Canadian Economy.....your thoughts

[Duby T]

I know that no one knows what the future holds for our economy, but I was wondering what your predictions are for the future and why. Is it gonna get worse? Is it gonna get better? How long will it last? ect ect

I don't really know much in regards to these matters and I figured this would be an interesting topic to discuss.

your thoughts....

[R_Ethug]

Re: Canadian Economy.....your thoughts

Well especially in Calgary how long did people think the boom would last!???

I think it will get slightly worse this year but will peak again. Depending alot on what the US does with itself. If they go to war the economy will start up as the war machine helps feed it. Then again even with oil down the rich are still rich.

I know from people i've talked too about oil/gas in alberta they are still busy as hell and doing tons of work.

My question is with all the new buildings going up in calgary how many will sit empty or may not get finished?? thats ghost town ghetto!

then you have the city of calgary building these farking retarded pedestrian bridges that cost a bazillion dollars which is such a waste of resources too so who knows.

As long as house prices don't tank which IMO they won't most people will be fine. But eating out every night and crap like that is going to definitely slow down.

My wife and I want to buy a new car in the spring (b6/b7 s4 avant) and I HIGHLY doubt i'm touching anything until spring 2010 now just to be safe with things.

IMO right now is a GOOD time to pay off debt while you can and to buy RRSP's if you beleive in them that is or a good time to buy stocks like apple, google, etc that are low right now and you know they'll go up in time.

Its all a waiting game :/

[Kor]

Re: Canadian Economy.....your thoughts

[JPO]

Re: Canadian Economy.....your thoughts

[Canadian Turbo]

Re: Canadian Economy.....your thoughts

Haha thats funny Kris!

My thoughts:

The situation in the US is not good, however it is primarily a result of poorly regulated and controlled banking system that gave far too many people sub prime interest only mortgages on homes they never could actually afford and when that all came down it just started the dominoes on the US's over extension.

In Canada things are not like that at all, however since we are huge trade partners and investors with the US we have a backlash of what has happened. Now I am not sure what things are like in eastern Canada but too me, here things are still fairly good, now we are not still in a boom of course but we are more just getting back to normal, just people forget what that is like. Real estate is a strange issue but we are still just correcting the crazy values from 2006 so this is taking time and I would expect 2009 to be a flat year and then things to start to grow again in 2010.

In my opinion the economy works like a pendulum swinging from good to bad and back again, however it seems the swing is going further and further in each direction as people are fueled by fear and greed and that is the real scary part. For example having over $100 in oil price swing in 6 months time is a very dangerous thing and could end up getting us into a much deeper hole. For me, cheap gas is nice but I would much rather see oil in the 70-80 range so that companies keep investing in projects in work because the way it is going as soon as supply tightens again the price is going to skyrocket and with companies delaying exploration we will all get caught with our pants down and it will not be pretty. Those huge swings up and down do more damage then if we could get things into a smoother ebb and flow.

In my opinion there are 2 major issues with the current world economy, firstly is the media, spreading the doom and gloom stories that make people panic and behave in ways that make no sense, and this makes problems much worse. With the recent decline in stocks, people look at there balances and see losses, however unless you are desperate for money why would you sell those stocks and realize those losses, there is no need to and why wouldn't you hold on see how things go in the next 6 months or years, as people forget that the stock market is best as a long term investment!

The other issue is the big investors who push the markets in strange directions, people who where buying oil futures or currencies and forcing things higher and higher, then short-selling to push them down and presumably they will be back again to bring things back up and force things to the extreme.

Overall, looking at the malls and stores this Xmas season things seem strong here, personally I have had no impact by what is happening and I purchased my current place back in 2004 so I still have lots of room in the value there, but I do have a deposit on another place set for late 2010 possession so really hoping things turn around by then to help make that transition easier.

[nordex]

Re: Canadian Economy.....your thoughts

Why is it oil can go from being at a world record high to such a low? Are people not using oil anymore? Has demand not stayed the same?

