I’m feeling a bit doom and gloomy about the economy. One possible bright side is that the people who live and work here in Vancouver, who make it a city and not a ghost town, may yet afford a place here. So take heart, Krystal.

It all has to do with this Asset Backed Commercial Paper problem. Don’t run away from me. It won’t be boring, I promise. And remember, I’m a money coach, I’m not an economist, so what follows may be way off base. But here’s the future as I see it:

Joe wants to buy Sally’s $300K condo. He doesn’t have $300K available just then (he’s not John Chow).

So Joe goes to Friendly Credit Union or Big Bank to borrow the money.

Now here’s the thing. Do you think Friendly Credit Union has the $300K sitting around? No! They don’t either! (seriously. they don’t.) So how do they get the money to pay Sally out? Two ways:

1. For every $1 dollar banks do have sitting around (in term deposits, gic’s, savings etc) they can essentially use their own credit to give Sally approximately $20 or a little less. (Think of it a bit like writing yourself a cheque on your line of credit.) So let’s say they have $10K in savings. They can pay out Sally $210 and owe themselves $200 which of course they’ll get from Joe over the years. But where’s the remaining $90K they still need to pay Sally?

2. Friendly Credit Union or Big Bank would go to outside sources, and “sell” that part of the mortgage to a third party. With the proceeds of the sale, Friendly Credit Union would then pay out Sally. Often, these third parties were american companies. And often these companies also provided mortgages for less than stellar people … who increasingly defaulted their payments in 2007. So now these companies are extremely jittery about lending out their money anymore – if they even have any to lend.

What that means is this. In the coming months, Friendly Credit Unions and Big Banks will have to be a lot more cautious about who they lend to. Why? Because they can only go to those third parties if Joe is a super-secure kinda guy. If he’s not, the third party companies won’t touch him, and the FCU or BB won’t be able to pull together the cash to pay out Sally.

It also means the FCUs and BBs are going to do all they can to get some cash coming in (see point #1 above if you don’t understand why) so expect pretty good rates on term deposits and high interest savings.

Here’s the doom and gloom part. Say Joe wasn’t a good risk. He’s more likely to get turned down than ever before. So Sally doesn’t get to sell her place. But there’s worse news. Sally isn’t the greatest risk in the world herself, and her mortgage has is up for renewal. She actually rents her place out (she doesn’t live in it) and doesn’t get as much in rent as her monthly mortgage payments. So Friendly Credit Union or Big Bank may end up not renewing her mortgage. So Sally goes from Bank to Bank and finally finds one who will lend to her – but at an interest rate so high that her cash flow would mean no lattes or ski trips for the year.

What would you do if you were Sally? You may start to feel pretty anxious. You may decide it’s not worth it, and dump the property. You may drop the price of your place to get someone – anyone – to take it off your hands.

And that’s where Krystal and all the other average joe/ette Vancouverites may find a gleam of hope.

I don’t know if I should laugh or cry. Or if I should take my own future-telling seriously.

Readers: what do you think? Will the other factors undergirding the Vancouver economy keep housing prices up? Or will the ‘credit crunch’ lead to falling prices and a fair bit of panic? Is the cold and rain of Vancouver just getting to me and skewing my perspective?

Photo credit: Azrainman (who apparently shares my sense of gloom)

Maggie, usually the dashund girl with the iron stomach, threw up a million times last night, poor thing.

Last time she got sick in the middle of the night (allergic reaction to bug sting) I spent 1am – 4am in pet emerg, and spent $300 only to find out really she just needed an over-the-counter antihistamine to reduce the swelling.

That got me thinking last night. I have saved a trip to europe by purchasing no-name equivalents of tylenol, asperin etc. I also like shopping at Winners.

Obviously I never want to put my ‘hounds health at risk, but this got me thinking: what are the doggy equivalents?

