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Do you think Canada’s economy is doing well just because the ass media is supporting the government’s economy of illusion? Yesterday, March 26th, one of my colleagues, returning from the bank, said the line-up at the bank was so unbelievably long that there was actually a traffic jam outside. She thought perhaps it was the day welfare checks were issued. I said that’s doubtful because many welfare recipients can’t afford cars so I can’t see them causing a traffic jam.
After work, I went grocery shopping. That was a mistake. It took forever to check out. Even though all cash registers were operating, the line-ups extended halfway down the food aisles. I’ve never before seen so many people grocery shopping all in one day.
As I like to chat up people, I talked to some of the people around me and asked if they knew why the store was so busy. I got polite responses but no real answers and, finally reaching the check-out, I asked the clerk the same question; also to no avail. I thought that was odd but, it didn’t ring any alarm bells. I also noticed the lines moved more slowly than usual. I paid with cash but, almost everyone else I saw seemed to be paying with debit cards which take a little longer to process than cash and yesterday the debit card system seemed even slower than usual. Again, it didn’t ring any alarm bells.
I thought nothing more of it until this morning. Before going to work, I checked my on-line bank account balance so, on my way to work, I could continue withdrawing the daily maximum allowable cash for “under the mattress”. I noticed that my Canada Pension Plan (CPP) payment had been posted yesterday, earlier than usual; I suppose because of the Easter long weekend. Suddenly, it dawned on me why the bank and grocery store were so busy yesterday.
If anyone thinks the Canadian economy is doing well, you better think again. There are a LOT of people in Canada who CANNOT afford groceries until they get their CPP payment. That’s evidence of THE Stealth Depression I’ve mentioned numerous times before. The soup kitchen lines of the Great Depression have been replaced with lines at the grocery stores and banks after government checks are direct-deposited in bank accounts.
Stay tuned. It keeps getting worse. Keep some cash at home – just in case.
Gerold
March 27, 2013
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Gerold's Blog 
Sorry to thread-jack Gerold (actually, it’s kind of related in the sense that people should keep more cash at home), but I came across this and found it to be very concerning:
http://globaleconomicanalysis.blogspot.ca/2013/03/canada-discusses-forced-depositor-bail.html
If the stage is already set here in Canada, perhaps things will go from good to much, much worse (and skip over “bad”) faster than I thought.
I think you’ve mentioned before you’re prepared to weather the storm, but I’m only in the infancy of my preparations (mostly because my prepping mainly involves steering my family to greener pastures). The idea was to acquire property AFTER the housing market goes bust… but if the housing market goes bust and triggers a bail-in of the banks, all the wealth I was planning to use to buy property at a depressed price goes *POOF*.
Cheers,
-GBV
Garth Turner felt the need to chime in too…
http://www.greaterfool.ca/2013/03/28/hysteria/
Makes sense, considering he’s a shill for financial investments and obviously wouldn’t want to see people pulling their money from the banks or to dive into gold & silver (well, physical silver anyway… I’m sure he could turn a profit off each of us by managing our gold & silver paper ETFs if we were silly enough to have any).
It astounds me that this guy can say “it’s NOT different here in Canada” when talking about houses, but can then be so obtuse to say things like “this ain’t Cyprus” when talking about our economy or the machinations of arrogant politicans.
Obviously it is not Cyprus – it’s Canada – but the basic premise of “when push comes to shove” still exists, and now the government has pushed legislature through that will allow them to confiscate deposits should the need arise.
Garth is probably right to suggest the banks will first issue bonds to shore up their equity; however, there’s nothing to suggest it would stop there, other than Garth’s opinion that it will “never happen”.
Can’t wait for that guy to get his come-uppance.
Cheers,
-GBV
You’re right about, “It astounds me that [Garth Turner] can say “it’s NOT different here in Canada” when talking about houses, but can then be so obtuse to say things like “this ain’t Cyprus” when talking about our economy”…
Garth says it can’t happen here. I’m beginning to think he’s either a paid shill or incredibly stupid. We’re always told it can’t happen here, just before it happens. Garth disses Jim Sinclair and Mish Shedlock. This is why I follow Garth’s real estate analysis and ignore his financial prognostications. He don’t know shit except real estate. Read his comments to his commenters; he sounds like a robotic propaganda machine.
It’s the nature of and the Achilles’ heel of fractional reserve banking. By keeping only a small fraction of deposits on hand, banks remain liquid only as long as a small fraction of depositors withdraw their cash. Bank runs (Google “bank run” produced 849 million results) – defined as a large number of depositors withdrawing at the same time – make governments shit themselves because once started, they become impossible to stop without a ‘bank holiday’ closing the banks or ‘capital controls’ limiting withdrawals. They become a positive feedback loop as more depositors withdraw, the likelihood of default increases thus triggering even more withdrawals.
This is what happened in Cyprus and many times in history. Given the downward spiraling trajectory I’ve been following for years, it’s only a matter of time before we have a banking crisis with runs on all the banks. Governments don’t have enough money to backstop the whole shebang. Or, as one commenter said, “Canada will never be a Greece or Italy or Spain or Portugal or Ireland or Iceland or Cyprus. No worries.” There oughta be a sarcasm font.
The US FDIC has $25 billion to protect untold trillions although Sheila Bair tell us the FDIC has access to $500 billion (government printing presses on steroids again) that’s still a tiny fraction (“highly leveraged”) of total deposits. The same leverage applies in Canada. That same leverage is what brought down the banks in Cyprus.
It’s all about confidence. The entire financial system and fiat currency is based on absolutely nothing except the plebes confidence and trust in politicians. If that’s not scary, what is?
