Some Forecast Notes... Winnipeg in 2008

I moved from Winnipeg to Vancouver (from a house to a condo).  Let me suggest to those who are considering purchasing a condo, to ensure that its concrete frame and not wood frame.

Anybody who thinks that Winnipeg is isolated from the rest of the world and that housing prices won't drop in 2009 doesn't even have the most basic of economic sense.

With all due respect:  Please note that this entry was made almost a year ago, based on statistics that were given to me from industry professionals, forecasting 2008.  This has nothing to do with 2009.  It will be interesting to see what happens however!

Need to know:

When you consider the health of any market, you need to be aware of the basic economic principles that drive it, so we'll start with the big variables:

1. Markets are funded by banks. All it takes for a market to fall is for lending to contract. If you add to this equation the lenders calling in their debts, then you have collapse.

2. There are two economies at work, one that you know via the media, and the one that races on behind the scenes. The one you know of is void of the facts, it's handed to you via a collusive relationship between policy makers, bankers and corporate news makers. It's delivered to your tv nightly in order to promote itself at your expense. If you think this in untrue, then please consider our national debt compared to what it was before the distruction of the "glass Stegall Act", or the rapid national debt expansion of the 70's. Look at our debt heading into the early 1900's and our corresponding inflation data. Just take a second and look. The second economy, the one that races on behind th scenes, is very quickly swallowing up the worlds wealth, erasing watchdog policies, accumulating massive stores of liquidity to make firesale purchases, and excuting giant global ponzi schemes. It's the theft wing of global financial governance. And it's what you should have known before you  invested in rrsp's and hedge funds.

Consider what power is economicly speaking? If I can control the issuance of money, i can issue it to whoever I want. If i want to issue it to the housing market, lending to buyers, then i have a sellers market and a housing boom, if i want to issue it to the auto sector, and car finanacing, then i have an auto production and sales boom, if i want to issue money to fund a war, then i'll have a war. Diametrical to funding, if i want to restrict lending to a sector, that sector falls. Overnight.

Now consider how money is created. You go to your bank and ask for a $100,000 loan. They say yes, they print that money into existence based on your ability to pay it back to them at a horrendous interest rate (known as usary, which used to be illegal and imoral). You end up paying back the principal over 25 years as well as double the principle in interest. While the bank needed only to press a few buttons to create the money into existence, it did not come from their vault, it was not taken out of a fund, or borrowed from someones account. It was created from your promise to pay. Money therefore is DEBT.

But it doesn't end there. The bank then leverages your debt another 9 times, creating more than $900,000 into existence to lend out or invest as they see fit. Either way it enters the market, and inflates the local currency. This is how we get inflation. consider the cost of a car in 30  years ago, the cost of milk, the costs of housing, everthing inflates.

2. Consumer Confidence: The North American economy is consumer driven, 70% of Americas economy is consumerism. So what happens if 10% of Americans loose their jobs, or 10% of Winnipegers loose their jobs? Every sector declines by 10% or more overnight, unless the industry in question is feeding off collapse, many are. Some industries, such as "short selling" actually manufacture collapse to then profit from it. But if you own a retail business and your profit margin is 10% and you loose 10% of your buyers you're then underwater. And possibly bankrupt. Which means you're jobsless, and in poor position to buy, and the effects dovetail into other industries.

3. Derivitives: The world is on the hook for more than $600 trillion in criminal-greed inspired, house of cards, house built on sand, style derivitive betting. The entire world economy only generates $30 trillion a year. The bets are spread out to all financial sectors and connected like a spiders web, so if one bank "Lehman Brothers" fails to pay it's $90 trillion share of it's derivitive obligations, every bank connected to the derivitives scandle owes someone much much more than they can pay in total assets, they fold, and that's what you're seeing today. But if they don't have any money, because they owe 10 - 20 times more than their net assets in lunatic greed inspired derivitive bets, how can they issue money to each other and to us? They can't. And this is what you need to know.

4. Winnipeg is not fire proof. Some of manitoba's biggest lenders are alive only on paper, but in reality they're clearly and completely ovrleveraged and under water. They collect gov bailouts, but these bailouts will only keep them afloat until their mangament can jump ship. CIBC, RBC, Scotia Bank, and TD all owe many times more in oustanding derivitive bets than they're worth. They average approx $2 trillion each in zany bets. unfortunately their net assets are in the Billions. They will likely fail, or we'll end up nationalizing then and taking on their massive debts. No matter which hand you're holding these options in, they spell hard times ahead. So if the Lenders fall, who will capitalize Manitoba's many industries?

5. You need to self educate, their are many trusted sources to navigate. Find them. Because a knowledgable public is the biggest determining factor on how a market aught to operate, without the an informed public, our nations fall into the ownership of the disgustingly wealthy, where they are governed to promote the advantage of the disgustingly wealthy. Not saying all those with wealth are bad, far from in, but those who are need you eyes on them, and their hands smacked when they reach for policy changes.

Good luck,   Owen