Thursday, October 02, 2008

the beat goes on

Wow, TSX down 814 points - about 7 per cent - at the last I heard, and this on the news that the latest bail-out package in the US has passed the Senate (now up to $800 billion). It still has to pass the House of Representatives though, and that is the body that rejected it last week. Will they pass it this week?, and if they do, will it save the American economy? I doubt it (on both counts).

The pain is coming, whether we like it or not. The only question that I have is, how bad will it get, and how will that affect the Vancouver RE market? (a pure, rhetorical question) Draw your own conclusions, but the RE market was already on it's way down - before all this global doom and gloom hit. Any investor with a modicum of sense will be looking for deals in the stock market, and will be staying well away from Vancouver RE, IMHO. The tanking price of oil is a bell-weather (unintended pun), I think. Potash Corp. was a big loser today - down almost 20% - anther bell-weather? Is the TSX a true measure of our economy? It doesn't look so good right now.

So, to slip into election schtuff; Harper said in the French debate last night that Canada is not the US (yet), and that we have solid fundamentals. Like the Potash Corp.? Or, oil production? What about manufacturing (Auto workers), tourism/service, etc.? How is that doing? RE is tanking across Canada, what about those soon-to-be unemployed realtors, mortgage brokers, conveyance clerks, construction workers, home stagers...? I don't see a strong outlook, fundamentally. Harper said not to worry. OK, he pretends to be not worried, but are you? Do you have faith in someone who says to ignore the train barreling down the track toward you with its horn blaring? Are you thinking of buying a new car? Plasma TV? New computer? Buying a house? Going on vacation? Buying an Olympic ticket package? Are you going to take a HELOC, or rack up your credit card going out for dinner and drinks? If you are not, do you think that any government is responsible in saying "don't worry, spend with a big Prozac smile"?

I have to say that I didn't take much away from last night's debate. I found it hard to follow because I couldn't watch it live, and saw a translated version. The problem for me was that the translation was over the French, and my mind kept on switching back and forth, and leaving me lost. I also have a hearing problem, and tend to watch people's mouths, which threw me off even more. I felt that Duceppe was the best speaker, and that Dion is not the right guy (not because of a lack of sincerity, ideas, but because of his style, and challenges with English). Neither is Layton, and Harper is certainly not. His body language was revealing, and it was obvious that he had complete contempt for everyone, including you and me. May did well - considering that she was out of her language depth. As after every federal debate, I have to ask the same question that so many do: Why couldn't Duceppe be the leader of a national party not bent on Quebec secession? He would take it.

Unfortunately, the salient election issue is on the personalities put forth by the leaders (at least, the personality that is wanted to be seen), and not about the real issues. How shallow is that?

Stay tuned.


Mike said...

Before I begin, sorry for ranting.

All this talk of the economy being 'fine', or 'strong', or 'resilient' is really getting to me.

We have never seen conditions like this, We also never seen the US fed (and other central banks) employ these tools to fight a ressession, and therefore we don't have an exact template to follow and are simply unequiped to say what will happen with any degree of certainty.

All we have to use as a gauge is at is past smaller bubbles, japan in the 80's, and the banana republics and their hot money crisis and general economic theory. Notice the common theme, lol. Using these I think we can guess the overall direction of the economy (towards the x-axis), but as far as to how steep the incline will be, or the duration of the one knows and they should qualify that in their responses. (Not sure if you read all the talk on what shape of the ressession will be, ie. V, W, L, U. They told me the shape but never the reason)

I wish blanket statements such "the economy" and "strong" were no longer allowed, you have to qualify and quantify it. For example, "the overall auto market will be 5% stronger due to the general population needing more fuel efficient cars to get to their 2nd and 3rd jobs so they can afford that 500 square foot condo."

My anger is directed towards the politician lying, er, making the statement and the media for not asking some follow up questions. Ask a Canadian politician about Mexico and they will tell you because of their close geographical proximity and historic economic ties to the US they will experience some economic termoil. Oh, ok, What about Canada? No, our economy will be strong simply because crap only flows south?

(on another topic, what are your thoughts on May's policies about CDN labour laws, 35 hour maximum work weeks and longer mandated vacations and such. She compares the laws of Denmark, Holland, and Ireland but neglects the fact that some of these places have the highest personal tax burdens of any G7/8 country. So it would be interesting to see how She will add strengh to the ecomony whilst cutting personal taxes and making us less competitive. The only way would be spending cuts and efficiencies, but I haven't made it to, or found that part of her plan yet.)

Anonymous said...

The model for this crash is not past smaller bubbles, banana republics, or Japan in the 80's.

Try Weimar Germany. Only far, far worse, because back then there were other countries on the planet whose currency was backed by gold reserves.

Not so anymore. All fiat paper currency and investments are crashing, and will soon be completely worthless.

That's never happened before WORLDWIDE.

Strataman said...

Jack Layton Hypocrit extraordinaire. This is a guy that wants to give our taxpayers money to subsidize a bunch of auto workers in Ontario that produce SUV's and Trucks, yet the main buyers of the forsaid mentioned vehicles are the OIL SANDS workers who he wants to shut down. The guy is a complete and utter nut case! He must make a stand that not one cent of tax money be used to subsidize in any way auto producers who do not produce 100% hybrid vehicles, and he must instigate a surtax on any employee working at an automotive production facility that does not drive a hybrid. They should have there personal tax exemptions reduced by 50 %. We must strive to totally destroy any manufacturing of non hybrid vehicles. It should matter to no one if these people cannot adapt, and are laid off. As persons they are persons of no concern. And yes the tarsands should be shut down, so I do agree with a bit of his philosophy but he should accept the fact that he cannot have it both ways. What an incredible loser that guy is!

Roy Pereira said...

Great post. Things are going to get a lot worse before they get better. People don't want to hear it, but it's the truth.

solipsist said...

Thanks for the commentary. I have nothing much to add at this time. I'm too burned out.

mike - rants are welcome from all.

alexcanuck said...

Strataman: I am all for environmental sustainability. Think your position through. I drive a diesel smartcar.
It gets better mileage than any hybrid out there.(With one caveat, in heavy downtown traffic, you know, when you can go faster on foot? A Prius or Insight can sneak in front.) Built with far less resources, in a green facility, with a 95% recyclable rate,well suited for a long lifespan, yet you say I should be penalized and this should be rewarded?
Smaller cars and less driving is a far better route to sustainability. The European model.