In The News: Interest Rates, Manhattanization, & Pensions


Three stories in the newspapers really stuck in my craw this week, and while each is not enough to necessitate an entire blog post, I figure the three together can.

The Bank of Canada announced they would not follow the “lead” of the Federal Reserve when it comes to raising interest rates, Toronto city council is going ahead full steam with the “Manhattanization” of the downtown core, and the Liberals are forcing us into a pension plan we didn’t ask for.

Okay, so the last story was described with my own bias and opinion in tact.

But that’s the point of today’s blog post: let’s discuss the pros and cons of each, as I’m dying to see where people stand on these subjects…



“Bank of Canada Won’t Follow Fed’s Lead On Interest Rates, Poloz Says”

This might be the most boring story of the week, but I find it the most interesting.

Bank of Canada Governor Stephen Poloz suggested this week that when the United States’ Federal Reserve starts to raise interest rates, the BOC might not follow suit.

While America and Canada may be two completely separate entities, they have always been tied together when it comes to monetary policy.  We are very different countries with drastically different ideals, but when it comes to something as simple as the overnight lending rate, Canada has almost always followed the United States.

From the Globe:

Mark Carney, conceded in 2010 that there “are limits to the divergence that there can be between Canada and the United States.” Mr. Poloz acknowledged that while “theoretically” the gap between Canadian and U.S. policy rates “could be anything,” the Bank of Canada “never will be 100 per cent independent” because the Canadian and U.S. economies are so closely intertwined.

So why now?

Why is now the time to diverge?

What scares me in this story is that it signals Canada might not be doing as well as the United States when it comes to the economic recovery from the drop-off in 2008.

From the Globe:

The U.S. has considerable forward momentum, while Canada still is waiting on a revival in exports and business investment.

Canada’s job growth this year is almost entirely driven by part-time positions, while U.S. employers are adding jobs at one of the most impressive rates on record.

Mr. Poloz reminded people that Canada’s rate is already at 1%, and much of the world is at zero, so perhaps it’s time to sit back while the rest of the world catches up.

But personally, I see perhaps the rest of the world is gaining momentum, and are in a position to raise the cost of borrowing, whereas our central bank is worried about the impact of higher rates on our economy, and the day-to-day life of the average Canadian.

“City Undergoing A ‘Manhattanization’”

This story hits a little closer to home than interest rates for most readers, as the Globe ran a story this week about the “Manhattanization” of our downtown core.

I’ve been using that term for years, and I’ve also suggested that change is happening with increasing speed.

But the Globe article made three points clear, all of which I find troublesome:

1) The city’s downtown core is growing at a rate four times faster than the rest of Toronto
2) Projects are being fast-tracked because this is the last city council meeting before the election
3) We need more infrastructure to support the development


The only conclusion I draw here: Toronto will be a mess in a decade.

From the Globe:

…..with city council approving 755 storeys in new development this week, including three new office towers – a trend that underlines the increasing density in the downtown core and the need to plan transit and infrastructure to support it, says the city’s chief planner.

Toronto city council is meeting for the last time before the fall election – a fact that had developers rushing to get approvals before the months-long break.

Toronto’s chief planner, Jennifer Keesmaat, said the volume is, in part, a result of work by her office to move projects through the approval process more quickly.

Perfect.  So we’re setting records for development, and not only that – we’re doing it quicker than ever before, because there’s an election coming up, and there won’t be another city council meeting for a month.

Aren’t these the kind of decisions that shouldn’t be rushed?

Referring to the $21 Billion in development that was approved, councillor Joe Mihevc said, “We did all that today, and yesterday, and the day before.  It’s unbelievable.”

Wait……is he proud of that?

Is he suggesting that 56 monkeys throwing feces in a room is anything different than the average city council meeting?

If you gave me a rubber stamp, I bet I could fly through those applications faster than anybody!

“What’s that, Mr. Mirvish?  You want to build three towers of 90++ storeys in an area where there are no buildings even HALF that high?”


Wow.  City council has reached a new low point: bragging about rushing important decisions that will impact our city forever.


And what plans does city council have to support all the changes?  What are their thoughts on the matter?

From the Globe:

“We’re experiencing the Manhattanization of the downtown core,” Mr. Mihevc said after the vote. “This is going to be a very different city in 20 years when these developments all get built out.”

Says Jennifer Keesmat: “The downtown relief line is critical and absolutely necessary for a key reason, which is that the Yonge line is at capacity and we have to find ways to divert some of the pressure off that line,” she said.

