IT WILL PAY TO BE LIQUID AND DEBT FREE - in Canada
Rant By: Patrick Walchuk, Ottawa REALTOR®
I've been reading a number of financial newspapers in the past couple of weeks. Doom, gloom, and economic death if one is a pessimist.
Brief article below seems to sum up a lot of what I'm reading about that will happen in Canada. No where near the impact of the states. (Did you know that they are averaging 20,000 home foreclosures a WEEK, and that number is going to increase!!
Anyhow, if it gets bad enough in the states, they slow down the amount of goods and services they buy from us and we are their biggest trading partner, hence the call that we may go into a recession.
Canadians are spending big time right now, like no one knows that there is a financial hurt coming on. When it does hit those Canadians with a debt load and no savings will be hard hit.
Our interest rates are due to come down significantly to try to keep the economy moving but what will be interesting is what will be happening in 12 months from now. Having gone through the 1990's I know that to be without debt and to have cash is king. Bargains are everywhere, and the economy will turn around again in a couple of years. Anyhow, some of my recent thinking.
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RECENT ARTICLE FROM THE Ottawa Citizen
Recession a growing danger,investment analyst warns
Eric Beauchesne, The Ottawa Citizen - Published: Tuesday, April 01, 2008
Canada is in growing danger of being pushed into a serious recession by the domestic credit crunch, a major investment bank warned yesterday.
The warning by JP Morgan Securities Canada was issued despite news that the Canadian economy expanded 0.6 per cent in January following a 0.7-per-cent retreat in December.
"Financial conditions point to increasing risk of a serious recession," JP Morgan economist Ted Carmichael said in an analysis that predicted the Bank of Canada will have to cut interest rates a further full percentage point or more to offset the impact of the credit crunch.
"Financial conditions have tightened to or beyond levels seen ahead of past recessions."
Other analysts were less pessimistic, but they agreed the rebound in growth won't last.
"The Canadian economy poked its head out of a huge hole in January, but still left doubts about its ability to stay much above ground in the first half of the year," said CIBC World Markets economist Avery Shenfeld
The Canadian dollar continuing to its recent retreat, falling to a close at 97.42 cents U.S. down nearly half a cent from 9.7.9 cents U.S.
Evidence that the U.S. weakness is spilling over into Canada is anticipated in the March employment report being released Friday, which is expected to show job growth slowing to just 15,000, down from 43,000 in February.
"We expect to see GDP slow considerably in February and March, particularly in the export-related sectors ... giving scope for further aggressive rate cuts from the Bank of Canada," said TD Securities economist Jacqui Douglas.
Still, the January economic rebound was broadly based, led by manufacturing, especially autos, and wholesale trade.
One area of surprise was the strength in discretionary spending on services, said Ms. Douglas, citing the arts, entertainment and recreation, and accommodation and food services.
"These sectors would typically be the first areas where we would see a pull-back as economic growth slows," she said. "However, it appears as if Canadians are keeping their wallets wide open, and are feeling confident enough to continue spending freely on entertainment.
"The question is how long this will continue as the effects from a slowing U.S. economy continue to spill over into Canada," she added.