Canada's Place in the Global Economy

[cupper]

Just to point out, What I said was based on different jurisdictions have different requirements, so where you are the regs may be different than another province, or here in the US state by state.

As you may have heard, we have had a "government takeover of health care" here in the US over the past couple of years.

As part of that, part time vs full time workers are treated differently when it comes to amount and type of coverage offered and how they count in total numbers of employees.

Another example, in NS, any employee working more than 48 hours in a week is to be paid time and a half. There are exceptions for certain industries (farming and fishing for example).

 

[Edward Campbell]

Another factoid that illustrates the shift of the global economic cockpit from Europe to America to Asia (where it was 750 years ago):

The World Economic Forum (those super-rich folks who meet in Davos every so often to moan about the price of caviar) reports that "Hong Kong improves position as world’s leading financial centre". The report goes on to rub a bit of salt in the wound by saying that "This year, Hong Kong not only maintains its position, but also manages to increase its relative score, thereby creating a wider gap between it and United States ..."

 

[Kirkhill]

Hong Kong (And Singapore?): Adding to some great islands of history?

Crete, Delios.

Gotland.

Cyprus, Rhodes, Malta.

Amsterdam (effectively an island in a swamp)

Britain (a big island off of Europe)

America (a really big island off of Europe with Manhattan a small island off of the big island)

And now Hong Kong and Singapore - With Australia well positioned to be an island something in between Britain and America with respect to historical attributes.

 

[Redeye]

Some people make money from stocks, although most do not,

Plenty of people do. Anyone who depends on a pension in any form, included CPP, depends on making money on stocks.

I looked at Costco, they have a 0.275c dividend on a $96.64 share price. LOL A whooping 0.28% return for every hundred bucks you give them hehehe  ;D at that share price giving them any money is pointless. they make take 30 years to hit $115 a share.

You don't know anything about investing in stocks do you? Plenty of stocks pay absolutely no dividend at all. Someone investing in stocks isn't generally chasing dividends, they're hoping the value of the company will grow, and thus the shares will increase in value. If the stock pays a dividend, all the better, but it's not necessarily what people are after.

 

[a_majoor]

Absolute worst case scenario: what if the investors refuse to take a "haircut". I'm not entirely sure just what you can do if you forclose on a sovereign nation, the only historical precident seems to be installing a Procouncil and collecting tax revenues on your own behalf. Having a huge army of occupation is usually part of the process (and adds to the expense, meaning you need to squeeze higher taxes out of the occupied country....)

This is not totally undoable; the Roman Imperium was quite good at it, and the US Marines occupied Hispanolia and not only ran an efficient customs and postal service (to collect revenues) but also built functioning schools, infrastructure and so on. Sadly, the Marines are really go-to kind of guys and didn't include training the locals on how to run things and maintain infrastructure. The British East India Company did similar work in India, but had centuries to complete the work and relied quite heavily on locals to do a lot of the administration, building the cultural framework as well as the physical.

Of course, I doubt there would be many takers for Procouncil, Imperial Tax Collector or Army of Occupation these days, but a deep enough financial crisis might change people's minds:

http://blogs.the-american-interest.com/wrm/2012/11/02/bad-omens-for-greece-in-argentina/

Bad Omens for Greece in Argentina

With Greece slowly circling the drain, the Greeks and the European officials charged with rescuing it badly need some good news. Instead, they get this: Quartz reports that the recent case in which an American hedge fund successfully sued Argentina for the full value of its bonds may set a precedent for similar actions by Greek creditors:

    In 2001, Argentina defaulted on its debt. It eventually went through two restructurings, in 2005 and 2010, to begin paying consenting bond holders between 25 and 29 cents on the dollar value of its bonds (i.e., a “haircut” of up to 75%). Elliott, earning the moniker of “vulture fund,” had bought up the country’s debt on the cheap and did not participate in these restructurings, holding out and suing the country in US court for the $1.33 billion face value of its bonds.

    While Elliott stews in legal limbo, Argentina pays restructured bondholders through a New York-based trust. The Oct. 26 decision essentially says that if Argentina is paying anyone, it has to pay Elliott, too, thanks to a (key vocab alert) pari passu clause in the bond’s contract. The Latin phrase means ” in equal step,” and says that Argentina will treat the bonds in question on equal terms with all of its external loans. Basically, the court says, pay everybody or pay nobody. . .

