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January 2011 Miscellaneous Economic Fundamentals

Ally

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15 facts about India's economy that will blow your mind





Happy New Year. India hopes this will be the year it returns to a .




But to reach this goal, the world's largest democracy will have to stave off threats of price inflation, asset bubbles and civil unrest.





It will almost certainly be a bumpy ride.






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Loonie at par, but prices aren't




MONTREAL ` The Consumers` Association of Canada has been snowed under by emails from Canadians furious about higher prices on this side of the border even as the loonie climbs past the U.S. greenback in value.




Some experts are warning Canadian retailers won`t drop their prices until the market becomes more competitive.




The Ottawa-based association said it has received hundreds of emails from frustrated consumers, some of whom have headed south in a bid to save money.




`In the past few weeks, many people went to the United States and noticed the price difference,` spokesman Bruce Cran told QMI Agency in an interview this week. `Books in some cases are 50% more expensive in Canada. We`re paying a lot more for cars, television and books.`



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Light rail transforming cities, guiding development




It's hard to find a city in America that isn't planning, proposing, studying or actually building a light rail system. Cities as diverse as Dallas, Seattle and Washington, D.C., all see light rail as part of their future ` a way to reshape their development.




There are 35 light rail systems operating in the U.S. today. At least 13 metro areas are currently building others. Many more are being planned.




Perhaps the most ambitious light rail project in the country is being built in Denver. Downtown, behind Union Station, lies a cityscape that doesn't quite exist yet.




Much of the area is empty, fenced off. Construction crews are digging a huge hole in the ground in preparation for some of the final stages of a multiyear transportation project that is already changing the city.



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Bankruptcy czar warns against the 'harsh realities' of debt





The head of the country's bankruptcy agency cautioned Canadians Friday to avoid taking on too much debt or face the "harsh realities of insolvency," the latest in a string of warnings issued to over-extended consumers.




In an unusual move, superintendent of bankruptcy James Callon issued the warning, even though personal bankruptcies rose just 0.3 per cent in October.




Callon said, however, that despite October's small gain, the overall number is still 22.5 per cent higher than the pre-recession level of 2007-08.




"It's important for Canadians to be aware of the risks and possible consequences of taking on a large amount of debt," Callon said Friday.




Callon's comments echo those of Prime Minister Stephen Harper and Finance Minister Jim Flaherty who -- along with Bank of Canada governor Mark Carney -- have cautioned consumers against loading up on debt at a time when interest rates are poised to rise, possibly making personal debt levels unsustainable.




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Rent vs. Buy




Should you rent or should you buy your home? It takes more than looking at your mortgage payment to answer this question. This calculator helps you weed through the fees, taxes, and monthly payments to help you make a good financial decision. Click the "View Report" button for a detailed look at the results.



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Muskoka chairs and unanswerable questions





The Globe and Mail`s Rob Carrick and National Post`s Jonathan Chevreau are arguably Canada`s most influential personal finance columnists. They both have strong, loyal followings and in each case I think that`s well-deserved. Carrick and Chevreau appear to be genuinely driven by their readers` interests. And remarkably, given how often they publish, they manage to avoid writing the same thing at the same time.




Last week though, both made a similar comment that I found striking. `It`s RRSP season, so let`s all start worrying about whether we`re saving enough money for retirement,` wrote Carrick, sarcastically. A couple of days later came this from Chevreau: `Pension and retirement anxiety has hit fever pitch, if the number of financial industry surveys released this week is any indication.`




The two pieces are very different, but I think this shared observation is important. RRSP season is upon us, and it`s hard to argue that the trepidation many Canadians feel about retirement planning doesn`t have something to do with the advertising messages around them.




Fear and anxiety have always been a part of marketing. The text books teach us three steps: 1) introduce the product or service and explain its benefits; 2) show satisfied customers enjoying those benefits; and 3) make people feel like they`re missing out on something important if they`re not in on it.



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Finally, a book that might help me stay focused on writing better headlines





At a downtown Toronto Starbucks, people dawdle in every imaginable manner: an older couple read the newspaper, a teenage girl uses her cellphone to change her Facebook status, a group of friends sit long after their drinks have been cleared.




"Coffee shops have been a serious enabler ever since caffeine was first poured into a glass," says Dr. Piers Steel, a professor at the University of Calgary's Haskayne School of Business who spent 10 years studying the science of dillydallying, which he examines in his new book, The Procrastination Equation.






"Look around, procrastination is our natural default, it's who we are. We're living at a time when there's a virtual strip club, casino and game room at our fingertips, and it's keeping us away from our goals."




Steel describes his introduction to procrastination in romantic terms. "I dated a lot of other topics, but when I found this, it was like finding my first love," says the 41-year-old father of two, who calls his research "me-search," and annotates his motivational self-help book with 70 pages of notes. "The book contains a lot of hard-won lessons I've learned from my own life. For me, the topic's a lot like that old Hair Club for Men ad: I'm not only the president, I'm also a client."



