Record Debts Being Written Off

Home Renovation Tax Credit (HRTC)

The financial crisis in which we have been living for some time now has changed the realities which we had accepted for some time, and many of those realities have changed for the worse. But for borrowers on credit cards who had been panicking about the pursuit from the issuers, there is one statistic which has improved. The issuers of credit cards are charging off a record amount of debt – meaning that they have accepted that people are not able to make their payments, and chasing them for those payments will not change the reality that they simply cannot afford to pay. It should be noted that this is not the case for every customer – if you can afford to pay but don’t want to, then the status quo will remain.

The simple truth of the matter is that with the unemployment rates having increased due to the global financial crisis, there are more and more people who simply cannot meet their credit card payments. Traditionally, this has led to  a troublesome situation where the banks pursue people to make any kind of payment at all, promising in many cases that if you can make “just a small payment” your account will be held for a while and that pursuit will be ended. For many customers, this pleasant notion has been miles away from the reality, which has been that a small payment alerts the company to the fact that you are responding to pressure, and the pressure just gets ramped up that little bit more.

When a company finally accepts that there is nothing they can take from you, they charge the debt off. What this means in practice is that they lay off collections activity and write the amount off, taking a hit on their profits which needs to be covered by the amount of money each bank sets aside for such reasons. It does mean that annual bonuses for the bank workers will be a little bit lower, but you will find fewer and fewer people complaining about that eventuality. As much as the everyday workers at a bank are relatively blameless for the profligacy of the bank’s lending policy, we are all having to cut out coats according to our cloth these days.

The fact remains that people who knowingly borrow and spend recklessly will have to be pursued to make their payments. Now is not a good time to take out a credit card and run up a mountain of debt which you have no intention of meeting. Quite apart from anything else, banks are still hugely reluctant to lend large amounts of money unless they are sure, on the basis of their own research, that they will see a good return on that investment. If you have a good credit rating, they may well still lend to you – but would you want to risk a good rating now of all times? If, however, you are looking for a fresh start, now could be the best time to get that start.

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Canada Welcomes The World

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There has always been a feeling in this world that the near neighbours of the larger or more prominent and influential countries in the world suffer from something of an inferiority complex when placed against their neighbour. As New Zealand is to Australia, as Scotland is to England, there is a feeling that Canada is the poor relation to the United States of America. This feeling comes from nothing more than a cheap, basic reading of the geography and the media profiles of the countries, and is typically quite wide of the mark, but it is still prominent in the way that people talk about the “junior” neighbour. So it should be embraced and celebrated when it is made clear, in any way, that the so-called “little guy” scores a notable success.

For instance, in July the number of people traveling North to Canada from the USA increased by nearly five per cent. There is an increasing feeling that Canada is far from being the “poor relation” here, but rather the more grown-up, sensible alternative to the admittedly attractive superpower with which it shares a border. Since the global financial crisis really dug its claws in (and the vagaries of global trade are such that when it got to one major country its neighbours and trade partners would be affected too), there have been experts in Canada and outside falling over themselves to credit Canada with being uniquely well-positioned to deal with a recession.

Part of Canada’s problem, if it really has one to be concerned with, is that “sensible” is seen as being an unsexy word. There is something of a problem in this world with “dumbing down”, and a country which can claim to be sensible – a highly desirable quality to have, surely – will raise fewer eyebrows than one which can come out, all guns blazing, and promise to really put on a show you will never forget. However, there is now a sense that we are tiring of dumbing down, and that this world has more to offer than the typical and well-worn attractions of the “bigger” neighbours. It is not just Americans who are pouring into Canada. The increase in visitors from Japan in July was a huge 32.4% – and visitors from all over the world increased too.

What this means for Canada is something essentially quite simple. Where there is tourism, there are dollars. As Canada boosts its visitor numbers, it will increase its income from holidaying families and also increase the demand for jobs in its travel sector. This is something that will increase further in the New Year as Vancouver plays host to the Winter Olympics, bringing visitors to Canadian shores in yet greater numbers and showcasing a country that has plenty to be proud of in terms of natural beauty, ease of visiting and a thriving hospitality sector. When Canada welcomes the world, what the world sees is not simply a country which is sensible, but the country that many others would like to be.

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Good News And Bad News On Pay Raises

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For many of the workforce, the opportunity to gain a pay raise is something that can be analogised to Christmas, their birthday and Easter all coming at once. Any employed adult awaits news of the latest pay deal like a small child waiting for Santa on Christmas Eve night, hoping that the new deal will be enough to maintain a decent standard of living as well as allowing a nice holiday somewhere sunny (or whatever other maverick spending plan they may have). But for many Canadian workers, hopes for a big raise in 2010 will have to be replaced by an acceptance that even with the recession getting smaller in the rear-view mirror, some realism will have to be employed by the driver for a while to come.

Two surveys from separate consulting firms this week have shown similar results on the question of pay deals from Canadian companies. The consensus is that yes, Canadians can expect a pay raise in 2010 and yes, it will be higher than the deal they got this year. Unfortunately, it is still set to be a modest one as companies gingerly take their initial steps in a world that has just emerged from a recession, and would like to avoid there being another one any time soon, thank you very much. While many companies this year have had to take the unpopular – but at least broadly accepted in the circumstances – step of cutting employee pay, the average Canadian pay rise is set to be around 2.8% according to Hewitt Associates, and 2.3% according to the Hay Group.

