It's US Against the World

The brand-spanking-new $819 billion stimulus passed Wednesday in the United States has politicians and captains of industry north of the 49th parallel crapping ice blocks.

At issue is the declaration that monies destined for infrastructure improvements must be spent on American materials - instead of sourcing the materials from foreign countries who can usually provide these materials for much less money. A dramatic departure from "business as usual" is unfolding, and the potential economic fall-out could be catastrophic.
I, personally don't equate the word "America" with the word "protectionism". The USA is for certain the country who has done the most to drive and broaden the spread of free-market ideologies throughout the world. Even those stodgy Europeans, after decades of convincing by the US, are finally on board with the idea of collapsing the old-fashioned "barriers to prosperity". The poor Europeans are now following the US into the figurative "20,000 leagues" under the sea.

Institutions like the World Trade Organisation and the World Bank are all dependent on the growth of free and unobstructed trade throughout the nations to grow their power. Countries around the world have spent decades tearing down the old ways of doing business to make way for the new, only to find that as Dylan said "the times... they are a changin' ".

This now unwelcome change in direction by the US may not sit so well with those citizens of the world who have tolerated or supported expanded liberalisations of trade on the premise that free-trade is the best key to prosperity. It looks to me like either an acknowledgement by the Democrats that globalisation has frankensteined or that there was too much divestiture of jobs that payed "living" (and tax-base creating/sustaining) wages. Perhaps some people are starting to wonder if the wholesale flushing of jobs down the Rio Grande was such a smart move in retrospect.



Canadian politicians, surely thought that Mr. Obama's fiery rhetoric about international trade issues (specifically re-negotiating NAFTA) was merely a political ploy to court blue collar workers.. I mean, hey - our politicians were even told that the intentions of Mr. Obama were: "more reflective of political manoeuvring than policy." Isn't that enough assurance?



It's hard for me to imagine a complete undoing of NAFTA, but if this plan to exclude foreign competition is carried out, the ensuing trade-war will get downright nasty. You don't like Canadian steel? Fine - but are you content to do without our oil, natural gas, metals, wood and water? Should be a fine predicament.

Federal Budget 2009 - Who wrote this thing?

A "Socialist", A Lame Duck and a Separatist walk into a bar.. My thoughts toward the budget have been generally supportive, although I see a number of items that still reflect a classist approach to helping Canadians through this time of economic tumult and fear. For the most part, I think the methods of relief were well thought out. Reductions in taxability (bracket shifts) and increases to various Government benefits to low and mid-income Canadians showed a much more egalitarian approach, versus the previous measure of a meager increase to the personal basic amount and reduction of the GST. The Conservatives took the hard road into deficit spending, a marked departure from the tough talk of recent months, albeit with their hands forced a bit. The way money is being thrown around these days, especially by means of corporate welfare, the least the Feds could do is throw a dog a bone right?

The bones keep getting smaller though don't they?

The Home Buyers Program, introduced under the Mulroney Government in 1992, is one item that was selected for enhancement. When the program was implemented, the housing market was in the doldrums, unemployment was sky-high and the real-estate purchasing power of a dollar was much greater than today.

In 1992, according to Royal Lepage Canada's House Pricing Search, in the period January to March 1992, a two-storey house in Kitchener, Ontario would have an average price of $143,250. As of the July to September 2008 period, the same two-storey house would cost $252,000 - A difference of $108,750.

The Conservatives have increased the maximum amount of down-payment obtainable through the HBP to $25,000 in 2009 and future years, from 20,000 in 1992. It is a nice perk, but if the goal of government is to maintain the valuations in the housing market, shouldn't there be other mechanisms to support homeowners? Come on Jim; what is $5,000 going to do in this real-estate market? It's like dropping a popsicle into a bonfire essentially.

Enter the HRTC, or Home Renovation Tax Credit.

In an effort to increase both consumer spending and the construction trades hurt by the decline of new housing starts across the country, the Harper Government has enacted a refundable tax credit of up to $1,350 on work deemed suitable by the government. Exclusions of things like appliances, maintenance and repair of pre-existing items (furnaces etc.). This tax credit is granted subject to provision of receipts.. So for the under-the-table guys out there, it may mean a loss of business to those establishments who are providing remittances to the Gov't coffers. I guess if there is a tax credit for renting, there may as well be one for home-ownership.

The Road to Hell is Paved with Tech Inventions

It never ceases to amaze me, the amount and scale of change that consumer electronics are constantly undergoing. The speed at which the changes are occurring and the seemingly impossible task of assigning true "value" to any given piece of equipment are giving those in search of the latest/greatest gadgetry conundrums aplenty.

