$1 USD, that's like $1 CAD?

[Tatar Khan]

I've had insurance agents at the house trying to sell sickness insurance. If you get sick, they pay you so much per day, and can pay for private beds etc. They then came by and tried selling accident insurance (cut off hand and they pay you for time spent in hospital etc). They are a bunch of leeches trying to sign up as many people as possible, and they really don't give a shit if you need the insurance or not. I had some girl try to sell me accident insurance. "It's only $40 a month! You never know when an accident will happen". They don't give a shit about me, they probably get commission for selling it to me. Hell, I know someone who was into the insurance business and she said that they try to sell everything to everyone even if they don't need it. She had some ethical issues with taking money away from people who didn't need coverage.

I think the first refers to disability insurance. Well the problem with the insurance is the fact that people do not see it right and often do not really have cash flow for it. The insurance products have been created with the use in mind however since the financial advisor industry ruined itself through easy access to the industry the result is that the quality of the advisors decreased and many idiots entered the market. Now most of them work for commissions because the industry is so overcrowded the financial institutions do not want to risk paying salary to their advisors.

[Andrew]

Scotiabank Reduces Interest Rates on 10-Year and One-Year Fixed Rate Mortgages

Sweet. Less interest on home loans. Sounds like a good time to finance.

Glad those greedy banks finally decided to lower interest rates. Everyone constantly biatching about "getting the money moving" and "liquidity". Lower the interest rates that actual consumers get, and they will be more likely to get loans (hurray debt society). As long as the loans are fixed rate and only lent out to those that can afford them, no problems in the future. The problem with low interest rates in ~2000 was that USA banks were giving out adjustable rate mortgages (ARM), so that when interest rates went back up people could no longer afford it.

[chatfsh]

Andrew-

At university do you study business administration and/or finance?  You sound as if you do.

[Andrew]

Business admin and economics.

EDIT:

Saw on the news (sweet on national tv as well) that people are getting home insurance when they buy a house. This is so that if a spouse dies (or if you are the only person on mortgage and die) the house payments are paid for by the insurance company. The insurance payout goes directly to the bank to pay off the mortgage owing. It was costing $40 a month, and they bought the house for $150,000. When a bank sells you a mortgage they will probably try to sell you this (or say it is normal to get).

The problem with this is that according to a personal financial planner, is that the family would be better off having term life insurance. Basically for much less monthly payments ($150,000 worth of insurance) if a spouse was to die the insurance payout would go to the family and not the mortgage.

So if almost done paying off mortgage, let's say $20,000 left after 20 years, the home insurance would pay out $20k directly to the bank when spouse died. But if they had life insurance, the family would get $150,000 if the spouse died after 20 years. Some of the $150,000 could be spent on paying off the rest of the owing $20,000 mortgage.

The person who complained about this then looked at the mortgage agreement and found that there was a 30 day money back guarantee, so she cancelled the home insurance. The bank never bothered mentioning this money back guarantee to her.

So be careful of what banks/salespeople offer you. They only care about profits and getting as much money from you as possible. Make sure to get an independent personal financial planner to help you make decisions.

[Dunenewt]

Known as an Independent Financial Adviser for those of you in the UK.

[Andrew]

Known as an Independent Financial Adviser for those of you in the UK.

Good to know. In Canada they are known as Certified Financial Planners (CFP). They have an affiliate in UK called Institute of Financial Planning

Not sure if same thing you are talking about.

According to wikipedia

http://en.wikipedia.org/wiki/Independent_financial_adviser

The highest level is 'Certified Financial Planner' (CFP) issued by the Institute of Financial Planning or Chartered Financial Planner status recently introduced by the CII.

So I guess CFP designation in UK is best.

