December 2010 Canadian Economic Fundamentals

[Ally]

Online Scams Evolving

John Pliniussen ventured online two years ago to purchase what he thought was a bur-berry scarf as a gift. Instead, he paid good money for a cheap knockoff that he could neither return nor give away.

"You know it`s the photo of the real product, but then you get it ... and you compare it to an actual product and you can see the differences," recalled the professor of Internet commerce at the Queen`s University School of Business. "[Online retail scams] are much more sophisticated now than a couple of years ago ... some sites can set up like there have been a lot of consumers and it looks like their ratings are good, and then you end up with a questionable product."

Far from a rare occurrence, Mr. Pliniussen`s experience is becoming increasingly typical among online shoppers. As consumers avoid the mad rush of the mall by spending record sums online this holiday season, even experts in the online retail industry such as Mr. Pliniussen are falling victim to what has quickly become the most common form of fraud facing Canadians today.

"We have only seen that trend in the last couple years, but it has been climbing steadily I`d say for the last three years," said Staff-Sergeant Paul Proulx, the manager of the Canadian Anti-Fraud Centre (CAFC) in North Bay, Ont. A joint venture of the Royal Canadian Mounted Police, the Ontario Provincial Police and the Competition Bureau of Canada, the CAFC was founded in the early 1990s under the name `Phonebusters,` referring to the most common medium used by fraudsters at the time. But today, about 60% of the nearly quarter-million complaints logged by the CAFC each year are Internetbased, most having to do with buying dubious or counterfeit goods or services.

Read the full article here.

 

[Ally]

Internet retail scams: Click with caution!

John Pliniussen ventured online two years ago to purchase what he thought was a Burberry scarf as a gift. Instead, he paid good money for a cheap knockoff that he could neither return nor give away.

"You know it`s the photo of the real product, but then you get it ... and you compare it to an actual product and you can see the differences," recalled the professor of Internet commerce at the Queen`s University School of Business. "[Online retail scams] are much more sophisticated now than a couple of years ago ... some sites can set up like there have been a lot of consumers and it looks like their ratings are good, and then you end up with a questionable product."

Far from a rare occurrence, Mr. Pliniussen`s experience is becoming increasingly typical among online shoppers. As consumers avoid the mad rush of the mall by spending record sums online this holiday season, even experts in the online retail industry such as Mr. Pliniussen are falling victim to what has quickly become the most common form of fraud facing Canadians today.

Read the full article here.

 

[Ally]

A Taxing Affair

They shuffle through the door in clusters, predominantly middle-aged men in jeans and rumpled sports jackets. Talking quietly among themselves, they file through the entrance at a Four Points Sheraton Hotel on the outskirts of Toronto, moving slowly, stiffly, like cabbies just off their shift.

It`s not the type of crowd you`d expect to see at a seminar on tax shelters, but that`s what they`re here for.

The main event on a recent weekday evening was a talk about something called the Global Learning Giving Initiative, a Canadian "donation program" under which participants can dramatically lower their income tax through a gift to a charity.

The idea is, with the help of Canada`s tax laws designed to encourage people to give to those in need, participants can end up with more money in their wallet than the original gift.

In this case, the donations are directed to a "learning centre" located in a highway shopping mall in Nova Scotia. The mall is owned by a First Nations group and, according to promotional material, the main beneficiaries will be band members who will learn job skills from "valuable courseware," which it turns out is produced by a private company in Florida.

Read the full article here.

 

[Ally]

Canada`s economic outlook tied to commodity prices

Economists have been busy forecasting what`s in store for 2011. However, much of Canada`s economy is dependent on commodities, so the outlook for global energy becomes increasingly important and investors should think beyond 2011.

Near-term challenges in the world economy are numerous. Growth in several industrialized countries has lagged and fears of a double-dip recession abound. The hurdles of sovereign debt and rising unemployment must be overcome in order to reinstate steady growth.

