Does it hurt, yet?

It doesn’t matter what political party is in power, the rule is the same, savage those least organized, most unrepresented, least able to provide donations to a political party or to provide high-paying directorships or jobs to politicians out of office.

That’s us, folks. You and me.

You made reasonable assumptions about the income you would receive on your savings or for an annuity. Reasonable assumptions don’t take into account the venality of the political class.

I just came across a copy of The Financial Post, January 26, 1980. Here are part of the tables provided.

“Five-year GICs and term deposits

At the banks:

Bank of B.C.        11%

Bank of Montreal 11.25%

Bank of Nova Scotia 11.25%

At the trust & loan companies

Canada Permanent         10.75

Canada Trustco                 11.25

Fidelity                                                11.25

Etc.

The government(s) lowered the interest rates, and lowered the interest rates, and lowered the interest rates to keep the economy moving. Except it didn’t. All it did was create a housing bubble that has threatened to destroy the American economy, robbed people of homes as the bubble collapsed, allowed lenders to make liar loans, sell worthless bundled mortgages in a frenzy of greed.

In the meantime, retirees were having their financial feet cut out from under them. That’s not the banks money that is being leant out at 2.99%, that’s the depositors’ money. And, because the loan rate is so low, the interest paid to the depositor is next to nothing.

Interest rates have not been set by the market. There has been no free market. Interest rates have been set by government(s) for all the wrong reasons. The very people who railed against government interference in the free market, capitalist system have been the first to privatize profits and socialize losses. The bankers who have, once again, created a terrible financial mess, get massive loans of our tax money and give themselves outrageous bonuses because they’re still in business.

Vancouver and Toronto are the centers of real estate madness with no price too high because no matter how high a price, the buyer knows that someone will pay even more. The music will never end and no one will be left without a chair. The music is stopping and more and more reports are of real estate “investments” going bad. The real estate industry plays games with the numbers but sales are down, prices are down and indications are that they’re going to keep going down.

The problem is that a lot of people in their sixties and early seventies have a simple retirement plan. Sell the house. Live off the avails. That’s fine, except a lot of people are retiring and how many younger people can afford houses of one million plus? I’m a bit ahead of the curve. A war baby, I retired eight years ago, sold my house and down sized three years ago. Right now, I wish I’d downsized into a rental.

When I downsized and bought my current house, the market was crazy. There was little for sale and what there was was mostly garbage. Tatted  up junk going for unbelievable prices. The atmosphere was that of a carnival with people certain they were going to win a prize.

The housing crash in the USA didn’t have to happen. It wasn’t a natural disaster like a tornado. It was created by a toxic combination of bankers and real estate companies abetted by governments. You’ve heard of Fannie Mae and Freddy Mac in the USA and the disaster they became. We’ve got our own CMHC. Those guaranteed mortgages? You and I are doing the guaranteeing. The bankers take the commissions and you and I take the losses.

In the meantime, to keep the housing bubble from collapsing, interest rates are kept at artificial levels. Retirees like you and me are being robbed. We thought we were in a market economy, we thought free enterprise was what existed in Canada. Not anymore.

Doesn’t matter whether the government if Conservative, Liberal, NDP, marijuana party, they all feed the same hogs with food off our plates. Check out what you get for your savings. Check out your grocery bill. It ain’t us whose being fed.

 

 

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