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Canada forgot to plan for its future by leaning on oil and the loonie

theglobeandmail.com

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Re: Canada forgot to plan for its future by leaning on oil and the loonie

#161

Post by graeme »

forgetsusername wrote: post #160
graeme wrote: post #115

Earlier quoted context omitted.

Plan for the future by not leaning into the upswing of a boom and bust cycle. Governments encouraged more development, accentuating the cycle. Governments could also have established rainy day funds. Alberta has one, but they haven't added anything to it since 1987. Canada as a whole has none (this is somewhat reasonable, as the federal government doesn't have jurisdiction over natural resources) https://en.wikipedia…

> Plan for the future by not leaning into the upswing of a boom and bust cycle. I disagree. The upswing of the commodity cycle is precisely when you sell. Who knows, maybe oil is obsolete in 10 years. Then we're sitting on a pile of worthless gunk. Get your money when the gettin' is good.

I would agree with you, if the country had been saving any of it. As we currently ran things, the oil sales crowded out other sectors via currency appreciation for no long run gain.

That's environmental concerns aside. There are pretty good global and domestic reasons for leaving the most marginal bits of the gunk in the ground. And leaning into the cycle develops precisely those marginal sources that were most polluting or least profitable.

Re: Canada forgot to plan for its future by leaning on oil and the loonie

#162

Post by brainfog »

dmix wrote: post #139
brainfog wrote: post #137

Earlier quoted context omitted.

Out of curiosity, when did you move away from Montréal? I would have agreed with you a few years ago, but things seem to have improved for anglophones as of late.

It was in 2010-2011. I'm curious what changed?

I've noticed much less awkwardness and resentment when people are faced with non-French speakers in general - both in stores and with regular people. I'm not sure about how things are in the workplace these days, though.

Re: Canada forgot to plan for its future by leaning on oil and the loonie

#163

Post by DKnoll »

patrick_99 wrote: post #28
3pt14159 wrote: post #16

Canada didn't forget anything. We have a diverse economy with common sense measures like reducing our net debt to GDP, while keeping a fully funded retirement pension fund (CPP, unlike SS, actually invests in the public market). Even the way we do provincial transfer payments is sane. While one industry is booming (Oil, manufacturing, tech) other "have not" provinces get payments through the federal government. This…

I'd argue Canada made concerted efforts to support natural resource industries at the cost of all other industries. Eg. expending massive political capital with the US to push for Keystone XL. We've hurt our image abroad by fighting climate change action, Canada even refused to consider asbestos a hazardous material because there's a single asbestos mine in the country. As soon as that mine closed we switched to cons…

Canada has been doing that since it's inception... the first industry in this country was natural resources and since that time it has remained our strongest.

Re: Canada forgot to plan for its future by leaning on oil and the loonie

#164

Post by F_J_H »

graeme wrote: post #158
F_J_H wrote: post #156

Earlier quoted context omitted.

This has been the talk for many years now. I know people who have been waiting for the bubble to burst, and now have absolutely no chance of ever getting into the market.

And if someone bought three years ago, and paid property tax, maintenance, interest on debt and all other fees, etc....what has their return been? I doubt it's very much, and they've got major downside risk.

How well do you know the Vancouver market? The returns in the last decade have been stunning.

Re: Canada forgot to plan for its future by leaning on oil and the loonie

#165

Post by graeme »

F_J_H wrote: post #164
graeme wrote: post #158

Earlier quoted context omitted.

And if someone bought three years ago, and paid property tax, maintenance, interest on debt and all other fees, etc....what has their return been? I doubt it's very much, and they've got major downside risk.

How well do you know the Vancouver market? The returns in the last decade have been stunning.

My brother sent me this chart earlier today:

http://www.theglobeandmail.com/incoming/article26200269.ece/...

I'm estimating since the chart isn't precise. It looks like, from 2013, the average change is:

single family home: 1.1 million --> 1.4 million = 8.37% return

condo: Hard to tell. Not as large.

