When a protestor tried to hit Media Baron Rupert Murdoch in the face with a shaving cream pie his young wife leapt to his defense and stopped the soapy mixture from ever reaching her husbands delicate body. It happened at the recent parliamentary committee hearings into alleged phone hacking by journalists at Murdoch’s now defunct News of the World paper. Could anyone have possibly predicted the media tycoon would ever face this predicament?
Now wait for the stretch.
Its the same feeling I get every time I hear the Bank of Canada Governor Mark Carney, is leaving rates at 1% (which happened again on Tuesday of this week). I know why he’s doing it. But did anyone predict this? Even in the depths of the recession back in 2009 most economists believed interest rates would start to rise slowly but surely by 2011. But so far, the Bank of Canada Governor has not mustered up the strength to do it and he has several good reasons why. The latest word from Europe is, not only will Greece default, but it could also have the prestigious title of being kicked out of the E.U. The debt worries are brewing again in Portugal, Ireland, Spain and Italy and the U.S is grappling with a debt crisis of its own. On top of this our Loonie continues to soar and an interest rate hike would send it higher. Making it even harder for Canadian businesses to trade across our borders.
In a worldwide panic attack, Gold prices have risen to $1600. Analysts say the safe haven commodity will be close to $2000 by the end of the year. In another OMG, I can’t believe this is happening moment; the U.S. wants to raise its debt ceiling by August. Failure to do so could lead to a catastrophic default in the world’s biggest economy. President Barrack Obama would be forced to choose between not paying creditors for the first time in history or not mailing social security checks to seniors. Sadly, I think it’s the old timers that will get shafted.
Here is our issue. Fundamentally Canada’s economy is okay. Our unemployment numbers are decreasing, the threat of a housing price decline is real but being offset by the fact that borrowing has slowed and most importantly we don’t have a sovereign debt problem. I don’t want to be all doom and gloom. So I won’t. Canadians can still celebrate the cheap money party, but like I said before, it won’t last. Put it this way, the 7-day Caribbean holiday is now a weekend at the cottage. See it for what it is. Start paying down your debt as soon as you can. Start with the expensive loans, like your credit cards and work you way down to your cheapest loan, which is most likely your mortgage. Don’t take on any more debt, I know the banks are calling, they are calling me too, offering lines of credit and cheap loans to get you through the “hard times” just hang up! When interest rates start to rise its gong to be very hard for many to afford variable-rate mortgages, lines of credit and floating rate loans. But we can see the future, so prepare for it. Eventually the party has to end and we all have to get back to reality. Don’t get stuck with pie all over your face, because most of us don’t have a wife like Murdoch’s to launch to our rescue.
Writer for RateSupermarket.ca