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The credit crunch isn't necessarily all bad.

It could contribute to housing prices becoming reasonable again out here in Alberta.

Also, I am a believer in people having equity in property they own. These 100% mortgages were a very bad idea. They signalled the top in 1987-8 and then again now.
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The question is not are we in a recession, the question is how bad will it be and how long will it last.

Countrywide plans to slash up to 12,000 jobs

NEW YORK (CNNMoney.com) -- Troubled subprime mortgage lender Countrywide Financial Corp. plans to slash as many as 12,000 jobs over the next three months, according to company statement released late Friday.

The cuts, which represent 20 percent of its workforce, follow a reduction of 500 jobs at its subprime lending unit in August and another 900 jobs mostly from its mortgage production divisions Wednesday...

Countrywide (down $0.27 to $18.21, Charts, Fortune 500), which is the largest U.S. mortgage lender, says it's shifting its focus to relatively conservative loans.

When a big fish sneezes, smaller fish catch a cold. The US housing market is finally in the mess that so many conservative analysts had warned about for the last year and a half. US financials and the construction industry are entering a deep freeze. Furniture manufacturing and sales are probably there too and automotive industries aren't far behind. Retail is set to start taking its own beating with all many unemployed from these sectors no longer able to buy.

In Canada, the impacts will be felt in our own automotive and hard goods sectors. Forestry will take a double-whammy of reduced US demand and increased protectionism. Commodities will not be spared as demand from China falls in response to the bottom falling out on demand for its consumer nick-knacks (I suspect that the Chinese will try to forestall this by ill-advisedly devaluing the yuan to make thier exports more attractive).

How bad and how long this will last largely depends on 2 things:

1. the number of consumer bankruptcies it precipitates

2. how long it takes for the US to withdrawn from Iraq (and possibly Afghanistan)

The first item will determine the scope of the meltdown; the second will speak to the States’ fiscal capacity to deploy remedial spending (i.e. investments in infrastructure).

I must admit that I’m not terribly optimistic on either score.

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How bad and how long this will last largely depends on 2 things:

1. the number of consumer bankruptcies it precipitates

2. how long it takes for the US to withdrawn from Iraq (and possibly Afghanistan)

The first item will determine the scope of the meltdown; the second will speak to the States’ fiscal capacity to deploy remedial spending (i.e. investments in infrastructure).

I must admit that I’m not terribly optimistic on either score.

That's an awful lot of wiggle room. Technically, Canada actually avoided the US recession of 2001.

The US is not going to withdraw from Iraq or Afghanistan anytime soon....been in Japan, Germany, and Korea for over 50 years.

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The question is not are we in a recession, the question is how bad will it be and how long will it last.

Countrywide plans to slash up to 12,000 jobs

When a big fish sneezes, smaller fish catch a cold. The US housing market is finally in the mess that so many conservative analysts had warned about for the last year and a half. US financials and the construction industry are entering a deep freeze. Furniture manufacturing and sales are probably there too and automotive industries aren't far behind. Retail is set to start taking its own beating with all many unemployed from these sectors no longer able to buy.

In Canada, the impacts will be felt in our own automotive and hard goods sectors. Forestry will take a double-whammy of reduced US demand and increased protectionism. Commodities will not be spared as demand from China falls in response to the bottom falling out on demand for its consumer nick-knacks (I suspect that the Chinese will try to forestall this by ill-advisedly devaluing the yuan to make thier exports more attractive).

How bad and how long this will last largely depends on 2 things:

1. the number of consumer bankruptcies it precipitates

2. how long it takes for the US to withdrawn from Iraq (and possibly Afghanistan)

The first item will determine the scope of the meltdown; the second will speak to the States’ fiscal capacity to deploy remedial spending (i.e. investments in infrastructure).

I must admit that I’m not terribly optimistic on either score.

Well, Golly gosh! Is the Federal reserve not going to lend any more money to the government? The direction of economics in the world is toward trading blocs. The US dollar has to drop, I would have said "tank" but that is too dramatic. The acceptance of a North American currency is the prime concern. Nationalism is still strong among the populaces of the US and Canada. Canada is not too willing to accept a common currency and the Constitution is a roadblock to that in the States.

