Take care all and may all your endeavours lead to wealth.

First off, three blogs posts that I want to share.  All three are on the same theme, that is on downsizing your lifestyle.  I think that this is an important topic as our wants is what keeps us in debt and on the treadmill (hamster ball?).  These guys are not saying that we shouldn’t enjoy life, just to shake off the constant wanting.

• Zen Habits provides nine tips to throw off the chains of  consumerism.
• Canadian Dream gives his five steps to try to live without wants.
• JD over at Get Rich Slowly talks about how he no longer loves his big house and longs for the simpler days of his smaller house.

Stats Canada released the September CPI.  Inflation rose a bit led by an increase in gasoline prices.  The prairies are still above the national average for inflation, however Alberta saw housing cool off while Saskatchewan still showed strong housing.

The Bank of Canada kept interest rates untouched again and released their Monetary Policy Report.  In it the Bank predicts a roughly balanced market where inflation may peak at 3% by the end of the year but will taper off again into 2008.  Expect that the interest rates will remain the same.

Meanwhile in the U.S., the Federal Reserve Board released their commentary on the economy, the Beige Book.  They confirm that American housing situation is still bad and will likely get worse.  An interesting contrast to the doom and gloom is that there are still labour shortages and robust consumerism – perhaps things aren’t all the bad after all.

Energy prices rose a bit this week with oil touching $90/ BBL.  Related to that is the hullabaloo surrounding the upcoming Alberta royalty review decision.  The big oil companies have publicly stated that they will pull out of Alberta if the royalties increase and the small players have said they’d close up shop while the premier has said that he won’t be pushed around.  It may just be sabre rattling but there is a potential that for unfavourable conditions in the oil patch would force the players to find greener pastures.  I’m betting Danny Williams (Premier of Newfoundland & Labrador) is drooling at the prospect of the oil companies leaving Alberta – where will they go, a likely candidate for further investment is Newfoundland.  “Calgary East” is starting to look like a possibility.

Curious Cat has made another interesting post about the American deficit spending being equivalent to future taxes.  Good point, debt is merely charging something to our kids.

My visa application has been approved.  I am going to be spending the next month in and around China!  The bad news is that my blog might get neglected since  I don’t know how well I’ll be able to connect while I’m in China.  I do have some posts ready to go, but if there is anybody who would like to make some guests posts please let me know.

• The Fed dropped the federal funds rate 50 basis points to 4.75%, in addition the discount rate also saw a 50-basis-point decrease to 5.25%.
• The Canadian dollar strengthened and is currently trading around par with the American.
• Statistics Canada released the August inflation numbers.  Total CPI is down to 1.7% and the core went down 2.2%.  The drop was largely due to  a fall in gasoline prices.
• Oil has been hitting new highs as well crossing above $80/bbl.
• The Calgary Real Estate Board finally released their August sales info.  9600 listings, only 2500 sales and the median price also decreased.

For whatever reason (fear of recession, to alleviate the credit crunch), the Fed cut rates.  That will be good news to American homeowners and leveraged businesses alike.  With the Fed cut and increased commodity prices, the Canadian dollar is continuing its strengthening trend.  Whether these things are good news are not is a matter of opinion, however, I am concerned with the rapidity of the change.

For the past two years Calgary was leading the nation in its real estate market, and inflation in general.  Now for the first time in years it is a buyers market.  If nothing else this might indicate that the Western economy has balanced out.  Canada’s CPI numbers also show that inflation has slowed, largely due to decreased gasoline prices.  Since gas prices are volatile this may only be a blip but if all house prices cool off as well then inflation may start to trend down.

1. Zimbabwe, once the breadbasket of Africa, is now claiming that they only have two days supply of flour. That announcement was followed by the news that the plummeting Zimbabwe currency is now worth 1/30,000 of an American dollar – bad news if they debts in any currency other than their own. This situation is only bound to get worse as their inflation is currently sitting at around 7,634%. No food, and lots of worthless money.:(
2. DJIA, NASDAQ and TSX all ended the week down slightly.
3. The BoC, ECB, and BoE all left interest rates alone.
4. TD Waterhouse now offers $10 trades, woot! (some conditions may apply… i.e., you need to have $100k in your borkerage account)

“For the fourth straight month, owned accommodation costs were the main contributor to the year-over-year increase in the CPI.

The component that contributed the most to the increase of owned accommodation costs was mortgage interest cost, which rose 6.0%…

..In Saskatchewan, the 15.2% increase in the cost of owned accommodation was driven mainly by a leap in homeowners’ replacement cost (+37.7%), which surpassed the 31.8% climb in June.“

TD Economics produces an interesting look at economic performance and performs their own analysis. According to them, since inflation has being greater than the Bank of Canada’s target (of 2%) for a year now, the Bank is not likely to lower interest rates. Their guess is that rates will remain the same and possibly edge up on the next announcement.

Interesting, inflation has gone up due to home replacement costs and mortgage interest costs. If interest rates do go up it might cool the replacement cost, but increase the mortgage cost.

It looks like the TSX has been quite flat this week. (Note that I’m writing this before market close.)

Mark you calendars… Wednesday is the BoC interest rate announcement.

Update: According to the BBC, rumour has it that President Bush has a plan to assist homeowners who are in default on their mortgages.  They mention that Bush also wants to beef up enforcement so that there’s tighter control on the subprime lending… this all sounds very familiar to me.  There is also strong pressure on the Fed to lower rates.  We’ll have to wait and see if they succumb to the pressure.