 CLICK CHART TO ENLARGE Canadian Billionaire Edition (2012 data)Here is another metric for grappling with the valuation disparity between Vancouver and the GTA. ( Comparison Chart) Toronto has more than twice as many billionaires as Vancouver, and more than Calgary and Vancouver combined. Montreal has more billionaires than Vancouver and yet for the price of an average single family detached house in Vancouver you can buy 3 of them in Montreal and still have cash left over ( Canada Chart). We can guess that New York and London as Financial Centers have lots of billionaires, but who knew that Moscow ranks 2nd? According to the Knight Frank Study, Moscow barely makes the list as a target for High Net Worth Individuals appearing only on the Political Power List at 9th place.
 CLICK to ENLARGE Atlas Van Lines Migration A Stampede for EarningsNewfoundland and New Brunswick lead in net inbound migration while net outbound household migration is flowing out of British Columbia, Saskatchewan, Manitoba, Ontario and Nova Scotia. Balanced net migration (50%) is happening in Alberta and Quebec; the former for employment and earnings, the latter no doubt for culture and low cost of housing. At the close of 2012, the biggest migration trend was into Alberta and a continuing move towards higher inbound household formation. Follow the money. This Chart is also located on the Census Page.
 WHAT TO DO DURING A HOUSING BUST Japan as we know has been in a 20+ year (and still counting) housing price deflation.As housing prices fall over long time spans, households have to make decisions about how they are going to turn the debt they acquired on the way up into equity. There are two basic choices; get in front of the falling price curve and sell at a either a loss or gain depending on timing, or if the household has the income, pay down the debt over time as a forced savings plan. The former allows for greater savings and re-investment and the latter is a suicidal prison term chained to one price decaying asset. In either case, households turn to saving and away from consumption. The charts above and below are from an article by Jack Crooks of Black Swan Trading where he argues:
1) The demand for dollar liquidity in a world where the European banking system is desperately deleveraging and many in the private world are doing the same likely means the world reserve currency remains supported, even though it is likely Ben Bernanke would like to push the buck lower.
2) The commodities super cycle is behind us. This doesn't mean all commodities go lower; agricultural commodities could spike again and are subject to lots of volatility. But even the Australian Central Bank believes there has been a peak in the mining cycle in Australia.
3) The credit crunch (2008-09) really was a sea change. Massive personal balance sheet over-leverage, coupled with the decline in the biggest personal asset, real estate, seems to have triggered a sea change in both real consumption and attitude toward future consumption. This means more savings. More savings tends to mean more money in fixed income (keeping yields low).
4) The knock-on effect of a change in reduced global consumption and increased savings is the catalyst for rebalancing the current account deficit nations with the current account surplus nations. It is especially bad news for those with export-dominated growth models who will take the brunt of the adjustment domestically; and we know who you are: China, Germany, Japan...
 THE CYCLICAL NATURE OF COMMODITY PRICES ~ BOOMS & BUSTS
 CLICK TO ENLARGE Canada Balance of Trade Canada's Balance of Trade has been dropping since the Tech Bubble blew out in 2000
Over 70% of our exports are sold into the U.S. The U.S. Output has been in decline since the end of WW II. China and the Emerging Markets are growing their shares of World Output. According to the charts below the long scale cyclical shift began 60+ years ago.
Meanwhile in Canada we have been engaged in a massive 10 year debt fueled real estate bubble that is in its early phase of collapsing. The boom did create employment and consumption in the 'FIRE' economy but now real estate equity is disappearing and savings are being depleted and highly leveraged Canadians are left with the long term chore of converting their debt into new equity either by repayment or by default. Canadians are going to have to retrain themselves to compete with skilled productive foreign workers; a difficult task to accomplish under the burden of extraordinary long term private sector household debt. A national educational policy would help, but is not likely; as Ray Dalio says:
"Because these cycles evolve slowly over long time frames – over at least 100+ years – they are imperceptible to most people. They are also essentially irrelevant to rulers who typically have time horizons of a couple of years. As a result, they are not controlled, which is the main reason that they are destined to occur. If human nature was different so that debt growth doesn’t outpace income growth and income growth doesn’t outpace productivity growth, these cycles would be pretty much eliminated."
