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Inside Ground Zero Of Canada's Recession
In the past year, we have extensively profiled the collapse of ground zero of Canada's oil industry as a result of the plunge in the price of oil, in posts such as the following:
- "Canada Crude Contagion: Calgary Home Prices Drop Most In 2 Years"
- "Canada's Biggest Oil Casualty To Date: Calgary's Nexen Shutters Oil Trading Desk"
- "The Canadian Housing Bubble Has Begun To Burst"
- "Canada's Oil Patch Confidence Crashes"
- "Canada Mauled by Oil Bust, Job Losses Pile Up – Housing Bubble, Banks at Risk"
- "The Stage Is Set For A Massive Housing Market Correction in Canada's Oilpatch"
Since then it has gotten far, far worse for Canada. In fact, as of September 1 it culminated with the first official recession in 7 years.
And it's only downhill from there. As Mark Thornton of the Mises Institute points out, in a report from the Financial Post shows that Calgary in Alberta Canada now has 1.7 million square feet of empty office space, the most in North America with another 5.2 million under construction! After years of booming construction, the natural resource rich country is starting to feel the pinch. To wit:
The number of half-empty office buildings in Alberta is projected to spike, as Colliers International predicts an “ill-timed” building boom should push up vacancy rates in Calgary and Edmonton. In a report released Tuesday, the real-estate brokerage’s chief economist Andrew Nelson said, “the fall in oil prices has had a negative impact on the energy-reliant markets (in Western Canada),” which has contributed to rising vacancy rates and falling rental prices in Alberta’s two largest cities.
Vacancy rates jumped over the course of the second quarter. In Calgary’s case, Colliers reported the downtown vacancy rate rose to 13 per cent from 10 per cent, while Edmonton’s vacancy rate increased to 11.2 per cent from 10.6 per cent.
A glut of new buildings under construction in both cities could push those numbers up even higher. “Canada is also in the midst of an ill-timed supply surge that caused vacancy rates to rise even in markets with positive absorption in (the second quarter),” the report noted.
There are 5.2 million square feet of office space under construction in Calgary right now, which is the largest amount of new commercial space being built in any city in Canada and could further push up vacancy rates.
Edmonton, a city with a current total of 17 million square feet of office space, is in the middle of its own building boom with over 2 million square feet of space under construction.
There is a silver lining:
Some observers see at least a partial silver lining in the numbers. In recent years, Calgary Chamber of Commerce director of policy and research Justin Smith said, commercial real estate costs downtown Calgary were “going through the roof” and “accelerating at a pace far beyond the Canadian average.”
He said those escalating costs made it difficult for some companies to stay in downtown Calgary and noted that even large companies like Imperial Oil Ltd. and CP Rail Ltd. moved their head offices to the suburbs.
The uptick in vacancy rates, he said, could provide some relief to smaller companies looking to do business downtown, as rental rates are projected to fall as vacancies rise.
* * *
Weakening demand for office space in both Calgary and Edmonton has resulted in large quantities of commercial real estate coming back on the market this year.
The report showed that 1.7 million square feet of office space has become available in Calgary’s downtown core, thanks in part to thousands of layoffs in the oil patch and a decline in the need for commercial space.
That is the largest quantity of newly empty space in any downtown in North America, including Houston, an oil and gas town where 1.6 million square feet have become available this year.
Who said deflation is a bad thing? Well, all the rich people for one, whose liabilities are denominated in fixed value debt, yet whose equity value and whose cash flow has just crashed through the floor, forcing them liquidate assets.
Which means that for all the pain in the oil sector, one industry is booming: pawn shops. As CBC reports, "some of the newly rich and long time wealthy in Calgary's once hot economy are now looking for fast cash because of the economic downturn, and they're turning to pawn shops."
?"Right now we have one, two...10 Rolexes for sale, two Panerais, a few Tag Heuers," said John Sanford, one of the owners of Rocky Mountain Pawn on Macleod Trail, as he counts the luxury watches in a glass case.
He has 100 more in a back room. He will have many more because "the economy has changed his clientele too, as formerly well-paid people are telling him they've been laid off or plan to leave town."
"People have come in and they've said, 'That's it, I'm heading back to Ottawa, Montreal,'" he said.
About six months ago, high-end items started rolling in to his shop, such as a 5.1-carat diamond — a $200,000 stone — and designer hand bags "whether it be Louis Vuitton, Chanel or Gucci."
Some of the items Calgarians are pawning to weather the recession.
(Kate Adach/CBC)
For some the current recession, Canada's second since the great financial crisis, is already worse than the last one: "in the 2008 recession, some pawn shops had to close because they were giving out more money than they were able to make up in sales, Sanford says." Not this time, though: this time, Sanford is being careful about the items he takes in because fewer people are buying.
"And whether it be Louis Vuitton, Chanel or, you know, Gucci, it's special and sometimes the person is pawning it, getting that $400 or $500, and they truly are going to be back for it."

