Hi Guys,

currenty all newspapers and channels talking about US financial crisis. Today, I was reading in newspaper and one analyst was predicting that financial crisis is coming to Canada soon.

I am not sure, what will be the impact on common man due to this financial crisis. Any precautions. I am not clear about this, that's why wants to discuss this here.

US has gone to the dogs but a manupulative nation as it is , it will try to rise from its own ashes and that is quite possible considering that it is a super power.
Canada exports 80% of its products to the US and hence it should face extreme difficulties. I wonder why we are not facing it already but that may be due to the immigrants (educated with money) who are coming in. Automobile industry is down and out in Ontario for a very very long time and that is a fact.
The US main crisis stemmed from after the tech bubble burst in 2001 and hence to counteract it, interest rates were reduced to a very low rate (up to 1%) .. This made mortgaging easy and every tom dick and harry were given mortgages to buy houses. It is estimated that 30% of the foreclosed houses were bought by illegal immigrants (Yes. Illegal one. B'cos the mortgage companies never check their SS number). Now when the interest rates climbed up, the houseowners were never able to pay mortgages and it took a domino effect with the losing job and then houses...
Now the $700 billion that Bush is going to print / borrow will significantly reduce the value of the US $. Thus it is going to be harder for Americans to buy from Canada and overseas and also our currency would have strengthened thus becoming a double edged sword.
Meryl lynch (Canada) says taht a crisis will come soon. Our PM says that we are safe.
But in reality, we are going to lose jobs, our housing prices will come down, our Automobile sector will be shattered, we will be producing less products which are being exported.
For sure the housing Market in Ontario will be affected to a large degree with prices plunging atleast 10-20% in 1 to 2 years (In condo's it will be more). Saketchewan , Manitoba and the atlantic provinces will see reduction ingrowth. Alberta may the same as usual. I donot think that we will have any mortgage meltdowns and liquidity crisis.
The people that I see who could face problems are :
Architects, Real estate professionals, Mortgage professionals, People working in Automobile , export oriented sectors, flippers buying houses in hopes of making a quick profit, Condo owners/ buyers (as price will drop significantly), People who have built new shopping centres / office buildings etc....
For the average immigrant who comes into Canada, I donot see him being affected significantly. Labour jobs will aways be there for the new comers.
The positive factor is that we are rich in Oil and Minerals and we will continue to export them.

Hope this helps
Peace

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I am a Gents and not a Ladies.

Here is another theory :
http://specials.rediff.com/money/2008/sep/25slid1.htm

I dont know which one is true, but the fact of the matter is : There is credit crisis in US of A.

Essentially the entire US economy is debt driven, they are the largest debtors of the world. But when access to credit is denied, thier business cycle is slowed or comes to a complete halt. So what happens :

1. Loss of jobs
2. Reduction in income levels
3. Increase inflation leads to weaker currency. US being a nation of imports is the the hardest hit - less income and increasing cost of living.
4. Loss of income=reduction in taxation=reduction in Govt income=reduction in govt plans.
5. Loss of business income = reduction in corporate tax income = same as above.

How does all this effect Canada?

When more than 70% of Canada's revenue is from business with US of A, how can Canada be not effected?

Rich in oil and natural minerals is only a Fairy tale, since we are bound by NAFTA to export 60% of our oil and minerals production to US of A at pre-negotiated prices. If you dare to break free from NAFTA, be prepared to lose the 70% of your business with US of A. Also, no PM in Canada has ever had the guts to rub the US of A on the wrong side.

Canadian economy is a secondary economy, mostly servicing US of A's interests. If the big brother has loss of income, the whole family has to suffer.

We havent felt the pressure as yet due to lot of censorship of data. Also the competition and the size of the market is not so huge to have fierce competition and the need for equitable access to reliable market data. We cannot seek data, only feed on what is being served. Also, the regulations here are quite tough compared to US of A, but scams do happen. I dont foresee the kind of mess as in USA, but we will have to ready to tighten our belts and live on smaller salaries for some time.

I hope I have been able to make some sense here...ofcourse this is all my imagination, I am not in the field of finance and economics. Please dont ask me for authentic data to support my fiction...

Hiren

Did anyone watch the telecast of Bush's address last nite?

I cant understand, why the US government cannot reduce identical amount of expenditure to save its economy instead of make such a sorry face on International TV? Even the reduction in its expenditure in the current Iraq or Afghanistan war for a few months will bring them more than the required funds..

Maybe I am to naive to understand the obvious, but the most basic principle of financial planning in the event of crisis is to reduce luxury expenditure and budget only for the essentials. I know the war cannot be called off overnight, but even the $700B we are talking about will be released over a few years, not overnight.

I would be glad if someone corrected me...

Hiren

Quote:

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Originally posted by hchheda


How does all this effect Canada?

When more than 70% of Canada's revenue is from business with US of A, how can Canada be not effected?

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The cowards never started,
The weak died on the way,
Only the strong arrived.
http://www.youtube.com/watch?v=_yK1i9cLAMM

Does anybody know how much is spent in Iraq per month?

I remember 5 years ago somebody in Canadian govt called Bush a moron!!! That person was fired from job... I think it is time we honour that person - give him/her some award...!

Canada and rest of the world will sink together with them. Does anybody have doubts about it?

Last time when I spent more that what I earned, I was in deep s&%&!