Canadian Personal Finance Blog

Archive for September, 2008

We most definitely live in very interesting times, and they are getting more and more interesting every day. With the U.S. government’s bail out plans going on hold and the markets not appreciating that (if you view a 700 point drop as “negative feedback”), I think we are most assuredly living in very interesting times.

Eerily Similar Commentaries

Now, I am not saying that this is time to panic, but I remember in 2000 when folks started wondering at Nortel whether the company could actually “collapse” from it’s $120 per share stock price I heard statements like:

• The government wouldn’t let it happen, it would kill the TSX and the Canadian Economy.
• If Nortel goes down, a lot of people are going to be hurting
• Nortel’s fundamentals are sound

Have you heard those same statements about the U.S. financial system? No, I am not saying this is in any way similar, I am merely pointing out that no one knows where this is going to go, and what the final fall out might be.

OMG I Almost PMP’ed

OK, that’s for my younger readers, for my reaction when I heard the Congress didn’t pass the “bail out” bill.  Speaking as someone with no income now, I am curious to see what happens, because if this causes an American recession or worse depression (anything is possible, I am not saying this is going to happen, simply I hope it doesn’t), finding a job in Canada is going to get a lot more interesting.

Is it time to buy in to equities? Don’t ask me! You should buy when you think the bottom has been hit, but I have no idea what “bottom” is any more.

By the Way Oil is Below $100 a Barrel

Remember two weeks ago when we were worried about Oil prices? Oil is below $100 a barrel, but I guess it’s kind of hard to notice that the hurricane is over if your house is on fire.

Now is the time to Panic?

No, but watching the financial pundits is more interesting than listening to the Election pundits, that is for sure.  In Canada Jack Layton is portraying the NDP as the official opposition to the Tories, if that happened, I would truly agree that we are living in interesting times, and the Devil is going to put in central heating, because it really is getting cold in hell.

The Finality of Severance

As of Tuesday the 30th I am officially no longer an employee of Nortel, but this past Friday the entire “severance machine” started grinding and the portion of my severance that I have elected to take this year, appeared in my bank account, and my first reaction was that of shock seeing that value in my bank account. 

After panicking that my instructions had not been followed for my severance (they had), I then calmed down and became my normal philosophical self and started hearing that old Peggy Lee song, “Is that all there is?“. Twenty years of my life summed up in a bank entry (a 5 digit bank entry so I am not really complaining about the sum itself), it just seems so final.

Over my twenty years at Nortel, I have met and worked with some of the most amazing people and seen technological changes that staggered me, when I think about how life was before these technological “miracles”. I have had four children, and many wonderful things have happened, and many sacrifices were made for work, and at the end of it, I have one line in a Bank Statement to sum it up?

It could be worse, I know people that don’t even have the one line in their bank account. 

To The Folks I leave Behind

My other regret is I never got to send a “So Long and thanks for all the fish” e-mail or posting inside of Nortel, so for those who are still on the inside at Nortel, please treat this posting as my “You’ve been a great group of folks to work with” posting. I learned a lot in Nortel, let’s see if it is true that Nortel/BNR was a “great place to have worked at”.

Now the Hard Part

Need to get that new job (some prospects), soon and then be able to apply this package to some serious financial planning and debt reduction schemes. The job of finding a job these days is not a simple one, and I have learned a lot, but still have more to learn.

I leave you with this one factoid I have learned, 80% of jobs are found through networking, so simply applying to a plethora of jobs is not enough, you must go out and market yourself and “press the flesh” like a politician to find your next job.

Luke 9:25

For what is a man advantaged, if he gain the whole world, and lose himself, or be cast away?

My view of this biblical passage is simple, and asks an easy question, that is very hard to answer: Why build wealth, if at the end of it you are unhappy? Better still does money buy happiness?

Many times I find myself worrying about money and trying to find ways to make more money and such, but why am I doing it? My reasons are clear to me, I am trying to make “enough” money to live and then not have to try to create more wealth, if I don’t need it.

When I was younger, I didn’t really have that perspective, I just wanted more, but I also spent much more, losing focus on the fact that if you make as much as you spend, you are not building wealth, you are simply acting as a “money pass through”.  I know now that my life outside of my “career” is rich and wonderful, and all I want now is to figure out a lifestyle that I wish to live, figure out how much money I will need to live it, and then have enough money to be able to live it, it is that hard and that simple.