Gucci and Louis Vuitton goods are just some of the designer items at
Calgary pawn shops. (Kate Adach/CBC)
And this is what it looks like when recent millionaires are scrambling for any source of cash: there has been a steady stream of customers, including a woman pawning Vera Wang earrings for about $3,000, or a man who can't find steady work as a truck driver so he's putting some art work on loan for short-term cash.
"That's a good grocery bill for a month, so — yeah — it's very important to get that $200," said Robert Huntington, who has used the pawn shop for the third time this year. He intends to pay back the money he borrowed from the pawn shop, plus rent, and eventually get his art work back — one of the many customers hoping to reclaim their items when things turn around, says Sanford.
Good luck to him, and in retrospect perhaps deflation isn't good for everyone: certainly not those whose cash outflows are greater than their current inflows, and have debt. They may not survive.
For everyone else in Canada's recessionary ground zero, strap in because it is only going to get worse. And if Goldman's $20 oil price target is correct (unlike its $200 price target 7 years ago) it will get a lot worse.
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I'd rather see Ground Zero of Russia's burst oil bubble!
Yeah, they would look like two different worlds I think. A lot has been made of a couple of small oil spills in Canada and the media jump all over it as if Canada is the world's biggest oil-spilling asshole. The truth is that the total of all of Canada's oil spill disasters add up to 1% of what Russia spills. I'm just quoting stats so don't beat me up for it.
It's getting bad up here... even teh we has been forced to cut back on his Bitcoin addiction!
This is Canada's reward for sucking up to the USSA.
Lemme pick this scab before it heals...because Canadians are exceptional ;-)
I will agree that in terms of office space, over a million sqft and 5+ million under construciton is pretty bad however, in terms of vacant retail space - the US far surpases Canada by any margin. The amount of mall closed, stores shut down, etc in the US of A simply boggles the mind.
The amount of Canadian Idiots per 100,000 population will never
surpass the amount of American Idiots per 100,000 population.
word
A $20 USD price target on Oil is an economists wet dream to stimulate dying economies.
They just don't get that the locals have to produce what they need to survive.
Global economics will fail by supply chain delay.
same old bubble bullshit here in BC. People would laugh at you if you said Canada could go into a recession
The Looney is at 75% of the Dollar now. When/if housing drops by 75% in the BC bubble mart, if I then purchase a property will it be essentially free to me? I never was very good with percentages ; )
Oh, and with such a poor exchange rate - worse than last winter even - I wonder if we'll be seeing as many Canucks down in the deserts of southern California and Arizona this winter? At least the booze is still much more affordable here : )
I have made quite a few good acquaintences with Canuck snow birds and want to see them again when we all flock into the warm desert for winter.
Anderson Cooper, Walter Cronkite, Peter Jennings, Mike Wallace, the 6 o'clock news stars are who the masses are listening to. Until these people are replaced and the media relays the correct information, they will do as they are told. Everyone sits down and watches the 6 oclock news before they decide what to wear, eat, buy, vacation. Consider the world without an internet and we'd be watching the holocaust unfold in 1st world nations. This is elimination of the middle class. We have been deemed unsustainable by Agenda 21 and the people are not putting up an argument because no one has told them it is a scam.
Conservatives (Canadian Republicons) are beavering away to close this gap and level the playing field.
I haven't looked at data but I would bet that the gap between higher Canadian SAT scores to US is slowly narrowing. Apparently rich people don't send their kids to public schools.
Also military jingoism and nationalistic pandering are way up since Conservatrons gained power. So eventually Canada won't be much different.
All we see here in FL from Canucks is redmeat.
have you been to Canada?
There's, what, 10x the population in the US. You're saying that Canada's vacancies are less than 10% the US's?
While one may, or may not, gloat about this one thing to keep in mind: the faster you recognize the problem the earlier you can adjust. Canada never did adjust to the 2008 crack-up, it just buried it hoping that the "next up-cycle" (which will never come, not anything that can even approach those of the past) would come along and save them.
Canada has trusted big gov for a loooong time, much longer than the Yanks. Many of the population up here are descended from "Loyalists", that is, those who figured the Revolution was far too independent for them and much preferred to trust and continue to support an overseas monarch. Anything to stay 'British'...
And yeah, Canadian exceptionalism includes being 'not American', even tho in many ways the populations are very close. More so than ever, since the '08 bust. Most Canadians still believe their Big Banks didn't get bailed out from the '08 bust -- although of course, they did. But hey, since Big Media hasn't admitted it yet, it must not be true. Canada has been riding the crest of Chinese commodity support since then, but try telling that to 90% of friends and family here. When the Chinese stopped supporting the commodities and housing bubble, the floor dropped out of the Canadian economy. It's taking awhile for the population here to understand this.
As a country, Canada needs most of all, to learn to stand on its own feet.
An exceptional comment from at least one exceptional Canadian, glad to know there are still some up there.
Tip-o-the-hat sir ;-)
Agreed. And a deep court style curtsy from me as well.
