12 comments on The Round-Up: July 13th 2007
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12 comments on The Round-Up: July 13th 2007
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Hi PeakTO,
I don't think for one moment that Canada will avoid what's currently happening in the US, which is why I cover the situation in the US in such detail. I think it's only a matter of time until we have to deal with the same issues, and Canadians would benefit from being forewarned. Canadians are just as addicted to credit as Americans and almost as much in debt as a result. Easy credit has been a global phenomenon, and credit tightening will be as well.
I personally would not recommend carrying more than a very small mortgage at most on any property, and then only if the source of income to pay for it was 'depression-proof' in some way. Renting is far better - pay someone else to take the price risk for you.
'depression proofing' -- That is a subject I would like to see more discussion on.
I imagine a lot would depend on how that income is derived; also if I were paying mortgage of any substance I would likely want to sell out and rent, put the capital in something that would hold value for the immediate future, (stock, bonds treasury bills or what??)then for further down the line, perhaps gold land and infrastructure, a boat to sail away on, trade goods to carry on the boat??
I would imagine there are many on site that have great knowledge to confuse me with, please go ahead. Maybe I will be sent so far into quandryland that I'll figure 'to hell with it all ... it's the Gypsy life for me!!
BTW, on CBC 9pm PDT. news last night the announcer stated that Alcan was to become a larger company ... that it was being bought out by Rio Tinto!! (how is that for some sort of strange spin, it makes my top end wobble)
I wouldn't put money into stocks and bonds, except short term treasuries. In a deflation you need liquidity - cash and cash equivalents. Stocks are likely to tank across the board IMO, and bond yields mostly don't reflect risk very well at the moment so that many of them are likely to be defaulted upon. Owning gold has too many complications for most people, especially in rural areas. Owning it could be declared illegal as it was in the 1930s, which doesn't stop you from owning it, but does stop you from trading it without running very significant risks. IMO investing skills and equipment for self-sufficiency would be much better. Skills in particular are transportable.
Depression-proofing income is tricky, but in general terms one can be involved in selling high-end niche goods to rich people (low volume, high profit margin), provisions/equipment to the military, basic staples to the masses (high volume, very low profit margin), or peddling some kind of cheap escapism. Sadly things like selling booze do very well in difficult times, and security would be a sure bet for earning a living, although it would be risky in its own way. Any kind of middle-man role would not be likely to be a secure source of income.
Off the top of my head, the kinds of work I would imagine there would be a call for would be things like making 'disposable' goods last far beyond their short design life, repair work of all kinds, power systems engineering, basic health care, cheap entertainment, skilled farm work, working with draft animals, horticulture, fiber work or seamstressing. It may be possible to make a living organizing charities to look after the less fortunate.
I had the most interesting discussion with a colleague a week or so ago. I was bemoaning the lack of savings and spendthrift ways of our society. A typical old fogey rant to a much younger man.
Not surprisingly, as he is of staid temperament, he agreed with me. A good thing since I'm his boss. He went on to mention that a friend of his is $160,000.00 CDN in credit card debt. It seems that the friend (in his mid 20s) racks up these debts and then the rich parents bail him out. Now on top of this debt, the friend has a mortgage. Neither the friend (nor the friend's spouse) have very good jobs (the friend would like to become a doctor and I imagine he's doing some pre-med thing hence the lack of a good job).
WTF? Why are the parents allowing this to go on? It is insane, and is replicated, I am sure, in many households throughout Canada and the United States.