With all the negative economic news hitting us lately, (the losses by the largest employers in our area, Canfor and West Fraser, the pine beetle epidemic, the bursting of the credit/debt bubble, the meltdown in the United States housing market and the indications that Canada's housing market is soon going to follow suit as evidenced by the fact that housing sales are decreasing and the number of homes for sale are increasing, the increases in our cost of living as evidenced by the rise in food and energy prices as well as other costs of living), I am interested in finding out how all of this news is affecting consumer spending in the Prince George area. As I have read, consumer spending in Canada is the driving force of about 60% of our economy.

I would like to find out from opinion250.com readers, how all of this negative economic news is affecting you.

If you work in the major consumer spending areas (or are considering purchasing any of these items, such as real estate sales, automobile sales, home improvement sales, consumer electronic sales, and the sales of "toys" , such as campers, motor homes, boats, atv's jet skis, etc,) how about sharing your thoughts with regards to how all of the negative economcic news is affecting you.

PS. Thank you Ben and Elaine for allowing me to share my thoughts with the citzens of Prince George.

I don't have any big ticket purchases planned, however, based on anecdotal evidence, I would suggest that "run of the mill" purchases haven't slown down much. We were going to go out for dinner tonight and we stopped at two restaurants on the way to Home Depot. Both had huge lineups just to get seats, not what you would expect to see if people were without dough.

I also see no shortage of new trucks around town. Although boat season isn't really here yet, it will be interesting to see how many new Alicraft's are running around. The housing market looks to have cooled off a bit (as it normally would in the winter) and prices seem to have dropped a bit, but the bottom certainly hasn't fallen out.

I don't get the sense that the local economy has yet taken the big hit that many people expected it would. Perhaps that will come, however, I haven't really noticed it yet.

Personally,I have not scaled back any short term plans for major purchases, but having said that, one pencil I HAVE sharpened lately is the one I'd use to sign any long term loans for such purchases. Luckily, I do not depend entirely on forestry to make my living, but its downturn will have a big impact on me too, just like it will on virtually EVERY citizen of Prince George.

Over the years I've learned that with the up and down cycles in the markets, Canada usually follows the US both ways, starting about a year or so later. While the downturn this time in the US has taken some really bizarre swings in all directions, and the US government has had to take some virtually desperate measures to keep the US economy afloat, the same patterns are emerging as before. The US housing market went into a nosedive starting last year, and this year, the ripple effects are starting to show big time, not only in Prince George, but everywhere in Canada. All those layoffs we're beginning to see here are ABSOLUTELY going to show up in reduced sales in pretty much everything purchaseable, especially the big ticket and luxury items !!

Last year, you couldn't rent, beg, buy, borrow, or steal a property out in the industrial sites ! This year --- take your choice -- there's at least a dozen business owners out there who'd like to talk to potential purchasers, or renters, and there's gonna be more over the summer, as reality sets in, and the meager winter earnings of some of our logging companies begins to peter out!

In my eye, one had better be very carefull in where one's money is being comitted these days, especially when signing up for long-term loans, because interest rates will have no choice but to come down to keep the economy afloat in hard times, and have started to do so already in the States. If the pattern holds, it'll be well into 2009, or 2010 before we start to see a significant upturn in our economy again, and I for one would be very nervous if I was locked in to a high, fixed interest rate over many years, especially if the loan was for a "toy".

Meanwhile, I think I'll go look for a cheaper, more fuel efficient vehicle! Its virtually guaranteed we'll never see fuel under a buck a liter again until we're all driving electric or hyrogen or some such vehicles, and nobody wants gas or diesel anymore anyway !! "Course, --- that's playing right into the hands of the economic manipulators out there isn't it !! Sweet little setup we got there -- get 'em all hooked on big, gas guzzling SUV's and pickups, then nail 'em BIG time with staggering fuel bills, and drive 'em all back in to the showrooms to buy our latest, greatest, fuel sipping wonder, that you just can't afford NOT to drive !!

Ah well, if you can't beat 'em, --- I hope you can afford to join 'em.

palomino

The beat rolls on...lots of good info here if you read between the lines.