[chatfsh]

The American CPA (Certified Public Accountant) seems to be commensurate with your Chartered Accountant.  The requirements for a CPA are as follows:  Bachelor

[Andrew]

Ok, let's assume citigroup is now back to profitability and this is a sign that other banks will follow by the end of the year. They got rid of all their bad assets and writedowns/losses. Let's assume the market has hit bottom or will before the end of 2009. With the economy increasing and doing better starting in 2010, and combined with massive government spending, will this cause massive inflation? If inflation becomes very high, this will mean very high interest rates to combat inflation.

If true, 2010 could be an inflation year. Maybe take on lots of debt now with low fixed interest rates, and then have your debt become worthless over the next couple years? Maybe not necessarily take on debt for the sake of it, but doesn't seem like a bad time to buy house with low interest rates, and slowdown/decrease in housing prices (and possible high inflation). Similar thing happened in 2001-2002 when interest rates were low. They were low so that everyone could get a mortgage. Everyone did get one (stupid people got ARM as well), and then interest rates went from around 2%-5% I think (they basically increased from a low in 2002, not sure what interest rates were).

It will be interesting to see how bad inflation will be. Price of oil is at $40, and that is with the world economy expected to shrink 0.2% in 2009 (first time in 60 years). So when the world economy is back on track I'd be willing to bet oil prices will double or triple in a year or two. They might as well gouge customers again, because with the recent decrease in oil prices, many renewable energy projects were put on hold or scrapped. And every American is scrambling to buy an SUV or big truck once again because gas prices will never go up again ::)

Ford: Feds should give car buyers $3,500 rebate

Rebates should have been given instead of bailouts. If the gov said, no bailouts for any auto company. Instead we will give large rebates (tax free?) for consumers to purchase vehicles. This would lead to an increase in vehicles being sold, and the consumers would decide what auto companies would get bailed out. Auto companies would fiercely compete to get people to buy their vehicles knowing there would be increased demand. This would solve the problem of all the thousands of unsold vehicles sitting in parking lots across the world.

But instead the gov gave billions to car companies that may or may not change, and may need more bailouts later. Consumers are no better off, and car companies get to waste taxpayer money to "thank taxpayers for their money" and to spend on advertising and luxury jets.

EDIT:

AIG scam:

Top U.S., European Banks Got $50 Billion in AIG Aid

By Serena Ng and Carrick Mollenkamp

7 March 2009

The Wall Street Journal

The beneficiaries of the government's bailout of American International Group Inc. include at least two dozen U.S. and foreign financial institutions that have been paid roughly $50 billion since the Federal Reserve first extended aid to the insurance giant.

Among those institutions are Goldman Sachs Group Inc. and Germany's Deutsche Bank AG, each of which received roughly $6 billion in payments between mid-September and December 2008, according to a confidential document and people familiar with the matter.

Other banks that received large payouts from AIG late last year include Merrill Lynch, now part of Bank of America Corp., and French bank Societe Generale SA.

More than a dozen firms with smaller exposures to AIG also received payouts, including Morgan Stanley, Royal Bank of Scotland Group PLC and HSBC Holdings PLC, according to the confidential document.

The names of all of AIG's derivative counterparties and the money they have received from taxpayers still isn't known, but The Wall Street Journal has identified some of them and is publishing others here for the first time.

The AIG bailout has become a political hot potato as the risk of losses to U.S. taxpayers rises. This past week, legislators demanded that the Federal Reserve disclose names of financial firms that have received money from AIG, which Fed officials have described as too systemically important in the financial system to be allowed to fail.

...The government's rescue of AIG helped prevent its counterparties from incurring immediate losses on mortgage-backed securities and other assets they had insured through AIG. The bailout provided AIG with cash to pay the banks collateral on the money-losing trades; it also bought out underlying mortgage-linked securities, many of which are currently worth less than half their original value.

Banks and other financial companies were trading partners of AIG's financial-products unit, which operated more like a Wall Street trading firm than a conservative insurer. This AIG unit sold credit-default swaps, which acted like insurance on complex securities backed by mortgages. When the securities plunged in value last year, AIG was forced to post billions of dollars in collateral to counterparties to back up its promises to insure them against losses.