Are we in for a recession? We are in for a period of high inflation most certainly. It could be considered a recession because people won't buy at what they consider high prices. It isn't really high prices but a drop in the purchasing power of the dollar, i.e. inflation, that they are looking at.

At any rate, these are interesting times, economically.

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That's an awful lot of wiggle room. Technically, Canada actually avoided the US recession of 2001.

Technically, I wouldn't characterize the US economy of 2001 as a recession. If one might consider a recession to constitute an economic hangover, then 2001 in the US doesn't apply because it would be more apt to speak of a wound inflicted as opposed to a consequence of fiscal excess. This helps to explain why Canada was immune. Katrina would be another example.

The US is not going to withdraw from Iraq or Afghanistan anytime soon....been in Japan, Germany, and Korea for over 50 years.

Too true and, in the case of Iraq, too sad.

As for wiggle room, I have to admit that the walls are closing in pretty drastically. One can't fuel and economy on ever expanding debt and deficits forever. Eventually, the margin call has to be heeded.

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The credit crunch isn't necessarily all bad.

It could contribute to housing prices becoming reasonable again out here in Alberta.

There is enough demand for workers that any slowdowns due to the crunch won't hurt employment figures, yet could help those of us trying to break into the market.

Still some greedy, greedy property owners and landlords out here.

But aren't they warning people not to come to Alberta unless they already have employment and housing?

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The credit crunch isn't necessarily all bad.

It could contribute to housing prices becoming reasonable again out here in Alberta.

There is enough demand for workers that any slowdowns due to the crunch won't hurt employment figures, yet could help those of us trying to break into the market.

Still some greedy, greedy property owners and landlords out here.

It may not be ALL bad, but I think it's going to be VERY bad.

The only thing keeping the system going are the printing presses which are in high gear (close to 15% increase in the money supply EACH year). This can't continue forever. Just look at Zimbabwe.

The US dollar index (http://quotes.ino.com/chart/?s=NYBOT_DX&v=dmax) has never been this low. This has the potential to really upset the global apple cart.

Just remember, the baby boomers are all 45+ and have money, but the next generation has none (savings rate is zero) and this is the generation the BBs expect to sell their half-million dollar homes to. It ain't gonna happen.

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Technically, I wouldn't characterize the US economy of 2001 as a recession. If one might consider a recession to constitute an economic hangover, then 2001 in the US doesn't apply because it would be more apt to speak of a wound inflicted as opposed to a consequence of fiscal excess. This helps to explain why Canada was immune. Katrina would be another example.

That's fine, but technically, there certainly was a recession in the US in 2001 (a decline in GDP for two or more consecutive quarters). Canada came very close to meeting the definition as well.

Too true and, in the case of Iraq, too sad.

The USA went broke for WW2...also a bad idea? Iraq is far cheaper by comparison at only $100 billion per year.

As for wiggle room, I have to admit that the walls are closing in pretty drastically. One can't fuel and economy on ever expanding debt and deficits forever. Eventually, the margin call has to be heeded.

Then there will be a Depression, not recession. The US has been there...done that...seems that WAR was the answer back then too.

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But aren't they warning people not to come to Alberta unless they already have employment and housing?

Housing is definitely a huge concern. The resale market in the major cities has cooled down a little, but rentals are still insane.

Employment? There are still tons and tons of jobs to be had out here. If somebody isn't working here it's by choice.

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The picture would be a whole lot brighter if Alan Greenspan would just shut up and let Bernanke run the show. He appointed him (or is that annointed?) for crying out loud. Seems to me that at every inflection point we get Greenspan shaking his jowls and muttering doom. I guess those free tickets at the Kennedy Center are hard to give up.

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The picture would be a whole lot brighter if Alan Greenspan would just shut up and let Bernanke run the show. He appointed him (or is that annointed?) for crying out loud. Seems to me that at every inflection point we get Greenspan shaking his jowls and muttering doom. I guess those free tickets at the Kennedy Center are hard to give up.

