Whither the economy?

[North Shore]

[I hate to be a wet blanket, but...] Just reading on some of the other threads: 15 tails at Encore, Air Canada on the cusp of a hiring binge, and regionals and tier 3s on the go, trying to keep up..
But, oil is in the toilet, the dollar is sinking to all-time lows, multi-billion deficits in several provinces and federally, little ( to my knowledge) mineral exploration, manufacturing in Ontario still not rcovered from 2008..

Ive heard two things said about the aviation business cycle through my career - the first is that aviation goes in seven year cycles: up in the late 90s, stopped on Sept 11th, recovered and then stopped in 2008, recovered great guns to now; the second is that aviation is the first to layoff in a downturn, and the last to hire in an upturn.. While I have seen a few cycles come and go, there doesn't seem to be any signs of a downturn in aviation right now, but...

As Freddy Laker said, its all about getting bums in seats; one wonders if people will be able to afford to put their bums in seats much longer, given my above points on the economy.

Thoughts?

[Roar]

Yes. Don't worry about it. What will happen is beyond the control of us working stiffs, Good and bad.

[Rookie50]

NS,

I've expressed my thoughts on more than one site, including this one. I've been in the investment management business 18 years. I have my finger on the pulse of the economy here, and more importantly the US.

I have some deep big picture concerns, mostly relating to debt carried on many levels, and unsupported by growth. This is a worldwide problem.

I can't give a timeline, or the precise catalyst, but I'll tell you this with high confidence: Whenever interest rates start to really rise -- and this won't be in governments control when it does -- a lot of people, and governments, will be in a deep world of hurt. Might make 2008 look like a tea party.

I'll add most people I know with investable capital, in Canada, are all in on real estate, with lots of debt carrying that. This, is a mistake. One of the most expensive assets in the world -- Canada real estate.

We, all collectively cannot continue on this debt fueled path.

Cut your debt----

-- that is all ---

[North Shore]

Yes. Don't worry about it. What will happen is beyond the control of us working stiffs, Good and bad.

Im not that worried about it - I feel that I'm pretty safe, recession-wise. And, you are correct, I can't really do anything about it anyway. What we can control is our movement - in a rcessionary environment, there's a world of difference between being #1 or BOTL at OneBigAirline...

Rookie, yes, unsustainable debt...if your parents didn't scream "Money doesn't grow on trees!" at you on a regular basis while you were growing up, you should sue for child abuse!

[Flypilot]

While I have seen a few cycles come and go, there doesn't seem to be any signs of a downturn in aviation right now, but...

I've been thinking about the same thing. Happy things are going well at the moment though!

[Flybabe]

NS,

I've expressed my thoughts on more than one site, including this one. I've been in the investment management business 18 years. I have my finger on the pulse of the economy here, and more importantly the US.

I have some deep big picture concerns, mostly relating to debt carried on many levels, and unsupported by growth. This is a worldwide problem.

I can't give a timeline, or the precise catalyst, but I'll tell you this with high confidence: Whenever interest rates start to really rise -- and this won't be in governments control when it does -- a lot of people, and governments, will be in a deep world of hurt. Might make 2008 look like a tea party.

I'll add most people I know with investable capital, in Canada, are all in on real estate, with lots of debt carrying that. This, is a mistake. One of the most expensive assets in the world -- Canada real estate.

We, all collectively cannot continue on this debt fueled path.

Cut your debt----

-- that is all ---

100% agree with that, Rookie50. The housing bubble is about to burst. Not if, but when.

[fish4life]

It is the hardest decision right now, stay at the recession proof job or make the jump to the airline one before you end up behind (potentially) a couple hundred guys.

[cgzro]

recession proof job

What would that be?

[Panama Jack]

recession proof job

What would that be?

1) Tax Collector
2) Prostitute
3) Drug Dealer

The Government will never go out of business, and people will always have money for addictions and guilty pleasures.

[Panama Jack]

On another topic, read some predictions published a few months ago about a 50 US cent Canadian dollar within a couple of years. Remains to be seen, but I think the Canadian dollar has definately not bottomed out yet; the consequences for Canadian aviation with many of their costs in USD's is serious.

[fish4life]

recession proof job

What would that be?

Fly to reserves, pop and chips will need to be delivered no matter how good the economy is.

[JohnnyHotRocks]

Justin will save us all. The budget will balance itself!

[iflyroads]

Funeral Homes....they never go out of business.

[xsbank]

Aviation is always out of step with the economy, it lags. All of the things that are needed to add capacity are slow to bring up to speed and very expensive. But stopping the extra capacity can be done in a heartbeat - return the leased junk and lay off. The big problem with the economy is the scare tactics: "the housing bubble will burst" "the dollar will collapse" "oil will never recover" and the best of all, "interest rates will rise." All of this is true, eventually, but there is nobody on this site that can control any of it except to see what happens. Sadly, even fire bombers can get laid off. I hope I can continue to buy groceries with my pensions but the government is not above defaulting on their share either.

My part of Canada should be ok until the Asians decide this place has nothing left to spend money on then they all decamp to Denver, or wherever, then we will all be riding bicycles and eating raccoons.

[Strobes]

recession proof job

What would that be?

1) Tax Collector
2) Prostitute
3) Drug Dealer

The Government will never go out of business, and people will always have money for addictions and guilty pleasures.

Agree on:
4) Government worker. Especially if your government believes in Keynesian economics. Or is a Western World socialist state. Or both.


