Christmas Wish

poinsetta

Expendable

That’s you. That’s me. Our previous government thought we were expendable. Do you know what that means? We don’t matter. We can be sacrificed at no cost to anyone important. Our young family members were expendable during WW2. Fifty thousand killed in an attack? A hundred thousand killed in an attack? Didn’tmatter. They didn’t matter. Their families didn’t matter.

Expendable. It’s an ugly word. It separates the necessary, the important, the valuable people from the rest of us peasants. The old stock and the new stock. Remember that? We were told that gee whillikers, it just meant some people’s families were here longer than others. No, it didn’t. It made it clear that the government divided us into the important and unimportant. I hate to say it, but most of us are unimportant. If we suffer, if we get ill, if we lose our house, if someone we loves die, if we die, it doesn’t matter because we are expendable. When I say we, I mean you, your kids, your grandkids, your parents, your relatives, your friends. Mine, too.

Hopefully, that has changed with the election of the new government. I pray that it has. I don’t want our government thinking my kids and grandkids are expendable.

A large test is coming. Most people don’t understand the implications of the fall in the price in oil. They don’t understand the fact that the US is going to raise interest rates. They don’t understand what the Canadian dollar falling to seventy cents US means for their daily lives. They don’t understand why their lives are going to be changed by the fall in the price of iron ore, copper, oil, natural gas, nickle, and grain.

That is, they won’t understand until they get a pink slip. But, but, but I don’t work in mining, or the oil business or farming. No, but it is those industries that provide the profits and the taxes that mean you get your pension cheque. It’s not magic. Pension funds get their money from profit and interest payments. In a year of bad crops and bad prices for crops look and see how every business in a farming community gets hurt. Not just the businesses selling farm equipment. The café, the coffee shop, the furniture store, the bar, the hotel. The list is endless. The people running those businesses say business is down, we’re sorry but we’ve got to lay you off. But, but, you can’t do that, my kids have braces, I’ve got a mortgage and a car payment. Sorry, we don’t have the money to pay you. You will have to apply for EI.

There are people ranting, raving, being absurd about how Notley and the NDP are ruining Alberta. North Dakota is going into to a recession. The ND Governor, just like Notley, didn’t bring oil down to 27$ American. Some people in Alberta have been threatening to murder Notley. I wonder if they’re going to want to murder the Governor of North Dakota? Whatever you do, don’t tar all Conservatives with this brush. I have a lot of Conservative friends. I like them. I admire them. They’re smart. They’re good people. They’re not going on the internet and saying that the way to fix Alberta’s problems is to put a pitch fork through Notley’s neck.

I’m sure the ND Governor, Jack Dalrymple, just like Notely, is doing the best he can but the price of oil isn’t partisan. What the Saudis are doing is going to hurt people all across North America, in cities and in small towns, Republican, Democrat, LIberal, Conservative, NDP.

Canada is going to get hurt twice. The drop in the price of oil has done serious damage to Russia and Putin says they are going to compensate by growing more grain. Just what our farmers don’t need.

Low interest rates have not, as classical economics would predict, helped our exports. Instead, low interest rates have removed our large retired community from purchasing groceries, clothes, holidays, vehicles, everything that retired people buy. They didn’t help create a diversified manufacturing structure. An economic principle that is outdated being applied by people who don’t understand the economics of today.

Low interest rates have resulted in insane house prices, massive mortgage debt that the banks convinced the Conservative government to unload on CMHC. What has that got to do with you? Everything. You see, CMHC is you. You are guaranteeing to pay the banks all the money that will be owed when people default on their mortgages. There is no such thing as government money. It’s your money. Money that the government has collected from you in taxes and fees. Every time someone defaults on a mortgage, your tax money is going to be paid to a bank. That money won’t be available for health care, or paving roads, or building schools, or outfitting the military, or anything else.

The Harper Political Party has left you in a terrible mess. It’s left your parents and your kids and grandkids in a terrible mess. But we’re all adults, right? Nobody gets to say, give me back my money. It’s gone. Your money was expendable. Where did it go? I don’t know. It certainly didn’t go to buy new equipment for the military. Our navy is falling apart. Our airforce is flying old planes. Bombs nowadays are very expensive. Don’t think of them as explosives, think of them, when they explode as a million of your tax dollars blowing up.

Will JT make things right? I hope so but I have no idea.I don’t know what has to be done. I don’t know what is possible. I know I want health care, I want education, I want infrastructure, I want security, I want compassion and caring. I don’t want to be expendable. I want the government to think I matter.

