March 29, 2011

Tough Economic Times Ahead

CANADA/POLITICS - Consumer confidence fell almost 6% in March, but its just one sign of a growing economic crisis.

Bailouts, buyouts and stimulus packages have all failed to boost the economy back to pre-2007 levels. And why should they? They're just bandaids measures, not real solutions for the serious problem with North America's manufacturing sector.

Consumer confidence measures how much people are spending, and Canada's CC levels are leagues ahead of the USA's thank to Canada's stronger mining and oil sectors, whereas the USA is more dependent on manufacturing. In March Consumer Confidence fell to 83.7 from 89.3 in February. Consumer confidence is now worse than it was in March 2010.

Canadians are becoming increasingly worried about their finances, part of the pre and post-xmas phenomenon. Before the Christmas shopping season Consumer Confidence routinely goes up because people think the economy will get better with lots of xmas sales. But in January when the credit card bills come people become worried about finances again.

What doesn't help is that many gifts are manufactured overseas, boosting the economy in China, Taiwan and so forth, often with no positive impact whatsoever on the North American economy because our trade deficit is so high (around half a trillion USD / year).

Here is some interesting stats for you to consider:

USA Interest Rate 0.25%
USA GDP Growth Rate 3.1%
USA Inflation Rate 2.1%
USA Jobless Rate 8.9%
USA Budget Deficit -$4.08 billion per day.

Meanwhile back in Canada...

25% of Canadians are in worse financial shape than they were 6 months ago, up 2.4% from February.

According to the report Canadians have been in worse and worse financial shape "for 30 consecutive months"

Less than 1% of people said their finances got better.

20% of Canadians say they expect their finances to get even more worse in 6 months time.

Meanwhile soaring oil ($103 USD) and gasoline prices aren't helping. Thanks to unrest in the Middle East we've seen the return of "hundred dollar oil" and with a Canadian election coming in mere weeks (and an American election coming in 2012) we can expect economics to be a big issue.

Record gold prices also suggest that many of the financial gurus know even worse economic times are coming.


Weird question... what is more important to you? Paying your credit card bill or your mortgage?

Apparently many Americans are dragging their feet on mortgage payments and paying their credit card debts first, and yet at the same time credit card debt in both the USA and Canada are soaring to record highs.

The danger of this unusual phenomenon is that many people will end up homeless, people will default on their mortgages, and banks will end up holding the debts when the real estate market crashes again.


With unemployment still high, another real estate market collapse coming, the next thing we can expect to happen is a credit crunch with the credit card companies. Eventually the debt will get so high that people will just plain start refusing to pay their credit card bills.

And when that happens we're going to be facing some extremely tough economic times.

At which point our governments are going to have no choice but to find a real solution to our economic problems instead of these bogus bailouts which only fatten the wallets of bankers.

See also The Enslavement of the American People.

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