July 13 Episode
01:20:26 Share

Welcome to Money Talks. My name is Mike Campbell. You know, I'm just thinking coming up, we're going to be talking to Ralph VanderWaal of EasyInvest.ca. And I just want to share this. I'm on all the time about how government is adding to the cost of housing, whether you're looking at rentals or whether you're looking at buying, etc. He has got an example that will blow you away. Just wait for that coming up.

I'm also going to be talking, well, we've got a lot of subjects on our plate this week. You know, I'm going to be talking about the whole challenge of immigration and newcomers coming into this country with one of the foremost experts, Mikkel Skutrud, who's a Waterloo professor. But this is his life's work for the last 20 plus years. Excellent work talking about the economic impact.

talking about, you know, how we've changed the system. My goodness, I think most Canadians don't understand that. So it's not just who's coming in, in order to benefit the economy, you got to know exactly what skills are bringing. We've changed that system. Anyways, I'll let him get into that. There's much more to come on that. Plus, I've got Ozzy. I've got, of course, Victor with us, and I got Mike Levy coming up. So all of that coming your way. But first, the

The increase in the capital gains tax, the debate over who's paying it, it has put taxes in the spotlight. And I think that's a good thing. After all, for many Canadians, taxation is their biggest item in their cost of living. Where and how effectively our tax dollars are spent? Well, it deserves a spotlight, along with how much and what is the impact, not just on us individually, but on the overall economy. And too often that's overlooked. I mean, simply put, high taxes discourage work and investment.

That should be obvious, but clearly it's not to proponents of higher taxes. A great example, well, a few weeks ago on Money Talks, we had internal medical specialist Kevin MacLeod on. Dr. MacLeod talked about the impact of the increase in capital gains tax on doctors who had, with the urging of the government and other professionals, they were told to organize their practice as a corporation, as a way of saving for retirement. The urging of the government part's important.

Doctors work under that single pay system of government, but they weren't included in retirement plans of other medical professionals like the nurses or what have you. So in return, the government encouraged doctors to form corporations in order to save for their retirement.

And under the new capital gains tax, well, they don't get, again, because it's a corporation, they don't get the benefit of the $250,000 capital gains. I mean, they pay on the first dollar and that's on, you know, a marginal tax rate, chances are is 54%. That means for some patients, the doctor's only keeping 46 cents on the dollar and then they have to pay for their office overhead and staff out of that. Well, for many, it's simply not worth it. They prefer to take the time with the family or maybe do other things.

And that's going to put even more strain on patient care. That should be, by the way, understandable to everyone. But in case it's not, let me give you an example. Years ago, Forbes magazine columnist Rich Kegard had this great illustration of the impact of tax rates. And it goes like this. Let's say each day of the week had a different income tax rate. So if you worked Monday, you paid no tax, zero.

You're taxed 25% of what you earn on Tuesday, 50% of what you earn on Wednesday, 75% on Thursday, and 100% of your income would be taxed on Friday. So here's the question. Which day would you like to work? Well, I don't think it matters what your political leanings are. You'd choose to work on Monday, and nobody would choose to work Fridays when every cent of the income is taxed.

That's the impact on taxes on behavior, whether we're talking work or investment. I mean, it's pretty easy to understand. Yet proponents of high income taxes continually ignore the disincentive to work that higher taxes create. When they propose raising taxes on that much vilified 1% or even 10%, but again, let's talk about the 1% for a minute. That means they're talking about people who earn over $290,000.

They pretend that no one is going to choose to work less or move to another jurisdiction, as Dr. Kevin MacLeod tells us is likely to happen. So to say you don't understand or ignore it, as those who want higher taxes than someone else do, I think is dishonest, disingenuous. But people do understand and its implications. For example, if you like to answer, hey, I'll work on Mondays, but you still want government services, well, the only way that happens is for people to work on the Thursdays or Fridays.

We rationalize it by saying someone or some business isn't paying their fair share. But the real reason is that some people simply want someone else to pay for the services they want. Well, it could be our children too, by the way, in the form of rising deficits and debt.

which has just exploded over the last several years. And that's why free lunch promises are so popular. But a final note, before the federal government initiated the increase in capital gains tax, they polled Canadians about their attitudes about the rich. They never defined exactly what rich is. And they found that going after the so-called rich was popular with the majority of Canadians.

Hence, the government rhetoric changed dramatically around the capital gains increase, focused on the rich not paying their fair share. So let's just clarify the target. According to the latest figures from StatsCan, top earning professions, they're talking about going after orthopedic surgeons, cardiologists, neurologists.

And that's exactly what they've done with the increase in capital gains tax. They're going after software engineers, speech therapists, pathologists, veterinarians, and of course, successful entrepreneurs and other professions, as well as the best and brightest in tech. Now, you might want to think about the consequences of that because we're already seeing it, especially in terms of the doctor shortage, the declining capital investment too, as money and people choose other jurisdictions.

Hey, as I said, we've got a great show planned for you today. So much coming your way, but a reminder to join us on Mike's money talks.ca Mike's money talks.ca. And you can find out the latest sign up for five minutes with Mike money talks, tweet Michael Campbell's money talks on Facebook. And I love the feedback and I love it even more by the way, when you recommend money talks to your friends and acquaintances.

I had an interesting discussion just, well, actually a couple of weeks ago with a friend of mine. We were discussing whether housing or immigration were the most important sort of social slash economic subjects today. And I said, well, they're both the same thing. I mean, the impact of one on the other. That's why I'm so pleased to have Mikkel Skutrud with me today.

This guy has done unbelievable work as a professor of economics at the University of Waterloo, director of the Canadian Labour Economics Forum, Roger Phillips Scholar of Social Policy, C.D. Howe Institute. Boy, you can see why I'm happy, Mikhail, that you're finding time for us. What do you get, about 15 minutes off a week with that schedule? It's busy, and it's been busy in particular as the immigration issue has become more topical in Canada.

Yeah. And as I say, I want to acknowledge, first of all, that you've been working on it for decades, you know, and the economic impact. But you're right. I mean, all of a sudden, it's as prominent an issue as we have in the country. And I do relate it to housing because that was so easy to understand. If you bring in 1.3 million people last year, for example, or the last 12 months.

they got to live somewhere. I think that was understandable to many people. And then they're impacted. And you're at the University of Waterloo. I was just looking at rents in Waterloo are up 20%.

you know, year over year, you know, that's, and some of that at least has got to be driven by people coming in to the area. So, and of course, working at a university, that's been another hot topic, you know, of university students having no place to live. And of course, then we have the temporary visas and universities, you know, so it's a broad based subject with that. Let me just get your take on

You know, immigration used to be sort of an off the table subject. You know, the broad majority of Canadians supported it. We're clearly seeing that support eroded right now. What's your take on why that's the case?

I think you're right. It wasn't, in a sense, an off-the-table subject. It's not because we didn't have high immigration, though. We were, you know, we had immigration rates of about 0.8% of the population for a decade and a half, and it was just kind of a slow-moving train that was...

behind the scenes, wasn't in the headlines of the newspapers, was very focused on a particular objective of trying to kind of raise average living standards in the population by raising the average skill of the population. So it was very much a skilled immigration system.

I think what's happened, especially in the post-pandemic era, is that there's been a reshifting of the immigration system and what it's trying to do. It's no longer focused on attracting and retaining high-skilled workers. It's much more focused on plugging holes in lower-skilled labor markets.

