rb
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Posts posted by rb
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I think what some folks may not get here is the differences between the US free enterprise system and the more restrained or blended form in other former British/Dutch empires & the Nordics. In the former B/D colonies & the Nordics, historically the government worked together with free enterprise in many ventures like Crown corporations in Canada and the Dutch and British East India companies to name a few. The US has historically had a government as a check on corporations in contrast to colluding with corporations. Both have there pluses and minuses. The possibility of corruption is higher in the collusion model as referee is also a player on the field. To prevent this many of these countries have rules enforced by law versus voluntary compliance. In those countries the rules are accepted for this. Many of these same rules would not be accepted in the US as a restriction on free choice.
Now the upside for the US is an environment like no else in the world where IP can be exploited for maximum gain. This leads to high investment in IP-type businesses and more important attracts the people with best ideas to come here to maximize their gains. Now others can free-ride this R&D but they are also forgo the IP investment environment in the US. I do think as a a part of this free ride other countries should have to give concessions to the US in trade negotiations which is another area I think Trump can add some value here as we no longer need allies to fight the communists.
Packer
Yea, about that Nordic corruption you may wanna check out the link below, fyi US is number 16. And are the US SROs such a bright spot? They worked brilliantly in the financial industry.
http://www.transparency.org/cpi2015?gclid=CKDEwoWOudACFUY8GwodQJMJpg
On the IP and innovation side you make it sound like the US is some shining city on a hill and every other country is just a dumbass. There is no authoritative ranking of innovation but there are a few of them and the US rarely ranks first. There are tons of really innovative businesses, very IP driven, which are not from the US and have no desire to be. It is true that the US has a lot of innovation but a lot of other countries with different systems are extremely innovative as well.
In the tech space: The US has Google and Apple and a host of other tech companies as well. But other countries do too. For example, the current president used a Canadian phone, the president elect uses a Korean one - they must be good for something. All the phones you use are powered by chips who's IP is British.
In the pharma space, out of the top 10 companies only 4 are American. The number 1 is Swiss.
I could go on. But guess what, innovation and invention is going on at high rates in other places in the world as well. Many other places in the world have high incomes and prosperity under different systems from the US. Your post has the feel of the guy in the crowd yelling USA! USA! USA!
On the trade side, you should read more on the subject because the US is not in the business of giving freebies. As a matter of fact they use their security guarantee to get concessions. It'll be interesting to see how it all develops but the US may be in for a surprise if they pull that guarantee. I'm a geek when it comes to that so I'll watch closely.
On the military side, it's been a bit pricey but it been pretty good for the US. And let's face it the US loves to have it's big dominant military as opposed to a regional force. Yes it paid some money, but in turn they get world dominance and stability - which is good for business. In a world with long and integrated supply chains you don't want a bunch of wars popping up all over the place. Germany got to save some money. Japan maybe too (not so familiar with that) but they did buy a lot of fancy weaponry that was made in the USA. However, these countries do have the financial resources and man-power to build large and sophisticated armies. Of course, nothing ever went wrong when Britain, France, Germany, and Japan armed themselves to the teeth.
I like how your post end with the note that you no longer need allies to fight the communists... (i guess it's ok to discard allies now)... very classy. I should point out that the only time when NATO article 5 was invoked it was by the US and it's allies stepped up. As the saying goes, with friends like these....
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Yes, because there are no oligopolies in areas such as telecom in the US.
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7.4 price to pretax income income is really high. I also believe the Richard's 4.3% gross yield does not include maintenance fees (HOA for our US friends). Not 100% sure how it works in Vancouver but in Toronto for a 2-bed condo you're looking at 800-900 per month in maintenance fees and the landlord pays the main fees. That really kills your rental yield.
In Toronto condo rental is cash flow negative. I know I'm not fair because I'm including the full mortgage payment, but still.
There are plenty of cities in the US where you can get a 4% net yield. Don't know if premier ones like LA and NY, but I don't think that Vancouver is in that league either.
I just want to mention one point - in earlier years I made the mistake of using the US prices as a benchmark when comparing housing prices in different parts of the world. And I found housing bubbles in every country. It took a while for me to realize that the US prices are abnormal.
If Middle America is at one extreme and Hong Kong at another, the world seems to be moving more toward HK than to Middle-America.