I want the government to think you matter. I guess that’s my Christmas wish.

Home or House?

 

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Someone asked me what I’ve been doing lately.

I said, “Fixing up my house.” It’s true. I fixed up my office: repairs, paint, new floor, etc. Now, I’m fixing up the laundry room. I’m not planning on selling. I’m just dealing with normal wear and tear. But just down the street is a house for sale. Nice place. The people who bought it and renovated it are asking 995,000. If someone puts twenty percent down and pays all the expenses, taxes with cash, they’ll still have a mortgage of 805,000. If they own 190,000 of the house and the bank owns 805,000, who really owns the house?

Made me think about my house. That’s what we say, isn’t it? My house. But it isn’t really my house.

When I had a mortgage, it was mostly the bank’s house. If I’d sold my house, the bank would have got most of the money. Some of my friends who didn’t have houses thought owning that 1915 house built by a Welsh shipwright meant I was rich. They mixed up debt with assets. I just owed more than them.

My grandparents and my parents were scarred by the Great Depression. My grandparents had their house taken away by the bank. The bank foreclosed. It really didn’t take my grandparent’s house. The bank took back its own house.

The problem is that we all suffer from recency. We think whatever conditions exist will continue to exist. If there is a depression , there will always be a depression. If there are high interest rates, there will always be high interest rates. If house prices are going up, they will always go up.

The longer a trend continues, the more recency is reinforced. Even though housing prices are at absurd levels in Vancouver and Toronto—in Vancouver, a vacant lot can cost two million dollars—people are still buying. Young people are taking out 700,000 dollar mortgages. Are they afraid that house prices could fall twenty percent (140,000)? Their down payment and their equity could be wiped out? No, because, you see, house prices always go up. That’s what the TV shows say.

House prices don’t always go up. House prices crashed in the USA. House prices in Victoria in the 1980s fell so hard that the banks and credit unions had room dividers set up that were covered in pictures of houses they needed to sell. An offer of fifty percent of the mortgage would get you a deal.

House prices in many areas in Canada are starting to slip. Money is still cheap but it isn’t just in Alberta that people are losing their jobs. It doesn’t matter how cheap money is if you are unemployed. Or underemployed. My grandfather always had a job but the railway cut his wages not just once but many times. He was working full time but he no longer could make the monthly payments.

According to Garth Turner’s blog, http://www.greaterfool.ca/, house prices in Saskatoon are down 15% from this time last year. 96 houses sold last week. 85 went for below the asking price. Then there is Calgary.

House prices are notoriously sticky. People who have financial problems will keep paying the mortgage as long as possible. They need a place to live. They’ll skimp on other things but they’ll make that payment. When they can’t, they’ll put the house up for sale. They’ll start by asking for a price that’ll get them back the money they’ve paid. If the market isn’t there, they’ll be forced to drop their price so they can give the bank the money they owe. If they don’t get enough money to cover closing costs and the bank debt, they still owe the difference. A lot of people think they can just walk away from a mortgage. Nope, no jingle mail here. You owe 700,000 The house sells for 500,000. You owe 200,000.

Recency. We all suffer from it.

I sold my first house for more than double what I originally paid. My second house I sold for four times what I paid. I wasn’t investing in houses. I just bought a house I needed and then a house I wanted. It seems to prove that house prices always go up. Buy now or buy never. That’s the mantra. Except the assessed value of this present house has slipped every year since I bought it. I’m glad I’m not planning on selling it to provide a pension. I’m glad I don’t have a big mortgage. I’m glad I accidentally made money on the first two houses.

My house. Maybe. In a way, I guess it’s my house. If I pay the strata fee every year. If I pay the taxes every year. If I pay the utilities every year. Stop paying those plus the mortgage and, like my grandfather, I’ll discover whose house it really is.

It’s not just Alberta that is having economic problems. It’s not just low prices for oil and natural gas. Our economy is resource based. We sell oil, gas, ore, lumber, grain, fish. China doesn’t need our natural resources or Australia’s natural resources the way it did. Our oil can’t compete with oil that can be sold for as little as twenty dollars a barrel. You don’t work in any of these areas so you are okay, Jack? No, you are not. There is a business and tax chain that runs right through the country. Oil field workers come from all over the country. Suppliers exist all over the country. They can’t sell their product, they’ll shut their doors. Medicine Hat is already seeing service and supply businesses closing.