Yeah, and that has implications, obviously. You've been writing about them. And one is, you know, I'm so glad you have been writing eloquently about productivity. I mean, that's now, again, as the Bank of Canada says, we've got an emergency on a productivity per capita basis. But it comes directly back also to the subjects you work on, which is temporary visas. Who are we bringing in? I mean, it can't have all the same balanced kind of impact if I bring in someone who

without skills versus someone with skills. And as I say, you've been doing direct study on that. - And I have been for decades. So within the economics literature, the question about what an optimal immigration policy looks like is very much focused not on immigrant settlement policies,

It's focused on immigrant selection policies. The reality, of course, for a country like Canada with a very high standard of living is that the supply of migrants that want to settle in Canada as new permanent residents far exceeds the absorptive capacity of the economy. What that means is that there's excess supply and policymakers can pick and choose who's

Who do we let in and who don't we? And, of course, that's just a reality. You know, you have to, as soon as you prioritize one type of applicant over another, it means you're picking and choosing. And so the question for economists for many years has been studying, well, how do we do that? How do we...

And it's really not that different from a business who has multiple applicants for their job vacancy. You know, how do they pick and choose between them? They have imperfect information. Ideally, they want the most productive person. But in a job interview, it's hard to know who's going to be the most productive. And the immigration department's job is not really that different. It's a job of trying to predict who's going to be the most productive, given the characteristics they observe, which are often quite

crude measures of productivity, but that is what the job of immigration departments is.

Well, I think most Canadians would be surprised. They'd heard of this point system, if you know what I mean. Like, it's not their first subject, but they go, yeah, we're on a point system. And as you've written recently in the Globe and Mail, co-authored a column there was, you know, we used to be the envy of the world. But I think most Canadians would be surprised because they weren't consulted that that point system isn't in play any longer. Maybe you could elaborate on that.

I think it might be a little of an exaggeration to say it's not in play, but it has what it's not exclusively relied on in the way it was. So up to 2019, all economic class immigrants. So there are different categories of immigrants, but 60 percent of immigrants are entering as economic class immigrants and all.

And all of those immigrants were being selected through a system called the express entry system, which was using a single points grid to give people a score. And then it was cream skimming the applicants based exclusively on their scores.

It was setting a cutoff and just like a university, how they pick their applicants for admission into a university program. They look at high school averages and they say, here's the cutoff. And everybody with a grade above that gets in. The immigration department was doing the same thing. What happened after the pandemic is that a new program has been introduced that they're not relying on that system. Instead, the minister of the day is able to sort of pick and choose students.

the flavor of the month or whatever law business lobby group is lobbying and shouting the hardest, the loudest. And they can, they can, they can prioritize those individuals. And those tend to be, they have undoubtedly been individuals with lower income,

Because we see that every time they select a particular group, we see what the point levels were, and they're much lower. So they're lowering the CRS points in this new system. The name of the new system is category-based selection. So that was a policy that was introduced in September of 2022.

Well, as I regularly say, there's only policy choices and then outcomes. Then you can decide whether you like the outcome in the end. So I want to talk about that economic outcome because it would seem a couple of things. It seems to me there's, and again, acknowledge that you've been writing about this, but I thought it's also for people easy to understand that

And the rationale was we bring in a lot of people and GDP will go up. The economy will go up. And I said, well, how can that possibly be the goal? I'm someone who lived in India, by the way. And, you know, yeah, their GDP is doing pretty good, but their standard of living sure isn't. And to not make that link to standard of living, just as I say, it was the kind of thing that just gives me a head shake and a headache. And just, you know,

Is that a myth or am I off base or is, you know, when that becomes the only rationale, you know, on the economic side on, you know, there's the asylum seekers, refugees, et cetera, but on the economic side.

I think, you know, there's different ways I can respond to this. I'm not quite sure the best way, but I think the really important point here is that when you have an immigrant selection program, which is ultimately what the government has to do, you've got lots of applicants in the pool, you've got to pick and choose. When you pick and choose, you have to

decide how you're going to do it. The most reasonable way to do that is to set an objective, to say this is the objective. For economists, that's a mathematical function. You know, when you've done calculus, you know there's an objective function. You're going to maximize that function with respect to something. But the key is there has to be one objective. There's something called the Tinbergen rule. Tinbergen, Jan Tinbergen was the first Nobel Prize winner in economics.

And the Tim Morgan rule says that for every policy objective, you need at least one policy instrument.

If you have one policy instrument, like how many immigrants to admit, but multiple objectives, you're going to run into trouble unless those objectives through luck all just tend to be perfectly aligned. But the reality is that the objectives of immigration, there are many, but they're not well aligned. So, for example, trying to meet current labor market needs, which tend to be in low skilled occupations, is not well aligned with trying to leverage immigration to raise GDP per capita.

to raise the skills of the population. So if those are your two objectives, you say, well, I want to do both of those things. I want to meet current labor market needs and I want to raise GDP per capita. Then you pull the policy lever to raise GDP per capita, but you make the other things worse. So that's the dilemma we have. And I think the problem in Canada is what we have is that ultimately we don't talk enough about what the objective should be. And we've written a paper that argues the most reasonable objective

for economic immigration, not humanitarian immigration, but for economic immigration, is to try to raise the country's average standard of living, GDP per capita, and then we talk about how to do that. And the CDL Institute has put out a report that we wrote to a wider accessible audience today that's been released today that I encourage your listeners to read that talks about how to best do that.

And again, I want to come back because you've been writing about it. And as I alluded to earlier that Carolyn Rogers told us we had a productivity emergency. You know, if that was the goal, it would seem we'd have to go back to skills tests because you have to get above the Canadian average income, right, to improve productivity per capita. So, yeah, I'm still confused what our goal is. I hear what you just said, what it should or what if your economics was a goal, but it seems to be all over the map.

And I think it was the prime minister himself. You know, I don't want to politicize it too much because of a lot of reasons, but the prime minister itself said the temporary visa program was out of control. And I was shocked because this is going back a couple of years. I was shocked to learn they didn't know how many visas they were issuing. I thought, wait a second, you've got an immigration target.

But you literally don't know how many visas were out there and they'd only know after the fact, which, of course, makes it a little difficult for planning, you know. So, yeah, I just I find that whole system seems to have not worked at any real purpose other than we're letting a lot of people in.

I'm not sure what the goal was, letting a lot of people in. - Well, so there was clearly a lot of advocacy for the growth in these non-Permanent Visas that were being issued. There were many groups behind this. The Canadian Business Committee, the Canadian Business Council, the Century Initiative that is funded by some of Canada's leading business people.

have been advocating for this for years, the growth in those non-permanent resident numbers. So we know sort of what's behind it. The reality of – and I should maybe also step back and make sure that, to be sure, the government knows how many permits are being issued. That we know for sure. There was never an issue about that. The issue is when they issue a permit, we're not really sure whether those –

Permits correspond one-to-one with people that are in Canada, that are living in Canada. You know, it's impossible an international student's issued a permit, an approval to come to Canada to study as an international student, but decide not to come.

well then we're going to count them as part of the Canadian population when they're not actually here. That's possible. Our population numbers might, in that respect, be over counting the population. On the other hand, it could be that migrants have visas that expire and they don't leave.

And then we're not counting the population when we should be. So there is some fudge factor, some fuzziness in the estimates there. And ultimately, the reason why we have that problem is that unlike some countries, Australia is the model for this.

We don't track exits. You know, when you leave Canada, there's no paperwork to fill out. When you leave Australia, you know, if you've taken a flight out of Australia, you'll know there's a form. It asks you very specifically, where are you going? Why are you leaving? When are you coming back? Are you coming back? They collect wonderful data on exits of everyone, whether, you know, you're a permanent resident of Australia or not. Canada, we don't do that. So we don't, what we rely on is just like spiry dates of the visas to infer whether people have left. That might not be true.

Yeah, I can see that as a big problem. What about the whole, I mean, I hope more and more people are understanding this was a temporary visa problem, probably more so than an immigration target problem. And that's what the government seems to have acknowledged recently by saying we're going to put a cap on it. So a few things around that. One, do you trust the cap? Do you think it's a good idea? Can they pull it off? What are the implications there?

