Traf,
Good thing you never applied because you would'nt have gotten in anyways.
Your barely veiled anti-french comments wich I have noticed many times before just show what a racist red-neck you are.
money
Moderators: sky's the limit, sepia, Sulako, lilfssister, North Shore, I WAS Birddog
Not only a racist. a moron to boot. Glad to see that someone believes their own company propaganda. Have you renewed your subscription to PRAVDA while you were typing your rant.
Pension or no pension? WTF! If I have a choice of making $50K with a pension, or $100K without. I'll go without. I can sure as hell put away a nice RRSP with the extra 50K per year. That Max RRSP contribution, invested in a well managed mutual fund, will pay a hell of a lot better than some bullshit pension. A RRSP is just a self directed pension plan.
Know of what you speak before you type. Mutt.
Pension or no pension? WTF! If I have a choice of making $50K with a pension, or $100K without. I'll go without. I can sure as hell put away a nice RRSP with the extra 50K per year. That Max RRSP contribution, invested in a well managed mutual fund, will pay a hell of a lot better than some bullshit pension. A RRSP is just a self directed pension plan.
Know of what you speak before you type. Mutt.
And to Mr. Skunk:
Well thought out. It sounds like you work there and actually know about what you are talking about. Nice to see the truth laid out plain and simple!
Not saying the place is good or bad. Depends on individual wants and circumstances. Just nice to see somebody put it out there plainly, so that someone looking at making the jump know exactly what they are getting into.
Well thought out. It sounds like you work there and actually know about what you are talking about. Nice to see the truth laid out plain and simple!
Not saying the place is good or bad. Depends on individual wants and circumstances. Just nice to see somebody put it out there plainly, so that someone looking at making the jump know exactly what they are getting into.
Awwww, is babybus gonna cry? Oh no, I wouldn't have gotten in to AC if I applied! Oh me oh my!!! How will I sleep tonight?! I am not the equal of those who had their daddy get them a job!!! PFFFFT!!!
I highly doubt that if I had interviewed at AC I would have made fun of the French, gays, whites, Hispanics, Middle easteners , women, Muslims, Christians, Liberal, Conservatives, Green party or the NDB. Come on moron, no one is that dumb.
What I was referring to was superiorwhore's lack of spelling ability. Most times on here it is because english is their second language or in SW's case, she just might be very dumb.
Don't be such a sensitive whiner!
I highly doubt that if I had interviewed at AC I would have made fun of the French, gays, whites, Hispanics, Middle easteners , women, Muslims, Christians, Liberal, Conservatives, Green party or the NDB. Come on moron, no one is that dumb.
What I was referring to was superiorwhore's lack of spelling ability. Most times on here it is because english is their second language or in SW's case, she just might be very dumb.
Don't be such a sensitive whiner!
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beaverboy2
- Rank 0
- Posts: 2
- Joined: Thu Jul 19, 2007 8:29 pm
Hmmm.... last I heard, if you make an extra $50,000 and taxed at 50%, yes Traf you're right, that's only an extra $25,000 of take home pay. Until you invest $50,000 into your retirement (ie. RRSP) and get that $25,000 back from the tax man. (Obviously given your max RRSP contributions can handle it) So it all evens out in the end..... $50,000 earned is $50,000 invested.
Couldn't help it seeing as how quick you are to point out what you see as everybody's flaws.....
Couldn't help it seeing as how quick you are to point out what you see as everybody's flaws.....
Yeah dumb it down for me because the math does not add up. Now you are claiming that if you invest 50k, you would get that 25k back from the taxman? Those are your words, not mine. Great theory but I have one question for you. WHAT ARE YOU LIVING ON? Great thought dumbass! Make 100k and invest 50k. Remind me again how much money you will have in your pocket to live on after you have invested 50k when your gross is 100k, meaning your take home is around 50k? I guess if you are making contirbutions to your RRSP you don't have to eat or pay your mortgage?
