Welcome To The Depression...

[Bob Armstrong]

Re: Welcome To The Depression...

Hi Gary:

Did your computer foresee Harper's majority slipping away in the economic chaos?

Bob

[Gary Ruben]

Re: Welcome To The Depression...

Hi Gary:

Did your computer foresee Harper's majority slipping away in the economic chaos?

Bob

Hi Bob,

I only saw one or two polls which had Harper in majority territory and thought them to be outliers. Once we get outside Alberta, Conservative support seems to be 4,500 miles wide and 1 inch deep.

The Carbon tax will probably cost Dion the election. If he loses, hopefully he will step down quickly. I say "if" because if we get a hugh stock index drop this week, people may quickly change their minds. After all, I understand at least part of the Canada Pension Plan is being invested in the stock market and people can't be enjoying watching the hugh loses to their holdings while being told there is no problem.

Take the situation with industry in the East, couple it with a hugh decline in the price of oil and gas, about a third of which I calculate we've seen, and we'll see what the economy will be like. If oil drops another 20 dollars in the next month it will be interesting to see how busy the winter drilling season is in the oil patch.

[Tom O'Donnell]

Re: Welcome To The Depression...

The carbon tax almost convinced me to vote Liberal. I am generally in favour of consumption taxes over income taxes. If the plan truly is revenue neutral, then it is a thing of beauty.

The stock market drop and possible drop in housing prices is great news indeed. The previous depression only allowed those people with assets and no debt to make purchases for pennies on the dollar after all the high-flying consumers, bloated from overspending, have hit the ground. A transfer of wealth from the fiscally irresponsible to the responsible. About time!


On a related note, I recommend that everyone interested should watch the documentary "Maxed Out"; I saw it about two years ago and again earlier today, it's a very prophetic movie. Fantastic film showing how predatory lenders operate and how they try to coerce people into making Faustian bargains.

Though it is an American program, same things happen here. Not too long ago my wife and I went to the bank to enquire about getting a home loan, even though we weren't really interested in owning just yet. I always dress like I have five bucks to my name, so the guy started talking about how he could lend us 105%(!!!) of the cost of our home over a 40(!!!) year term. I asked him if he weren't worried that: 1) If we couldn't save even a few thousand bucks weren't we a bad risk? and 2) We are both in our 40s. Won't we likely be dead before this thing is paid off?

Nope, he wasn't worried. I guess they figure you are going to be an indentured servant for the rest of your life. Thanks, I'll pass.

[Charles Aronowitz]

Re: Welcome To The Depression...

I'll believe better financial days are ahead when I see some mortgage fraudsters (the borrowers who lied on their applications, the bankers who gave them loans knowing the applications were BS, the CEO's who padded their bonuses by putting out phony reports, and govt. officials, like Barney Frank and Christopher Dodd, who colluded in the scams) undergoing "perp" marches.

[Gary Ruben]

Re: Welcome To The Depression...

The carbon tax almost convinced me to vote Liberal. I am generally in favour of consumption taxes over income taxes. If the plan truly is revenue neutral, then it is a thing of beauty.

The stock market drop and possible drop in housing prices is great news indeed. The previous depression only allowed those people with assets and no debt to make purchases for pennies on the dollar after all the high-flying consumers, bloated from overspending, have hit the ground. A transfer of wealth from the fiscally irresponsible to the responsible. About time!

Though it is an American program, same things happen here. Not too long ago my wife and I went to the bank to enquire about getting a home loan, even though we weren't really interested in owning just yet. I always dress like I have five bucks to my name, so the guy started talking about how he could lend us 105%(!!!) of the cost of our home over a 40(!!!) year term. I asked him if he weren't worried that: 1) If we couldn't save even a few thousand bucks weren't we a bad risk? and 2) We are both in our 40s. Won't we likely be dead before this thing is paid off?

Nope, he wasn't worried. I guess they figure you are going to be an indentured servant for the rest of your life. Thanks, I'll pass.