Economists never believe caps are a good idea. Caps are always a bad idea. I mean, you just think about like trying to regulate carbon emissions. You won't find an economist that thinks that a hard crap, that at least a cap where you can trade permits is one thing, but just a hard cap is a terrible idea. Why? Well, because governments generally aren't good at resource allocation. They aren't good at deciding where the labor is going to be more productive or where those carbon emissions are going to create

create the most value added to the economy. So, you know, as soon as you impose a cap on like study permits or work permits, you've got to decide, well, which companies get the visas that get the temporary foreign workers or what's the universities or colleges get them. And that's,

That's hard to do. And so the government, with a cap on the study permits, what they did was they shirked their responsibility to decide which schools were going to get them. And they just passed it down to provinces, which I guess makes sense because education is the provincial jurisdiction. But provinces, at least the numbers I've seen in Ontario, have done a completely absurd job of allocating these. You know, 15% of the permits are going to universities.

So that really doesn't make sense if, and this is a big if, if the objective is to leverage immigration to raise GDP per capita, that doesn't make sense.

So caps are not a good idea. Coming back to kind of, well, what caused this huge surge in the non-permanent resident population? You're right. The kind of the talking points from the liberal government have been that, you know, that wasn't intended. Those numbers weren't those weren't targeted. That wasn't what we intended to do. It was something something independent of our policy. It's not our fault it happened.

I think that's not quite right. The reality is in Canada, we've moved increasingly towards, I could make this long, but I'm going to try to make it as quick as possible, Mike.

Here's the story. We have moved towards a two-step immigration system. Didn't used to be like that. When my family immigrated to Canada, we landed at Pearson. We were new permanent residents the first day we landed in Canada. That's one-step immigration. Two-step immigration is you first come here on some temporary permit, and that is what's going to allow you to – so you kind of go through the first gate. The first gate is getting –

becoming a temporary resident, then that's going to allow you to get through the second gate, which is the transition to permanent residency. That's what people are aiming for. Permanent residency, not citizenship. People think that's not citizen. You know, you people, lots of Canadians. I lived in Canada for more than 10 years. I wasn't a citizen. It's permanent residency that matters.

So how do you make that transition to permanent residency? Well, the government has dramatically changed the rules there. It used to be this point system where it was very transparent and lower skilled migrants knew, "I have no chance of getting through that second gate. What's the point of me paying you ridiculous tuition fees at some substandard university or college

to get through the second gate when I know I'm not going to get through it? Or what's the point of me accepting this really crappy job with really low wages and poor working conditions if it's not going to help me get through the second gate? And so what happened was after the pandemic, they changed the rules about who gets through the second gate. It looks much more like a lottery now. This categories-based selection system means that the minister every two weeks is changing who gets through. And so migrants say to themselves, well, I got a shot at this now.

And student recruitment agencies and worker recruitment agencies are telling migrants, come to Canada. And if you pay a lot of tuition or you work in those crappy jobs, you're going to have a chance to get through. And I think what that's done is it's lured large numbers of migrants hoping to make that transition to PR. And the problem is they're here. And for good reason, they are.

are going to find it difficult to leave when their visas expire. And so then the question becomes, what happens to these folks? We undoubtedly are in the midst of a growing and surging undocumented population in Canada. And that's a big problem. That's a first-order problem for the economy. And so many other implications. As you were saying that, I'm going back to, have we really determined why we're letting these...

inviting people to come in. Have we really determined what the economic goal is? Is it an economic goal? I mean, I'm with you. It should be. That's what we've been sold. That's what, you know, the public's been told. But, you know, I'm looking at that university situation in Ontario, right?

my God, why didn't I go into business just setting up some cheap college that promised a pathway to permanent residency? Because I saw those tuition fees and then I compare them to your university, Waterloo, because you did, I think, the most in-depth study we've seen on that in Canada. You know, when you've started to track everybody at Waterloo and then you track these others and you go,

Remind me of the name, is it Catastoga College? - Catastoga, yeah. - Yeah, that were charging 50, $60,000, which obviously they weren't selling an education, they were selling a pathway to permanent residency, but that wasn't the highest skilled. Those weren't the people who'd have the most positive impact on our overall economy. So man, what a mess. - So I think the really important point here is that trying to leverage immigration

Whether changing the composition of the immigration inflow or the immigration rate, the number of immigrants, try to pull those policy levers to increase GDP per capita is really tough. Really tough.

The literature overwhelmingly suggests that for the most part, immigration doesn't probably do a lot to GDP per capita. Yet at a relatively stable rate of like the numbers we were at, 0.8%, probably doesn't do much. When you go up to over 3% population growth like we've been seeing, it's undoubtedly, you know, it's contributing to the decline in GDP per capita. But for the most part, reasonable numbers doesn't do much.

However, what it does do and what we know from the economics literature is that it has big distributional effects.

What does that mean? That's economics legal, but it crudely means there are winners and losers in the population. So who are the winners and losers? This is really important to recognize. To be a winner in the market, you want to make sure you're on the opposite side of every market from the newcomers. Where the newcomers are supplying things, you want to be demanding. What are immigrants supplying? Their labor.

And if it's cheap, low-skilled labor, you want to run any kind of a business that relies on low-skilled labor. There's going to be low costs of getting those folks.

And where immigrants are demanding stuff, then you want to make sure that you're supplying. So where immigrants are renting housing, you want to make sure you're a landlord. Where immigrants are buying mortgages, you want to make sure you're selling mortgages. Where immigrants need language trading, you want to make sure you're providing language. You want to be on the opposite side of every market. So then you can be a winner. But if you're on the same side of the market,

So if you're a recent immigrant who arrived, say, 10 years ago or five years ago, and you're living in an immigrant community where you're competing for rental housing with the newcomers, or you're competing for jobs in the same low-skilled sectors as the newcomers, there's going to be growing pains. You're going to feel that. And it's not surprising when you look at polling data where you see the highest increases in dissatisfaction with current immigration candidates among newcomers, among first-generation immigrants.

They're the ones feeling the pain. It's not, you know, the biggest push for the increase in temporary foreign workers numbers came from the Canada Business Council. I have Goldie Heider on record. I'm happy to share the video saying that Canada needs to remove all obstacles for business to access temporary foreign workers. That was only two years ago. I don't think he's making that point anymore, but that's what he was advocating for.

Right. And let's be clear about who's behind it. Let's be clear about who the winners are. And let's be clear about who's feeling the growing pains.

And speaking of losers, I mean, if you think we can't, you know, we need temporary workers because we're filling jobs no one else is filling. You know, we need them. Well, those are the jobs. Well, raise the price. Someone will fill it. So you're basically saying we're not raising prices. You know, we're not raising wages. So the existing workers, I can see, again, not doing any study, but the existing workers are the ones, hey, I'm not doing that unless you pay me $20 an hour. Well, no, I got somebody in. I'll just bring him in. We'll pay him $12. You know what I mean?

I can see them, Ali, your point really being the ones who pay a price. Right. No, I think that, I mean, I teach Econ 101 every fall term to about 800 incoming students to Waterloo. And Econ 101, that's sort of the bread and butter is the workhorse model of neoclassical economics is the demand and supply model. And a shortage in the demand and supply model is very simply defined. It's a situation where the demand for something is greater than the supply at a given price.

And if you have a situation where there's excess demand at a given price, what should happen is that that scarcity should lead the people trying to get whatever it is that's scarce to bid up the price, to bid it away from their competitors to get it. And so what companies should be doing is if there's scarce labor, they should be bidding up wages. But in fact, it's funny when you look at these sectors of the economy or occupations where

all this rhetoric around labor shortages is, for example, in the skilled trades, and you look at what's happening to wages, they're flat. There's no evidence of real wage growth.

