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Trick or treat?

Sunday, October 30, 2016 18:54
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Hallowe’en is a mystery. Pagan, meaningless, pointless and expensive. But every year it gets bigger, apparently because people like dressing up and pretending they’re super heroes. Or fruits. In the US, for example, more citizens will celebrate this silly ritual than will vote. They’ll be spending $8.4 billion on a single night, turning their lawns into graves, gluing fake bats to their front doors, carving pumpkins to look like relatives and (at the extreme) renting costumes so adults can masquerade as a creepy clown, Beyoncé, Prince, a T2 voter or a deplorable.

This blog won’t be dressing up, since it’s plenty scary enough. But in the spirit of the moment, here are some relatively terrifying things to contemplate.

First, November the 8th. As you know, on Friday the meanies and poopers at the FBI informed lawmakers thy;re re-activating that probe into the Clintonian email disaster. The timing – nine days before the Presidential vote – could hardly have been worse, and the impact was immediate. Stocks dropped, currency markets reacted, ten million F150 owners went for a joyride and the election outcome odds abruptly changed.

The latest: Clinton has a 78% chance of winning vs Trump’s 21.4%. That’s still a decisive trouncing, of course, but it also means the goofy billionaire’s doubled his numbers in the last few months. Worse, Clinton shed ten points on Friday and now has negative momentum. This doesn’t man she won’t win (rational analysis says she will) but the election could end up being tighter than pundits expected, meaning the Trumpster may not consider it “a clear outcome” and decide to lead an armed rebellion (or at least Tweet a lot).

By the way, the Electoral College – not the popular vote totals – determines who gets to be supreme leader. Right now Clinton has 318 votes and Trump has 218, according to To win requires 270. As stated, this is getting ghoulish.

Now, here’s another blood-curdling thing, if you happen to own real estate in Vancouver. There’s hard proof now the Chinese Dudes tax has all but stopped the flow of foreign money into that market. The impact was sudden, dramatic, draconian, shocking and far-reaching. By announcing it without consultation or advance warning, and making the 15% levy almost immediate, the BC government scored political points with a confused electorate but sent out a harsh message to the world when it comes to investing in Canada, and especially delusional YVR.

From about 13% of sales, foreigners now account for  just 1%, and dropping. Of more than 12,000 trades in August and September, merely 150 were to non-Canadians. Realtor phones have gone silent. Audi dealerships are being swamped with early-lease returns. Open houses are funereal. Bidding wars have ended. In the past year the province not only took over the entire real estate industry regulatory function, but outlawed practices perfectly legal elsewhere in Canada, then dropped the hammer on one specific set of buyers. Meanwhile Ottawa raised down payment minimums, then imposed its MST, seriously restricted mortgage insurance and brought in a capital-gains-tax-exemption test.

This was layered over a market which we told you in May, June and July was already starting to roll over. Sales of detached homes were in freefall even before either of these governments decided to appease their electorates by overreaching on real estate reform. Now comes months of a market which will more resemble The Walking Dead than Love it or List It.

The inevitable result? Simple. Economic growth in Canada will be whacked, since housing-related stuff accounts for at least 15% of GDP. That could prompt the Bank of Canada to drop its rate a quarter point in the Spring (or sooner), cratering the dollar and increasing consumer prices. If we do slip into recession, our central bank will be almost out of bullets – and your ‘high interest’ savings account will be negative factoring in inflation.

More consequential, all those moisters hoping for lower house prices will get them. No, not enough to make real estate affordable in a country with a moribund economy, but enough to punish the homeowner class. Most at risk (as you have been warned in the past) are those with the least and the greatest equity. Young couples who bought in the last few years will see their paper gains evaporate, while their epic mortgages remain intact. The house-rich, cash-needy Boomers who resisted selling during the boom (‘But honey, where would we move?’) will see the greatest retirement windfall of their lives fade, never to return. Shudder.

Of course, no market is immune. From Ottawa to Victoria, the latest wild mortgage measures will have an impact, knocking out young buyers, killing sales and eventually dropping values. Markets will move from balanced to weak, to favouring buyers. Ironically this will happen when many buyers qualify to borrow less, face a weakening job market and cannot take the plunge.

Now, add in a NAFTA-shredding, Muslim-fearing, protectionist alt-POTUS after the 8th, and you’ll wish you’d read this pathetic blog more closely.


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