Personal Finance

Should Canadians take precautions given the financial situation down south?

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  • Sep 6th, 2011 8:49 am
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Sr. Member
Nov 30, 2006
568 posts
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Should Canadians take precautions given the financial situation down south?

I did a search and didn't find anything on this.

Many articles, mostly for Americans, are saying to "Prepare".

What would be some of the best things for Canadians to do in case everything goes to $h!+ in the next little while?

Bullets and beans?

But really, in all departments (finances, living, housing etc...)
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Feb 15, 2008
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Calgary
It goes without saying -- arm yourself. If you have a business that relies upon a long distance supply chain with intermediaries in the United States, you might want to consider some different arrangements. Likewise, if you sell a lot to the United States, or rely upon those who export a lot there -- its probably time to find some new customers.

Might be useful to at least partially hedge US currency exposure, or at least diversify your debt such that you have a short position in the US dollar that is in proportion to your assets that are US-dollar derived.

For instance:

Assets = $500k house (in Canada), $200k in US stocks, $300k in Canada/International stocks
Debt = $300k mortgage (in Canadian dollars)

You probably should diversify the debt, such that, 20% of your debt is also USD$ denominated, ie: convert $60k of your Canadian debt to US debt.

If you're a business, you might also want to hedge exposure on any fixed price contracts. Your US competitors potentially could benefit enormously from debt devaluation, so if you at least aren't similarly positioned, it could be very painful.
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Member
Mar 1, 2010
447 posts
39 upvotes
BillyH wrote: I did a search and didn't find anything on this.

Many articles, mostly for Americans, are saying to "Prepare".

What would be some of the best things for Canadians to do in case everything goes to $h!+ in the next little while?

Bullets and beans?

But really, in all departments (finances, living, housing etc...)

Well, you're gonna want to stockpile water and antibiotics and . . .

There is nothing you can do. Especially if you haven't done anything already.

If you're a normal Canadian, you have little to no USD cash of note and in terms of liquid assets almost all our stocks are in your RRSP, and there's no point changing your allocation there because what happens tomorrow won't affect the value of your RRSP forty years from now. Too many people pull out of the market when it's low and never reinvest. Don't mess with your allocation; stay the course.

The other things, the ways the US downturn will affect prices here.... guess what? There's nothing you can do. You are literally powerless. So is everyone else.
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Apr 1, 2007
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philosofaux wrote: The other things, the ways the US downturn will affect prices here.... guess what? There's nothing you can do. You are literally powerless. So is everyone else.

Powerless because we as a society let it come to this. If we held politicians to account, and were actually interested in society, it wouldn't be the way it is now.

Politicians need to save us, but they won't. Look at who is in charge...
Member
Mar 1, 2010
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WontonTiger wrote: Powerless because we as a society let it come to this. If we held politicians to account, and were actually interested in society, it wouldn't be the way it is now.

Politicians need to save us, but they won't. Look at who is in charge...

Yeah, if only Jack was PM. He'd make sure we'd not be vulnerable to the global marketplace...

I don't see how that can be done without turning Canada into an arctic North Korea.
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Aug 10, 2008
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Markham
Has the market revived? Oil stocks are starting to rise back up, or is it just it's last breath before it collapses?
Deal Fanatic
Jul 1, 2007
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philosofaux wrote: Yeah, if only Jack was PM. He'd make sure we'd not be vulnerable to the global marketplace...

I don't see how that can be done without turning Canada into an arctic North Korea.

This is what's so wonderful about Canadian politics right now. The only mainstream party is conservative and their only alternative is left-wing extremists, meaning if you don't support the status quo, you're a commie, haha!
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Mar 1, 2010
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Thalo wrote: This is what's so wonderful about Canadian politics right now. The only mainstream party is conservative and their only alternative is left-wing extremists, meaning if you don't support the status quo, you're a commie, haha!

Or you know... there could be a big recovery in the Liberals by the next election... Or an NDP-Liberal merger.
Anyone else remember 1993? The Tories are never gonna come back after that! Am I right? Oh, wait...
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Mar 30, 2004
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philosofaux wrote: Or you know... there could be a big recovery in the Liberals by the next election... Or an NDP-Liberal merger.
Anyone else remember 1993? The Tories are never gonna come back after that! Am I right? Oh, wait...

Well, the PC's never did recover. But yes, I don't think Reform could have pulled off government alone with the PC's still bumming around splitting the vote.
Newbie
Aug 17, 2011
68 posts
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HALIFAX
I believe precautions (read: safety net) should always be in place, regardless of the economic state. Far too many people live beyond their means, rack up a ridiculous amount of debt and have no safety net.
Deal Addict
Jul 21, 2005
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Yes be cautious. Canada is not immune to a down turn if both the States and Eastern Europe's debt troubles gets upgraded.
That and we do 75% business south of the border means that anything that happens over there with the economy will have a ripple here.
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Mar 27, 2011
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Nowhere
Teenwolf wrote: I believe precautions (read: safety net) should always be in place, regardless of the economic state. Far too many people live beyond their means, rack up a ridiculous amount of debt and have no safety net.


This.

But people in Canada are still going nuts with low interest rates and view it as an excuse not to save and just go out and spend on houses, cars, other things that they will wind up not being able to afford.

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