It’s a strange feeling to watch the beginning of the carnage in the housing market and know that it must get much worse if my sons are to have a chance to buy a home for a price they can afford. Here are my posts for the past two weeks: The Inevitable Masquerading as the Unexpected Inflation Porn Here are some short takes and some weekend reading: Doug Hoyes explains why he does “not expect a significant rise in homeowner insolvencies until mid- to late-2023.”   A judge has ruled against CRA in three appeals of gross negligence penalties, not based on the merits of the cases, but because of CRA’s “egregious” behaviour .  From the judge’s ruling, it seems that CRA is willing to flagrantly violate court rules in cases where they believe taxpayers are guilty of gross negligence.  A powerful government agency such as CRA has no business engaging in such gamesmanship.  If CRA is correct about the conduct of these taxpayers, they should follow court rules and argue the me...

We’ve certainly heard a lot about inflation in the past year or so.  Despite the Bank of Canada’s efforts to fight inflation by raising interest rates sharply, we still see headlines blaring that inflation is very high.  What’s behind all this? Here is a chart showing the official Consumer Price Index (CPI) for Canada since 2020. We see that inflation was low in 2020, prices rose sharply during 2021 and the first half of 2022, and prices have actually dropped slightly in the past 3 months.  However, this is at odds with headlines still screaming that September inflation was still very high at 6.9%.  What gives? The answer is that we often measure inflation by comparing current prices (as measured by CPI) to what they were a year ago.  So, headlines about September inflation are measuring the change from September 2021 to September 2022.  Last month’s headlines focused on August 2021 to August 2022.  If it seems like the news is churning out stories wit...

Rising interest rates are causing a lot of unhappiness among bond investors, heavily-indebted homeowners, real estate agents, and others who make their livings from home sales.  The exact nature of what is happening now was unpredictable, but the fact that interest rates would eventually rise was inevitable. Long-Term Bonds On the bond investing side, I was disappointed that so few prominent financial advisors saw the danger in long-term bonds back in 2020.  If all you do is follow historical bond returns, then the recent crash in long-term bonds looks like a black swan, a nasty surprise.  However, when 30-year Canadian government bond yields got down to 1.2%, it was obvious that they were a terrible investment if held to maturity. This made it inevitable that whoever was holding these hot potatoes when interest rates rose would get burned.  Owning long-term bonds at that time was crazy . One might ask whether we could say the same thing about holding stocks in 2020 ...

A prominent politician recently referred to CPP premiums as a tax.  This sparked a debate about this question.  Personally, I find CPP premiums look a little like a tax, but mostly not.  I once looked into how much of your CPP contributions are really a tax , but this was not intended to be like the current semantic discussion.  I don’t think this debate about whether CPP premiums are a tax is very important, but the answer a person argues for can tell you something about what they think about more important questions.  Should we scrap CPP?  No.  Should we be allowed to opt out of CPP?  No.  Can Canadians do better investing their savings on their own?  No.  Can most of the people who claim to be able to invest better on their own actually do better?  No. Do most of the people who claim to be able to invest better on their own even know their past investment returns?  No.  Should we reduce CPP premiums to reduce payro...