I guess some people like myself, (whose vehicle was long ago towed to the side of the info-superhighway) may be overwhelmed by choices and could be having some trouble identifying that oh-so important balance of performance, price, durability, reliability and form factor. I suppose the challenge holds allure to some folks because of the potential of harnessing a perfectly seamless interoperability of devices - bringing the whole world to their figurative doorstep. Count me in!

The market for consumer electronics is growing on a global scale, particularly in Africa where cell phone ownership greatly exceeds that of land-lines and has for years. Africa certainly has come to the party (later than fashionably), but like other groups throughout history I think they will prove to be quite the innovators in their own right. The meld of existing technologies and knowledge brought by connection to their fellow Africans and to the greater world community will empower the youth. Eventually the spread of language translation software will permeate previously isolated areas and contribute to a higher enlightenment and bring Africa toward further integration with the rest of the world.

The kryptonite to consumer electronics seems to be the general lack of tangible value as an asset, when compared with some other asset classes like real-estate, financial investments or even snow tires in colder climes. Let me elaborate a touch:

• The "buy and hold" philosophy can not generally increase the value of a television set, (not that this approach has done much for equity or real-estate investors lately either)

• In Ontario, where I live new homes are entitled to receive a TARION warranty that covers major items against major structural defects and various other defects to specified degrees. Compare this against most electronics, which enjoy anywhere from 90-days coverage up to a couple of years, and the investment can quickly leave you with a room full of e-waste

• A blue-tooth enabled GPS will do nothing to prevent your vehicle from skidding of into a ditch or taking out a country road mailbox
  
  

If Nostradamus were still with us, I'm sure he'd be most giddy about the abundance of opportunities for a great see'er that exist these days. If he was as accurate as some of his proponents claim, he could made a mint or two on retainer to any deep pocketed individual, corporation or government.

Surely, at the dawn of the Internet age, ol' Nostradamus would have foreseen the meteoric rise of "netbooks", the re-birth of Apple, the market dominance of e-Bay and the world shrinking effects of P2P, the Blackberry or Facebook. The guy would have made someone trillions. His Quatrains devoted to 3G, the iPod, and his solemn prose (envisioned below) on "The Tragedy of Vista" would be required reading for the movers and shakers in the early 1990's.

The Tragedy of Vista ~ channelled by Steve van der Planet

An over-bearing Sentry plunders the resource vast..

Reviled by the commoners- who have not systems fast..

For those who know his wrath - will beg for his predecessor..

Instead, the peasants doomed - will be forced to upgrade in two-thousand ten.

Change and Challenge

With the inauguration of President Barack Obama taking place recently, I thought it timely to make a few predictions related to his presidency.



The incoming president, whose eloquent and passionate oratory on the potentials of America and Americans, has lifted the hopes of many people not only in the US, but also world-wide. Even pre-eminent political observer Montell Williams agrees, stating: "this has already been one of the most influential Presidents of all-time, giving Americans hope and touting the common cause of all persons, regardless of economic standing or other divisions. These coins deliver a stunning picture of the President Elect complete with authentic gold plating."


Obama, the man whose charm, delivery and intellectual prowess have propelled him into the most powerful chair in the world will undoubtedly face many very tough decisions within his time as Commander in Chief.



Here are my predictions:

• By May 1st, the Dow Jones Industrial Avg. will be below 6500 points with oil prices hovering around $25/barrel $US
  
  
• A major military provocation or skirmish by a foreign power (likely Russia) will occur in early 2010 when Eastern Europe deepens defence integration with the US

• Within 4 months of US departure from Iraq, Iran will control the majority of the country by proxy and Iraq will spend the next 5 or so years in a civil war

No pressure though, Barack..

Know Thy Customer

What does it say about the part of my city that I live in that the end-caps at my local Zehrs grocery store are stacked eight feet high with 20kg (~50lb) boxes of cat litter? Other Zehrs stores have things like Nabob Dark Roast, French's Mustard, maybe some President's Choice potato chips - and our Zehrs gives the best seat in the house to gravel that cats use as a toilet.


Is it possible that the main thing drawing people to the Preston Zehrs store is actually not even a food product? It is probably not the ambience.

I have wondered for some time if the store management has ever given thought to the idea of modernizing the store. With some effort, surely this location could experience a renaissance of sales and customer loyalty. It seems that sometimes people shop at this store because they have to, rather than it being their first choice. Personally, I would rather shop close to home, but find myself often put-off by lack of selection and quality of goods, especially produce. If I was a single guy who didn't eat vegetables, and lived out of the microwave this wouldn't be such a frustrating situation..


