The Brexit…

smallpoliceSo Brits voted to jump out of the EU train. Universe, as we know it, did not end, fish&chips did not disappear from pubs, Queen still wears her fuzzy hats, banks did not run to the other side of the Channel, England did not turn into wasteland and streets are not full of riots (other than regular soccer hooligans). Simply speaking the doomsday did not happen. Life goes on and Brits will eventually sort out their relations with the continent, perhaps without centralized bureaucracy that regulates how curvy bananas and how straight cucumbers should be. Old fossils and boomers were very disciplined and voted for exit while youngsters voted to stay in EU. Twenty something lemmings will have bad aftertaste of the lost referendum since most of them were too busy playing Xbox in mama’s basement to care about referendum outcome.

Farage and Cameron left the boat and May sat behind the steering wheel. This may introduce some changes in the way how foreign investments are involved in the British industry. Take for example British car manufacturers. Out of over 500 car manufacturers only 35 survived until today and most of those survivals are not anymore British. Mini and Rolls Royce are owned by BMW, Bentley is run by VW, Jaguar and Land Rover have been bought by TATA, TVR is owned by Russian millionaire, and Vauxhall is a GM subsidiary. The rest such as Caterham, Ascali, Radical or Noble are small number producers mostly for local market. British have great input in development of motorization. When they were not on strike they managed to design wonderful machines such as Noble M12, Lagonda, Discovery, Mini, Jaguar R-series. It is worth to remember that British cars were not designed by committees, like GM products, but by passionate engineers who did their best to avoid compromises. Jaguar XK had great chassis and it handled very well but as most British cars it was poorly built and it leaked rainwater into the cabin, XJ R-series had oil leaks so common that owners worried when car did not leave any stain in garage floor: “it must be something wrong with the car, it did not leak oil today!”

During last 10 years Brits took great effort to improve quality of their cars so they do not brake as often as Fiat or Alfa Romeo. New generation of Jaguars are well designed vehicles that compete head to head with BMWs, Mini become fashionable transportation for celery and granola bar eaters, Range Rover is a weapon of choice for gangsters, Aston is driven by movie stars and Lotus become a pretty good alternative to small Porsches.

Let’s hope Brexit does not brake down what’s left out of the British car industry, so maybe one day I can get myself an Aston….

Posted in Cars and Driving

The Swingers….

swingers11This year primaries in US unveiled that large number of voters wait until last minute to decide who to vote for. This lack of decisiveness may result in 300 million nation being led by a fellow elected by champs who took decision over big mac and fries 10 minutes before closing polling stations. This only means that consumers will be choosing their president in the same way they choose ketchup or corn flakes in Walmart. This becomes scary when you consider that random guy will lead country with total outstanding student loan debt $1.2 trillion and total outstanding mortgage debt $8 trillion.

When I observe crowd that is unable make firm choice of who to vote for I can’t stop thinking of a new breed of cars that do not know what they are. According to marketing ads this new breed supposed to be fashionable like front page of Vouge, handle well on corners, drive well off-road, have trunk big enough to accommodate 200 kg of cheese, be comfortable like Victorian couch and circle Nürburgring in 30 sec. Unfortunately most attempts to build a car that does everything well end up with car that does nothing well.

BMW, for example, built a monstrosity called X6 GT that supposed to be comfortable like 5-series, spacious like X5 and fast like M3. The final result is quite disappointing: the car is is too tall for fast cornering, too stiff to be comfortable, skinny tires makes it useless off road and its trunk is smaller than regular X5. To add insult to injury, it costs more than regular X5. So you pay more to get less! X6 could be a perfect car for Russian mafia or blokes who can not decide if morning pancake should be served with maple syrup or honey.

You would think that such car is pointless like Hilary’s rhetoric and it should not have place in automotive industry, but you would be wrong! There is one application where such car would serve a purpose: US elections. If people who can not decide who to vote for drive X6 (or some other I-do-not-know-what-I-am car) then we would not need to spend time and money on polls or statistical analysis.

