Crawl Across the Ocean

Sunday, July 29, 2007

End of Weekend Random Notes, 6 Sequiturs and 1 Non

1) There's nothing like being sick for weeks to make you appreciate not being sick anymore.

2) As a follow-up to this post, so far I'd have to assess that the bad luck from the two black cats cancelled each other out at worst, or perhaps even resulted in positive luck.

3) Meanwhile, walking home tonight I had two skunks cross my path, including one I came within half a foot of stepping on (I was walking backwards, admiring the full moon). I'm guessing that stepping on a skunk is bad luck, even (especially) if you step on two. Of course, if I had to be sprayed by a skunk, that wouldn't have been the worst timing as I was already wearing an old beat-up pair of jeans and a light blue shirt that had recently been covered in purple spots.

4) Things change, whether you want them to or not. And moving generally sucks, even when you're not the one moving.

5) Always pack the corkscrew last

6) If you open a bottle of (in particular, red) wine by pushing the cork into the bottle, exercise caution!

7) I have agreed to argue against the idea of a 'flat' tax as part of the 'Great Canadian Debate' (see here for the origins of said debate).

Thursday, July 26, 2007

Like a Compass that Always Points South

Heh, sometimes you gotta love Paul Wells.

Here he is, digging out an old Mark Steyn article from 2002, predicting all the things that would be happening by December 2007 (dollar at 55-60 cents, gun crime accelerating in Toronto, etc. - if it hasn't happened, he predicted it would.)

Brings to mind this excellent recent post from James Wolcott, coincidentally also on the topic of Mark Steyn being wrong every time he makes a prediction. How can one man be so wrong indeed!

A Few Thoughts on the Housing Market in Vancouver

Naturally, the first thought is that house prices are unsustainably high. You can read this (pdf) report from RBC and see that affordability levels in Vancouver are back up where they were last time prices tanked and didn't recover for a decade. Or you can compare house prices to rents and see that the ratio between these is way out of whack (check out this real estate trends document from Scotiaback which explained that you saved $1,200 a month renting instead of owning in Vancouver.) Or you can consider the standard bubble spotting wisdom that the time to sell is when even people you would least expect to be interested start telling you about how they've started investing in x (in this case speculating in condos).

Whatever measure you look at, the message is the same: bat time to buy, good time to sell or wait.

The second thought is that, on previous occasions when affordability levels were this poor, they were brought down by a combination of two things: Price decreases and interest rate cuts. In fact if you look at the historical spikes on the affordability curve, they were caused by sudden run-ups in interest rates which triggered recessions and then were (relatively) quickly brought back down. But this time, affordability levels have reached the same painful levels despite interest rates that are pretty low. So without the possibility of deep interest rate cuts to improve affordability, price cuts are all that is left.

Here's a chart of the bank rate, from 1976 to Q1, 2007 so you can get the picture.

The big spike on the left is what triggered the recession of early 80's. The spike in the centre is what triggered the recession of the early 90's.

But then look what happens as we move forward from the early 90's. Interest rates just go further and further down until a mild increase in the last year or two. But if you check back with the affordability chart in the RBC document, affordability actually deteriorates in this period of low interest rates. Just the small rise of rates we've seen in the last couple of years is enough to drive unaffordability up to where it was back when the bank rate was at 14% (as compared to the current 4.75%.)

The third thought is that ultimately it comes down to supply and demand: The supply is plenty high, as a glance around at all the cranes would tell you. Meanwhile, what about demand. Migration to the province is below historical norms and home ownership rates in Canada have already climbed from around 60% in the 80's to around 70% so you wouldn't think it could go a lot higher.

On the other hand, inspired by the success of looser mortgage lending standards in the U.S., lots of changes have been made in the last year to loosen lending standards here as well, allowing a down-payment of 20% instead of 25% to avoid needing to buy insurance, and allowing 0 down payment for insured loans, and extending the amortization period from 25 to 40 years for both insured and uninsured mortgages - so all that may push things a little higher.

Another question is how much demand is true demand (i.e. people who want to live somewhere) and how much is speculative (people investing in real estate because it always goes up).

I'd say the combination of speculative demand, demand borrowed from the future as people buy "before it's too late," year after year of high housing starts and low population growth will all lead eventually to too much supply, not enough demand. Which again means that prices will go down.

Of course, saying that the market is overpriced and will come back down - eventually - is easy. The hard part is saying when. If I had to guess (and that's all it would be, a guess), I'd say prices will peak in Vancouver before end of 2008, but only time will tell. In the meantime, I'm certainly no financial expert and you don't want to follow my advice, but in any event, the only advice I might offer right now is to be careful.

Now, I suppose you might say that it's always good advice to be careful, but there are particular times when it is much more important than usual, and this is one of those times, in my opinion.

Wednesday, July 18, 2007

No Foolish Consistency Here

Andrew Coyne on Stephane Dion,
"The message one hopes public figures would wish to send is this: that Canadian citizenship is a precious thing; that it is not only a gift, but a vow; that we are a nation, or must be if we hope to amount to much -- a compact, if you like, binding all 32 million of us to each other in common cause. We do not merely populate this half of the continent; we are, rather, engaged in a great collective venture, the construction of a society based on justice and committed to do its part in advancing the human prospect."

Such powerful words, let's bind all 32 million Canadians in a common cause - oh wait, sorry, would you settle for 31,999,999 Canadians?

Andrew Coyne on Conrad Black,
"To be sure, the first Lord Black of Crossharbour has had a famously complicated relationship with his country of birth, even renouncing his citizenship when forced to choose -- a peerage for a passport. But if he has sometimes sounded angry with his country, these were clearly the cries of a wounded lover. We disappointed him, and he was not too shy to let us know it."

