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Tweedldum and Tweedledee
As a Canadian I have only a mild interest in the outcome of the U.S. election but an enormous interest in sound money and all the benefits that flow from that such as personal freedom. I have let our own politicians know in no uncertain terms that following the disastrous U.S. policies in banking would be a big mistake.
To their credit, hopefully under some influence from my barrage of E-mails to the Prime Minister & Finance Minister they have taken some positive steps such as tightening up down-payments and mortgage requirements to prevent the "liars loans" and subprime mortgage debacle that occurred in the U.S. Canada with ZERO gold reserves still seems to believe they can navigate a "fractional reserve banking system of fiat currency" successfully based on their track record to date.
Mathematically I believe it is impossible, when, (not if) the U.S. dollar collapses, the Canadian dollar will follow the downward trajectory, with a delay of maybe a few years at best, as is probably also the case with our real estate situation.
What disappoints me is that Ron Paul was our best hope for a sensible outcome and transition to a sounder economic footing yet has now been effectively shut out of the presidential race by the Republican party. I think he made a tactical mistake in not seeking the Libertarian nomination, he certainly owes no allegiance to the Republicans, so maybe the only salvation is Gary Johnson who is on the right side of most issues picking Ron Paul as his V.P. running mate giving the huge base of Ron Paul supporters a productive place to tender their votes that would send a message to the two main parties that their dominance is in jeopardy.
I listened to a few hours of speeches at the Republican Convention and some of them very impressive, they certainly projected all the correct "sound bites" but notably NOTHING of SUBSTANCE was actually said about reforming the flawed monetary system we operate under, and with out those needed reforms it matters not a whit which of the two nominees gets elected, either one will spend the U.S. into oblivion. The downward plunge is now inevitable, it is like a roller coaster having crested the top of the hill, the trajectory is irreversible and to expect different results when the same policies of borrow, spend and tax are deeply embedded in BOTH parties is indeed INSANITY!
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Re: Tweedldum and Tweedledee
OK southpen, I see your point and I agree. Add to it workers that build up sick pay. I am not against it for the ones that do indeed get sick but totally against the God given right top use it for paid time off in lieu of not being sick.I am all for an attendance bonus reward but some of these union deals made are rediculous. My son-in-law, a city employee asked/told me " Why did the city agree to it in the first place and now want to take our benefits away?Obviously, I am not a union man
Re: Tweedldum and Tweedledee
Frank ,I totally agree .I would never suggest making CPP ,old age Pension or Social security , Private ,NEVER.
What I'm talking about is pension plans like these; a City ,county or provincial ,state bureaucrat doing a job .Teachers,garbage men,city managers,parks dept. employees,police,firemen politicians,in short anything owned by government.These people get extra pensions usually for every dollar they put in ,an equal or multiple amount is added .
This is why Provinces in Canada and States in the U.S. are broke or going broke and nobody will address it.
i'll go even further. GM CANADA ,gave an insurance policy to spoiled GM CAW workers that IN the event of the demise of GM in Canada or around the World ,Canadian CAW workers would get their pensions 100% ,on the Canadian taxpayers. Isn't it bad enough that Government employees rake the system,Do we also have to cover costs of private enterprises?
People should be paid well,in accordance with what their Province or State, or Municipality can afford but over the years if they haven't learned how to save (a pension plan) ,or build wealth,then all they would have would be CPP or SS. I hope that's clear enough. I find it odd that a City manager of a community (whose charge is to make sure the city can afford to exist and function) cannot be expected to save for his own retirement beyond Social Security.
Re: Tweedldum and Tweedledee
Hey southpen, In Canada, we have the old age pension that starts paying at age 65 to virtually every Canadian and the Canada Pension Plan which is a employee/employer contribution plan administered by the government and not subject to opting out of..Actually this plan has performed quite well and many would not have contributed a dime to an optional private plan and would have indeed opted out or simply. procrastinated. The CPP has been a good thing and no Canadian politician would ever consider privatizing it,
Re: Tweedldum and Tweedledee
Thinker, I stated that manufacturing was up. It has been for many months as the slow decline of the USD was evident ,but new reports are now out ,saying manufacturing in China,Europe and the U.S. are slipping. China and Europe can easily be linked to the thought of global recession but the U.S. ,imo has more to do with the rebound nature of the USD,largely based on the fact that the EURO is dying. USD is the best of the worst,I guess. We have a lot of ground to make up for and there is an entire world out there ,outside of the BRIC that will buy US goods ,if only not so expensive. BRIC nations can use increased value of their currencies to buy infrastructure improvements in their own countries,another windfall for resource based Canada.
Devaluation of currency has upside but I agree that waste has to stop. Strictly speaking of the U.S. and Canada,I would enter into pension reform ,but what politician in either country has the balls for that. ? Not reductions in pensions but a new system where pensions are entirely a private affair.
