June 30, 2008

Careful Where You Get Your Advice

Category: Economy — Cranky @

This morning I caught a little bit of Robin Meade’s morning show on CNN. They were talking about the consequences of walking away from a mortgage. The person being interviewed mentioned how such a decision would impact your credit for seven years.

So Robin Meade opened up her mouth and revealed a little bit about herself.

“It would be so smart to exhaust all of your resources before you finally make that decision.”

It’s a good thing she’s pretty, because she’s clearly stupid.

If you think it’s likely that you’re going to lose your home, burning through your resources before doing so just makes you an idiot. In the end you still don’t have a house. Ruining the rest of your finances doesn’t make any sense at all.

During the collapse of your finances, you have to make the choices work best for you. That might not be the “moral” choice, if you knowingly made decisions that landed you in trouble. Many people signed the adjustable rate mortgages knowing full well they couldn’t afford the reset.

However, the banks and the government are culpable as well. People made loans that were unlikely to remain good, and the decisions made by the Federal Reserve with tacit permission from the government created the housing bubble that has landed so many people under water.

Screw the banks. Figure out what strategy leaves you in the best possible position, and go with that.

Cranky

June 26, 2008

Ten Things I Have Learned In My 30's

Category: Life — Cranky @

The average doctor is about as good at his job as the average auto mechanic. If you find a good one of either occupation, stick with them.

The customer is frequently wrong, and occasionally just stupid. Sometimes it helps the business if a particular customer just goes away.

Don’t underestimate the ingenuity of fools. If there’s a way to bugger something up, they’ll find it.

There are idiots who read philosophy, and there are geniuses who pick their nose. Ten minutes of meaningful conversation can tell you more than appearances ever will.

I know next to nothing about advanced mathematics, and the well of knowledge in that field is very, very deep.

My mother doesn’t care about the density of matter found inside a neutron star.

I’ve been told pretty women are a dime a dozen, but no matter where I look they are way more expensive than that. I need to find a wholesaler.

The Muppets are far more brilliant and satisfying than I ever realized when I was a child.

I will never be a guy who scrubs vegetables with a brush before cooking them.

If I don’t have to have something now, I can have it cheaper.

Cranky

June 18, 2008

Disconnecting from The U.S. Economy

Category: Economy — Cranky @

These days I worry about the economic ties that Canada has with the United States. We’ve been very fortunate. Our neighbour wants our goods, seems to be happy with a trade deficit, and is willing to borrow endless amounts of money to continue to buy stuff. How awesome a neighbour is that? We’ve prospered because of their endless ability to overspend.

The party is nearly over, though, and they are going to pay the price. The U.S. is deeper in debt than any country in the world. They owe four times as much as every other country in the world combined. In fact, they’re the most debt-laden country in history. There is no chance they will ever make good on that debt. Were the U.S. dollar not the reserve currency of the world, their credit worthiness would be graded like really dicey junk bonds, instead of AAA.

So what can we do? The U.S. is by far our largest trading partner, accepting 82% of our products. Geographically they are right next door, and we enjoy excellent relations with them. As they stare down the barrel at possible hyperinflation, we stand to either fall with them, or lose our best customer.

There’s no doubt in my mind that no matter what happens, economically, we’re going to see our exports to the U.S. diminish, and rather drastically. Hyperinflation often occurs very quickly, and our dollar will decouple from theirs on its own. We couldn’t possibly print money fast enough to follow it down. So if we demanded payment in another currency we’d quickly find out the U.S. couldn’t afford our products anyway. We produce very little that the U.S. could not produce on their own if they were forced to do so.

Our next largest trading partner is the United Kingdom, at 2.3%. Canada has never really opened up large scale trading channels with the rest of the world, simply because it hasn’t had to do so. Our economic strength is in raw materials, but we also have strength in unexpected places. We have a laughably small military engine for such an unbelievably large country, and yet we are the sixth largest exporter of military hardware in the world. We supply 28% of the world’s uranium, which makes us the number one provider of fuel for nuclear power. We have massive reserves of gold, nickel, lead, and aluminum. We are a huge exporter of canola, wheat, and timber.

In short, we have everything necessary to produce nearly anything. We have endless supplies of raw materials. We have a highly educated work force that hasn’t yet priced itself out of its own markets. We have the expertise needed to produce everything from advanced aircraft to nuclear power plants, and we have vibrant high-tech, entertainment, and agricultural industries. We need to become competitive on the world stage. There’s no chance that we can compete in the arena of cheaply produced products, but there is no reason that we can’t compete with midrange and high quality products. Our population is too small for us to be significant importers for products from most other countries, so we have to make products those countries want. Most importantly, we have the money to do it.

What is needed is the political will to admit that the U.S. won’t be filling our piggy bank much longer. We have to change our whole economic world view, and approach the rest of the world as a significant trading force. Canada must recognize its own strengths, and make smart use of them. We’ve begun to do so, but we have a long way to go, and time is running short.

Cranky