Archive for the 'Economy' Category

This is sad. They say 20% of the sub-prime mortgages are in default, this is the story of one of those people.

Until this month, few Canadians knew what “subprime” meant. Fewer still could imagine why they should even care. Common in the United States, these loans are a rarity in Canada, accounting for roughly 5 per cent of all mortgages.

But these risky loans – made at inflated rates to borrowers with inadequate income and spotty credit histories – were all the rage south of the border. Last year, they accounted for 20 per cent of new mortgages, spawning a $1-trillion (U.S.) market.

Yesterday was a bad day in the markets; North American exchanges fell the most since September 17 2001 — the first trading day after September 11. It all started with a comment by the Chinese government that they were going to crack down on speculators in China, causing a tidal wave of selling across world markets. There was one big difference though between yesterday and September 17th. Yesterday, even when people were pulling money out of markets to ‘safe havens’ Gold fell also. For those who don’t know, when bad things happen in the world, investors/traders have a ‘flight to quality’. They’ll pull money out of capital markets and put them in resources, metals, treasuries, currency etc.. The interesting thing is that didn’t happen yesterday. I read an article in today’s Globe that highlighted this issue, it’s an good read.

Link to article

The Canadian economy is something to marvel at, we’ve become so divided, dependant on so many resources in so many different areas, that making a forecast for the overall state of the economy is insanely difficult. Take Alberta for example, a great part of Canada, becoming the new economic driver, we’re an experienced Tim Hortons cashier can make upwards of $17/hour. Inflation in those parts is borderline out of control, but don’t worry says the Government, the inflation is contained and won’t affect the rest of Canada – fine, I’ll take that as is.

I read an interesting article in this weekend Globe about the pain Windsor is going through:

Windsor, despite the sentiments of its people, is probably Canada’s worst-case scenario, where all the negative forces working their way through the Canadian economy have come together at once. Rather than being the harbinger of bad times to come, however, the automotive-and-gambling city in Southern Ontario is more likely experiencing the nadir of the country’s slump.

This has become the reality of the Canadian economy, specific regions will continue to prosper based on the resources in their area, but as we move to a more knowledge based society, manufacturing based communities will inevitably suffer. As the article says, things will most likely continue to get worse for Windsor, with Chrysler likely to layoff more workers and the manufacturing sector continuing to slump. Then again.. like many times before, this could just be the cyclical nature of economies in general, and before we know it, Windsor will be buzzing again.