I've always assumed the majority of Canadians had fully embraced Socialism but after being here a few years, I have found I was in error. Perhaps we shall find out all in Cali are not mentally insane as well.
Miffed;-)
Well of course, me lady. I do realize that all of the people in Canada or California are not batshit crazy insane monarchists or socialists.
Just the exceptional majority of them ;-)
Im in So Cal. Hes right theres morons everywhere i go.
Socialism sucks. Anything but full backed honest money for currency is just a bandaid anywhere. Pain for canada. I know some good ones.
Some advice to the Canadians Learn of Full Recourse Lending. At least they can walk away many places, canada isnt one of them.
RIPS
Of that I am sad to say I have no argument. Some day I hope to live in a nation that reclaims its roots but we have gone so far astray... Rome never rose again. I hate watching powerlessly as it slips into the sewer. However, It looks now like Europe may win the race though. Interesting times is it not?
Miffed;-)
Hey nmewn, just a suggestion:
Don't take that attitude into any small town bar in Humboldt, Del Norte, Trinity or Shasta County in northern California.
I was born and raised in Canada but moved to Florida in the early 90's. The USA was a far more attractive place then. I left Canada because of government over regulation, taxes, and severe winters. However, over the following 2 decades, I noticed that the US was becoming more like Canada, in terms of taxes, bureaucracy, and regulation. In the interim, I travelled to Europe many times so I had a first hand look at the differences between Europe, Canada, and the USA. Over the years, the difference became less. Five years ago, I decided to move to Europe. I am sad to say there is little difference but when you look at all the pros and cons, Europe comes out slightly ahead. The good news is, Europe is approaching peak debt, but taxes are already sky high, leaving government very little room to maneuver, so Europe will hit the wall first. The other good news is that the police have not yet been militarized here, so as odd as it sounds, I feel safer here.
Having militarized police is a bonus when it comes time to steal their MRAPs & beer before bug out time manifests. It's not like the average CANUCK has a Hummer to appropriate instead, eh.
no worries. the US is just riding the last wave of its world reserve currency status and enjoying the initial illusion of prosperity that comes from money printing and zirp. our chickens will come home to roost soon enough. best of luck to you and yours up there.
It was a bail-out, with an important caveat: It got flipped back to the banks by the goobermint AT A PROFIT.
Thank you USA (and others) for spending trillions so we up here could keep our illusion alive for 7 (possibly 8) moar years.
Consumer debt to gdp just ticked up to 164%, we are living proof that mass delusion CAN power an economy.
It also helps that we are not Americans ;)
Spot on Renfield. My inlaws are loyalist descendents (Nova Scotia). There is a clear mindset of trust/obedience in .gov/authority. While up there this summer, we went to a lake to take the kids swimming. As we pulled up to the beach, a thunderstorm (strong wind/lightning all around and sheets of rain heading towards us). The teenage lifegard told my motherinlaw that the beach was open and it was fine to swim. I said not for my family. My mother in law (age70's) was upset that I did not trust the judgement of this lifegard and proceeded to unpack the other car and cajole the others to get in the water. Needless to say, the storm broke all around us and was very intense. We waited it out. Blue sky above and the fast moving storm 15-20 miles to the east and the lifegard wouldn't then open the beach until a mandatory 40 minutes went by. Bad judgment on both ends, but she was the authority and had to be listened to. Give me the USA anyday where I am responsible for my own decisions.
"Give me the USA anyday where I am responsible for my own decisions" ... Might want to check on that.. The Nanny state is alive and well here.
My relatives moved here from Boston because they were being pressured to pick a side when they just wanted to be left alone. So that is the other side to the 'loyalists', some just did not want to be dictated to and have to participate in a war. Perhaps they saw that this new authority wasn't so different from the old, just used new titles and wanted to tax the materials themselves.
Got to remember where Canada comes from. Our colonists won the war against the Brits. Canada's French settlers lost the war agaisnt the British Empire. Our laws that came out of the period were built to make sure we don't get invaded by a foreign foe ever agan... and it sort-of worked for a while. In Canada the laws were made to keep the invasion going while limiting domestic dissent. Those laws are still pretty much in effect.
Eh!
My first issued birth certificate listed United Empire Loyalist beside my name. When I got a second birth certificate because I lost the first one issued, the UEL was gone from the card entirely.
USSA will consume recklessly until it can't (soon), so more than enough space has been provided.
"Calgary in Alberta Canada now has 1.7 million square feet of empty office space, the most in North America with another 5.2 million under construction!"
Build it, and they will squat!
It's the bankers, stupid.
Cuba and Venezuels didn't suck up, Latin Boy ?
"Calgary [...] now has 1.7 million square feet of empty office space, the most in North America with another 5.2 million under construction!"
