TD Canada Trust to start charging compound interest on all personal credit cards, Benefiting From Canadian Indebtedness – January 27, 2019,
Until you’ve been to third world nations, you don’t know how lucky we have it in Canada to even have the ability to obtain debt. I can remember in the 1990s how difficult it was to qualify for any debt, you used to have to be someone or something special to get into debt in the 1980 and 1990s. The developed world has spent about 70 years trying to create the economic system we enjoy today, you might not like it, but when the crash or economic collapse happens you’ll back at this era and reminisce of how great things are, for debtors, who in reality, shouldn’t even be allowed to qualify for some of these loans.
Now, with the optimism established, let’s get into the reality of what’s happening to the Canadian economy and the risks the big 5 Canadian banks are taking on, in order to stimulate Justin Trudeau’s Canadian economy. Infrastructure, Canadian employment infrastructure revolves primarily around manufacturing, you’ll notice a theme when I write posts that, although I’m a Right Winger and agree with the Libertarian Right Wingers on many topics, I disagree with the idea that the Central Banks are to blame.
Historically there has always been a demand for a Central Bank or a Some Sort of Derivative of a Central Bank
I don’t blame the banks for being what they are, I lay the blame squarely on the demand for these institutions on the people’s unwillingness to help their neighbor in their neighbors’ time of need. What I’m a referring to you ask, humans not wanting to plan for retirement, humans being restricted from innovation, humans wanted some form of protection from competition, humans wanted security from Nature, humans wanting perceived security from forces outside of their control, this is why central banking exists.
Now, in the modern world, humans are still allowed to barter and volunteer their collective energy to achieve, a Gold Standard of economics, but in practice, what you’ll notice is most of these doom and gloomers are simply trying to prop up particular fiat money based stocks, they believe would have more value in their ideal world. So with all of this being priced in and more people volunteering to join the consumer debtor class, the banks are starting to price in their risk, which also has it’s own risk, because personally I don’t bank with TD, primarily because I see their collateral mortgage as a problem for their institution in the future.
What is a Collateral Mortgage?
As an investor, I view the world differently than most, I research human behavior and price human behavior and economic trends into concepts and ideas. As an investment TD’s Collateral Mortgage products could be extremely problematic in the event housing prices are either stagnant or start to decline. I’ve stated for years, that Canada’s housing market can’t stagnate or deflate for a prolonged period of time because it will crash with or without lower interest rates, because Canada is dissolving into a service sector economy.
Technology-based jobs typically require smart people, there usually aren’t any entry-level tech jobs, there are on the other hand entry-level manufacturing jobs, well Canada has been losing its manufacturing jobs at an alarming rate and these manufacturing jobs are being replaced with service sector jobs, many of which aren’t high paying or even full-time jobs. Justin Trudeau the current Prime Minister of Canada has made matters worse by not only growing the size of government but by also adding more layers of bureaucracy and basically leading the charge with something called “climate change” which is even making Canadian energy companies less competitive.
Now, this has been priced into the Canadian stocks as there has been stagnant growth in comparative terms. In the long term if things don’t change, what’s more than likely to happen is you’ll get a different type of creditworthy consumer, who may or may not be able to qualify to prop up Canada’s housing market further, by purchasing real estate at even higher prices.
Based on the policies of both the Conservative and Liberal Political Partys, propping up the housing market appears to be part of their agendas, this to me signifies future devaluing of the Canadian dollar as well economic policies which will benefit people in the real estate market, as I’ve stated in prior posts, I see Canada having a Zombie economy, similar to Japan, the difference being that Canada, won’t have the same brand recognition of branding as Japan, also Canadians will be in more PERSONAL Debt than the Japanese.
So, being perfectly honest, I don’t know how the Federal, Provincial or Municipal Governments will be able to stimulate FAST growth under those conditions. Japan’s debt, as well as much of the debt in many Scandanavian nations, are ‘Public Sector EMPLOYEE’ related debts, meaning it’s an austerity related problem that they’ll address if need be.
