For God’s sake they should get a couple of thousand tugboats, some good strong rope, and tow this island somewhere closer to civilization. 

In the name of all things holy it’s far.  For God’s sake they should get a couple of thousand tugboats, some good strong rope, and tow this island somewhere closer to civilization.  For transparency I was fortunate to be able to sit at front of the bus for the flight over.  That gave me the opportunity to stretch out and get some sleep, some seven hours’ worth.  It was the other fifteen hours that I had to fill, and what I learned is that to pass that amount of time away you need a distraction.  Like food!  The flight attendants try to feed you at every moment.  “Mr. Bozic, is there anything I can get you?” Let me see, it’s been 22 minutes since my last meal, “sure, how about some dim sum and 4 bags of chips”.  I’m not kidding.

The real estate market is red hot here – This according to the cab driver who drove me to my hotel.  Property values are increasing by 10% annually, and he owns multiple properties. Hmm, interesting.  I was afraid to ask him if he was a part-time mortgage broker.  Let me rephrase that, I was afraid of the answer.  I have this illusion that the Australian mortgage broker industry wouldn’t allow that.

As soon as I unpacked at the hotel in Melbourne, I went for a walkabout.  I went out and picked up two newspapers, which I planned to read from front to back, so that I can get a flavour of what’s current and happening in Australia.  On the front page of The Australian and The Daily Telegraph was this number one story: the original Wiggles are no more.  Yes, Australia’s jewel and gift to children’s programing is going through a radical makeover.  Three original members are leaving for personal reasons; the usual, wanting to be closer to family etc.  Yeah right, one day the truth will come out and we’ll all learn that there’s a Yoko Ono story in there somewhere.  One of the replacements is, are you sitting down, a Wigglette.  Only 22 years of age, Emma Watkins is the new face and the first female member of the Wiggles.  If you’re wondering she will dawn the yellow shirt.

Australian stock market has tanked.  It’s lost all of its gains in 2012. The European debt crisis dominates the business section but the major banks here feel they’re insulated because they have been preparing for the inevitable for some time now.  Australia biggest trading partner is China.  As goes the Chinese economy so goes Australia’s.

The best five year fixed rate I could find is 6.5%.  Gulp!

Melbourne is a lot like Vancouver, from architecture to the overall feel.  Melbourne hates all things Sydney; just like Vancouver and Toronto.

The learning continues.  The bastards drive on the wrong side of the road.  I was nearly killed twice jaywalking.

Revolving doors at the hotel turn in the opposite direction.  Smacked my head a few times – D’OH!

Clearly I speak funny.  I was in Melbourne for less than twelve hours and two people asked me the following: “so you here on vacation, mate?”

The most important thing I’ve learned so far is that there’s no awkwardness in meeting family for the first time. It was odd talking to my cousin on the phone, making plans to meet at the hotel and having to describe what I was wearing so he could pick me out of the crowd.  He found me, and I got a chance to spend some time with him, his beautiful daughter, his brother and his mom, my aunt.  They were extremely gracious and they treated me like family.  It doesn’t matter what happens from here – that will be my lasting memory of this trip.

Until next time

Cheers

Not long ago CAAMP’s Chief Economists, Will Dunning, said to me that economists base their forecasts on their personality.

It’s hard to imagine that Europe’s economic situation could become more uncertain but you have to hand it to the Europeans, they figured out a way.  The “left” is taking control of the political leavers in Europe, and the response was somewhat unexpected.  The markets did not react negatively to the elections in France, and Greece last weekend.  Pundits on Wall Street are suggesting they have already built in the outcome of the elections.  It’s seems somewhat odd that the markets took the elections in stride given past responses to the European crisis.  Ah, but that was on Monday.  By Tuesday the markets started to react as investors finally took note.  The delayed reaction was surprising because recent history suggests that the markets will respond negatively to all things Europe.  Manchester United loses 1-0 to Bolton; the Dow and TSX down 200 points.

