Less Money For Us

I thought I’d share a situation with you that in many ways epitomizes some underlying issues with the current economy. I am involved in a volunteer organization that regularly gives out scholarships to university students. Since I was involved in the organization in the mid-90s, up until a couple of years ago, the scholarship fund has managed to sustain a reasonable, though not profligate, level of scholarship and bursary awards to students. These monies came mostly though not exclusively from interest on the principal fund. The fund was topped up each year through small transfers from the organization’s general operating budget, and through these two mechanisms has managed to have its award amounts keep pace with CPI inflation for the past 15 years.

Until late 2008 that is. At that point interest payments started to dwindle. Now, two years in, more and more higher interest investments have matured and the only option available for the cash, given the scholarship fund’s requirement to retain capital, is re-investing in (now) lower interest vehicles. This has led to the organization scrambling to solicit private sector donations to the fund to cover the shortfall, or consider reducing the number or value of awarded scholarships.

The experience of this organization is, in many ways, akin to any other business or family who is using its capital to produce income. As interest rates remain low, incomes start to dwindle and the tough choice appears: start eating into the capital to fund operations, take more risks with this capital, or find other ways of producing income such as taking on another job, accepting donations, or delaying retirement. The difference with a volunteer organization, perhaps, is there isn’t any finger to point for past mistakes. This is simply a case of trying to manage ongoing operations of a conservative fund and there’s no easy way out.

In itself, the financial issues of this scholarship fund are deflationary: more money must be sucked in, ex dwindling interest income, to maintain existing operations or operations start to come under pressure. I think, in general, this background deflationary meme is hidden from most of us still young who aren’t overly concerned with funding retirement in the near future. The longer low interest rates remain, however, the more stressed those with fixed income will feel. If interest rates don’t rise soon, funding the future will start to become a more prevalent concern, realized through reduced spending, increased risk, delaying retirement, and, to the glee of many here I’m sure, accelerated liquidation of existing assets.

120 Comments
newest
oldest most voted
Inline Feedbacks
View all comments
Anonymous
Anonymous
9 years ago

@superduperbulltime:

I posted that as crazycatfoodeater to demonstrate the stupidity.

We all knew you were stupid before you posted it.

superduperbulltime
superduperbulltime
9 years ago

@Anonymous: I posted that as crazycatfoodeater to demonstrate the stupidity.

oneangryslav2
oneangryslav2
9 years ago

@pualb:

This was used as an example of how kneejerk the voting is on VCI…Duuuhhhh

As soon as I see paulb (or what I think is paulb) and numbers, I reflexively vote him up, regardless of what the numbers are, because he puts in the effort to provide the numbers for us. I've voted up both "good" and "bad" (from the bear perspective) days. Your experiment failed because it was based on faulty premises. Back to the lab.

Best place on meth
Best place on meth
9 years ago

Dear trolls,

Whining about what posts get voted up or down adds nothing meaningful to the discussion.

Piss off.

Anonymous
Anonymous
9 years ago

@crazycatfoodeater:

"Every time I look at a bull in the face and smell his nasty broke ass breath I want to puke. It’s because of all the coffee they drink to keep awake during the day after another sleepless night thinking about the mortgage. Meanwhile I’ve got piles of cash just laying around the house because I don’t know what to do with it all thanks to my renting ways."

.. and a post like this, an obvious troll, gets voted up.

Anonymous
Anonymous
9 years ago

pualb=some anonymous realwhore with too much time on his hands.

coastal
coastal
9 years ago

Peter Schiff has lost a ton of money for his clients the last few years. He's the biggest blowhard out there. If he had it his way he would have everyone lined up at soup kitchens.

pualb
pualb
9 years ago

Royce :

Well censorship worked well for Hitler, Mussolini , Mao, Stalin and most other post WW11 leaders of their era.

Look how well they did with their tax-free RE holdings.

realpaul
realpaul
9 years ago

Forgot to mention that China also upped rates last week…..it seems that more responsible governments worldwide are saying that inflation borne of 'emergency rates' is a BIG problem. If…as Flaherty says' that Canada is such a bastion of strength…that we lead G8 growth…that the recession is behind us…etc etc etc….then why are they so adamantly sticking to the 'emergency rate' policy while offering mere lip service to the obvious issue of price inflation and consumer debt. These guys are suggesting that tomorrow will never come? What about the recesssion that comes out of the debt bubble they have blown while cutting rates to blow up the failed asset bubble? There is obviously more to the issue for governments…no one can be this stupid…..are they deliberately sabotaging the economy for some nefarious future where people are desperate and beholden? Is this… Read more »

crazycatfoodeater
crazycatfoodeater
9 years ago

Every time I look at a bull in the face and smell his nasty broke ass breath I want to puke. It's because of all the coffee they drink to keep awake during the day after another sleepless night thinking about the mortgage. Meanwhile I've got piles of cash just laying around the house because I don't know what to do with it all thanks to my renting ways.

pualb
pualb
9 years ago

Let's see re: voting trolls.