[Canadian Turbo]

Re: Canadian Economy.....your thoughts

Supposedly demand is way down (slow down in US & China etc), but I think a big factor is the speculators got out of the game for a while, but just wait till they come back, and at prices this low I think it should not be long.

[RONDAL]

Re: Canadian Economy.....your thoughts

there are two things that drive oil pricing, fundamentals (simple economics supply and demand) and speculation (what you think the price may go to).

The investment banks and others after the late 90's and the fall out of tech stocks first went to housing for investment, and then as that began to dwindle went to commodities, including gold and oil. companies like goldman sachs put together billion dollar trade desks to trade oil futures.

The fundamentals for oil were never near $147/barrel. They were more in the high $70's to low $80 range. even at the peak of the summer. There were no demand increases or supply decreased to warrant the inflated price.

Because firms were pumping so much money into their oil futures it represented a large amount of trading. You have enough money you can actually influence or move the market. So when goldman sachs screams $200 oil tomorrow enough times, it has a way of coming true. This led to inflated prices, and oil going where it did.

Now that the investment banks have fallen apart, there are these future positions and exposures in trading that need to be wound down and gotten rid of. So what we have seen is a massive sell off of oil futures (paper trades) that have suppressed prices. One firm starts selling off a lot of things it has the look of increasing supply, so prices drop. This causes other firms to want to sell quicker to wind down their positions at a quicker rate and get the most they can, so you have a flooded market of oil futures, and a rock bottom price....which is where we now sit.

Since the fall of the investment banks and the large firms liquidating their positions oil daily trading is 10% of what it was at the peak this summer in terms of the number of trades. Thats how large this issue was.

Add to that the fact that the world economy is slowing down, so the fundamental demand for oil will drop slightly, you have prices sitting on the floor right now.

If we let this play out oil should rise back into the $70 range without any help, but it will take time for all the mess from speculators to work its way out.

[RONDAL]

Re: Canadian Economy.....your thoughts

As for where I see our economy, its not good.
The boom in Alberta is over. High wages, high materials, low commodity prices.... it doesn't take a genius to figure it out. Some would say the boom was done in the summer as high wages and material costs were crippling our bread and butter oil and gas industry...but the low pricing is the final nail in that coffin.

it's not to say bust times are ahead, but you are likely going to see a lot of names on buildings changing hands or disappearing. There are a lot of companies reeling from the lack of available credit, and pricing in the tank.

As for Canada....its going to suck. Eastern Canada is going to feel it the worst most likely, they already are having record numbers of unemployment being filed, and it will only get worse in the new year.

All of this is driven by the US economy. Dont forget who we do 80% of our trade with, and remember that we are an exporting nation. The US is dying a slow death, and even if the bailouts go through one has got to wonder about the long term viability of a nation that has that much debt. The money has to come from somewhere, so think of what social programs and other govt spending will take cuts in the future to trya nd pay for these bailouts. Add to that a baby boomer generation beginning to retire, a declining tax base, and its not good.

Some that say its not so bad we have been through this before I don't think understand the large scale of this. Worldwide this is an issue this time, its not just a fall of the asian market, or a US tech stock bust. This is a worldwide economic slowdown, with some of the worlds largest banks going under.
The asian market is the worst its been in decades, western europe hasn't seen this hardship in 50 years, and the US is posting economic numbers that rival the 1930's.

To get through this is going to take a world wide coordinated effort by the banks to get their **** together. Once the credit issue is sorted out business can once again stabalize once they know they can get financing. From there it will just take time to grow business back to where it was. More business means more employees which means more wages, taxes, and spending. And the economic machine can start turning again.

Right now we're trying to run without oil, and it aint going so good.

2009 is going to be a tough year.