 The stock market aside, this wasn’t a good week for Europe.  Some economists are suggesting that Europe is once again in, and heading towards another deep recession.  Last month Europe’s aggregated economy contracted.  Spain now holds the dubious distinction of having the highest unemployment rate of member countries in the EU.  It’s estimated that one in four Spaniards are unemployed today.  You know Europe is teetering when Germany and France’s economy has come to a sudden halt.  The population of Europe is looking to punish someone for the mess there in.  The first big shoe to drop was in France.

There’s a new president elect in France.  President Hollande is a left wing ideologue.  He exploited the mood of the French population, and convinced them that they could tax and spend their way to prosperity.  He convinced the French population that France could recover without having to impose deep austerity measures.  France’s new president wants to move from transatlantic agreements and focus more on member countries of the EU.  This will impact Canada.  The Harper Government has been negotiating with the EU about a new free-trade agreement but now that Hollande is controlling one of the leavers the free trade agreement may not come to pass.  At the very least it might be put on the back burner.  France is not the only country to move to the left.  Greece, they’re back.  Yes, a new government was elected in Greece last weekend, one that promises to spend their way out of debt.  Correct me if I’m wrong – but I think that way of thinking contributed to mess they’re in today.  It’s worrisome to see the direction Europe is headed in.  But I also understand when people feel hopeless, confused and desperate, the impulse is to roll the dice and hope for a miracle.  How much worse can it get?

It can get worse, a lot worse.  What was unthinkable a year ago, countries defaulting, is starting to look more probable.  The IMF will not put up with Greece if they attempt to increase spending.  There may be no more bailouts, and if that was to happen there’s no way Greece could remain a member of the EU.  There’s a real possibility that we’ll be witnessing history; rather appropriate given a number of countries in Europe appear to be history.

Until next time,

 Cheers.

My ritual every morning is to load up on some high octane coffee and surf the web for economic news.  I’ve conditioned myself to expect some negative articles about the mortgage industry, and thanks to Canada’s major newspaper I’m rarely disappointed.  Our industry has taken so many body blows that we’re qualified to perform for the WWE.  Go ahead, suplex me off the top ropes.  It can’t be any worse than the predictions of doom and gloom and specifically that the housing industry is the greatest threat to Canada since confederation. Well, imagine my shock when I read the Globe and Mail’s Report on Business last Friday.  The headline bellowed, “Labour market shakes off winter blues.  Economy creates 82,300 jobs in March, its best month since recession, as unemployment rate falls to 7.2 per cent”.  I double checked, it really was The Globe.

To be clear there wasn’t a single sentence in the article about the importance of the housing and mortgage sector, and the millions of direct and indirect jobs the housing and mortgage sector creates.  Let’s not let facts get in the way of a good story.  At least we’re not being blamed for something.  Maybe I’m becoming cynical but one day I expect to read that global warming, Iran’s nuclear capabilities and the Leafs failure to make the play-off is a result of consumer debt levels in Canada, as well as over inflated home values.  So it’s big news when we can get through a day without being held accountable for… well…  just about anything that goes wrong with the economy.

There was plenty of good news of Friday.  On the employment front some 82,300 jobs were created last month.  The overall unemployment rate fell to 7.2 per cent.  The pace of hiring is clearly picking up and corporate Canada is far more optimistic about our recovery, as well for our neighbours South of the boarder and in Europe.  You know the news is good when the manufacturing sector in Ontario is showing signs of growth.  And you we’re skeptical about the Easter Bunny.   What’s really refreshing about our economic growth is who’s leading the way.  Not the usual suspects.  All hail the new king, Saskatchewan!  You want to live and experience an economic boom…move to Regina.  The unemployment rate there is 3.9 per cent.  Last year Regina’s GDP growth was 6.1 per cent.  The average price of a bungalow is $315,000.  For prosperity go west young man, just not all the way west.  This is a great success story.  Good people deserve good fortune.