Are you guys mixing alcohol with the kool-aid now? I know WJ is a great place to work and most people are happy there which is huge in my eyes compared to Jazz. Forget the money, job satisfaction is worth a hell of a lot more than the pay and the morale at Jazz is at an all time low. But seriously guys, try and look at realities and not spill your kool-aid onto everyone's table. Yes, there is more salary to be made at WJ but you can't pull a rabbit out of a hat. There is no way in hell that a 100k salary means you can invest 50k/year in RRSP's. Even if you can survive on that, your argument about salary vs pension is lost as you are having to invest close to 100% of your take home just to have a retirement. I am going to call BS on this one. A person making 100k/year does NOT have 50k to invest so that he can get 25k back from the taxman.
So please, four1oh, put down your pom-poms, get off you knees and ask beaverboy2 face to face to dumb it down again because your hero's numbers just don't seem to add up!
Are you guys mixing alcohol with the kool-aid now? I know WJ is a great place to work and most people are happy there which is huge in my eyes compared to Jazz. Forget the money, job satisfaction is worth a hell of a lot more than the pay and the morale at Jazz is at an all time low. But seriously guys, try and look at realities and not spill your kool-aid onto everyone's table. Yes, there is more salary to be made at WJ but you can't pull a rabbit out of a hat. There is no way in hell that a 100k salary means you can invest 50k/year in RRSP's. Even if you can survive on that, your argument about salary vs pension is lost as you are having to invest close to 100% of your take home just to have a retirement. I am going to call BS on this one. A person making 100k/year does NOT have 50k to invest so that he can get 25k back from the taxman.
So please, four1oh, put down your pom-poms, get off you knees and ask beaverboy2 face to face to dumb it down again because your hero's numbers just don't seem to add up!
Traf, here is how the whole system works. Lets assume a third year first officer, as they would now be on an hourly rate. Your total compensation is comprised of cast, stock option, employee share purchase plan and profit share.
1. Stock option: you have the choice of receiving addition hourly rate pay. The base is $59.26, but then you would receive $29 246 in stock that you can sell after two years. This is called the 100% option. Or take more cash at up to $82.11 hour and receive $7 312 in stock (25% option). This is "free stock". So you can choose how you want your money.
2. Cash. If you choose 25% option your looking at $80 000. Include some overtime add another $5000.
3. Profit. This will vary of course, but on average I have been told it is about %10 of your take home. Lets say $5000.
4. ESP. WJ will match 20% of your gross salary. That includes the addtional pay you took home due to your reduced stock option value. This can be in RRSP shares or Non-RRSP your choice or how or if you split it. So if you are making $95 000 @%20 = $19 000 of stock. So now the company matches that for a total of$38 000 of stock. Yes, you take home less due to the purchasing of stock, but it is RRSP deductable
So for the year you get $38 000 ESP stock, $7312 stock option equals $45312 of stock for the year. Now you have to get an advisor to plan properly for retirement.
This is only for a third year first officer too and you can make more with overtime then what I have stated and more on profit sharing.
Jazz has alot of good people working for them. I spent some time there on the RJ and I had some good times. You just can't compare the money. If I have make any mistakes please correct me
1. Stock option: you have the choice of receiving addition hourly rate pay. The base is $59.26, but then you would receive $29 246 in stock that you can sell after two years. This is called the 100% option. Or take more cash at up to $82.11 hour and receive $7 312 in stock (25% option). This is "free stock". So you can choose how you want your money.
2. Cash. If you choose 25% option your looking at $80 000. Include some overtime add another $5000.
3. Profit. This will vary of course, but on average I have been told it is about %10 of your take home. Lets say $5000.
4. ESP. WJ will match 20% of your gross salary. That includes the addtional pay you took home due to your reduced stock option value. This can be in RRSP shares or Non-RRSP your choice or how or if you split it. So if you are making $95 000 @%20 = $19 000 of stock. So now the company matches that for a total of$38 000 of stock. Yes, you take home less due to the purchasing of stock, but it is RRSP deductable
So for the year you get $38 000 ESP stock, $7312 stock option equals $45312 of stock for the year. Now you have to get an advisor to plan properly for retirement.
This is only for a third year first officer too and you can make more with overtime then what I have stated and more on profit sharing.
Jazz has alot of good people working for them. I spent some time there on the RJ and I had some good times. You just can't compare the money. If I have make any mistakes please correct me
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superiorwhore
- Rank 3
- Posts: 155
- Joined: Fri Jul 07, 2006 10:19 pm
First off I must say that I have never saw one guy on this site call sooo many people arrogant pompass ass's. You tell us to grow up. WOWTraf wrote:Remind me again how much money you will have in your pocket to live on after you have invested 50k when your gross is 100k, meaning your take home is around 50k? I guess if you are making contirbutions to your RRSP you don't have to eat or pay your mortgage?
