Recession Tips
Or, How Are You Planning On Surviving This Recession.
With a recession all but certain, you have two choices:
1) Hunker down, cut back and ride it out…
2) Ignore it and continue down a blissful path of running up your credit.
#2 sounds a lot more fun, less work, and if you’re listening to the Canadian media, all will be hunky-dory.
The reality is that with the market poised to go well below 10,000, the Canadian dollar is retreating, our commodities are falling fast, the price of oil is headed towards $50… it’s starting to sound like an exact repeat of the 80’s.
High interest rates are certain to be here next year, the price of a home will be significantly less than it is today, and stocks will be a bargain. Hell, if you want to get into business you’ll be sure to find a company you can buy for a song.
Cash is now king.
Those with cash can play along with Warren Buffett and buy up assets at incredibly low prices. Those that do will be incredible rewarded and - in good ‘ol Canadian fashion - be vilified (or at least frowned upon).
Canadian’s don’t like those that get rich by being smart. Just look at the what’s being blamed for the current mess. Wall Street, greed, sub-prime mortgage brokers…
The reality is that a socialist policy of making it the right of every American - whether they could afford it or not - to have a home lead to this collapse.
The market and the financial industry just did what was expected - they made money off of a “system” the Democrats handed them.
When house prices stoppped rising at a rate of 10%+ per year, the system failed.
This is because people who never had the income to pay for the home that was given to them through the Equal Housing Opportunity laws suddenly couldn’t get a home equity line of credit to cover the spread.
Then it became the game of musical chairs. Pass the mortgage around and the last one left holding the bag wins.
Unfortunately, the Canadian financial system played in this game too. We’re only starting to hear the news - wait till after the election for the rest of the story.
So, it’s official - we’ve maxed out our credit… now our bills are due.
If you want to get through the next few years without serious pain, now’s the time to:
1) Put away your credit cards.
2) Avoid loans or relying on your home equity.
3) Save.
The bright side of the above is that you will lessen your carbon footprint - and get those pesky environmentalists off your back - and you’ll seep better at night.
How are you planning on surviving the recession?
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October 7th, 2008 at 5:38 am
“High interest rates are certain to be here next year”, what makes you think interest rates will rise? That’s the last thing that happens in a recession as typically central banks lower them in an effort to kick-start the economy. In the early 80’s many would argue the recession was CAUSED by high interest rates, not a product of the recession. I’d be interested to see where you found the rationale for this categorical statement.
October 7th, 2008 at 5:53 am
With the credit lock-up - the price of credit is going to rise. Not now, but I guess it will by next year.
Inflation will come in the US with a falling dollar - again this will happen early next year as China starts unloading.
I don’t believe they’ll be able to use low rates to prop up the economy - sure, they’d like to, but we’ll need higher rates just to attract anyone to the dollar.
You can’t print trillions of dollars without any repercussions.
Canadian rates have to be a bit higher than the US - meaning we’ll follow suit.