SHUT.IT.DOWN
Boom-bust cycles are part of Alberta culture, especially in Calgary. Everybody is mortgaged up to their eyeballs, living in cookie-cutter suburban ticky-tacks with a shiny new 4x4 on the driveway, a Winter Club membership and a credit card balance that would keep most ZHers awake at night. When oil and gas prices are high, it's Keynesian-consumption heaven. When prices come back down, it's like a multi-year hangover, with empty office buildings, house values down about 30-40% and masses of newcomers moving back to wherever they came from, mostly Eastern Canada. About a decade later, it's like nothing happened. You know the cycle is going to repeat when bulldozers start clearing more land for more sprawling residential subdivisions. The only difference this time is that a crtiical mass of Albertan voters got complacent, allowing a new generation of seemingly incompetent and/or corrupt politicians and bureaucrats to blow the province's Heritage Savings ("rainy day") Fund and put the province deep into the red after some twenty-five years of brutal frugality under Premier ("King") Ralph Klein. Now eveybody in business is on edge, fearing higher taxes and fees and punishing royalties. It's about to put hundreds if not thousands of otherwise good operators out of business. I don't envy Albertans nowadays. The province is a fiscal basket case, with too much government and an economy that won't recover until oil and gas prices recover, which by my reading should take the rest of this decade.
Let the bubble burst with the ferocity of a thermonuclear device. Let it smash into scorched earth.
THEN LET THE RUBBLE BOUNCE.
The province is a fiscal basket case, with too much government and an economy that won't recover until oil and gas prices recover, which by my reading should take the rest of this decade.
Your assesment is correct but the irony is that for the last 40+ years ALberta was run by the pro-fascist pro-business Progressive Conservative party and as total fascist posers they fucked the goat and were stripped mined by big oil, lterally and figuratively. Hence the opposite party (NDP) was voted in..... because the party in power is always crony-corrupted by big business. 40 years is a hell of a long time to be completely consumed by big oil interests. The NDP probably have less than 5 years before they too succumb to big oils $$.
I understand your anti-establishment sentiment, but let's avoid sweeping generalization and hyperbole and careless labeling.
Alberta still has a wealth of oil and gas reserves, especially in fields and pools at greater depth. Drive through Central Alberta and you see thousands of capped wells, more now because of the low prices. The majority of oilsands deposits remain untapped. Nobody would seriously suggest that the province has been "completely consumed" or "strip mined." (And oilsands are just a postage stamp on the provincial map.)
I'm convinced that the NDP got in mainly because most of the electorate didn't bother to vote, because they just assumed the Conservatives would get back in again. This election was a rude awakening for a lot of complacent right-leaning voters. (It didn't help that the right was split by Wildrose.)
There seems to be a lot of corruption, including / especially the oil and gas sector, where some kind of broad based audit seems many decades long overdue, but the province still seems a lot better than living in socialist Ontario or bizarre Quebec.
"SHUT.IT.DOWN"
Naw, just ignore it. It might go away.
Where are those spills?
What would be an acceptable level of spills?
Yupp.
Cheers
Pawnshops are really just in the repo & reverse repo business, only with stuff.
I live in Vancouver and have friends in commercial real estate. This article doesn't even come close to how bad it is. The sub lease market in Calgary has exploded, EVERYONE wants to sublet space and there's no demand at all.
You can have A class space for overhead cost only, all day long. Anyone will gladly sublet to you if you just cover their expenses. As for below A, make us an offer, NO offer refused!
Meanwhile, like every city in Canada, developers are in a bloodlust to build. It's like a madness has overtaken them, because there's empty space everywhere, in every city, yet these fools keep putting up more buildings.
In Montreal. Condos rising like hot cakes. Not a problem though, all of them can only be built if >=50% of units are sold. Not a big deal, really.
BS. A friend of mine just rented an upscale new townhouse in Montreal from a developer who can't sell them so he's forced to rent them.
I am so sick of "mixed-use" multistorey shoebox condos. We have thousands of them, with plans to slap up thousands more. Fucking Agenda 21 BS, subsidizing tomorrow's ghettos.
Redevelopment, "Densification" and United Nations Agenda 21
Syrians will be gracious and work cheap.
Um, ok...im happy for you and him. Note that a townhouse isn't a condo.
There are lots of townhouse condos in urban Canada. A condo is a legal entity, a townhouse is a type of building, not mutually exclusive.
It is madness!
The commercial and residential expansion is jaw dropping.
They just keep building with reckless abandon. The developers will be long gone once everything seizes up. I thought I counted about 10 cranes in Edmonton skyline just the other day. New infill houses going up everywhere and new areas sited for residential & commercial(strip mall) community development in all directions. It's crazy plain and simple, and it seems to be accelerating at an evermore alarming rate. Nero fiddling...
A lot of building is Zero Interest rate driven! You know, you can borrow at zero, so if you turn even 3% on a building, it's money in the bank! If we had market based interest rates, half of the building could not and would not be done. Any economy wirth ZIRP, is totally distorted!
Hammer and nails powered by debt and greed.
"there's empty space everywhere, in every city, yet these fools keep putting up more buildings."
The developers are waiting for the flood of knife catchers.
If you're already down that street, you better liquidate it all and use what's left to'start over.