I'm not sure that's the right way to think about it. That's like saying something like... "well a lot of stock markets are trading at 60x PE so stocks must be worth 60x PE now".
I think that rental yields are a much better indication of prices. You can have longer lived dislocations in real estate price/value because home ownership is such an emotional thing. My home is my castle and all that... But if prices are high and rental yields are low the market eventually corrects. People figure out that it's better to have no castle pay low(er?) rent and have a good life as opposed to get the castle, slave over the payments, and have no life.
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Question for the locals - it seems prices of single family homes are too high in Vancouver, but what about the apartments? Are they pricey relative to income, rents, and historical prices?
The average apartment price (not my preferred statistic, but it's hard to find median price) is $562K. The median household income is around $76K, so that makes a 7.4 times multiple. I'd guess an average 2-bedroom apartment would rent for around $2000/mo. So if you assume the average apartment is the average 2 bedroom (which I imagine it's not), you're getting a 4.3% unlevered return on a rental, before you factor in taxes, depreciation, and special assessments.
In 2002, that average apartment was sub $200K. It first broke $400K in 2007, and a year ago was just under $500K.
Thanks Richard.
Assuming the average price went from $200k to $562k in 14 years, the CAGR is 7.7%. This would seem a very good return for apartments, but is it outrageous? I don't know. So while future returns should be lower, it's not clear to me that apartment prices need to adjust a lot, unless there is a vast amount of supply coming up soon. (In Australia, there's a huge amount of apartments being built in key cities.)
Price/income of 7.4x also seems ok.
Gross rent yield of 4.3% looks ok. If there is a major city in the world where one can get a 4% net yield, I'd be interested in hearing about it.
So it seems while there is a bubble in single family homes, apartments are more affordable. If apartments account for a large portion of the housing stock, then risk to the overall economy may be limited.
Also, could it be possible that the sub-$200k price back in 2002 was too low? Is there a way to conclude one way or another?
7.4 price to pretax income income is really high. I also believe the Richard's 4.3% gross yield does not include maintenance fees (HOA for our US friends). Not 100% sure how it works in Vancouver but in Toronto for a 2-bed condo you're looking at 800-900 per month in maintenance fees and the landlord pays the main fees. That really kills your rental yield.
In Toronto condo rental is cash flow negative. I know I'm not fair because I'm including the full mortgage payment, but still.
There are plenty of cities in the US where you can get a 4% net yield. Don't know if premier ones like LA and NY, but I don't think that Vancouver is in that league either.
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Yes. Basically Italy cannot exit the EU. It will unleash a massive banking crisis which will be incredibly bad for the Italian economy. It was different for Greece. Since Greek banks were essentially already bankrupt they didn't much to loose. But you don't want to trigger a banking crisis just cause you're bored.
But then when you put it to the people anything can happen. Plus it's quite hard to explain the mechanisms of a banking crisis to a population. Fun times!
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Obviously not, Richard. Does property rights protection mean it's legal to steal? Does making murder a criminal act mean it's legal to murder my neighbor? Does A equal non A?
Let me make this very simple for you. How are you going to enforce property rights and make murder illegal without a government and a legal system, and who will pay for those costs?
In math, the most common way to prove something is true is to assume it isn't true, and then show that that assumption leads to a contradiction.
That's why you're frustrated. You've assumed property rights and without government or taxation, and that leads to a very simple contradiction. You really want to be able to say with a clear conscience that taxation is stealing and also want to believe in property rights and basic legal protection. Yet you can't get property rights and legal protections without the government and taxes. Darn.
It can be really annoying when you realize that a core belief leads to a contradiction. When people with intellectual honesty run into such a sticky situation, they change their core belief, but in your case, I recommend just waving your hands and whining that nobody's taking your argument seriously.
Dude, shhh... don't try to relitigate. I already got the libertarians to admit that the state/government can add value/crate wealth by establishment of law and property rights. That was like 6 pages back or whatever. I don't know if it means much, but when the libertarians admit that the government is useful just that's a pretty big thing. I was surprised myself at that. Lol, just take a win and leave it. Move on to the next fight.
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Haha, I was thinking that Cardboard. :)
While I find DT's methods and rhetoric offensive I am all for giving him a chance to see how he handles the next 4 years and sincerely hope he is able to convert me to a fan. This is why I was very much against the protests that were spreading across the country. The guy was voted in democratically so those who were protesting against him need to suck it up and see what he is actually going to do in the coming months before complaining about it.
