Thinking of buying yourself another car, opening a business in India or building a house? Maybe you should think again, unless you’re not banking on your bank to get there. According to reports, this week was the nastiest of the year for the Dow Jones as it dropped 1.7% in the second week of April while German, UK and French markets all dropped by more than 2%. Analysts suggest worries regarding the stability of the world economy are to blame for the decrease (a no-brainer if you ask me). And though there have been reasons to be optimistic with announcements of job growth in certain sectors in Canada and the United States, deep-rooted problems and debt continue to plight the recovery of the full economic system. Concerns appear to be mounting that Canadian non-mortgage, consumer debt is on the rise, the Bank of Canada governor Mark Carney recently spoke to the Canadian Press about the issue that he’s been sounding warnings about for more than a year, saying, “In exceptional circumstances, if there are issues that threaten financial stability, such as household debt … the bank could use monetary policy for that purpose. That factors into our decision-making without question.” Spain continues to face borrowing costs of nearly 6% in tandem with industrial output down 5% from last year, a number of countries are continuing with austerity measures (Canada included however, our government is deliberately avoiding the ‘a’ word while favouring the term ‘budget cuts’) and Finnish cell phone company Nokia had its shares fall 17 percent after announcing they expect losses in the first half of the year are all examples of how a the dramatically changing world is continuing to throw tremors our way that will be felt for months to come. The above sentiments seem to be shared by the BBC’s very animated business reporter and TV presenter Aaron Heslehurst who gives a rundown of the essential financial story and explains why 2012 may be a “carbon copy” of 2011 in this video. Heslehurst points out that the Eurozone crisis’ are “back on the table” as various countries bond yields are “up across the board” even in France, a country that has managed to keep its economic name less tarnished than neighbouring Italy, Spain, Portugal and Greece. The video also mentions that in China growth is slowing and inflation is up. And just today news has surfaced that electronics giant Sony will be letting 10,000 of its global workforce go as it reformulates the business in order to compete. So even though there have been some positive signs – things are still shaky. Keep saving, keep planning and be cautious with your money. | Raymond Matt, CFP, CLU, TEP, CHS | The Ontarian, Writer, Editor
Subscribe to: Post Comments (RSS2)