Now, other problems are popping up for AIG. The insurer generated a sizable business helping European banks lower the amount of regulatory capital required to cushion against losses on pools of assets such as mortgages and corporate debt. It did this by writing swaps that effectively insured those assets.

Values of some of those assets are declining, too, forcing AIG to also post collateral against those positions. And if the portfolios incur losses, AIG will have to compensate the banks.

AIG had seen this business as a relatively safe bet for the company and its investors. The structures were designed to allow European banks to shuck aside high capital costs. A change in capital rules has meant that the AIG protection no longer meets regulatory requirements.

The concern has been that if AIG defaulted, banks that made use of the insurer's business to reduce their regulatory capital, most of which were headquartered in Europe, would have been forced to bring $300 billion of assets back onto their balance sheets, according to a Merrill report.

---

Covered Counterparties

Some banks that were paid by AIG after it was bailed out by

the government:

Goldman Sachs (USA)

Deutsche Bank (Germany)

Merrill Lynch (USA)

Societe Generale (France)

Calyon (France)

Barclays (UK)

Rabobank (Netherlands)

Danske (Denmark)

HSBC (USA)

Royal Bank of Scotland (UK)

Banco Santander (Spain)

Morgan Stanley (USA)

Wachovia (USA)

Bank of America (USA)

Lloyds Banking Group (UK)

Source: WSJ Research

AIG: Is the Risk Systemic?, 26 Feb 2009

AIG propaganda to scare politicians to give them money. Hosted on wikileaks and is confidential.

Jim Rogers: Let AIG Go Bankrupt, Not America

AIG is too big to fail.

In boat terms, this is AIG:

45 percent of world's wealth destroyed says Blackstone CEO

Wrong. Factors of production are still there. Land, labour, capital (building/machines), entrepreneurship never disappeared. They might be sitting idle, but they didn't magically break. The only thing that disappeared was imaginary wealth. Say, a house that was worth $500k, is now only worth $200k, yet it is the exact same as it was when it was worth $500k (and same as when it was $200k in 1990s). Maybe available money to purchase products and to acquire more debt have decreased, but I would say that was overvalued anyways.

Looks like governments are in trouble because of pension plans have been hit hard, and they now have to come up with money to make up for shortfall. Seems like a decent scam by corporations. Have governments hand all your money over to stock market. Stock market increases rapidly, everyone is happy as their assets are worth more. Stock market loses 50%. After 20 years of putting money into the market to pay for pensions/retirements, you lose 50% of it in one year. How long will it take for the stock market to get back to its peak? 10 years? How long until the next big recession when everyone loses 30% value of assets again?

EDIT:

oops, Ford did not ask for bailout in Canada. Thus they should go ahead with tax rebate (and trade in old car) instead of bailout if required. Higher rebates for more fuel efficient vehicles.

It will not happen yet though, gov officials said, and no plans for it.

EDIT:

Ford-UAW deal cuts wages to $55 an hour

That is not enough for uneducated workers to live on. I mean full benefits and pension are included in that number. They should be making $100 an hour, which is what it was at a couple years ago.

EDIT:

Big Banks Strike Again: Didn't Pay Their FDIC Premiums For TEN YEARS

So banks are supposed to pay fees so that FDIC gets money to save up in case banks need money later on. They did not collect fees for 10 years.

[Tatar Khan]

EDIT:

Saw on the news (sweet on national tv as well) that people are getting home insurance when they buy a house. This is so that if a spouse dies (or if you are the only person on mortgage and die) the house payments are paid for by the insurance company. The insurance payout goes directly to the bank to pay off the mortgage owing. It was costing $40 a month, and they bought the house for $150,000. When a bank sells you a mortgage they will probably try to sell you this (or say it is normal to get).

The problem with this is that according to a personal financial planner, is that the family would be better off having term life insurance. Basically for much less monthly payments ($150,000 worth of insurance) if a spouse was to die the insurance payout would go to the family and not the mortgage.