While on the topic of Conrad Black (sucks to be you Conrad!), I find it mysterious that right-wing folks are all so keen to rush in and defend him. I guess Occam's razor suggests that it's just because left-wingers have taken such glee in his downfall and right-wingers hate to see left-wingers happy, so there's not much point reading more into it, but still, it makes you wonder how much of a scum someone would have to be before right-wingers would refuse to defend them.

I mean, he was expelled from school for cheating, he was forced in court to return money he stole from the pensions of his employees and now he's been arrested and thrown in jail for fraud and obstructing justice. Yet the 'law and order' crowd just says poor old misunderstood Conrad.

Speaking of the law and order crowd, crime hits a 25 year low - if only the word 'crime' didn't rhyme with 'time' maybe demagogic politicians would stop trying to play the fear card and do something sensible like legalizing marijuana.

Saturday, July 14, 2007

The Importance of Perfect Pitch

I've been watching the U-20 world cup (No, I'm not going to talk about the Canadian 'performance', ugh.) and I have to say I was really impressed by the Spaniards who were playing in the group based in Vancouver. They scored (and allowed) a pile of goals playing exciting attacking soccer with a ton of skill. So it was really striking to see how much their game is being affected by trying to play soccer at Commonwealth stadium, where the ball never rolls flat for more than 5 yards at a time, and the turf seems very hard and tough to get a proper grip on.

I mean, sure, the Czechs are playing good defense, but you can see the impact of the poor surface on almost every sequence (unless you're a CBC soccer commentator of course. At least up to the point where I switched over to watching the game on Telelatino, (I can't speak Spanish but it's still a far more enjoyable experience, despite, or perhaps because of that) the CBC commentators treated every bad play caused by the lousy turf as some sort of inexplicable error).

It makes me wonder how much of Canada's inability to develop players who can pass the ball around and dribble and generally show good ball skills is a function of our players playing on terrible pitches all their lives, where you might as well as hoof it up because if you try to pass it will just get caught in the weeds or take some crazy bounce off the pitchers mound or a pile of gravel. True, the obvious counter-argument is that it's not as if the Latin American countries are filled with with pristine pitches, but I still can't help thinking this is a factor we could work on. I recall that, as a kid, we always played a much more skillful game on the rare occasions we were able to play on the town's one decent soccer pitch (built on a swamp so it wasn't rock hard like every other pitch in town).

Anyway, carry on.

Thursday, July 12, 2007

The Mathematics of Superstition and Other Irrelevants

I was walking to work yesterday morning, when out of nowhere two identical, entirely black cats scooted across my path, a mere step in front of me (while an all white cat sat on the edge of the sidewalk, unmoved.)

Which left me wondering: is the bad luck from black cats additive or multiplicative? In the former case, I can expect twice the bad luck of a single black cat, but in the latter, I would expect good luck representing the square of the bad luck from one black cat.

I guess I'll have to wait and see as, for once, Wikipedia is not helpful.

Went to see the new Harry Potter movie the other day (note to Canadian Conservatives and other supporters of 'Canada's New Government': by 'new', I mean the 'new' Harry Potter movie that opened this week, not the 'new' one that opened in late 2005, or the 'new' Harry Potter movie that opened in 2004.) and it was pretty well done. Probably the second best so far after Prisoner of Azkhaban. Cutting 766 pages of print into 2 1/4 hours of film can't have been easy and there's really only one scene left out that I really thought should have been left in (Harry and co. meeting Neville's parents at the hospital), so, well done to screenwriter Michael Goldenberg, who also managed to get away from Steve Cloves (screenwriter for the first 4 movies), tiresome Hermione=good, Ron=comic relief dichotomy in an effective manner.

Before the movie there were previews for film translations of two other children's novels: The Golden Compass, which looks good, and 'The Dark is Rising' which, alas, looks like the epic battle between good and evil as penned by Susan Cooper, re-imagined as an American after-school special - "I'm supposed to save the world, I can't figure out how to talk to a girl" Will tells us in the preview which suggests that being too faithful to the book won't be a concern for this particular adaptation. Sigh. Oh well, 2 out of 3 is pretty good, especially when we're talking books made into movies.

Back on the topic of previews, I have to say that Steve Carell was born to play the role of Maxwell Smart. There's an adaptation that has some real comic potential.


Before the movie, we were, as always, subjected to a pile of commercials, with cars and cell phones among the usual suspects, but there were two ads I noticed in particular - one from a bank advertising its new 0 down-payment mortgage (as if mortgages were physical products and the U.S. housing implosion was causing their banks to ship their leftover inventory North), and one from local condo Marketer Bob Rennie offering the usual incoherent condo-babble (a dialect all its own, really). Two desperate real estate pitches in the pre-movie ads? Can you say bubble? More on this in a later post.

Monday, July 02, 2007

Banana Republic

I was watching Adam's Rib the other day and there's a moment, just over half an hour in, in the establishing shot as the trial is about to start, where the camera zooms in on writing carved into the stone wall of the criminal court building. The words read, "Equal and Exact Justice to all Men of Whatever State or Persuasion."

A good rule for a democracy, I'm sure, but not one that is applied too consistently in banana republics and aristocracies. Happy (early) Independence Day Scooter, spare a thought for the over 2 million Americans who will spend independence day in prison.

Sunday, July 01, 2007

Happy Canada Day!

Lazy blogging: a pic taken from my living room window...