Friday, March 20, 2015

The Vancouver Housing market and foreign money

There are few things are the fueling Vancouver housing market. One factor, that has gotten a press recently is the amount of foreign money coming in. The problem is it has been next to impossible to pin down just how much money is flowing in and just who it is that is buying. Most of the evidence is anecdotal -- official figures being few and far between. Further complicating matters is there are a large number of high worth individuals, many of them investor class immigrants, who are not foreigners at all, but Canadian citizens who work elsewhere and pay taxes elsewhere. Whatever the case, given the huge gap between medium income levels and housing prices, particularly detached housing prices, it is fair to assume that the role of outside money is playing a big role.  The gap between housing prices and median incomes levels is second only to Hong Kong.

A second factor is interest rates. Lower interest rates have greatly increased people's ability to take on a larger mortgage. A few examples should drive home the point. The monthly payment on a $500,000 mortgage at 5% with a 25 year interest period is $2,908.03. The monthly payments on a $615,000 loan at 3% is $2910.46 The monthly payment on a $650,000 mortgage at 5% is $3780.44. The monthly payment on a $800,000 mortgage at 3% is $3785.97. Now, the maximum period that one can lock in for in Canada is 10 years. As a result, we tend to think of these results and transitory and so forget that what matters is not the purchase price but the amount of interest paid, plus the down payment plus the principle. Someone with a $325,000 10 year fixed rate, 10 year interest period, mortgage at 3% is going to pay less than someone with a $300,000 mortgage at 5%.

The third thing, that is not getting much play at all, is this. All that foreign money following in is not simply vanishing. Foreigners, however you want to define them, are not buying off other foreigners. They are buying from locals -- more often than not local baby bombers looking to downsize. These newly displaced locals are not retiring and moving full time to Mexico. They are staying in town and so still need a place to live. Flush with cash, these lucky locals have helped inflate and now sustain the condo market. Of course, many of these same people have passed some of their wind fall to their offspring. This in turn has made it possible for the lucky sons of daughters of these baby bombers to enter into the market they would otherwise be priced out of. According to a survey by mortgage insurer Genworth, 40% of first time home buyers used family money in purchasing a home. Finally, the huge spike in housing prices over the last 15 years has greatly increased the ability of those still in their homes to purchase a secondary property or to "right size". With regard to the former, the amount of collateral they have to offer up has gone though the proverbial roof. With regard to the later the huge increase in equity on the house they already live in provides them with the ability to afford price of a new home that is incongruent with their income level.

This leads me back to foreign money. In so far as the amount of foreign money flowing into the market represents a windfall for a portion of the local population, housing prices are somewhat sustainable. The money is still in the local economy and a chunk is ready to be reinvested in the local housing market. However, eventually that is going to come to an end. Even if foreign money keeps flowing in and even if the secular stagnation thesis proves right and low interest rates become the new long term norm by the time the next generation goes to downsize they will be no position to inject their earnings back into the economy and the local into the housing market. Most if not all of the spread will go into paying off debts, most notably the mortgage they took out buying the place they are selling.

Thursday, October 09, 2014

Bombing Campaign against IS

I do not know where the idea that bombing never works comes from.

Of course, bombing campaigns sometimes work.  For example, it worked fabulously in Libya. What the US et al need is people on the ground to mark targets and for indigenous ground forces to press home the advantages created by a bombing campaign. Both those conditions were present in around Kurdistan and IS was pushed back there.

Now, however, badly lead the Iraqi army is, there is some reason to be believe the Iraqis could successfully drive IS back from Baghdad. The question is who to partner with in Syria. The US is pushing the Turks to fulfill that role, but I doubt Erdogan will bite. He has staked far too much on regime change in Syria. Indeed, according the Seymour Hersh, it was the Turks that supplied Syrian rebel groups with Chemical weapons in the hopes of goading the US into bombing the crap out of Sryia. You can read the article here. That said, there is hope that the US can put enough pressure on Turkey to prevent it from becoming to IS what Pakistan, the ISI in particular, has been to Taliban. Up to this point Turkey has been a jumping off point for Jihidi tourists, the primary destination for illegal oil transports and a major source of funding.

Kobani may be a game changer for a number of reasons.

1) If the city falls and IS does its worst, the Pesherma may reconsider its unwillingness to press beyond the Kurdistan.
2) In Turkey, both internal and external pressures will increase exponentially. Conservatively the number of ethnic Kurds in Turkey is around 10 million. 