Int eh end Fraser and Canfor will be the only ones left, and the Canadian Gov't appears to be fine with that.


You folks had better speak up now, or it will be too late if you want any of your other mills to still be around Western Canada. Look to the South of your border and we are living proof of that.

Sawmills do not come back, they don't build new sawmills, when they are gone they are gone.

I agree completely lumbertrader!
Personally,I think that's where the government has been heading for a long time,especially our PROVINCIAL government.
And this isn't really anything new.
At one time here in the north,back in the day,there was small sawmills from McBride all the way to Prince Rupert.
Anywhere there was a rail line,and they are all gone now,except for a few the big names.
That process began here in B.C. back in the 50's when the old coalition government began turning it all over to H.R.McMillan,Crown Zellerback,Weldwood,
etc.
Just about the time the Social Credit government was on the rise.
That was the end of the independant "gypo" operators.
Even many of the bigger companies are gone now,all swallowed up by politics and big money.
And your right...I think the government would like it that way,not that they will ever admit that

Most clear thinking northerners can survive without the blood sucking large corporations who treat their shareholders the same,profit for a few at the publics expense.when you look at what is left up in the north governments are no better void of all social responsibility, good -maybe we will have a strong base for the upcoming riots,terrorism and insurrections that will surely take place when the foreclosures get under way,given purchasing power the working stiff will keep it in circulation, unlike the multinationals who will hoard their earnings.advice hoard your money until the dust settles.

"hoard your money until the dust settles"..
And very good advice too,because it IS going to get very nasty over the next few years,if it even takes that long!
The those who will do well are the ones who are paying attention in the early stages of what could become very tough economic times.
The most important situation to avoid is DEBT.

The forest industry is going to continue to be dwindled down to two major producers, Probably about 20 smaller producers under 600 mmbf/yr. But all the companies with multiple sites will be consumed up by the big boys. Guys like Novaks and Carrier Lumber will always be around. They run a efficient operation and is ahead of the curve.

In about 5 years our fibre supply will be so reduced anyway. It probably can only support two major operators. This is just the way it is. So if your working in the bush, a contractor or worker, take a good look around, May be 1 in 3 will be still around. Likely one in five. Sure the lucky one will continue to make good money. Infact probably more than ever, but with the limited supply. It ends up being a lottery to win the contract. Thus, less contractors will be involved in the race.

The money is going to be in reforestration for the next 60 years. We got to prepare the sites, plant the trees, and take care of the trees before we can harvest them. Thus the stumpage rates will go up. The americans will be screaming for our lumber, we tell them to get rid of the border tax, We get more money for our product. The government will get more, to spend it on reforestration. The companies will make money, and the IWA members than can ask for more money. Looking at it on the sunny side of things.

Hoard your money. So save, save , save. and die with a lot of money??? Give to your kids that are just waiting for you to knock off.

Nope, thats what I call living to work. I would rather Work to live.

So figure out what all your expense are each month, multiply that by 3. That should be your savings for the just in case your laid off.

CPP will not disappear. it will always be there. It will not be enough to cover retirement. That is the reason why your suppose to put away money into RRSP, when your younger, so you don't have to eat dog food when your older.

If your 65 now, your mortgage should be paid off. You should have about $2500 - $3000 a month coming in, then you will be able to make ends meet.

I'm going to make a bold prediction. Within 3-5 years, Prince George will still have at least 70,000 people living here, the standard of living will still be above the Provincial average and people will still be making doom and gloom predictions about how the City is on the verge of collapse.

There is some good advice in this thread though. It never hurts to pay off debts, have some savings and live within your means. Even in the good times.

RRSP's are the biggest rip-off ever foisted on an unsuspecting population by a Government that's kow-towing to big Banks and ignoring the present and future needs of all Canadians.

In terms of dollars, your savings will 'grow'in one all right, but the "purchasing power" of each dollar over time will be eaten alive by inflation.

Think about it, and don't be blinded by the propaganda that's peddled about how they're going to save you tax, and keep you in your 'golden years'. It's a cruel hoax, and that's putting it mildly.

Virtually all our 'money' originates as Bank credit, created and 'loaned' for productive purposes, and repaid through the process of consumption of that production on its sale to a final consumer.

