Friday Free-for-all!
The weekend is nigh! Let’s do our end of the week economic news round up and open topic discussion. Here are a few stories I’ve noticed lately:
-Canadian consumers rated ‘remarkably resilient’
-City Hall seeks Federal help to boost rental stock
-Metro Vancouver health cuts include layoffs and increased fees
-Advertisers not so hot on the winter games
-TD: All provincial economies to decline in 2009
-Merril Lynch: Get ready for 10% gdp growth!
-Conference Board: Lukewarm recovery coming soon
-Boomtime building and Chinese toxic drywall
-US Foreclosures at record high despite aid
-Paulson hid facts to ‘protect taxpayer’
-US 30 year fixed rate mortgages near record low
-Nothing will stop housing prices from tanking, but rates help
So what are you seeing out there? Post your news links, thoughts and anecdotes here and have fun-tastic weekend!
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July 16th, 2009 at 11:40 pm
First Post!
July 17th, 2009 at 6:40 am
It looks like Gavin Hughes’ monthly REBGV stats page is no longer being updated. I’ll really miss that data.
July 17th, 2009 at 6:59 am
“The government responded that no extra money was available, and that they would be getting no more than the planned 20 per cent increase over three years.”
Does.. not.. compute.. Why do health authorities need to cut when their budgets are increasing by 20%? That’s 6.3% per year. Inflation is not much more than 1%.
Either someone is double-counting or there are some mighty large raises people in the private sector would only dream of.
July 17th, 2009 at 8:00 am
Survey:
Employees more pessimistic than employers about economic recovery
http://www.news1130.com/news/l.....75735_1080
“A national survey finds employees are a lot more pessimistic than employers about a quick end to the recession. But the survey also shows people in British Columbia are more optimistic than employees in the rest of the country.”
We all now that “Best Place on Earth” is different!?Really? There is something that we don’t know about BC,or what, that is always different here?
July 17th, 2009 at 8:10 am
it lloks like the turnaround in the states is in full swing. banks posting big profits, home sales up. pretty soon theyll be buying more resources from us. i think the recession here is over. best time to buy a condo is now if you want to profit.
July 17th, 2009 at 8:54 am
“If I want to profit I should buy a condo?” WTF kind of thinking is that. As it is the cost of a condo has surpassed the average persons ability to pay by any conventional means by a factor of 2.5.
So, using that logic, I will find a sucker to pay even more than current value? Are incomes doubling? 10.8 times earnings is the ratio is Vancouver now as oppsed to 3-4 average in most other western countries as it was here traditionally.
The real whores would love the re-introduction of 50 year mortgages but I really don’t think thats going to happen. Why not 60 or 75 year multi-generation mortgages? If prices were to continue to go up without respite then the concept of leaseing property from the banks may gain popularity because it is de facto what is happening now. 0 down 35 year am is tantamount to the same thing.
The Olympics have turned into a Gestapo free for all,
http://www.vancouversun.com/sp.....story.html
Naysayers and truth tellers are on the fascist hit list. Good going guys, this is really a bump up for Canada.
July 17th, 2009 at 9:43 am
realpaul: shut up gasbag no one cares about why you think condos are overpriced. why don’t you go protest the olympics with the other 7 dirty unemployed hippies who don’t like any progress. I don’t really care what you do because Im busy making money and enjoying myself.
July 17th, 2009 at 10:56 am
realpaul:
I’m going to take that Olympic book out from the library and see if the cops come to visit me! Now that would ROCK!
July 17th, 2009 at 11:03 am
The creepiest part about hassling that author about his Olympic book is that they did it at his COFFEE SHOP. Were they following him around or something? It would definitely get me pretty freaked out (which I’m guessing is the point?) – “We know who you are and (perhaps most ominously) where you buy your double decaf latte!”
July 17th, 2009 at 12:40 pm
Mortgage Rates – up and away
http://www.americacanada.blogspot.com/
We are living off an excessive amount of fiscal and monetary stimulus. But none of it is sustainable. In the next couple years, we will have to raise taxes, raise interest rates and cut government spending. Furthermore, the United States, with the international reserve currency will need to resell over $1 trillion in bonds purchased by the treasury. This last action will dramatically increase bond yields. UK who embarked on a more generous quantitative easing plan will need to make the same dump.
Other countries such as ours will need to defend their currency. If the Bank of Canada and Federal Reserve in America lifts interest rates from 0% to 4%, still a very low rate historically speaking, the bank’s prime rate will go up to around 6%. As the rate rises, Canadian home prices will most likely plunge and the banks will begin charging a premium over prime (instead of under prime, which right now seems to be the norm). This premium will help compensate the banks for the added risk. As a result, a variable rate mortgage of 7 or 7.5% is quite optimistic. Historically it is a very competitive interest rate. It also assumes that nothing crazy happens with the currency markets (such as a US or UK dollar collapsing – which will happen if the US loses its reserve currency status).
