Financial Crisis

The market half expected the Bank of Canada to hike interest rates on Thursday, but it was still a surprise to many given the concerns that remain about the strength of the economy. The central bank raised the benchmark interest rate from 0.75% to 1%, marking the third quarter point increase since the hikes began in June. Banks were quick to follow suit and raise their prime rates by 25 basis points to 3%.

Interest rates have been at abnormally low levels as a result of the financial crisis and the resulting global recession and now with countries out of recession, many central banks, including Canada's, have began to slowly correct these levels. There is a lot of concern among central banks that if interest rates are kept too low for too long another bubble could occur, such as the housing bubble that sparked the U.S. subprime crisis.

Canada's housing market does not appear to be in trouble of bubbling anytime soon, and the central bank has admitted that economic growth will likely be slightly softer than it had expected this year. With three and a half months left of 2010, will the central bank hike again, or will Canadians be spared another rate rise for now?

In the early days of my freelance writing career (and if I'm being honest, some slow months even now) I've thought of abandoning the writing hustle for a hustle of a different kind -- one that comes with quick tax-free cash. A wise man by the name of Biggie Smalls once opined, "You're either slinging crack rock, or you have a wicked jump-shot" when describing the two possible career paths for black youths in the 'hood. For freelance writers it can seem like you're either slinging crack rock, or you have a well-paying article (Doesn't really roll off the tongue the same way). I sometimes look up from my laptop and imagine the bricks stashed in the vents on my wall next to stacks of unreported cash -- except there's this little thing called prison and this big thing called death that kind of negates any financial top-up that may come my way.

That's when I got to thinking, 'What are the fastest, easiest and legal ways to make money -- you know, to make sure those lean times aren't quite so lean? Better yet, why not take the WalletPop readership along for the ride...

The end of the recession hasn't provided any relief economically for half of Canadian households.

That's what the employees at Toronto-based advertising agency Bensimon Byrne found when they commissioned their Consumerology report this past July. The Gandalf Group interviewed 1,500 Canadians between the 6-13 of July 2010 and found that half of Canadians feel worse off financially now, than they did a year ago, during the recession. Not only that, but one third of Canadian citizens feel like the country is still in the midst of a recession right now and 21% say that someone in their household will lose their job this year.

Gold is predicted to rise for a 10th straight year in 2011, making it the longest rally in 90 years, forecasters say. According to a Bloomberg article in the Financial Post, some top gold forecasters expect the yellow metal to rise 18% to about US$1,500 by December.

It's a staggering outlook, but given gold's recent performance, it's one that may just play out. Gold is up 13% since the beginning of the year at about US$1,248. On June 21 it hit a record high of US$1,266.50.

Many analysts and professional investors cringe when they admit they expect the price of gold to rise, especially from its current levels. Being a "gold bull" in the investment community comes with a stigma. This is basically because gold usually performs well when everything else is going to pot.

They don't call it smart shopping for nothing but these days it's not the money we spend that's making us feel brainy – it's the money we save. That's what the researchers from Deloitte and The Harrison group learned. They surveyed 2,000-plus consumers and learned that four out of five say they find saving money using techniques like coupons and loyalty programs "fun." So fun, in fact, that 93 percent don't plan to return to their frivolous spending habits when the economy improves.

The research – which is called The New American Pantry Study (PDF) – pointed to five different, new consumer behaviors. Take a look. Join in. You may be more satisfied with how you're using your money if you do.

Keep on reading to find out what these five new behaviours are, and whether you exhibit them in your own daily life and habits.

It's the outcome no one wants, a second recession - the 'double dip,' also known as the 'W-shaped' - but economists are beginning to increasingly fear that the U.S. will drag us back into the red.

It's something the economic community has speculated about since the U.S. first entered recession at the end of 2008, sparking a financial crisis that took the rest of the world down with it. Some economists have believed from the start that once stimulus programs began to unwind that the U.S. economy would drop into a second recession. Those concerns have strengthened after the U.S. jobs report last week showed that employment actually fell for the first time this year.

So how likely is Canada to fall back into recession?

Just when we thought things were getting better, the world economy gets shaken up by a Greek debt crisis and sends stock exchanges and currency markets into a tizzy. Before the latest crisis, all the signs had pointed to the loonie sticking at parity with the U.S. dollar and likely even surging back towards that US$1.10 high of November 2007.

But, on a dime, it all changed as cautious investors looked for safe places to park their money in case the crisis grew out of control. The Canadian dollar is down at about US93 cents, 7 cents short of where it was just a month ago. Looking at it historically, the loonie is at a firm level, and once the markets are confident the Greek debt crisis is under control, it should once again begin to climb against the greenback.

But we often get too carried away with what the loonie is doing against its biggest trading partner and forget what's going on with the rest of the world. In fact, when we look at the Canadian dollar compared to other world currencies, the loonie has been putting in a stellar performance. So what does this mean for you?

I'm no expert by any stretch and I generally live under a rock when I should perhaps be keeping up to date about certain things in the world, but it seems to me the markets are acting a wee bit funny of late.

I'm reviewing an investment book this week. It's pretty good so far. (Will tell you more about that shortly – hopefully later this week.) In it, the author examines good stocks and mutual funds to own and a few dogs to avoid. Checking those names out, however, I've noticed that a lot of those companies are trading near their 52 week high prices at the moment. The same seems to be true about a few things I own already. (Though, not about a few mutual funds I bought a few years ago – go figure!)

At the beginning of March last year I was sitting in my office watching the line that charts the Toronto stock market dive even lower into the mid-7000 level, wiping out five years of investment gains for many Canadians. No one knew for sure when the market would begin to rise, and when it finally did begin to creep up later that month, even the experts were reluctant to say the worst was over. The country was still in recession and unemployment was rising.

But as time has shown, the worst was over and in the past year the S&P/TSX composite index has risen 58% to sit near the 12,000 level. As the global economy heals and business conditions improve, the experts say Toronto stocks should keep on rising.

So if you're in the stock game, where should you put your money?