    Particularly, Salmon worries—as does the United States’ government, which sided with Argentina in the case—that the precedent in this case could make it exceedingly difficult for countries to modify debt in the future. Argentina explicitly warned that Euro crisis-related restructuring both on-going and expected in Portugal, Italy, and Greece (the “PIGs”) will be made exceedingly complicated by the decision.

    When countries end up in financial crises, they usually end up getting “bailouts” from the International Monetary Fund and other countries, but a key component of any rescue is usually some kind of “bail in,” which essentially means coercing or convincing bondholders into accepting the kinds of haircuts that Elliott is trying to avoid here.

It’s still too early to see how this will shake out, but if the case passes muster in the Supreme Court, it will set a precedent that will totally restructure how sovereign debt functions. More immediately, it make Europe’s sovereign debt crisis considerably more difficult to solve, removing one of the tools that governments have traditionally used to fix their finances after a default. Neither Greece nor the IMF nor Europe will be happy if this tool is removed from the toolkit.

 

[kevincanada]

I really believe the world needs to move away from the the debt system, or the 'rob Peter to pay Polly' view of doing finances.  Some fast numbers to drive the nail home.  We all know the 2% inflation number central banks use.  When applying the rule of "72" at 2% cost of goods would double in exactly 36 years.  72/2

The consumer price index went up 78% in last 10 years. in 36 years with all things being equal would mean a rise of 280.80% rise inflation on cost of goods.  A big difference than what the public seems to believe.  It means real inflation would be at between 5% to 6% yearly factoring in that it compounds.  Of course the banks stay ahead of this with money printing,  GDP doubling roughly every 10 years, so cash available would be increased 360% in 36 years hence us being richer.

Are we really going to be paying $10 for a diet coke at a convenience store in 36 years?  Or how about university tuition going from $10,000 per year to to $36,000 per year.

I find this to be a interesting concept and also a dilemma.  The system does make the people slowly richer, yet when trouble strikes as in the last 5 years it drags on and on and on.  How is it both can be true?  I guess everything really is a bell curve.

 

[kevincanada]

As you may have heard, we have had a "government takeover of health care" here in the US over the past couple of years.

Yes ObamaCare, ie universal healthcare costs less.  United states, has i believe the highest cost per person in the world for healthcare.  Canada is like 27% percent cheaper,  Japan, includes, eyes, dental and everyone receives healthcare no mater who they are as long as they are within Japan's borders and they have a better system that costs less than Canada lol.

I'm not saying our hospitals are better.  But boy you guys are paying huge $$$ south of the border.

 

[Edward Campbell]

I really believe the world needs to move away from the the debt system, or the 'rob Peter to pay Polly' view of doing finances.  Some fast numbers to drive the nail home.  We all know the 2% inflation number central banks use.  When applying the rule of "72" at 2% cost of goods would double in exactly 36 years.  72/2

The consumer price index went up 78% in last 10 years. in 36 years with all things being equal would mean a rise of 280.80% rise inflation on cost of goods.  A big difference than what the public seems to believe.  It means real inflation would be at between 5% to 6% yearly factoring in that it compounds.  Of course the banks stay ahead of this with money printing,  GDP doubling roughly every 10 years, so cash available would be increased 360% in 36 years hence us being richer.

Are we really going to be paying $10 for a diet coke at a convenience store in 36 years?  Or how about university tuition going from $10,000 per year to to $36,000 per year.

I find this to be a interesting concept and also a dilemma.  The system does make the people slowly richer, yet when trouble strikes as in the last 5 years it drags on and on and on.  How is it both can be true?  I guess everything really is a bell curve.

