US recession?

[d_rawk]

Yes? No?

If so, how deeply does it affect Canada? Is the sub-prime fiasco just a flash in the pan, or does it dig in?

[Dr_Evil_Mouse]

I gather they're running at rather a deficit right now - cost of bombs and bullets and all that. My sense is that it's a spiraling vortex that will suck in everything in its economic and social radius.

Apparently, ever local police forces are having to buy their own bullets these days. No kidding - they're having to complain about it.

[d_rawk]

Doesn't the demand for bombs and bullets help the US economy overall though? (Local forces do stand on their own, unfortunately -- and as always, must make due with what they can scrape out).

I'm particularly interested in the fallout from all of these ill-advised loans. I can see this spiraling into something beyond anyone's control ..

[Dr_Evil_Mouse]

Spiral's been going on for a while, evidently.

Link to above point -

Ashville Police Paying More for Bullets

ASHEVILLE — With wartime demand for bullets high, police departments nationwide are waiting longer and paying more for certain types of ammunition.

In Asheville, the Police Department waits about 10 months for bullets that officers could once get in about a month or two.

“And that’s if we’re lucky,†Lt. Kevin West said. “It’s been a terrible problem for us. We’ve had to be as creative as we can to get ammunition for our .223 rifles, and it’s even become an issue for the .45 (caliber bullets).â€

Officers patrolling neighborhoods won’t be running out of ammunition, but the shortage has caused departments to order bullets further in advance.

Beyond demands from fighting in Iraq and Afghanistan, ammunition distributors also cite a shortage of raw materials used to make bullets, which has driven up costs.

West said 1,000 rounds of .45-caliber ammunition cost about $235 last year. Now, the Police Department is paying $324.60 for the same amount of ammo.

The department has about 185 sworn personnel who shoot between 300 and 400 pistol bullets for qualification and training a year, which is where most of the ammunition gets used.

For this fiscal year, the Asheville department is looking to spend about $24,000 to buy 60,000 rounds of .45-caliber bullets and about 15,000 rounds of rifle ammunition.

Lt. Gary Gudac said he expects to see a significant price increase when the latest state bid contract prices come out.

“We’re still able to handle any situation that would arise,†Gudac said. “It’s maybe making us plan more in terms of long-term training needs because we don’t want to use up all of our ammo if some sort of tactical situation would arise.â€

Crunch forces cutbacks

Gudac said the ammunition crunch has forced the department to cut back on sending officers to firearm instructor training.

“If it’s not something the department is doing and it requires ammunition, we’re not sending officers there right now,†Gudac said. “They can go on their own if they want to supply their own ammo.â€

[etc.]

[hamilton]

Yes? No?

If so, how deeply does it affect Canada? Is the sub-prime fiasco just a flash in the pan, or does it dig in?

US mortgage woes felt worldwide.

[Blane]

well, in the space of a month I've lost all the interest I had earned in 1.5 years of long-term saving. Wild shit. What the hell you gonna do though?

[The Chameleon]

The US is in a recession, but they have learned the valuable lesson that if you don't call it a recession, it doesn't impact as bad on the public...

The cost of the war is killig them.

[Kanada Kev]

The cost of the war is killig them.

And what if they had to pay for all of the "private" soldiers over there?

How about another $30 BILLION in arms to Israel?

http://news.bbc.co.uk/2/hi/middle_east/6948981.stm

[jonyak]

Doesn't the demand for bombs and bullets help the US economy overall though? (Local forces do stand on their own, unfortunately -- and as always, must make due with what they can scrape out).

They probably get all that stuff made oversea's cause its cheaper... oh the irony.

[d_rawk]

The war has taken its toil in lots of ways, and it is tempting to put everything at its door, but I think it is a little too simple to attribute what is happening in the markets - and now, by extension, outside of them - to all of that. You've got some nastiness born out of good conditions cum bad conditions through excessive greed and risk, a global ripple, and a sinking (or at least faltering) economic ship immediately south.

