A Money Coach in Canada

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10615906_0ca81abb7f_m.jpgAny readers from Calgary or Montreal? I’m interested in your anecdotal take on the net economic benefit or cost when you hosted the Olympics.
Full disclosure: I voted for the olympics to come. I envisioned the many jobs that would be created. I wanted the funding for infrastructure from other levels of government. I wanted the world to visit Vancouver.

Increasingly, I’m regretting my vote. The economics aren’t playing out the way I had thought. For instance:

BC Hydro donated $20,000,000.00 (yes, $20 million) in services. I’m guessing that’s not sitting around in a surplus, so guess who’s footing that bill. You and me, bro.

Vancouver Airport Authority has just signed up as an official sponsor, providing special amenities. It’s anybody’s guess what the dollar amount is. Watch for airport improvement fee hikes.

And MP David Emerson (he’s the one who crossed the floor) has committed $20,000,000.00 of federal funding (yes, $20 million again) to the opening ceremonies. To the opening ceremonies. (that’s some party. I haven’t been invited. Have you been invited?)

And then there’s all the extras which may, or may not, be Olympics linked: $150m to repair BC Place roof. Funding for the streetcar demonstration project. Extra police costs.

I actually don’t mind paying taxes so much, for things like social housing, or help for people with mental illness, or keeping uni education affordable, or re-employment programs.

But $20m on the opening ceremonies alone? When we somehow can’t figure out how to house the homeless lunatic who sleeps next to the vent on the building across the street from me?

I’m losing my enthusiasm.

Photo credit: KK

Last Tuesday, I wrote my Angst Post about our economy which may be going you-know-where in a you-know-what.

The first of April, 2008 is not making me feel any better at all, especially after a VP of Citibank issued  this press release.

Note: the explanation gets more clear about partway down the page.

2085541144_b925053054.jpgI’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)

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

D20070324_30_T20070306_St. James Anglican Church,
originally uploaded by PhotoLanguage.

Firefox eats Internet Explorer

I’m reading a book called Wikinomics.

You know how the music industry has been turned on its head by all these who-do-they-think-they-are artists who skip the Big Major Record Labels altogether and make their own recordings? Create a great MySpace page, get 1,000 true fans, sell directly, and are set for life? Or how more people are leaving IE in favour of Firefox?

Wikinomics argues that this is the way of the future. Bye-bye (and good riddance?) big major Corporations; hello business models based on collaboration and a radical egalitarianism like this T-shirt business. These businesses don’t have to market to you. Instead, they win your trust by delivering the genuine goods – or you’ll hear otherwise on facebook or the blogosphere.

Recently I switched phone providers (landline). Did I go to the corporate websites for their pitch? Not a chance. I surfed blogs and forums and overwhelmingly heard from consumers: Vonage – NOT! Shaw Digital – thumbs up (and for the record I’ve had a positive experience with Shaw).

Q1 for Readers: Will more and more business models be based on collaboration, including customers in the design of their product, and gain customers by grassroots marketing? What do you think? Are corporations going the way of the dinosaurs?

Q2 for Readers: What sources do you use for purchase decisions? Do you think businesses generally give an honest story in their marketing? Or are you cynical, and opt for finding out what other people are saying about a product instead?

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