If you sell piece by piece to eat it all, you'll end up with a hunger and proud doesn't buy shit.
rolex was popular back in the 1980s oil bust too. buy for $5000, pawn for $500. Of course nobody wants to hold that worthless fiat. lulz lulz lulz
http://calgaryherald.com/business/energy/more-than-12000-albertans-let-g...
Not sure if this is suggesting that *only* 12,000 people have been let go, but the premiere said in March that at that time there had already been 150k layoffs, and this doesn't take into consideration all the commission jobs where they aren't getting a paycheque.
It's truly Armageddon in Alberta right now, and getting much worse by the day.
Couldn't happen to a nicer province.
I lived there in the 1980's -- big pseudo-Texans full of themselves,
pompous asses.
Sweet, bring these assholes down.
Those are the red necks. They all work in the patch and drive overpriced F150's and dodge diesel 4x4s. They are ignorant and arrogant and their day is coming. However, those are the minorities! The majority, and I'm sure it's no different in Calgary, are new Canadians from 3rd world countries and they work @ Tim Hortons and mcdonalds and live 20 to a household in these new $500k McMansions and have yellow taxi parked in their driveways
That is hilarious.
I live in Calgary, and you don't have to go far (Saddletown, NE calgary) and you will see plenty of homes with a taxi parked in the driveway. Heck, even in my area (not saying).
Yeah, that is typical of Calgary now. And we are getting plenty more coming here from India, Pakistan and parts of Africa thinking that it is still a boom. Now they are getting the ugly reality of it.
hehe, with a fresh crop of rookie socialists steering the big ship swirling down the toilet bowl.
3 winter tours in the patch, I'm with the poster below...a well needed attitude adjustment for those who assumed it was THEM who was worth something, as opposed to the black gold.
Do you mean dump truck drivers aren't worth $200K in the real world?
Yes, these are the companies that declre the layoffs to government up front and honestly. The laid off get treated with all the benfits allowable in law and that our society has deemed appropriate.
Then, at least 1 oil company tells the gov, media, and markets that they will have no layoffs.
However, the internal mandate to managers is to reduce staff by 10-15%. Accomplish this using constructive dismissal so that it is all firings for cause and no severance is payable.
Absolutely no sense of loyalty to their employees, society, and all the levels of government/agencies that must deal with the fallout from this policy.
You could have replaced Edmonton with Dallas in this article and it would have been 1987 all over again,
way worse than the 80's, way worse.
Of course it is. Because it is.
Denver took on the ghost town look in the 80's but weed has kicked that place into gear! (but for how long?)
Not to mention the supporting businesses in the area that benefitted from workers (resturants, lounges, apparel, etc.)? Don't hear any Canadians crying or blaming the government or seeking bailouts? Seems the oil patch people just take their lumps and man-up.
Been there, done that.
86, 98, 01, 08, 15
I see what you did there. "Ground Zero". 9/11. Nice touch.
How do you spell "ZIRP" in Canadian?
With a Zed.
Funny because the BoC was just mulling over the idea of doing QE.as a test balloon it was mentioned on BNN just a few weeks ago
Uh right.. Calgary real estate... that's it?
We're as bearish on the Canadian economic miracle as anyone else, but all the evidence we see published has been anecdotal (like this story) since 2013.
Oil is only one aspect which could conceivably be isolated and contained in Canada (an economy of economies).
Anyone willing to short Canada without hard numbers to back it up is looking to get blowed up real good.
Oil, gas and mining is 10% of Canada's economy, but about 30% of Alberta's GDP.
I would say more than that. It has to account for half of our trade, with the other half being automotives. And that industry is getting hit hard as always and needing bailouts.
Fact Check: Oil/Gas account for less than 8% of the entire country's GDP. The other 92% is a hodge podge of other industries. (30% of Canada's GDP is tied to U.S. trade, so where Amerika goes so does Canada)
Which sector contributes the most to GDP?: Real Estate and Rental/Leasing at 12.5%. Bank of Canada policy is very accommodative to this sector and they will protect it, so unless you're part of a hedge fund cartel trying to break the BoC (or are aware of the activities of such a cartel), it's best not to bet against the central plan.
Looking closer at Real Estate: The 4 pillars propping up this beast are:
- Low interest rates
- A currency in the toilet with the BoC's hand on the flusher
- Capital flight out of EM's into Canada
- A booming economy, tied to all of the above, but also tied to Oil and a growing population.
Finally, people who want to short Canada typically point to the fact that Canadians have racked up $1.29-trillion in mortgage debt (2015 stats). However the majority of that debt is carried by people under the age of 55 - so their parents are sitting on all the cash with fully paid for homes and plenty of dry powder to maintain the younger generation's debt payments. It wouldn't be surprising at all if BoC policy is geared towards shaking this money tree to have their cash flow through the system, similar to how the Bank of Japan has been doing it since 2012.
Until you see all of the economic pillars above start to crumble, which includes the BoC starting to raise rates, find a better short play somewhere else. All central banks are fully invested in making sure nothing pops until the next commodity and global Economic cycle. Until then, your only play in shorting Canada is Calgary housing, but good luck in structuring that play.