What's this "we" stuff? Tickets are free in Canada, oui?

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The trouble is Greenspon did say very early on that a day reconning was coming for the USD. He does seem to make sure that he will be remembered for doing so. It does not matter what the new man says or does, he can only try to hide this for as long as possible, but in the end it does have to happen. I do not think there ever is a good time for that kind of thing, so now is as good as any I guess. Maybe they are trying to keep a lid on it so they can dump all on Bush as he goes out of office, but that will not save the republicans much. People will still blame the party for Bush for quite some time to come i would think.

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It does not matter what the new man says or does, he can only try to hide this for as long as possible, but in the end it does have to happen.
Notwithstanding Greenspan's retirement, he remains one of the key economic thinkers in this country. We do not put our retired talent out to pasture the way Canadians put Mulroney, Chretien and Martin aside.
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Notwithstanding Greenspan's retirement, he remains one of the key economic thinkers in this country. We do not put our retired talent out to pasture the way Canadians put Mulroney, Chretien and Martin aside.

Indeed....I don't even think that the current Bank of Canada Governor (David Dodge) or Minister of Finance (Jim Flaherty) command much attention compared to a retired Greenspan, let alone those put out to pasture.

I will search this thread about a possible Canadian recession for any such references to domestic leadership instead of the usual 'merkin references.

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The USA went broke for WW2...also a bad idea? Iraq is far cheaper by comparison at only $100 billion per year.

For the record YES! WW2 was a bad idea. But the idea certainly didn't originate in the Oval Office.

As for the Iraq is a bargin by comparison line, the sacrifice of 3760 uniforms (4058 if you count coalition forces), countless civilians and $100 billion per year to secure failure seems like a total waste by comparison.

Then there will be a Depression, not recession. The US has been there...done that...seems that WAR was the answer back then too.

I hope you're wrong (both about a depression and its implied solution being war).

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The trouble is Greenspon did say very early on that a day reconning was coming for the USD.
You mean, the Final Judgment Day? And Alan Greenspan spoke of it? Where? When?
More evidence that the credit crunch is starting to hurt?

http://www.msnbc.msn.com/id/20638614/

The first time in four years that jobs have declined in the U.S.

I wonder if we can expect the same in Canada in the next quarter.

The US lost 4000 jobs. That, as they say, is statistically insignificant. It's also politically and economically insignificant.

----

For the first time ever in world history, we have an independent central bank using well-informed, knowledgeable advisors making decsions about our fiat money supply. We've only been doing it for about 25 years or so and so I'd say that the experiment is still in its early stages. Yet the result has been remarkably good. Volcker was the Fed's George Washington. I frankly thought Greenspan overstayed his welcome. Bernanke is an academic. The Fed has to find a better way to change governors. Nevertheless, I'd expect to see more independent institutions within government. The US Fed is now like the US Supreme Court. By rights, the US would amend its constitution to reflect this practice.

Anyway, I was talking about recession a year ago and boy was I wrong. As pessimists say, it's better to predict the worst and be happily contradicted by events.

And once again, why are we (why am I) discussing US policies in the Canadian federal category?

Edited by August1991
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The US lost 4000 jobs. That, as they say, is statistically insignificant. It's also politically and economically insignificant.

And once again, why are we (why am I) discussing US policies in the Canadian federal category?

Politically and economically insignificant maybe but psychologically significant to investors about what to do next.

And the reason I posted the job cuts here is because of the integrated markets Canada has in key sectors. While Canada's job growth has continued, we have seen some blowback from the U.S. downturn. I expect we'll see more.

Edited by jdobbin
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There will always be fallout from US companies when they need to cut jobs, and yes if I were them I would make my cuts as much as I could to foreign plants and workers, where money company plans would allow it to be so. That goes without saying. As for lots of auto workers jobs coming north, yes this was done, and usually at a big expense from government etc.. So there may be some things there that would need looking at before the axe gets too well used.