So it really does fly in the face of this real narrative. I'm sure there are tight labor markets, but tight labor markets, at least if you're a worker, are not a bad thing. If I ask my students, when you graduate, would you rather to be in a situation where jobs are scarce or workers are scarce? None of those students will say they won't.

they want to be in a situation where there's more workers than jobs they say we want to be where there's lots of jobs compared to workers that's good that's not something to worry about that's something to celebrate and it's really interesting to see uh some recent poll results very recent talking about the dissatisfaction of 18 to 34 year olds you know i know housing is a big part of that but uh not getting a summer job and i don't want to oversimplify but

This would be an example, or we're seeing it. I don't think it's been quantified how many young people, but they come on TikTok or something and say, I've put out 73 job applications and I can't get a job. Obviously, that's frustrating, but it's important to understand there could be relationships here that people should examine. And there are always consequences, I say, just policies, and there are going to be consequences. I don't want to run out of time without getting into one other quick subject. But first,

Let's sum up the immigration for a second and say, okay, I give you a magic wand. We're far down the road. We have some huge challenges. What would you start with? Returning, for example, to the point system, or is there something else that you think, one or two things? I just want to make sure people leave with that clear clarification. To make the point as strongly as possible, Mike, I'm going to give you one thing, and I think it really is the most important.

And it's really not, you know, usually when people ask, what would you, what's kind of your dream or your wish for a system? Often these are pie in the sky, wishes. This is not. Why? Because it's literally returning to the system we used to have.

That's all I'm asking for. Let's go back to the way we used to do it. In 2019, we had a system that relied on this scoring system called the comprehensive ranking system to cream skin the applicant pool every two weeks. It was a predictable system. Immigrants, migrants could go online and they could see what their points were. If they found that their points were below the cutoff they needed to get admission, they could say, well, what if I improve my English language score a little bit, right?

What if I went and got another degree here or upgraded? How much would that push my score up? And so I would go back to that system. But not only that, I would improve it. So I was part of the consultations when that system was introduced in 2015. And one of my recommendations was I emphasized that the points grid can't be a static thing. You can't.

do it once and forget about it. Where the point system comes from is statistical analyses of looking at the characteristics of migrants at the time they apply and predicting using what's called regression analysis to predict their earnings 10, 15, 20 years in the future.

But that's constantly changing. What characteristics, what fields of study or occupations are valued more is constantly adjusting. So we need to constantly update the points grid. And that's what I would like to see us do, go back to relying exclusively on the points grid, but improve the points grid. I have all kinds of recommendations on how we can improve it. But for example, we don't make any distinction between immigrants' fields of study, the school they came from,

The earnings that they have, we have the earnings in Canada. We're not even using that information and deciding who to pick and choose, right? Why not use that information to do a better job of selection? I think that's fair to the immigrants and it's going to lead to better outcomes for the economy.

No, that's well said. Well said. But I also want to recommend that, and I am really glad that you are putting out your work now and go to CD How, but go to, you know, you were just recently in the Globe and Mail, you know, and there's other outlets. I just would really recommend people have a look because no one's doing more in-depth research in this, as I say, for over 20 years, but with the data that I hadn't seen anywhere else.

So I really highly recommend it. I think we agree. What a key subject, as you've just said, you know, uh,

myriad of implications economically. I'll add socially, not you, but it's incredibly important stuff and we appreciate you finding time with us. Yeah, so, you know, I'm an economist. For 20 years, I worked in this space of the economics of immigration and very rarely did any media outlet or people like you contact me. I wrote papers in academic journals and probably five to six people read these things on average.

As the issues become bigger, I've been pulled into this space that I don't really enjoy. You know, I'm not, I refuse. I keep a disclosure statement on my website. I take no money for any research. None. I won't accept it for money. Even the CDL Institute, they wanted to give me money. I refuse it. So I'm not going to accept it.

I am doing this because I care about immigration, right? I deeply care about immigration in this country. I'm an immigrant. I want to keep my economics hat on and I want to stay. I do not want to become a talking head that talks about every aspect of your culture. But I will say this, I'll just say this, that I immigrated to Mississauga as a child, eight-year-old child. I grew up in a kind of

kind of middle-income neighborhood, where the vast majority of my friends were immigrants themselves or their parents were immigrants. I think that Canada's record on immigration has truly been outstanding.

The way we've been able to maintain high immigration rates, we've had diverse populations of people becoming newcomers in Canada for decades, and we've maintained high public support. That's an incredible record when you look around the world.

I worry about the direction immigration is moving in. And I worry about, in particular, the way that we're selecting immigrants and we're focusing on these lower skill labor markets instead of trying to raise kind of the average skills of the population. I think that has important consequences. Great stuff. Thanks for having me on, Mike. I really appreciate it. Time now for the quote of the week.

Yuri Bezmenov had been a KGB agent promoting foreign subversion when he grew disillusioned with the Soviet Union. In 1970, he defected to Greece, but then he moved to Canada. The rest of his life, he dedicated to exposing the secret Soviet apparatus of subversion in the West.

Now, living in the West, it was 1983, Brezhnev gave a lecture in which he explained the psychological warfare, subversion, and the control of society. It seems like that subject is as pertinent as ever, given the efforts of the Communist Party of China, of Russia itself, and Iran to influence what's going on here. In quotes, Subversion refers to a process by which the values and principles of an established system are contradicted or reversed in

in attempt to sabotage the existing social order and structures of power, authority, tradition, hierarchy, and social norms. It involves a systematic attempt

to undermine a government or political system, often carried out by persons working secretly from within. Subversion is used as a tool to achieve political goals because it generally carries less risk, cost and difficulty as opposed to open belligerency. The act of subversion can lead to destruction or damage of an established system

or government. In the context of ideological subversion, subversion aims to gradually change the perception of values of a society, ultimately leading to the undermining of his existing systems and beliefs.

As I say, that seemed more pertinent than ever. There's so many examples that one can jump on for that. But I think it's a good warning that we have a huge level of foreign interference, and that's the goal. It's to absolutely undermine our system, and we should be vigilant about it.

We've had some great examples of how inflation can slow down or maybe it's a little more stubborn, but the cost of living still feels pretty harsh. I was thinking about looking at the rental.ca numbers this past week, where you still have Vancouver topping the list with a one bedroom about 2,800. Yeah, that was down, you know, 7% or 8% since the previous June, but nobody thought it was affordable. And, you know, it's interesting how stubborn some of these inflation numbers have been. I want to bring Mike Levy in to discuss this.

Mike, of course, the rationale for rising interest rates was to discourage consumer purchasing and borrowing, etc.,

reducing demand, ergo inflation comes down. But let me add one thing. None of that has anything to do with government spending. Do you know what I mean? Like the bank of Canada can throw those interest rates way up there. Government spending obviously hasn't changed. You know what I mean? It keeps growing. So that's a huge part of the economy and it can't have an effect on it. And as you said, it has the,

they can keep on spending. And it does, it throws a change in, Mike, for all of us, because with government spending, that is inflationary. And just let me go over, like this, a good part of the action of the current liberal government and government spending. And as you said, interest rates have no impact on government spending. However, the government spending is inflationary. And just let me go over a few. Government is spending on daycare, denomination,

dental care, pharma care, housing, immigration, and all that money they are spending produces inflationary results, whether it's daycare costing more, dental care costing government more, pharma care, housing particularly in the money that they're trying to throw at the housing market. Immigration is huge. Immigrants come into the country, God bless them, but when they come in, they spend and

Of course they spend. They've got to buy groceries. They've got to buy shelter. They've got to buy whatever they clothing. And that is inflationary. And those are pressures, Mike, that are all put on by the federal government. And I'll go to another one in a moment is government hiring is also huge.

Yeah, if we can't have the productivity and the supply being at a greater rate of change on the upside than the demand, obviously that puts upward pressure. And you just mentioned one is the government hiring has had, you know, has a significant impact.

