November 2010 Miscellaneous Economic Fundamentals

[Ally]

News articles for November 2010.

 

[Ally]

Where the rich can go when they need a loan

Scotiabank has stolen the march on its rivals in the race to provide simplified lending to the 1.1 million Canadian families with net worths of $1-million. Scotia Private Client Group has formally announced a program that`s been in the pilot stage since April: 200 affluent clients already use its Total Wealth Credit Solution.

In an apparent first, clients get consolidated views of all financial assets held at different parts of the bank, then borrow on the combined collateral value. This might include non-registered investments held at full service broker unit ScotiaMc-Leod or discount brokerage Scotia iTRADE, GICs held at retail branches, a principal residence or recreational property and the cash surrender value of insurance policies.

Head of private banking Andrew Wright says clients want the flexibility to borrow quickly when opportunities arise: whether in temporary dips in the stock market or when bargains arise in real estate or business.

Wright says it was inspired by Brett Wilson, chairman of Canoe Financial and lead deal-maker on Dragon`s Den, the venture capital reality TV show. Wilson says entrepreneurs need uncomplicated, convenient access to integrated but flexible credit platforms.

Read the full article here.

 

[Ally]

Couples & Money Pt. 3: Good vs. Bad Debt
Show-and-tell doesn`t stop in grade school. It just gets more expensive as we age.

Whether you covet your neighbour`s turbo engine lawnmower or kid sister`s vacation property, peer pressure, greed and easy credit perpetuates debt. The Certified General Accountants Association of Canada released a study in May 2010 revealing that Canadians collectively owe $1.4 trillion which is 2.5 times greater than in 1989 and equates to $41,740 per person.

Canadians chalk up the increase to inflation. But experts say our desire to act richer than we are and our attitudes toward debt are the leading causes of growth, rather than the 20- to 30-something crowd using it as a tool to build net worth.

Surely we`re happier than our debt-free grandparents, right? False. Studies show Canadians suffer more now than ever before from rising rates of depression, anxiety, burnout and stress. Debt contributes to dissatisfaction because it`s expensive, restrictive, and impacts health and personal relationships. More than 80 per cent of couples report they argue about money problems, namely debt.

If you want to reduce stress, live a debt-free life: Besides avoiding debt completely, the best strategy is to only borrow to invest in assets (good debt) and avoid debts that don`t help increase your net worth (bad debt). In moderation, good debt helps build net worth through owing a home, building a business, investing in retirement, etc. Interest rates are competitive and payment plans flexible.

Read the full article here.

 

[Ally]

Pay down mortgage faster

Buying a home and building equity over time is a great investment in your future.

While homebuyers can look forward to one day being "mortgage-free," renters will continue to pay rent indefinitely and will likely see their rent payments increase significantly as time goes by.

Even though the average time to pay off a mortgage is about 25 years, you can speed up the process. When you are buying a home, ask your Realtor to advise you on ways you can pay down your mortgage as quickly as possible. This information will be helpful when you are arranging financing on your home and be sure to discuss these various options with your financial institution before choosing a mortgage.

AMORTIZATION SCHEDULE

One of the best ways to pay off your mortgage faster is to shorten the amortization period. By choosing a shorter amortization, you will not only pay for your home in less time, but you will make substantial savings in interest too.

Read the full article here.

 

[Ally]

Stock & Awe - A great financial primer

Because platinum cards don`t buy credibility.

There is a defining moment, in every young professional`s life, when carefree living is no longer charming and bohemian, it`s just poor.

From socialite to social pariah, Hilary Doyle, rogue business reporter, is living proof that economics isn`t all theoretical.

If this girl is to maintain both career and shoe collection, if she is to retire before joining the century club, if she is to move out of storage and replace her lawn chair with an actual mattress, this woman will need a miracle, a dead aunt, and an army of financial experts (who`ll work for free), to rocket her out of the red and restore her rep.

Read the full article here.

 

[Ally]

Reno website sheds light on contractors

Nancy Peterson wanted to give her 60-year-old house a facelift — a new kitchen, an updated master bathroom, new windows and refinished hardwood floors.

There was just one problem. She didn`t know any reputable contractors. "It was pretty daunting," she says.

Realizing other homeowners faced the same situation, Peterson decided to do some problem-solving. In 2006, she launched

HomeStars: a website where homeowners can post reviews of contractors, painters, electricians, plumbers and other renovation-related service providers.