Cwericb,
We agree on something politically charged!!! ;D
Catdboard
I think that despite our leanings and heated discussions we agree on a lot of things.
For example on Trump. I think he will be (hopefully) a medium sized disaster. Nonetheless, he won the election. Yes he lost the popular vote by a good margin(he should probably note that), but that's not the way it works down there. So he should be president. Congress will do what Congress does, and there will be another election in 4 years. Personally hope he does all 4 years because Pence is down right scary.
On protestors, a lot of these people didn't vote? Why not? Wouldn't it have been so much easier to go vote, get the problem solved, and not have to spend so much time making signs? Maybe learn a lesson a lesson and vote next time. You won't see me at a protest, I generally don't think they achieve much. I go vote - I think that's more effective. But then I respect the rules of our democracy which say that people are allowed to protest, so I'm not gonna stand in the way. Go ahead and protest. Also there have been very successful protests in the past - Gandhi and MLK come to mind, maybe Vietnam. Those changed the world. So obviously I can be wrong and protest can work. People should be free to do it.
On the subject of healthcare my views are formed mainly by empirical data, namely that a public "medicare" system is more efficient. It delivers the an amount of care for a lesser cost. Yes, some of that care goes to some people that didn't pay enough for it and is subsidized - but let's put that aside for a bit. As Cardboard points out the Canadian single payer Medicare system is not all milk and honey.
One of the ways that the system keeps costs under control is some rationing of healthcare and triage. This system is as old as healthcare itself but what it means is that you get some crappy customer service. The outcomes are pretty good (you'll get fixed) and the price is good. But it's not unlike dealing with the cable company - and nobody likes doing that.
However I don't want to blow up the system by saying to hell with it, let's make it all private, but maybe introduce some more efficiencies into the system. Maybe then use those efficiencies to reduce cost or redistribute towards better customer service. I agree with Cardboard's suggestions. There should be some nominal fee to see a doctor. That can be structured in such a way to discourage frivolous visits but not prevent access to people with legitimate sickness. The prescription visits I agree are another low hanging fruit. I know a number of doctors that only write prescriptions with zero refills. In my opinion this is tantamount to fraud and we should do something about that.
I'm not sure I agree on the STD testing stuff because I'm not sure if society would benefit from a bunch of idiots out there distributing syphilis. But I also posit that there are further efficiencies that can be used. Such as the gov't using monopsony power to negotiate drug prices. If Costco can use its size to negotiate good drug prices for its customers why shouldn't the government use its size to do the same?
Anyway just trying to point out some area where I think we think alike despite leanings and approaches. Apologies for the wall of text... :)
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Wow, I take a day of meetings and all of this develops on what's supposed to be a dead thread. I won't go through everything, but I'll make a couple of points.
1. I started talking to the libertarians from the basics. I wanted to point out that the the state/gov't can create value/wealth. Law and property rights is the most obvious point but there are others.
2. I challenged the idea that prosperity in the US is not provided by the fact that government is more limited there. My thoughts are along the lines that there are lots of countries out there with similar prosperity to the US. Most of those countries have taxation/governments bigger than the US. So the source of prosperity is not the size of government. But the answers are not based on figures, no it's theft, slavery, etc.
3. My "we" post was meant to show that there is not this great wealth utopia in the US. Yes a lot of people may have microwaves and air conditioners and still be poor. I still wouldn't want to be "them". As we've seen with this election, a greater lot of people that do not fall into those poverty statistics are not happy with their situation nonetheless and guess what, they're looking for a government solution.
4. I agree that the poor in the US or Canada could seem down right spoiled compared to the poor in India or some other God forsaken place. But I don't think that's an excuse. Should we strive to converge to the lowest denominator or should we strive to excel and push the boundaries for the better? Btw, I don't think we should institute new welfare programs. (A Camaro in every driveway?) But i do think that as we make decisions they should be balanced and move in the right direction for prosperity and welfare of the people. I don't think that a tax cut for top earners paid for with a cut in Medicare is a move in the right direction.
5. A lot of people are trying to politicize economics. This has a lot to do with people's beliefs and not so much with economics. Economics is vulnerable to these influences because it's a slow moving science (for good reason) and very influential. But economics itself is agnostic to political thoughts. Maybe pay more attention to it's data and mechanisms and less to talking heads that know nothing about economics. Probably not a lot to do with this post, but it's a pet peeve of mine, and while I'm on a roll..... why not?
