Greed has a powerful effect on asset bubbles as speculators and insiders try to exploit every available loophole to profit from rising prices.

First we had mortgage brokers behaving badly. Then we had shadow-flipping real estate agents. Now The Globe and Mail has exposed a new scheme where a Vancouver real estate speculator is buying homes financed with investor money from China and mortgaged issued by Canadian banks. Home ownership is obscured, houses are flipped, and profits are concealed from Canada Revenue Agency.

Records link the speculator and his clients to at least 36 properties in the past five years.

“Yet Mr. Gu, 45, paid next to nothing in taxes last year, while millions of dollars flowed through his business and personal accounts.”

From the report it sounds like the CRA doesn’t have the experience or resources to detect and prevent these schemes from happening. How long until it all unravels and this real estate bubble pops? In the meantime, an entire generation may have been priced out of the Vancouver housing market.

This Week’s Recap:

On Monday I explained why my thinking changed around dividend investing.

On Wednesday Marie explained the 50-20-30 approach to budgeting.

And on Friday I offered a twist to the RRSP vs. mortgage debate.

Over on Rewards Cards Canada I revealed how I earned 80,000 Aeroplan miles almost pain-free.

And on Lowest Rates I explained what you need to know about insuring someone else on your car policy.

Weekend Reading:

New homeowners face many problems, but hot markets are tricky for those looking to move up. Should you buy first or sell first?

Jessica Moorhouse revealed a big secret – she’s now a homeowner. Congrats!

Bridget Eastgaard weighed-in on the mortgage pay down vs. investing debate and says you’ll come out ahead investing in a TFSA.

Preet Banerjee gives us the low-down on disability insurance:

Stop screwing your retirement, says Money We Have blogger Barry Choi.

One common argument used by active investing proponents is that if every investor switched to a passive approach then markets would no longer be efficient. Larry Swedroe shreds that argument here.

A look at one of the most successful investors of all time – Bill Miller – and his infamous fall from grace.

Nelson Smith says that mutual fund dealers such as Investors Group are missing out on a massive opportunity to develop their own ETFs and robo-advice services.

Successful investing really isn’t that complicated – an interview with Harold Pollack, co-author of The Index Card.

Meet the parents who won’t let their children study literature.

Why our life in three stages – school, work, retirement – will not survive much longer.

Overeducated and underpaid? The Globe and Mail looks at how to address mal-employment.

Should Julie cash in shares or drawdown on her RRSP? Jason Heath on the best way to fund your retirement.

Michael James shares his misadventures in trying to get his free credit report from Equifax and TransUnion.

Thanks to Ellen Roseman for including my open letter to Air Miles in her recent column about the loyalty company’s shoddy customer service.

Finally, Rewards Canada shared a letter from a disgruntled Air Miles customer explaining why he’s done with rewards programs.

Have a great weekend, everyone!


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