CLICK TO ENLARGE Output as % of World Output by Ray Dalio June, 2011
Shifts in Relative Wealth and Power Tend to Occur via Very Long Cycles Lasting Five Generations or More.SOURCE: Why Countries Succeed and Fail Economically Ray Dalio June, 2011 © 2012 Bridgewater Associates, LP These cycles have occurred through all recorded history going back to Rome and before, though they have become more sophisticated over time. While many influences contribute to these shifts in relative income and power, we believe that the two most powerful of these are 1) the psychology that drives people’s desires to work, borrow and consume and 2) war. Throughout history, these two influences have changed countries’ competitiveness and indebtedness which have caused changes in their relative wealth and power. Since different experiences lead to different psychological biases that lead to different experiences, etc., certain common cause-effect linkages drive the typical cycle. While we will describe what we believe is the typical cycle, of course no cycle is exactly typical. Now about half of world GDP (53%) is produced in what we now call the “developed world” (US, Europe, Japan, UK, Canada and Australia) with about equal amounts being produced in the US and Europe, and about half of world GDP (47%) is produced in what we now call “emerging countries” with a bit less than half of that being produced in China and India. Russia produces 3% of global output. For reasons explained later, we believe that in another 15-20 years emerging countries will produce about 70% of global GDP, China will produce about 25% and India will produce about 12% as they did in the mid-19th century. Russia will produce around 8% as it did in the mid-19th century. READ: The complete Ray Dalio analysis here. Definition: Purchasing Power Parity Adjusted
CLICK TO ENLARGE Share of Real World GDP by Ray Dalio June, 2011
 CLICK to ENLARGE Super Rich Sources of Power Follow the Money or "First there is a mountain, then there is no mountain, then there is." (Zen Aphorism, Donovan, etal)The Super Rich are peevish (contrary) when it comes to accepting what comes out of the mouths of real estate promoters: "Vancouver is Unique". I heard this oft touted phrase from a genial Realtor last weekend at his west side Vancouver open house in a below street level grade "garden" condo asking well over $600,000 (~$650/sf); it looked to me like a good place for starting a mold farm. The tables presented here are from The Wealth Report 2012 created by Knight Frank and Citi Private Banking gleaned from opinions of their HNWI (High Net Worth Individuals) aka The Super Rich.
 CLICK to ENLARGE Super Rich Important Cities To gauge which cities are considered the most important to the world’s HNWIs, The Wealth Report surveyed Citi Private Bank’s wealth advisors around the world and Knight Frank’s global network of luxury property specialists. They asked which are the most important cities to their clients now, which will be the most important in 10 years, and which are growing in importance the fastest. In addition respondents were also asked to name the cities that they felt were global leaders in the fields of economic activity, political power, knowledge and influence, and quality of life. Apparently very wealthy people enjoy Vancouver over Toronto for "Quality of Life" but as a destination for "Knowledge, Influence, Political Power or Economic Activity", Canadian cities don't make the list. When it comes to grading Canadian cities by the well heeled with respect to a trend to rising importance in the world, only Vancouver is currently viewed in ranking as important but with a bias to the downside as developing destinations move up the list. If we look at the top tier cities in these two tables, it's evident that the Super Rich, the 1-2%, the Go-to-Folks want reliable established proven money and power centric cities (London, New York, Paris) or alternatively they look for emerging volatile liquidity centers (Beijing, Shanghai, Singapore) so they can leverage some change. Canada is a nice place to visit and perhaps dabble in real estate flipping during a manic heat wave but the real money is flowing elsewhere. A new page devoted to Whale Watching and the Knight Frank data is here now.
 Impending Economic Collapse of 2012-2022 Impending Economic Collapse of 2012-2022 by John F. Carlucci DEC 8, 2011The series of charts provided by Doug Short at advisorperspectives.com point to various long and short term scenarios for the market, several of which have a very high probability of coming to pass. Statistically, it is extremely unlikely that the mathematical patterns discussed here are simply due to random chance. Taken as a group it would seem to be virtually impossible. Although the patterns are mathematically driven and not dependent upon world events it is fascinating how current events seem to be aligning with the near term pattern. In particular, the S&P decline indicated for 2012 - 2013 coinciding with the very likely disintegration of the Eurozone and euro. Is there a silver lining for investors somewhere within this dark cloud? Full text and charts of Part II (Dec 9/11) and Part I (Nov 28/11)
Harry Dent Explains the Demographic Forces Charlie Rose Interviews Ray Dalio the Global View 
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