Breaking recession psychology

Here's something that everybody knew: we are worried about our jobs and household finances and the country's economy.

The Conference Board of Canada says its December consumer confidence index sank to levels just above the historic lows hit during the recession of 1981-82.
The board had some other bad stuff to say. But we're going to choose to highlight some of the bright spots the board found in its telephone survey of 2,000 Canadians.

For one thing, the survey discovered that, for the second straight month, an increasing number of consumers said it was a good time to buy large items such as TV sets, fridges, stoves, washing machines and cars.

Glen Hodgson, the board's chief economist, noted that optimistic consumers are taking advantage of steep price cuts.

He also pointed out that the economy is in better shape than in the country's two previous recessions. Some predict Canada's unemployment rate could reach eight per cent next year, but that would be down from 13 per cent during the early 1980s and 10 per cent in the early 1990s.

In Canadians' favour is a decline in energy costs, which is taking out some of the sting of filling up cars and heating homes.

Unfortunately, any bright spots are, as Mr. Hodgson noted, being "crowded out by a fear of the future ...and that fear is not totally rational."

The economist is pinning his hopes for an increase in consumer confidence next year on an effective federal stimulus package expected to be announced as part of next month's budget.

If the package works, it could go a long way to breaking the "psychology of recession," which causes consumers to Hodgson also points out that confidence will return once most Canadians realize they are keeping their jobs and, perhaps, getting a small wage increase.

When that starts to happen, you'll see a change in attitude," Mr. Hodgson said.
So, much depends on breaking the "psychology of recession," which takes hold when worried consumers stop spending, which in turn causes retailers and manufacturers to cut back on goods and jobs.

We're counting on our political leaders to give us reason to be hopeful.

Source: Posted By Brantford Expositor

Asher Ullah

www.homesforgta.com

Is your debt is 'Good' or 'Bad'?

People are usually scared and spectacle about the word 'debt'. It reminds them of a feeling of obligation and deficit.


But is it really true? Well their are two types of debts: Good and Bad.


A Bad debt is to finance things that can be consumed. This is the kind of debt that creates an unhealthy financial situation. Credit card debt is often considered bad debt because of the nature of items that credit cards are used to purchase. E.g clothes, restaurants etc.


Even debt used to finance a vacation is bad debt. Even though it might help you feel better and be more productive once you return, a vacation does not appreciate in value.


Debt is good as well. A debt considered an investment is a good one. You’re probably thinking, “How can anything as bad as debt be considered an investment!” If someone took on the debt to purchase something that will increase in value and can contribute to your overall financial health, then it’s very possible that debt is a good one.


For example, a home purchase can be considered to be a good debt. Since homes usually appreciate in value, the mortgage loan to pay for the home is an investment. Another example of a good debt is a student loan taken out to finance a college education. Earning a college degree usually means that you’ll make more money over your lifetime.


Some people consider using good debt to pay off bad debt, like getting a mortgage for $110,000 instead of $100,000 and using the extra to pay off credit card balances. This isn’t a good idea for several reasons. First, repaying debt with debt is never a good idea. Second, it ends up taking longer to pay off the mortgage than it would have otherwise. Third, the higher mortgage increases your monthly payments and the time it takes to build equity in your home.


Use cash to repay debts, not more debt. One must still be careful that don’t take on too much debt, even if it’s good debt. If you’re overloaded with debt, then it doesn’t matter whether the debt is good or bad, it still hurt your financial health.


So now evaluate your financial situation and find out whether the debt you have is good or bad.

Asher Ullah
Sales Representative
Re/Max Active Realty Inc. Brokerage
Mississauga, ON. Ph# 416-568-5932
http://www.estate4tune.com/

What to expect On Dec Dec 9, 2008 Interest Rate Annoucement

Its time for me to put some of my thoughts to share with others.

As we all know that the next scheduled meeting of Bank of Canada will be on Dec 9, 2008 and the important question is what will be the new change in the inetrest rate will be?

Most of the experts are expecting 25 to 50 bases points reduction that will be based on the key market indicators.

Its most likely that the bank will go for 25 bases points and reduce a further 25 bases points in next Jan 22, 2009 meeting.

Most people that have recently bought a home or will be planning to buy a home in near future will be happy with a lower variable rate and off course will enjoy lower monthly payment as well.

But on the other hand the banks wouldn't be happy as they are making the lesser amount money on the variable mortgages, and hence further rate reductions will make things even more difficult for them.

The banks right now are more happy to have a client with fixed mortgage as compare to variable, as they know that the lending rates at least in short run will not be on the increasing trend.

Well lets see what will the expected change would be on Dec 9, 2008. But hopefully it would be one that is good for economy!

Asher Ullah
www.homesforgta.com