blog

Dear Clients, 

Below is a good article for today as most people are asking how long are we going to be in this mess.  I am thinking a long recovery and agree with the final paragraphs of this article.   This would mean we do not have to be quite so worried about rates going up in the near future.  This slow economic recovery will hopefully give enough time to reset some of the practices of the past to make sure this does not happen again.  Many believe we were in a "make believe" economy. The governments did not have to print money because the large corporations and banks were printing it. 

 What this results in is, companies becoming fat and hiring too many people because things are growing too fast for them to keep up with inefficiencies so they hire more people to fix it rather than taking the time to fix the problems at the source.   Of course they are compounding the problem as they are creating jobs that are really redundant and creating a false labour market which in turn creates more immigration.  Can you imagine if they had opened up the immigration gates as suggested?  We would now have a flood of people with no jobs and all the new immigrants would find it even harder to be gainfully employed.   Benjamin Tal mention two years ago that Canada should not be heading down that road for about another 6 to 7 years as we may not have any employment for them.  I guess he was right as we cannot even employ our existing workers.

 Some of you have been touched by this in some way.  It is very difficult to loose your job and keep a happy face and high self esteem.  This is a time where you have to be creative.  Take "can't" out of your vocabulary and go to every event you can.  Join clubs and charities and exercise groups.  The more people you know the more you will realize how much people love to help each other.  If you have a positive attitude and you allow people to give you their helpful hand you may be surprised to find yourself even happier than you were before. 

 I had the same experience years ago and would not be where I am today if I did not work with the opportunity of loosing a job. 

 Just make sure you are including your friends looking for opportunities in your network if you can.

Tips on surviving income loss

 (most tips are good for all families other than the reduced payments on debt)

• Approach your mortgage company and ask if you can extend your amortization.  This can save you quite a bit if you had been making bi-weekly payments.  You may be better off on monthly payments to take the heat off for the year. (let us know if you have done this so we can track)


• Call us for a budget sheet and use it to give to your spouse.  We even have a modified budget for the kids, they will feel they are part of the solution rather than the problem.  It is surprising how fast they can drain dollars so allow them to give you a budget and allow them to earn the money from you to meet their needs.


• If you have any loans get the bank to extend your loan back out to 5 years to reduce your payments.  If you have credit cards try to get them to include at least their own and STOP USING.


• DO NOT USE CREDIT only cash


• If you do have credit cards take the offers of 1.99% and 2.99% but try to not pay the 1% transfer fee and do not have them advance to the limit of card.  Make sure you pay the cards out one week before the interest rate changes back to 22% to be safe and never miss your payment date.  Pay min. three days in advance.  Before the offer expires find the next card that is going to offer a great discounted rate.  If you can reduce the principle amount during the low rate.


• Look at your utilities - phones can be a big bill, power and heat.  Do you really need to spend $140 a month on TV.  Used books are cheap.


• Shop at Value Village and other used clothing stores, you can dress well on next to nothing especially the kids.  (this is becoming a trend of the stars!)


• Cook from scratch - food is cheap and better for you when not processed.


• Cut the drive through coffees and food.  This is extremely expensive and why pay to get fat?


• Drive less walk more (you will feel better)


• Go back to fun local vacations and participating in the great free events our community works so hard on. 


• Don't make investment contributions for now.

You will find that your family finances are restructured to go forward and become financially successful.  Remember job loss is usually replaced by employment if you are actively trying within 3 to 6 months and many times sooner.

 Have a great weekend.

 Suzanne

Economy shrinking but end to recession in sight, Fed chair says

Jeannine Aversa The Associated Press

WASHINGTON The U.S. economy is suffering a "severe contraction,'' Federal Reserve Chair Ben Bernanke told Congress yesterday. But he planted a glimmer of hope that the recession might end this year if the government managed to prop up the shaky banking system, and Wall Street rallied.

Bernanke said the economy is likely to keep shrinking in the first six months of this year after posting its worst slide in a quarter-century at the end of 2008.

Bernanke said he hoped the recession will end this year, but that there were significant risks to that forecast.

Any economic turnaround will hinge on the success of the Fed and the Obama administration in getting credit and financial markets to operate more normally again.

"Only if that is the case, in my view there is a reasonable prospect that the current recession will end in 2009 and that 2010 will be a year of recovery,'' Bernanke told the U.S. Senate Banking Committee.

Among the risks to any recovery are if economic and financial troubles in other countries turn out to be worse than anticipated, which would hurt U.S. exports and further aggravate already fragile financial conditions in the United States.

Another concern is that the Fed and other Washington policy-makers won't be able to break a vicious cycle where disappearing jobs, tanking home values and shrinking nest eggs are forcing consumers to cut back sharply, worsening the economy's tailspin. In turn, battered companies lay off more people and cut back in other ways.

"To break that adverse feedback loop, it is essential that we continue to complement fiscal stimulus with strong government action to stabilize financial institutions and financial markets,'' Bernanke said.

In an effort to revive the economy, the Fed has slashed a key interest rate to an all-time low and Obama recently signed a $787-billion stimulus package of increased government spending and tax cuts.

In addition, Treasury Secretary Timothy Geithner has revamped a controversial $700 billion bank bailout program to include steps to partner with the private sector to buy rotten assets held by banks as well as expand government ownership stakes in them -- all with the hopes of freeing up lending. The Obama administration also will spend $75 billion to stem home foreclosures.

Those and other bold steps -- including a soon-to-be-operational program to boost the availability of consumer loans -- for autos, education, credit cards and other things -- should over time provide relief and promote an economic recovery, Bernanke said. That program is "about to open,'' he told lawmakers, without providing an exact date.

Sen. Christopher Dodd, D-Conn., chair of the panel, and other senators suggested expanding that program overseen by the Fed and Treasury, to help squeezed local governments.

Radical actions by the government since last fall when the financial crisis intensified have relieved some credit and financial strains, Bernanke said.

"Nevertheless, despite these favourable developments, significant stresses persist in many markets,'' he said.

Although Bernanke didn't mention any financial institutions by name, Citigroup Inc. -- the industry's troubled titan -- apparently is in line for additional government help.

Critics worry the Fed's actions have the potential to put ever-more taxpayers' dollars at risk and encourage "moral hazard,'' where companies feel more comfortable making high-stakes gambles because the government will rescue them.

Stress tests on the nation's biggest banks, which regulators will start conducting today, are designed to give regulators a better idea of how much additional capital and the type needed for banks to lend if the crisis were to grow worse than anticipated, Bernanke said. Regulators will assess banks' capital needs over a two-year horizon.

The nation's unemployment rate is now at 7.6 per cent, the highest in more than 16 years, and it will climb higher -- even in the best-case scenario that an economic recovery happens next year.

The Fed expects the jobless rate to rise to close to nine per cent this year, and probably remain above normal levels of around five per cent into 2011. The recession, which started in December 2007, already has killed a net total of 3.6 million jobs.

Fed policy-makers think that a "full recovery'' of the economy is likely to take more than two or three years, Bernanke said.

To brace the economy, many analysts predict the Fed will leave its key rate at record lows through the rest of this year.