Jump ahead four years. The site has 250,000 companies listed on it from across Canada, including 50,000 in Toronto. Now, if you want to hire an electrician, you`re no longer in the dark about finding someone other people liked. "Homeowners are more empowered," Peterson says.

Read the full article here.

 

[Ally]

Province blocks homeowner trying to sell house on the cheap

A St. James man is angry provincial officials are blocking his attempts to sell his home on the national Multiple Listing Service using a cut-rate real estate agent based in Ottawa.

Stephan Carson hired Ottawa realtor Joe William, who posted Carson`s Collegiate Street home on the national Multiple Listing Service (mls.ca) for 10 days. But then William got an email from the Manitoba Securities Commission instructing him to remove the listing on the grounds he was violating provincial law because he`s not licensed to sell homes in Manitoba.

"We believe we`ve been bullied out of listing our home on mls.ca," Carson said.

Carson said he hired William because of a recent change in Canadian Real Estate Association policy allowing sellers to list their homes on the national MLS by hiring an agent for a flat fee instead of the traditional commission.

Carson said he couldn`t find an agent in Manitoba willing to list his home for a fee, but did find four others, all based in Ontario.

"If we could have found one in the province, we would have used him," Carson said. "But we went with Joe (William) because he was inexpensive and he had a reputation."

Read the full article here.

 

[Ally]

Refinance attemp undercovers appraisal shocker

In 2005, Shahin and Nasila Edalatdju contracted to buy four Chicago condominium units from developer American Invsco, contingent on the Edalatdjus` ability to obtain financing for the purchases.

Under Invsco`s 2-2-2 Lease Program, Invsco guaranteed the Edalatdjus sufficient monthly rental income to cover their debt service and other costs of owning the units for the first two years of ownership, according to court documents.

Also under the program, Invsco directed the Edalatdjus to Guaranteed Rate Inc. (GRI) for financing. GRI rendered its financing of the units contingent upon each unit being appraised at the purchase price, and retained appraiser Lazer to appraise the units. The appraisals came in satisfactorily and all four loans and purchase transactions closed.

When the Edalatdjus sought to refinance the units in 2007, GRI refused and took more than two months to provide the Edalatdjus with the copies of the appraisal reports they requested, claiming they were lost, court documents state.

Read the full article here.

 

[Ally]

Legislating light bulbs has a dark side

I recently happened upon a forlorn news item that put me into a slow boil.

"The last major GE factory making ordinary incandescent light bulbs in the United States is closing, marking a small, sad exit for a product and company that can trace their roots to Thomas Edison`s innovations in the 1870s," the story began.

The factory, in Winchester, Va., is closing as a result of the 2007 Energy Independence and Security Act, passed by Congress, that set standards essentially banning ordinary incandescents by 2014. The law will, of course, force millions of households to switch to more efficient bulbs.

In 2007, the Harper government also decided incandescent bulbs would be phased out in Canada in 2012. In Europe, the phase-out of the traditional light bulb has already begun.

Read the full article here.

 

[Ally]

10 Market Myths that just got Debunked

Sell in May and go away is touted in the stock market, backed by the belief that the period from May to November is marked by weak growth. Yet Fisher debunks the myth by citing returns of the S&P 500 from December 31,1925 to December 31, 2009 and finding that June, July and August average at 4.51%, the strongest average of any three consecutive months.

Read the full article here.

 

[Ally]

Alberta deficit forecast to hit record $5 billion

The Alberta government`s deficit is expected to climb to a record $5 billion on the back of shrinking revenues and extra costs to deal with flooding, wildfires, and aid for farmers, according to the latest fiscal update released today.

While the province anticipates pulling in more money from oil and gas land sales than in the first quarter - an all-time high of $2.1 billion - several other revenue projections have been downgraded in the province`s financial forecast. See the government`s release and backgrounder herehttp://http://www.alberta.ca//acn/201011/2953774AD5C8B-B99A-31D8-24D7B031694EFFE7.html.

The Stelmach government expects to rake in less money from corporate and personal income taxes, $11 billion, down $571 million from August`s forecast.

Oil and gas royalties are also projected to drop $350 million from the first quarter, delivering about $7 billion to provincial coffers.