But many Canadians justify that buying now makes sense because of exceptionally low interest rates. So in other words, there is a rush while rates are low. So we are all in agreement that rates will go up. So for all those squeezing into the largest home they can afford on a variable rate mortgage, what can they possibly expect? I thought I’d calculate it out to show the risks that they are taking.
MARRY AND BOB
Let’s assume Marry and Bob earn $60,000 and $50,000 respectively. They are approved for $500,000 loan and choose a 35 year, variable rate mortgage. After-tax income is $75,000 or $6,250/mth.
$6,250 / month income
less:
Two Vehicles:
$500 car payment
$200 insurance
$125 car maintenance
$500 gas
Home:
$400 property taxes
$100 house insurance
$300 house maintenance
$200 utilities
$150 internet, cable, phone
Food
$800 groceries
$200 work lunches, snacks and coffee ($100 a piece)
Total deductions:
$3,475
Total left over for mortgage payment, entertainment, debt repayments on loans, CC’s and HELOC’s, household improvements, disposable consumption, savings and investments.
$2,775
So let’s see what happens when the couple signs on for their $500,000 mortgage for 35 years and the associated mortgage payment:
2.5% – $1,787 – “cheap, anyone can afford that, we have about $1,000 left over for everything else.. let’s put a new deck in while the reno tax credit is still in effect”
3% – $1,924 – “we can cut back on our lunches and we’ll be fine”
4% – $2,213 – “$500 a month extra, where are we going to get that? – we are breaking even despite cutting back on entertainment and lunches”
5% – $2,523 – “we are going to have to max out the cards this month to pay for this”
6% – $2,850 – “home prices are plummeting and we’re in negative equity”
7% – $3,194 – “It’s been like since like the late 90′s since rates were like this!
8% – $3,551 – “Our mortgage has doubled”
9% – $3,920 – we’re broke
10% – $4,298 – mortgage payment is now 2.4 times larger than the initial loan.
The point is, whether you are calling for a subtle 1.5% rise in mortgage rates, or 6.5%, the change is quite dramatic. This does not bode well for home prices.
July 17th, 2009 at 12:46 pm
From the same article….
He then mentions the stability of the Canadian Banking system. So one might ask, was it ever unstable? Did instability bring about the initial downturn in Canadian home prices? Were banks going broke in the summer of 2008? No in fact their stock prices were higher then they are today. There is no connection between the initial downturn and the stability of the banking system. In America, the banks were making record profits when housing took its downturn. It wasn’t until home prices fell beyond 10% that the banks started to feel the pinch. It was housing that brought instability to the banking sector – not the other way around.
The financial collapse did not cause the Canadian housing market to drop. Prices stopped moving around December 2007 – 7 months before oil peaked at $147, nickel was trading at $10,000 plus a tonne and Canadians thought they hit the commodity mother load. Corn, wheat, milk, potash were all trading at double the prices today. At the time there was no real estate horror stories in the media – a favourite excuse for realtors to explain the decline. Horror stories like Wolf’s report on a Canadian housing collapse, did not get produced until August 2008.
So it’s unlikely that when the economy improves, that real estate will fare the same. In fact, the only fuel that is driving real estate right now is affordability in the form of renting cheap debt. An economic rebound will actually make debt more expensive and cause Canada’s housing correction to once again begin its akward decline. I will show you how. Higher interest rates will sink home prices, and trigger the same deflationary spiral that existed in real estate only 9 months ago.
=====
Higher interest rates attract investors into your currency. The only reason you can have interest rates so low right now is because there is an international financial crisis. Since every developed country in the world has coordinated each other’s actions with low interest rates, no country is attracting anyone into their currency from others. So it’s not a problem. Investors are subdued into receiving a return of one or two percent on their money. They have no choice.
Soon some countries will start to lift interest rates to avoid inflation, speculation and to reward savers for their money. When this occurs there will be a large currency shift as investors pull away from low interest rate countries and put their funds into countries that pay higher rates. Currencies with higher interest rates will appreciate as investors vie for their denominations. The opposite will happen to those who do not lift rates. This is nothing new. This is one large reason we don’t always have interest rates set to zero. This may be another reason why the IMF and some indebted nations (i.e the States) have urged all countries to leave monetary stimulus in place.
