The Great Canadian Economic Melt Down 1989-1992 - Anybody out there?
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I had recently met a Desi from Dubai at NYC during a business meeting. When I introduced myself from Canada, he immediately responded saying \"Sade Saath Kisko Choda ?\"(For Tamils the translation is \"Sani disai yarai Vittathu ?\".
I asked him to explain further, to which he gave his Story, in which he had migrated to Canada in late 80's and was here for 6 years. He lost everything during the great Canadian Economic Melt Down, and he walked out of his house and handed over his keys to the Bank as he could not pay the mortgage. His net loss was Rs.12 Lakhs in 1993, and he went back to Dubai and is currently a GM in a large corporation involved in construction.
My question to our CD's is that, were any one of us here in Canada during that period and if so what had happened then to lead to this Economic melt down, where scores of people had to walk of their houses and businesses and file for banckruptcy as they could not manage. I heard many Desis had heart attacks and few even died.
Is it true and what did happen then ?.
The reason I'm asking is with the CAD strengthening again and the interest rates firming up are we heading towards a similar situation?
Comments please.
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Location: God's own country
Posted on: 28-05-06 16:04:52
Though i was not in Canada at this time, I have heard of stories and i have researched about this. I have also experienced recession in India (construction field) in 2001-2002.
It was due to recession in USA and Canada was affected too. Recession means the abundance of things produced while people have no money to buy the stuff that is produced. It has a domino effect. People in businesses would not make profit and had to lay off people. People could not find work as work was not available. Another reason was the outrageous interest rates going to 18% and up. Mortgage rates were too much while the house prices were not very cheap.
Now it is the boom time in Canada. Remember, recession does not come in a day. There will be ample indications to announce it's arrival. Recession would not mean much to desi's like me (who have never had a firm base/ house/job in Canada). Desi's like me will just leave to greener pastures. Sons of this land would be the people suffering more.
Right now, there is no sight of recession and inflation is at check. When oil hits $100 a barrel, then the recession could start in a matter of months. People in USA say that the building bubble is about to explode and if it does it could trigger a mild recession. In Canada, resource sector is doing well and well as housing. If both these were to end , then recession is imminent.
Remember, you canot esacpe a recession. You can only plan to live with it. Recession is a cylce that hits USA/Canada in 10-15 year cycles. Strengthening of the Canadian dollar is actually sign that recession is about to come soon. But this is hampered in Canada by higher oil prices, building boon and the shining of the resource sector. (Canada is strong in resources like gold, nickel, copper, zinc, uranium ect..)
TK
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I am a Gents and not a Ladies.
Location: Canada-Glorious and Free
Posted on: 29-05-06 10:15:23
Quote:
Originally posted by shankaracharya
I had recently met a Desi from Dubai at NYC during a business meeting. When I introduced myself from Canada, he immediately responded saying \\\"Sade Saath Kisko Choda ?\\\"(For Tamils the translation is \\\"Sani disai yarai Vittathu ?\\\".
I asked him to explain further, to which he gave his Story, in which he had migrated to Canada in late 80's and was here for 6 years. He lost everything during the great Canadian Economic Melt Down, and he walked out of his house and handed over his keys to the Bank as he could not pay the mortgage. His net loss was Rs.12 Lakhs in 1993, and he went back to Dubai and is currently a GM in a large corporation involved in construction.
My question to our CD's is that, were any one of us here in Canada during that period and if so what had happened then to lead to this Economic melt down, where scores of people had to walk of their houses and businesses and file for banckruptcy as they could not manage. I heard many Desis had heart attacks and few even died.
Is it true and what did happen then ?.
The reason I'm asking is with the CAD strengthening again and the interest rates firming up are we heading towards a similar situation?
Comments please.
The recession was a diliberate move by the bank of Canada. Inflation was getting out of hand. To counter inflation, Bank of Canada raised its bank rate. It got to a point where the bank rate was 15-16%.
It is ridiculous to say that desi's had heart attacks etc. It was bad. But not as bad as people make it out to be. I was employed, switched jobs, bought a house etc.. during the recession. The unemployment was around 10%. And I specifically remember Bob Rae (the premier of the time) saying Ontario is going to spend it's way out of the recession. What an idiot!