Well, my government hiring, and I just have numbers that go up to 2023, but the size of the federal public service reached 274,000 at the end of 23, an increase of 40.5% since 2014, 2015, coincidentally when the Liberal government came into power. And according to the Parliamentary Budget Office, and what

one of your great guests Yves Giraud, total compensation for federal civil servants increased by nearly 37 percent from 2015-16 to 2022. Mike, that's just those are astronomical numbers and they cost and they're inflationary.

Yeah, let me take a slightly, forgive me for this, a little digression here, Mike, on that. Is that, I mean, and it's fine. I'm always big on this. If Canadians want bigger government, that's their right to vote for. If you want smaller government or stable government, you've got the right to vote for it. But clearly the program has been a bigger government, you know, as you just alluded to there. And I was looking at...

The challenges we had, I put this up the other day about the Port of Vancouver, second to last in a global ranking for efficiency. Well, that's a productivity issue. But you can look at the passport office. You can look at how our airports are being run, health care, and that's provincial jurisdiction with federal oversight. But that's a huge challenge when we don't have family doctors. My point is my list can keep going, Mike. You go have a nap, come back, and I'll still be talking about

I think government's involved in too many things. And it's the old, you know, if you want to do something, well, do it. But when you start spreading yourself that thin, including the increase, when we don't even have a model for efficient delivery of services.

You know, nobody is going to say the way the health care system is going right now and again provincial, but that's efficient. You know, there's questions about education. There's certainly questions about defense spending. There's questions about all sorts of spending. I mean, wait till you hear my goofy award today. You know, all sorts of spending.

And I'm just thinking it's kind of hopeless. They're involved in too many things to have proper controls in place, efficiency goals in place, etc. So I'm just saying, wow, no wonder that expansion. But that's another fallout from that, that we don't get services that focus on excellence because we don't even know what that looks like in even singular areas, let alone broad based like they've been.

Well, Mike, let's just sort of put that and I'm going to use the word focus. Let's focus on the follow up from all of that. And it's one thing that I don't think what political stripe you are. This government has no focus. They have absolutely they have no focus on models that work. So what they're doing is unbiased.

Almost feels like random. It's a plan they've got. But I don't know where that plan is focused, except, and I'm saying this, not you, is reaching out to the greatest number of people to get themselves reelected. But where's the focus for the plans that are going to give us efficient results as Canadians? And I think that's a big question.

It is. I would rebut and say climate change is their number one issue that none of the economic sides have proven to be. I think it's very difficult to make the case that productivity per capita and when you look at the debt and deficit situation, I mean, all of those things. And again, I want to say,

People are allowed to have their priorities. Some people have a priority on the climate change. Some people would like to see more economic priority across the board. But your point's well taken. But efficiency in government spending hasn't been a priority, clearly.

It hasn't been, Mike. And there's one other thing that it's sort of at the tail end. But Canadians have reaped, especially those with savings accounts in the banks or in treasury bills or whatever monetary they you want to use. But all of a sudden they've seen interest rates come from zero percent to five and a half percent. And there's lots of Canadians that do have money in savings.

Well, they can spend the interest. They had no money to spend from that before because the money wasn't earning anything. You could get five or five and a half percent. That's income without touching principal. Let's go out and spend that.

So higher interest rates don't always equal lowering of inflation. And that's your point to begin with, which is a good one, which is, yeah, it creates a ton of... By the way, it also creates a lot more revenue for the government, by the way, because interest rate is taxed as income. But your point on the spending is well taken because all of a sudden we have a lot more people lucky enough to have savings accounts or a Canada bond, you know, asset rich in those ways. Yeah, they have more to spend. That'll push up the price of things too.

I guess my last point is it's complicated. And I don't mean that as a cop-out, is that we can't pretend it's so simplistic you could put it on a bumper sticker.

And Mike, you're so right. And I'm just waiting for the next shoe to drop. There's a lot of shoes to drop, but I'm waiting now for the next shoe to drop with the federal government and spending and what they're going to do in order to increase business in Canada, in order what they're going to do to see productivity increase. So this is an ongoing story. Well, as I say, it's the Imelda Marcos of shoes in financial issues. Mike, have a good week.

- You too, Mike. - Going back, it was a couple of months, I talked to Ralph VanderWaal about the expenses right on the ground. He's with easyinvest.ca. They're building projects. They're searching out whether they wanna do a project and they go forward or they don't go forward depending on their guidelines about risk and about reward, et cetera, normal things.

But I think most people were blown away by how much money government adds to the cost. And this has been one of the themes on our show because our politicians keep talking about affordable housing and how much they care. And presto, you turn around and you go, well, that ain't helping. And Ozzie and I talk about that all the time. So I'm really pleased that Ralph, who's the founder of Easy Invest, easyinvest.ca is flying time for us here. Ralph, I,

Again, I think people were just blown away that what it's like being on the ground, trying to get something going, trying to develop something, et cetera. And you just keep on bumping into government charges.

You got that right, Mike. Good to be with you again. The cost of doing this business just keep increasing. Now, if they would increase on a 5% or 10% basis like most other things, we could deal with that. But let me give you a striking example. We just got our development permit for our Maple Ridge project called Portal. The website is portalmapleridge.com. We're now in pre-sales. But the city of Maple Ridge is increasing their developer cost charges.

Now, DCCs are what a developer pays so the city can use that money for parks and amenities. Fair enough. They're increasing their cost of DCCs by, are you sitting down? 80%. 80%. Wow. I mean, seriously. What do you say? But again, that's against a backdrop.

of politicians running around saying how much I care, you know, and that's just not possible. And then people say, well, why is housing so expensive or rentals are so expensive, you know, et cetera. Well, look at the costs that are going up. And I mean, we could be talking insurance, you know, we could be talking other, you know, other types of charges. Well, for an individual, you could be talking the property purchase tax out in British Columbia. You know, not all provinces have that, but still it's just, you know,

government fingerprints are all over the high cost of housing. Let me ask you within that context, though, as someone who, as I say, develops projects, you actually have one out in Maple Ridge where that development cost charge has gone up. Now, I would assume, do they apply to you, for example, or are you already too far into the project? Yeah, our development permit got approved over a year ago. But if we were to go back with a new project, we're facing an 80% increase.

Well, and I look at the housing, you know, and I'm proud to say, though, we've been chronicling this. I talked to Michael Mikkel from Waterloo, the Waterloo professional Mikkel Skutrud, you know, just a little bit ago about the immigration challenges with this. I mean, it's a cross-country problem, but...

Again, what do we need? Like 3.5 million houses in five and a half years or something by estimates? Well, we're just not going to get there. It's a crazy amount. Yeah. I mean, CMHC comes out with this study that we need an additional 3.5 million homes in addition to the houses already in the books on the plans. And that's by the year 2030. That's just not going to happen. Even when and if we get a new government and they're supposed to speed up development, and they surely will,

we are not going to be able to catch up. It's literally doubling the amount of construction. Another thing to keep in mind is when we get that new government and they will speed up permittings, then the cost of lumber is going to rise drastically as well. I mean, governments out there are making it very difficult to get permits for companies to go out and find new lumber. So a lot of the lumber mills are actually shutting down. So I think we're looking at the next storm that will increase cost of housing yet even further.

Now, you know, and you don't have to answer this because I'm getting into your business with easyinvest.ca and we appreciate that. But okay, so you're out. I want to just write right on the ground. You're out in Maple Ridge. You're pre-selling at this point.

What's the market reception? Are people feeling better about it? And keep in mind where Maple Ridge is, if you're listening across the country, you know, it's a suburb of Vancouver. So we've seen that gravitation out of that very expensive downtown core that everybody's heard about. Everybody's heard about the prices in Vancouver. So are you still finding that there's a market for that? And I essentially, cause you still, I mean, despite all this, you still start at a better price point.

than you would if you were closer to the city.

