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Dumb guy economics: A thread. Follow at your own risk.
**If you don't want to get down, do not read.**
Back in March when schools in Ontario let out for a 3 week March break due to COVID, I knew this wouldn't be good. My brain started to work forward.
**If you don't want to get down, do not read.**
Back in March when schools in Ontario let out for a 3 week March break due to COVID, I knew this wouldn't be good. My brain started to work forward.
I called a very seasoned Certified Financial Planner and said this wasn't going to end well, and I predicted at that time it would end up worse than the Financial Crisis of 2009. He told me at that time that there was no way it would come close. Its now estimated to be 2X as bad.
I remember thinking...yeah but the world almost financially collapsed but people were still able to go out and spend and add to GDP. Like, literally able to leave their home and spend money. But with COVID, full shutdown.
Then I emailed my client database and mentioned how this was massive, and that airlines were cancelling international flights. One replied back and told me that wasn't the case and I should be care with my facts. Later that week, almost all international flights were grounded.
Then the Feds roll out CERB. 100% needed. 100%. But the worry then was how will we pay for this. PMJT comes on TV and says "we took on the debt, so you wouldn't have to." Again, we needed it for sure. But come on, man.
YOU paid for it? "I am he as you are he as you are me
And we are all together" Just political speak. So then my thought was how long until we are out of the woods, whether its the actual virus or the economic recovery.
And we are all together" Just political speak. So then my thought was how long until we are out of the woods, whether its the actual virus or the economic recovery.
I want to say this: All of you parents out there sending the kids back, I wish you good luck this week and next. Very uneasy times ahead of us all. Lets all take good care of each other as well, lots of stress.
But here's my next economic worry *enter Rob "the dumb guy economist unqualified to give any financial advice other than Mortgages" Campbell:
1. CERB will run out, which will lead to a slow grind of spending everywhere. Winter is coming in Canada, which either means no outdoor restaurants, or maybe outdoor heated venues (like Quebec City)
2. University is back in session. Rental properties will sit vacant. No more mortgage deferrals for home owners who rent to students. In Guelph alone, only 540 students moved in to rez, normally 4,800 as reported by Guelph Today ( https://www.guelphtoday.com/coronavirus-covid-19-local-news/only-540-students-moving-into-u-of-g-residence-this-year-2686821)
3. Investors will list their rental properties in Feb & March as no students to rent to (think remote learning) leading to more inventory (not a bad thing at all). So local home owners may be able to buy their first home at a decent price instead of moving away
4. Recession: If Joe Biden wins, he'll increase the capital gains tax on $1M+ investments in the stock market. So what happens if you sell today at a market high and pay less than selling in January 2021? More in your pocket, and a sliding market in to recession.
5. That paired with economic effects of COVID means the US will be in recession for a while (2-3 Years). And when they sneeze, we cough and grab the hand sanitizer. That paired with $350B of a deficit of our own, and the world demand of oil decreasing, we're in for a bad year.
I hope I'm wrong, and I'll most likely be wrong. We'll have historically low rates for 3-5 years. Mortgages under 3% for quite some time. Use this time to top up your payments. More towards principle.
Really lay out your plan for the next 24 months. What money goes where. What money goes under the mattress. What debts to pay immediately, and what debts to push for a bit.
If you took CERB, consider starting every week to put aside what you can for next years tax bill. I know that's a blanket statement, and not everyone is in a position to give up a few bucks every month. Times are still very tough. I know.
And for the love of all that is holy, do not buy a f**king car. Not new, not used, not leased. If you ain't buying cash, don't buy. Again, blanket statement I know. Obviously there is someone somewhere who needs it to get the kids to school and to work.
But you can't* own a car for less than $500 per month between insurance, gas, payment, and maintenance. (* put the calculator down, its a dumb guy's economic outlook and should not be taken as advice)
So that's it.
Stock up.
Second wave.
Second shutdown.
No more CERB.
No more deferrals.
The hardest part of this is ahead.
Unless there's a vaccine in March. Then ignore everything and buy a Ford Raptor with gold rims. :)
Stock up.
Second wave.
Second shutdown.
No more CERB.
No more deferrals.
The hardest part of this is ahead.
Unless there's a vaccine in March. Then ignore everything and buy a Ford Raptor with gold rims. :)
