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June 21, 2017 | Sucks

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.


First the bad news. Then the worse news. Then you’ll end up wondering why you ever started reading this post. I gave up and went directly to a single malt. Good luck.

Late Tuesday night blog dog Adam sent this note:

Garth: RBC just started laying off in their headquarters for Canadian Banking. HR has 2 floors dedicated to letting people go. Apparently it’s 500 people and it started late this afternoon. They haven’t done a wide scale cut in years. They must see it coming, growth is low and digitization is here so plenty of reasons to reduce expensive workforce. From what I’ve been told it’s mostly people close to retirement.  Sucks if folks were hoping their home would be a part of their retirement fund. This is the worst time (in a while) to sell, fingers crossed everyone will be okay.

Hours later the news hit the media and, yeah, RBC confirmed it. After posting record profits, making about a billion a month, the bank’s hacking away at its workforce. Why, when it’s a money machine? “We are making changes that focus on the capabilities that we need now and in the future to meet our clients’ evolving needs. As always, we consolidate where necessary so that we can reinvest in key areas including digital, data, new technology as well as investment in high-growth business areas.”

Well, RBC poses just one example of what’s happening to the economy. But while banking is a great business (we all use money) it’s changing. Millennials don’t go to banks. And so you can bet five years from now the Royal will no longer have 75,000 employees. By the way, Millennials don’t go to stores much, either. They’d rather get a package from Wayfair via UPS than stroll across the road to Ikea.

So Sears Canada is going paws up. The company is a short distance away from seeking creditor protection, and its share price has crumbled as a result. What was once an icon of fashion and Canadian corporate pride – Simpsons, then Simpsons-Sears, the largest retailer – will soon be dust. And so will 17,900 jobs in 155 locations.

Because we all can’t be coders or social media consultants, the death of ‘traditional’ jobs in finance and retailing – as technology displaces bodies – will take a toll. Meanwhile it looks like oil has a dim future, while manufacturing embraces automation to the extent some economists are asking if robots should start pay taxes. Add it up – banks, stores, wells, factories – and the places where people have always found employment are thinning. Seems like the future will belong to those who are flexible, mobile and adaptable.

But that’s not what people want, nor who they are. As this blog demonstrates daily, everyone – even the kids – want a Forever House, a big mortgage and to never move. It’s like the 19th Century all over again – a long-gone world in which you landed a lifetime job in the town of your birth, could afford real estate and raised a family of little people just like you. Groundhog Day. Predictable. Stable.

So it’s inevitable conflict looms between the realities of employment in a rapidly-changing economy and the way Canadians have structured their lives. An inevitable casualty of that will be residential real estate – like what happens to house values when an industrial town sees the big mill close. Suddenly there’s no reason why things should cost what they used to. I wonder if we’re coming to that point, quietly shaking our heads at what we’ve done by dint of emotion and hormones, not logic and perception.



Well, the latest stats are grim if the bulk of your net worth’s in a GTA house. In April the average price was $920,800. In May it was $864,000. In the last two weeks it’s $808,900. That’s a 12.1% drop in eight weeks, at the same time sales volumes have collapsed by half from last year. Just imagine where we might be in two or three months if this pattern continues. If Toronto real estate were the stock market, the media would be freaking. As it is, the decline represents a loss of $2.5 billion in economic activity as monthly sales of more than 6,000 crash to less than 3,000.

Are we on the precipice of a hard landing that will approximate the 30% drop that Hoovered the US middle class? Even today, almost a decade later, American houses are (on average) 13% cheaper. But personal debt there has fallen while employment has risen and home ownership levels have diminished. Canadians, meanwhile, continue to nest, and borrow, with a vengeance. We looked south and learned zip.


Now interest rates will rise at a time of maximum debt and wobbly house values in a barista-condo economy. Jeez, even the bankers who made the mortgages are being punted. And it’s only started.

I warned you not to read this. Shots?

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June 21st, 2017

Posted In: The Greater Fool

One Comment

  • Avatar John Thistlethwaite says:

    Tequila shots, sure. Love the blog. Makes me uncomfortable at times but that’s the point I think.

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