Canadian Personal Finance Blog

The Fed taking over IndyMac in the U.S. made me wonder about whether this kind of thing can happen in Canada. Of course the simple answer is no, it is not likely to happen, however, it is still amazing that this kind of financial failure can happen in this day and age.

Evidently this lending institution has been in trouble for a while, and the FDIC stepping in was inevitable, but seeing the panic’ed clients standing outside of the Bank Offices was scary (to me). Evidently there are over 10,000 people who have more than $100,000 in the bank (from CNN), deposits are only insured up to $100,000. The other question is, how much is this going to cost the U.S. government? Numbers bandied about on the weekend were $7-8 Billion, which isn’t cheap!

CNN was abuzz the entire weekend about this, and analysts were on all asking, “How could this happen?”. The simple answer is greed, and incompetence, someone tried to make money the wrong way, and no one stopped them, as simple as that.

The U.S. Government took the extraordinary step to assure folks that Freddie Mac and FannieMae will both remain solvent. This whole thing sounds like it is going to get a lot more interesting before it all resolves.

For immediate release

The Board of Governors of the Federal Reserve System announced Sunday that it has granted the Federal Reserve Bank of New York the authority to lend to Fannie Mae and Freddie Mac should such lending prove necessary. Any lending would be at the primary credit rate and collateralized by U.S. government and federal agency securities. This authorization is intended to supplement the Treasury’s existing lending authority and to help ensure the ability of Fannie Mae and Freddie Mac to promote the availability of home mortgage credit during a period of stress in financial markets.

Makes you feel all warm and cozy doesn’t it?

Why do I see that scene from “It’s a Wonderful Life” being replayed when folks were trying to get their money out of the Bailey Savings and Loan? Monday should be an interesting day.

Anyone else care to add their comments or opinions, I am eager to hear what my readers think of this.

TSX Forward to the Past

Thanks to the latest bit of market jitters, the TSX composite index closed Friday at where it started 2008 (on January 2nd). This means if you had an index fund for the TSX composite, you are breaking even this year.  Guess it could be worse, but it has been a topsy turvy kind of year on the markets.

Banks are certainly taking a beating, and I await the moment to get into them more (my opinion, not a recommendation). I note Nortel is below $7 but BCE is managing to hold it’s price above $39.00 for now as well, so that is a good thing too. Bombardier should be interesting to watch as well, maybe Larry MacDonald will have something to say about that :-).

Tomorrow: A review of the book Smoke and Mirrors 2008 by David Trahair

Market Crash?

Figured I’d add my 2 cents to the fray of Bloggers talking about the problems on the Stock Market these past few weeks. Is this an opportunity to buy? Should we be selling? Is it time to crack open skulls and eat the goo inside? Don’t ask me, I am standing pat for now, and we shall see what happens. My portfolio is down a fair amount, but my feeling is, now is the time, just to “Not Look”. Remember most of my stock holdings are in an RRSP, and thus aren’t a short term investment either. I am watching TD with intent.

Q3 of 2008 for Personal Finance Started

For those of you doing a Quarterly Personal Finance report, remember that Q3 just started, and you might want to think about doing  your Q2 report. I have been procrastinating doing mine, but need to get it done, to see what happened in the past 3 months, and see if there are any changes needed in our financial plan.

Money in the Jars?

Gail Vaz-Oxlade’s favorite trick with her problem spenders is putting her spenders on a set cash budget which she puts in glass jars for them. Mrs. C8j is thinking that might be an intriguing summer project, I am not so sure. I understand the concept, but am not sure it is something I can live with. Stay tuned this could turn into an interesting discussion (Mrs. C8j did convince me to go on a diet 6 years ago, and I lost 80 lbs., and I didn’t want to do that either).

How Much Do I Make?

For those curious about the scads of money I make doing Financial Blogging, well check over here at my working diary site: How Not To Make a Fortune on the Internet. Yes it’s a slow day for topics (if you haven’t guessed).

Happy Birthday Personal Finance Blogger

Michael James on Money a member of the N.C.F. B.A. is celebrating his birthday today, go on over and wish him a Happy Birthday.

No that is not my pet name for the guy who stuffs my super mailbox, however, I do get some very interesting e-mails and 1 yesterday I felt I had to make a comment on.

Art for Financial Gain

This e-mail almost had me passing my liver I was laughing so hard. It started off with:

If you’re looking for an alternative to investing in stocks or real estate, art might be the way to go – whether you have $1,000 or $10,000 to spend.

You are not serious or as my daughters might say WTF? For my regular readers you know I have very little skill when it comes to investing in stocks (I have had many more flops than wins), I think I know as little about Real Estate, but then again, I have a nice house (which is not an investment in my mind) and I know I never want to be a landlord, so that covers most of the investing areas I know of, but this e-mail suggests Art?

Don’t get me wrong, I like art and I own art, but it is Art for Art’s Sake. I am an amateur ornithologist, especially liking pictures of birds of prey, so I own a couple of Robert Bateman prints which are worth something, I think. This e-mail is saying that I should work with this web site to make money using a methodology outlined by an entrepreneur.

Pardon? So as with most get rich schemes, I give someone I don’t know money to invest and hope they don’t simply squander it, in an area where I have no expertise other than, “That looks nice to me”? I think I’ll be passing on that “investing idea”.

Other Interesting Mail

I also get lots of other interesting e-mails, which fall into a few categories:

1. How my girlfriend is unsatisfied with me, and I need herbal Viagra of some kind. Why is it my girlfriend is unhappy but my wife isn’t? Curious why those ads always talk about my girlfriend.
2. Get rich schemes for this blog and how if I use the right keywords like: Royal Bank of Canada, Scotiabank or PC Financial, I will make a fortune. No Canadian Capitalist is the only successful financial blogger I know of right now.
3. Phishing e-mail from people in the former Soviet Union or Nigeria who want to send me $1,000,000.00 because I am a good person.  I think I deserve that money, but no, I don’t answer those either.
4. Occasional inquiries from readers about specific things and even some who ask for investing advice. Here is my investment advice: Pay off your debt and never ask me about investing advice, I will steer you wrong.

I enjoy reading mail and e-mail, and I like reading comments too (especially the nice one who said the Globe and Mail got it wrong and that I was one of the top 5 Canadian Financial Bloggers).

Be Cautious

The CBC asks the question are Canadian Investors being too cautious?

Canadians are sitting on a record $45 billion in excess safe, liquid assets that would normally be invested in the market, according to a report Wednesday by CIBC World Markets economist Benjamin Tal.

So people who want you to invest so they can make money on the transactions think we aren’t investing enough? I am pretty sure that Laura Secord thinks I am not eating enough chocolate too, but I don’t listen to her either.

We in Canada have seen some SPECTACULAR investment busts in Bre-X, Nortel and the high tech bubble, and others, be skeptical and be cautious. Invest in what you understand and know (to paraphrase Warren Buffet), unless you are able to deal with losing the money you invest!