They say the proof is in the pudding. So we take risks when we buy a piece of land to go through a development permit and ensure that we can build what we envision for the site. The biggest test, however, comes when you go to pre-sales. That's where the revenue is going to come from. So we started our VIP events last July 6th, last Saturday. The sales center is ready on Fraser Street. I pull up at 930. We're supposed to open at 10 o'clock. And I look and there is a bunch of people inside the sales center talking to our team.

We sold the first five units, pre-sold the first five units in the morning out of a release of just nine. Now, the thing that's really catching my attention is that many of the people in that sales center are recent immigrants. I think historically, Canada has welcomed a lot of poorer people in most of the 21st century. Nowadays, I've read some studies that say 50% to 60% of new units are being bought by recent immigrants.

Well, again, though, when we're talking about a pool, whether it's temporary residents or immigrants, we're talking about adding to what, two and a half million, 2.3 million in the last two years. And of course, the point has always been, you've got to find a place to live, you know, and, but that's interesting. What else do you make of it? Is it, do you think people's attitudes about interest rates have changed too, that they said, okay, we've seen the peak, things are sort of edging down, I can get involved in this, I feel better about it, or,

Is it still more a scarcity? Like I better grab something now while there's still something to grab?

That's a really good point. You can feel both. You can feel scarcity. You know that they're going to run out of units. All we have is 36 units. So they're in there and they want to buy a unit ASAP. The interest rates are having an effect, but they're having an effect on the people that are having trouble qualifying. Those are the younger people, the ones that don't have enough equity built up yet. And that's very unfortunate. I mean, studies show that most of the young people in Canada have given up hopes of owning property.

The public that we deal with are the ones that have been in the market for 10, 15 years. They've built up equity. A lot of them are downsizing. So our age demographic tends to be 40 to about 65.

You know, and again, it's different. We're talking about, I would assume, and not that they have to tell you, but you're looking at people who are looking at a place to live for five and 10 years, etc. They're taking the broader perspective. And in that case, I mean, there's different centers, you know, look at how successful Alberta is in attracting people coming into the province.

But British Columbia will also be a destination around that Vancouver hub and Victoria and Nanaimo and others, but also in Toronto. So I think if somebody says, I don't care what's happening on the short term, I talked earlier about the coming restrictions on temporary visas, but they still close their eyes and they look out. We're going to have a heck of a lot more people living. Hence, again, that demand for housing is built in.

I think so. I don't see any end to the real estate boom. It's, in my humble opinion, one of the best businesses to be in. On one side, it's an enormous crisis. There's a lot of people that can't afford to pay the rent, can't afford to buy a house. That's a terrible thing, and that needs to be addressed.

However, if you're in real estate development, like our mutual fund trust is, it's the Holy Grail. I mean, you've got literally an unending supply of buyers and many of those people are qualified to buy these properties, even though the prices are starting to get pretty crazy in places like Maple Ridge. Yeah. Again, when you look at another project, sorry, I'll get inside your business now, but

Again, are you have other sites in mind at this point that you're starting due diligence and how long does that process take?

We do. Generally, we'll take a look at a site once we go into construction with one project. So this one is scheduled to break ground in September, October. We'll start looking at other sites. Our due diligence projects takes about two months or so because there's a lot of pitfalls. You really have to make sure that you don't have to go through a rezoning. I don't do that anymore. I've tried that for other clients. It takes years and years and years. In the meantime, you pay your cost of capital. So we tend to look for sites that are almost unregulated.

ready to build and near bus stops, near transit in urban areas. You know, obviously, Ralph, this is a big subject. Just one more quick thing, though. I want to talk. You've got a couple of webinars coming up and I'll get to that in a second. And it's free coming up this week on Tuesday and Wednesday. And I'll give a little more detail on that because it's a chance to expand on and again, hear the thinking process, that kind of stuff.

Tell me a little bit about the trust units. I didn't get to that, but if you can explain that. So we've got what's called the Western Canada Monthly Income Fund. It was established in 2018. It's a mutual fund that invests in these real estate projects. We're pretty much fully funded for the Maple Ridge project. We're raising just a little bit of cash for construction financing and working capital. So we're releasing a limited amount of trust units. And we'll have a webinar on that for anybody interested this coming week.

Yeah, and so that's what invests in the projects from there that we're talking about. Nan, you mentioned the webinar. That's Tuesday and Wednesday at 6 o'clock Pacific. Tuesday and Wednesday at 6 o'clock Pacific. And I'll put more of those details up on Mike'sMoneyTalks.ca and our social media. But in the meantime, Ralph, thanks for finding time for us. Thank you, Mike. Always a pleasure. Time now for the shocking stat of the week.

And I think it's one that illustrates, well, it's one of the big themes on Money Talks, but it's the biggest threat to your personal finances. First, a few facts. In January 2015, it took $1,500 Canadian dollars to buy one ounce of gold. Well, let's fast forward to today. It takes about $3,290 to buy an ounce of gold. Question, do you think the ounce of gold changed?

In January 2015, it took $56.51 Canadian dollars to buy one barrel of WTI crude oil. Well, today it takes over $110. In January 2015, it took $17 to buy one ounce of silver. Today, it takes about $42 plus to buy that same ounce of silver. Did the silver change? No.

And finally, one more example. In 2015, the average home in Canada cost $442,000. Well, today, $700,000. So the point is, what happened? The oil, the gold, the silver, it didn't change, and broadly speaking, so did the home, and neither did the home. Why the change and how much it cost? Well, it's obvious.

because the purchasing power of the currency went down. But we must note it. You know, Bridgewater's Ray Dalio said, what's the value of your money in relation to the prices of other currencies, gold and goods and services, to understand what's really going on with the value of your money and what it buys? Because if you don't do that, you might fall into the illusion that the things measured in that money, i.e. stocks and bonds, are going up, when the truth is the value of your money is going down.

Now, as we've said on Money Talks for, what, over four years, the biggest challenge to your financial well-being is the erosion of that purchasing power. I mean, it's happening all around us. And with government still creating billions of dollars electronically, which outstrips the growth of supply of goods and services, well, the trend's going to continue.

But here's the other aspect that's regularly overlooked. This trend exacerbates the huge gap between those who own assets like stocks or your own home, precious metals, Bitcoin, and those who don't. You know, we're allowed to protect ourselves through those assets, but many people cannot.

And by the way, real estate used to be part of that protection portfolio. But come on, look at what government's doing, increasingly going after it, whether it's a huge array of tax increases. We're talking about the change to the capital gains taxes. We're talking about talk about going after your primary residence, the bottom line. So the government's determined not to let you protect yourself through that asset, or at least it seems to be. But the bottom line is this, the main point, don't ignore the threat.

to your personal standard of living from the declining purchasing power of our currency. Lots of buzz about the potential to tax your primary residence. I'm proud to say we were first off the mark, but now lots of other people are weighing in with this. I'm going to bring in Ozzy Jurek. Ozzy, I just want to come back to that subject for a moment and talk a little bit about, as they say, it's certainly got tons of

response and tons of people talking. I'm not saying it's going to be implemented, the government's not saying it, but they have this peculiar tendency of continuing to talk to people who support it or initiate a study for something they say they're never going to do. Yeah, we did on your show on June 29, we talked about the fact that, yeah, eight years ago, the government made us report the sale of our principal residence and we wondered, well, why? What's the purpose of

Well, then there was always money given to the university to study this and study that. And the prime minister always says, we're not going to do this. But Financial Post just reported that the prime minister and the finance minister met with the same government-funded think tank we talked about, which has an operation called Generation Squeeze. And you love their website, Mike. And if you really think, they're not thinking about it.