Post 100 was at 11 , now its down to 7…so 4 people voted it down after post 108.

So 11 people can't change their vote, 4 have had an epiphany or simply embarassed over past voting patterns.

Everyone else is quiet ???…don't want to play their cards either way ???

Royce McCutcheon
Royce McCutcheon
9 years ago

@pualb:

paulb gets a 'kneejerk' vote up for me because he provides hard data for us to consume at this site on a regular basis. How many others make emperical contributions like this? Whether it's a high or low sell-list ratio, he gets a vote up from me for advancing meaningful disucssion at this site.

The earlier post about a three button system may have merit. Get enough red down arrow button votes and the text shrinks. Get enough troll button votes and the text disappears.

pualb
pualb
9 years ago

FYI;

That is NOT paulb( post 100 ), only one person picked up on the mis-spelling

As of this posting the vote was 11 up votes for pualb

This was used as an example of how kneejerk the voting is on VCI…Duuuhhhh

When was there ever such a huge drop in sales ?.

All the numbers were made up.

Bear Patrol
Bear Patrol
9 years ago

@Dave: Schiff got the housing bust right. It was so obvious even he could call it.

Anonymous
Anonymous
9 years ago

@pualb:

Is that you Paul B, or an impersonator "pualb"? Seems hard to believe that we're off to such a bearish day at only 8:00am… would be nice if it is true though.

Dave
9 years ago

@Makaya:

Peter Schiff isn't looking too great with his predictions right now either. The US dollar should have crashed by now and we should be in hyperinflation. The DOW and S&P were supposed to fall to half of what they did. He made some big calls and got a couple things right, but got most things wrong.

Mike
Mike
9 years ago

The message board is 100 x better since you've hidden troll posts. Keep the way it is.

It is not perfect, but it is a major improvement.

realpaul
realpaul
9 years ago

Aussie and India raise rates AGAIN overnight…..Thailand began two weeks ago. Canada, US, UK, mired in the politics of stagflation have decided to throw caution to the wind and let the citizens contend with a massive tsunami of inflation that everyone from kids to grannies are noticing the effects of. Hmmmmmmm…. I saw a 'happy face' piece on TV recently about a young mom with two kids and her 'relationship' with the food bank. The food bank now boasts some 50,000 clients a week…. in the GVRD….we're doing great!!! Pretty soon small stores will close altogether because no one in the neighbourhood can afford to shop….food and clothing distribution will have been 'centralized'. Isn't this what the Liberal Party did to New Foundland……made everyone beholden on the government for handouts? What are the politics of poverty? In Newfie it was… Read more »

superduperbulltime
superduperbulltime
9 years ago

@Anonymous: Bear this site is for debby downer bear loser only! Bull gave up posting rational thought years ago and troll instead since this is circle jerk only. Vote down post and move on bear. Have a crappy day loser.

Makaya
Makaya
9 years ago

You gotta love this video "Peter Schiff On FOX Bulls And Bears".

The bulls then really look like morons today…

http://www.youtube.com/watch?v=60CLQse27p8

pualb
pualb
9 years ago

New Listings 153

Price Changes 145

Sold Listings 25

Dave
9 years ago

@Junius:

Halloween is over. You can put the Strawman away now.

Junius
Junius
9 years ago

#94 Patriotz,

Good response.

The current RE Bull crowd simply cannot fathom that anyone can argue against the economic viability of the Re market and not be pushing something else instead. It doesn't seem to have occurred to them that pushing reality would be the real goal of most people here.

chip
chip
9 years ago

@Starving Artist:

Capitalism is simply a system in which production is privately owned and individuals, not central planners, make economic decisions based on supply, demand and other factors.

The Fed, Fannie/Freddie, the CRA and CMHC aren't private actors in the market. Nor are the Party bankers you mentioned in your own post.

"A-Sharp"
"A-Sharp"
9 years ago

@patriotz: I was buying a year and a half ago.

same with this bear.

It's well documented on REtalks.