Debt is, most simply, the obverse of credit. If you cannot borrow then you will never have any debt. If you must save every penny that you, an independent contractor, need to buy a new tool then you will forgo the extra money you might make by being more productive until some time in the future. Credit allows you to have the tool now, when you need it, and with hard work and good management you can - most likely will - pay of the debt and make extra money for yourself at the same time. Credit and debt, amongst many other things fuel inflation. A bit of inflation helps you when you're paying off your debt. Each year the value of the dollar you are repaying is slightly less than the value of the dollar you borrowed - and that's why banks charge interest. Inflation hurts people on fixed incomes, e.g. pensions, unless those pensions increase at the rate of inflation that is applicable to their situation - for most pensioners that's the local cost of living index. Inflation is not the same all over, we all know, for example, that gas prices at the pump and food prices in the supermarket might be different in, say, Victoria and St John's or even in places as close together as Lloydminster AB and Lloydminster SK. Let's say that food and fuel prices, and taxes, are lower in AB than in SK but the rate at which CPP payments increase to account for inflation are set nationally: in that case, after the government has increased pensions, inflation will be more painful to the person in SK. But normal inflation can help the entrepreneur by allowing him or her to increase prices slightly more than his or her cost increase.

Oh, and the future vale of a present amount is calculated this way: FV = PV x (1.00 + i)n ~ that bit of arithmetic explains the "miracle of compound interest."

“Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.”
Albert Einstein

 

[vonGarvin]

I have recently begun to FINALLY understand compound interest, and am earning it, a few pennies more each week. 

 

[Brad Sallows]

Health care, like most things, costs increasingly more per unit of improvement.  The US generally gets better health outcomes (murders and accidents are not "health outcomes", so there is no need to introduce life expectancy measures which include killings and accidental deaths at this point), and they pay more for those outcomes.  No one should be surprised.  The issues are what level of care should be provided to those who lack means and ability (or are unfortunate enough to suffer catastrophic illness or accident), and how should it be funded.

A low rate of inflation is preferable to any rate of deflation because it encourages economic activity (spending).

All you youngsters out there may not know that there was a time when mortgage rates ran at 16-18%.  When I first started working I could get 10+% on a 5-year GIC.  Don't plan on rates - interest or inflation - as they currently stand.

 

[cupper]

Health care, like most things, costs increasingly more per unit of improvement.  The US generally gets better health outcomes (murders and accidents are not "health outcomes", so there is no need to introduce life expectancy measures which include killings and accidental deaths at this point), and they pay more for those outcomes.  No one should be surprised.  The issues are what level of care should be provided to those who lack means and ability (or are unfortunate enough to suffer catastrophic illness or accident), and how should it be funded.

Actually Brad, most studies comparing expenses vs outcomes show that the US in some cases gets only the same level of outcome as others but at higher costs, or in most studies, the outcomes are worse than other countries.

 

[kevincanada]

Actually Brad, most studies comparing expenses vs outcomes show that the US in some cases gets only the same level of outcome as others but at higher costs, or in most studies, the outcomes are worse than other countries.

Yep.  The WHO when they kept records have always pegged the USA around 25th to 30th overall for quality of service.

 

[Edward Campbell]

Yep.  The WHO when they kept records have always pegged the USA around 25th to 30th overall for quality of service.

I agree, that conforms to most of the data with which I am familiar: the US is near the bottom of the "outcomes" heap, usually just above Canada but at the top of the cost pile, usually just above Canada there, too.

Almost the only health care delivery system in the OECD which is not superior to ours is the US one. But our system is a failure in both policy and economic terms. The only reason we don't change it is that Canadians, in a very large majority, are both stupid and greedy. They hope the system will, as if by magic, work when they need it and they believe, against all the evidence, that it is "free."

 

[kevincanada]

Debt is, most simply, the obverse of credit. If you cannot borrow then you will never have any debt. If you must save every penny that you, an independent contractor, need to buy a new tool then you will forgo the extra money you might make by being more productive until some time in the future. Credit allows you to have the tool now, when you need it, and with hard work and good management you can - most likely will - pay of the debt and make extra money for yourself at the same time. Credit and debt, amongst many other things fuel inflation. A bit of inflation helps you when you're paying off your debt. Each year the value of the dollar you are repaying is slightly less than the value of the dollar you borrowed - and that's why banks charge interest. Inflation hurts people on fixed incomes, e.g. pensions, unless those pensions increase at the rate of inflation that is applicable to their situation - for most pensioners that's the local cost of living index. Inflation is not the same all over, we all know, for example, that gas prices at the pump and food prices in the supermarket might be different in, say, Victoria and St John's or even in places as close together as Lloydminster AB and Lloydminster SK. Let's say that food and fuel prices, and taxes, are lower in AB than in SK but the rate at which CPP payments increase to account for inflation are set nationally: in that case, after the government has increased pensions, inflation will be more painful to the person in SK. But normal inflation can help the entrepreneur by allowing him or her to increase prices slightly more than his or her cost increase.

