Monday, September 15, 2008

Financial musings

I've been watching the news of the stock market crash in the US and UK with not a little disquiet. Wife and I got out of the UK almost at the peak of the property market, paid off the mortgage and invested our money carefully. No stocks or bonds, just a big wodge of cash earning steady interest at fixed interest in several of the larger banks, taking care to spread the load. We're still a bit nervous, but as they say, in a recession cash is king, and we have cash. We also have jobs. Our children's University courses are funded. So far so good. The family is safe. That is what counts.

Well, I'm not saying 'I told you so' but the UK economy is still, in my very staid and sombre economic view at least, horribly over inflated and has a way to go in a downwards direction. Even back in 2004 the writing was on the wall, it was only a question of how long the pressure was going to build before the bubble finally burst. You can only sell debt for so long. Even a comparative financial ignoramus like me could see that you couldn't float an economy on over inflated property values and credit cards forever.

At the time (2004-2006) we had Estate Agents (Realtors) soliciting us to sell so they could earn commission on the sale and so we could get a bigger mortgage for a bigger house, which we didn't really need. I shut down my business because I could see the way things were going in 2004, and took a day job to weather the inevitable financial storm. Turned out I was a bit previous as far as guessing the date of the crunch, but now the storm is with us, and we are hunkered down watching it pass.

There was plenty of warning in the markets, and I'm pretty sure the 'smart money' got out last year (2007) and went into precious metals because the price of gold soared as the UK gas price climbed above the #1GBP per litre mark. We were crossing the Trans Canada at the time, and keeping in touch with things via the various Wi-Fi points in Motels.

Some Neighbours of ours who put their house on the market shortly after we sold up are still on the market a year later at a reduced price. For less than we finally got, and they have a larger, more modern abode than we ever did. Notwithstanding, I feel for them and wish them well but in my heart I know they'll have to take another serious hit on the price before long if they still have to sell. My Brother bought into the district three years before prices peaked, so he won't be hurt too much.

Wife's ex, who she divorced back in the 1990's, is feeling the financial pain because all his stocks and shares have taken a palpable hit. We had some very snotty e-mails from him back in March regarding our Girls' higher education funding, but since we'd already taken care of 'the necessary' I fail to see what he was whinging about. Unless of course the Girls had been wheedling expensive stuff for 'Uni' out of 'Daddy', which, knowing them is pretty much par for the course. Hopefully, Wife and I have taught them a little frugality, and the world will teach them a little more. They both have jobs and support themselves, and I think will not be coming out of University with a first class degree and massive debts, just a First. That will put them ahead of their peers. I approve.

Here on Vancouver Island I am still perplexed that Gas prices locally are still at the 148.9 marker, yet oil has sunk below the $100 a barrel mark and dropping. Screenshot taken at 20:09 New York time 15th September 2008.

What the markets will do in Canada is another thing, and I don't know enough about them to even hazard an opinion. All I know is if you put the price of one thing up, it will have a knock on effect. No price or tax rise can ever be 'revenue neutral'. The UK is currently paying the price for thinking of that nature.

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