Re: Tweedldum and Tweedledee
Hey thinker, Pardon the pun, but I do like the way you think and the thought that goes into your blogs. For our American friends not familiar with or country, and many are not and that goes for much of the world outside their borders, Canada is joined at the hip to the USA. Not so much as we used to be but we will follow their path a step or two behind. The saying was when the US gets a cold, Canada gets pneumonia. We have diversified somewhat so that when the US gets pneumonia we might get a milder case of it, but pneumonia just the same.Our standard of living has been good because of the US. If you drive 200 miles north of the US border into Canada what do you see. Trees, rocks, lakes and blue sky and an occasional dwelling.but not much else, because 90 percent of our population is straddled along the border where the action is.Now of course, weather plays a part too.,but we have no trading partners in the north,only our resources,fortunately which are vast,most of which headed south to fuel that market. Well, maybe the odd Yank who isn't yet tapped out that wants go hunting or fishing.The day of financial reckoning is not an if or a maybe. It is a certainty. Fortunes will be lost and fortunes will be made.
Re: Tweedldum and Tweedledee
I guess ,from my perspective I wonder why countries such as China,Japan and Canada would stop buying U.S. treasuries. If they stop buying at present interest rates and the Federal Reserve is forced to raise our interest rates,then new buying will occur, but now the U.S. has a bigger interest payment. It's not so much a crystal ball as it is knowing the facts,daily. Few people in the U.S. are privy to exactly how close we are or for that matter how far away we are from a collapse.
Interest rates are the key ,however ,that fact still does not tell us how long the U.S. can operate within budget restraints while paying the enormous interest payments. This is why I laugh at so called Neo Conservatives. Their (so called ), fiscal dicipline could cause a more immediate reaction,which sounds more like "your collapse". If we "allow" the USD to slowly depreciate while improving GDP through exports from manufacturing ,we can still prolong this for years.. Romney's claims of getting our house in order , are more like appeasements to the Chinese and the like,not a real plan. The real plan has been in action (albeit stealth) and if you check ,you will find manufacturing.and exports up. I think the USD can survive but go through transitions of collateralizing currency ,slowly with most other nations. We still might see your huge currency crash (collapse),but imo it will be short lived. Other nations like China might develop gold backed treasuries but not money.(just not enough around )it will not work.
If Americans spend less ,it cripples only one segment of our society,which we have relied on FAR TOO LONG, but improves our overall financial condition. Personal debt is something that is as important as the countries debt. I'm afraid ,Canada fails this miserably
Americans and Canadians have to be more fiscally responsible, (invest) America has to slow spending on International affairs ,whatever they may be. All back to , We don't really know the facts of how close or far (to the day) the country is from a currency collapse. If we plan to be prepared ,and all buy gold,I'm sure the chosen few will have considered that and act to spoil our plans. (maybe a gold tax) Did you notice Romney,in all his pledges for tax reform,leaves the 28% tax on bullion.He might even raise it. Insider alert !
Re: Tweedldum and Tweedledee
Hi southpen, no I was not aware that as you put it, "Canada has been a huge buyer of U.S. treasuries" and if that is the case you may be right that the C$ would tend to fall within weeks of the U.S. $ doing so. Perhaps what was missing is a definition of "collapse" depends whether your thinking is based on "TOTAL" which is highly unlikely, though I do not rule out the possibility of it happening, which would result in total chaos on a world scale.
I would consider a 20% to 40% fall in purchasing power a "collapse" by definition. Just as the U.S. $ has recently been the beneficiary of the problems in Europe with EURO soverign debt, the C$ is easily the best alternative currency should the U.S $ falter, so it could rise in value against the U.S. $ as it has been doing for some time. This is what fools a lot of people who do not have a macro world view, the U.S. $ has not risen because of any fundamental strength, for those who still believe in fiat currencies it is still the best of a bad lot.
My point is that Canada has historically been 18 months to 2 years BEHIND trends in the U.S. (for instance, we have not yet had our real estate collapse) but I believe it is coming. If I had an infallible crystal ball as to the TIMING of all factors I could certainly make a life altering fortune over the next few years and I doubt that anyone has insight to the exact "HOW and WHEN" of our economic problems playing out.
thinker70
Re: Tweedldum and Tweedledee
Thinker, I could spend a long time going over several points in your excellent blog, but I think I've said these things so many times,it's just too repetitive .I just want to understand your reasoning about why the CD would continue in a downward trajectory after the USD collapses. You don't think they would collapse within weeks of each other ?For that matter ,all currencies on the USD Index ;
Wouldn't they all collapse ,like a house of cards ?,if USD collapsed. I 'm guessing that when you say ,USD collapses,you mean nobody buys our treasuries other than our own government departments;ie; social security or member banks of the Federal Reserve(whom really have no money) Eventually this sends the devaluation into a freefall.
Canada has been a huge buyer of US Treasuries, Are you aware of that ?