There are a lot of US owned companies here in Canada, and I believe the stats are around 75% US controlled. While that means many things to many people, it does not mean that these companies can just pull up stakes and go to the USA. It does mean we have a heavy load of USD investments in most of our companies. If the USD goes bust or gets major hit, it will not affect the companies to a great degree as the investments were already made and as long as they were not carrying a lot of debt will it mean very bad things.

Ontario will of course take bigger hits then all other provinces, because our economy is based in a lot of US investment etc. So when the USA slows down, so will Ontario. Alberta which is now the biggest economic province in Canada, will also see some slow down, but not near the same as Ont. The oil based economy there would not even have to look hard for other countries to buy the oil, if the USA slowed down so much that their demand for oil lessened. Investment in the oil sands would also be easy to find as the USA, is not the only ones interested in this. It is hard to say just how well the rest of the provinces would fair, but I would think BC would fair well and just chug along with out much change. The Atlantic provinces, are all just now coming into their own oil based economies, so I would say they would have no where but up to go, but yes things may come a little slower. The real big winner in Canada will be the North. With the first open water summer season of the north west passage, there will soon be many companies and investors putting money there, even if there is a recession in the USA. I would maybe go as far as saying this will still be the case even if there were a depression in the USA, even though yes I know a depression will hurt much of Canada too. I worry that in all of this the CND may well then be over valued in time and a possible correction may hit us as well, but hopefully we will be better prepared.

Oh and the time Greenspon said about the USA getting hit by an overvaluation correction was in the same speech he gave about China having 10 times their normal USD reserves and Japan also having way more also. He commented on the fact that one day the USA will have to address this, as can not say you have control of your currency with so much USD being held outside the country and not in circulation. Roughly about 2 years ago, but I will admit that I could be wrong on the dates.

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There will always be fallout from US companies when they need to cut jobs, and yes if I were them I would make my cuts as much as I could to foreign plants and workers, where money company plans would allow it to be so. That goes without saying. As for lots of auto workers jobs coming north, yes this was done, and usually at a big expense from government etc.. So there may be some things there that would need looking at before the axe gets too well used.

I interpret this to mean that the only Canadian skin in the game was government tax incentives and "free" health care. It just reads as quite silly when auto worker jobs are lost in the same fashion they were gained. There are many Tier 2 and Tier 3 auto suppliers in Canada who understand how the game is played.....somebody needs to tell the CAW.

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Canadian jobs figures were released this past Friday.

http://www.thestar.com/Business/article/254207

Stock markets ended the week on a distinct down note today with indexes racking up triple digit losses after investors were blindsided with the first indication that the imploding U.S. housing sector and crisis on credit markets had leached into the overall U.S. economy.

The U.S. Labour Department reported that payrolls fell by 4,000 in August, the first decline since August 2003, as job losses in construction, manufacturing, transportation and government swamped gains in education and health care, leisure and hospitality, and retailing.

“Everyone’s been waiting for the signs of the labour market specifically, but the U.S. economy broadly, to buckle from the housing correction and then the mortgage head wind and now, increasingly, a full credit-crisis head wind,” said Michael Gregory, senior economist at BMO Nesbitt Burns.

“And now we’ve seen solid evidence.”

The latest snapshot of the employment climate was in sharp contrast to expectations of job growth of about 112,000 and cemented expectations that the U.S. Federal Reserve will move quickly to cut interest rates by as much as half a point.

The employment news in Canada was much better as Statistics Canada reported that the Canadian economy created an additional 23,000 jobs, keeping the national unemployment rate at a 33-year-low of six per cent.

It wasn't all good news. Most of the jobs were part-time and manufacturers job were down considerably.

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Yes there are lots of jobs out there at minimum wage. A large resort is offering present employees monitory incentives to help bring in new employees. The problem is you have to have a car to get to these jobs and housing is very expensive in this high end vacation area. How anyone can live and work on even $10 is beyond me. And a lot of the jobs are part time so people are working at two jobs. In our area Tim Hortons and equvilant jobs are being filled by women in their late 50s and 60s. Some for something to do and others out of necessity.

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