While these issues are certainly troubling, the long-term energy outlook appears more favourable. In a recent report from the International Energy Agency, global energy demand is expected to increase 36% by 2035, averaging 1.2% per year. A whopping 93% of the projected increase in demand will be due to strong economic growth in the non-OECD, emerging countries.

For example, according to the International Monetary Fund, the Chinese economy is forecast to grow 9.6% in 2011. In comparison, world economic growth is expected to come in at only 3.7%.

As emerging countries develop, their energy consumption will increase accordingly. Consider their growing demand for automobiles. According to the IEA, China will have 135 million cars on its roads by 2035, a significant increase from the 40 million in use today.

The breakdown of fuel sources is a crucial factor when considering the outlook for global energy. The IEA anticipates that fossil fuels — coal, oil, and gas — will account for more than 50% of the increase in total energy demand. Within this mix, crude oil is expected to remain the dominant fuel source until 2035.

Read the full article here.

 

[Ally]

Global energy outlook sizzling

Economists have been busy forecasting what`s in store for 2011. However, much of Canada`s economy is dependent on commodities, so the outlook for global energy becomes increasingly important and investors should think beyond 2011.

Near-term challenges in the world economy are numerous. Growth in several industrialized countries has lagged and fears of a double-dip recession abound. The hurdles of sovereign debt and rising unemployment must be overcome in order to reinstate steady growth.

While these issues are certainly troubling, the long-term energy outlook appears more favourable. In a recent report from the International Energy Agency, global energy demand is expected to increase 36% by 2035, averaging 1.2% per year. A whopping 93% of the projected increase in demand will be due to strong economic growth in the non-OECD, emerging countries.

For example, according to the International Monetary Fund, the Chinese economy is forecast to grow 9.6% in 2011. In comparison, world economic growth is expected to come in at only 3.7%.

Read the full article here.

 

[Ally]

More Canadians fear working well into retirement: Poll

A growing number of Canadians fear they`ll be forced to work well into their golden years, a new poll suggests.

About 40 per cent of Canadians aged 25-34 said having to work longer was their No. 1 retirement concern, up 12 per cent since 2006.

Similar concerns have surfaced in the U.S., the poll found, where nearly a quarter of Americans share the same fear compared to just 15 per cent four years ago.

The survey of more than 1,000 Canadian adults and 1,000 U.S. adults was commissioned by financial management firm Edward Jones.

The survey is considered accurate within plus or minus 3.1 per cent, 19 times out of 20.

Read the full article here.

 

[Ally]

Canadian house prices edge up in October: StatsCan

OTTAWA—The New Housing Price Index rose 0.1 per cent in October following a 0.2 per cent advance in September.

Statistics Canada reports prices were unchanged in nine of 21 cities the agency surveyed.

Prices increased the most in Saskatoon (up 0.8 per cent) followed by Greater Sudbury and Thunder Bay, Ont. (0.5).

Prices dropped in Calgary (down 0.6 per cent), London, Ont. (0.3), Victoria (0.2) and Regina (0.1).

Read the full article here.

 

[Ally]

Why home foreclosures are often unfair

payment, the law gives the bank the right to sell your home to recover the amount owing. The law also requires the bank to try and get a fair price for the property. This is done so that the bank doesn`t act too quickly and sell the property for a reduced price, as this will greatly harm the homeowner.

Let`s say you buy a home for $300,000 and have a $250,000 mortgage. Later you default. If the bank sells the property for $255,000, then after expenses there may only be $240,000 left over. Not only will you lose everything you`ve invested in the home, you will still owe the bank $10,000.

Although the banks are supposed to act fairly, the process is anything but fair.

To start with, the bank has to hire a lawyer to do a search of title and issue the "warning notice" to the owner and any other interested party, advising them that if the mortgage loan is not put into good standing within 35 days, then the bank will start the power of sale proceedings. In order to put the loan into good standing, the homeowner has to pay any arrears, plus legal fees which are usually $2,500 to $3,000. The legal fee usually bear no relation to the amount of work necessary for the law firm to issue these warning notices. In most cases, this should take no more than two hours to conduct the title search and prepare the notices.