As a rebound improves the economy, other investments will do well and fears of inflation will scare bond holders. Investors will need to be wooed into buying massive issues of government debt. Higher interest rates are the only solution. As the government raises interest rates to attract investors, the deficit will substantially increase. As Peter Schiff often likes to say, the US runs a ponzi scheme with its debt. And this is essentially true. All maturing bonds are renewed with new bonds at the most current interest rate – nothing is being paid back.
July 17th, 2009 at 12:52 pm
I don’t know how many people have been adversely affected by the new bike lane on the Burrard St Bridge. But I and many others have.
In protest, I have written an open letter to the Vancouver City Mayor and Council. (Which I have also e-mailed to them.)
http://forum.freemarkets.ca/topic.php?id=704
I encourage everyone who has also been adversely affected by the new bike lane to e-mail them at: mayorandcouncil@vancouver.ca and gregor.robertson@vancouver.ca
July 17th, 2009 at 12:56 pm
DEFLATION is HERE! We just saw the first negative reading in 15 years, with energy and house prices down, but food prices way up.
http://www.theglobeandmail.com.....le1221928/
So if you drive a lot you’ll save big bucks, but if you eat food, you’ll pay more for it. House prices are down year over year, but still way up.
July 17th, 2009 at 1:01 pm
Charles Iliya Krempeaux: Have you tried getting off your ass and riding a bike in this beautiful weather instead of complaining about traffic? What if the city were to put in so many bike lanes that anyone of moderate health that lived less than 5 miles from work would bike instead of drive. Do you think your drive would be worse or better in such a hypothetical situation? Bikes take up a hell of a lot less space than cars, I always find it ironic when the people who make up the traffic complain about traffic.
Walkable and rideable routes help make this a far more liveable city than it is otherwise. We need more bike routes to make traffic here better, not less.
July 17th, 2009 at 1:04 pm
NO -LYMPICS: Nice! Thanks for the numbers, I remember what happened to family and friends in the early eighties when rates where higher than any of the examples you give. There are a lot of people living on the edge who are going to be screwed, but hey, we make our own financial decisions. Please no crying to the government about completely predictable outcomes.
July 17th, 2009 at 1:06 pm
NO -LYMPICS: “As a rebound improves the economy, other investments will do well and fears of inflation will scare bond holders. Investors will need to be wooed into buying massive issues of government debt. Higher interest rates are the only solution.”
It’s not “fears of inflation” as much as other investments are competing for a fixed amount of capital. Remember circa 1999 with mortgage rates above 7%? It’s not like inflation was high but there were lots of other investments producing better returns than fixed income that forced rates up. It will happen again; I predict 4% mortgage rates will look downright insane in 5-10 years.
July 17th, 2009 at 1:09 pm
Charles Iliya Krempeaux:
I LOVE the BIKE LANE !!!
traffic volume doesn’t seem any different to me. There also seems to be twice as many buses whizzing by my shoulder southbound on Burrard.
shudder..
Don’t you see that if we embraced bike lanes we could attract tourists ? I think we should cover the freaking region with them. Make the gulf islands “bikes only” a few weeks a year, bike paths by the ocean etc..
Give up your car once and a while
July 17th, 2009 at 1:28 pm
The bike lane is bad and I am not sure what the city council is trying to solve here. There was a functioning bike lane on the bridge before.
The traffic congestion in the peak hours is much worse than ever and the pollution from the slow cars is pretty bad too. The bike lane is also ruining some businesses (as if the recession wasn’t enough): http://www.straight.com/articl.....ail-coffin
July 17th, 2009 at 1:41 pm
This bike lane nonsense pretty clearly demonstrates that the city is giving in to a tiny but vocal minority of ideologues. That their “solution” is making the problem much worse is never an issue for the true believers.
July 17th, 2009 at 1:44 pm
NO -LYMPICS:
#10 really excellent work. This is the kind od perspective most people seem to lack. It is not the kind of economy anyone can ‘price for perfection’.
Canada has been bleeding over 56000 jobs per month since November 2008. Thats EVERY month. The unemploymnet numbers were just snuck out ( late Friday after the markets closed and most people are already heading into the drunk zone for the weekend) in an attempt to hide the facts as always. As opposed to the US where the public numbers are made public first thing in the morning.
Now, keep in mind that these are only the ‘current’ insured jobs. The 454,000 number doesn’t include those people who are self employed and can’t collect, those who’s EI has run out, those already on welfare, those who have gone to part time from full time etc etdc. The real unemployment numbers are WAY higher than the government is reporting. Unlike the US we do n ot get the ‘E6′ numbers that would clarify the true state of unemployment.