That which cannot continue forever...
I continue to be amazed at all the math-challenged people that pose as being "intelligent." Exponetial function has your number. As the economic puckering of the Chinese goes forward you'll soon enough learn what the other side of the parabola looks like.
Thanks for playing!
Oh Canada! )c:
It's good to see that Canadians are financially responsible and save up for rainy days like this.
lol
Albertans have the highest debt of any province, and that's saying something in a nation of people with the among the very highest debt in the world, maybe even THE highest.
These people are the epitome of dumb money, spending it on total Bullshit like multiple recreational toys, every gadget for their pick-em-up trucks you can imagine, boats, snazzy trailers for the boats that match their vehicle, etc, etc.
They truly deserve this.
Truly.
I guess dumping their second homes in the desert SW is the next step. Should be interesting to see how real estate prices hold up here in Palm Springs when they head for the exits en masse.
Every Albertan really has all that cool stuff?
My hat's off.to them!
No.
Most of us are living paycheck to paycheck, while spending ridiculous amounts on a mortgage, car payments, petrol (yes, we spend quite a bit for an oil producing province on petrol) and other such. Having a kid is also expensive if you do not have a relative (like mother in law or mom at home) taking care of the kid while both parents are at work.
I am lucky with nearly paying off my credit card, compared to most. Even then, it is nearly impossible to save any money.
Another unresearched article on ZH. Sigh.
The article linked to a report showing Canada's real estate bubble was beginning to burst, and was dated March 24, 2015. 6 months later its still 'beginning to burst'??
Because all over Vancouver and Toronto the skyline is dotted with cranes.
You see, this isn't a normal business, as the article fails to discuss. The primary Canadian real estate markets of Toronto and Vancouver are really capital flight businesses.
So, unless the writer can explain how a capital flight bubble bursts, this article is meaningless.
Because, since the Chinese stock market started crashing a few months back, Vancouver and Toronto real estate markets have gotten hotter, with even more Chinese losing faith in their government's handling of the economy and wanting to get out.
So the top 1% of China is 13 million people and a recent survey showed 60% want to relocate to Vancouver. That's 7.8 million.
Well, last time I checked Vancouver's population was still below 2 million.
Because when it comes to capital flight, any number thats less than a nosebleed is better than waking up Monday morning to a bank account that had $100 million in it on Friday and now has $0, thanks to a 'withdrawal' by the Red Party because your cousin or uncle said something or participated in some protest or posted on some blog.
Yep, the capital flight continues until the Chinese government changes their ways. And that would require throwing the elites in China under the bus (so it ain't happening anytime soon).
And when China finaly PWNs your collective asses,
and forces you pathetic Canucks to submit,
and cuts your testicles off,
shoves them in your mouth,
and sews your lips shut,
and takes you naked in a helicopter
out into the pacific and drops you off,
and asks you to swim home,
THEN
tell us all about your Chinese Escape Money.
"ecause all over Vancouver and Toronto the skyline is dotted with cranes."
The Easter Islanders were still chiseling and erecting statues right up until they went extinct.
"So the top 1% of China is 13 million people and a recent survey showed 60% want to relocate to Vancouver. That's 7.8 million.
Well, last time I checked Vancouver's population was still below 2 million."
"Want" that's W A N T. That's not CAN.
"Yep, the capital flight continues until the Chinese government changes their ways. And that would require throwing the elites in China under the bus (so it ain't happening anytime soon)."
Do you feel lucky? I mean, you're betting against the Chinese govt.. Kind of sad in that your entire house of cards rests on the verdict of that cluster of folks.
The long arm of Xi Jingping is pretty long. He already has a list of over 300 corrupt gubmint officials living in the USA and has asked DC for them to be returned to face corruiton charges back home in China. A few have been handed over already. I don't know how many more there are on his list for America but there's also quite a few in Australia, NZ and Canada that they are after. Mostly Gubmint officials who have made off with many millions... Big Fish. Who knows if they will be "turned over" but I wouldn't be surprised if there is some quid pro quo and they get sent back.
Plus, China has tightened up on all these high levle officals there before they can even get away with the loot. So RE may feel effects from this corruption crackdown.
A LOT of truth in this posting TT . I am on the ground and know of what you speak. Cant agree that the offshore flood of indiscriminate money might not dry up in an instant ( or at least freeze itself in liquid deposits ) , but this economy is truly still firing beyond what any rational economically aware being could expect..............bit like "Road Runner "........ Already over the edge of the cliff, but still defying gravity !!!
Does anyone have any thoughts on moving from the US to Canada? I am a citizen by birth but have never lived there. Will Canada possibly fare better in the coming economic collapse??? Any ideas? Your comments would be greatly appreciated...
The collapse as you call it won't be sudden, but rather a long, slow decline. If you look how the largest societies collapsed in the past, it's generally a long, drawn out process. Note that there is a huge difference between the collapse of one of the dominant societies on the planet, and the collapse of a little country.