In the arcane language of bankers, deposits are the bank’s “liabilities” and this new legislation allows for “very rapid conversion of certain bank liabilities into regulatory capital”. I notice that the latest Canadian government propaganda does NOT spell out that deposits are exempt from confiscation (“bail-in”). Welcome to ‘Bail-in Nation”, folks.
In fairness, the government has not yet finished spelling out the details. In reality, even if they do exempt deposits, how many times have we seen governments change the rules when they get desperate? Governments don’t give a rat’s ass about the people they supposedly serve; they only look after themselves.
It can’t happen here? The difference is Canada can print unlimited amounts of inflating fiat currency whereas Cyprus could not. The end result is the same. Instead of depositors tanking a haircut, ALL Canadians’ money becomes worth less and less due to unofficial but REAL inflation. It IS happening here and has been for years. The REAL inflation rate is about 7% (it’s 9% in the U.S. as per ShadowStats). I get my money out of the matrix twice a month and put it into hard assets.
One of Garth’s commenters said it well, “I quite like Jim Sinclair. He called 1650 gold ten years before it happened, when everyone said it wouldn’t happen. He is now calling for 3500 gold minimum.
“I like garth too but think he dismisses the gold story far too quickly… Maybe he just does it because it gets a rise out of so many.
“I think the short story is this…
“All governments and banks will tell you everything is ok and guaranteed until it is not. The system we’re in is completely broken and dependent on quantitative easing into perpetuity. There is no “market” anymore for anything, because interest rates are not at a natural rate and they will not be allowed to return to a natural interest rate. Its all one big series of serious capital misallocation. Savers get punished and pulled into equity markets that are rising on vapour volume, or bonds that pay nothing. Behind the scenes are quadrillions in derivatives that are marked to some fairy tale valuation, but are really like drunks leaning on each other in a bar.
“There is no amount of deposit guarantee that would protect a derivatives crisis. Bail out vs bail in who cares you will get skinned one way or another. Tax, levy, inflation whichever is politically expedient. There is not enough capital anywhere to plug the derivatives holes that already exists post Lehman. And really the reason why there is a save cyprus at all costs mission.
“Thats the big secret, and gold trades unlike any other asset. I read one analysis that showed 96% of trading days on Comex was down…think about that. Why are people so shocked that gold is manipulated when we have libor, enron, madoff, man financial, and others? God gold is set by a process on the LBMA known as “fixing” What more do you need?”
Gerold again: This is why governments and the ass media are in overdrive trying to convince us we have nothing to worry about. Meanwhile, the smart money is converting devaluing fiat currency into hard assets which is exactly what I’m recommending to my readers. Warren Buffet is an excellent example. Here’s a piece I’m working on for a future post: He is the master of “Indirect Exchange”. He pays for an asset with depreciating money and the asset then generates revenue greater than holding money (inflation depreciates its purchasing power) or holding gold (inflation increases its price at roughly the same rate as inflation). He also recently bought HJ Heinz and previously bought Burlington Northern Railway. Inflation will increase the price of ketchup and shipping rates. So he sells a depreciating asset (paper money) and buys an asset that adjusts for inflation while generating a profit over and above that. That’s why he’s the master of Indirect Exchange. He understands that people will always want a good quality ketchup and need transportation to ship it.
As far as home ownership goes, here’s one of my lessons in “Oh, the Things I’ve Learned”
https://geroldblog.com/2012/05/12/oh-the-things-ive-learned/
RENT, DON’T OWN
I was owned once by a house. I won’t do that again! Home ownership is a form of slavery encouraged by governments to control us with immobility and threaten us with theft such as expropriation, taxation, regulation and unnecessary bylaws.
Home ownership tied me down and limited my mobility. Instead, renting makes it easy to pull the pin and move. I would have missed several business opportunities had I not had the freedom of renting.
I was surprised to learn a house isn’t even a chick magnet. I thought that women lusted after the sense of security a house provides (they do) but it made no difference in my love-life.
I also thought I made a hefty profit after selling my house. Then I calculated what I would have paid to rent a comparable size apartment. My profit was reduced to $378.00. And, that did not include my labour for maintenance, repairs, mowing the snow & shovelling the lawn, etc. In other words the time I spent doing maintenance earned me pennies an hour. Some profit! That’s not ownership; that’s debt slavery. I learned that owning a home is a lifestyle choice, not an investment. I prefer to rent and let the landlord do all the work. I know. I’ve been a landlord, too.
Furthermore, home ownership is a pervasive myth. It’s a ‘motherhood” issue that few people are willing to expose because so much of our economy depends on home slavery. Also, we can expect desperate local governments to massively increase property taxes not to mention water rates, power, etc. Few people are willing to admit that, too. Rent, don’t own. A home is a depreciating asset. In stagflation, the things we own depreciate and the things we owe increase.
In fairness, there’s only two positive things I can see about home ownership. 1) It’s a lifestyle choice; a way to keep up with the Joneses and impress other house slaves. 2) It’s a form of enforced savings for those lacking discipline to save or invest in safer assets.
Yes, I’m prepared to weather the storm but I have no illusions about absolute security. Security is a feeling, a sense, an illusion. I harbor no illusions about the future. I expect many unpleasant surprises. Preparation is a matter of degree. The best preparation is mental: attitude. I’m mentally prepared for unprepared people losing it, losing patience and tempers and possibly their lives.
I’m glad I’m old and had a helluva great life. I wouldn’t want to trade places with a young person today given the future we face. That’s one reason I blog. To share my knowledge, hopefully help someone and pay back all the people who have helped me in the past.
Stay tuned.
– Gerold