Now that is overspending

That is a Credit Card Debt!

Here in Canada we are flagelating our government because they are going to be running a budget deficit (they are going to spend more than they make this year) of over $50B, and rightfully so, given we have been runnnig surpluses for several years (i.e. making more than we spend), however we are humble overspenders compared to our brothers to the south (the USA). The estimate now is that this year the US Federal Government will run a deficit (remember that is overspending this year’s budget) of over $1 Trillion, wow.

That is effectively the same as giving every single human being on the earth (assuming the Trillion they are talking about is 10 to the power of 12) $140.00, this year.  Canada’s deficit would only give every human a paultry $7 , as you can see we Canadians are small time in this overspending world.

How will this be remedied in either country. Some are arguing in both cases there are 1 time bail outs that do not reflect actual spending habits (Bank Bail outs, Car Company Bail outs, etc.,), and that may well be the case, but what is going to be the fall out trying to pay back this deficit? Canada had been paying back the National Debt (i.e. the money we owe, from accumulated deficits over the years) however this latest set back is not a good thing.

As with personal finance every time a deficit is run for a year, it will eventually need to be paid back, Live Now but you will Pay A Lot More Later.

Local Ponzi News

If you think Bernie Madoff is a uniquely American issue, think again, evidently a new collapsed Ponzi scheme has been uncovered in Montreal. Earl Jones, the advisor in question is missing, as is all of his “clients” money as well.

This begs the question, do you trust your financial advisor? Are you sure you know where all your money is, and why it’s there?


Stocks: What is the Bottom?

Buy Low and Sell High is the trite advice that any moron will give you about the stock market or any other major purchase, but the more important question is “What is the Bottom?“.

The better question is, “Is now the bottom?”, and as usual my non-committal answer is, “It depends”.

Is it the bottom for IBM? Most likely it is near the bottom for them, they have announced good numbers, have a sound business model and look like they have a plan for the next five years, and the same can be said for companies like Cisco too, since they have such a large monopoly in their area of high tech.

Is Google at the bottom? I have no idea, since I still have no idea how Google can be worth that much, but that is my opinion as a High Tech Skeptic (maybe an honorary title, but well deserved). I don’t believe there business model and I have no confidence in how they make money, aside from Advertising. 

Is Nortel at the bottom? I asked that same question when the stock was at $90 in 2000, so you can guess what my answer might be today as well (given they are at $0.19 compared to that $90, today). Remember what Garth Turner said in my post “And He’s An Expert?

Are Canadian Banks at the bottom? Hard to tell, some seem to be, TD Canada Trust and RBC seem to be near bottom, as does BMO, but CIBC’s continued exposure to the mess in the states makes them a little more interesting too. I have invested in banks in the past week, just for disclosure sake as well.

Please do not take these opinions as advice, they are simply me stating my opinion, you should (as always) make your decisions with as much information as you can and should consult reputable sources for this information as well.

Hopefully these depressed stock prices will hang around ’til the new year, that would be a great time to open a TFSA and then take advantage of lots of growth in a sheltered account like that (wouldn’t it?).

Buy Equities, Warren Buffet Says So

Is that reason enough to go out and buy equities? I have no idea, however it is interesting that Warren Buffet is saying in an article in the New York Times “Buy American I am” that he is putting his personal money into U.S. equities now. 

The article does have a Canadian Financial Angle as Mr. Buffet points out here:

Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky’s advice: “I skate to where the puck is going to be, not to where it has been.”

Anybody who quotes Wayne Gretzky can’t be wrong, can they?

Then again, some might say “Equity Investment is the Devil’s Work!“, only time will tell who is right.


Did I say Interesting Times?

Financial Meltdown Continues (aka I really don’t like Mondays)

Well, just when you thought it was safe to go swimming in the Amazon, a fresh batch of piranhas come out and chew the living daylights out of you. Yesterday, I watched the TSX dip below 10,000 for the first time in almost 6 years, and while there was a ‘recovery’ of sorts by the end of the day, the roller coaster continues to swerve, dip and dive making even the most ardent investors sweat a great deal. 

My RRSP as it stands now seems to have lost about 20% of it’s value, and it may well dip a lot lower before things start getting back to normal. Is this a concern? Not really, since the money is for my alleged retirement, which is many years away, and most of the equities I own are fine (OK some of the banks I wonder about), but I am not planning on getting “Whip Sawed” as Michael James points out. I will continue on the course I have chosen for now.

Why Am I not Financially Panicking?

Well, I am trying to be more optimistic for one thing (yes, I am not succeeding all the time), but I also am about to inject a great deal of cash into my retirement, to be invested in some fashion, and for once, I think I may enjoy shopping for bargains in this BEAR of a market. 

My wife and I (Mrs. C8j as we call her) will need to put together a plan for investing and put together a budget with some “bear” assumptions to get us through to next year, with the severance I have just received, but with those decisions will come the interesting questions of where to invest? Most of the financial bloggers I know will be getting that question asked to them (once I can get them over a beer or two), and that is one of the reasons I am smiling during this grim financial time.

Could it get worse financially?

Never ask that question. Every time in my life that I have stated, “It can’t get any worse…”, it has, so I have stopped asking that question, or making that statement. Follow the lawyers credo in this situation, “Never ask a question you don’t already know the answer to…”.

Remember many things can happen, the Horses Might Even Sing!


Who(m)ever inherits this mess in the U.S. or Canada, I wish you good luck, because you are being left holding the bag, and as usual, the culprits (as it were) are enjoying the fruits of their labors, on our nickel (not that I am pointing a finger of blame, just that I know someone made money on this, and they aren’t giving any of it back).

For the rest of either electoral race, the simple answer to any other issue is


to paraphrase Bill Clinton’s campaign of 1992. Nothing else matters, now.


Tomorrow watch for a celebration of sorts on this blog, celebrating 4 years of work and the fun I have had doing it (unless today brings even worse news, then I’ll push it out another day).

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Crisis in the U.S. Financial Industry

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.

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Kippers? Not Just for Breakfast Any More

One of my Dad’s favorite treats was kippers, I loathed the smell of them, but my Dad loved their taste.

This weekend, however, I read a new twist on the term Kipper, evidently there is a new financial term to describe “older children who won’t move out of their parents’ houses”, KIPPER. In this case it decodes to:

Separating bank notes / Séparation des billets

  • Kids
  • In
  • Parents
  • Pockets
  • Eroding
  • Retirement
  • Savings

I read that and it really tickled my fancy as a new and useful Personal Finance Term. In your retirement plans, do you have any contingencies in case you have KIPPERS?


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