Collapse of Zimbabwe, was local, and didn't affect the rest of the world. But the collapse, or even decline of the US, Europe, or China would certainly affect everyone.
Will Canada fair better? Who knows. Canadian government debt is skyrocketing and the country is at this time turning more socialistic. Socialistic governments, attitudes and spending are not sustainable in the long run. There is DEFINITELY a reduced economic standard of living occurring, and the standard of living will continue to decline. This isn't exclusive to Canada, but in almost all first world countries.
Be flexible, and move as conditions change.
Excellent response.
I'll add that my reasoning for staying in the US was because, when you strip everything down, it comes down to resources. Anyone can riffle back through the ZH archives and look for my comments on what countries I figured would hold up the best: Canada, Russia and the US- all because of the variety of resources and land (US still being at the top for ag land).
US may be at the top for ag land.
Too bad about the US rating for ag rain though.
If you have enough saved and don't have to work [basically retired] there's many incredibly beautiful and zero-crime areas in Canada to enjoy life. I think crime and civil unrest will become a bigger issue in the usa then in Canada. Plus, super clean air in many parts and much lower pop density. I lived in Charlottetown on Prince Edward Island for a year awhile back and loved it; plenty of activites for all ages and super environment.
Alot depends on yur persoanl preferences and goals.
just to add for Matrix, since I moved from Miami to Vancouver. Canada is filled with morons like in the states. But the States has more awake people. And because of that, I think Canada will be safer to weather the storm. That's my reason why I moved.
Expect a 30% higher cost-of-living and a 50% higher tax rate -- but that's offset by the free national healthcare system [rolls eyes]
Oh, and the reason there isn't as much of a homeless problem is because they mostly freeze to death up here. Nature's way of culling the eaters.
Thank goodness they sent the fool that was running operations there to England. Nobody likes the English.
And to top it all off, Alberta elected a socalist government earlier this year. It wasn't really intentional, the two right wing parties split the vote (53% of total vote) and allowed the socalists (NDP) to win a majority (40% of vote).
So, what's the NDP's plan for economic recovery? They'll give some "infrastructure" money (borrowed) to their friends to spend.
What's the BEST way to create long term stimulus in an ecomony? Lower business taxes and barriers to business so they can hire workers. What did the NDP government do? They RAISED taxes for businesses and want to bring in more environmental laws and obstruct projects.
Definetly a one term government.
Not defending "socialist" govts, but dumping taxes in order to make a better business environment misses the FACT that the entire fucking world is broke and in debt- there's no growth left! WTF are you going to build and sell that a broke-ass world is going to be able to buy?
And the alternative was to re-elect the incumbent party that spent hundreds of millions building dozens of 60-bed rural hospitals, and then cutting back the nursing staff to only open six beds.
After 40-odd years of the same party that got us into this mess, how is doing the same thing going to give a different result? Give the orange wave a chance because the conservatives already rammed this ship into the iceberg and now they're queuing for the lifeboats.
So long Canada, we hardly knew ye.
Real state prices in Alberta are still though the roof, I guess that will be the last part to go down as they don't have up there the insane real state Taxes we have in U.S.
The Canadian oil patch over-investment was only made worse when Harper's hand picked central banker tried to "rebalance" the economy by devaluing the currency while oil was still in its bubble. That of course loosened policy more than it already was: https://canadianinsider.com/blog/harper-economics-running-debt-and-easy-...
Bunch of BS blog post.
Funny watching the spin-meisters go into hyper-drive after the last quarterly GDP number. "The drop in GDP over the last 2 quarters does fit the technical definition of a recession". Yes. Exactly.
Basically if China isn't buying Oil or machine parts then you have auto sales to the US and then domestic demand.
We all know China is fucked so that leaves US auto sales and internal demand.
Assuming the US auto inventory data is correct then sales are being taken from 2016.
So that leavs internal demand which is already getting hammered by knock on effects from the Western recession.
God help us if the foreign money stops flowing into the housing market.
I work in an office tower in Houston and am grateful it is occupied by an accounting firm, bank, an entertainment business and others not related to energy. I look out the window at all the skycranes building new office towers and keep expecting to one day see them come to a halt in mid lift.
Its a matter of.time I guess....
Um, grateful to be around accountants, bankers, and entertainment peddlers?
We know from research that people who are concerned that they may lose their jobs tend to develop more health issues than those who believe their jobs are secure. We also know that those who do lose their jobs develop health issues at a significant rate. Alberta is going to pose significant challenges to the Canadian health infrastructure.
Also a good reminder to create/keep an exercise regimen + eat well yourself.
Perth not doing so well as far as commercial real estate is going either, heading for 24% vacancy rate and they are still building. Perth is still at the beginning of its down turn, its going to be epic.
http://www.abc.net.au/news/2015-07-14/perth-office-space-changeover/6618612
It is mostly Newfies, losers form Ontario and BC rejects getting laid off in Alberta. Looks good on the homo lovers.