Now to your quote, read it.
Now you do realize that the first 2 years a Jazz your making 35K and 42 K respectively and yet folks are doing just that, paying mortgages, rent, whatever. Now what is the difference of investing 50K of a 100K salary. Hell if you invest 50K your still up 15 K from what jazz's gross is for the first year.
your salary arguement is lost my friend. I'd take the stock and invest it into an RRSP over Jazz's shit ass pension plan any day.
here just to save you the time of saying the same thing AGAIN.
get on your knees and open up superior.
Self respect for sale.
29 Chev, if you make 100,000 your take home (depending on which province you live in) will be roughly 70,000 not 50,000. I don't work for WestJet but my understanding is, if the pilot opts for maximum stocks and matching..and the company does well the pilot doubles their salary. The salary seems to be pretty close to the 320 pay at AC without the added benefits.
Maximum RRSP contributions per year right now is just under 20,000 of which you will get around 8000 back. You can invest more in but you are going to have to pay tax on it.
Traf, you might want to take a closer look at your pension. It is not indexed for inflation. If you are young(ish) and think you are going to retire off what you get from Jazz in 30 yrs, as it stands now its not going to be worth very much (around 20,000 at todays buying power) You would be far better off with increased pay, stock options, RRSP matching and profit shares.
Maximum RRSP contributions per year right now is just under 20,000 of which you will get around 8000 back. You can invest more in but you are going to have to pay tax on it.
Traf, you might want to take a closer look at your pension. It is not indexed for inflation. If you are young(ish) and think you are going to retire off what you get from Jazz in 30 yrs, as it stands now its not going to be worth very much (around 20,000 at todays buying power) You would be far better off with increased pay, stock options, RRSP matching and profit shares.
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beaverboy2
- Rank 0
- Posts: 2
- Joined: Thu Jul 19, 2007 8:29 pm
Ok, I guess I'm going to have to 'dumb it down'.
For simplicity's sake, let's just say you make $100,000/year and the tax man takes 50% of that every year. At this point, you've made $50,000 after taxes in your pocket without investing a cent. Now, let's say before that year's RESP deadline you invest $50,000. (Who cares where you get it from savings, beg, borrow, or steal. It doesn't really matter) Because you are in a 50% tax bracket and taxed as such, that $50,000 invested yields a return of $25,000 back to you in tax savings. That's the incentive the government gives for people to save for retirement and old age.
By doing it this way, at the end of the fiscal year you'll have paid $25,000 to the taxman, invested $50,000 for your retirement (or whatever), and put $25,000 of take home pay in your pocket. (=$100,000)
Obviously, most people can't afford to invest $50,000 a year on a $100,000 salary but these are the facts on how the system works whether you like it or not TRAF.
IF you're interested, the next lesson on financial planning will cost you. And yes, that means it'll come out of your after tax take home pay.....
For simplicity's sake, let's just say you make $100,000/year and the tax man takes 50% of that every year. At this point, you've made $50,000 after taxes in your pocket without investing a cent. Now, let's say before that year's RESP deadline you invest $50,000. (Who cares where you get it from savings, beg, borrow, or steal. It doesn't really matter) Because you are in a 50% tax bracket and taxed as such, that $50,000 invested yields a return of $25,000 back to you in tax savings. That's the incentive the government gives for people to save for retirement and old age.
By doing it this way, at the end of the fiscal year you'll have paid $25,000 to the taxman, invested $50,000 for your retirement (or whatever), and put $25,000 of take home pay in your pocket. (=$100,000)
Obviously, most people can't afford to invest $50,000 a year on a $100,000 salary but these are the facts on how the system works whether you like it or not TRAF.
IF you're interested, the next lesson on financial planning will cost you. And yes, that means it'll come out of your after tax take home pay.....
Go ahead, draw me the picture four1hole. Draw me a picture of your 85K year and you investing 50k. I would love to see that picture.