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A bigger bathroom through lighting techniques




As is the case when selecting lighting for any room in your home, an important thing to consider is the design and layout of that space. The illumination of a room affects our perception of space proportions as light reflects from various surfaces including the walls, floor, and ceiling. Most often for bathrooms, we want to make the space seem larger or wider.




To create the illusion of a larger bathroom using lighting, select dÃcor and furnishings with reflective surfaces. Keep in mind that a substantially lighter color on the ceiling (compared to the walls) visually lifts the room, creating the illusion of a higher ceiling. Dark floors create the illusion of a dropped floor, instantly lengthening the room. By directing lighting upward and keeping light saturation on the walls, you can visually expand your bathroom.




When choosing lighting for your bathroom it`s important to remember that optimal lighting has 3 layers: general/ambient lighting, task lighting, and accent lighting. Layering light creates a tranquil atmosphere while having a function and purpose.



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If you're not watching your money, who is?




I was introduced to my first financial advisor at the age of 18. She had accepted my relatively small account as a favour to the family. I thought I was set for life, but unfortunately, I was about to learn the first rule of investing: If you don`t watch your money, no one else will.


Five years later, my portfolio was down almost 60 per cent. I wasn`t paying attention to my investments and neither was my advisor. I decided it was time to learn about investing.


It can be challenging to attract a financial advisor when you are young. But rather than feeling down, consider this an opportunity to become empowered. This is the perfect time to embark on your investing education.


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Why isn't a high dollar making things cheaper?




More than three years after the Canadian dollar hit parity with the U.S. greenback, consumers are still complaining that prices in Canada are higher, in some cases dramatically higher.




Nearly 4,000 consumers wrote to the Consumers Association of Canada in the weeks following Christmas about lower prices they`d seen in the U.S.




They cited examples from a broad range of categories: from luxury cars to staples like milk. A kitchen cabinet at Ikea was $479 in Canada but just $299 in the U.S. A baby stroller at Toys R Us was $465 in Canada but just $300 in the U.S.




`We`ve been virtually at parity for 40 months and we have seen no evidence of anyone substantially dropping their prices,` says association president Bruce Cran.



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Why tenants need household insurance





Say someone breaks into your apartment and makes off with your cherished possessions: laptop, flat screen TV, that leather jacket you got for Christmas. Or maybe the dishwasher overflows, flooding your kitchen and the unit below. It`s quite a mess you`re in.




But it could get messier, and financially crippling, if you don`t have renters insurance. Yet despite the affordability of tenant insurance policies ` versus the staggering costs incurred in a worst-case scenario ` many renters neglect to cover themselves. That`s a pity, insurance industry experts say. After all, less than a dollar a day (for a typical policy) ensures that if disaster strikes, you can weather the storm.




An average package offers up to $100,000 in contents coverage and $1 million in personal liability coverage for less than $20 a month, or about $200 a year.




`It`s a no brainer ` renters should carry insurance,` says Henry Blumenthal, vice-president and chief underwriter for TD Insurance. `For a small amount of money you`re getting increased peace of mind.` If you haven`t got it you should get some. Here`s what you need to know.



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Oil production retreating from the ends of the earth






Chapter 4 in my book A Thousand Barrels a Second (McGraw-Hill, 2006) was one of my favourites. Titled, `To The Ends of the Earth,` I spoke about the diverging trends of a growing, global appetite for oil and the industry`s diminishing ability to serve the hunger at the then price of around $50/B. After five turbulent years that hosted an intermission for a financial crisis the same script appears to be replaying. But the theatre is not the same as it was in 2006. Some themes need revisiting, notably that the oil industry must still go to the `ends of the earth` to find new barrels of oil for a hungry world.





The 150-year progression of the oil industry`s exploration activity from easy-to-find onshore oil, to progressively more challenging and deeper offshore regions, to increasingly inhospitable geographies, to more demanding, uncomfortable and constrained political locales, all constituted a costly migration to `The Ends of the Earth.` Against a backdrop of a voracious oil appetite from emerging markets like China the megatrends in play were a strong and correct argument for a rising oil price.





At the time I wrote in Chapter 4 that, `There are billions of barrels of reserves remaining on the planet,` but that `The real issue is that we are running out of reserves that provide enough economic incentive to produce with today`s technology and in our current geopolitical atmosphere.` But now oil is being priced at $90/B and `today`s technology` has been surpassed with new innovations in drilling, well completions and a multitude of other related disciplines. Under these revised conditions, is it still true that the industry must continue going to ends of earth? In truth, we cannot ignore the possibility that lots of oil may be liberated from areas in North America that are not constrained by geopolitics and hostile geography. And the numbers could be starting to show it.




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