Questions from Eastern Canada

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nex_s's picture
nex_s
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Questions from Eastern Canada

 

 Hi Everyone,

  I'll post this in the hope of getting some information on the Canadian situation and the future of our economy.  I have no doubt when the U.S. enonomy goes into a tailspin no country will be spared.  We live in a global enonomy of which the U.S. is the biggest player, by far.  It's like a team losing their star player, captain, coach, and sponser, sure we can still put forward some effort but not much concerted effort.  I started on this road reading about peak oil and then found out about Mike Ruppert, Richard Heinberg, Dr. Albert A. Bartlett, Matthew Simmons, Collin Campbell, David Hughes(Can.) ,Chris Martenson, and the list continues.  I've put hours upon hours in watching videos, reading blogs, and while doing this I've always kept an open mind and as I learned in my university days, consider the source.

  Watching Chris' Crash Course and other videos that explain how the Fed robs people of their savings and punishes savers and how world banks and big business manipulate the markets not only leaves you feeling used but frustrated and angry as when one watches videos of the assasination fo JFK or the dismantleing of the Avro Arrow.  You always knew there was some level of corruption not so calulcated and widespread.

 I live in Eastern Canada in the province of Prince Edward Island.  A good deal of our economy is based on tourism, fishing and farming.  As a side note during the last Great Depression we did go without many things but most people could still afford the basics of food and shelter.  In fact many Islanders who went to the bigger cities for work ended up returnig since life there was more brutal.

  My questions are these:

  Since we still rely on farming and fishing do you belive we will weather the economic storm better than others?

    I've heard from many people that the first thing to do is get out of debt and second buy gold.  The only debit my family and I have is our mortgage but would you suggest I focus only on paying that down or pay it down a bit and buy some gold as well?

  If one was to buy gold and the price goes up and the dollar loses it's value would it be logical to think that a mortgage could conceiveably be paid off with a few ounces of gold?  Provided I have a fixed rate mortgage the bank can't increase the rate of interest to compensate for the loss of dollar value can they?

I currently have a company pension that I can't get at until retirement age.  Would you suspect it'll be fairly worthless when the economy crashes since our pension manager invests our money into stocks and bonds which I assume will lose value?

Thanks for your responses,
nex_s

 

deggleton's picture
deggleton
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Posts: 250
Re: Questions from Eastern Canada
nex_s wrote:

Since we still rely on farming and fishing do you belive we will weather the economic storm better than others?

It depends.  If the farmers and fishers are doing the commodities thing and you all are eating stuff from away, not much better.  If those producers have contingency plans to supply a different mix to a market on the island on short notice, quite a bit better.  If they have not or do not, they might not stick around because of the ways they are and will be handicapped.

Help them (find the time and energy to) begin making such arrangements!

David

Ruhh's picture
Ruhh
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Posts: 259
Re: Questions from Eastern Canada
nex_s wrote:

Since we still rely on farming and fishing do you belive we will weather the economic storm better than others?

Good reply by David.

ALSO: It will depend on how deeply farmers/fisheries are dependent on credit to fuel their boats/machinery, seed, fertilizer etc.  It will become increasingly difficult to obtain the startup capital if credit markets seize up.

crash_watcher's picture
crash_watcher
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Posts: 146
Re: Questions from Eastern Canada

I've heard from many people that the first thing to do is get out of debt and second buy gold.  The only debit my family and I have is our mortgage but would you suggest I focus only on paying that down or pay it down a bit and buy some gold as well?

 Welcome, nex_s

Being out of debt and owning some gold are good ideas, but I would not necessarily make these the first things to do on your list.  Whether or not getting out of debt and buying gold is a high priority, will depend on your personal circumstances.  

Chris has been running a series of posts on “The Basics of Resilience:” I suggest that you start there: http://www.peakprosperity.com/blog/what-should-i-do-part-i/42449

“Protecting Wealth” is on the list, but I think there is a reason Chris put it seventh on his list, not first.

In my opinion, you need to take steps towards being able to withstand at least a short term STHF scenario, by working towards the things Chris outlined in his “Basics of Resilience” articles, before put too much of your resources into canceling debt and buying gold. 

ps, it so happen that TAE is running an article talking about the on the Canadian economic situation here: http://theautomaticearth.blogspot.com/

Also, for a different perspective on gold, listen to Stoneleigh'd interview and talk, here: http://twobeerswithsteve.libsyn.com/index.php?post_id=629329 and here: http://sheffield.indymedia.org.uk/2010/06/453356.html

pps, love them PEI beaches! You are lucky to live in such a beautiful province.

