of course. So we have conflict. Well, we wrinklies may be oxygen-sucking fossils in thirsty underwear, but we’re sure less stunned than our spawn. At least according to TD.

The bankers did a little online survey on RRSPs, the tax shelter which massively favours the wealthy, a fact T2 and his youthful groupies so far have not cottoned on to. That may be because they’ve no idea of what it all means. For example the bankers found millennials (18 to 34 years of age) have assumed an RRSP is just like a tax-free savings account – so 60% of them think the money can be taken out to pay for child care expenses. Over half believe you can use an RRSP to buy a second home to rent out, and 52% think it’s a thing to use to finance a car purchase.

Only half have heard of the home buyer’s plan. Two-thirds have no idea an RRSP can be used to finance another university degree after you lose your job as a barista because you only have an MA.

Your music sucks, too.


After his full cabinet meeting at the swanky Algonquin Hotel in southern New Brunswick, the prime minister was asked about the new budget that Po’ Bill is tasked with coughing up. It’ll be great, he said. When asked how much the deficit will be, he praised his finance minister. When Po’ Bill was asked the same question, he walked away.

This is the New Clarity. Live with it.

Meanwhile in Ottawa the non-political Parliamentary Budget Officer was being a lot more forthright about what the current situation (and house lust) is doing to household finances. So, here’s the scorecard: as 2015 came to an end debt reached a new nosebleed level of 171% of disposable income. That’s the highest in 26 years, since they started counting such things. (Prior to 1990 apparently we were not idiots.)

To put this in context, debt is growing faster here than in any other major western country. Households are also now more indebted than in all other G7 nations. “We project that household debt will continue to rise, reaching 174 per cent of disposable income in late 2016, before returning close to current levels by the end of 2020,” said the report. “Based on this projection, the financial vulnerability of the average household would rise to levels beyond historical experience.”

Beyond experience. If that sounds vaguely apocalyptic, you get it. Were it not for emergency interest rates, the pain of carrying this debt would rise from merely irritating to the equivalent of listening to all Adele albums in sequence.

That is what Wednesday morning’s all about. Don’t be late.

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January 19th, 2016

Posted In: The Greater Fool

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