Hi Tom,

It kind of depends on who has to pay the carbon tax. If it's the consumers directly that's one thing. If it's companies which make goods or buy our energy that's something else. Anything which adds costs to our exports, be they manufactured or natural resources, makes us less competitive. I don't know how many more industries we can lose to other countries.

House prices is kind of different. I'm not sure how much houses have fallen in price nor do I care. For someone who is selling a house and buying another one, he's buying on the same market as he's selling on. It simply doesn't make much difference because the difference he's paying or getting is likely the same as it would be at the higher price. On the other hand, for someone trying to get into the housing market, does it really matter if the price is $250,000. or $235,000.? More important is the interest rate and if the person can afford the mortgage payment. You're right about the 40 year mortgages. I think that's been stopped and they don't give such long mortgages anymore, from what I read. I think it's 35 year now. Also, I think they get those long mortgages CMHA (Canadian Mortgage and Housing Association) assured or insured. I think as far back as the 70's a person had to come up with about 5% down. Maybe less. They don't worry about your age. Only if you can qualify and I think it's harder in Canada than it was in the U.S.

How could he justify lending you 105%? I never heard that one before. What was the catch? Were there no income requirements or anything like that?

When Wall St. and Bay St. are having problems the effect is felt on Main St. Companies have to come up with money to keep the economy oiled. Even to meet the payroll. Why not go into some bank now and ask them how much you're qualified for in the way of a mortgage loan. Get some hard numbers and figure out what's best for you. Obviously it's not 105% because somehow that has to be a bet the value of the home will rise.

[Tom O'Donnell]

Re: Welcome To The Depression...

"It kind of depends on who has to pay the carbon tax. If it's the consumers directly that's one thing. If it's companies which make goods or buy our energy that's something else. Anything which adds costs to our exports, be they manufactured or natural resources, makes us less competitive. I don't know how many more industries we can lose to other countries."

Agreed.

"House prices is kind of different. I'm not sure how much houses have fallen in price nor do I care. For someone who is selling a house and buying another one, he's buying on the same market as he's selling on. It simply doesn't make much difference because the difference he's paying or getting is likely the same as it would be at the higher price."

I do not agree with this. Let's suppose you own a house and you paid $100,000 for it. Now it is worth $300,000. When prices shoot up (and it has to be substantial to overcome frictional costs of selling, moving, etc.) it is smart to buy a less expensive home and pocket the difference. On the other hand, when houses are dropping in price, and your $100,000 home is now worth $50,000, it is a good idea to sell that house and buy a more expensive one on the theory that when the market corrects itself the bounceback you get is greater when you leverage. I am assuming the price of a house in the down market is not caused by something like Love Canal.

"On the other hand, for someone trying to get into the housing market, does it really matter if the price is $250,000. or $235,000.? More important is the interest rate and if the person can afford the mortgage payment."

It matters to me. I would put my $15K to work doing something else. Interest rates are important to me only in that high interest rates make buying homes less affordable for the average buyer and that sinks the prices of the homes, which is good.

" You're right about the 40 year mortgages. I think that's been stopped and they don't give such long mortgages anymore, from what I read."

That would have to be very recent. We went into the bank roughly a year ago.

"I think it's 35 year now. Also, I think they get those long mortgages CMHA (Canadian Mortgage and Housing Association) assured or insured. I think as far back as the 70's a person had to come up with about 5% down. Maybe less. They don't worry about your age. Only if you can qualify and I think it's harder in Canada than it was in the U.S.

How could he justify lending you 105%? I never heard that one before. What was the catch? Were there no income requirements or anything like that?"

There were income requirements, but the 105% was to cover the frictional costs associated with moving, I think. I don't care what someone's job is, lending people 105% of the cost of a home is irresponsible.