So if almost done paying off mortgage, let's say $20,000 left after 20 years, the home insurance would pay out $20k directly to the bank when spouse died. But if they had life insurance, the family would get $150,000 if the spouse died after 20 years. Some of the $150,000 could be spent on paying off the rest of the owing $20,000 mortgage.

The person who complained about this then looked at the mortgage agreement and found that there was a 30 day money back guarantee, so she cancelled the home insurance. The bank never bothered mentioning this money back guarantee to her.

So be careful of what banks/salespeople offer you. They only care about profits and getting as much money from you as possible. Make sure to get an independent personal financial planner to help you make decisions.

Usually the mortgage insurance as it often called is cheaper than term insurance because they underwrite after the person's death rather than before and that could lead to the bank refusing to pay sine they call claim insurance fraud after they underwrite.

Also the policy is renewed every time the mortgage is renewed and so it always underwritten to a smaller amount.

Independent personal financial planner are also not perfect and there is enough of people there to screw the people over as the industry is so easy to get in. Write 2 exams on e for insurance and one for IFIC and you are in. Than 2 years after that write one for CFP.

[chatfsh]

Buffett says U.S. Treasury bubble one for the ages

Great, another bubble. Everyone is ditching the markets and buying "safe" treasury bills that offer no return. So the gov (or private banks) is willing to sell as much t-bills as possible to finance other debt. And if everyone buys t-bills that offer no return, expect massive inflation to make t-bills worthless. And when the federal bank can not pay interest on the t-bills because they have no money, then everyone will ditch the USD.

According to this graph the treasury bubble has already popped.

Investing in precious metals or foreign currency is looking pretty good right about now, eh?

I

[Andrew]

Independent personal financial planner are also not perfect and there is enough of people there to screw the people over as the industry is so easy to get in. Write 2 exams on e for insurance and one for IFIC and you are in. Than 2 years after that write one for CFP.

I agree that some CFP type people are most likely working in a company which only sells specific packages that come from one supplier. They probably get commission on selling everything to people, and thus can not be trusted.

I guess I was more referring to an ideal truly independent financial planner who would look at your situation, see what is best, and if it turned out for example you should have term life insurance, they would go and review available term life insurance policies costs etc and choose the best one offered by many corporations. None of the "omg you need all this insurance and it just so happens for "convenience" sake that the company I work for offers it all! Sign, here, here, and here." that salespeople do.

Hopefully this financial crisis (recession) will do what the tech bubble did. Get rid of overvalued companies, get rid of the surplus of finance related stuff (including labour so that only best are left), and hopefully take a more gradual increase in services. Take a more realistic approach in the sector instead of infinite growth that tech bubble had.

Investing in precious metals or foreign currency is looking pretty good right about now, eh?

Not really. I'm sure many people have suggested that it is a bubble too. Gold went to a high of $1000 per oz or whatever, and it has been between 900-1000 since then. It would have been a good idea to buy gold in 1990s when it was selling for 300-400. Buying gold would not be much different than buying stocks. They can go up/down, who knows? It has already gone up lots in 10 years. Maybe it will go higher, but probably a chance of it correcting itself (down) when the recession is over. You buy a bunch of gold, but is it ever shipped to your house for you to keep? Or is it like stocks where you may never actually see it, but you have a piece of paper saying you do, and maybe someone will screw you over.

[chatfsh]

As America

[Andrew]

As mickey rourke said on an interview with barbara walters before this years academy awards (paraphrased)

barb walters: will you be grateful if you win?

mickey: I'd be grateful, but reality is I can't eat it, I can't fuck it and it won't get me into heaven.

Yes, I know all about metals as currency and how they supposedly hold up against inflation. But really, it is just a metal, that should only be used in jewelry or computer equipment.

