Blessed by the Potato

Well the opposition coalition seems to have lost its will to run the country, which is unfortunate because then it makes Stephen Harper’s whining to the GG and setting the country adrift work. The new version of the budget is out, and it doesn’t wow me.

I reluctantly agree that a monumental stimulus package is probably needed to keep this recession from snowballing into a depression, and that going into deficit, temporarily, is probably needed. However, I can’t wrap my head around the amount of money we’re forecasted to miss out on. A lot of it is due to lack of tax revenue (you don’t pay taxes if you don’t make any money) rather than spending, but still, where’s the grand stimulus?

Where’s the reintroduction of the green car feebate to stimulate auto sales? Instead we get some vague restructuring of car loans. Where’s the grand vision, the infrastructure spending to not only get bodies working, but also to lay the roots of a better society when we come out of this? In short, where’s my Windsor-Quebec Shinkansen???

Universities, never exactly rolling in the dough even in good times, are finding things are seriously tight as their endowments have been decimated by the stock market (and real estate) crash. PhD comics pointed out that academia is often a refuge for those who would otherwise go into engineering or business or the real world in general: spend a few years in grad school below the poverty line (but at least with some kind of income) and wait the recession out. However, this time there doesn’t look to be the capacity there. I’m pretty sure our department is shrinking, and will shrink more next year as many supervisors seem to not have the funds to take on students. The US is throwing more money at this, specifically towards graduate fellowships, so why nothing from our government?

I did like seeing the duration of EI benefits increase. To my thinking, EI should be automatically scaled to the unemployment rate: as the job market gets tougher EI should automatically extend a few weeks/months to reflect the fact that people need the extra support and that finding a new job is just plain harder; likewise in a hot market EI benefits should be scaled back slightly. Another step I’d like to see is flexibility added to RRSPs: they can continue to tax withdrawls, but the contribution room should be given back, though I don’t think many people in the situation of both having RRSPs and needing to tap them in hard times are terribly worried about losing their tax shelter for future years.

There’s a small rejigging of income tax brackets, leading to a small savings for most Canadians (most of which was already planned to account for inflation), arguably where the previous frittering of the surplus (yes, there was a surplus just a year ago) should have gone, rather than to cutting the GST, though I would have argued it should have all gone to paying the debt from the last recession. The problem with broad-based stimulus packages like this is that the dollars very quickly become diluted: $40 billion spread out amongst 30 million-some Canadians comes out to something like $1300 each. That’s not something I’d sneeze at… but it is easy enough to have that disappear in a family budget, especially after a summer of record high gas and food prices, or to vanish into savings*. To get the economy rolling again a big kick is needed to specific areas that will, hopefully, get those going and lead the way for the economy as a whole, rather than spreading a small amount of love around everywhere. Of course, this isn’t a video game and the recession monster’s weak point isn’t flashing neon orange telling us where to hit it. The banking and auto sectors might be good ones to try to prop up/nationalize — banks in particular are needed to supply credit to grease the wheels of the recovery. However the budget also contains a lot of measures targetting home ownership: renovation credits (which might be as much about getting contractors to issue receipts and file taxes), and changes to help get first-time homebuyers into the market with a modest increase to the HBP and a tax savings of up to $750 for a purchase. I don’t think trying to prop up the housing bubble here is going to help the economy. In fact, more money sunk into houses/mortgages by first-time buyers is less money out there circulating in the economy. These are also poor measures because they can’t even focus spending in one area in a focused way: there are at least 3 different ways of trying to stimulate housing rather than that one big kick.

I’m also a fan of the targetted big kick for infrastructure because then the country gets something it might need/want anyway at rock-bottom recession make-work prices. Take $40B, heck raise the GST back to 7% while at it and make it $60B or whatever, and build a shinkansen in Ontario, a few hospitals in BC, some nuclear plants in Alberta, some wind farms in Saskatchewan, carve a whole new riverbed and hydro project through Manitoba, create a shinkansen network in Ontario and Quebec, covered bridges for NB, some tidal energy projects for NS, and a teaching hospital for NFL, then have PEI build a 50-storey phallic fucking tower just because they can. You know, at least that way you get something to show for your stimulus money.

* – Savings are great things to have on an individual level. However, as a country as a whole we should be doing our saving during the boom years, and then tapping the savings during downturns to help stabilize everything — stimulus packages that just go straight to savings just make recessions worse. I’ve seen some recommendations that stimulus gift cards be sent out: something that you have to spend (though that wouldn’t necessarily stop people from then saving the equivalent amount somewhere else).