"When Wall St. and Bay St. are having problems the effect is felt on Main St. Companies have to come up with money to keep the economy oiled. Even to meet the payroll. Why not go into some bank now and ask them how much you're qualified for in the way of a mortgage loan. Get some hard numbers and figure out what's best for you. Obviously it's not 105% because somehow that has to be a bet the value of the home will rise. "

Oh, I only went in to see what they were offering. We already have enough to buy a home with cash. Personally, I would like the costs to drop and get it at a discount. Like anything else, pretty much, I look for sales. And I am very patient. No "buy now, pay later" dreck for me.

[Gary Ruben]

Re: Welcome To The Depression...

"I do not agree with this. Let's suppose you own a house and you paid $100,000 for it. Now it is worth $300,000. When prices shoot up (and it has to be substantial to overcome frictional costs of selling, moving, etc.) it is smart to buy a less expensive home and pocket the difference. On the other hand, when houses are dropping in price, and your $100,000 home is now worth $50,000, it is a good idea to sell that house and buy a more expensive one on the theory that when the market corrects itself the bounceback you get is greater when you leverage. I am assuming the price of a house in the down market is not caused by something like Love Canal."

I was talking more about the normal type sales one sees. In the times of great inflation the idea was to buy as much house as a person could afford and their wages would grow into the mortgage payment. Not everyone was rooting for Trudeau to wrestle inflation to the ground or to knock the wind out of inflation. In any case, the mortgage company might be concerned if the sale price were lower than the size of the mortgage.

-" You're right about the 40 year mortgages. I think that's been stopped and they don't give such long mortgages anymore, from what I read."

"That would have to be very recent. We went into the bank roughly a year ago."

I think I read about it only a few months ago. Something about them feeling those kind of mortgages were like a financial "timebomb".

"There were income requirements, but the 105% was to cover the frictional costs associated with moving, I think. I don't care what someone's job is, lending people 105% of the cost of a home is irresponsible."

I'd have liked to listen to their explanation. Voodoo economics fascinates me. :)

"Oh, I only went in to see what they were offering. We already have enough to buy a home with cash. Personally, I would like the costs to drop and get it at a discount. Like anything else, pretty much, I look for sales. And I am very patient. No "buy now, pay later" dreck for me."

That's a good way to look at it from what I know. I don't know what the real estate market looks like in Ottawa where I imagine the goverment salaries and high paid unionized jobs abound. I wouldn't imagine house prices will come down the same percentage in all areas of the country.

In the U.S. they claim people are better off to have a mortgage because it's tax deductable and they will play less taxes. I guess the idea is to mortgage the house up, invest the money and take a tax deduction on the mortgage interest paid. For this I'd have to see the numbers.

I was visiting someone in Flaherty's riding today. Not as many election signs as I recall from previous years and I wonder if he will win the riding. From what I saw there seemed to be more NDP signs although the size of Flaherty's signs dwarfed them in size. Newspaper reports I read mention it's a high income area and the north part of the riding probably is. The South end has older homes, at least one subsidized large nursing home and I would imagine a lot of auto workers live there as the riding borders the Oshawa GM plant.

I still don't plan to vote. Can't see anyone whose policies will turn things around in my view. Besides, if oil falls back to 40 dollars or less per barrel it would be nice if Alberta had one of their own to fall back on for help.

Still, I don't consider the current polls firm and think at least some support will shift before election day.

[Gary Ruben]

Re: Welcome To The Depression...

The beat goes on...

Today many central banks around the world cut lending rates by a half a per cent. Britain launched some bailout plan for their banks, with strings attached.

How many of you get the feeling they are merely trying to get from day to day? Try something, see how it works and for how long and then on to something else. Inevitably it must turn around some day.

I notice our election is becoming something of a horse race. What was once a comfortable lead in the polls for the prime minister seems to be narrowing.

I don't know if there is any government or leader who can turn around what is unfolding. Probably the only question is if the voters wish to hold the governing party accountable for their past term and the current problem. If the voters would like to see a different approach or more of the same. I think it's become very appearant over the past few weeks what the results of staying the course have been.

