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September 18, 2020 | Giving It Up

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.

Hmmm. There’s something happening here. What it is, ain’t exactly clear.

Covid has done a number on politicians’ heads. The first global pandemic in a century spawned states of emergency across the country, shuttered legislatures, hobbled the federal Parliament, caused a suspension of many civil liberties, hardened borders, afforded new powers to premiers and mayors as well as the prime minister, caused hundreds of billions in public money to be spent without debate – all while millions of people were forced out of their jobs by decree and businesses told to change, diminish or close.

Wow. And the people accepted it. They actually support it. Polls give this new reality a big thumbs-up.

So, of course, the political class won’t stop here. Even the right-wingers.

The next target: housing.

For example, Ontario’s boss – Doug Ford – has brought in legislation to freeze residential rents (which are falling) for an entire year. No increases. Not even the miniscule 1.5% hike the previous restrictive legislation had allowed. This comes after a moratorium on evictions, and a virus-caused shutdown of the province’s landlord-tenant board.

The result is that thousands (maybe tens of thousands, or more) renters lived for free with landlords unable to remove them. Meanwhile condo fees, insurance costs, utility charges and property taxes continue to inflate. Says Ford, speaking to almost two million tenant-voters: “The last thing I want any family to worry about right now is whether or not they can afford to stay in their homes.” The legislation also bans the evictions of small businesses unable to pay rent for the next year. There is no assistance for those who own and carry the buildings.

Covid, 1. Property rights, 0.

In Vancouver the mayor is pushing ahead with a plan that would allow prime residential single-family lots to be carved into multiple units, so long as two of the additional homes are affordable to families earning $80,000. The change is huge. Such neighbourhoods currently contain homes requiring a $200,000 income and three hundred grand in down payment cash.

Accomplishing this will require an easing of restrictions on parking, design and floor size. More cars, more density, smaller spaces because, says Kennedy Stewart, “I see a future where families are no longer pushed out of town because their only two options are a condo or a multi-million dollar house.”

Impacted, of course, would be those families who paid seven (or eight) figures to live in areas which were less populated, calm, spacious and convenient. But the virus has changed everything. Policy-makers have been emboldened. The public good has emerged victorious over economic reality. It is, as Justin Trudeau said, a great opportunity to remake society. Governments have a mandate now to pick which industries will survive. To tax accumulated wealth. And tell you how to live.

Covid, 1. Capitalism, 0.

In Ottawa, after seven decades of operation regulating real estate financing, Canada Mortgage and Housing is about to become an activist arm of an ambitious government. The name change to “Housing Canada” likely says it all.

The Liberal government has turned CMHC into an agent of social engineering. A national housing strategy is backed with tens of billions earmarked for helping people get homes, whether that means rental units or state-built social housing. The agency has been mandated to “provide all Canadians with homes they can afford and meet their needs by 2030.” Other regimes and political systems have tried this in the past. It failed.

This comes as we ready for the Throne Speech on Wednesday. It’s widely anticipated this will be the precursor to UBI – a universal basic income to replace the CERB payments that moved almost $70 billion into private bank accounts from the government over the last six months.

The pro-UBI lobby has been frenetic of late, seeing Covid as a golden opportunity to push government into the unheard-of position of paying everyone just to be a resident. After all, CERB paved the way. It created a public expectation of support. Once turned on, taps can never be turned off. The $199-billion annual cost of UBI would be financed by (among other things) an end to TFSAs and RRSP deductions, a financial transaction tax (on your ETFs, for example), plus a new tax bracket, higher capital gains tax rates and a clobbering of employers. (It’s all spelled out here.)

Covid, 1. Personal initiative, 0.

Is it a plot, as anti-globalists, MAGA freaks and half the steerage section believes?

Nah. It’s just politics. The virus turned elected officials into benevolent despots. It removed opposition, sober second thought, and debate. It made them more popular. More powerful. After utterly disrupting society, they seek to rebuild it closer to a utopian deal. Everyone gets a home. All receive money. The successful are drained. The rest are supported.

From each according to his ability, to each according to his needs.

You may wish to Google that.

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September 18th, 2020

Posted In: The Greater Fool

One Comment

  • Jimmy says:

    “Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience.”

    ― C. S. Lewis

    But what can be done about it?

    I keep asking but no one has any answer, just blank stares.

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