Canadian Personal Finance Blog

Strong Minority?

My prognosticative skills are about as good as my stock picking skills, my Liberal minority turned into a “Strong” Tory Minority, but we are back where we started. The Tories still cannot run the country without the help of 12 close friends of some kind (i.e. they are short of a majority by about that many seats), so where does that lead us? Back where we started and a question about whether this government will last as long as the last one did, that remains to be seen.

The Liberals will now “eat their young” and go looking for a new leader, Jack Layton is kind of a power broker so his job is relatively safe, and the Greens did better, but their leader really needs to get into Parliament as the next big step. The Bloc, I still have no idea what their goals are now, since they didn’t mention sovereignty much over the campaign.

Plus ca change, plus ca reste la meme.

Economic Recovery?

Not really, not yet. The Markets in Canada recovered somewhat but most stocks are still well down and don’t show signs of a huge recovery just yet. Canadian banks showed a strong recovery but other stocks were mostly mirrors of what happened in the U.S. on Monday. The TSX showed a record upswing, but it was mostly historical price fixes from the Monday boom on the U.S. markets, it will be interesting to see today whether this “rally” will keep going. 

Plan Started

As of yesterday some of my severance package was in place, so my wife and I started our plan to stay afloat as long as possible, given the “sketchy” job market currently. 

1. All short term debt has been eliminated, the only debt I now carry is my mortgage
2. A large part of money has been put in short term investments
3. A smaller amount will be more liquid
4. All bills have been paid 

Burns? That is the question we will have answered today, but my guess is the answer will not really be an answer, just another question.

Financial Recovery?

So far, so good from the actions of the G7 nations, the equities market seems to be recovering, in some fashion or another (remembering full well, that one day does not a trend (or recovery for that matter) make). Stocks are starting to strengthen, but is this a simply stop on the way down or an actual restart or reset of things? I’ll tell you the answer to that…. in 6 months, since I have no idea, nor do I wish to even hazard a guess.

Tuesday is the first chance Canadian investors will have to show their support or concern with the entire recovery, so it will make for another interesting financial day. I will be watching banks very closely to see whether the statements about Canada’s banks being the most “solid” are actually taken as “truth” or “fluff”. 

Vote Often!

Sorry, growing up in Quebec, that is one of the fun jokes you always heard, Vote Early and Vote Often!  Not to say that politics in Quebec was or is corrupt, just that it always had an interesting attitude.

On September 11th, I called for a Liberal Minority as My Election Prediction, and I will stand by that call, even though I feel Monsieur Dion has done his damnedest to snatch defeat from the jaws of victory. My guess is there will be no majority this time, and that more likely than not we will be voting again in 2009 (possibly very early), we shall see if my ability to prognosticate elections is better than my ability to pick the next BOOM stock.

If I was going for an interesting long shot call for this election? There could be a Conservative Majority IF (and only if), the NDP, Greens and Liberals split the vote three ways and a bunch of Tories win in Ontario because of this, but I think this is a 20% chance (i.e. I’d want 5-1 odds if I was betting on this).

Cash is King

Currently I am collecting cash from my severance in a few investment vehicles (and look forward to the TFSA which is coming on January 2nd), but I am still unsure of what to do, so I may stay totally liquid until I am sure of what is going to happen. I think the TFSA is going to be my new favorite topic in the coming weeks, as every bank is offering it, so I am confident this thing is going to be something big in investing.

For now, in investing, Cash is King (i.e. if you have the cash, you are in control of things), no I am not saying cash out of your existing investments, just that it would be good to have some cash right now (as well).

Vote Canada, if you don’t you don’t get to complain!

Carnivals

• Girls Just Wanna Have Funds is hosting the 173rd Carnival of Personal Finance where they had my  Stupidest Bill Ever, post.

Well an eventful week all around with the Western economies all on the brink of collapse and me reaching a milestone of sorts, and it’s all summed up with my catch phrase for the week.

It’s The Economy Stupid!

Around the blogs we read the following:

• Everybody Loves Your Money asks the chilling question, Is this The End of America? Where it is asked is it time for America to get it’s books in order?
• Nancy Zimmerman had a guest post by Franklin Delano Roosevelt stating The Greatest Thing We Have To Fear is Fear Itself. FDR guided the US out of it’s first depression, maybe he can lead the way out of this mess too?
• Michael James writes about Lessons Learned from the Great Depression, where he asks two very pointed questions at the end of the post, that we must all think about. 
• The Canadian Capitalist asks a timely question (especially for me) Thinking About Worst Case Scenarios, where he outlines some points to think about in these hard times, especially if you think you might lose your job.
• Larry MacDonald points out that The Stock Market Hates You!, gee thanks Larry, way to cheer me up with the headline!
• My Money Blog talks about Current Market Conditions: His Opinions, where he outlines maybe we should just all stop watching so closely? It’s kind of like asking someone not to watch a 300 car pile up going on outside of their house, but not bad advice. 
• Gail Vaz-Oxlade talks about how Credit Limits Going Down, not just credit rates, but limits too! Read on, as the sage of savings straightens you out.
• Free Money Finance points out How The Rich Get Poor, interesting in these times that there are still spendthrifts out there.
• On a happier note One Million and Beyond announced the birth of his daughter in It’s a Girl! Good for them, and good luck.
• I even had a momentous moment with Posting Number 1000 this week, which is funny given the futility of things sometimes, but I am still at it, for now. 

The Bank of Canada announced a 1/2 point drop yesterday of one of their key rates to 2 1/2%, and made the statement:

Bank of Canada lowers overnight rate target by 1/2 percentage point to 2 1/2 per cent

The Bank of Canada today announced that it is lowering its target for the overnight rate by 1/2 percentage point to 2 1/2 per cent. The operating band for the overnight rate is correspondingly lowered, and the Bank Rate is now 2 3/4 per cent.

Normally I would be dancing in the streets and celebrating (the way I was yesterday for the Canadian Personal Finance 1000th Post), however, sometimes things are not as they seem to be at first blush, at least from one bank.

Toronto Dominion: When is Prime Not Prime?

That is actually an excellent question for Michael James, as he is a Pure Mathematician who revels in all things to do with Prime Numbers, however, in this instance Prime means, Prime Lending Rate.

As of two days ago TD (my current bank of choice) had their Prime lending rate (for only their best clients and least risky loans) pegged at 4.75% and their Variable Rate mortgages (at least some) were available at that very rate. Yesterday an odd announcement and change was made that these loans are actually now at Prime + 1%, or 5.75%, thus bumping up the rate for all of these mortgages almost an entire point (and adding much more to monthly payments).

I on the other hand use a secured line of credit which allegedly is at the TD Prime Lending rate of 4.75% as of two days ago. Today, I have seen no change in that rate either up or down, which worries me.

1. The rate should drop 1/2% in reaction to the Bank of Canada rate drop, but it might not
2. The rate might go up 1% as has happened with the Mortgages to reflect the banks concern about liquidity and credit.
3. The rate might only go up 1/2% as a combination of (1) and (2)
4. None of the Above and the rate simply does not change, thus the bank pockets 1/2% increase.

It’s The Economy Stupid

Thanks for the 1000th Posting