[RONDAL]

Re: Canadian Economy.....your thoughts

Supposedly demand is way down (slow down in US & China etc), but I think a big factor is the speculators got out of the game for a while, but just wait till they come back, and at prices this low I think it should not be long.

i dont know about coming back. some of the largest firms have completely dissolved their energy trade desks (if the firms themselves are still even around). you will see some remain, but a large majority are done. especially when they have no backing for the exposure anymore.

[R_Ethug]

Re: Canadian Economy.....your thoughts

one thing that doesn't help the US car makers is that the average employee is making 70+ dollars an HOUR!!!!!!!!!! WTF man! your telling me some high school dropout pushing buttons on a line makes 6 figures!!!????

[Tuna]

Re: Canadian Economy.....your thoughts

Yea, just my opinion but I think part of the automakers issue is the pensions and wages they are paying out. There are people that have been retired for over 20 years receiving a full wage and benefits. This is great for the families but tough for the company.

Not sure how true this is but an analyst was saying a while ago that instead of the government bailing them out with money they should force them into bankruptcy protection. This allows the company to restructure in a way that is not possible under normal circumstances. For example they would be able to lay off some of their employees making high wages and such and restructuring.

I think the Auto workers union has a lot more power than many people realize too, they are an old old organization and I'm sure they have a lot of ties.

[stefan]

Re: Canadian Economy.....your thoughts

Natural gas is still profitable at 5-6$, and conventional oil can still make money. New oilsands stuff will be hurt. I'm feeling the effects of the fairly massive development cancellations in and around Ft. Mac. here at my office. I've been hearing that we will see a good whack more O&G layoffs in the new year until things pick up.

For auto industry, I agree with Tuna.. the UAW Illuminati has a little too much power, I do think.

[Smartiepants]

Re: Canadian Economy.....your thoughts

The pension issue is a very large one, also very touchy. I do also in general believe that the consequences of an auto maker failing are overstated. Many of those people will get jobs, the people hardest hit are the people like the pensioners, who aren’t able to make up the lost income. Backruptcy protection is very much there for the above reasons, somewhat to allow companies to make the changes that are necessary to be profitable. And personally I don’t feel the need for unions in North America at this point.

I believe unions are necessary when people require protection, when things like labour laws are lacking, and people need the solidarity to maintain adequate wages, and safe working conditions, however I would say that in general this is done due to modern labour practices. The unions now in many cases exist to protect the lowest common denominator (even amongst some of the auto workers) the ones that don’t really deserve their raises, but get them due to union mandates. Losing the auto workers union would be a huge step for the big 3.

As far as our economy, we are coming to a slow down, but in many cases (at least out west here) we aren’t in so much trouble as we think, there is still oil demand, but now it just requires a little bit more planning, rather than getting it out at all costs. We now have to be a little smarter though. The thing that bothers me is the idea of a Canadian bail out. Fundamentally the US requires it to protect the banking system, however in Canada, we have some trouble, but I have yet to really see anything major risking collapse. We feel the ripples (waves) from our largest trading partner, but I don’t feel there is anything fundamentally wrong (economy wise) with our system, whereas the US is needing to correct some problems.

[RONDAL]

Re: Canadian Economy.....your thoughts

the car makers are so quick to blame the struggling economy for their tough times, and demand a bailout to get them through......but they have been bleeding money for the last decade basically, losing ground to the asian and german cars, and losing profit margin like you wouldn't believe.
the UAW is one of the biggest reasons that the big3 have failing business models. On top of the fact they make a shitty product no one wants, that is bad quality, having zero margin due to the union wages and benefits just kills them.
allowing these crappy business models to keep going is just a waste of money. the ramifications of a failure of the big3 is far out of proportion. companies will buy up the assets, and retain the workers (of course only after they redo the contracts).
hell nissan has been talking about purchasing part of chrysler for a while now.

the whole thing is a mess.

oh yea....and whats the bailout going to do anyway? you are going to bailout an industry that has surplus inventory and zero demand for its product due to the economic situation. sounds like a winning solution to me