There are huge numbers of middle class people now standing in the food lines ( I mean right now), the lines start at 7AM and go all day until 6PM. These are the people you describe in your piece. They are barely scaping by now and things are being whittled away by simple inflation. Wait unti rates actually start kicking them in the ass as well.
The enrollment for kids sports is way down this year. I think that this stat is also very telling that people can no longer afford Baseball for Bobbie and Dance for little Jane. Internal tourism numbers are way off as well. So even camping is too expensive for these tapped out pedestrians. I told you about the post man at Superstore who had to walk out without his groceries because all 5 of his visa cards were maxed. Very telling and typical in a way that is more common than most people think.
July 17th, 2009 at 2:05 pm
sheila:
#13 Shiela, don’t fall for the hedonics bait and switch that the government is trying to sell. There is raging price inflation. The CPI is measured in ways that would shock the average person if they were to take the time to understand it.
Currently it is in the govermnments best interests
( remember that we just had a new coordinated policy discussion at the G8) to make the sheeple feel all warm and fuzzy about green shoots and price stability. The sales pitch is to get you shopping again.
The thinking is that if you think prices are stable, then you’ll forget about the previous rampant escalation in prices and think you’re getting a good deal from here on in.
China has plowed hundreds of billions into a stimulus plan and that has factories humming at a time when the western markets ain’t buyin’. So T-Shirts and plastic flowers are cheaper, both are items counted into the CPI, does that spend like ‘deflation ‘ to you?
I just spent $5.10 on a gallon of milk that cost me $2.99 last year. Thats inflation, down and dirty on the street.
Aside from that the definition of inflation is ‘money supply’ and Canada’s money supply has been increasing 14% per year for the last 8 years. Thats real inflation because every dollar they print makes the dollar in you pocket less valuable, thats real inflation. It means in laymans terms that the cost of living will double every 7.14 years. In terms of M3 the real inflation rate is 14% p/a.
July 17th, 2009 at 3:02 pm
Inflation versus deflation:
I read a well – written article by an economist a few days ago. His premise is when people have limited income, they will focus on paying for things they must have( create inflation ) and turn their backs on other items = less demand = deflation.
Thus you will see price rises in some thing, and concurrent price drops on others. This tide will NOT raise all ships.
Re: Real Estate, it appears that the only thing priming the RE pump is the ability , via artificially lowered interest rates, to make the minimum payments to maintain ownership/tenancy.
This faux economy based on denial is not rocket science…it’s pretty basic economics.
Shame on the Gov’t for luring the last of the greater fool type of people in, they must certainly know that this will not stimulate a recovery, just simply delay the inevitable.
July 17th, 2009 at 3:12 pm
NO -LYMPICS:
What do you mean by ‘artificially low’ rates? Setting rates by the BOC isn’t a new thing.
July 17th, 2009 at 4:28 pm
Agree that “artificially low rates” implies some grandiose manipulation that doesn’t really exist. I think the BoC doesn’t have much choice but to push overnight rates to zero. And rates on anything over a few months is set by the market, not by the BoC, and they’re saying there isn’t anything appetizing to invest in, aside from mortgages that is
.
July 17th, 2009 at 4:34 pm
Swine Flu concerns? Not in Canada, just everywhere else. Will we see a repeat of the SARS outbreak where hundreds die in secret only to be found out later when the deaths couldn’t be hidden?
Or will it be tens of thousands like all the other countries are predicting. Even Argentina is taking resposibility. Think of it this way, you and your family mean shit to the tourism lobby.
http://www.breitbart.com/artic....._article=1
July 17th, 2009 at 4:41 pm
jesse:
#24 J, I for one would be very interested to read your explanation of the BOC interest rate policy. Who are ‘they’ and why would you think that mortgages are appetizing to invest in?
July 17th, 2009 at 8:25 pm
realpaul: “I for one would be very interested to read your explanation of the BOC interest rate policy.”
Don’t take my word for it. Go to their website and read it for yourself.
“Who are ‘they’ and why would you think that mortgages are appetizing to invest in?”
“They” is the bond market and last I checked getting approval for a mortgage is pretty simple and the bar isn’t that high. There is lots of money around chomping at the bit to get loaned out for housing financing. If there were better places to invest the money I’m sure that’s where all the capital would go but for now the mortgage business seems to be pretty popular, given 5 year rates are 4-5% and variable is crazy low.
July 17th, 2009 at 9:50 pm
jesse:
#27, J, surely you’re just being coy. I understand the Act throughly. I would like to hear from you what your learned interpretation is.
“The bond market” is investing in mortgages? Which bond market are you referring to?
Lay your wisdom on us oh savvy one.
