Monday, October 13, 2008

The reckoning

Kate MacMillan at Small Dead Animals has posted a link to a financial graph that she thinks is re-assuring. Stocks, she and her neo-con friends believe, are simply finding their value.

First, notice the dishonesty of the graph. It ends in 2007, just when the market started going south. That was a million years ago in market time. 2007 sure ain't 2008.

Yup. Tory times are good times. Neo-cons really know how to help.

See all those places where the market went from a really high peak to a really deep low? The biggest peaks to the deepest lows? They were in 1939 and 1981. Starting in 2006, we're on a slide down from the biggest peak ever. And every peak has, so far, been followed by a deep low which -- strange coincidence -- was an economic downturn or post-war economic restructuring. (Even after WWII, millions lost their job. These people were called "women"). Click the graphic for the big picture. Take a good, long look.
If you are re-assured, you don't know how to read a graph.

Happy days are here again, right Kate?

And if Harper's re-elected, you're on your own in this thing. Do you feel lucky? Do you make your income off one commodity? Live in a one-industry town? Have a mortgage? Worried about retiring? Planning on getting EI if you lose your job?

I lived in a small town during the early 1980s. For the life of me, I can't understand why anyone in small-town Ontario would vote Tory.

(BTW, if you think recessions are cripplers for the middle class, wait to you live through this.

It will certainly clear up your debt problems, but make sure you have lots of canned goods and no need for any purchases for about a year. I think we may be OK in Canada but the US dollar is way, way, way over-priced. The reason it's up is because people are converting equities into US cash and selling foreign currency to "go liquid" in US dollars and, to a lesser extent, yen, which is probably a big mistake. That won't last long.)


JonoVision said...

So what then...

Let's say you've got rock solid job (teacher, city bus driver, police) and a few bucks in the bank. A reasonable mortgage, with equity, and the chance (still) to borrow against its equity.

I know you're not an economist, but what would you do? (Not who to vote for, but what purchasing or investing decisions would you make.) Just curious.

Ottawa Watch said...

Right now, I'd put my cash in short-term T-bills -- if you can get them, GICs if you can't -- and wait until after Christmas, then buy some solid equities like Canadian banks and infrastructure stocks like CP.

Anonymous said...

CP stock is in the toilet at the moment-high of ~ 90 and now sits at about 41. I wouldn't bring this up at any family dinners in the future. Most CP employees take advantage of gainshare.

Ottawa Watch said...

Probably a good time to buy it.