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BUD
What do you think of the 25% foreign tax withholding on the dividend?
I don't like it, esp since I bought it in tax free accounts. If you buy the Belgian common the tax is only 15%. Not sure if one can get the reduced 15% rate on the ADR. But basically if I buy it in a non tax-free account I'd pay more than 25% tax on the div. So obviously not an ideal situation, but not the end of the world either.
I also bought it in tax free accounts. I read that if you do buy it in taxable account and if you qualify to itemize your deduction, you can get tax credit on your 1040.
I'm in Canada so things are a bit more different. But I'd still pay more more tax in a taxable account even though i get the tax reclaim. Still I'd like it more if it was US listed and i had to pay no tax whatsoever.
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BUD
What do you think of the 25% foreign tax withholding on the dividend?
I don't like it, esp since I bought it in tax free accounts. If you buy the Belgian common the tax is only 15%. Not sure if one can get the reduced 15% rate on the ADR. But basically if I buy it in a non tax-free account I'd pay more than 25% tax on the div. So obviously not an ideal situation, but not the end of the world either.
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I'd like to trim some stuff but I can't really :(. Some positions like WFC I still think is undervalued, others have large gains on them which will trigger lots of taxes and I have plenty of cash around. Just a heads up that some very interesting companies have been selling hard for a while and the election accelerated the selling. Could get interesting.
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And why does that make any difference to what I've said?
Because you appear to believe that government is responsible for the high standard of living we enjoy in the USA. Sadly mistaken:
One thing you never consider is that you enjoy the standard of living you do and you have the amount of money and property that you do because of such oppression.
Who exactly is part of this we? The 42 million Americans living in food insecure households? The 47 million Americans living in poverty? Or are those just the soon to haves? The working class, most of whom are not part of those statistics but yell that they were left behind anyway? You may want to be a little careful with that "we" term.
It's hard for me to prove. But I'll tend to agree with you that the gov't hasn't done as much for the people in the US as in other places. But is that such a surprise when you try to sabotage it at every turn and hope for its failure?
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Btw, where is this mythical place with no business regulations and no taxes, but with the rule of law and strong private property rights?
That place doesn't exist and I never claimed it did. I never said anything about rule of law and strong private property rights. That's the cognitive dissonance I was trying to point out. Once you're talking about rule of law and strong private property rights you're talking about state, government, and taxes to pay for it.
Btw, since you're looking for those things, which are provided by the state/government. I'd argue that it's exhibit number 1 that the state can contribute to the standard of living and the creation of wealth.
I never said there was no role for the State; my point was that our current manifestation of the State, far beyond what our Founding Fathers envisioned or the Constitution literally allows, hugely infringes on our personal liberty. In the prior discussion you seemed to be arguing for all of the taxes and government regulations currently proffered by our DC overlords. Government should be for the most part limited to enforcing the rule of law / property rights and defense. When it does more than that, by and large it destroys both our standard of living and liberty.
See now it would be nice if you brought some evidence to back those facts up. I would say that empirical evidence would indicate that there's a point of balance between gov't and private market. Too much gov't is bad and too little again bad. This sweet spot also depends on the people and society, also on recognition on efficiencies that gov't can bring and also new trends such as entrepreneurial government etc.
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And why does that make any difference to what I've said?
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Btw, where is this mythical place with no business regulations and no taxes, but with the rule of law and strong private property rights?
That place doesn't exist and I never claimed it did. I never said anything about rule of law and strong private property rights. That's the cognitive dissonance I was trying to point out. Once you're talking about rule of law and strong private property rights you're talking about state, government, and taxes to pay for it.
Btw, since you're looking for those things, which are provided by the state/government. I'd argue that it's exhibit number 1 that the state can contribute to the standard of living and the creation of wealth.
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It might also be partly due to the cluster$%^% that is India (at the moment). Prem's bullishness there is all about PM Modi reforming the economy. For this to happen Modi needs to last more than one term
cheers
nwoodman
The idea that anyone will transform an economy in one or even two terms is a fantasy. These things take decades of work and fail most of the time.
I don't like to revert to quotes but that WB quote applies here "When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact."
This is magnified by 1,000 when applied to economies and governments because they such complex systems. Much more complex than an individual company.