I just purchased a house a couple years back. In a perma-depressed economic area. But that doesn't stop me from worrying a bit, and starting a business. Suddenly, a bit of extra money on the side helps so much, and I'm that much more recession-proof.

Remember folks, if you're your own boss, you can't get fired or laid off!

[YYZSaabGuy]

Remember folks, if you're your own boss, you can't get fired or laid off!

Sure you can: your customer(s) can fire you. It's just called going out of business, or going bankrupt. Or both.

[Rookie50]

NS,

I've expressed my thoughts on more than one site, including this one. I've been in the investment management business 18 years. I have my finger on the pulse of the economy here, and more importantly the US.

I have some deep big picture concerns, mostly relating to debt carried on many levels, and unsupported by growth. This is a worldwide problem.

I can't give a timeline, or the precise catalyst, but I'll tell you this with high confidence: Whenever interest rates start to really rise -- and this won't be in governments control when it does -- a lot of people, and governments, will be in a deep world of hurt. Might make 2008 look like a tea party.

I'll add most people I know with investable capital, in Canada, are all in on real estate, with lots of debt carrying that. This, is a mistake. One of the most expensive assets in the world -- Canada real estate.

We, all collectively cannot continue on this debt fueled path.

Cut your debt----

-- that is all ---

100% agree with that, Rookie50. The housing bubble is about to burst. Not if, but when.

Further to that; US five year interest rates are (quietly) near 3 year highs today. 5 year mortgage rates are set off this. Still extremely low and below inflation. If they start to move up a lot -- This matters a lot. Millions of people who are 90% financed, will have a problem when floating rates move.

And no, governments have no control over what sophisticated investors will pay for bonds, which determines interest rates, which in turn determine mortage rates. Someday Bond buyers will demand a fair return, something higher than inflation.

If this in turn leads to a housing correction, even fixed rate mortgage holder are subject to re - assessment.

Cut your personal debts, my $0.02 of advice.

Don't mean to be negative but I know what I'm talking about here. Not a Rookie Don't want to see people lose their houses.

[Mach1]

1. Ontario needs to come to terms with the fact that all that manufacturing that left is never coming back. A new economy needs to be built.

2. We escaped the global meltdown relatively unscathed... perhaps we were just behind the curve and we'll come late to the financial correction party.

3. Eventually, the government is going to hike the taxes to the point that no one can move up the economic ladder and we all become reliant on government subsidies to survive... an economic death spiral for any country. IMHO, we are teetering on the precipice right now.

4. Jump on an airliner if that is your career goal. Even if things here collapse, that type rating will be valuable on the international market where there is a pilot shortage... providing you are comfortable going abroad.

Last one, fun with maths, JSYK. On a 25 year amortized mortgage, for every 1% your interest rate goes up, your monthly payments increase 9%. If the prime rate returns to the 100 year average of 4%, your monthly mortgage payments will increase roughly 36%. Yes, too much debt is bad.

[mbav8r]

3. Eventually, the government is going to hike the taxes to the point that no one can move up the economic ladder and we all become reliant on government subsidies to survive... an economic death spiral for any country. IMHO, we are teetering on the precipice right now.

Yes, very much a concern for me, after you factor in property/school tax, PST, GST and then income tax, I'm at over 50 cents of every dollar I make goes to these rotten thieves.
The Manitoba NDP, if reelected, plans to increase taxes or a surcharge on Manitobas wealthiest but this is the best part, that kicks in at 67,000.00, yep if you want to be considered wealthy in Manitoba that's all you need to earn. Apparently we already lead a very comfortable life and need to do more, news to me, I guess half is not enough for these fu%^ers, they want more!
If NDP gets in again, I'm fucken moving, I've had enough! Where? I don't know but somewhere I can keep a little more of my income, if that exist. Can anyone offer some insight on that, I know Alberta has NDP now so it's only a matter of time before they reach into their pockets, that is 100% guaranteed, it will happen if it hasn't already.

[schnitzel2k3]

I love it when people spout the same doom and gloom they read in the paper without thinking constructively and for themselves.

The only people seriously affected by this downturn are the formerly filthy rich oil and iron workers, who are now dirt poor with drug and alcohol problems and three sleds in their garage because they lacked any economic foresight to save.

Unfortunately the economy that surrounds this industry is also affected including aviation. There will be a contraction but it's only a reset from the crazy oil bubble. Will we ever go back to those 150-200 dollar per barrel days? I hope not.

That being said, aviation in this country is growing with regards to global economic demand, and with retirements on the horizon with all of the baby boomer generation finally ready to ruin the pension system after their elongated careers, the growth should remain steady as we've seen.

There will likely be a housing reset in Calgary, Fort McMurray and Edmonton as the economy adjusts for these new oil prices, but shouldn't be too drastic. If we had this oil drop and an interest rate hike, you'd likely see some foreclosures, but I don't see that happening.

As far as canadian housing, there will be a dip in pricing as interest rates rise with the market, but we won't see the fallout of 2007/08 like the U.S. did. Did you see what those people signed for mortgages. Ridiculous.

If anything the exchange rate right now is good for the economy here because our labour rates are relatively cheaper so it would be nice to see some U.S or global manufacturing make it's way back to our shores.

Live within your means, budget accordingly, save appropriately.

And don't stress, the biggest danger in economics is a self fulfilling prophecy.

S.