Ok, there is a definite finite resource of gold, so as fiat currency is inflated, the price of gold should increase, since gold quantity does not increase at a fast rate because you have to dig it out of the ground.

I probably don't make much sense, just trying to provide an insight that is against the normal "gold hedges against currency devaluation"

US gov stopped allowing gold to be bartered with and used as currency many times in history. What if they went further and did something to devalue gold because people were buying it instead of using USD? If everyone is runing to buy gold to hedge against currency devaluation, tehn it is possible there is a bubble (demand > supply) of gold, artificially increasing it's price.

EDIT:

Insurance giant AIG to pay $165 million in bonuses

AIG had worst loss ever in history of any business. But they can afford $165 million in bonuses to execs with taxpayer money. No matter what happens the rich and powerful continue to get paid.

[chatfsh]

Yay!  Bank stocks are continuing to rally, at least the ones that I bought in the last week.  I couldn

[Andrew]

Looks like 6500 DJI was a good time to buy :)

Buy low, sell high especially if young and have the next 10 years to sell

Better off buying each time the stock market goes down, than each time when the stock market goes up. :P

Fed's Bernanke sees recession ending 'this year'

So according to how wrong he was the past 2 years in ignoring the recession and saying it would not occur, that means recession will extend into 2010.

Of course he is just playing on peoples expectations, because if people think the recession will be over soon, everyone will start investing and the recession will be over. Without even fixing the problems that caused the recession, so we can head towards the next bubble/recession.

I mean back in February 2008 he was still denying a recession even though it started in December 2007. He kept denying it over summer 2008 downnplaying what he had to have known was going to be bad.

Treasury secretary and Fed chairman say rate cuts and rebates should keep economy out of recession but warn of tough times. Feb 14, 2008.

Now they have almost run out of monetary tools (at least the most used one which is interest rates). And he expects everything to be fine. But USA/world has high unemployment, which means less demand for goods, so I don't see how this recession will magically fix itself by the end of the year and everyone will have their jobs back.

Ok maybe the GDP will stop decreasing, and start increasing, but things wont be back to normal for at least a year. so technically yes the decreasing GDP definition of recession will be over by December, but that doesn't mean the effects of the recession will be gone.

[chatfsh]

Couldn

[Andrew]

Canadian Banks begin to decline federal aid in first sign of recovery

Well Canadas banks are now back to normal. Banks don't want the money because *GASP* it costs the banks money to get government money. There are strings attached. Unlike the USA where gov gives out billions with no paper trail and that money ends up leaving USA to go to banks in England and Germany.

Canada last country to enter recession

Last country to enter the worlwide recession, and probably the first country out of it.

Also, having no banks fail since 1980s is nice.

EDIT:

here is a chart showing what politicians got bought by AIG before the crash. Oh look Obama got $100k donation from AIG. They are all corrupt.

So AIG gives money to politicians. AIG makes bad decisions, goes bankrupt. Politicians give money to AIG. AIG funnels bailout around the world.

[chatfsh]

And I thought that China (with their stockpiles of cash and enormous trade surplus) would be the first one out...can't remember where I read that.

Way to go, Canada. :)

[Andrew]

Well, I don't think china will have any negative GDP.

Instead of having 25% growth they will have something like 20% growth. I don't know exact numbers, but basically their decline would be similar to western countries. They just have large growth to start with. And if western countries are not spending money, then China can't make products. Lots of people in China losing jobs and having to move back to countryside to farm.

Although it will be interesting if this recession causes more companies to outsource to Asia to save money, or maybe they will invest locally. So the recession could be good for china in long run as everyone depends on them for cheap stuff. :O

I remember hearing a story about in Vancouver seaport the amount of imports has declined a lot. I believe something about lots of stuff is shipped to Canada, but the containers are going back to China empty, which costs a lot of money. Or maybe it was because the ships were not at full capacity and this was back when fuel was expensive. No one was using the cargo ships.

Manufacturing in Canada was down 5.4% in January. All but 1.2% was caused by auto manufacturing.

