The year has been tough. People are being impacted financially and for many simply surviving has been a challenge. We need freedom.
Add into this the uncertainty of job prospects and pressures of debt.
In recent weeks we have seen banks and governments calling people out for having a buildup of cash in bank accounts.
Incidentally this is an interesting accusation for a bank or government to be making. “Canadians are hoarding cash.” The information started in an economic report released by CIBC on Nov 17th entitled “Excess Cash”.
Next In the report CIBC gleefully reports strong growth in personal deposits and that “Households Sitting on $90 Billion Excess Cash”.
Excess Cash?
CIBC thinks the cash is piling up because government support created a spike in “disposable income”.
Something Does Not Add Up Here.
I noted the unprofessional phrasing in the report “No panic: As illustrated in Chart 3, the panicky consumption diverted to grocery stores early in the crisis was not fully reversed…”. Poking at panicky people, in a pandemic that is being perpetuated on fear?
Not Ok.
Anyhow, good news! CIBC and other financial institutions have determined there will be “a relatively swift deployment of excess cash in the Spring and into the summer.
Pent-up demand from mid and high-income households will be utilized rapidly”. Happy we have a choice in this economy and big corporations respect the people.
Next in August the Aspen Institute released a report entitled “The COVID-19 Eviction Crisis: an Estimated 30-40 Million People in America Are At Risk” where they present a bleak outlook for the American housing market. The report stating “an estimated 30-40 million people in America could be at risk of eviction in the next several months”.
They go on to suggest the problem compounds as property owners become unable to meet mortgage and tax requirements on these properties as rent goes unpaid.
To bring clarity to the financial picture we can look at VisualCapitalist recent update on debt to GDP by country.
Take A Moment To Absorb That Graphic.
Saturday The Globe and Mail reported Canadians “household debt burden rises to 170.7%”.
The banks say people are sitting on stockpiles of cash, countries are facing an eviction crisis and Canadians now owe $1.71 for every dollar of post-tax income.
I know I am mixing countries here, and you can call me on that inconsistency. I am pretending to be from a mainstream media outlet, and I am manipulating the data to tell the story I want to tell.
But not to worry, all that pent-up consumer demand will come flowing out in spring in this wonderful new world order we will be delivered into as good complying citizens. (Spring seems prescriptive from numerous sources by the way.)
For those not aware this current economic state is the result of planned economic reform. The pandemic was only the catalyst to this desired reform. Reform desired by controlling corporations, not by individuals.
Media is encouraging a fight between what they have labelled the have and have-nots, often quoting disparity in household income and household savings. These statistics and focus only pit neighbor against neighbor. Woman against woman. Have-not against have-not. Media fails to speak about the riches of the world that are not reported as household income. The fight between you and your neighbor will drive the masses to demand the change that the NGO’s will save us with.
Before you hate your neighbor, who is bragging about owning rental properties and being in the top 1% realize that this person is as owned as you are. You can dislike him for being a braggart, and your neighbor isn’t any further ahead than you. In our new normal we will be equally owned, by design.
When scanning housing market trends, we see people still pouring over real estate. Sampling Vancouver key trends include inventory lagging behind sales, upward pressure on pricing continues, people are moving away from urban centers and benchmark price is up 9.4% year-over-year. Benchmark housing prices in this market now pushing 80% to 103% increases over a 10-year period.
If you recall our discussion on the non-linear relationship between gain and loss you will know that those significant property value increases can be quickly lost with a 44% to 51% loss in market value. Explanation can be found here.
Imagine if you ‘went long’ real estate investments on the excitement of 1% mortgage rates picking up the highest priced home you could in an inflated market where the economy is worse than flat and your renters back out. Possibly the definition of ‘fucked’.
Home Valuations Only Go Up Though.
I am quite proud of all these people who are stockpiling cash, the banks seem upset and that could be a good sign. Don’t worry about the banks, they have still reported strong profits this past year, not record profits like the previous 8 years but strong profits. Some banks are reporting it this way “Banks face four more years of lower profits in pandemic…”. Those poor banks. You may recall these headlines in recent years: “National Bank Reports Record Profit”, “Banks Report Record Profits”, “XXXX reports fourth quarter and record profits”, and one more, “Canada’s Big Five Banks Rake In $9.9 Billion In Profits In Third Quarter”. One of these 5 banks was front in line to complain about the cash in your savings account.
Who Are The Have’s?
If you are sitting on cash and have a large component of debt in your financial picture you should defer any pent-up urges to consume extravagance when restrictions lift. Instead pay down debt and secure other sources of income so you can enjoy financial freedom. I don’t care how cheap debt is, don’t be a slave.
I would love to see banks complaining that most of the population is financially independent. Wouldn’t that be something, the banks and corporations would have to provide unique opportunities to investors for them to access capital. That would represent a true power shift in the global economy, moving toward a morally sound and transparent financial system where ‘we the people’ matter.
From the haves to the have nots.
FREEDOM.
If you are down and out, waking up with a headache, worried about christmas gifts and struggling with bills you aren’t alone. Don’t stop caring, learn about what brought us here and have a voice.
Make gifts with your kids and keep what is truly important, connection.
This Week we have added amazing new Meditations to our store and YouTube channel. Check them out here!
