Friday, January 9, 2009

Weekend Open Thread

Some thread starters:
  • NFP in the US is bad, but could have been worse. Still the year ended with an unemployment of 7.2 per cent. Very few except those on the 'lunatic fringe' had predicted such a high rate by the end of 2008. It's very likely that we'll see 2009 end pretty close to double digit unemployment in the US.
  • Closer home, the unemployment jumped here as well, with the biggest fall in construction activity. The quintessential migratory worker to Alberta- single male in early 20s-will soon find Alberta to be too expensive, too cold and with too few job opportunities in an area of his expertise. Result: falling demand for rental units, putting further pressure on residential prices.
  • From the same report, Alberta recorded the largest loss of full time positions (-16000). Alberta still has the lowest unemployment rate in the country but one must wonder for how long. I guess some of us had it right when we saw the commodity bust coming. This is only going to increase foreclosures and make rentals even cheaper.
  • It should be little surprise that with all the negative news firmly getting entrenched in the minds of consumers, sales have ground to a halt in Calgary and Edmonton. People fearful for their jobs and prospects don't buy overpriced shoe boxes. Especially when they have to pay part of it from their pockets in the form of higher down payment.
  • And coming from the 'heard from friends' section, layoffs are affecting Calgary's engineering workers. Jacob's, Colt, Bantrel and others. Most mining projects have been delayed by six to 9 months and a severely truncated workforce is keeping the projects alive so that if the oil prices do bounce back (another on the wish list of most Albertans), the projects can be brought back online quickly. So much for the 'long term' and strategic thinking of the Alberta Energy companies. You can go through the entries in this blog and see what a lot of Alberta RE bulls had to say about the energy sector- this time they are doing things differently. And short term price fluctuations don't impact the long term, 'peak oil' driven perspective these companies have taken. But guess what, all that stuff amounts to zilch when it costs $60 to produce something and you can only get $40 for it in the market. The economically unviable operation will soon cease to exist no matter what the company's 'long term plan' says.
  • And in another return to fundamentals, a quick perusal of Kijiji shows asking rents are falling steeply and based on my personal responses to some of the ads, most of the 'landlords' have come down from their high horses. You can negotiate rents down by upto 10 or 15% off from the asking prices. And falling rents don't make the underlying properties more attractive.
  • Another variety of salesmen is having a good time selling the fix for the forthcoming gloomy conditions. But despite what you read here on this blog, I'm not afraid of the gloom and doom that is being used to sell some of the 'life saving' things. If one has spent certain amount of time in Africa or the poorer parts of Asia, what is being termed as 'catastrophic' in Canada will be taken as business as usual. Power failures are common there and so is a lack of potable water and sewage. But life goes on. People live and are happy. And the same is the case with this recession, severe recession or depression. There will be pain, unemployment and other problems. But our system in Canada, with all its flaws, is still amongst the best in the world and will prove to be a lot more resilient than some think.
  • Have a great weekend.
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