Beaverboy tried to make it sound simple but he keeps leaving out the fact that you still need money to survive throught the year. Great theory but the reality is, the mortgage has to be paid, you need gas for your SUV, kids gotta eat etc... One can't simply bank all of his earnings so that they can be invested at the end of the year and that is essentially what your arguments are. You are making the assumptions that you will have a savings. Correct me if I am wrong but after the 1st and 2nd years at WJ, AC or JAZZ, savings is not something that most people have a lot of. Borrowing sounds great. At what interest rate? 10%? In that case, every Jaz pilot could do the same. Even if you borrow the money, you still have to pay that back so again the math does not add up to 100k=50k disposable income for investments.
I don't doubt that the WJ people have some great strategies for turning their extra coin into retirement savings. I would hope everyone there does. I just can't sit back and believe the BS when someone says that an 85-100k/year salary means a straight up investment of 50k in RRSPs annually.
Superiorwhore said:
Beaverboy tried to make it sound simple but he keeps leaving out the fact that you still need money to survive throught the year. Great theory but the reality is, the mortgage has to be paid, you need gas for your SUV, kids gotta eat etc... One can't simply bank all of his earnings so that they can be invested at the end of the year and that is essentially what your arguments are. You are making the assumptions that you will have a savings. Correct me if I am wrong but after the 1st and 2nd years at WJ, AC or JAZZ, savings is not something that most people have a lot of. Borrowing sounds great. At what interest rate? 10%? In that case, every Jaz pilot could do the same. Even if you borrow the money, you still have to pay that back so again the math does not add up to 100k=50k disposable income for investments.
I don't doubt that the WJ people have some great strategies for turning their extra coin into retirement savings. I would hope everyone there does. I just can't sit back and believe the BS when someone says that an 85-100k/year salary means a straight up investment of 50k in RRSPs annually.
Superiorwhore said:
Superiorwhore, I just figured it out, you aren't english handicapped, you are just fucking stupid. Have you not been reading or do you have problems with that also? 100k salary does NOT leave you with 50k to invest!!! If it did, you would have zero to live on. If that is our argument, no one would care because with zero cost of living, even Jazz pilots would live like kings. At least beaverboy is trying to make an argument with some numbers etc... but you just make no sense at all. I don't think I will take my advice from someone who talks about my "PENTION". IIf you are a WJ pilot, they better start do cog tests or maybe even and a spelling Bee in the interviews. Everyone makes spelling mistales on here because most don't give a shit but you my friend have to be one of the worst. Bon soir!!!Now you do realize that the first 2 years a Jazz your making 35K and 42 K respectively and yet folks are doing just that, paying mortgages, rent, whatever. Now what is the difference of investing 50K of a 100K salary. Hell if you invest 50K your still up 15 K from what jazz's gross is for the first year.
Okay everybody. Lets get this straight. With WJ you are NOT investing $50 000 of your gross salary into stock. The company gives you anywhere from $7313 to $29 000 in stock options. Plus you can choose to buy up to %20 of your salary more stock. If you are making $85 000 that would be about $17 000. WJ will match this giving you another $17000.
Salary 85 000- ESP= $68 000
Stock $17 000 + $17 000 + $7 312 (low side) = $41312
or 100% stock option $17 000 + $17 000 + $29 000 = $63 000
Salary 85 000- ESP= $68 000
Stock $17 000 + $17 000 + $7 312 (low side) = $41312
or 100% stock option $17 000 + $17 000 + $29 000 = $63 000
swampie You said
Wikipedia says
Depending on the vesting schedule and the maturity of the options, the employee may elect to exercise the options at some point, obligating the company to sell the employee it's stock at whatever stock price was used as the strike price. At that point, the employee may either sell the stock, or hold on to it in the hope of further price appreciation.
so the options are not free you have to buy them at the strike price, now if the stock has gone up great you sell and make a small profit or you keep it(the stock) as savings but you still need the cash to buy the options.
where does all this investment income come from after taxes and rent............ clearly I save my cash all wrong.
29
The company gives you anywhere from $7313 to $29 000 in stock options
Wikipedia says
Depending on the vesting schedule and the maturity of the options, the employee may elect to exercise the options at some point, obligating the company to sell the employee it's stock at whatever stock price was used as the strike price. At that point, the employee may either sell the stock, or hold on to it in the hope of further price appreciation.
so the options are not free you have to buy them at the strike price, now if the stock has gone up great you sell and make a small profit or you keep it(the stock) as savings but you still need the cash to buy the options.
where does all this investment income come from after taxes and rent............ clearly I save my cash all wrong.
