My employer has engaged the services of an outside Value Added Reseller (VAR). They have sent us a couple big fancy IBM servers and a guy to help us install it. The guy they sent was telling me he used to work for the Union of Soviet Socialist Republics, well everyone who lived there worked for the government, it was the only job in town. His job was to configure and maintain the computer networks that monitored radiation, he worked at the Chernobyl Nuclear Power Plant in what is now the Ukraine. The consultant started Sept 1986 and worked there for a few years. In case anyone does not remember, according to the Wikipedia article I linked to above, the explosion at reactor number 4 took place in the early hours of April 26, 1986 - I remember, I was in grade 2 at the time.
Of all of the failures of engineering humanity has endured over the years, Chernobyl has to be one of the worst. It did not just kill people who were fighting the fire, or in the explosion, it decimated the land for miles. Chernobyl is probably as much to blame for the fall of the Soviet Union as the Titanic is to blame for the collapse of the European social order that existed prior to World War I. Both events destroyed the people's faith in an existing order. Naturally as I write these words I am inclined to think will historians look back at the failure of Lehman Brothers as the destroyer in faith of our complex financial system?
Well on further reflection, I never really had much faith in our complex financial system, it only works as long as a very precarious set of checks and balances are maintained, if China stops buying US treasury bills, if Americans stop spending, if commodities become too expensive the whole thing comes crashing down... ooops!
Anyway all this talk of financial ruin, I should point out that since I made my little contribution to the policy wiki on the Globe and Mail, it is policy briefing number 8 (RRSP Withdrawal), I have seen three people vote on it, no not me, I suggest it, other people vote on it. Of the three votes, two were in favour. I still think it is a good idea, sure over the short term people are given an incentive to piss away retirement savings, but they actually put their money in a very wise place, their high interest loans. I mean look at this really silly example using the numbers I used the other day when I argued that TFSA were idiotic.
Our hypothetical person earns $100,000 per year, pays 30% flat tax and contributes $5000 a year to their RRSP. Well first off, most financial advisers seem to suggest that we should set 10% of our income aside for when we are old farts, but who cares! So lets allow our hero an RRSP that we will say has a net return of 2.5% on his investments (he was smart and bought GICs in the run up to the disaster that is the current economy). Oh and lets assume our person has $5000 in personal debts that cost him say 5% interest per year.
Our guy pays back the $5,000 he "borrowed" from his RRSP within one year, and thus while his RRSP looses 2.5% of $5000 (or $125), he saves 5% on the debts he has now paid off, or $250, thus after one year, he can take his $250 savings and shove it into his RRSP.
So what I want explained to me is why is this a bad idea? Okay I will grant, my idea assumes that you cannot generate as much wealth through interest as you loose through interest, in other words, interest on debts will exceed interest or growth on savings. Of course that is almost always the case for the little people who don't have millions of dollars and uber wise investment gurus to guide them. I believe that us normal people are wisest when we pay down our debts and not run up new tabs in crazy investment schemes. The fact is, play long enough and the dealer (bank) always wins.
In other news, it is terribly cold out, still, sigh. I want to ride to a bike repair store, I have promised to fix their computer, in return they are going to give me a new front wheel for the Coppi, but it is too bloody cold. Lesley has told me she can drive me to the store, before she does her pre-trip to China shopping, I fear I will have to take her up on that offer. I hate winter, is there an employer in Phoenix or maybe San Fran... no too foggy, maybe uhm Houston, who is willing to give me lots of time off to ride and a really good salary? Real estate prices where they are if I were willing to live in Miami with our savings, we could buy a property and have no mortgage, except Florida? Ewww, they still have not figured out who won the election of 2000 down there and its been more than eight years!
Of all of the failures of engineering humanity has endured over the years, Chernobyl has to be one of the worst. It did not just kill people who were fighting the fire, or in the explosion, it decimated the land for miles. Chernobyl is probably as much to blame for the fall of the Soviet Union as the Titanic is to blame for the collapse of the European social order that existed prior to World War I. Both events destroyed the people's faith in an existing order. Naturally as I write these words I am inclined to think will historians look back at the failure of Lehman Brothers as the destroyer in faith of our complex financial system?
Well on further reflection, I never really had much faith in our complex financial system, it only works as long as a very precarious set of checks and balances are maintained, if China stops buying US treasury bills, if Americans stop spending, if commodities become too expensive the whole thing comes crashing down... ooops!
Anyway all this talk of financial ruin, I should point out that since I made my little contribution to the policy wiki on the Globe and Mail, it is policy briefing number 8 (RRSP Withdrawal), I have seen three people vote on it, no not me, I suggest it, other people vote on it. Of the three votes, two were in favour. I still think it is a good idea, sure over the short term people are given an incentive to piss away retirement savings, but they actually put their money in a very wise place, their high interest loans. I mean look at this really silly example using the numbers I used the other day when I argued that TFSA were idiotic.
Our hypothetical person earns $100,000 per year, pays 30% flat tax and contributes $5000 a year to their RRSP. Well first off, most financial advisers seem to suggest that we should set 10% of our income aside for when we are old farts, but who cares! So lets allow our hero an RRSP that we will say has a net return of 2.5% on his investments (he was smart and bought GICs in the run up to the disaster that is the current economy). Oh and lets assume our person has $5000 in personal debts that cost him say 5% interest per year.
Our guy pays back the $5,000 he "borrowed" from his RRSP within one year, and thus while his RRSP looses 2.5% of $5000 (or $125), he saves 5% on the debts he has now paid off, or $250, thus after one year, he can take his $250 savings and shove it into his RRSP.
So what I want explained to me is why is this a bad idea? Okay I will grant, my idea assumes that you cannot generate as much wealth through interest as you loose through interest, in other words, interest on debts will exceed interest or growth on savings. Of course that is almost always the case for the little people who don't have millions of dollars and uber wise investment gurus to guide them. I believe that us normal people are wisest when we pay down our debts and not run up new tabs in crazy investment schemes. The fact is, play long enough and the dealer (bank) always wins.
In other news, it is terribly cold out, still, sigh. I want to ride to a bike repair store, I have promised to fix their computer, in return they are going to give me a new front wheel for the Coppi, but it is too bloody cold. Lesley has told me she can drive me to the store, before she does her pre-trip to China shopping, I fear I will have to take her up on that offer. I hate winter, is there an employer in Phoenix or maybe San Fran... no too foggy, maybe uhm Houston, who is willing to give me lots of time off to ride and a really good salary? Real estate prices where they are if I were willing to live in Miami with our savings, we could buy a property and have no mortgage, except Florida? Ewww, they still have not figured out who won the election of 2000 down there and its been more than eight years!
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