Canadian banking haven myth exposed

Canadian banking haven myth exposed

"One of the reasons that Canadians (and international commentators, other finance ministers and global financial institutions) buy this Canadian banking fairy tale is the way the government accounts for the money borrowed to support the banks." The sorry spectacle of Conservat

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Get rid of your mortgage, loans, because interest rates set to rise

Get rid of your mortgage, loans, because interest rates set to rise

Get rid of your loans, guys and gals, because we are going into a high interest rate period. Very high. It will be the equivalent of going into the double digit interest rates we had in the 80s where many people threw their house keys at the bank and we had record numbers of ba

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E-cigarettes save lives, money

E-cigarettes save lives, money

"We know that cigarettes have thousands of chemicals in them and we know that they are killing us. They have been for over a hundred years. So now, the e-cig industry comes along with only one or two chemicals in their mixture and people are freaking out over these as well. Whe

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US inches closer to big bank charges

US inches closer to big bank charges

Federal prosecutors are nearing criminal charges against some of the world’s biggest banks, according to lawyers briefed on the matter, a development that could produce the first guilty plea from a major bank in more than two decades. In doing so, prosecutors are confronting

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Canada’s home sales top predictions; why a real estate crash is inevitable

Canada’s home sales top predictions; why a real estate crash is inevitable

“The assurance of relatively low borrowing costs has likely given home buyers confidence while rising home values have kept new listings at a healthy level. Stable employment has provided some assurance to owners and buyers alike.” Our website is back after many months of

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Comparing today’s recession/depression to the 1980 recession

Comparing today's recession/depression to the 1980 recession

"Much like today, Americans were concerned not only with high unemployment but increasing budget deficits in the early 1980s. A September 1983 Gallup poll found that three-fourths of the public agreed that the federal government's budget deficit was a great threat (42%) or some

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Why savers are getting screwed

Why savers are getting screwed

"Without the intervention of economic policymakers, interest rates would be naturally higher. That would increase the cost of borrowing for businesses and consumers, but there would be some offsetting economic benefits. Savers are getting screwed by the current monetary policy

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Geithner admits USA bankrupt to US Senate

Geithner admits USA bankrupt to US Senate

"Never in our history has Congress failed to increase the debt limit when necessary. Failure to raise the limit would precipitate a default by the United States. Default would effectively impose a significant and long-lasting tax on all Americans and all American businesses

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World economies on verge of currency revaluations to deal with debt

World economies on verge of currency revaluations to deal with debt

"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." -- Henry Ford Basically what the world central banks are doing is increasing their money by devaluin

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Is Obama the next Mugabe of Zimbabwe?

Is Obama the next Mugabe of Zimbabwe?

"America, Britain, Japan, Germany, France, Sweden, Holland, Norway, Canada and Australia make up the Fishmongers Group and their meeting on Tuesday will deliberate on the state of the inclusive government, debt relief, public finance administration and the controversial economi

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US raiding foreign countries with dollars, not soldiers

US raiding foreign countries with dollars, not soldiers

""The United States is going to China and saying: we want you to commit economic suicide, just like Japan did. We want you to follow the same thing: we want you to revalue your currency, we want you to squeeze your companies, we want you to go bankrupt,” says Michael Hudson,

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FDIC wants your retirement cash to save banks: Bloomberg

FDIC wants your retirement cash to save banks: Bloomberg

“The FDIC is constantly looking at structures where we can get the greatest opportunity to tap into capital that we have not had the success reaching through previous disposition methods,” FDIC spokeswoman Michele Heller said in an e-mailed statement. “We welcome and work

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Content By: The Coming Depression Editorial Staff (dates cited below)
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economist at street sign is unsure of recession

Looking at economics as a discipline, it would be fair to point out some of the issues with what mainstream, government economists are saying. To begin with, no economic model can predict the future. Economists who do try to predict the future are as likely to be right as Helicopter Bernanke. They are a discredit to the discipline, but they are doing it because they see an opportunity to make money from people who want a prediction. Quite simply, they see demand in a market and they look to supply it (which is proper economics).

Economic models are, by and large, meant to be descriptive rather than prescriptive. That’s not to say that we can’t, with a reasonable amount of accuracy, model the local effects of a particular type of behaviour; the problem with prediction on a macro level is that there are so many unknown variables it becomes impossible to always adequately account for them. An Economist can say, with confidence, that a tax or a subsidy is inefficient, or that market quotas or tariffs are inefficient, or that an increase in demand will cause upward pressure on price in the short-run, but likely downward or equilibrating pressure in the long-run.

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However, we can’t know, for sure, what other variables may enter the picture or how they will affect the model. Long story short: Economists are necessary to explain why things that have already happened have happened the way they have, and for modeling the likely way to avoid or bring about a similar outcome in a similar circumstance in the future. But we can’t know; and those of you who look to economists to tell you the future are just asking for trouble, so stop it.

Looking at unemployment

It is important to note that the US has a couple of measures for unemployment rates (from U1 to U6). The official rate is the U3 which was 9.7% for March 2010. If you take the most encompassing measure, the U6, which also includes:

  1. “discouraged workers”, or those who have stopped looking for work because current economic conditions make them believe that no work is available for them.
  2. “marginally attached workers”, or “loosely attached workers”, or those who “would like” and are able to work, but have not looked for work recently.
  3. Part time workers who want to work full time, but cannot due to economic reasons.

The U6 unemployment rate was 16.9% for March 2010 which means that an additional 7.2% were unemployed for the other reasons listed above but are not “officially” reported!

Bottom line is that you can’t take any of these statistics at face value: If the numbers look bad, just change the standard of measurement and hope that nobody looks into the details.

The following link gives a good explanation:

http://portalseven.com/employment/unemployment_rate.jsp

The following link is the official Bureau of Labor Statistics if you want official verification of the figures:

http://www.bls.gov/news.release/empsit.t15.htm

On Canadian – US dollar currency parity

While most economists would agree that a high Canadian Dollar could detract people from purchasing Canadian goods, this is not necessarily true in the long run. Products are made by consumer demand and such pressure is good in the long run. Companies should produce goods in a way that is attractive for the buyer, for example: has the features consumers want, are of good quality and are durable. A high currency helps to pressure companies to ensure these things rather than rely on cheapness. This is why European and Japanese Cars tend to dominate (minus the recent Toyota downfall events) because they offer these qualities, but they are still expensive; but also because many Asian car makers have their currency tightly linked to the US dollar. In essence, Chinese manufacturers get an unfair advantage on Canadian and American manufacturers. This was also the case in the 1980s when Japan had its currency pegged to the US dollar.

An expensive currency also presssures companies to become more efficient and competitive. Why? They must manufacture goods that are innovative and get more out of a worker for how much they work. If labour will cost you so much, and if you have to pay a more expensive currency, companies must become more competitive. You can see this with competitive indexes. Canada ranks $9 behind Switzerland, US, Singapore, Sweden, Denmark, Finland, Germany, and Japan; Countries on the most part, more expensive than Canada.

Canadians should not rely on how cheap their products are but rather on things that people want. Research In Motion’s Blackberry devices were not built on how cheap it is to buy but rather it’s practicallity in the office. However, we shouldn’t forget that many of their products are constructed in places like China and not domestically. Indeed, If the Chinese would stop pegging their currency below par in order to undercut North Amercian jobs, the USA would not be in as much pressure to devalue its currency. The US owes the Chinese a lot of money but due to Chinese unfair trade practices, internet attacks, software and literature plagiarism. Therefore, the US shouldn’t give a dime of it back to those thieves who probably have already stolen more through these practices than the US owes them.

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