29
29chev, no you are right. I should not have used the word "gives". You do purchase the stock options from the company. You have a choice of how much stock options to purchase 100%, 75%, 50% or 25%. When you choose your amount you also have chosen your hourly rate. So if you choose 25% your hourly rate is $82.11. You choose 100% you get $59. an hour. The salary amounts I have quoted already had the stock option deducted.
You bet if the stock price drops below the strike price you can lose money. That's why most people take the 25% for the higher hourly. They have a litte more control.
You bet if the stock price drops below the strike price you can lose money. That's why most people take the 25% for the higher hourly. They have a litte more control.
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Brick Head
- Rank 8
- Posts: 882
- Joined: Fri Jul 22, 2005 4:37 pm
I am guessing that the majority of posters here are young and probably don't remember 20% interest rates. Yeah the early eighties.
I am of course, a product of my own experience. One of the things I have noticed is that those under 40 and more so under 30 think cheap money is a given.
One of the flaws I see in the type of investing discussed above is exposure to debt. Lets say an individual starts borrowing money for RRSP's. Lets even say they are really disciplined and when the Tax return comes in they drop it back on the money they borrowed. The end result is still a tax deductible debt payment that reduces disposable income. Continued repetition of this practice can put individuals into situations where disposable income no longer meets living expenses unless income is increasing with debt. Granted probably happening for most WJ pilots. This has become a standard practice for many. In fact many retirement planners recommend using home equity to invest and so forth.
If interest rates jump when an individual is in a situation of high investment debt and mortgage debt you are in trouble. I here people say all the time. I will just sell if I get into trouble. Think again. Everyone around you, pinched by an interest rate jump, will be trying to liquidate at the same time driving markets and housing prices down.
I am not suggesting that interest rate are going to 20%. However I am suggesting that they have only one direction to go. Ask yourself. What would 8-10% rates do to me? Would I be forced to unload assets even if it meant a loss? Use moderation. And above all do not presume that what works now will continue to work into the future.
The Baby Boomer's are just starting to retire and are an enormous part of our economic engine that monetary policy will strive to protect. Once retired, most Boomer's will be invested in guaranteed certificates of one form or another, that depend on interest rates. Central banks will, in the future, be very diligent in protecting the Boomer's disposable income from erosion. Higher interest rates will drive down inflation and provide investment income.
Investing using borrowed money is not risk free. I am not saying don't do it. I am just suggesting use moderation and don't think you can just bail yourself out by selling if it were to happen.
I watched individuals loose everything in the early eighties and had to start over.
From an old guy. Take it as you will.
I am of course, a product of my own experience. One of the things I have noticed is that those under 40 and more so under 30 think cheap money is a given.
One of the flaws I see in the type of investing discussed above is exposure to debt. Lets say an individual starts borrowing money for RRSP's. Lets even say they are really disciplined and when the Tax return comes in they drop it back on the money they borrowed. The end result is still a tax deductible debt payment that reduces disposable income. Continued repetition of this practice can put individuals into situations where disposable income no longer meets living expenses unless income is increasing with debt. Granted probably happening for most WJ pilots. This has become a standard practice for many. In fact many retirement planners recommend using home equity to invest and so forth.
If interest rates jump when an individual is in a situation of high investment debt and mortgage debt you are in trouble. I here people say all the time. I will just sell if I get into trouble. Think again. Everyone around you, pinched by an interest rate jump, will be trying to liquidate at the same time driving markets and housing prices down.
I am not suggesting that interest rate are going to 20%. However I am suggesting that they have only one direction to go. Ask yourself. What would 8-10% rates do to me? Would I be forced to unload assets even if it meant a loss? Use moderation. And above all do not presume that what works now will continue to work into the future.
The Baby Boomer's are just starting to retire and are an enormous part of our economic engine that monetary policy will strive to protect. Once retired, most Boomer's will be invested in guaranteed certificates of one form or another, that depend on interest rates. Central banks will, in the future, be very diligent in protecting the Boomer's disposable income from erosion. Higher interest rates will drive down inflation and provide investment income.