Read the full article here.

 

[Ally]

Calgary job growth to improve in 2011

CALGARY - Job growth is expected to gradually strengthen into 2011 as economic activity improves, says a report by Canada Mortgage and Housing Corp.

In its Housing Market Outlook, the CMHC said changes to the provincial royalty framework and sustained energy prices are expected to attract more investment and support employment growth.

In 2011, employment is forecast to rise 1.8 per cent in the Calgary region.

"Calgary`s unemployment rate peaked at 7.6 per cent in May 2010, reaching its highest level since 1996," said the housing market outlook.

"With the economy steadily improving and employment rising, the unemployment rate is forecast to average seven per cent in 2010 and decline to 6.4 per cent in 2011."

Read the full article here.

 

[Ally]

Calgary enjoys lowest inflation rate in country

CALGARY - Consumer prices in Calgary had the lowest rate of annual increase in the country in October.

Statistics Canada reported today that prices rose by 0.8 per cent from October 2009 and by 0.2 per cent from September.

In contrast, at the national level, consumer prices increased by 2.4 per cent in the 12 months to October, the largest increase since October 2008. They also rose by 0.4 per cent on a monthly basis.

In Alberta, the federal agency said prices were up 1.2 per cent on an annual basis and by 0.3 per cent on a monthly basis.

"Heading into the fourth and final quarter of 2010, Albertans were seeing a continuation of very soft price increases," said Todd Hirsch, senior economist with ATB Financial in Calgary. "But unlike the situation in the U.S., where slowing inflation is threatening actual price deflation, it appears that Alberta`s rate of price inflation has been generally stable over the past year."

Driving inflation in Alberta were higher prices for natural gas (11.1 per cent), new vehicles (5.2 per cent), and gasoline (4.5 per cent). Slowing inflation was household furnishing (- 4.0 per cent), public transportation (- 3.1 per cent), and women`s clothing (- 5.5 per cent), added Hirsch in a research note.

Read the full article here.

 

[Ally]

A first for Habitat for Humanity

A new townhouse in Mississauga marks a Canadian first for Habitat for Humanity.

Instead of the traditional build from the ground up, Habitat Mississauga acquired a partially finished townhouse at Daniels First Home Destination Drive II in Erin Mills and is putting the finishing touches on it. The project is partnership between Habitat, Daniels and the Citi Foundation.

The home will go to Shaukat, his wife and four sons, ages 9 to 15. The family came to Toronto from Pakistan in 2002 to seek a better life and educational opportunities for their children.

The family has been actively involved in the local community; Shaukat is coordinator of a local food bank, where his wife and children volunteer, and his wife is the current chairperson of the parent council at her children`s school. They initially lived in a small basement apartment before moving to the crowded two-bedroom rental apartment where they currently live. The whole family pitched in to contribute the "sweat equity" required by Habitat for Humanity home recipients. Shaukat, who had little construction experience, learned the ropes by volunteering on a previous Habitat build. They`ll receive the home in the spring.

Read the full article here.

 

[Ally]

10 ways to keep energy costs in check this winter

Warm air can leak out of a home from places small, such as electrical outlets, and large, such as picture windows. But there are steps you can take to close those gaps, beyond taping plastic to the windows (although that old standby certainly helps).

And keep in mind: Your utility bill isn`t the only reason to tighten up your home.

"When people are thinking of making these improvements, saving money is a huge issue," said Andrew Frowine, owner of the energy-auditing firm SaveGreenUSA in Peebles, Ohio. "But it`s not the only one.

For many people, the compelling thing is to make the home comfortable."

Read the full article here.

 

[Ally]

The 10 Commandments of Wealth & Happiness

I`ve been doing TV news stories about saving more, spending less, and avoiding debt for more than 20 years. And I`m now financially independent. But unlike most wealthy people you`ve read about online or seen on Oprah, I didn`t get this way overnight, nor did I do it by selling books or advice. I did it the same way you can: one paycheck at a time over many years.

One of my young staffers recently asked if I could condense everything I`ve learned into 10 simple ideas that would serve as a guide to those starting out, starting over, or maybe beginning to realize they`re not where they`d like to be. While certainly a challenge, it`s a worthy one. So here goes: the 10 commandments of achieving financial independence and being happier while you do it …

1. Thou shalt live like you`re going to die tomorrow, but invest like you`re going to live forever.

The ease of making money in stocks, real estate, or other risk-based assets is inversely proportional to your time horizon. In other words, making money over long periods of time is easy – making money overnight is the flip of a coin.