For example:

1. I purchased an Expensive Bottle of Oil that I add to their food to keep the boy dog’s skin from itching. Recently, I heard bottles of fish-oil-pills will do the same. Anyone know if that’s true? Or other suggestions?
2. I purchase raw chicken wing tips from my favourite hi-end doggy store. There’s a really inexpensive human-meat store a block away. Any reason it would be less safe to buy the same from them? And spend my savings on other stuff at the hi-end doggy store like those gorgeous pillows?
3. Any suggestions of plants that are good to help the dogs throw up when they need to? (sorry to be gross on the blog)
4. What about cheap toys? (they love squeeky stuff)
5. And if anyone can recommend good value dog walkers that specialize in small dogs (Vancouver) let me know.

Readers: as you can see, these guys really want to know!

Today is an extremely important day in my faith tradition: Good (or “holy”) Friday.

Frequently, the cruxifixion is viewed through the lens of economics. It goes something like this:

We sinned. A price had to be paid. The price was death. God sent Jesus, his son, to pay the price. Because the price has been paid, we are now forgiven and have full access to the life of God, and ultimately, to eternal life with God.

I don’t know about you (if you think about these kinds of things), but this model has left me with a lot of questions.

If God is God, why can’t He/She simply opt to forgive without insisting on a price? And how does Jesus’ death somehow make up for all the lousy things I do? (the person I disrespected probably still feels the sting, regardless of Jesus’ death).

I am willing to acknowledge that simply because I don’t fully grasp this model does not mean there isn’t Truth in this model.

But there’s another quiet way of understanding the cruxifixion that has coexisted throughout the centuries. It has been espoused by such notables as Dietrich Bonhoeffer. It’s one I can more fully enter into.

The “Suffering Servant” model goes (very) roughly like this: God loved humans enough to enter into our suffering. He entered life on planet earth and made Himself (not being sexist here – Jesus as far as we know opted for the male gender in this instance) vulnerable to all of its ‘slings and arrows’. He knew what is was to be hungry. He experienced being painfully strapped for cash. He knew the hopelessness of being part of an oppressed people. He knew what is was like to put himself out there and say things he knew were true, and not be taken seriously.  until enough people started buying in. then:  He knew what happened to people who spoke out against “The System” – but he did it anyways. He experienced the highs of mass approval, only to be dismissed and rejected when he didn’t conform to people’s expectations. He experienced the worst that humans can inflict on one another – raw torture, degradation and ultimately, being nailed hands and feet onto a couple piece of wood – while his mom and best friend watched.

So today, I will observe Good Friday in a way that aligns more with this model. With several other citizens (christians and perhaps others from other faiths) I will be walking the “Stations of the Cross” in a very different way. You can find the details here.

Later, I will be a bit more traditional and spend some quiet time in my own parish church in the dtes of Vancouver. With me will be sex-trade workers, professors, people with mental illness who will disrupt the service, classically trained musicians, my ex, professionals, the priests’ dog, Bear, this money coach, and anyone else who wants to take a moment to acknowledge the mysterious, extraordinary man, Jesus, who lived with us for a while.

D20070324_30_T20070306_St. James Anglican Church,
originally uploaded by PhotoLanguage.

I did my history degree with a group of 13 crazy-bright fellow students. Alas, I was bright, but not crazy-bright so I watch their brilliant careers from afar. One of them, David Fraser, is one of Canada’s top privacy lawyers. He’s a really good guy to boot – I feel better for Canada knowing he’s part of the mix. He recently posted on a topic I know something about: canadian law as it relates to us bankers reporting suspicious activity. He points out that Canada declined to be as intrusive as US. law. Spitzer would not have been caught here. And that’s a good thing, he argues (and I agree). Here’s his guest post:

______________________________________________

The downfall of Eliot Spitzer, former governor of New York, was precipitated by a financial information system that has been seen by Canadians as too intrusive to implement in Canada. The system requires financial services companies to report suspicious looking transactions. High profile politicos are tagged for closer scrutiny in an effort to detect blackmail and corruption. (See: How an information system helped nail Eliot Spitzer and a prostitution ring Between the Lines ZDNet.com.)