Yeah, as I say, it's peculiar behavior. I mean, there'd be so many problems, for example. How do you calculate the gain on a house? Because I didn't keep records on the renovations I've done or the major repairs. People get a roof done, that's 15 grand, but it was done six years ago. They didn't keep receipts like you would to have your cost base. So I think it's incredibly problematic, but the government has shown a willingness at least to talk about

the generational unfairness of one generation accumulating wealth, especially targeted to real estate. And they haven't stopped on this one. They've been done. The prime minister himself has been talking about that. You know, old people, you know, kind of cash in on their house or they've got a house that's too big and he thinks they should have it broken down more, you know,

more government intervention in other areas too. Well, the idea is it's not just that they're targeting, say, that particular thing. It's everything. The youth cannot afford a new home, so we go after old people who worked hard historically to save enough for a home and pay off their mortgage. But

But that's not it. If you don't like this, we'll put in an equity, inequity tax on houses valued over $1 million. And then what really annoys me is it will only apply to the top 12% of high value homes. Well, you put a 1% or 2% tax on a home over $1 million.

In Toronto, it affects every single house. In Vancouver, it affects every single house, which prices are closer to 2 million. And since it's an annualized thing, you add hundreds of thousands of dollars of tax out of nowhere. And it's nothing to do with not going after your capital gain. It is clearly a tax on equity.

Yeah, and again, not a tax on income. So someone could be in a home, they've been in for 60 years on a fixed income. Well, lucky if it's 60, but let's say 40 years, you know, and you sit there, this isn't on income, it has nothing to do with your income's ability to afford anything. You're just taxing on an asset value that hasn't been realized at that moment.

So, yeah, I think there's more to come on this, as I say. But you talk about impact. I want to talk about the impact of a lot of things coming on. I know you follow these like a heartbeat, but look at the listings jump. Look at the activity that's been going on. It is a dramatic change in the market. For anyone who didn't heed your warning last February and you said a change is happening,

is coming, is here, man, it's pretty hard to deny now. Yeah, the numbers, if the government is really truthful, saying that they want house prices to come down, which I don't think is truthful because it means lower taxes, but we've had a 17% decline in sales in Toronto and the active listings were up 64% for over 23,000 now.

So the buyer should be happy. But at the same time, the benchmark price in Toronto is down 5% on a year-to-year basis. So the market is in a major shift. We hear anecdotally that the pre-sale market seems to have outright stalled and a lot of the units that are coming for sale in the market now that were sold at the height have a difficulty finding new buyers.

Yeah. And you look at right. You know, let's go to the other side of the country, into the Vancouver area, Calgary area again. Well, Calgary again, Edmonton and Calgary have been an anomaly within the broad market. So I'm going to separate them out. But let's go to the British Columbia numbers, for example, around Vancouver. Man, in spades, that kind of a trend.

Sales are down 20% below the 10-year average. Active listings are up. See, Vancouver up 48%, US Mid-Star up 78%, Richmond up 39%, Coquitlam 60%. So it's everywhere. Listings are up. So buyers, Richmond,

Rejoice because when there's more property available, the realtor has more time to talk to you and you have a better ability to buy. But I thought we should take a look at this eyebrow popper. We're always looking at last year and last month, you know, months and more months of this. Well, the interesting thing is, and very quickly in Vancouver, if you look from July 1, 2020 to June 30, 2021, so a year, we sold 15,334 houses.

In July 1, 2023 to June 30, 2024, we sold 7,330. Less than 50%. And Mike, in the Fraser Valley, it was worse. It was 13,200 and now it's 5,200. Less than 40%. There is a major, major downturn in sales that went like every year. 15,000, 11,000, 9,000, 7,000. That's the same in condos. So the point is,

We have seen a remarkable change and we could give you all sorts of reasons as to why, but primarily it's been, of course, prices, interest rates, you know, the confluence of influences that made us all, you know, buy less real estate. That should help.

Yeah, historically, with those kind of trends, when does the price sort of catch up to the downtrend, if you know what I mean? Like you're just mentioning 5% down, you know, in the prices. Do you normally find, you know, because people sit there, wishful thinking is a large part of emotion for stocks, for houses, for anything, right?

So they sit there and they go, OK, now I'm on month three and I got way more competition to sell. Now I'm on month six and I got way more competition. I appreciate that would be an individual situation. But does it broadly sort of say, well, we're really when I expect the real drop in prices to come five months after we start seeing this or one month after whatever it is. I'm just wondering any indication only of that.

Well, there is--in Toronto, there's a whole slew of areas that are down in price by some 20 percent. But then there are other areas that have gone up 5 percent. And it depends. Is it condos or is it single-family homes? Is it used homes or new homes? There's all of that. Overall, though, the pressure has been for prices to readjust. I mean, the difference, as you pointed out, is going to be Calgary. We're going to talk about that.

Prices are down, people can negotiate better. And Michael, I think it's a good thing. We always say it's a good thing if we wrestle each other to the ground and pay 100,000 too much. In reality now, I can make a lower offer. And the owner says, yeah, better a low offer than no offer. Yeah, no, it's an important point that you don't make a mistake that way. You have more time to consider. And as you say, really...

as opposed to feeling that pressure. I've got to get in the FOMO of it all. Let me just finish with coming back, though, to Edmonton's been the, or sorry, Alberta, I meant to say, has been the exception, you know, to the downturn we've been witnessing across the country. You know, but I was noticing that, you know, in Osbuzz, you were saying that Calgary's also seen a significant change, really for the first time within this context, like rising listings and sales down.

Calgary was the wunderkind, you know. It was always up, up, and now sales are down 16%. Active listings are starting to rise. It's only 9%, but it is 9%. The beautiful thing about Calgary is that prices are still higher. Single-family prices are up 12%. Apartments are up 17%. Now, when you look, the apartment is up to 344,000.

and the house at 767, it is still a darn good price. So prices are hanging in there, but we're seeing a downturn. It's maybe psychological, plus everybody's expecting maybe rates to come down more and waiting. And so before we have a mad dash into real estate, now we seem to have a real, let's wait this one out.

Well, you'll get more on ozbuzz.ca. That's where you get the latest. He's got the pulse of the nation when it comes to real estate. Ozzy, thanks for finding time. I hope you have a fantastic week. Thanks, Mike. And it's funny, I spend a lot of time with my grandkids and they drive me crazy. I don't have explanations for them. But lately, I'm quoting Fran Lebowitz who says, in real life, I assure you, there's no such thing as algebra. I'll be sharing that with mine. Ozzy, have a great week. Thank you, Mike. Take care.

I want to go live to the trading desk now. Victor Adair joins me, and you can find him at victoradair.ca. Hey, Vic, let me come back to the American Consumer Price Index report.

And I thought it was kind of funny. I thought that the... And I want you to elaborate on this because I thought the market reaction was very different what I think the broad expectations were. You know, if inflation gets better, you know, lowers, in other words, you know, we can lower rates, the market's going to love it. And Presto, it didn't act that way. Yeah. Well, the CPI is important because of...

what the Fed will do because of CPI. That's why the CPI number every month is such a humdinger, you know, when it comes out, that really moves the market around. But I'm with you on that. I saw the CPI number and I thought, what's that's pretty benign, you know, in terms or let's say favorable to the prospect of higher interest rates ahead. And the various stock indices kind of popped higher for a few ticks and

and then started to roll over on Thursday. And I thought, well, that's odd. That is really odd. And I thought, okay, well, maybe this was the moment where the market finally, there's some good news comes out, the market reacts up to the upside and then starts to drop. I've been looking for that moment. Again,

I can't tell you for how long, but here it was. And sure enough, we had the NASDAQ take a real tumble to the downside on Thursday and the different indices kind of acted in their own way. So,

NASDAQ down hard and the small cap Russell just screeching to the upside. And I think part of that was there's been a popular trade on in the hedge fund community for the past few months where they've been short the small caps and long the NASDAQ and making money hand over fist. But when that trade pivoted, you know, you got a very, very sharp reaction.