July 17th, 2009 at 10:33 pm
realpaul: I’m not sure what you’re talking about with the government not telling anything about the swine flu cases and deaths. It’s just the newspapers that aren’t bothering to publish the data.
Stats: http://www.phac-aspc.gc.ca/ale.....ce-eng.php
They’ve got more info at http://www.fightflu.ca
July 18th, 2009 at 7:12 am
realpaul: “I would like to hear from you what your learned interpretation is.”
Well I’m glad to hear you have read and thoroughly understand the “Act”. I will not claim to be well versed in the specifics of it. I will give my simplistic explanation, as it applies to overnight lending rates, and please feel free to correct me.
The overnight lending rate is a tool for controlling the money supply and, ultimately, a means of keeping inflation and inflation expectations contained, which is one of the BoC’s primary mandates. My comments were surrounding someone using the term “artificial” to describe the BoC’s interest rate policy. I take issue with that because nowhere in my readings have I encountered evidence that the BoC is producing “artificially low” rates. They are, to the best of my knowledge, trying to keep inflation targeted to a slightly positive number but have hit zero bound.
My limited understanding also indicates the Taylor Rule says rates should be below zero. Hence talk of QE.
““The bond market” is investing in mortgages? Which bond market are you referring to?”
MBSs are traded along side bonds in most trade houses. Are you mocking me, realpaul?!?
July 18th, 2009 at 8:42 am
Since the financial crisis hit, the central banks have been influencing the cost of money downwards in order to keep companies, banks, homeowners afloat. Not doing so would have meant many economic entities would not be viable in the current economic environment.
The past few years the fed deviated from the Taylor rule and the consequence was a huge misallocation of capital to unproductive uses. Of course, at the time, this was not realized by the market and the market had illusory expectations of return. Once the bubble burst (that is, it was realized these expectations were untenable), the consequence was a dramatic change in various macroeconomic variables to the point where many economic entities could not stay afloat without cutbacks.
And now everyone is paying for that (eventually, even those who profited will suffer).
If you read around a bit on the various blogs (krugman, roubini, etc), the sense is that we are essentially in a kind of a trap. Those companies which can survive are trying to maintain their profitability, cutting jobs and attempting to improve productivity. But if those profits start coming back and money flows back to the stock markets, then bond yields will rise. So the recovery will head a strong headwind every time it tries to take off. And each time, there will be the danger of overshooting. The other possibility is that the stock market does not robustly recover its profitability and we will start to slide back into the deflation directly (hence the talk of second round of stimulus).
The central banks influence the money supply. But the only real way to get out of this kind of trap is through productivity gains. But nobody is going to work and be productive if it is too easy to borrow money and speculate. On the other hand, with rising unemployment, there is incentive for workers to be more productive and valuable (or they lose their job).
Ultimately, I think the economy can only recover once all of that money which was misallocated is paid back in terms of value to the economy.
July 18th, 2009 at 9:15 am
Good post, observer:
“…the consequence was a huge misallocation of capital to unproductive uses”;
“..nobody is going to work and be productive if it is too easy to borrow money and speculate.”
—
Bubbles skew the playing-fields and people change their behaviours.
Lots of unfair distortions and moral hazards.
It’s not puritanical to be calling for some kind of ‘purge’ and a return to a time when the basic rules of the game apply.
July 18th, 2009 at 10:41 am
Buy now. If rates are locked in for 5 years will likely benefit from increased inflation. Depends on how far prices will decline 5 years out and where you are buying.
July 18th, 2009 at 11:03 am
observer:
#31 O, you’re on the right track. The trouble is ( as the authors you have referanced have pointed out many times) is that money supply meddling has overrun any gains in productivity that are achieved. This is the basic fallacy of Keynsian economics.
Systemic inflation was disagreeable but workable unti greedy governments weren’t willing to pull back when the waves began to trough to ever expand the revenue goals they had set for themselves. Initially the stated rate was 2% p/a, now its 14% ++.
The BOC has continued to print massive quantities of paper driving inflation up as the dollar becomes increasingly worthless. Many of the same authors you referance recognize this game as a giant ponzi scheme which has come precariously close to running its course.
The BOC has ‘intervened’ in the CDN dollar market consistently since the 1970′s. This has served to keep buisnesses on the wrong side of productivity gains as they can not afford to expand on a level playing field with improvements in capital equipment upgrades. The low dollar serves the politicians well but deals the citizens the joker. It is the reason why the CDN citizen has the lowest standard of living and the lowest wages of any industrialized country. As people have seem recently Mexico and Canada are tied (almost @ 13 & 11 respectively) in GDP output.