Read the full article here.

 

[Ally]

5 Huge Economic themes for 2011
Theme 1: The Global Cyclical Recovery is for Real

While 2010 saw threats to the global recovery, now it has stabilized and growth looks likely to expand in 2011, even though there is fiscal consolidation in developed markets.

Global growth for 2011 will be at 4.4% in 2011, with 60% expected to emanate from emerging markets.

The result will be a global rise in equities with returns of 10 to 15%, according to Danske.

Read the full article here.

 

[Ally]

Canadian mortgage debt rises over $1 Trillion: Report

Canadians amassed mortgage debt at a slightly higher than normal level in 2010 as low interest rates helped push the country`s total residential mortgage debt to over $1 trillion for the first time.

The value of outstanding mortgages is now 7.6% higher than it was last year, the Canadian Association of Accredited Mortgage Professionals said in its annual report released Monday. The average annual increase is around 7.1%.

"But debt growth levels are actually slowing," said Jim Murphy, president and chief executive of CAAMP.

In the early 2000s, debt growth hovered closer to 10% year over year.

"Canadians are being smart and responsible with their mortgages," he said. "The survey results speak to the strength of our mortgage market, especially when compared to the United States."

Murphy said most Canadians have heeded warnings from economists -- including the Bank of Canada -- about growing debt levels and took advantage of low interest rates to refinance and pay off other debts.

Read the full article here.

 

[Ally]

Household net worth strong despite high debt levels: BMO

Canadians may be carrying record high levels of debt, but overall household balance sheets are in pretty good shape, according to economists at BMO Capital Markets.

New research by BMO shows that while debt has risen, household savings levels and net assets have also rebounded in recent quarters.

BMO estimates that total household net financial assets rose to $2.7 trillion in third quarter. Meanwhile, total assets, including real estate, surged to an estimated $6 trillion – a new all-time record high, according to Douglas Porter, deputy chief economist at BMO Capital Markets.

"While debt has climbed, household assets are still more than five times as large as those debts," Porter said in a virtual roundtable discussion on Wednesday. "So household net worth has actually been rising pretty steadily over the last couple decades."

Porter admits that there`s reason to be concerned about rising levels of borrowing. Canadian household debt has been growing by more than 7% in the past year, and is now almost as high as U.S. household debt levels, when compared on an apples-to-apples basis.

Read the full article here.

 

[Ally]

Why a backward approach makes city taxes go higher

Come next year, Edmontonians will see their municipal taxes increase 4%. In Regina, home owners will get dinged an additional 4%, too. Vancouverites will pay 2% higher taxes next year. Calgarians can brace for a 4.5% increase. In Saskatoon, there`s a 3.86% tax hike on the horizon. And in Montreal, the total municipal tax bill is up 4% this year over last.

Yawn. Big deal. Municipal tax hikes happen all the time. In most cities, denizens have come to accept them as an annual tradition, as arduous and inevitable as Lent or Yom Kippur. Still the question is: why do we accept them so apathetically? Canadians give no other level of government such easy licence. Federal and provincial politicians would be mad to think taxpayers would shrug at a raise in income or corporate taxes by several percentage points year after year after year. Only, it seems, in our cities — where the average family drops roughly 10% of its tax dollars — do we take a bigger yearly grab for granted.

Actually, we take the entire upside-down approach that municipalities use for taxes for granted. At the federal and provincial level, the system generally works like this: economists project incoming government revenue, and legislators decide how to spend it, where they can afford to increase funds, and where they must make cuts. In the city, it`s done the other way around, says Jack Mintz, chairman of the University of Calgary`s School of Public Policy.

Read the full article here.