Yes, if you are over-extended in debt, then there is a problem to solve. Look at a recession as an opportunity. It has a tendency to bring home prices back to the ground, stocks also drop because companies tend to stop dividend payouts. So investments become more affordable.
To be ready, simply reduce your debt load. If you have no debt, the effect is minimal.
As for the future, I see no indication of a long recession. The rising dollar actually slows our economy and there is talk that the interest rate is going to fall by the fall. While inflation is on the way up, it is primarily due to energy costs, unlike the late 80's when it was everything.
BV
Quote:
Originally posted by Big Vee
Yes, if you are over-extended in debt, then there is a problem to solve. Look at a recession as an opportunity. It has a tendency to bring home prices back to the ground, stocks also drop because companies tend to stop dividend payouts. So investments become more affordable.
To be ready, simply reduce your debt load. If you have no debt, the effect is minimal.
Nice post Big Vee.
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Location: God's own country
Posted on: 29-05-06 10:50:48
Quote:
Originally posted by Big Vee
If you have no debt, the effect is minimal.
BV
Hi!
I donot agree to this statement !
During any recession, job loss is for sure. The people who will mostly be affected will be immigrants since they would be the junior most. What will you do with out a job? How will you survive? What will happen to your lifestyle?
Once it is recession, it will be a slow down of everything. Less things will be produces and this in turn will purge jobs. No one without a job will have the buying power.
And during recession, Immigrants will have a very hard time finding a job. Even at the peak boom time, Immigrants have a tough time finding jobs in Canada, just think of the situation during recession times.
But there is a silver lining to the cloud. When there is a recession in North America, it is always boom time in SE Asia (Malaysia, Singapore, HK, Thailand etc...). Gulf will also be stable in terms of their economy. So we people have alternate places to go to.
I remember an Indian who settled in Aussie land in 1992 (peak recession time). He could not find a job. He was living on welfare. in 1995 he took passport and left for Thailand and then Malaysia. In 1998 when Malaysia was under recession, he went to Aussie land .(It was boom time there) and he got a goood job , outside his profession. He now works as an accounts manager in coca cola.Just a story of a sand in the seashore for the benifit of CD's
TK
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I am a Gents and not a Ladies.
God forbids we find ourselves into this recession again, do we still get EI?
I believe you can remain in debt free in Canada only if you live in rented apartments forever and have no line of credit (I am not including credit cards as I never have any outstanding amounts on them).
But I am still surprised that a desi would have his house reposessed during meltdown, unless he/she has no EI, no savings, no other mode of income
I have survived on EI while paying my mortgage and condo fees. But it is no easy job. It eats in your savings. You have to cut down on everything. No digital cable, no outside food, no movies. I bought my house taking into the account, its affordability if I do not have a job. You still need to keep necessary evils like phone, internet service, car etc. etc.
Meghal
Location: God's own country
Posted on: 29-05-06 13:28:59
Quote:
Originally posted by meghal
God forbids we find ourselves into this recession again, do we still get EI?
I believe you can remain in debt free in Canada only if you live in rented apartments forever and have no line of credit (I am not including credit cards as I never have any outstanding amounts on them).
But I am still surprised that a desi would have his house reposessed during meltdown, unless he/she has no EI, no savings, no other mode of income
I have survived on EI while paying my mortgage and condo fees. But it is no easy job. It eats in your savings. You have to cut down on everything. No digital cable, no outside food, no movies. I bought my house taking into the account, its affordability if I do not have a job. You still need to keep necessary evils like phone, internet service, car etc. etc.
Meghal
Meghal,
You will get EI even during recession. The govt. has a big EI fund to last 5 or 6 recessions and so donot worry.
I donot know how you managed to pay your mortgage/Condo fees while at EI. EI max. benefit is $780 for 2 weeks (after tax). So this works to $1560 a month max. inclusive of all. How you managed is only what only God can answer.
The individual who lost his house must have been layed off and his mortgage must have been $2500+ (remeber those days interest was 18% +). He could not afford to run his family and pay the mortgage. Even if your salary is $180K a year, your max. EI is only $1560 for 4 weeks.
How can you be debt free when and if you have no job and bills/rent to pay?
TK
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I am a Gents and not a Ladies.