July 18th, 2009 at 11:35 am
M-:
#29 M, let me take a flyer here and let you know that I think the government is playing a game of ‘backy-stabby’ with the public through the media. I think the reason that the MSM isn’t on the story is because when they are the government cuts off their advertising and access. It looks as if the government is being forthcoming but they play a cynical game of keeping the masses in the dark, so as not to ‘create a panic, obstensively. Its the same game that they play with FOI docs. The info is available but you’ll have to crawl over barbed wire to get to it.
Now , you have found some info. The question is, how many people are going to go through that exercise? The fact that it isn’t mainstream means that 99.9% of Canadians are completley in the dark. Ipso Facto it doesn’t exist.
I have brought up the raw sewage issue a time or two and shockingly people react violently to the news, as if it couldn’t be possible and yet the issues stands as one of the all time biggest embarrassments of this Province. Does it get reported? It is a fact that 99% of ground fish in English Bay display pre cancerous lesions on their flesh. Is that a goood enviornment for your kids? Does this make the news? Who’s going to run the story risking denial of access and funding through ad revs?
Like the X-Files said “the truth is out there’. But truth isn’t always popular. I have brought up the alarming stats of police manipulation of the court system and the fact that Canada now has more death by cop kills than any other western country. People seem shocked to hear it. Total jaw dropping disonance. They want to think of the musical ride and Dudley do right. The fact is that the RCMP has deteriorated into a murderous regime that answers to know one and fully expects not to answer to the citizens at any time soon.
http://www.vancouversun.com/ne.....story.html
The truth can be very uncomfortable. The H1N1 issue is really big, a lot of people are dying unreported. The story is that the hospitals are under strict orders to call the deaths anything else but H1N1 Swine Mexican Flu. As we have seen in the MSM, the deaths that can’t be hidden are constantly renamed ” as having died from a previously existing condition’. After the first 25 or so don’t you have to start recognizing the pattern?
The IOC and VANOC have requested that in the event of an outbreak during the Olympics that THEY, the organizers get the vaccine available first!!! That was a line out of a long blather by a reporter on Global. It was one short line in a long speech about preparedness.
The death toll is being reported in real time in many other countries. It is only known to a few intrepid researchers like yourself in Canada. The general public is totally unprepared and like the SARS debacle we will pay for the governments preferance to keepp the hotel room full as opposed to marshalling the public against the coming epidemic that liteerally everyone everywhere says is coming. Except in Canada of course.
We get lied to a lot, it kind of pisses me off, how about you?
July 18th, 2009 at 12:05 pm
Argentina is #1 in honesty, no such luck from Canada on H1N1 issue.
http://news.yahoo.com/s/afp/20.....0717163530
July 18th, 2009 at 12:20 pm
Maybe signs of a difficult economy or mismanagement, regardless another group of decent wage earners are out of work for now.
http://www.vancouversun.com/bu.....story.html
July 18th, 2009 at 3:40 pm
Let’s assume Marry and Bob earn $60,000 and $50,000 respectively. They are approved for $500,000 loan and choose a 35 year, variable rate mortgage. After-tax income is $75,000 or $6,250/mth.
$6,250 / month income
less:
Two Vehicles:
$500 car payment
$200 insurance
$125 car maintenance
$500 gas
Home:
$400 property taxes
$100 house insurance
$300 house maintenance
$200 utilities
$150 internet, cable, phone
Food
$800 groceries
$200 work lunches, snacks and coffee ($100 a piece)
Total deductions:
$3,475
My wife and I are in a similar situation income wise so I’d like to comment on your numbers a bit.
1. 500$ a month for gas. It seems really high to me maybe we just have a full effecient car but even with my fairly long commute it has never went over $150 in a month.
2. Two cars. You don’t see many 2 car families in Vancouver. With the new skytrain the wife and I could seriously get by without one. We won’t but it is possible if we were forced.
3. Layoff. You missed what is in my mind a major risk what if Bob and Mary suddenly lose half that income. The numbers get worse in a hurry. EI is nice but it doesn’t help much once you are at a higher income.
All the other numbers seem pretty good to me.
July 18th, 2009 at 3:57 pm
Dry spell on the West Coast docks
http://www.canada.com/vancouve.....595df77362
Quote:
Longshore worker Ryan Groening woke up at dawn one recent rainy weekday and drove from his Port Coquitlam condo to the east Vancouver dispatch hall, hoping for work at Vancouver’s port.
The 40-minute trip was fruitless, as there was no work for him and dozens of other longshore workers.
Groening usually worked five days a week last year, but so far this year he’s been getting two to three days of work a week. “It’s like going from full-time to part-time,” he said.