The boom is fueled by low interest rates and pension funds looking for yeild, teachers pensions, civic employees and others, try and tell them that their pensions will be bankrupt soon and you just get a blank stare.
Oil prise down more than 50% but houses prises in Calgary almost unchanged ( down only 2%) compare to August lust year . So one cant even compare to US recession . Oil just a one part of economy .
As the article states, now that the recently-rich have pawned their toys to pay for food and housing, soon the only asset left for them to sell is their house because there's no value in their leased vehicles or remaining toys like boats or ATVs. The housing collapse will start with their vacation homes in Canmore and continue onto their primary residences. Expect an epic drop in real estate value of 30-50% in the next 18 months.
The other point that has been missed regarding commercial real estate vacancies is that many companies signed up for double the amount of office space they needed during the boom, expecting to fill it as the business grew. Now that they're laying off like crazy, this ghost office space will double the expected vacancy rate.
As a province Alberta has no debts and low tax rate I bet non of the states can claim the same . Most of professional workers came from other provinces (not oil dependant) and ones they move back they will get their jobs back. So no recession here just a wishful American thinking to fill better about its own problems .
Alberta will be fine. They've been through oil crashes before. These articles are written by puppies in their thirties. 86 was MUCH worse than this.
But let's not try and over simplify by tossing Vancouver and Toronto into the same coversation as Calgary and Edmonton.....different worlds.
Squid
We have a fundamental problem in Canada. We import oil in Newfoundland from Saudi Arabia (yes, a competitor to Canada in oil and gas), and we then have it pumped through a pipeline into mainland to Ontario (they have two refineries). But, we cannot build a pipeline from BC to Ontario cause it pisses off Quebec and Ontario's "green peace freaks" who are saying it is dangerous for such a pipeline, yet Saskatchewan leaders stated that a northern corridor would not only be efficient but also secure for a pipeline. But no, we will continue to import oil.
But that isn't all. We sold off various Canadian oil/gas companies during Jean Chretien's rule, and now we only have, what, one refinery in Alberta? And 1 gasahol plant in Manitoba (I believe within riding mountain park area between Brandon and Dauphin). So we are also importing petrol from USA, whom we sell majority of our oil to (or all of it, I am not sure). These little things are costing a fortune which could work big time in Canada's and Canadians favour. But we have too many morons who think otherwise.
We are very reliant on US economy. We did sign the autopact deal so that does benefit us where now the auto sales account for 40+% of our export (other 40+% being oil and gas) and does bring in a lot of money, but is constantly clouded with bs thanks to various Unions, mixed in with politics, so the industry is always needing bailing out. Much similar to Air Canada and Bombardier (now needing bailout for the C400 series).
When I read that our GDP is to be about $2T this year, I cant help but call bullshit. Our industries always need bailing out, and Canada as well as Canadians are heavily in debt. Maybe that is were our GDP growth is? All tied to credit/debt? If so, then we are in trouble. People keep saying the 80's were worst, but that was also the time when interest rates were 18%. Will people be able to afford that now? Homes in 1980's weren't $500,000 average as they are now (especially in Calgary. In Winnipeg in 1980's, our home was a little over $140,000. Same home is now selling for over $500,000). So I can imagine that many, including myself, will be royally screwed.
ground zero huh? ... a lack of Gucci and Rolex sales ... I'm pretty sure they'll get by OK.
Hold the Calgary Stampede indoors ?
That giant sucking sound .... Muslim "Refusegees" ?
Eau Canada .... a new fragrance .... hints of Pinsol and tar sands !
Roosh V, Toronto Sucks: https://www.youtube.com/watch?v=FoS8bA_Tb8E
Canada has no vision for the coming 20 years.
1. Canada will no longer be exporting Toyotas and Chevies when the Ontario plants are transplanted to Mexico. Does Canada actually own and make anything else of consequence? NO.
2. Canada's historical dependance on oil exports will get a rude awakening as oil prices soften and alternatives come on stream.
3. The dependence on out-of-control IMMIGRATION has not produced a sustainable Tax "immigration factor." Yet the welfare state continues to accept "depandants." Canada has no cash reserves to cover its mid to long term medical care and social security requirements. Even the Conservative government is afraid to stem the inflow. Newcomers are NOT creating jobs or creating exports.
Canadians are 'traders' - good at selling crap made elsewhere to their neighbours, a la Jim Pattison. Or they're good at banking, producing nothing.
4. Over 60% of voters are left of centre politically -- voting for handouts and big government. The current oposition leaders are doubling down with insane promises of greater spending. Who'll pay? Who cares.
5. Canadians cannot afford to live in the major urban centres, but the banks are happy to load them up with debt that will NEVER be repaid. Canadians are an endentured species, more debt laden than Americans. Even households where both heads are working good paying jobs, are living hand to mouth to make ends meet.
6. Canada's liberal socialist riddled Media doesn't tell Canadians any truths about the state of their nation.
7. Canada's few entrepreneurs more south of the 49th parallel. Canada has no interest in stimulating entrepreneurialism, never has.
Vision? What vision?