 

[Ally]

Unhappy client released from contract with realtor

Jim Southgate said he wasn't getting service after signing a buyer representation agreement with his real estate agent. I asked her to comment when I wrote about his case and she refused.

The brokerage owner, Wenda Allen, responded to my email today and agreed to release him.

"I would like to thank you for realizing that there are two sides to every story," she said, adding that his agent was well respected and had not received any complaints in her three years with the Century 21 brokerage.

"It is apparent that the time and effort that she spent with this client was not in any way respected or appreciated by Jim. His claims that I have not returned his calls are dishonest."

The next agent he worked with would find that "he has absolutely no respect for their time or skills.

Fortunately, customers like this are very rare. We will leave a Release from his Purchaser Contract at our front desk for pickup tomorrow after 4:00 pm," Allen said.

His agent had sent him an invoice, saying she had reviewed over 880 properties on his behalf since last April (though he hadn't signed the contract until November). She had worked 202 days, averaging 1.5 hours a day, at $51.50 per hour, so he owed her a total of $15,604.50.

Read the full article here.

 

[Ally]

Resale housing market on solid ground in November





OTTAWA ` December 15th, 2010 `National resale housing activity continues its return to normal levels, having risen in November 2010 for the fourth consecutive month, according to statistics released today by The Canadian Real Estate Association (CREA).





Seasonally adjusted national home sales activity via the Multiple Listing Service (MLS&#194 Systems of Canadian real estate Boards climbed 4.8 per cent in November 2010. Although this is well short of record level activity for the month of November posted a year ago, seasonally adjusted sales now stand 19.5 per cent above levels recorded in July 2010, when it reached this year`s low point.





`Sales activity rose in many local markets but eased in others,` said Georges Pahud, CREA President. `Home buyers and sellers need to recognize that local and national market trends may differ, and for that reason, they would do well to consult their local REALTORÂ in order to understand how the housing market is shaping up in their market.`





Seasonally adjusted activity was up from October levels in two-thirds of all local markets, including eight of Canada`s ten most active markets. Month-over-month increases were reported in Calgary (+2.6 per cent), Edmonton (+6.9 per cent), Fraser Valley (+10.5 per cent), London & St. Thomas (+6.5 per cent), Montreal (+8.2 per cent), Ottawa (+4.2 per cent), Toronto (+6.0 per cent), and Greater Vancouver (+11.3 per cent). These markets accounted for more than half of national activity in November.





Actual (not seasonally adjusted) national sales activity in November 2010 was 9.3 per below levels in November 2009.





Read the full article here.

 

[Ally]

Fewer Candians collecting EI benefits in October





OTTAWA ` The number of Employment Insurance recipients fell by 5,200 in October according to data released by Statistics Canada on Thursday.





There are currently 683,000 people receiving the EI benefits, a number that has hovered around the same level since the beginning of 2010.





More people however submitted EI claims ` the first step toward receiving benefits ` in October. The government received 257,000 initial and renewal claims, up 7,500 from September. The bulk of the new claims were filed in Quebec, Alberta and British Columbia.





Read the full article here.

 

[Ally]

Loonie stuck in global chokehold: CBC





Mark Carney, governor of the Bank of Canada, warned of a "death grip" on the U.S. dollar this week, but the Canadian dollar is also in a choke hold of its own, the chief economist with CIBC World Markets said in a report Friday.





One way to break it would be for the Bank of Canada to `fight fire with fire` by intervening to sell loonies in the foreign exchange markets, in an effort to weaken the currency, Avery Shenfeld said.





Mr. Shenfeld highlighted two factors that have kept the loonie buoyant.





The first is more incidental than anything, with the loonie getting a relative lift as a byproduct of all the greenback purchases that U.S. trade partners have been making to devalue their currencies ` the "death grip" Mr. Carney warned about.





More importantly, though, is the general interest foreign banks have had in the Canadian dollar over the past year.