Just walk around parking lots at Republican and Democratic caucuses and count ugly cars….

Posted in Cars and Driving

The establishment…..

establishmanetWatching last results of Iowa caucuses made me think of track record of each candidate’s campaign. When I compare Hilary’s and Bernie’s campaigns I can’t stop thinking that establishment class still believes in old fashion targeting where existence of the Internet and online archives can be totally neglected. The establishment seems to be living in a bubble where cable TV and newspaper are considered the only media to choose.

Somehow Wall St. funded crowd is convinced that is it perfectly OK to ignore millennial crowd  as it was going to disappear in a thin air like oil price. Hilary seems to be following this pattern: she keeps repeating the same gutless slogans and hopes for different results, she counts on polls done through cable TV that only handful of boomers would care about, and she dodges questions with grace of elephant in China pottery store. Ignoring new media and hoping no one pays attention to her moral flexibility on economical issues has already diluted her supporters like coffee substitute served in Tim Horton. The political damage Hilary done to herself can not be reverted even by the biased media reports and debates full of meaningless mumbling.

On the other hand Bernie broadcasts his campaign through Internet media, he avoids issuing attack ads, and he speaks simple language. This made him closer to younger voters to the extend that Hillary can only dream about. In addition, being a son of Polish immigrants made him cool in the same way as close ties with banking system made Hilary totally uncool.

The way how establishment candidates roll their campaigns is somewhat similar to the way how car sales are attempting to reach potential clients. Once in a while I get in a mail box flyer full of curb dealers who tell me that Dakota, RAM or C300 are certainly cars of my dreams. Ads printed with stinky ink seem to be the weapon of choice for marketing champs at Chrysler dealerships and this makes their tactics outdated like Hilary’s rhetoric. Why would anyone possibly think that sending random junk mail full of price tags that does not differ from other dealership will move inventory out of the lot in a blink of an eye. Interestingly I did not see such flyers with other brands, especially the Toyota-Hyundai-Honda triplet. There must be something in the water served in Chrysler dealerships that makes crowd working there delusional like hairdresser who takes on million dollar mortgage for molded shack in Vancouver. Such attitude could be possibly explained in Toronto, where cloud of pot smoke is inevitable like potholes in early Spring.  But how to explain it in Ottawa, where 80% of cars are sold by four families and sidewalks are rolled up at 11 PM.

What if car sales business turns slowly into establishment that is too big and too fat to see its own toes? 

Posted in Cars and Driving

The hangover….  

car-accidentSo the 2015 has ended. The end come with bitter taste of fallen CAD, higher food cost, T2 gender-perfect mob attacking TFSA, tighter mortgage rules, eroded manufacturing business, and Toronto Stock Exchange hovering just above basement. Although the bitterness of the year-end was sugar-coated with low gas prices, it left me with mental hangover. Housing bubble and consumer debt grown to the epic dimensions and multiple attempts to slow it down were futile like lecturing first year Freedom Arts student about taxes. Higher down payment rule is attached only to $500K+ houses, tighter lending requirements were overrun by brokers, iProduct addicts still believe prices can only go up, 7-year-long car loans infested dealership ads, and average Canuck has less than five grand in savings.

Rates have already started to go up in the US and like bad pop music it can not be prevented from spilling across the border. Cheap money will end soon in land of maple, and house-rich cash-poor crowd will discover (again) its inability to learn from own mistakes. When bubble gets busted and house becomes liability rather than “investment” everyone will ask “how did that happen?”.

Kijiji is full of ads with lease take overs posted by desperados who discovered after 6 months thy can not afford anymore the four-digit monthly payments for the shiny BMW. What could possibly prevent from posting similar adds about houses? Are posts such as “$2000/month mortgage take-over” unthinkable or is it just a matter of time when they show up?  How about having Facebook pages ornamented with ads about mortgage takeover right next to “Magic Diet” and “$50 Rolex”?