Investing using borrowed money is not risk free. I am not saying don't do it. I am just suggesting use moderation and don't think you can just bail yourself out by selling if it were to happen.
I watched individuals loose everything in the early eighties and had to start over.
From an old guy. Take it as you will.
No one at WJ is going to tell you the first 2 years are easy, then again they aren’t going to say don’t do it either. 40K for first year, 50K for second year salary. You’re in the money by year 3.
Depending on what your personal financial situation allows, you can contribute up to 20% of your salary, in any increment from 0%. You can also do it RRSP deducted from source (also in any increment) so your take home pay isn’t as bad as if it was non-registered. Personally I went 50/50. 50% RRSP deducted from source, 50% non registered.
With the company matching your contribution your basically banking 40% of your salary, which you have access to after 2 years. Most people sell there shares and reinvest those funds into something else.
There are also the stock options of 5K each year for the first 2 years. Depending on what the stock does you can make money, or lose nothing. With the strike price for this year, looks good for making money with the current price let alone what the analysts predict. If not oh well, I won’t loose any money either.
Then we have the profit sharing twich a year. This one coming up will be my first one. I hear very good rumors!!! If you look back at the last one, FO’s took home around $2500, that’s a nice injection of disposable funds. This one is rumored to be much bigger. We shall see.
There is also the ability to do overtime. I hear some very hard working FO’s are making 10-20K a year in overtime. With 15 guarantied days off a month (most getting 16-18 off) working an extra few days isn’t that bad.
After asking all my captains on what they make and so on, I can tell you I have yet to come across a single one that feels he/she are paid poorly. Most are laughing all the way to the bank. They are contributing 30-40K a year, matched by the company. So assuming the stock does NOTHING, they are banking 60-80K a year towards retirement.
I myself will have about 10K at the end of first year, and 30K by the end of year 2. My lifestyle would be similar to the first 2 years at Jazz, only I would have 30K+ in the bank. Not bad.
Sure it’s not a pension, then again AC’s pension is severely under funded, Jazz’s just sucks, and personally I would rather have control of my own money. IMHO anyway.
Depending on what your personal financial situation allows, you can contribute up to 20% of your salary, in any increment from 0%. You can also do it RRSP deducted from source (also in any increment) so your take home pay isn’t as bad as if it was non-registered. Personally I went 50/50. 50% RRSP deducted from source, 50% non registered.
With the company matching your contribution your basically banking 40% of your salary, which you have access to after 2 years. Most people sell there shares and reinvest those funds into something else.
There are also the stock options of 5K each year for the first 2 years. Depending on what the stock does you can make money, or lose nothing. With the strike price for this year, looks good for making money with the current price let alone what the analysts predict. If not oh well, I won’t loose any money either.
Then we have the profit sharing twich a year. This one coming up will be my first one. I hear very good rumors!!! If you look back at the last one, FO’s took home around $2500, that’s a nice injection of disposable funds. This one is rumored to be much bigger. We shall see.
There is also the ability to do overtime. I hear some very hard working FO’s are making 10-20K a year in overtime. With 15 guarantied days off a month (most getting 16-18 off) working an extra few days isn’t that bad.
After asking all my captains on what they make and so on, I can tell you I have yet to come across a single one that feels he/she are paid poorly. Most are laughing all the way to the bank. They are contributing 30-40K a year, matched by the company. So assuming the stock does NOTHING, they are banking 60-80K a year towards retirement.
I myself will have about 10K at the end of first year, and 30K by the end of year 2. My lifestyle would be similar to the first 2 years at Jazz, only I would have 30K+ in the bank. Not bad.
Sure it’s not a pension, then again AC’s pension is severely under funded, Jazz’s just sucks, and personally I would rather have control of my own money. IMHO anyway.
The feet you step on today might be attached to the ass you're kissing tomorrow.
Chase lifestyle not metal.
Chase lifestyle not metal.
Regarding interest rates, Brick Head wrote:
"However I am suggesting that they have only one direction to go."
From your self description I am sure you have had more birthdays than I have shits; however, I wouldn't be so sure about your statement.
Keep an eye on the Fed during the next few rate decisions, I wouldn't be surprised if they dipped a quarter of a percentage point or so. Inflation, for the most part, is in check in this country.