Harper suggested people buy stocks only yesterday, I think it was. The days go by so quickly I lose track. The other leaders jumped all over that suggestion calling him insensitive. Personally, I didn't think it was a bad idea. Yesterday evening I picked a company I like, put in a ridiculous bid at a price where it has never traded so low, and missed getting it by 1 cent. Maybe tomorrow I'll get it. Not a time to chase anything, that's for sure. What I want to do is get them at MY price and wait two or three years. That requires a good dividend because I don't like to wait for free.

Of course, the risk is they will go to Zero.

What are your thoughts on the depression and how are you passing your time while the events unfold?

DISCLAIMER: None of what I write should be used for investment decisions. I write this stuff for entertainment. Consult a financial adviser.

[Ben Daswani]

Re: Welcome To The Depression...

The carbon tax almost convinced me to vote Liberal. I am generally in favour of consumption taxes over income taxes. If the plan truly is revenue neutral

It ain't.

TEN CHARACTER LIMIT = RETARDED

[Jason Lohner]

Re: Welcome To The Depression...

I just read today that the IMF says that Canada's economy will do better than all the other G7 nations.

[Gary Ruben]

Re: Welcome To The Depression...

Another day has passed...

Can you smell it? Sniff, Sniff... I can smell it. The winds of change. It no longer seems to be a question if the Conservatives will get a majority or a minority government. It's a question if the Conservatives or the Liberals will form the government. Like I wrote in another post, I think the conservative support, once you get out of Alberta, is 4,500 miles wide and one inch thick. I'm sure you'll excuse this old guy that I still think in miles and leave the more modern kilometers to the young.

I like to watch the news station of TV. A lot is being made of Harper suggesting people buy stocks but I thought it was a good idea. Honest, I did. Such a good idea I've started what I call my Depression Portfolio. I told you about my first one a couple of days ago. Added another one. My ridiculous bid got hit again. A conservative voter must have bid lower because the price kept dropping after I got it. What can a person do. On the dark side it's already down. On the bright side, it had never traded as low as I got it AND pays a yield of 13.5% at what I paid. Now to find something else I just can't do without, but maybe I'll have to wait for my next pension cheque because I'm spending my grocery money. I sure hope that Harper fellow is giving me good advice to invest in stocks. :)

Probably you want to know why I'm bothering with such a portfolio at my age. I want to be able to tell my grandkids that at the depth of the depression, when everyone was puking on their shoes, I was buying stocks. This dull old correspondence chess player has a sense of humour!

Now I must run. My computer, "Crystal Ball", which I also use for my correspondence chess, is awaiting input from me so it can give me a list which will help me follow the advice of MY Prime Minister.

Please read my disclaimer and take note.

DISCLAIMER: None of what I write should be used for investment decisions. I write this stuff for entertainment. Consult a financial adviser.

[Ken Craft]

Re: Welcome To The Depression...

Bring back the Old Chesstalk.

[Gary Ruben]

Re: Welcome To The Depression...

Bring back the Old Chesstalk.

Ken,

Did your chewing gum lose its flavour on the bedpost overnight?

[Ken Craft]

Re: Welcome To The Depression...

Larry is a smart businessman. I'm sure he sees that this site is moribund compared to the old chesstalk. Those who intially counselled against the change appear, so far to have been correct.

[Gary Ruben]

Re: Welcome To The Depression...

Larry is a smart businessman. I'm sure he sees that this site is moribund compared to the old chesstalk. Those who intially counselled against the change appear, so far to have been correct.

I find it interesting that you are a governor of an organization which has embraced the same format. Do you feel them using the format is some kind of negative indicator?

This site isn't moribund, as you call it. The main topic of the old board was the CFC where you often held court with daily countdowns.

What seems to have happened is CFC topics don't seem to hold much interest nor many views of the topics. On the other hand, this thread has more than 4,000 views.

I at least try to entertain people. Possibly that's the reason the CCCA membership rose so much in the years I was the membership secretary.

If you want to know what I placed in my Depression Portfolio you need only ask. :)