"Reasonable decisions by central banks to diversify their reserve holdings, including added weight in Canadian dollars, may have been a key factor in driving our currency to parity vs. the U.S. unit, offsetting a large trade deficit," Mr. Shenfeld said.




Read the full article ]here.

 

[Ally]

The West ascendant: Canada's new political power





Canada`s rising west, now accounting for over a third of Canada`s national economic output and sitting at No. 26 on the list of the world`s largest exporters ` ahead of even India and Thailand ` is sparking, albeit slowly, a political sea change away from the historical Ontario-Quebec power base, experts say.





With a combined population now of more than 10 million and climbing, and an economy that now ranks 18th in the world, political scientists say Canada`s westernmost provinces ` Manitoba, Saskatchewan, Alberta and British Columbia ` are carrying more weight in debates over national issues, such as pension reform, health and social transfers, and foreign investment, and will continue to do so as their economies grow.





The prognosis comes on the heels of the release of a new study Thursday by the Canada West Foundation that pegs Western Canada as the country`s fastest-growing region ` a region that accounts for over a third of Canada`s economy, and which has one of the highest rates of college and university education in the world.





`In terms of federal-provincial relations I think you`re going to see a shift to western Canada but I think that`s going to take a while to catch up in the House of Commons itself,` said David McGrane, a political science professor at the University of Saskatchewan. `You have places like Saskatchewan and Alberta having increasing amounts of weight when it comes to national questions, and I think you`re going to see this when you talk about re-negotiating the health and social accords.`




Read the full article ]here.

 

[Ally]

Poll: Oil price will rise for 2011








LONDON ` Oil will rise to a higher average over US$86 a barrel next year, a Reuters poll showed, almost US$3 up from last month`s poll on the expectation of declining inventories and quickening demand growth.





The third consecutive month of higher poll predictions was due to strong demand from Asia and more modest spare output capacity growth, analysts said.





`We anticipate that oil prices will remain robust in 2011 as demand from thirsty developing nations continues and inventories are tapped,` said Lloyds Bank Corporate Markets` senior oil analyst Simon Cooke-Yarborough.





Most of the 33 analysts, banks and government agencies who contributed lifted their forecasts, with U.S. prices expected to average US$86.36 a barrel in 2011, up from US$83.66 a barrel in November`s poll.




Read the full article ]here.

 

[Ally]

Electric cars still don't make sense





Only one week after the much-hyped rollout of electric cars at the Los Angeles Auto Show, Canadian news media carried reports about how Ontario electricity costs are expected to double over the next 20 years.





That forecast must have Ontarians questioning whether buying an electric car is a good idea. But there are other questions all Canadians would be wise to ask about electric cars, and the electricity needed to power them. Let's put those questions into perspective.





- Will there be enough electricity?





Even the staggering electricity rate increases announced by Ontario would not generate nearly enough power to handle a large auto-recharge load, nor could already stretched power grids handle it. Hydro-Quebec recently said its distribution grid could accommodate a meagre 1,000 car plug-ins. In other provinces also, costly retooling of power generation, main line transmission and local distribution grids would be required.





- Won't wind and solar generate a lot of the power needed for electric cars?




Read the full article ]here.

 

[Ally]

Credit unions say household debt no big deal





Efforts by chiefs of the big banks to slow the growth of Canada`s booming mortgage market are unjustified and in fact could set off a housing slump, the thing the banks most want to avoid, warns the chief economist of Central 1 Credit Union, the umbrella group for credit unions in British Columbia and Ontario.





`I don`t see a price bubble and I don`t see that we need the mortgage criteria tightened as is suggested in some quarters,` said Helmut Pastrick.





The comments come on the heels of warnings from several top bank executives, including Ed Clark, chief executive of Toronto-Dominion Bank, that consumers are carrying excessive debt, especially around mortgages, and that`s made them vulnerable to economic shocks.





They fear that a rise in interest rates or deterioration in employment could leave many borrowers unable to meet their payments.




Read the full article ]here.