Tag: Finance Posts

Lords Of Finance: The Bankers Who Broke The World

Book Reviews

I picked up a new book while camping this weekend, Lords Of Finance: The Bankers Who Broke the World. Given that I can usually get through most books in a few hours, I’m a bit surprised that I’ve spent nearly a full day reading this new book and still have about half to go — so it must be fairly large. Lords Of Finance is essentially a history of the modern financial system, with emphasis on the major players throughout the years. I’m currently reading about the Great Depression, and some of the decisions that led up to that. It seems pretty clear that nobody really understands how the global financial system works. Even some of the experts described in this book differed in their interpretations of events and their recommendations for helping stabilize the system. Many of them also teetered on the brink of personal bankruptcy throughout their life, […]

US Could Default On Debt Payments


I’m scheduling this post for when I’m out tomorrow for a while, so it’s possible the US may find some common ground on the current US debt negotiations. I don’t it though. Right now things aren’t looking very good for the United States, and the time is almost out where a solution can be reached and implemented before the debt ceiling expires. Negotiations continue to stall, and both sides seem unwilling to deal with some of the harder issues, like coming up with a long term financial strategy that will reduce the deficit and the debt. I actually thought there was only about a 10% chance that the US might default previously, but I’d say we’re probably looking at 50/50 right now. Either way, I think the ratings agencies should severely punish the US for the state it is in. What use is there in waiting until after a default […]

The Wheels On The Bus Go Round


I’m currently sitting in the Edinburgh airport in Scotland sipping on a rather expensive $6 diet coke while waiting for my flight to Dublin. I haven’t done a post on the economy in a while, so I figured it was about time. Lots is going on down south, none of it is good. Last weekend the US government came close to a shutdown due to the fact that they hit their congressionally approved debt ceiling. While it’s been raised previously, there’s growing concern that the US debt is at the point of no return. As a result politicians on both sides are trying to get both sides to agree to cuts. Unfortunately the cuts that are proposed are so small that they are basically insignificant. As Peter Schiff said, the cuts may as well be a rounding error in the math for all the good they will do. An article […]

The Impending Debt Crisis


It’s no secret that most of the organized governments in the world are essentially broke. The current debt to GDP ratio in the United States is almost 100%, a fairly incredible number that continues to rise. That number alone indicates that the US is in poor financial shape, and it’s not even that accurate a number. For example, the US has a number of off budget items that are technically debt as well – all the Freddy May and Fannie Mac purchases, Social Security (the US has been taking the money every year and basically putting an IOU in its place) and Medicare. If you factor in all of those items, realistically the debt-to-GDP ratio of the US is more like 500%. The United States only has a brief amount of time to get their financial house in order. Already the debt load in the United States is crippling the […]

Economies Based On Debt


One of the things I’ve come to realize over the last year is that in most cases, debt is horrible thing. Granted, many businesses look towards debt as a way to fund capital purchases in their beginning stages, and I have no problem with small business loans. But all the other debt that people are addicted to is ultimately bad for the economy in general. There are many people who believe that the reason housing prices are skyrocketing in North America, as well as education costs, is due to the availability of cheap credit. I’m one of those people. Stated another way, housing and education costs would be forced to come down if people couldn’t take out massive loans in order to fund them. It seems almost self-evident if you think about it – a product or a service that people can’t afford to pay for must eventually come down […]

Comparing RRSPs And TFSAs


A few years ago, the government opened up a new investment vehicle for people looking to save for retirement, the tax free savings account (TFSA). An RRSP is effectively a tax-deferred investment account. When you contribute to it, you are doing so out of pre-tax dollars (or, if you get a tax refund due to your contribution, you are getting the tax you paid on that amount back). Eventually you have to pay the piper, so when you start pulling money out of your RRSP to fund retirement, you will pay tax on that amount. The upside is that you’re able to invest pre-tax money (hence you have more of it). The downside is you’ll pay tax later on all the investment gains you make. TFSAs are a bit different. You contribute to them out of post-tax dollars, so there’s no immediate tax advantage. While it’s harder to contribute out […]

Inside The Economy


My background obviously isn’t in finance – I’m actually some weird hybrid between an electrical engineer and a physicist. While I understand a lot of the basics in finance, there are still quite a few gaps in my knowledge, and I’m slowly working towards filling those in. Last night I was pretty beat, so I crawled into bed and purchased a book about capitalism and the economy. I actually managed to read most of that in a few hours, and decided I’d grab another book as well. Wouldn’t you know it, I finished that one as well sometime around midnight, and passed out on the couch. Both books gave pretty dismal predictions about what may happen in the United States in the next few years. They also gave a brief history of capitalism and some rather interesting insights into what’s going on now. Like I said, a lot of this […]