Certainly the federal gov has gotten itself mired in debt and deficit, but that doesn't normally phase the money managers who are just now having the major panic attacks. There is a lot of unrecoverable money out there right now .. this shit looks like it may go deep. Even the conservative stalwarts are beginning to show sweat beads on their brow.

My initial post was about a week ago .. yesterday Flaherty came out sounding the alarms and basically begging the banks to help stave things off Canada side. And the BoC has begun pumping money into the Canadian markets to keep them afloat and above the panic. This isn't a doom and gloom 'everything is coming to an end' type thing, but it seems as though we are in a cycle where things are going to get awfully tight for awhile. And I don't think it has anything at all to do with bombs and bullets.

[d_rawk]

Fed rate cut tomorrow. Smart money on .25%

well, in the space of a month I've lost all the interest I had earned in 1.5 years of long-term saving. Wild sh!t. What the hell you gonna do though?

Heavy. Where've you been stashing your cash? Mutual funds?

[d_rawk]

.. and the smart money consensus was too conservative by half. 50 point cut. That smell in the air is euphoria.

But does it fix anything?

[Biggest Fan]

You know what they say 'a little knowledge is a dangerous thing'. With my disclaimer out of the way....

As far as the housing (credit) thing I do not think it will get 'much' worse but it is not going to correct itself any time soon. The next big issue is potential inflationary pressures in food (-n- energy). As far as the cost of the war as an issue that would'nt be as such a big deal if it were not for the issue of the 'budgets' that had been passed by the 'fiscally responsible' conservatives. An oxymoron if there ever was one 'fiscally responsible politician'.

As far as any lingering effect on Canada; that depends on the amount of exposure It has on all of the bad loans,and food and energy prices.

My guess on the long term impact depends on how responsible our politcians are during this time. With that said I hope we as individuals have been taking care of our own houses.

Edited September 18, 2007 by Guest

[d_rawk]

Luckily exposure here to the bad loans and credit crunch has been fairly minimal, I think. Seems no-one here was playing the risky sub-prime game.

The housing and mortgage industries are fugged for awhile. Where does consumer spending go? Anyone on the board with an economic tilt? This sort of thing isn't my bag.

Bears and Stearns is saying 35% chance of US recession. Greenspan saying about the same at 1/3rd. All I know is you guys have got to shape up your dollar .. I'm getting killed on exchange. 98.64 cents and counting. You gonna let us Canucks slap you around like that?

[ollie]

The housing and mortgage industries are fugged for awhile. Where does consumer spending go? Anyone on the board with an economic tilt? This sort of thing isn't my bag.

So then does this situation favour home buyers? If the mortgage industry is fucked, does that mean the consumer can take advantage of it? Speaking in Canada of course.

[bradm]

If you're currently in a financial situation that would have qualified you for a mortgage before the "sub-prime" stuff started happening (and if you go for something plain and traditional, like a 5% or 10% down payment, and a regular type of mortgage, as opposed to something like an interest-only one), you shouldn't have a problem getting a mortgage now. (Remember, banks need to lend money to make money; if they didn't give out mortgages, their profits would dry up.)

I think the main way the consumer can take advantage of the burst in the housing bubble isn't in the mortgage area, but in the home price area. It's looking like there are going to be a lot of foreclosures (especially in the USA; I'm not sure about Canada), and a reduction in prices (from the bubble level, but they're still reductions), and you might be able to jump on cheap stuff.

To me, the "right time" to buy a house has much more to do with whether it's the right time for the buyer than whether it's the right time for what's being bought. If you have the money (across the board, taking into account monthly income, regular savings [including emergency funds], retirement savings, credit card debt [if any], etc.) to afford the kind of house you want, and if you think you're personally ready (in terms of responsibility and wanting to settle in to ownership), then start looking (which is free).

Aloha,

Brad

[ollie]

I have been casually looking and I want to buy sometime within the next year but I'm willing to wait if this means the house market will become more reasonable because right now prices are too high. Yes, I know, not compared to other cities like Toronto and Vancouver, but too high nonetheless.

