This pic has been used beyond redemption...
...so, I redeemed it
Slow motion train wrecks and all...
I'm still digesting the last weeks, and there is ever-more to digest. It is difficult (for me) to look at markets, bail-outs, etc., without getting into politics, but I'll do my best.
Trillions of dollars lost in the stock markets, and governments pumping trillions into the banks to "save" them, but who, and what, is being saved? Those trillions (or, in the case of Canada, billions), are not magic dollars pulled out of a hat, they are dollars from central banks, and have interest attached to them. We, or more accurately, our children and grandchildren, will be on the hook for that. Who benefits? It could be said that we benefit; by not having bank failures (yet), by not having our economies wiped out (yet), by saving jobs (so far), by propping up RE markets, and businesses that have made record billions (and collectively, trillions) in profits. Nobody "knows" if these cash infusions are going to make any real difference (well, I know that they won't), but what the heck, eh? It's just Other People's Money. My own feeling is that it is just delaying the inevitable, and we are still going to have a global recession, or worse (worse is my feeling). It's a bit like the guy who is over-leveraged, and keeps borrowing more to make the payments on what is already borrowed. It just can't end well.
85% of Canadians' wealth is in their homes, and those homes have fallen almost 7% in value nationally, and 8% in Vancouver since May. And it has just begun. American RE is still falling. But, it's different here, right? Then there are all of those hedge funds and mutual funds and such that make up the rest of the wealth. That has only fallen 40% since July. Oil has fallen 50% since July, and with all of that, a large chunk of government revenues. Just wait for the lay-offs, when even more tax revenues will be lost, and unemployment benefits, welfare benefits, CMHC insured mortgages go belly-up, etc., start to suck evermore money. Then there are the consumer goods that will not be purchased, leading to even more tax revenues foregone, plus more unemployment.
The only prediction that I can make right now, is that it is going to get very ugly, soon. I know that my predictions are worthless - I am not an expert, or highly educated and paid economist, but were they not the ones talking about slowing appreciation in the housing markets that would be confined to single digits? Were they not the ones saying that oil was going to $300/bbl within a year? That the Canadian economy was as "solid as the Canadian Shield"? That the government would never run deficits? Insert your own platitudinous reassurances here ___________.
I've got more to say on this, but have not the time right now. I'll be back.