3) There will be a great deal of pressure on the US to step up bombing. This in turn may prompt other rebel groups within Syria to A) distance themselves from IS to prevent from being targeted and B) offer to aid the US campaign for their own purposes. 
4) Although the Syrian regime helped spawn IS (see Hersh again), the regime is in many ways a natural partner in the fight against them. A massacre in Kobani may make cooperation, which has hitherto been unthinkable, possible - albeit on a convert level.

Thursday, October 02, 2014

The Supreme Court gives away BC and the 5th Estate barely utters a word of protest

The 5th estate in Canada has a lot to answer for. A little more than two months ago the 9 idiots, then 8, laid the groundwork for all crown land in BC to be given away to single ethnic group. One immediate consequence is that the Feds, the province and the municipalities now lack the ability to sell, lease or develop Crown land -- at least not without paying substantial kickback to various native bands. The provincial government is now in shambles; one ethnic group has a veto over much of what it does and sanctions, what gets logged, where oil gets drilled for, what natural gas reserves are tapped, what damns get built, what roads are built, what electrical towers are built -- everything. Of course, all these problems could just be the tip of the iceberg. It would seem to follow from the Supreme Court idiotic decision that if much of province was not ceded to the crown, then virtually all private property in the province is ill gotten fruit.

It is time that 5th estate acknowledge the scope of this idiocy and call for the judges to be ousted. It is possible to oust them. If the government lowers the retirement age for Supreme Court justices to 65, then Canada would be rid of 7 of the 9. The government does not need a reason to carry out the needed purge, but there seems one in the offing if they did. The justices are showing signs of dementia.

Wednesday, September 17, 2014

Lower the Supreme Court retirement age to 65

In light of the Tsilhqut decision, it clear that something needs to be done about the Supreme Court. Billions upon billions of dollars are at state. No longer can Canadians stand idly by as idiot judges give one ethnic group control of the country’s resources. In the long term that will mean that the Supreme Court needs to be politicized. Judges with a predilection for idiocy must be made objects of scorn and a heavy political cost must be attached to political parties that appoint such judges to positions of power. In short term though, something needs to be done about the existing court and that will require doing something much more far more drastic. The only way of getting rid of majority of the existing court is lower the retirement age to 65. With that 7 of 9 would be gone.

Stephen Harper and Adrian Peterson on Spanking -- with "spanking sticks" and "switchs"

Stephen Harper 

"Yet the most recent Liberal Throne Speech, as part of its "children's agenda," hinted at more government interference in the family. We saw the capacity for this abuse of power in the events that took place in Aylmer, Ont. Children there were seized for no reason other than the state disagreed with the religious views of their parents. No conservative can support this kind of intrusion, and conservatives have an obligation to speak forcefully against such acts."

The judge ruled in the Aylmer case that spanking the kids with a metal "spanking stick" went well beyond the use of "reasonable force" and that Children's Aid Society had every right to intervene; the parents claims to the contrary were "sheer nonsense". "No community, or society, could reasonably agree with the concept that a parent who sexually abuses or physically mistreats a child should be entitled to give his/her consent to the interviewing, or examination of the child by a member of a Children's Aid Society."

The Conservative party has vowed in the past to stop such activist judges and Children's Aid Societies from interfering again.  2005 Policy Declaration: "The Conservative party believes in the right and duty of parents to raise their own children responsibly according to their own beliefs. We belief that no person, government or agency has the right to interfere in that process accept though due process of law."

Monday, September 08, 2014

How the Liberals can handle reefer madness

Potent Pot

Potent pot is more myth than reality.

However, even if one assumes that potent pot is a reality it is certainly nothing to be concerned about. Indeed, saying that potent pot is reason for keeping marijuana illegal is akin to saying that alcohol should be banned because gin has a higher alcohol content than beer. It makes no sense. The pharmacological effects depend upon the overall amount of THC consumed not the amount in any one joint. Moreover, as various researchers (e.g., Lester Grinspoon of Harvard Medical School, Mitch Earleywine of the University of Southern California and UCLA's Mark Kleiman) have pointed out, the vast majority of users aim to consume only so much THC and are comfortable consuming only so much THC. As such, potent pot may actually be a welcome development. After all, one of the most prominent health effect related to marijuana, if not the most, is that it is usually smoked. The more potent the pot, the less people have to smoke to achieve the same high.

