Negative Interest Rates

There is speculation that Canada will be the next country where the central bank sets negative interest rates. This forces reluctant banks to lend money. Right now banks and corporations are sitting on piles of cash.

It bothers me when interest rates are cut by the central bank and my mortgage company the Royal Bank increases mortgage rates. Punishing the good credit clients because they are too scared to lend money. I have been with RBC for 35 years. They have had mortgages, car loans, credit cards and  lines of credit with me for decades. I have never defaulted. In fact it would be impossible to default because I have asset backed loans. I'm risk free and they have made a ton of money from me. Not so much as a thank you or "how do you do?" from them.

The Canadian economy is stagnating. The $dollar tanking and oil prices are in free fall. Only the construction and housing markets in Toronto and Vancouver are healthy. If the housing market crashed we might as well hand in our First World papers and join the Third World community of nations.

The biggest mistake I made was conservative investing in the TSX. I believed in Republican dogma and bet on Harper over Obama. It cost me hundreds of thousands of dollars. The NYSE outperformed the TSX by a wide margin. I'm a patient investor and I never panic. I have made tons of money on the panic investing of dummies. The same dim bulbs that sold their stocks after 9/11. Believe in the cyclical nature of the stock markets and invest long term. It is tried and true formula.

I believe in stimulus spending on infrastructure by governments. I don't believe that taxes are an evil thing. After George Bush nearly bankrupted the US economy, Obama's stimulus brought stability to the markets and rescued entire industries. Now America has to lower its spending. Harper tried the opposite, he reigned in spending hellbent on a balanced budget. He provided no stimulus and relied on an oil boom to float the economy. When oil prices collapsed his house of cards tumbled and the Canadian economy is in crisis. Trudeau is about to let the deficit increase with infrastructure spending to stimulate the economy.

There are two sure investments in Canada guaranteed to make you money. Real estate in Vancouver and Toronto. I own a couple of pieces of Toronto real estate. On top of that investment I use one as a domicile for my aching feet.

I have read for the past decade about the imminent collapse of the Toronto housing market. Like clock work you can count on articles on two topics in the national newspapers. One is an article written by a Brian Mulroney flunky that the former PM was misunderstood and the other about the collapse of Toronto real estate.

Toronto real estate will continue to boom. Constant immigration, urban sprawl and longer commute times will keep the money train on the track. In retrospect I should have invested more in real estate and less in the TSX.