Like his father, Groening was lured to the busiest Canadian port by the variety of work and the ability to make an honest living and “raise a family on a union wage.”
But annual wages have plummeted for many workers and nearly disappeared for some as work has dried up during the economic downturn.
========
Quote:
Even the A-board workers have seen their salaries plummet from $80,000 last year to a projected $40,000 this year, Westrand said.
“It’s definitely a lot slower,” said Koraley Tanner, an A-board worker. “I haven’t seen a job for quite a while.”
Annual salaries for B-board workers have nose-dived from $70,000 last year to a projected $20,000 for this year, if they’re lucky. One employee on the second-to-last T board last got work in February but still comes in three to four times a week seeking work.
On the OO board, workers will likely make just $140 to $1,000 this year, compared with up to $15,000 last year.
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Quote:
Through May at Port Metro Vancouver, imports had plummeted 35 per cent and exports had fallen 13 per cent, compared with the same period last year.
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Quote:
Groening, 28, and his wife don’t go to the movies any more. They cut back on buying clothes. And they’ll skip vacation this year.
“We were thinking about getting a new car, and that’s not happening,” Groening said.
And as workers lose hours, they face the prospect of losing the top medical plan, which kicks in with 300 hours of work per quarter.
==
A good ” canary in the mine ” story re: economy .
July 18th, 2009 at 5:13 pm
It’s not that i want to see people suffering, but longshoremen are so over paid for the work they do and their level of education / skills that this story doesn’t evoke much sympathy from me.
July 18th, 2009 at 6:30 pm
me neither. too many year spent creaming high union wages. time for a rational readjustment, imho.
then again, sucks to be those in the readjustment firing line, so let’s hope they adjust well to the new situation.
July 18th, 2009 at 7:05 pm
“too many year spent creaming high union wages”
80K a year, and that seems to be NON union wage. wow.
July 18th, 2009 at 8:57 pm
The whole system is phooked:
The reduction in port traffic shows imports are almost 3 X’s the exports.
The imports , by and large, are basically loonie store stuff and other cheap manufactured goods. We sell them the raw materials to produce the aforementioned.
The ports want to expand? Gateway? lol.
No…they want to convert that prime waterfront to more condos and shift the truck traffic elsewhere. Improving Gateway any further simply worsens the imbalance…we are exportng more jobs than we are creating.
Economists talk about our need to be more competitive, higher efficiencies,higher productivity blah, blah. Tell that to bankrupt auto manufacturing sector or BC’s idle sawmills.
There is a point that greater productivity is a race to the bottom, it leaves a lot of unemployed in their wake. When this mess started last fall I asked other posters if they had any info re: the ports traffic…and a few did note it was down back then. When driving recently over the Ironworkers bridge…a look on the North Van side and the West side of the bridge shows a bare parking lot..isn’t this the lumber export dock ?
The dot.com bomb and the RE bubble basically shows that Gov’ts and banksters have run out of ideas. Fiat money and paper shuffling at the speed of light is not a lifeboat, it’s cement shoes.
July 18th, 2009 at 9:29 pm
The Seven Immutable Laws of Bubbles: Example, Housing Markets in USA, UK & Dubai
http://www.marketoracle.co.uk/Article12114.html
” Years ago I was friends with old man from Texas, he had a big silver buckle on his belt and crocodile-skin boots, and he used to eat three fried eggs, a slice of steak, for breakfast, extraordinary! Lovely guy; full of stories, he had a sidekick called Ron, and Ron wore “Blues Brothers” shades, and never said a word. I was just a kid and he was like in that Jerry Jeff Walker song…”Desperado Waiting For A Train” which he used to play on his car cassette-player over and over; it was that long ago. Anyway he’d been through the S&L and well, let’s say, he was a long way from home.
One day I asked him “what happened”? He said “Son”…when he was being serious he always used to say that…”Son when the money starts chasing the projects not the projects chasing the money, that’s the time”.
Other samples:
Law #3: Greed starts bubbles, fear drives them.
Law #7: The amount of wealth created by a bubble is always less than zero.
(Good article).
July 18th, 2009 at 9:38 pm
Ulsterman:I think that workload has been shifted to delta port and there are restrictions for batches of employees.Some might have lost many hours of work but others are gaining,Specially Those employees with permit for Delta port,Container traffic on that port was increased 95% compare to last year and it was reported in the Vancouver sun around May 2009 .