Every dollar that's put into an RRSP is a dollar that has been already 'costed' into the price of some product. If it was paid to you as 'income', that income will be part of the cost, and final price, of some good or service. When your income is spent on consumption of your needs and wants, that cost/price is liquidated to that extent.

When that same dollar is 'invested' instead, (through an RRSP), it creates ANOTHER COST that will have to be recovered in the final Price of SOME OTHER PRODUCT, while the existing cost of the already existing good or service remains unlquidated, and unliquidatable, UNLESS SOMEONE "BORROWS" ANOTHER DOLLAR.
Hence the real attraction of RRSP's from the big Bank's perspective. They keep the "necessity" of their customers to keep coming back for "more" loans all the time.

That "borrowing" ISN'T going to be from dollars that already exist. Banks never lend their customer deposits. It's going to come from new credit, created as a further debt to the Banks, by a simple process of bookkeeping.


It's creation will dilute the purchasing power of all dollars already in existence, (inflation), and eventually render your savings largely useless in terms of what they will actually "buy" when it comes time to remove them from your RRSP.

It is certainly prudent to live within one's means, avoid debt, and save ~ all as a matter of trying to enhance individual personal security and future well-being. But under the current system of national cost accountancy, Banks, with the complicity of "our" Government have set up a system to perpetually fleece you of your money's true worth. Which is only found in what it will actually "buy" at any given point in time.

"Banks, with the complicity of "our" Government have set up a system to perpetually fleece you of your money's true worth. Which is only found in what it will actually "buy" at any given point in time"

So if your rate of return on your invested money exceeds the rate of inflation over the term of the investment, would you not come out ahead by using an RRSP as opposed to just socking your money away in a pillow?

"BIG OIL REPORTS RECORD FIRST QUARTER PROFITS"

Westfrasers 1st quarter loss = job losses in BC and increased raw log exports to their US sawmills. All of it with the blessings of the federal and provincial governments of Canada

NMG, when you take the money out of your RRSP it is taxable. A RRSP only 'defers' tax on income, it doesn't eliminate it.

If the rate of inflation continues as at present, when most people who have contributed to RRSPs retire they are going to have to withdraw their money from their Plan at a far faster rate than they've anticipated, just in order to meet their ongoing costs of living.

And the tax man is going to exact his pound of flesh based on the tax calculated on these larger than anticipated withdrawals as it comes out. This will, in itself, negate a fair bit of the excess of rate of return over the rate of inflation. Perhaps even all of it.

There are a number of other drawbacks that occur, in the economy as a whole in respect to 'prices' in general, from the way RRSPs currently effect it. The notion of saving for one's retirement, or of personal investment of surplus income for a greater return later is not wrong in itself. But under the current system of accounting the OVERALL EFFECT can not help but be an increase in OVERALL unrepayable debt levels, and a greater amount of spendable income being diverted to pay interest on them.

Of course RRSP's are a tax deferral mechanism, that shouldn't come as a surprise to anyone. That being said, I would think that the best way to ensure you have a secure future, is to have the largest amount of dough/wealth accumulated as possible for when you need it. Even though you will end up paying tax on your withdrawals, would RRSP's not help one do this?

There may indeed be a point where you have too much money set aside and in that case, yes you may be paying more in tax than you need to. In those situations, a person may well have better off using their money for other purposes. It does get difficult to balance everything however, and much about the future is unknown. For the average person, I would think that erring on the side of caution and having more than enough set aside is better than the alternative. I suspect that most people wouldn't run into that situation though. Most people will probably have to work longer than they had planned to just so they can enjoy the lifestyle they are accustomed to.

So all of this theoretical debate aside, what do you suggest people should actually do with their money? It almost sounds like you are suggesting that people shouldn't save at all. Rather, it sounds like you are suggesting that a dollar earned should be a dollar spent. What then happens when you have no dollars coming in, yet you still need dollars to spend (i.e. retirement, lay offs, time off from work due to illness, etc.)?

"So all of this theoretical debate aside, what do you suggest people should actually do with their money? It almost sounds like you are suggesting that people shouldn't save at all. Rather, it sounds like you are suggesting that a dollar earned should be a dollar spent."