 

bluestone's picture
bluestone
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Joined: Dec 29 2008
Posts: 263
Re: Questions from Eastern Canada

Nex_s

I think gaining some exposure to precious metals is a good idea.  if you don't have much money,  some silver bullion is a good place to start.  I wouldn't count on paying off your mortgage with a few gold pieces.  The arguments I've heard for deflation are just as compelling as the arguments for hyperinflation.  Nevertheless, precious metals (in hand)  may protect you in deflation or inflation.  whether you aggressively pay down your mortgage is a matter of debate and something I'm grappling with.  Chris Martenson has suggested in the past that he would recommend paying it all the way off or just make the minimun payment.  For example if you pay off 99% of your mortgage and then default, the bank still takes your house back.  If you've barely paid anything down and default, this is a "bad asset" and the bank might not even foreclose on you.  Even if they do foreclosure, at least you haven't put all your wealth into it.  The other option is considering selling your home and waiting for housing prices to drop even further.  Is the home efficient? do you have enough land to get started with gardening or permaculture?  

hope this helps

Brian

SteveW's picture
SteveW
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Posts: 490
Re: Questions from Eastern Canada

Welcome nex_s. I'm from the other side of our country (BC) but as far as I know potatoes are the major agricultural export from PEI. I believe you are self sufficient for food with market gardens and livestock. Also the Islanders are a fairly small cohesive community and you could always blow up the Confederation bridge to keep folks out ;-). So I think you are in an excellent location for self sufficiency in food, water and community cohesion.

The major problem for PEI is the lack of energy resources and the question is how are you going to get through the winters if oil becomes expensive/unobtainable?

Regarding your mortgage it cannot be any longer than the 5 year term (renewable) that is now the limit in Canada. Since interest rates are at record lows my opinion would be to not accelerate payments as long as rates are favourable. Gold or silver purchases will maintain their value if/when significant inflation devalues fiat paper. From this perspective one should not hold more paper currency than necessary for month to month expenses. Any excess funds I would use to address the energy issue.

You don't mention the nature of your employment and whether you expect to maintain your job in a global economic crisis or whether you have general handiman skills that will be valuable. Pensions differ as either defined contribution or defined benefit. The former should generate a personal fund whose value depends upon its investment history. The latter depends upon the company fully funding its plan which was the problem for Nortel employees when the company went belly up with an underfunded plan. All of the bad news concerning pension funds relates to defined benefit plans that are actuarily underfunded by companies or local/state government.

 

Ruhh's picture
Ruhh
Status: Gold Member (Offline)
Joined: Nov 12 2008
Posts: 259
Re: Questions from Eastern Canada

You should also follow Garth Turner for a great Canadian perspective (mostly Real Estate and finance). He's got quite the sense of humour too.
http://www.greaterfool.ca/

Bluenoser's picture
Bluenoser
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Posts: 28
Re: Questions from Eastern Canada

I have to agree with Steve that one of your greatest vulnerabilities in PEI is lack of access to energy resources.  We lived there for a year in the early 2000's before moving back across the Strait to northern Nova Scotia.  While you have begun to develop some wind energy, any disruptions to fossil fuel imports would leave you cold in winter (and our Maritime winters can be nasty).

One of the things you really notice in PEI is the absence of large tracts of forested land, and what little remains is primarily softwood.  Yes, much of your agricultural land has been protected from development, but many of those potato fields were cleared at the expense of your forests.  In the event of an energy disruption, you will want to have a back-up plan, and firewood may be hard to come by if you don't own a private wood lot.  I would earmark some resources for energy security, and only then worry about precious metals.  I know that there are some who may disagree, but I believe that in a true shortage there may be things that aren't for sale at any price (unless you have something useful to barter).   Think hierarchy of needs; if you know that you will have access to enough food and that you would be warm and comfortable even if Maritime Electric comes up short then you are ready to turn your full attention to protecting your wealth. 

Hoping that Earl leaves you well alone this week-end,

Bluenoser

 

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