July 19th, 2009 at 10:44 am
#20, Stats Canada will sell you the alternate unemployment rates. The ones they have stats for are:
R1 – unemployed 1 year or more
R2 – unemployed 3 months or more
R3 – comparable to the United States rate
R4 – official rate
R5 – plus discouraged searchers
R6 – plus waiting group (recall, replies, long-term future starts)
R7 – plus involuntary part-timers (in full-time equivalents)
R8 – plus discouraged searchers, waiting group, portion of involuntary part-timers
http://cansim2.statcan.gc.ca/c.....Id=2820085
July 19th, 2009 at 4:40 pm
So after waiting years for the real estate bubble to pop in Vancouver I’ve come to the conclusion I don’t really want to be here anymore. Over the years Vancouverites seem to have taken on an arrogant self absorbed me first attitude. When I first moved here I was attracted to the fact people in Vancouver were so accepting and low key. Is it just me or did something change here? Was it those “best place on earth” licence plates that made the majority fat heads?
July 19th, 2009 at 5:56 pm
People have more money that brains around here.
I have a six thousand dollar motorbike for sale on craiglist listed for $8K (just for the hell of it – I don’t really want to sell it, actually) and I’m getting several inquiries every day, some are repeats getting more and more anxious. They want it now!
I don’t get it.
July 19th, 2009 at 7:28 pm
BoB, I notice its bad in the trendy yuppie areas like Yaletown and Kits. If you move out to the affordable suburbs, you’ll find where the friendly, down-to-earth people went. Or even better, check out places like the Sunshine Coast.
July 19th, 2009 at 7:32 pm
I too drive over the ironworker’s bridge everyday and that dock on the northside use to be full of iron pipes, and lumber. And it is EMPTY. I don’t if it’s seasonal but there is nothing on it at all.
I think the iron was imports, and the wood was exports, and the lack of both is scary.
But when I go to the ferry, Delta port looks really busy shipping out coal.
July 19th, 2009 at 10:42 pm
Bob I have lived in Vancouver and surrounding areas my whole life well up to 3 years ago. I don’t remember it every being low key. I always found the peole flaky. Unless you moved here a long time ago like in the sixties I find it hard to believe it was low key when you got here.
July 20th, 2009 at 6:03 am
realpaul:
The BOC has continued to print massive quantities of paper driving inflation up as the dollar becomes increasingly worthless.
Your dollar buys more house than a year ago – everywhere (including here).
And more stocks.
And more gas.
And more commodities.
And about the same amount of most everything else.
And rents a bigger condo.
What’s that called?
And what’s your definition of “becomes increasingly worthless”?
July 20th, 2009 at 8:27 am
realpaul / patriotz
inflation / deflation
“The annual rate of increase in the Bank of Canada’s core measure, which eliminates a number of the more volatile series, both energy and non-energy, and thus better reflects the underlying trend in inflation, continues to increase close to the two per cent mid-range target.”
http://www.cbc.ca/money/story/.....e-038.html
According to this article, you are both wrong, at least at present. Volatile sectors are excluded from the monthly calculations, which may just be the feds gaming the system or there may be a reasonable argument there.
Also, it would seem that federal stimuluses have have as yet little inflationary effect. Would be interesting to hear what you guys think of these “official” inflation numbers.
Personally, I think month to month this is impossible to get a handle on, so I’m interested in looking ahead for the long-term trend.
How do you see energy, housing, and stimulus affecting prices twenty-four months from now?
July 20th, 2009 at 8:41 am
Miracle: Well it depends how you define “inflation”. Yeah sure, the government is “gaming the system”. In fact the conspiracy is so complete it’s to the point where trillions of dollars being held, issued, and traded on world markets are losing value as well. That’s truly amazing stuff but I wouldn’t put that one past the central bank cabal, those magnificent sly devils.
July 20th, 2009 at 12:38 pm
Does inflation include or not include energy? I was always told that energy and housing were excluded, this is what I was told when gas was hitting $1.50 a litre and housing was going up 20% per year, yet interest rates were low. I just read an article stating that we have deflation for the first time in 15 years, due to falling energy costs and housing. What gives?
July 20th, 2009 at 2:43 pm
$2200/month for a “LARGE” (cough cough) 600 sq ft apt in TV Towers….
someone obviously trying to clear their mortage and HOA fees..
And you don’t even get to keep it over the Olympics !
ummm, not for me
http://vancouver.en.craigslist.....41394.html
July 20th, 2009 at 8:35 pm
Bob, don’t worry mate. A rain will come soon (it is Vancouver after all) and wash these streets clean.
It’s called high interest rates, and it has the amazing ability to silence those people who have been annoying you at dinner parties for the last 5 years with tales of their Trumponian sized empire.
It’ll be back to talking about corn and Eugene Levy in no time.
July 20th, 2009 at 8:37 pm
That was me by the way. I don’t like Anonymous posts.