Well, NMG, I can certainly understand how what I've said could be interpreted that way. But that isn't what I'm suggesting. There are really two separate issues here.

What goes on in the 'micro-economy', where savings does indeed make perfect sense. For all the reasons you've outlined above.

And what goes on simultaneously in the 'macro-economy', the economy of the country as a whole. Where, with things as they are, the act of saving, and subsequent investment, or re-investment of those savings, has some highly deleterious effects on the general price level of all the goods and services our money, in the final analysis, is only useful as a means of access to.

This is generally unobserved by most of the public. Who fail to realize the implications of what it will do to negate the perfectly normal actions they have taken towards sought after personal security by prudent saving.

Without going into a great deal of theory, to really make, and keep, savings what most people think they are ~ which is certainly what they SHOULD be ~ there needs to be a correction made in the way we 'account' for things in that macro-economy.

It is a very simple correction, and it involves the application of a technique of 'credit' so that what is actually going on in the economy as a whole can be properly reflected 'financially'.

Without that correction, OVERALL debt levels in this country, and every other industrialised nation, will continue to rise until we will indeed truly witness widespread "poverty in the midst of plenty". And it will be a "poverty" that no amount of money savings, sheltered from the tax man or not, will be able to overcome.

Interesting discussion socredible. So how would the correction or reconciliation between the micro and macro economic factors actually impact the individual?

It would introduce 'new credit' into the economy in a way that would lower consumer prices without involving the producer taking a loss on his costs of production.

Right now, if there is not a constant increase in the overall supply of bank credit ('money' ~ since virtually all our money is now bank credit), overall business profit cannot be maintained, and the economy enters a period of recession.

With all the well known effects we're already beginning to witness in our forest industry.

The fundamental problem in this is that at present all 'new credit' is issued as 'debt' to the producer to increase production in some manner. (Even so called 'consumer credit' ~ which you won't get to access unless you have a 'job', or some other part in some process of production.)

Or, failing the private sector's ability or willingness to increase production, to fund non-productive 'government' projects, like the 2010 Olympics. Or in a larger economy, to build armaments, or actually wage war.

What happens is that we are issuing money in the present, to buy 'consumer' goods made in the past, that is going to be repayable in either prices or taxes, and most likely both, in the future.

And those prices and taxes, will of necessity, have to be higher in order for this to work. This should not be necessary, since 'physically' the 'costs' of production are totally met as production occurs. Or production COULDN'T occur. The actual 'costs' of ALL production is ALL'consumption' over the same time period. We cannot consume more than has been produced. But finance does not currently accurately reflect that fact.

Presently, the only way we can repay in the future is to continually repeat the process. Which we cannot 'physically' do. Eventually the market cannot absorb all the increase in production, at least at the 'costs' that must be recovered in 'prices'to keep businesses profitable enough to repay their loans.

When that happens, business profit falls, and the Banks stop lending. And the 'drying up' of 'new credit' causes what we're witnessing in the USA right now, and its spillover effects here. The solution they are trying to apply there right now, of the Fed pumping ever more credit into their economy as more 'loans' (for still MORE production) is only deferring, and worsening, the problem.

The solution is to continually reflect what is happening in the 'macro' economy in a proper set of national accounts. A set of 'books', if you will, similiar in construction to that found in any business. From what those books tell us, appropriate amounts of 'new credit' can be issued 'debt-free' (not 'costed' into any production), directly to CONSUMERS. All of us, for we're ALL consumers. NOT, as at present, solely to PRODUCERS (or for government 'make work' type projects)~ there's already enough 'production' ~ why should we have to make 'more' just to be able to sell what we've already made?

This 'new credit' can be issued as a rebate against existing consumer prices, effectively lowering them to consumers. Which is non-inflationary, and stimulates demand, maintains employment, and the ability of consumers to be able to continue to make purchases of goods and services they need. And allows you to 'save' without 'inflation' taxing your saving's purchasing power away from you. And we could do this, without the slightest problem, as long as the capacity to produce exceeds consumer demand. Right now, it is, for most products, far, far in excess of consumer demand.