Canadians are worried and rightly so.Our major industries, automotive, lumber, transportation and aerospace are in serious distress.Add to that the energy sectors who are now becoming very worried as the cost of production is exceeding the world commodities markets sale prices.Things are not looking good at all.One of the big hot button issues currently is the automotive bailout for General Motors and Chrysler.Let us hope that it succeeds; the consequences of failure are catastrophic for both US and Canadian economies.The reverberations of that failure would be felt globally.Very few Canadians are feeling secure these days.
The Federal Government has introduced some measures that can assist people however it is questionable as to their overall effectiveness in the longer term.The government is now taking the approach of spending its way out of a recession.This means deficit budgets since they have already spent the huge surpluses left to them by the previous Liberal governments.Canadians will be paying for this spending spree and deficit budgeting for at least a decade and possibly two.No one can predict the future with any certainty but knowing the current situation is probably the worst since The Great Depression of the 1930’s any quick fix is unlikely.
Just as there are many who are feeling more than a financial pinch, many others are positioned to capitalize on this economy.Those who have funds for investment can take advantage of the TFSA (Tax Free Savings Account) as a vehicle for investment.The prices of stocks and other investment tools are lower today allowing for significant long term growth.This assumes of course you have time to realize the long term growth potential of your money.Many Baby Boomers do not and the Gen Xer’s are on the borderline for retirement savings.
For many, the largest investment they have is in their homes.This is where the single largest asset most of us can claim as our own.Many Boomers are “downsizing” or “right sizing” as they are finding themselves as empty nesters and while this may seem as a good idea it equally has its pitfalls.
Downsizing may mean smaller accommodations and with that, less living expenses but many people are falling into “The Condo Trap”.They are finding just what they want but the prices are no bargain, often seeing a 4 bedroom home selling for equal price of buying that smaller 2 plus bedroom condo.Then there are the taxes that are usually about the same as for the detached dwelling plus the condo fees.Condo fees of course cover the cost of external maintenance and property maintenance.These need to be examined carefully because they often far exceed the costs you will make with the current ownership.For this boomer, it is no savings except for the yard work and maybe a little less housework; both of which I enjoy.
The government has also provided some home improvement incentives of up to $1500 for any improvements you make to your existing dwelling.These improvements can be for anything from paving your driveway to upgrading your electrical panel.It is well worth considering since improvements will help to maintain the value of your home and property.
All of this is designed to spur the economy as we look for recovery.While the temptation is to save, only when people start spending will the economy begin to recover.It is unfortunate but it is we the little people who have to pay for the past and in some measure, the current excesses of business and government.
In this light, spending our way out of a recession is the way to go.It will help to speed recovery; that is assuming that government does its share and does so wisely.If it doesn’t, our spending will have no positive effects.It is a bit of a gamble no matter what.