Am I reading that chart right? Of course, that doesn't tell you the increase in price in existing homes. And that return rate comes with interest, fees, property taxes, maintenance and the massive downside risk if we're in a bubble.

This is a very rough calculation on my part, so let me know if it's wrong.

That said, as to the original question, which was whether someone should invest now: With the massive economic slowdown + the large drop in Calgary real estate prices, this seems like a particularly bad time to invest, even if it might theoretically have been better a few years ago.

Re: Canada forgot to plan for its future by leaning on oil and the loonie

#166

Post by JamisonM »

eigenvector wrote: post #93
JamisonM wrote: post #50

Earlier quoted context omitted.

Even the way we do provincial transfer payments is sane. While one industry is booming (Oil, manufacturing, tech) other "have not" provinces get payments through the federal government. This brings a measure of stability to the system. Yes and no, the resource-heavy provinces have been working hard for natural-resource carve-outs and natural resource revenues get a 50% haircut going in anyway. Any rational economist…

"Canada went all-in on oil" implies Canada had a choice. When the global price of a commodity you have massive reserves of spikes, what else do you do besides sell as much of it as you can?

You can choose to sell less of the asset but you can also quite simply buy up massive amounts of reserves in a different currency. The CAD's value relative to the USD was motivated by the need to buy CAD in order to purchase the oil. This can be offset by using the royalties, and more, to buy up USD-denominated assets to balance the demand and lower the relative value of the CAD. As an example, there is a reason that the Chinese government his such a prolific purchaser of US treasuries, and it is not because they are particularly bullish on the US.

Re: Canada forgot to plan for its future by leaning on oil and the loonie

#167

Post by anonbanker »

HorizonXP wrote: post #10

I've been saying this to my circle of friends and family for years. The stark contrast between Toronto and Silicon Valley is mind-numbing. And the short-sightedness of our politicians and society is infuriating. I cannot understand why people think it's ok to rely on banks, resource companies, and manufacturing to hold up our economy. We need to invest in growth sectors. It may not create a ton of jobs immediately, b…

American expat having the same nerd shortage in Manitoba, but worse. 1 out of 100 have heard of linux, and 7 out of ten of those will wince/sneer when it's mentioned. A handful of people use Solaris or AIX (because you don't get fired for buying IBM/ORCL), but most are windows peasants trying to keep their ASP.NET skills relevant.

It's like living in 1999 again.

Re: Canada forgot to plan for its future by leaning on oil and the loonie

#168

Post by anonbanker »

3pt14159 wrote: post #12
turnip1979 wrote: post #4

Earlier quoted context omitted.

Agreed on the brain drain. Toronto is a major (and expensive) world city. From talking with friends, 100K (Canadian, that's 70K US) is the ceiling for intermediate to senior developers. Junior devs make a lot less ... 50-60K (that's 35 to 42K US)! That said, free healthcare counts for a lot. Also, as a dev in a Canadian tech company, you are probably not going to see as much stress and volatility as your average Sili…

$100k CAD is not the ceiling. Far from it. I've personally extended offers for $120k, and that was for a pre-series A startup. The larger guys pay even more. First company that comes to mind, Shopify, pays up to $150k: https://angel.co/shopify/jobs/88003-software-developer?utm_s... And it goes up from there, especially once you start looking at positions that include less sexy startups, less common technologies, or m…

if you look into the tax code, you pretty much max out at 150k. if you go higher, the tax rates eat all your wages alive.

Re: Canada forgot to plan for its future by leaning on oil and the loonie

#169

Post by nasalgoat »

HorizonXP wrote: post #10

I've been saying this to my circle of friends and family for years. The stark contrast between Toronto and Silicon Valley is mind-numbing. And the short-sightedness of our politicians and society is infuriating. I cannot understand why people think it's ok to rely on banks, resource companies, and manufacturing to hold up our economy. We need to invest in growth sectors. It may not create a ton of jobs immediately, b…

There's decent devs here in Toronto. You just need to pay them above average pay.

Also, getting people right of school is a good way to get talent before it moves south.

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