My house. I want to feel that it is my house. Although someone else lived here before I did and someone else will live here after I leave. The banks, the credit unions, the mortgage brokers, the real estate agents, the TV hypsters, all say now is the time to buy. Certainly, for them it’s a good time for you to buy. Maybe they’re right. Maybe I grew up too close to the Great Depression. Maybe I’m still influenced by the Great Depression that destroyed so many lives. Maybe house prices always go up. Maybe. Maybe no one will ever have to go through the trauma my grandparent’s went through. I hope so but I wouldn’t bet on it.

(WDV studied economics in university. Theory of Business, Money and Banking, Labour Relations, International Trade but then foolishly went off to write poetry, fiction, and drama.)

Putting On The Style

If I remember correctly Solli Sigurdson sings a song about putting on the style. It should be a popular  hit as nothing is as important today as style. Style costs money and credit cards pay for it. They pay for it so much that Canadians, according to an article in The Star, “the average consumer’s total debt load is” $26,221. Credit card debt is $3,556. Then, of course, there are mortgages. Car payments.

What made me think about this is the other day when I went to the RumRunners bar in Sidney and, overwhelmed by a desire to eat gluten free fish and chips, I didn’t worry about the price. Along with a diet Pepsi, plus tip, the bill came to 30.00. For one piece of halibut and a potato.

Today, I was at the strip mall to get some gluten free bread at Origen bakery and decided to check out the Old British Fish and Chips shop. They’ve got a sign in the window saying “Gluten free menu.”

Yup. They do. I had to try it. There goes my waistline again. One good sized piece of halibut and more French fries in a half-order than any sane many could possibly eat. $10.08.

So, let’s see. There was no atmosphere. I took the fish and chips home wrapped in newspaper. There was no view of the harbour and the islands. There was no cute waitress smiling and checking to see if my fish and chips were okay. There was just a woman at the counter who took my order and a woman dipping fish in batter, putting fries into hot oil. No linen napkins.

Fish and chips, 10.08. Actually, the order taker at the counter rounded the bill off to 10.00. Atmosphere $20.00. Man oh man, I should have paid more attention to the atmosphere. It cost me twice as much as the meal. I guess the extra twenty was so that I could put on the style.

I guess that’s what we’ve been doing with our houses. Putting on the style.  There’s a new house in Coquitlam. It’s got a “beautiful kitchen with centre island, wok kitchen, granite counter top, stainless steel  cook top and more, 7 bedrooms, 2 ensuites, crown mouldings, in floor heating” all in 5300 sq ft. The owners put it up for sale for 1,280,000 on March 10. Price drop, price drop, open house, open house, currently 998,000. Let’s see, my putting on the style cost me an extra $20.00. It’s going to cost them at least 282,000 plus closing costs. Maybe more. There’s no sold sign yet.

Putting on the style. Clink clink of cocktail glasses. “I have 20 feet of granite counter tops.” “Really, is that all. I’ve got 30 feet.” “We have seven bedrooms.” “Oh, seven, really, we only have five. But you should see our view.”

Putting on the style. I grew up in an 800 sq. ft. house. Three bedrooms. No bathroom. Washed in a basin. Bathed in a galvanized tub. Heated with wood, then coal, then oil, then natural gas. Never felt deprived. I was warm, secure, well fed, clothed. We went once every couple of weeks to a matinee at the local theatre. No car. We took the bus to the city, street cars and buses when we got there.

Putting on the style. I guess we did that with big home cooked dinners on Thanksgiving and Christmas. Nice clothes when we went visiting. Entertaining and feeding people on the Icelandic Celebration weekend. Having an occasional meal at the local Chinese restaurant.

My parents’ goal and my grandparents’ goal was to owe no money. There was no halibut in Gimli, Manitoba but there was lots of Lake Winnipeg pickerel, whitefish, goldeye. We’d never have thought to pay for it in a restaurant where it would cost us twice as much as the food so we could put on the style. It’s not something we would have considered even though we could have paid the bill in cash, not on borrowed money with a credit card. (There were no credit cards.) It just made no sense.

Having been through the Great Depression, neither my grandparents nor my parents wanted to owe anyone money. The saved until they had enough to pay for something and then they bought it. Eaton’s had a lay away plan. You put so much down, then paid them a bit at a time until the object was paid for then you picked it up. It was yours. You’d paid for it.

If my grandfather was alive today, I can hear him saying to me after I told him about going to the RumRunner. “How much did you pay? Thirty dollars for a soft drink, one piece of fish and some fried potatoes. Who were you trying to impress?”