That said, if potency is the concern, then it should be legalized.  The only way to regulate the potency of pot is to legalize it.

Finally, the attempt to scare parents that have grown up on marijuana by distinguishing between potent pot and “your dad's marijuana” is too clever by half. It begs the following question. If today's marijuana is truly different in kind from "dads marijuana", would it be okay to legalize "dad's marijuana", i.e., low potency pot?

Talking Points

1) Saying that potent pot is reason for keeping marijuana illegal is akin to saying that alcohol should be banned because gin has higher alcohol content than beer. It makes no sense.

2) If today's marijuana is truly different in kind from "dads marijuana", would it be okay to legalize "dad's marijuana", i.e., low potency pot?

The US will Never Let it happen

Yes Canadians understand some Americans would not be pleased about legalization. As such, Harper's musings about legalizing marijuana causing trouble at the border seem reasonable enough. The problem is this does not make marijuana prohibition any more legitimate in the eyes of the Canadian people. Support for legalization has been above 50% since 2004 and a recent poll in BC put it at 75% here. In BC the last year 4 attorney generals, a large chunk of the medical establishment, a former police chief, the current mayor of Vancouver and 3 former Vancouver mayors came out in favor of legalization. Support for prohibition has all but collapsed in this province. Whether you think the marijuana issue an important one is somewhat beside the point. We as a society should not pass laws or keep others in place simply to placate foreign governments. We as a society should not be enforcing laws that no one believes in. This goes especially for laws that would result in Canadians languishing in jail. Any perception that Canada is enforcing laws to meet with illegitimate demands of a bullying third party, whoever that may be, is simply poisonous to the health of a functioning democracy.

All that being said, it was one thing for opponents of legalization to employ the let us not piss off the Yanks argument in 2004; it is quite another for them to dust this argument off now and act as if nothing has changed Stateside. Colorado and Washington State voted to legalize marijuana. This changes everything. Indeed, it is hard to fathom Obama going to war with Colorado and Washington State over marijuana legalization yet alone large portion of the Democratic base. Moreover, almost two years out, there is no indication whatsoever that Obama will move against them. Finally, this is an issue that is clearly started to tip not only in Canada but also Stateside. The first polls showing the majority of Americans supporting legalization have started to appear.

Talking points:

1) It is not matter of if the US will legalize marijuana, it is matter of when. Furthermore, this is likely going to happen sooner rather than later and Canada had start preparing.

2) We do pass laws or keep others in place in order placate foreign governments. This goes especially for laws that would result in Canadians languishing in jail.

Gateway Drug

Researchers have rightly noted that people who have try marijuana are statistically more likely try other illicit drugs. This gave rise to the theory that there was something about marijuana that encouraged drug experimentation. Marijuana, it was alleged, is a gateway drug. This, in turn, was given as one more reason to keep the drug illegal. However, the gateway drug theory has until recently fallen on hard times for lack of an intelligible mechanism. The problem was that there was no coherent explanation for why marijuana would lead people to experiment with other drugs. Without this explanation doubt was cast on the relationship being more than mere correlation. That said, in recent years researchers have breathed new life into the theory, albeit with a sociological twist. According to the new version, it is not marijuana's pharmacological properties that serve as a gateway, but rather marijuana's illegal status. Specifically in the process of illegally procuring marijuana, users are introduced to the criminal elements with access to other illicit drugs and hence it is the forged black market relationship between dealer and buyer that serves as gateway.

In this context it should be noted that when the Dutch partially legalized the sale of marijuana, heroin and cocaine use went down despite an initial increase in marijuana use. Dutch use of hard drugs remains well below the European average.

Talking Point

Every time someone goes to buy marijuana they come into contact with criminal elements with access to other hard drugs. This is your gateway. When Holland decriminalized consumption and made it available in coffee shops, heroin and cocaine use went down.

Schizophrenia and Marijuana

Epidemiological studies have consistently failed to show any kind of positive correlation between marijuana use and schizophrenia. Despite a massive increase in the number of Australians consuming the drug since the 1960s, Wayne Hall of the University of Queensland found no increase in the number of cases of schizophrenia in Australia. Mitch Earleywine of the University of Southern California similarly found the same with regard to the US population and Oxford's Leslie Iversen found the same with regard to the population in the UK. According to Columbia's Alan Brown, "If anything, the studies seem to show a possible decline in schizophrenia from the '40s and the ‘ 50,"

Talking Point

There has been an astronomical increase in the number of pot smokers since the 1950s and no increase in the rate of schizophrenia whatsoever.