Money is like a tree: Plant it properly, care for it every so often, then wait patiently. Stare at a newly planted tree for 24 hours, and you`ll be convinced it`s not growing. Fixate on your investments the same way, and you could miss out on a game-changer.

Read the full article here.

 

[Ally]

Why Canada`s oil trumps Saudi crude

Hypocrisy is nothing new; perfection exists only in our imaginations or in the occasional saint. Still, that fact is no excuse to abuse such reality to any end. Case in point? Co-operative Credit Investments, a U.K.-based credit union, which often slams the oilsands. Their criticism, included in a 2008 report Co-operative helped publish with the World Wildlife Fund, proclaimed "such investments [the oilsands] are both environmentally and economically unsustainable and can only serve to undermine international efforts to combat climate change."

In an effort to show at least part of its shareholders` money would be put where the bank executives` mouths were, Co-operative also helped fund a legal challenge to the oilsands by partnering with Beaver Lake Cree, the First Nation that sued the provincial and federal governments and claims all sorts of deleterious effects from oilsands development.

There`s only one problem, at least for Co-operative Credit Investments: the U.K. bank and its funds invest in multiple projects that it publicly decries. For example, it owns tens of millions of dollars worth of stock in Total, BP, Shell and plenty of other oilsands companies.

This rather large inconsistency is revealed in Ezra Levant`s new book Ethical Oil -- The Case for Canada`s Oilsands. Levant, a Calgarian familiar to most Calgarians, is never one to back away from a challenge. He last took on "human rights" commissions after they decided the groups most intolerant in today`s society -- religious fundamentalists of an Islamist persuasion -- deserved a pass on scrutiny lest any critic be accused of "hate crimes".

Read the full article here.

 

[Ally]

Gas gaining on oil, summit told

He isn`t predicting the end of oil, but ARC Financial Corp.`s chief energy economist says things are likely to change dramatically within five years as natural gas becomes a global commodity.

In Peter Tertzakian`s view of the big picture, oil prices will rise -- perhaps to $100 a barrel for a short period -- but that level won`t be sustainable as nations turn from oil to natural gas and embrace new efficient technologies on a massive scale.

"We have to begin to think about how we are going to manage the ups and downs and the switch from oil to gas," Tertzakian told the Energy Services Summit on Thursday.

Today the industry is focused on the price of oil, but soon the more important question will be the cost of production, and Alberta is not an inexpensive producer, he said.

Oil demand in Europe and the U.S. has fallen in the past few years, while the market is being pushed up by rising demand from emerging nations -- with 40 per cent of that coming from China.

Read the full article here.

 

[Ally]

Yes, money can buy happiness

Does money buy happiness? We certainly behave as though it does, spending most of our waking hours pursuing it. If only we got that raise, owned that second home, third car or 3G iPad, things would be better, we tell ourselves. We would finally be happy.

Truth be told, people drastically overestimate the impact of changes in income on their well-being. In a survey I conducted with my colleagues Elizabeth Dunn and Lara Aknin at the University of British Columbia, we asked 315 Americans to rank their happiness on a 100-point scale and predict how happy they would be if they made ten different incomes, ranging from $5,000 up to $1,000,000. Those who reported earning $25,000 a year predicted that their happiness would double if they made $55,000. But when we measured the actual happiness of these two groups, the change was only 7%. Beyond that, our data showed that once people reach the median income in the U.S. (about $60,000), the happiness return on additional income is very small.

Hapless lotto winners, take heart. We did discover at least one way to buy happiness with your money: Give it away.

Why might this be the case? We hypothesize that making more money leads people to accumulate more and more material goods, but not to accrue the things that really make people happy--relationships with others. Think of the wealthy person who buys three homes with 15 guest bedrooms--yet finds himself without any friends or family to host. Even shopping, Americans` longtime preferred method of social interaction, now requires no social interaction at all. You can fill your 16-bedroom home with goods without leaving it. All you need is a cable modem and a PC.

Read the full article here. <script type=text/javascript>

 

[Ally]

In Pictures: 11 Movies Entrepreneurs should Watch

View the entire list here.