To me, this is an example of how intrusive legislation designed to go after big crimes (terrorism financing, money laundering, corruption) often will be used to prosecute much more minor ones. In the case of Spitzer, it’s a “minor misdemeanor“.

While Canada has money laundering laws and requirements to report suspicious transactions, the Canadian government has declined to put additional scrutiny on “politically exposed persons”:

globeandmail.com: Ottawa dropped plan for more scrutiny

PAUL WALDIE

From Thursday’s Globe and Mail

March 12, 2008 at 10:25 PM EDT

Canada quietly dropped an anti-money-laundering proposal for politicians that would have automatically scrutinized the type of financial transaction New York Governor Eliot Spitzer used to hire prostitutes.

In 2005, the Department of Finance recommended including so called “politically exposed persons,” or PEPs, on the list of people whose financial dealings would receive more scrutiny under the anti-money-laundering legislation. That legislation requires banks, casinos, real-estate agents and others to report suspicious financial transactions as well as all transactions of more than $10,000.

At the time, the department defined PEPs as politicians, judges, military leaders, senior bureaucrats or senior executives of Crown corporations. The proposal would have required banks to review large transactions by these people and “conduct enhanced ongoing monitoring of the business relationship” that led to the transaction.

Finance officials said PEPs had become higher-risk customers for financial institutions “as they have potentially greater opportunities to engage in corrupt activities.” They promised that the measure would show that “Canada will do its part in the global fight against corruption.”

However, the proposal was dropped last year after many groups, including the federal Privacy Commissioner, complained that the definition of PEP was too broad and could have included thousands of Canadians. Instead, the government opted to include only foreign PEPs, defined generally as foreign political, military or business figures who hold accounts in Canadian institutions. That change takes effect in June.

The United States has generally stricter reporting rules and it has included foreign PEPs for years. Since the September, 2001, terrorist attacks, federal officials have also pushed U.S. banks to track accounts held by high-profile domestic politicians as well, in order to guard against bribery.

That extra scrutiny appears to have tripped up Mr. Spitzer. According to various news reports, two banks became suspicious last summer about money transfers Mr. Spitzer made from his accounts. Even though the amounts were each less than $10,000, the banks filed Suspicious Activity Reports with the U.S. Treasury Department. Those officials passed on the information to investigators at the Internal Revenue Service who were looking into the prostitution ring.

Canadian officials said yesterday that there are no plans to change our reporting system to specifically include more scrutiny of politicians. They added that our system is in line with many other countries and requires reporting of all suspicious transactions.

“If the financial institution or the casino or the real-estate agent feels there’s a potential here that it might be linked to money laundering or criminal activity, there’s a legal requirement on them to report it,” said Peter Lamey, a spokesman for the Financial Transactions and Reports Analysis Centre, the federal agency that collects and analyzes Canadian reports.

“We provide guidelines around what might be determined suspicious and how you might come to that determination.”

Readers: do you agree with me, that the less intrusive requirements are a good thing? Or do you wish us bankers would specifically monitor political figures more closely to detect corruption?

Lest anyone think I walk around in sackcloth and ashes after Monday’s post – I assure you, I am not averse to good things in life, and esp. not averse to some rock n’ roll! (but even these won’t compensate for the impending death of cbc radio 2)

Thanks to Bargainista for pointing out 99 Nights – in which REM posts a video a night til Mar 30, which you can download! HD no less.
Thanks to Krystal for pointing out the Pemberton Music Festival (who knew?) featuring Coldplay, Tragically Hip, Tom Petty, 9 Inch Nails.

Thanks to Steve for pointing out the set sale for the X-Files movie:

Thur. Mar 20|10am-5pm|Northshore Studios|555 Brooksbank Ave., Construction Mill 1| North Vancouver.