Yeah, I find it interesting. And I want to put this out there for some people know because we featured Tony Greer a few weeks ago. And Tony's and I want to just put it out in this way. And I know it's an opinion that you've been sharing. But, you know, for someone who was absolutely dead on on the return, you know, on the reversal in the market in mid-November. So that's why we should pay attention. His indicators and he was very lonely in that position became obvious, you know, six weeks to two months later.

he's changed his mind. He sees a rotation now out of those big name AI stocks. And I know that you had been talking about that too. And I just want people to know that, you know, when somebody, you know, a lot of times people listen, they don't continue to listen. Hey, didn't you tell me X? Yeah. And I changed my mind, you know, four months later or six months later. So that's why I'm bringing that up. Well, congratulations to Tony. I mean, he caught a tremendous move. I mean, just to give you an idea in the last 12 weeks, right?

OK, and he was in the trade well before that. But in the last 12 weeks, the S&P has been up 11 of the last 12 weeks. It's up 14 percent in that period of time. You want to annualize that. That's about 55 percent annualized. You know, the market's just been smoking to the upside. I mean, just this week.

Just this week, from Wednesday's lows to Friday's close, the Dow is up 1,000 points. I mean, Mike, you and I used to trade when the Dow wasn't even at 1,000. And now you're getting 1,000 points in three days. So I do think, and I've been...

thinking this way for some time that the market's kind of goofy to the upside. But, you know, as they say, you know, the market can remain goofier than you can for longer than you can stay solvent. So, and I understand Tony is said, okay, I'm taking my money off the table and good for him. He's had a, had a great run on that call.

Yeah. And as you are and as he is, you know, for traders, you could be back in next Tuesday. You know, you're following the market, following the indicators that you use, you know, and investors are taking, you know, you have to assess, for example, you know, we talk about some of the short term moves here. And let's say I'm bullish the U.S. dollar as an example.

Well, I have to decide if the things I saw this week are long-term bullish, because I'm thinking long-term. I'm not going to get in. I'm not going to get out. So just a reminder, people have to always come back to their time frame when they're looking at these moves. But speaking here quickly of the U.S. dollar, you know, other than Canada, you know,

The US dollar seems to be back in play to some degree. Yeah, the US dollar is at about, the US dollar index, I should say, is at about a three-month low right here. The European currencies have done better. The British pound, by the way, is at a one-year high. The euro, which got whacked here a couple of weeks ago when France created a tempest in a teapot, the euro has recovered.

The Japanese authorities were in the market Thursday, Friday as well, it seems, trying to keep the yen from going to even lower 34-year lows. But the Canadian dollar, it's been peculiar, Mike. I mean, it has been dead in the water for six trading days. I think we've had like a 20-tick trading range. 20 ticks is one-fifth of one cent. I mean, it was just like going nowhere yesterday.

There still is that very large speculative short position in the Canadian futures markets. I'm not sure what those people are looking at. I mean, it's a big, big position. It may be, you know, the mortgage renewals that we're going to have in Canada may slow things down. Our unemployment's rising here, but they've clearly got a very negative view on Canada versus the U.S. dollar.

I want to come back to something because you were talking about it and it's obviously a time of year too, but the summertime market and the kind of descriptions that we've got now, you know, with that, you know, stock indices nearing all-time highs.

Well, to me, a summertime market means, you know, just a lot of people are away. As Dennis Gartman used to say, you know, the kids are on the trading desk because the adults are all on vacation and things happen. And, you know, it's not taken too seriously. I think right in through here, it's that kind of a market. We've got the stocks at all time highs. Nobody really wants to be short here. But at the same time, a lot of pros don't want to miss the top.

We've got expectations that the Fed's going to cut interest rates. And Mike, you know, to cap it off, I think the most important thing in the market this week is everybody's got an opinion about Joe Biden, and that's what they're talking about.

Yeah, absolutely. You know, it's funny when you see the market pricing in two interest rates cut this year. I got to just tell you, I sit there and listen to that and I just go blah, blah, blah. Why? Because they've been so damn wrong, you know, and that's fine. I'm not knocking being wrong, but I think we should just want to put it in perspective. The same people who told me there'd be six rate cuts and then there'll be no rate cuts and now back to two rate cuts. You know, I just listen to that as entertainment. I don't take anything from that as someone who's making some investment decisions.

Well, I actually have a little note here on one of my screens that says, don't trade infotainment. That's a great note. And are we ever in that sort of thing? Everyone, as you said, can weigh in on Joe Biden. Is it going to run or is he not going to run? We've got the Republican convention coming up. I've always felt that all the

Apologies, but a political punditry was just gossip and entertainment and all this because there's no cost to being wrong. You put up your money and you make a bet on a direction of a stock or a commodity, et cetera, currency. Hey, you're going to find out and you're going to pay for it.

being wrong or missing something. Oh no, these guys have it easy. They can just throw out just about anything on rumor and speculation. So yeah, I just take it exactly as that. This is infotainment. Mike, something we missed actually was the gold market. And it's been a little bit of a sleeper here. Gold's up about a hundred dollars from the lows we had last week. The open interest on the futures market has gone up to a two year high.

Speculators have got the biggest net long position that they've had in two years. And by the way, two years takes you back to just after the Russians had invaded Ukraine. So, yeah, the gold market may be a little bit of a sleeper here with everybody focused on the stock market. But the gold market has been creeping higher here the last 10 days or so.

Speaking of long-term investments, as you heard earlier on with my shocking stat, more on that. Victor, I hope you go out and have a great weekend and people can have a visit with you on victoradair.ca. victoradair.ca. Vic, great week to you. Thanks, Mike.

Time now for this week's Goofy Award. But first, I've got to ask you, how long are we going to accept the excuse, it was during the pandemic? Or how about, it was during the pandemic and we didn't use common sense?

vilified anyone who questioned the government's narrative, didn't follow procurement rules and doling out tens of millions of dollars, or in the case of aerospace firm CAE of Montreal, it got a $282,500,000 sole source contract for ventilators, despite the fact it had never produced even one, never manufactured one.

And by the way, it never did, at least if we're looking for ones that work. As Blacklock's reporter tells us, records show 8,200 taxpayer-funded ventilators were produced. 8,180 of them, that's 99%, in quotes, were slated for sale as scrap metal.

Documents didn't disclose what public health agency did with the remaining 20, but they were never used for medical purposes. According to internal emails in the Prime Minister's office, the devices repeatedly failed Department of Health tests and were considered defective. For example, this is a September 10, 2020 staff email stated in quotes, CAE's first delivery proved deficient. Problems were serious.

A second review found in quotes, significant shortcomings with patient safety implications.

Now, to date, we have had no follow-up investigations about how the entire program was run. $720 million for ventilators. No explanation why the average contract was $20 million. Hey, but that contract to CAE, who by its own admission had no experience manufacturing ventilators, and by its own account in quotes was starting from scratch. Why did it get 13 times more taxpayer dollars?

All we do know, though, is that 99% of the ventilators produced were sold for scrap for about $6 apiece. But I know it was a pandemic, and there are political considerations, not just health. And it was a Montreal company, and there's votes to consider. And besides, as the Auditor General and the Parliamentary Budget Office reports continue to concern, it happens all the time.

Hey, I want to remind you to go to Mike's Money Talks dot CA and sign up for five minutes with Mike. If you haven't done that, I think you'll enjoy it. But also go to Mike's Money Talks on Facebook and Money Talks tweets. But a reminder, join us on YouTube. We have our own YouTube channel, easy to find out, Michael Campbell's Money Talks. Join us there. More and more content coming your way that way. And in the meantime, I hope you have a terrific week.

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