 So we should all bask in the glow of this good news for as long as it lasts.  I see the markets have gone into the tank since Friday because of poor job growth numbers in the US.  It seems that economists were expecting much better job numbers in the U.S.; economists have been having a tough go of it recently.  Our actual job growth numbers came in eight times greater than what economists were calling for.  I wonder if this is the same group of economists who called on the Finance Department to change the mortgage rules because the sky was falling.  Here’s a suggestion for them; they should set aside their data and cognitive skills and use something a little more reliable, like tarot cards.

 Until next time.

 Cheers.

Plenty has been written about federal budget which was handed down by the Conservative Government last week.  The reality is that’s only been four days, and yet the fallout, criticism and navel gazing has been rather muted.  The opposition played their role and provided reporters with negative sound bites but by all appearances their collective protests have had little impact.   Why is that?  Is it because they’re ineffective?  Do people not care?  I think the answer is that the Tories managed expectations extraordinarily well, and they provided everyone with a lesson in shaping the narrative. 

For over a year now the PM has stated, in no uncertain terms, that the government had to manage its affairs more efficiently.  Cuts were coming, and the only question was how much?  For over a year the press has been reporting that federal agencies would be required to cut 5% of their operating budget.  Your highest fixed overhead costs are salaries, therefore, job cuts were on the way.  The budget didn’t disappoint, just over 19,000 jobs will be made redundant.  That’s a fair bit of bloodletting but the reaction seems to be, “oh well, it had to be done”.  There’s no doubt that the government tapped into the mood of the electorate, pensions and salaries being too generous, but I am surprised at the lack of reaction.  You have to give the Tories credit for managing this message.  How do you criticize the Tories when they’ve been saying all along that they would do this?  How dare they keep their word?

That being said the Tories may step on a few land mines  over the budget.  Many of the 19,000 plus civil servant jobs to be cut are here in Ontario.  This won’t help an already beleaguered  Ontario economy.  Moreover, the Minister Finance has got into a war of words with his provincial Liberal counterpart, Dwight Duncan.  There’s no love lost between these two, and I guess all is fair in love and war.  But Ontario gave the Conservatives a majority, and Ontario’s vote will be critical to the Tories if they want another majority mandate.   If it wasn’t for the 905 and 416 area code voting for the Tories, we would have another minority government.  There’s little doubt that the Federal and Provincial Liberals will play this up.  It’s happening already.  The Federal Liberal talking points are that this was a Western Canadian based budget, and voters west of Ontario are the benefactors.  Political regional warfare?  You can count it.

Ontario aside, the most common theme in the press was that the budget wasn’t bold enough.  I guess there was an expectation that something draconian was on the way.  Once again, if you get in front of the message and position it effectively, people’s reaction is “it wasn’t really that bad”.  And if you push out certain things, like those under the age of 54 today will now have to wait until they’re 67 years old to receive Old Age Security, people will say I’ll worry about that later.  To deflect some of the criticism over contentious issues the government threw the voters a few bones in this budget.  Like cross boarder shopping.  This is especially helpful for those who lie through their teeth and do not declare everything.  You know who you are.  You’re the person who recites a silent prayer when you’re talking to the customs agent, asking the lord for help and begging your ever merciful god to ensure that you don’t get pulled into that special room and have your bags checked.  Good news!   Effective June 1st – if you’re out of the country between 24 to 48 hours, the exemption increases from $50 to $200.  Trips between two and seven days will see an increase in the tax exemption rise from $400 to $800.  That’s a lot of shoes! 

The highlight of this budget was saying farewell to the penny.  This annoying and useless coin is being taken out of circulation.  I had no idea that the removal of the penny will save the government $11 million annually.  The government is recommending that commercial transactions be rounded off to the nearest five cent interval.  This is a great start but there’s other currency we should take out of circulation, like the $50 and $100 bill.  If no one accepts them, why have them?  Just my two cents worth.

Until next time

Cheers.