[bradm]

I have been casually looking and I want to buy sometime within the next year but I'm willing to wait if this means the house market will become more reasonable because right now prices are too high.

It might be worthwhile setting aside some time once in a while (every week, every other week, whatever) and survey whatever listings you can find, as a plum place might pop up with a seller who's motivated enough to have a price that's lower than you'd expect. (In other words, while there is an overall housing market, with an average/median price, each house for sale also defines its own micro-market, which will be somewhere within that overall market's price range.)

As well, if you're planning on waiting for a year (or so), take that as an opportunity to (if necessary) get the rest of your financial house (no pun intended) in order: savings, an emergency fund, insurance, retirement plan, elimination of debt (if any), investments, etc.

Aloha,

Brad

[phishtaper]

good advice, brad. Ollie, scan the www.mls.ca listings on a regular basis so you will be able to determine what a good deal is in specific areas of town. get an agent now and make sure you have all of your ducks in order when you do go to buy, because the best deals will often be had quickly. submitting an offer the day of listing is sometimes an effective strategy, but you have to be prepared to do that. dont expect prices to drop. at best, they will not increase. the market is still quite healthy in most of Ontario.

[Kanada Kev]

Another good idea would be to get your financing lined-up. Go to a Mortgage Broker and get pre-approved at a good rate. That will stay locked-in for some time, and you'll probably be able to extend it. Then you're good to go when something comes up and have a lower interest rate just in case they start to rise.

[phishtaper]

the CMHC home buyer's guide is an excellent resource. it lists everything you need to do and provides some great tips.

[ollie]

Thanks for the advice guys, I appreciate it but I was really just asking a much broader question, which phishtaper answered with this:

...dont expect prices to drop. at best, they will not increase. the market is still quite healthy in most of Ontario.

[allison]

Economics is one of those things that hurts my head but this is my fairly shallow take on it...

One of the things that is happening with both the recession ...and forseeably a housing trend in Canada, is that for the last while consumers have bought into the idea that buying a house at all costs is a good idea AND that it is an investment.So people have taken on huge debt loads to finance the house in the first place, enticed by low credit rates.As they gain equity however, they are in turn using it to finance further expenditures.Which would be alright the equity was real...but it isn't.

As the house gains in value, so does your equity.No brainer.But the issue is that your house is gaining in value because the market is gaining...so should you sell your house you'll need the SAME cash to buy something similiar.It's not real equity.

Without an input of cash into your house..renovations or accelerated payments..the equity isn't tangible...yet most people perceive it to be, borrow against it, escalate their lifestyle, servicing a higher and higher debt without really furthering their asset base.

Which isn't to say buying a house isn't a good idea...it just probably shouldn't be viewed as investment leveraging...but is handy in the latter years of your life when you may not need the same size of house or a house at all(like when you are dead and can leave the equity behind.)

At base then the recession is sort of a result of the populations approach to credit and lifestyle, falsely lead and supported by the government for those fuzzy, paternal, we helped you have a home votes.

Also Ollie...make sure your agent isn't an idiot.My last one was and while suing him is kind of fun...it's not that fun.

[phishtaper]

...make sure your agent isn't an idiot.My last one was and while suing him is kind of fun...it's not that fun.

oh, do tell.

we had an agent several years ago that would show us properties that were exactly what we didnt want (and they were often ones for which she was the listing agent - double commission, cha-ching) or she would send us emails with listings that "just hit the market" but we'd already seen them on line two weeks prior. we got rid of her.

yes, a good agent is hugely important.

[ollie]

Which isn't to say buying a house isn't a good idea...it just probably shouldn't be viewed as investment leveraging...but is handy in the latter years of your life when you may not need the same size of house or a house at all(like when you are dead and can leave the equity behind.)

Hey Allison, would you mind talking to my dad for me. I get the "Why are you still renting?" speech everytime I see him.