Oh, and the future vale of a present amount is calculated this way: FV = PV x (1.00 + i)n ~ that bit of arithmetic explains the "miracle of compound interest."

“Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.”
Albert Einstein

Albert Einstein also said compound interest is the cruelest form of tax there is.

Yes credit today is easier to pay later and so on.  That is not my beef, my beef with it is, the application of that method is based on a assumption.  The assumption that there will be a pay cheque (check for you American readers coming in tomorrow you can repay this credit with.  This is blatantly untrue.  Warren Buffet himself.  Who is sitting on 10's of billions in the stock markets admitted that his wealth is a unjust tax on the working class.

I believe it is because we take the credit on the assumption that there will be work tomorrow.  Then people like Warren Buffet step in, take $50 billion out of the market and doesn't spend it, That is $50 billion that has been zapped from the working class pool.

My other beef with the economy is monopolies.  I think back 15 years ago, There was no Home Depot, Lowes or Rona in my region I live in.  Now there is a few of each.  All but 2 of the Lumber yards have went out of business.

I use to have one yard, I could walk into if there was a problem with blue prints,  he could re-draw them for me, get it corrected and re0submit it and approved by the municipality. Lets see Home Depot do that LOL.

Point being, this whole credit system favours monopolies, when that happens, money gets sucked out of the pockets of the many into the pockets of the few, quality of service goes down,  poverty (I'm including working poor) goes up and quantity of cheap crap we can buy goes up.

City of New York knows this.  Walmart been begging for years to open up shop there.  New York won't allow them in due to this reasoning.

 

[ArmyRick]

I agree. I do not have the evidence or proof but I have a "gut" feeling that our government shows favorites to larger corporations and their bottom line, making $$$.

Right now in my area, there is a huge shove from LOG about putting like 500 slots in an establishment. They are really pushing it as if though its all good and no down side and they seem to be in a hurray to get local council approval. That bothers me. Anyways, different subject.

Walmarts, home depot, etc, etc, the big chain stores that pop up everywhere, hire lots of local people on a part time basis and minimum wage basis mostly, then bring in management staff from somewhere else.

However most Canadians are complacent and have no passion about anything worth fighting for (like smaller business that actually serve people).

 

[SeaKingTacco]

Sooo.... Don't shop at the big box stores.  Enough people do that, and they will be out of business.  Problem solved.

 

[Edward Campbell]

Sooo.... Don't shop at the big box stores.  Enough people do that, and they will be out of business.  Problem solved.

:goodpost:

The very fact that Home Depot Loews and Rona coexist and compete means that there is no monopoly in the home building supply business.

What you have is a very mature industry where, in so far as the market permits, economies of scale, and the efficiencies they create, provide that old utilitarian standby: the greatest good for the greatest number. I understand that in the more competitive environment which used to exist, when many, many small stores competed, they went out of their way to try to win your business, kevincanada - it cost them money something to do that, something that the owner could have used in a more productive manner. Home Depot doesn't do that; it doesn't have to; it wants your business but the marginal impact of your business is not not big enough to make them "pay" any more for it.

 

[kevincanada]

Sooo.... Don't shop at the big box stores.  Enough people do that, and they will be out of business.  Problem solved.

Easier said then done =)

 

[SeaKingTacco]

Easier said then done =)

No.  It is literally that simple.  Home Depot (et al) are not charities.  People shop there and spend money.  There must be a reason.

If they stop shopping at big boxes, big boxes will shut down and something else will spring up in their place.

 

[kevincanada]

Easier said then done =)

It is a our politicians that lets the big chain stores in, as they have to acquire a permit.  I have nothing against big chain stores existing, just that they will stop at nothing for making a profit.  Walmart been sued many times for hiring cash laborers and employing illegal immigrants,  they have even had developing stores shut down.  At the end of the day it is bad for everybody and poor people will shop at walmart no matter the damage as they cannot afford to go elsewares.  Hey when you can get a T-shirt for $7 bucks why not right?