Tuesday, February 26, 2008

Budgets, economies and houses

I've neglected commentary on political budgets a purpose. There were two in two weeks and while neither had anything directly to do with houses, both had to do with fiscal houses and order.

I'm a fiscal conservative. I like governments who tax less and spend less. But that said, I think we owe each other basic human-rights-based services, so call me a liberal. Just don't call me a socialist/communist. Actually, lets leave politics alone, people just get offended.

So the BC provincial gov't announced a gas tax that has everything to do with grabbing your cash (and adding to inflation) and nothing to do with saving the Earth (despite what Dr. Suzuki says). And then the feds have a "prudent" low tax, low spend budget today. Make no mistake about it, both budgets are about stimulating consumer spending.

What we have seen this last week or two is worried gov'ts and fiscal stimulus. The economy is headed south, people have too much debt and your governments are acutely aware of it. Too bad they aren't acutely aware of the inherent problem of stagflation.

And for the record, PrairieBoy, don't go the way of VHB, stay the course my cyber-friend and hold out from the dark side. DON"T BUY A HOUSE.


vg said...

even Greenspan is predicting this coming US recession will be deeper than the last two. How does that bode for us ? hmmm, where were you in 82 ?

As far as taxes go, Hydro wants another 14%, gas/carbon tax,no personal tax cuts,mill layoffs,tourism down and record levels of personal debts that weren't around the last two recessions. I don't like the looks of this one at all.

Mr.4AM said...

You forgot to mention Oil @ $102/barrel this morning, most economists predicting a very rapid increase in interest rates within a year or so, food prices hitting all time record highs with no end in sight (Kellogs to increase prices by 20%, Wheat at astronomical prices due to increased global consumption competing with biofuel needs - trading food for gas).

Oh well at least I got a 5% raise this year after 4 years of no raise, though it took a lot of complaints to HR before that happened. But wtf is 5% when real inflation is 17%+++ ?

I'm hoping the VISA IPO will help me out a bit.

I was also reading about the new (2009)government TFSA acct - like RRSP but no taxes deductable before or after, but max deposits of $5K/yr per person. Sounds like a good start in the right direction given that pension plans are hemmoraging due to ABCP/sub-prime. It's about time we're not double taxed (income tax + RRSP savings tax), but as somebody else
said, I think the government put this on the table hoping consumers will only save short term for autos and houses so as to stimulate the economy, rather than a long term tax shelter.


VicREBear said...

This tax free savings account initiative has me nervous, too. Since it's a given that the government isn't in the business of doing us money-related favours out of the goodness of their heart, they must really be concerned that the coming recession and the worsening credit crunch are going to severely decrease people's ability to earn and/or borrow money. Why else would they suddenly be encouraging thrift and saving? I think they see the demise of easy credit, 100 percent financing for housing, low interest rate car loans and so on, and realize that Canadians (who have become utterly unused to saving) need some help and remedial lessons in actually putting away cash for these things. Does the government already know that in a year or two we'll all be back to traditional 20 percent down mortgages based on real income and NOT factoring in fairy income from things like suites? Hmmm...

Billy TwoBaulz said...

Many Canadians seem to think that because times are so good and we seem so invulnerable now, that a recession is impossible:

"Pride goeth before destruction, and an haughty spirit before a fall."
Proverbs 16:18

Aleks said...

I'm already worried about a recession, I don't need the budget for that. And the TFSA will be a nice perk, especially a few years down the road. By 2014 you'll be able to shelter $25,000 in it, which is actually a fair amount of tax.

vg said...

Not to mention Clinton and Obama said today they will tear up the NAFTA agreement if no new deal on their terms. How will this effect our 75% trade action with the US ? and with our manufacturing already in rough shape.

Clinton, Obama threaten to tear up NAFTA deal

Canada told to improve labour, environment rules

Wednesday, February 27, 2008
WASHINGTON -- Hillary Clinton and Barack Obama last night both threatened to take the United States out of the North American Free Trade Agreement if elected president, warning Canada and Mexico the deal is dead unless America wins concessions to strengthen labour and environmental standards.

Anonymous said...

Also, I heard a meteor is on a collision course with Earth. How will that affect the market?

This blog works itself into a new level of hysteria with every post. I used to come here for facts, but since those have given way to rampant speculations ... now I come here for fun!

Anonymous said...

Trading up NAFTA may seem like a smart move for the U.S only in the short run. Many countries, India, China, UAE have made great strides in becoming leaders in economy growth, education, etc. You would probably see bigger ventures happening between Canada and these developing countries. We still have an abundant amount of Natural Resources which will benefit up and coming countries.

The U.S. seem like they are trying to create a bubble around them but a bubble stops people from going out as much as coming in.

vg said...

"I used to come here for facts, but since those have given way to rampant speculations "

is this not why we are here ? to speculate on the direction of the real estate market ? within speculation is looking for signs that will possibly effect the future of our economy and thus real estate prices,hardly meteors hitting the earth material.

Happy Owner said...

Also, I heard a meteor is on a collision course with Earth. How will that affect the market?

This blog works itself into a new level of hysteria with every post. I used to come here for facts, but since those have given way to rampant speculations ... now I come here for fun!

Rampant speculation? Please anonymous, this is informed commentary. But the comming asteroid will drop housing, but increase building costs. lol.

vg said...

Sounds like the bulls are nervous when the try to downplay serious implications for Canada's economy.
Protectionism from the USA has always spelt bad times for Canadian business trying to compete.

Even the Canadian finance minister is saying a negative trade deficit is a real possibility . Anything that rattles the confidence of consumers is serious stuff,it's the only thing keeping this bubble alive.