Money buys you the ability to do what you want, but you must be the master of your wealth, and not get caught up in the trappings of having a lot of things. Making money will allow you to do what YOU want, and by building a strong financial plan, and remembering why you want this money you achieve freedom. 

You are buying your financial freedom, and with that freedom, the power to do what you want.

If you are to believe the pundits and financial commentators the end of the western economic model may be at hand, OK not all of them, but the DOOM and GLOOM and naysayers are out there. Is now the time to panic? No, it is not.

From the Blogosphere:

• Preet over at Where Does All My Money Go writes today about the single largest bank failure in the U.S. so far and how in Canada we have only had 2 small banks fail since the early 1900s.
• Michael James on Money wrote about Understanding the Current Financial Mess, at first I thought he was writing about my finances, but found out it was a Big Picture story .
• The Canadian Capitalist writes about Investor Reaction to Market Volatility , so far I haven’t heard of anyone jumping out their windows, so it seems to be better than in 1929.
• All About Nortel talks about how Moody’s has downgraded Nortel’s debt to “negative” from “stable”. Wonder what rating is lower than that for debt? Charmin?
• Ellen Roseman write about How to Invest in a Bear Market (two), pick your “bargains” wisely.
• Larry MacDonald asks the same question, Are Stocks a Bargain Now? , my answer is, I’ll tell you in six months.
• Paul Kedrosky takes a much more philosophical view with Voltaire, Batman and the Precipice , an interesting spin on the week’s events.
• An interesting side note from the National Family Childcare Association, accusing the NDP of not caring about Mom’s who stay at home, with the essay, NDP Thinks Moms Who Work at Home is Poppycock . An interesting thing to say during an election campaign.

No Fraud Payback Yet

What else should I be writing about right now? Every news outlet is telling of the end of the U.S. Financial system and the collapse of the economy. Speaking as someone who is unemployed, and looking for a job, this worries me. As the wise International Analyst said of Canada, “When the U.S. sneezes, Canada gets a cold”, so any kind of economic turbulence in the U.S. does not bode well for Canada, in the services area at least. I believe Canada’s economy may weather this storm better, simply due to our heavily resource laden economy, but again, only a guess on my part.

Bush’s Own Words

The scary thing is, President Bush seems to inadvertently hit the nail on the head with the following statement:

“… It will help American consumers and businesses get credit to meet their daily needs and create jobs. And it will help send a signal to markets around the world that America’s financial system is back on track…”

American consumers need credit to meet their daily needs? If that is the case, the U.S. economy is in dire trouble. Americans are living on credit and now the whole system is collapsing under the weight of this credit load? Not sure that is completely accurate, but given the President mentioned this, it’s an interesting point to consider.

Fraudulent Securities?

President Bush also mentioned:

“… Many investors assumed these securities were trustworthy and asked few questions about their actual value. Two of the leading purchasers of mortgage-backed securities were Fannie Mae and Freddie Mac. Because these companies were chartered by Congress, many believed they were guaranteed by the federal government. This allowed them to borrow enormous sums of money, fuel the market for questionable investments, and put our financial system at risk…”

So you are implying that there was a fraud on investors, or you are saying there are some very stupid investors out there. I think both of those statements have a ring of truth to them as well.

Blame Canada?

No, but it’s a funny headline. Will this affect (effect?) Canada? Yes, but how much remains to be seen. There is now panic statements about how the Canadian housing industry “bubble may burst”.  Given I am living in a house, that I bought a while ago, I am not that worried about this, but for new home buyers this could be a big issue. Being saddled with an enormous mortgage, with possibly much higher interest rates (to deal with that 3.5% Inflation I mentioned yesterday), could slow spending from these folks, causing yet another interesting economic ripple in the pool.

Now is the Time To Panic?

I would suggest going out and buying some Eagles or maybe some Jackson Browne, slam it into your Impala’s 8-track tape player and drive ’til the music stops. Sorry, I waxed poetic, no it is not time to panic, but it is time to watch and see what might actually be going on here. I suspect we are living in very interesting times, to quote a Chinese proverb.