Sigh.  Again….

So basically, the city is approving projects that will provide massive revenue in the form of development fees, building permits, and eventually property taxes, but all the while, they’re aware that there is no infrastructure to support it.

I’ve got news for you, folks: a simple LRT across Eglinton, or an extension of the Scarborough line, or a downtown relief line – these are NOT what we need.

We need all of them and more.

We need to quadruple the existing underground subway system, or our city is going to implode.  No, I’m not exaggerating, when I say “quadruple.”  I don’t mean double, and I don’t mean triple.  I really, truly, in my heart of heart, mean quadruple.

1954, folks.

It was 1954 when the Yonge Street subway line opened, from Union Station to Eglinton Station, and in 1974, it was extended to Finch.

It’s been FIFTY YEARS since that subway was built, and according to my sleuthing on Wikipedia, the population of Metro Toronto has increased about 500% in that time.

City council hasn’t accomplished anything in the last four years with Rob Ford, or the previous eight years with David Miller, when it comes to public transit.

The downtown core continues to build skyscrapers, and city council continues to sit on its hands.

Oh well.  At least the latest polls have Rob Ford gaining momentum…

“Wynne Set To Urge Provinces To Take Lead On Pension Reform”

Okay folks, I may be way off base on this one.  So if you disagree, let me have it.

My very best friend and I got in a spirited debate about this topic when we drove up to play golf a couple months ago.

He works in government, and whether that influences his opinions or not, he feels that Wynne’s mandatory pension is a good thing.

I feel it’s socialism at it’s finest, and it infringes upon my simple right to invest and save for MY future, however I please.

I work hard, I really do.

I work seven days per week when the market is busy, and I’ve been working since I was making shish-kebabs at Bruno’s Fine Foods when I was 13-years-old.

I know how to have a good time, but I’m stingy, frugal, and good with my money.  I know how to save, and I know how to invest, and I make plans, goals, and set benchmarks.

I live in today, but I see tomorrow, and plan for next year, and beyond.

I’m capable, responsible, and in control of my own life.

But that’s just me.

Many people, it would seem, are not.

And such is the plight of Kathleen Wynne, who has decided that Canadians aren’t saving enough, and/or don’t know how to save for their retirement.

So as a result, the Liberals are forcing us into a Provincial pension plan, and it’s not opt-in, opt-out.

If some people don’t save enough for their retirement, then I have a simple solution:

1) Don’t retire.  It’s a privilege, not a right.
2) Borrow Doc Brown’s Delorian, get it up to 88 miles-per-hour, and go back in time and work longer and harder

I know, I know, many of you will suggest that option #2 isn’t possible, and by that I’m not referring to time travel, but rather the idea of working “longer and harder.”  Many of you will suggest that some people just can’t work enough to save for retirement.

That may be true, but what about the millions of people who take vacations each year while others put that money into their RRSP?  What about people who buy a can of coke from a vending machine for $1.50 rather than buying a 12-pack for $2.99 when it’s on sale at Loblaws?

Do you see what I’m getting at?

How we spend our money and live our lives is up to us!

At the risk of sounding like a Tea Party member here, I really wish the government would get out of my way, get out of my pocket, and get out of my personal finances.

From the Globe:

69 per cent of Canadians believe the federal government should take the lead in ensuring “Canadians can retire – either through savings programs or income supports.”


We really are socialists, aren’t we?

If 69% of Canadians rely on the government to ensure they can retire, then these folks really do expect life to be handed to them.

This story makes me even more sick than the “Manhattanization” piece.

It’s one thing to live in a city that’s cannibalizing itself as its “leaders” stare blankly like primates in the opening scene of “2001: A Space Odyssey,” but it’s another thing to know that 69% of Canadians are leaving their lives and futures in the hands of somebody other than themselves.

That’s scary stuff.


Tell me if I’m wrong, on any of these points.  I welcome your thoughts.

Or maybe this is just way too deep for a Friday before a long weekend.

Either way, I hope you enjoyed the read, and I hope you all have an awesome long weekend.

On Tuesday morning, it’s back to school.  Not actually back to school, but we all know what that back to school “feeling” is like.  It’s always 4-degrees cooler, there’s moisture in the air, there’s dew on the neighbour’s lawn, and your stomach is in knots as you approach the school……….office

I expect the real estate market to absolutely explode after Labour Day, so if you’re an active buyer – don’t worry, your day is coming soon…

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Hamed Fardad

Hamed Fardad

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CENTURY 21 Percy Fulton Ltd., Brokerage*
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