There’s one thing that’s been bugging me for a long time about telemarketing: how does it work? That is, how is it remotely profitable for companies to hire people, even below-minimum-wage offshore workers, to call people in their homes to sell them things? The theory is of course that a lot of the attempts will fail, but a few will succeed. This works for spam email: all it takes is one stupid son of a bitch in a hundred thousand to fall for the spam and it’s worthwhile, because sending spam is essentially free (especially these days with zombie botnets responsible for much of the load). I have trouble believing that the latest generation of spam ever works — random character strings without any kind of message, sometimes an image without a link — but that might be as much about de-training filters as it is about sales. Ditto for comment spam.

However human telemarketers have to get paid. Even if they’re only paid $5/hour, they’d probably only be able to pitch to 100 or so people an hour. How much is a hit worth to those hiring them? Rogers calls me once a month, at least, so it’s not even like they’re reaching 100 unique people each hour. What would their success rate have to be to make this a worthwhile venture? That depends partly on what landing a moron is worth — if getting a new subscriber to home phone is only worth $5 to Rogers (or the call centre), then they need to land one every hour, or every 100 attempts, but at $50 then it’s “only” one in 1000. Me, I have a hard time believing that telemarketing has anywhere close to a 1 in 1000 success rate. I have a policy — and everyone who hates telemarketing should too — that I will not, under any circumstances, buy something from a telemarketer. That handy policy also helps protect you from a large amount of fraud. Even for those who don’t, is having someone calling you during dinner to pitch the same thing you just got 3 direct mailings and saw 15 TV ads about going to suddenly change your mind? Who is telemarketing going to work on that those other cheaper, less annoying methods of marketing won’t?

To get telemarketing to stop, all we have to do is make it not worth their while, to bring the success rate down below about 0.1% (or even below 1%). I would have guessed that it was already below that… but according to a quick Google search, it’s actually above 5%, which just blows my mind. [Sorry, no references that appeared valid/unbiased enough to cite]

The Do Not Call List sounds like a decent idea on the surface, but unfortunately it’s been reported that signing up might not really help you, and that offshore telemarketers might have taken the list so now people who signed up are getting called more. Me, I found a slight decrease in calls after signing up, but I already had a lot of telemarketers calling my (listed) home line. I did not sign up my cell phone, since I figured that the list getting leaked was a possibility, and there were already very few people who called that number, so why bother? If you’re not presently swamped by calls, don’t sign your number up.

Anyhow, a post in the Freakonomics blog rang true with me: this has to be the worst list to steal/buy. Even if the do-not-call list doesn’t work through its original intended fashion (using the law to stop telemarketers), it should still work in an economics fashion: this is a list of people who don’t want to be called. If you call them, they will likely not buy your shit. In fact, they’re people who were aware enough of the telemarketing issue to go out of their way to sign up for a do-not-call list, and so they’ll probably be pissed if you do call. Stealing this list and calling people on it should be expected to lose money for the underhanded telemarketer. The Canadian do-not-call list is full of loopholes, for charities and political parties for example. If any of those excepted companies call, remind them that you’re on the do-not-call list. If they say that they’re an exception, then tell them that you don’t care about the legalities, but rather that you won’t give your money to an organization dumb enough to waste resources calling people who don’t want to be called.

On the other hand, some commenters in that post indicated that the do not call list is just the opposite: a collection of people who are gullible and vulnerable to telemarketers, so they need the protection of that list, or at the very least it is a list of working numbers answered by humans… making it the perfect list of people to call.

In a brazen move, TD has introduced an inactivity fee for unsecured lines of credit, and apparently is also pushing through a rate increase. Despite having a LoC at TD myself, I haven’t received any notification of this from TD yet.

From a customer care point of view, the inactivity fee is bad optics — LoCs were marketed as accounts with no fees that would be there when you needed them, that you could open and have just in case… then bam! as soon as the economy starts to sour and people might actually need to use them, they get pricey. The fee is targeting those people who don’t need the credit and so are arguably the smallest credit risk! Personally, I’d be more annoyed at a rate hike since the fee is easy enough to get around (move money out for a day, put it back in the next, pay a cent in interest, and you save the $35 fee).