Inevitably, some province s will have to look on enviously as others benefit from greater increases. At the head of the queue when it comes to 2010 pay increases will be Saskatchewan, expected by Hewitt to benefit from a 4.1% boost due in no small part to the province’s success in the energy sector. This is far and away the highest increase, with the next competitor being Manitoba, due to enjoy a 3.2% increase, and Alberta which can expect a flat three per cent lift. The lesser increases are due to be in Ontario, with 2.6% and British Columbia, with 2.7 – little surprise there as both provinces were victim to slowdowns in their essential services, manufacturing and forestry respectively.

Raises may be lower than hoped in 2010, but given the economic situation of 2009’s first half, that there will be even this level of raise is seen as positive news. The sunnier financial climate, expected improvement in company performance, as well as a desire to reward employees who have been working “cheaply” are seen as the major reasons for the increased raise. And while the average Canadian may look at their pay raise and feel somewhat undervalued, it is worth remembering that the inflation rate is currently so low as to be almost imperceptible, meaning that any raise in pay will make for a decent gain in living standards. Something to celebrate, even if it may not yet be time to buy airline tickets and sombreros.

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Canadians Feel They Have More Job Security Than Before

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Nearly half of Canada’s current workforce feels more secure in their roles than they did one year ago, according to findings released this week. Although this does not technically constitute a majority, the numbers are in favour of the proposition that Canadians feel they have more job security than before, with 38 percent feeling that they were less secure compared to 46% who feel more secure. It is a sign that people are still divided on the subject of the economy and employment, but that optimism is continuing to creep upward in the light of positive noises at home and abroad. As we wait to see how the recovery continues, it would be chutzpah to suggest that the findings of the recent Harris-Decima poll proved that we were out of the woods, but good news is good news.

The positive feeling is more pronounced among people working in the public sector, of whom 53% said they felt more secure in their employment compared to 42% who felt more secure in the private sector. This is natural, as the companies which are going bankrupt and the plants and offices which are being closed down tend to be private sector entities. With a national unemployment rate of 8.6% expected to rise in the weeks to come, private sector workers still nurse understandable doubts that their jobs are safe. However, the prevailing opinion is that most companies with substantive cuts to make have already made the bulk of those cuts and have now downsized to a reasonable level.

Of the 1,009 people surveyed, some 33% said that they felt job security was the top perk in a job – nearly exactly a third of the group. Almost as many (31%) said that work/life balance was the most important thing in any job. Taking these two groups together it could be said that almost two-thirds of the Canadians surveyed felt that comfort and confidence played a big part in their reasons for doing their job. With 15% citing a secure pension and 12% a generous salary, those feeling that remuneration was the important part of a job was just over a quarter. Whether everyone responding was being entirely honest with the researcher and themselves is a question for another day, however it would appear that a sense of uncertainty in the last couple of years has caused people to reassess priorities.

Other interesting results to emerge from the survey had much to do with the divisions between public and private sector workers. When asked whether government workers were overpaid, 64% of the private sector said they were while only 39% of public sector workers agreed. The reasons for this strength of feeling among the private sector may well be that they resent their taxes being spent on workers who they very much (83%) feel do an excessive amount of “paper pushing”. 72% of public sector workers agreed that their jobs involved a lot of administrative work, but did not feel in such great numbers that it should mean they have to take a pay cut.

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Home Sales Will Still Increase in 2010

In the surest sign yet that the economy is beginning to truly repair itself, the Canadian Real Estate Association has improved its forecast for house sales on existing real estate properties this year. The level of house sales is expected to rise to the point they were at last year just before the recession took hold, and although overall 2009 is set to show falling numbers as compared to last year, the fall will be much less than initially forecast. The experts base this optimism on a second quarter which showed much better results than expected, with sales climbing through the spring months and into July.

The numbers forecast stand at a total of 432,600 for the year. Admittedly this represents a fall on the overall resales in 2008, but only a 0.4 percent drop when we had been led to expect a much steeper fall. The Canadian Real Estate Association had previously forecast a very dramatic fall in the region of fifteen percent. The turnaround sees house sales almost hold to 2008 levels, which represents a much better result than we could possibly have expected. In addition, looking at the price of house sales, the average is expected to increase by 1.5% on last year.

The big winners on house resales would appear to be residents of British Columbia, with an increase this year on their numbers in 2008 of 5.2% (a projected total of 72,500 sales). This is a strong performance in any year, but in a twelve-month period which has contained a long spell of recession in the national and global economies, any increase is impressive. An increase of more than five percent is to be considered nigh-on miraculous. In other provinces, with the exception of Ontario (looking at a half of a percent rise), the numbers are still expected to fall on last year’s numbers, but the scale of the fall-off has now been revised dramatically.

There is some good news for determined pessimists, if you like that kind of thing. the projected sales increases for 2010, which were made around the same time as the previous figures on resales for the year 2009, have been revised downwards. A sign that the recession is going to stick around in some capacity? Probably not. The reason given by the Association is that a number of prospective home buyers are now bringing their plans forward in the light of more positive news. Sales will still increase in 2010, all things being equal, just by a more shallow factor than previously expected.

The projected rebound for 2010 now sits at 5.3% for the year. In any year, this is still a healthy performance, and some commentators are sure to point to the fact that this recovery is now looking more like a steady, shallow recovery as opposed to a steep bounce. In any economy, steady improvement is always preferable to stratospheric increases as the performance is easier to sustain and any retracement much easier to deal with. Overall, the news is positive, and that is news we all wanted to hear.

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