[chatfsh]

I believe that China is projecting a 2009 GDP growth rate of 8%.  Last year it was around 12%.  If I recall correctly. ;)

[Andrew]

I thought my guestimates were too high.

Harper defends policies against Dodge criticism

Former Bank of Canada governor says Canada will have long and difficult recession.

Harper denies that and says everything will be fine. Just like in October 2008 he said there would be no deficits on live national television, and said the recession would be mild. It almost looks like he is willing to destroy Canada so that he can get elected a majority. Putting personal politics ahead of whats best for the country?

Looks like Canada is in for a long and difficult recession. :(

The biggest worry I have is that for the first time in 15 years government has deficits (thanks Harper). Harper is going to bankrupt Canada with his spending and tax cuts.

For first time in 30 years we have trade deficits (thanks USA). I'm not sure how Canadian industries will cope with not having massive exports.

This could be very bad for Canada if policies are not done properly.

Whereas every other country has had massive deficits and trade deficits for past 20 years, a good change in policies can extremely benefit themselves. Canada has done good policies in the past, and now is heading in the opposite direction that other countries are. (other countries: very bad->bad Canada: good->bad)

Example: USA is bankrupt. Maybe they will do something about balancing budgets and stuff and make things better. Canada is rich but is spending all the money to keep it afloat. Once we go in red it will be difficult to get out of red. conservatives are only forecasting deficits for 3-4 years, but in reality once you start deficits it is difficult to get out of them. Simple saying that to buy votes.

Canada province of N.B. is going to have $730 million deficit. They have 11 billion in debt. That is a large increase to debt.

EDIT:

Boston globe has pictures of recession around the world.

try not to cry

USA suburbs are the best to look at. Cookie cutter houses built cheap and someone was expecting people to live there, but for some reason people are not living there. Where are they people that were supposed to fill the houses? They magically disappear, or is the housing bubble just something silly that people were led to believe in that they should buy new houses every couple years and upgrade to better suburbs?

[Dante]

I like the selection of pictures. Though 26 and 5 were hilarious, in their way. Shun the unemployed, shun! Lest it become contagious!

[chatfsh]

I like the selection of pictures. Though 26 and 5 were hilarious, in their way.  Shun the unemployed, shun! Lest it become contagious!

Funny. :) 

Picture 9 - not so funny but a rather apt depiction of the vultures closing in.  (Oooh, foreclosed homes that the haves can snatch from the have-nots for a steal.)

The real estate bubble was caused by the inflated, unrealistic demand for housing.  The government was instrumental in creating that bubble by empowering FNMA and FHLMC to provide every Tom, Dick and Harry a home beyond their means.  That unsustainable demand drove up the price of real estate and drove home builders to manufacture cheap, quick build homes.  Of course, higher-end homes were also constructed while the banks began offering exotic mortgage products to make the homes affordable in the short-term.

Andrew, your post reads a little

[Andrew]

Andrew, your post reads a little…differently this evening.

Just interpreting the data. :)

Yesterday, I saw something that showed Canada last country to enter recession (good thing?), and that Canada has best banks in world.

Today Harper disagreed with from BoC governor and dismisses anything bad will happen. As we know politicians lie to get elected (bush and bernanke ignoring recession), so that means BoC person could be correct.

The suburb craze in USA was silly. Look at all the empty suburbs in inland California. All empty. All those resources used to make them and they will not be used and probably quickly deteriorate. It will be interesting in 10-15 years when a photo journalist goes to these abandoned suburbs showing empty houses. Dunno if they will eventually get people to buy and live in them. If so, then that means no other construction will occur (why build more houses when <10 year old houses are already built?). Same for the thousands of vehicles sitting in parking lots. Will they eventually get sold? If so, then production will be very low until inventories are sold.

EDIT:

Actual headline for article

Markets rally as Fed cranks up the printing press

Inflation to the rescue!

[chatfsh]

I know!  It