Please feel free to repost this thread in 6 months when the rates have jumped and I will eat my words. I am in no way an economist, but I do keep a keen eye on such things.
"However I am suggesting that they have only one direction to go."
From your self description I am sure you have had more birthdays than I have shits; however, I wouldn't be so sure about your statement.
Keep an eye on the Fed during the next few rate decisions, I wouldn't be surprised if they dipped a quarter of a percentage point or so. Inflation, for the most part, is in check in this country.
Please feel free to repost this thread in 6 months when the rates have jumped and I will eat my words. I am in no way an economist, but I do keep a keen eye on such things.
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Brick Head
- Rank 8
- Posts: 882
- Joined: Fri Jul 22, 2005 4:37 pm
Absolutly ....short term you are correct....well most likely anyway.
I guess I should have been more clear. I was suggesting that rates are going up in the medium to long term.
And since most debt is medium to long term, and subject to renewal, it is a risk IMO that seems to be lost on many.
As for inflation I would disagree. It is there. It just hasn't been passed on to the consumer. And that is where inflation is read from....the final cost of a basket of goods. The purchasing power of our dollar has made it possible for importers to absorb inflationary items such as fuel and not pass it on to the consumer. Our dollar is up....what 50% in the last five years?
As for where our dollar is going.......who knows. Even traders don't like commenting on the direction of currency's with any certainty. So ask yourself this. What happens if the dollar stops or even reverses its climb? What happens to inflation then? The increased cost will no longer be able to be absorbed and will have to be passed on to the consumer.
David Dodge himself stated a few weeks back that he should have more aggressively raised interest rates. Now his hands are kinda tied. At least for the moment. What he is referring to is that house hold debt is getting too high. From a monetary policy makers point of view, he may have backed himself into a corner. High house hold debt, created by sustained historically low interest rates( monetary policy), will make fighting inflation with interest rate hikes very painful if it needs to take place.
Not saying the sky is falling. Ideally the process will be slow.
Ever heard the term "Normalization of Risk" I believe it is a behavioral Sciences term. It is used in flight safety. It basically means that if you do a risky thing repeatedly with positive outcomes eventually the individual no longer perceives the risk. Landing with a thunderstorm over the field for example. Deviating from SOP's as to when to be stabilized on the approach would be another.
So has this happened with our perception of interest rates and the risk they pose if we are exposed to large debt loads? Has there been so many positive outcomes that we have totally forgotten to analyze the risk associated?
My opinion is yes.
I guess I should have been more clear. I was suggesting that rates are going up in the medium to long term.
And since most debt is medium to long term, and subject to renewal, it is a risk IMO that seems to be lost on many.
As for inflation I would disagree. It is there. It just hasn't been passed on to the consumer. And that is where inflation is read from....the final cost of a basket of goods. The purchasing power of our dollar has made it possible for importers to absorb inflationary items such as fuel and not pass it on to the consumer. Our dollar is up....what 50% in the last five years?
As for where our dollar is going.......who knows. Even traders don't like commenting on the direction of currency's with any certainty. So ask yourself this. What happens if the dollar stops or even reverses its climb? What happens to inflation then? The increased cost will no longer be able to be absorbed and will have to be passed on to the consumer.
David Dodge himself stated a few weeks back that he should have more aggressively raised interest rates. Now his hands are kinda tied. At least for the moment. What he is referring to is that house hold debt is getting too high. From a monetary policy makers point of view, he may have backed himself into a corner. High house hold debt, created by sustained historically low interest rates( monetary policy), will make fighting inflation with interest rate hikes very painful if it needs to take place.
Not saying the sky is falling. Ideally the process will be slow.
Ever heard the term "Normalization of Risk" I believe it is a behavioral Sciences term. It is used in flight safety. It basically means that if you do a risky thing repeatedly with positive outcomes eventually the individual no longer perceives the risk. Landing with a thunderstorm over the field for example. Deviating from SOP's as to when to be stabilized on the approach would be another.
So has this happened with our perception of interest rates and the risk they pose if we are exposed to large debt loads? Has there been so many positive outcomes that we have totally forgotten to analyze the risk associated?
My opinion is yes.
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Vickers vanguard
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