Some of the low-lights of this location I have observed:

• myriad neglected, hand-me-down carts, complete with lack of manoeuvrability and original-looking paint




• expiry dates on many goods are drastically sooner than other locations (do they ship perishables from other locations as the foods approach spoilage)?




• higher prices for certain produce than other locations (even though this location is not in a swank part of town some of us still enjoy the odd salad or citrus fruit)

I understand that the other stores likely do exponentially more volume than the Preston location. The recent economic climate could actually benefit Zehrs with stock analysts pointing to Loblaw's becoming more profitable as people elect to eat at home more often. There is no desire on my behalf to see "self-check-out" stations added. With Waterloo Region already experiencing an abysmal 7.7% unemployment rate, I can wait in line for 5 minutes for a human to process my purchase. I don't think I'm asking for the moon here; just a nice clean interface where I can find the foods that my family needs to make it through the week.

Come on Zehrs, I'm rooting for ya'.

Barbercued Wisdoms 3/$1.00

Like many twenty and thirty-something Canadians, a virtual right of passage into responsible adulthood was the reading of David Chilton's personal finance classic "The Wealthy Barber". I remember reading it perhaps ten years ago and finding it to be a pretty clear presentation of basic financial knowledge, wrapped up in a non-descript, somewhat campy storyline. Although my overall memory of the book is quite fuzzy, I remember a few concepts and details from it:

1. 10% of everything you earn is yours to keep (outside of retirement savings and for long term growth)




2. Canadian government bonds had insanely high yields by today's standard (try to find a Canadian gov't bond that pays 12% these days)




3. The quote: "the car loan is the black hole of personal finance"

Like many people, I do not have enough cash flow to accomplish number 1, although my wife and I try to make sure we are saving sufficiently for retirement. I find the double dip of retirement savings and a hefty income-tax refund more appealing than the idea of saving money after said money has been reduced by the sticky fingers of government. The best path is not always the easiest to travel and or the best marked I suppose.

If yields were even close to 10% on a stable investment like a gov't bond I would consider saving much more money outside of retirement savings. I'm sure that many people after weighing the merits of paying income taxes and then investing post tax come to a similar conclusion. Is it beneficial, for instance to lose 30% of your income to taxes only to realize a 2.75% gain on your investment in a secure investment? Even with the advent of the Tax Free Savings Account, it still benefits a person minimally to invest with post-tax dollars, until they have maxed out their RSP contribution room unless that person expects to see a substantial increase in annual earnings going forward. That said, if one could fill all of their available RSP room and have surplus funds to invest the TFSA would be in the words of the timeless philosopher J.J. Walker: "Dyn-o-mite!" I find some aspects of the account quite attractive, first and foremost the fact that regardless of whether one decides to contribute or not contribute to the TFSA, the annual savings room accumulates indefinitely. Doesn't hurt that the account's principal and proceeds can never be taxed or result in any detrimental effects such as the Boomer curse-word "clawback" of C.P.P. benefits or any supplemental or income-based allowances. An idea being bandied about in web forums is that the TFSA will likely become an increasingly common method of wealth-transfer from parents to their adult children, skirting probate and other estate taxes entirely. This scheme will take years to bear big fruit, but in the year 2029, a person could inherit 100,000 (20 years x $5,000) from an estate and not pay a penny in tax on the amount, or any proceeds from the inheritance's subsequent investment.

Number three is something that I find creeping into my consciousness whenever the thought of undertaking a vehicular purchase arises. Our family vehicle is a newer vehicle that we use for trips to the grocery store and about town. We bought the family vehicle a couple of years ago, when my wife traded in her vehicle. My personal vehicle (not used for family transport) is an older sedan that has been very reliable and cheap to operate thus far. It is as economical as they come, costing me an average of $30-35 dollars in gas per month for my short commute to work and the odd trip around town.

I have been incredibly fortunate in my experience with this older vehicle, but I would prefer to modernize soon, for a couple of reasons: safety and family capacity (post 2002 vehicles are mandated to have the LATCH/Canfix system of child seat tethers which are favoured versus the old "throw the seat belt through it and shoot a bolt into your back deck beside the brake light".

Perhaps it was rock-metal legends Gun's N' Roses who said it best - "nothing
lasts forever.. even cold November Rain".

Welcome to Chinese Garlic

"It's like merging onto the information super-highway on a uni-cycle.." - Steve van der Planet

As a relative newcomer to today's tech-central environment, I must warn you that what you are about to witness will not be pretty, well laid-out or overly coherent.

What it will be is a journey into the abyss of unknown mediocrities, laced with onerous grammar and a strong chance of headbutting you in the face with my insights. You may lose teeth.

So, without further adieu; please enjoy a suggested serving size of Chinese Garlic!