I supposed to write about cars, but I got distracted….a little bit….


Posted in Cars and Driving

The bandwagon….

PAY-Stormtrooper-filling-up-his-carIf you happen to watch recent news you may know that US decided to rise interest rates. It is not a huge raise. It is a tiny little hike just to give a cool shower. This small raise together with a proposal of lifting embargo on oil export made the USD stronger than Viagra. Since Canadian Central Bank historically always followed US rates, you may expect to see similar action in the land of timbits and maple syrup. But this time our central bank will have much tougher time to decide what to do (the deadline is January 20th, 2016). If it cuts rates CAD will slide down further and then you can as well use Canadian Tire money to buy your favorite Kraft dinner. If the Central Bank jumps on US bandwagon and hikes rates it will certainly hurt cash-poor owners of million dollar macmamsions. If it keeps rates unchanged it will most likely sustain Status Quo of the real estate bubble in Canada, since new down payment rules, pushed by Prince Justin, will have little effect on house horny buyers. The down payment hike applies only to the price difference between $500K and the next threshold, not the entire price as people would think. The new rule adds only about $20 to monthly mortgage payments on $600K house.

Rate hike, depending on its scale, may start a slow meltdown of the Canadian housing bubble or ignite a tectonic shift that will immediately wipe out inflated values of million-dollar shacks in Toronto and Vancity. This will cause massive defaults on mortgages and HELOCs as soon as next mortgage reset pops in a calendar. Indebted lemmings that pay 80% of their income for housing costs will certainly be crushed even by small rise of 1%-2% in mortgage rates. On top of this the previous federal government had capped CMHC’s insurance at $600 billion and this limit will be exhausted very soon since it reached $543 billion in 2014. Such event will make Trudeau 2.0 government so unpopular that he wished the Nannygate was the only problem.

The Central bank has three choices: sacrifice CAD in the name of inflated housing market and the T2.0 popularity, deflate housing bubble in the name of strong CAD, or do nothing: let the CAD slide down and the bubble grow.  Regardless of the Central bank decision the magic threshold of $500K may turn many neighborhoods into very unpopular place to live in.

Toronto burbs are full of $500K+ cookie-cutter houses built on post-stamp size lots. Those neighborhoods are sad place to live: no trees, you have to drive everywhere, the only community center is developer-built gym and the only pub in the neighborhood is full of 60+ year old crowd: the only people who have some spare cash for a beer. If you happen to work in Toronto the commute on 401 takes about one hour in a good day. Sometimes you do not get to work at all because your 15- year old Kia breaks down before you reach Scarborough. You wish you had a batter car but you are already maxed out with the mortgage payments and property taxes. You can not take you squeeze out for a dinner because all you can afford are frozen onion rings in a corner store. Although life of house-rich cash-poor Canuck is already a pretty dim experience, it will only get worse if Central Bank jumps on a rate-hike bandwagon.

Although introducing new down payment rules is rather a symbolic gesture of the feral government it has already sent a chill wind across real estate business because it shows what may come next. Cheap money do not last forever as well as house prices do not go up forever.

If you plan to upgrade to bigger and more expensive house, hold on, wait for the bubble to pop. When rates goes up and lemmings can not reset their mortgages anymore then you will buy a nice place for a half price.

Until then… get yourself a nice ride so you can take your squeeze in comfort for a dinner.

Posted in Cars and Driving

The obsession….

obsessionRecently the Toronto municipality, in its great wisdom, come up with an idea of closing hookah bars. According to city council hookah bars are place where little kids are being addicted to smoking tobacco (like little Johnny and Jane have never done it in a high school). As every good citizen knows, tobacco is bad for health, therefore tobacco has to be ban from public use because public has to be treated like irresponsible children.

The obsession with fighting tobacco smoke can be compared only to obsession with avoidance of having toilet clogged with paper. Nearly every restaurants and rental place in Toronto has washroom ornamented with signs printed in approximate English saying something about not flushing toilet paper into the toilet. Usually toilet is the place where toilet paper ends up unless you are in Russian Olympic village, so any suggestion that toilet paper should be dumped into garbage bin makes me wonder how the Toronto Public Health’s food safety program “DineSafe” actually works.