But like many things going on these days, I don’t think this is exactly what it appears on the surface. This to me is a fee that will never be collected. It’s unfortunate that they’ve chosen to do things this way, but this fee has been designed to infuriate people into closing their inactive LoCs. TD wasn’t making any money from people who weren’t actively borrowing and racking up interest charges, but they had to keep some capital reserve on hand in case they did. And lately they (and the other banks) have had to raise capital at some pretty costly rates to shore up their ratios, and the big increase in default rates coming down the pipeline hasn’t even hit yet. So it just made sense to try to convince those people to close their accounts, and a “eat shit and have a nice day now” letter in the mail is one way to achieve that. Heck, just look at the number of people around the blogosphere closing their LoCs in outrage. Of course if they do find a need for that loan, they’ll have to reapply from scratch, and the rates offered nowadays can’t be pretty. After three rounds of negotiations with TD last summer I managed to get Prime+1% on an unsecured LoC — I doubt I could get that on a secured loan these days.

Edit: And just as I get around to posting this after writing it two days ago, I find out that TD has cancelled their plans for the fee, citing negative feedback. I suppose I was at least correct in that this was a fee that would never be collected.

From today’s Globe and Mail:

Two recent leaks at the aging Canadian nuclear reactor that produces most of the world’s medical isotopes have heightened concerns about the unit’s safety – and the willingness of officials to raise a flag when things go wrong.
…
A small amount of radioactive tritium was released into the air, and about 50 kilograms of heavy water spilled into the sump below the reactor. “There was never any harm or impact to the employees or the community,” Mr. Coffin said.
…
“Of course, is the nuclear safety commission going to shut down that reactor for safety after what happened a year ago?” asked Mr. Bennett. “The people responsible for safety are afraid to shut it down because the last time they held up production, their president got fired.”

[emphasis mine].

This is a fairly minor issue at Chalk river, at least about as minor as you can get when you’re talking about a five decade old nuclear reactor. Things are probably still safe enough to continue Moly-99 production, for now. But the fact is Stephen Harper’s inept partisan ham-handedness last year has hurt the ability of the CNSC to do its job, and hurt the public’s perception of nuclear safety in Canada.

Hey, speaking of ancient reactors critical to nuclear medicine procedures all over the world, wouldn’t that be a great way to spend a few billion dollars to stimulate the economy? [Ok, actually it wouldn’t really help much because it would take years before any bulk construction was done, unless they just tried the same old MAPLE or NRU design again, but nonetheless, there’s still no succession plan in place…]

And to dovetail nicely with my last post on buying a car for the first time, Baum has recently decided to sell his car. Since this is another major transaction I’ve never done on my own, I shot him off a few interview questions which he graciously took the time to answer for me:

What made you decide to sell?

When my girlfriend and I moved in together we each had a car, we rented a place right by the subway, so I decided to give it a year and see how much we needed two cars, after that year I only put 3000km on my car and partiality due to the fact that when we’d go out sometimes we’d take her car, and sometimes we’d walk or take transit, I noticed I didn’t take my car anywhere for work, and that keeping it was costing me at least $200.00 a month in insurance and parking at the apartment, not to mention gas and maintenance costs.

How do you plan to get along without it? As I understand it, you can share a car with your serious long-term special live-in girlfriend. Has there ever been a time in the recent past where you needed both cars?

serious – long term – special… heheheh

not really, nothing dire it was more we we’re both driving to a location for convenience and I’m sure that with planning and some flexibility on both our parts, we can work this out, also I will be looking into a car sharing program like auto share or zip car when the time comes.

What steps have you taken towards selling?

I purchased the used vehicle information package (government mandated), gave it a car wash took some pictures, and posted it on craigslist, I’m not in any rush to sell the car at the moment so I’m doing the minimum

What tools are you going to use to determine the fair value of your car?

I’ve checked around on the internet to see what the car is going for, and decided what it would take to let me give up my car.

I understand you’re selling it yourself, where have you decided to advertise?

Craigslist, I’ve used it in the past to move some merchandise I like the interface

Have you considered using Autotrader.ca? [Full disclosure: I own shares in YLO]

No, I’m going to use the free sites first I’m not so keen on spending money on the listing I’d rather put it into the car to help it sell [full disclosure: sorry if this stops other people from using Autotrader.ca thus making your stock worth less, but I’m cheep]

What does someone selling a car on their own need to know? How do you transfer the ownership? How do you collect and pay the taxes? How do you protect against fraud? What sort of safety certifications are needed? Who pays for that?

Ownership needs to be transferred at the MTO, they will collect the taxes, directly from the purchaser. To protect against fraud I’ve decided that I will only deal with money orders or certified cheques. The car will need to pass an Etest and get a safety certificate from an authorized mechanic, as for who pays for that I’m willing to negotiate when the time comes. Also an aforementioned used vehicle package is required it provides the perspective buyer with information such us past owners, accidents reported, and the suggested wholesale and retail prices bases on the cars “black book” value and it is their right in Ontario to ask to see this before they purchase any used car.

Ok, thanks Baum!