The gangs will simply move on to other drugs

The market for marijuana positively dwarfs the market for all other drugs combined and marijuana is far and away gangs' biggest money maker. The notion that the gangs would simply shift focus and thereby maintain the same levels of profitability is absurd. Comparable demand for other kinds of drugs is simply not there. Such an argument rests upon a mistaken assumption. Namely, it assumes that the sure size and scope of the marijuana industry is limiting the distribution of other kinds of drugs. The reverse is true. Marijuana profits and sometimes even marijuana itself are providing the seed capital the gangs need to diversify operations (e.g., cocaine, heroin, human trafficking and guns) and to expand those other operations. Moreover, existing infrastructure used in smuggling marijuana stateside, for example, has the potential to used for other purposes. All of this is reason enough why we need to nip this in the bud.

Talking Point

It is not like the gangs have access to capital markets. Marijuana profits and sometimes even marijuana itself are providing the seed capital the gangs need to diversify operations (e.g., cocaine, heroin, human trafficking and guns) and to expand those other operations. This is one of the main reasons why we need to nip this, pardon the pun, in the bud.

The Black Market will live on

It is one thing to illegally sell a legally produced product and make a profit, e.g., black market cigarettes. It is quite another thing to illegally produce and sell a product (e.g., moonshine) in market where there is legal competitors. The reason is simple. The illegality of the product means that your production and distribution costs are significantly higher. Also demand for your product is always going to be less. People want to know what they buying and consuming. So when given the choice of buying an illegally produced product versus a legally produced product they are going to go with the later. (There is one notable exception and that is when an illegally produced product is successfully passed off as a legal one, e.g., fake brand name goods). That is why no matter how much Canadians drank during the time of American prohibition, I am sure that it never crossed the RCMP’s mind that American moonshine might become a competitor of Molson’s.

Talking point
Molson executives do not worry about moonshine eating into their market share. Demand for illegal products is not what it is for legal ones.  

Sunday, June 29, 2014

Idle no More: the Supreme court is the biggest threat to BCs economy: it is time to fight back

The Supreme court of Canada is now one of the biggest threats to the Canadian economy and is certainly the biggest threat to the BC’s economy. It is time to fight back the only way possible. It is time politicize judicial appointments and judicial decision making.    Billions upon billions of dollars are at state. No longer can Canadians stand idly by as idiot judges give one ethnic group control of the country’s resources. Judges with a predilection for idiocy must be made objects of scorn and a heavy political cost must be attached to political parties that appoint such judges to positions of power. Immune from the savages of politics for too long every word, every foible and every indiscretion must used to against them.

Saturday, June 28, 2014

Treason is reason enough to Politicize the Supreme Court

The supporters of native rights like to talk about Canada having to negotiate nation to nation with various native bands. The notion is absurd. A nation without recognized boundaries is no more a nation in the way Canada is than a “marriage” is a marriage without a marriage license. No foreign government recognizes the various bands as being a nation. NATO is not going to offer membership to the Squamish “nation”. The US and Mexico are likewise not going to ask them to join NAFTA. The US is not going enter into negotiations to have the Squamish nation join the US. However, the 9 idiots saw it otherwise. They have decreed that because title was not formally extinguished a nation that clearly no longer exists does. This is akin to saying that any soldier declared missing in the American Civil War is not dead for lack of a body. Sadly, for Canada, the Supreme Courts resurrection is far more than a textbook non sequitur. The undead nations want their pound of flesh and billions and billions of wealth that now flows to Canadians as a whole will no go to one ethnic group instead. What is lost on the supporters of this abomination is the sure absurdity of another nation’s supreme court similarly cleaving off a whack of national territory to apiece another “nation”. The citizens of those countries would not stand for such treasonous behaviour. Canadians should not either. I was once loath to see the Supreme Court politicized, as it is in the States, thereby bringing it under political control, but years of judiciary idiocy have changed my mind. For would be Supreme Court appointees down south abortion is the political litmus test par excellence. It is time to make national loyalty the litmus test up here.