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Well that's what I've said in the beginning you just don't want to pay taxes. So give me a break with the personal liberty bullshit.
Like it or not you are part of a society. The society has decided to oppress people like you and me by not letting us open up medical practices because we didn't graduate from med school. I'm willing to bet that's not gonna change no matter who wins the presidency in the future. So you and I will have to continue being slaves.
One thing you never consider is that you enjoy the standard of living you do and you have the amount of money and property that you do because of such oppression. There are places in this world that conform to your world view: you can do whatever you want, open whatever business you want without any approval or regulation, you don't have to pay taxes, ext. The problem is that for some reason nobody wants to live there.
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"those freedoms are pretty much available"...
I can't not pay my social security tax and invest it now instead,
I can't stop paying for older people's medicare
I can't stop funding the EPA with my tax dollars
Taxes
I can't hire someone for $6 an hour
Yea that one you can't. I'll give you that one. Though I'm not really sure it's an individual freedom. You're still free to pay them nothing though.
I can't start a medical practice. I can't open a shampoo parlor for that matter.
Lots of people people open medical practices. But for some weird reason society decided that you should be a doctor to do that. Crazy I know. There's also lots of people opening shampoo shops and there's tons of private schools - those are actually really easy to open. Also don't think those fall under the bill of rights.
Hiring Mexicans doesn't fall under the bill of rights either, but I'm also fairly sure you'll be able to hire Mexicans in the future. There may be somewhat less of them around, but u'll be able to hire them.
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Then we can finish off the enlightenment values this country stood for permanently. We can squeeze out individual freedom with a socialist left and a fascist right. Then we will be only a few steps from dictatorship and western civilization on a clear path to a return of the dark ages. Happy days ahead.
I think the only way for the right to act rationally is to not act at all. I thought 2008 taught them that but nope, we are back to square one. I would rather have a wannabe socialist than an irrational tyrant. This whole conservative ideology is repulsive at this point since it lacks any moral foundation and must go. How else can you explain the so called fiscal conservatives voting for a populist who ran left of Clinton?
Yea, but he's not a stinkin' coastal liberal..... Oh wait...
It's because he embodies traditional family values!.... shit, not that either....
hmm... I wonder what it could be? Well he wants lower taxes... maybe that's it.
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What's preventing you right now from doing any of that?
I was referring to the proposals of Trump and Clinton, but of course some are true right now: A government monopoly in education, an utterly distorted health care market with forced redistribution, forced retirement planning, a fascist regulatory state, obscene tax rates with my money spent on things I oppose, a proposed revision of the first amendment, and proposed tariffs cover just the freedoms I listed.
That's the thing right? All those freedoms are pretty much available in all countries no matter they left or right lean with a few exceptions like Cuba or whatever. So the freedoms are there. You're just complaining about the price.
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What's preventing you right now from doing any of that?
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Then we can finish off the enlightenment values this country stood for permanently. We can squeeze out individual freedom with a socialist left and a fascist right. Then we will be only a few steps from dictatorship and western civilization on a clear path to a return of the dark ages. Happy days ahead.
LOL thanks that gave me a chuckle. Individual freedoms.... all you guys care about is not paying taxes.
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Not just new airlines. But existing ones too. The big boys maybe can keep capacity restricted with a wink and a smile. But what's to stop say Virgin America from adding routes if they're profitable? Unless they cannot get planes. But I recall a while back the CEO of Delta saying that there are plenty of planes around.
Canada Economy
in General Discussion
Posted
Specifically to this. Health care is paid out of income tax. Pension is paid for through payroll taxes. The rate is 4.95% of salary up to 54k income and 0 above 54k. This deduction is matched 1:1 by the employer. After reforms in the late 90s the pension system is very well run. I'm not sure how generous it is. Everyone gets a fixed amount based on years or residence then the rest is determined by how much you paid into the system. I think it maxes out around $1,600 per month if you've paid the max into it. Most people get less.
Regarding the disparity between Europe and Canada there are several factors ate work. Yes there's more inherited wealth it Europe. There are some countries in Europe with really high savings rate (Germany, France, Italy), more organized labor in Europe, more income inequality in Canada. Also Canada is a country with high immigration (about 0.8% per year), more than 20% of the population was not born here and were quite poor when they came. So they didn't really have the time to build that wealth.