In Sweden and Switzerland both countries which didn’t burden their Private Sectors with the minimum wage law, have a middle class that easily clears €100,000. This is part of the reason negative interest rates have worked in certain parts of Europe, after all, Canadians have gotten used to paying banking fees, if the concept is to invest in the markets, well, the negative interest rates are stimulating a different type of growth.
From my investors perspective, Canada has put herself on the wrong side of history, we’re behaving as if the Canadian consumer isn’t in debt, if you believe in a globalist climate change tax, that’s fine, but try to understand that Socialism and regressive taxation are expensive to implement.
France is still burning, sure it’s old news that people don’t care about, but austerity measures are getting rid of minimum wages aren’t on the people’s agenda in France right now and it’s unlikely it ever will be because viewing the world from a financial protectionists lens in which government-enforced wage and price controls on the private sector and great wages and entitlement for the public sector is an accepted reality, good luck trying to change that attitude overnight! You can’t spoil a child and expect the child to start obeying 16 years old, the child had 15+ years of bad behaviors in which the child managed to survive.
Climate change initiatives mean that we don’t have a free market economy, in energy, it means we have a Government controlled monopoly in the sections of energy creation, climate change is like a minimum wage for energy companies, meaning that barrier to entry into the Canadian market has artificially raised by the Government, therefore only the Walmarts and Amazons need to apply and if you’re a business that finds success in Canada, your reward will be the benefits of enjoying a monopoly of your own, because chances are, there will be few that find your level of success or even find it worth the energy to remain in the Canadian market for a prolonged period of time.
TekSavvy a Telecommunications company as an example is finding some success in the Canadian market and already the existing Telecommunications giants Rogers and Bell want to use their power over the political process to make sure Teksavvy doesn’t become a future rival of theirs.
Most Canadian companies grow simply to become irritants to be bought out by the giants later, because it’s not worth the trouble to grow in an economy in which the government can pass a simple financial regulatory law (usually a tax), to make you or your company uncompetitive. In Canada, we’ve lost our manufacturing primarily because of monopolies and the net beneficiaries of lower-paying jobs are the banks, who can issue loans.
In the long-term, the way I see things for the Canadian dollar is we’re going to have to make the Canadian dollar rise and we’re going to have to shrink the size of Government power, however, in my personal opinion, I don’t see my prediction happening for at least a decade unless it’s forced upon us, via a Donald Trump figure as an example renegotiating the U.S debt which when people learn the details will force central bank interest rates all over the world to rise.
Higher interest rates if Donald Trump wins the 2020 election might not happen while he’s president, but when he leaves, whether now or later, it will be a signal to the markets to price in the new President and the reality is the new U.S President could be a Socialist, as I’ve stated in aforementioned paragraphs, socialism is expensive and he who holds the cash the people currently demand rules.
In my opinion, TD Bank can see the writing on the wall for their collateral mortgages, historically Canadian Banks have been some of the best in the world, they tend to think long term and I believe TD Bank is already starting to pice in future challenges, their bank will face as more and more Canadians in debt simply can’t service their payments. Let the moronic future governments find a way to make the unworthy borrower qualify for a loan. Again I remind the Canadian consumer how lucky we are to have access to the amount of credit we’re able to obtain!
When I see a demand for a Gold Standard currency, then I’ll take the side of the Libertarians, but for now, I call it as I see it, TD Bank is preparing for the inevitable, Keynesian economics has been the name of the game in Canada, whether you agree with it or not, doesn’t matter, I’ve tried to convince people to abandon it, they look and speak to me like I’m crazy, I hoard precious metals personally but I can’t stop the demand of the people who want unearned wealth, I will only call it for how I see it! Prepare yourselves accordingly!
TD to start charging compound interest on all personal credit cards | GlobalNews.ca
Interesting times ahead!