The only reasonable explanation of this phenomenon is that Toronto sewage system is in poor condition because of massive amount of pot butts being flushed down. Stressed people of Toronto who were banned by the City Council form smoking regular tobacco products switched to smoking pot, and this must be true since 15 min walk at Dundas square gives a second-hand high, and design of roundabouts with stop signs certainly has something to do with presence of pot smoke in City Infrastructure Committee.

Daily life is full of similar obsessions usually created at different levels of the nanny state. Take the EPA for example. Its sky-high regulations led VW to rig the emission system so it kept low level of NOx only in test conditions. Thanks to this cheat their diesel cars had performance and fuel economy that justified the price tag. After problem is fixed VW diesel may not be as efficient or economical to attract customers. Apparently for EPA it is incomprehensible that no one buys diesel to save polar bears, and 40 mpg is the factor that really counts here.

So what if you really do want to get on bandwagon and buy a diesel? Would that really save you some bucks? Let’s do some math. Since VW and Audi removed all diesel offers form their website and buying a truck is out of question the only option we have is Chevy Cruze from the GM garage. Cheapest 2015 Cruze with gas motor is priced at about $17,000 and its fuel efficiency is rated at 6.8L/100km on a highway with automatic transmission. The diesel model is priced at $27,000 and it is rated at 5.1L/100km on highway. This brings $10,000 in the initial price difference and 1.7L/100km fuel consumption difference. Assuming fuel prices (Dec. 11th, 2015) $0.98/L diesel and $0.89/L gas, cost of driving  1 km is  $0.04998 in diesel car and $0.06052 in gasoline car. You would certainly believe the savings in fuel costs will balance out higher price tag of diesel car, right? Let’s see the total accumulated cost of fuel in each car versus distance driven.


So yes, the diesel will rebound the $10,000 extra you paid for diesel car. You just have to drive it over 900,000 km! Considering you will never keep the car for so long time and you will sell it before it hits 300,000 km you will never recoup the extra cost of diesel motor.

Do yourself a favor and keep the ten grand in a pocket. You will afford life time supply of pot and some change for a plumber when your toiled gets clogged….

Posted in Cars and Driving

The enlightened…

enlightementWalking through shopping malls before Christmas allows me to contemplate bright interiors. Cold bright lighting makes impression of sanitized interiors, where no dust or dirt have right to appear. Light reflected from shiny walls amplify impression of being in a science fiction movie where everything is spotless. Sometimes the lighting is too strong or badly positioned that entire mall like like Christmas tree set up by a drunk. This is certainly not a good place to arrange jazz concert.

I see increased number of cars with flat leveled front headlights. For some strange reason car makers do not follow the common sense of asymmetric headlamp configuration where driver side lamp is pointing a bit lower then the light on passenger side. This configuration prevents from blinding oncoming cars and at the same time shows the roadside well lighted.

According to urban myths this configuration was introduced by Saab (those Swedes and their common sense…), but apparently it did not pick up with others.  Unfortunately the rest of the bunch did not grasp idea that we do not need to blind the oncoming traffic and driver side headlamp may point a bit lower then eyes of oncoming drivers.

Car makers seems to be reluctant in introducing this solution, or if they do it’s inconsistent at best. Hyundai, Mazda and Subaru have it in certain models (why not all?). I have not seen yet any GM or Ford with such lights. The worst are SUVs. Since their headlamps are higher than regular car, any oncoming or following SUV lights up my car interior like shopping mall just before Christmas. Blinding oncoming traffic increases chances of accident and if it happens to be on a highway you can imagine how this may end up.

Ah, those sensible Swedes! What did they know that Americans, Germans or Japanese do not know? How come they got enlightened with such simple idea, while others still live in darkness?

Posted in Cars and Driving