Weekend Reading: What’s Keeping Us Awake At Night Edition

A thoughtful, well-written essay by Bank of Canada Governor Stephen Poloz highlights this edition of weekend reading. The Governor spoke before the Canadian Club in Toronto and shared that while the Canadian economy is on pace to be the strongest among the Group of Seven economies this year there are still three (or four) things keeping him awake at night.

The first is the potential for a cyber attack on our financial system. “We cannot assume that our financial system is immune, despite best-in-class cyber defences.

The second preoccupation is with high house prices and household debt – more specifically mortgages and home equity lines of credit. Poloz talked about new mortgage rules and how borrowers might respond to the new regulations by perhaps looking to alternative lenders. He said:

“To those people who hope to avoid the rules, I offer this advice: testing yourself to make sure you could handle your mortgage payments if interest rates were higher at renewal is a very good idea, whether it is a rule or not.”

The third item that is keeping the Governor awake at night is the tough job market for young people. Of the 350,000 jobs created this year only 50,000 have gone to young workers.

Poloz did add a fourth item keeping him awake and that is “all the noise I keep hearing about cryptocurrencies, especially Bitcoin.”

“What their true value is may be anyone’s guess—perhaps the most one can say is that buying these things means buying risk, which makes it closer to gambling than investing.”

Interestingly enough, the Governor did say that bank staff are exploring the circumstances under which it might be appropriate for the central bank to issue its own digital currency for retail transactions.

This Week’s Recap:

On Monday I explained the illusion of wealth.

On Wednesday Marie looked at comparing your investment returns with benchmark indexes.

And on Friday Marie explained how the new CPP changes will affect you.

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Weekend Reading:

A brilliant, crazy, wild read on why millennials are facing the scariest financial future of any generation since the Great Depression:

“Even if economic growth picks up and unemployment continues to fall, we’re still on a track toward ever more insecurity for young people. The “Leave It To Beaver” workforce, in which everyone has the same job from graduation until gold watch, is not coming back. Any attempt to recreate the economic conditions the boomers had is just sending lifeboats to a whirlpool.”

Here’s what the proposed new income sprinkling rules mean for you and your business.

Morgan Housel on how we solve hard problems with simple ideas.

Here’s retirement advice most people don’t expect: Spend more money, have more fun, give more away.

In the latest Canadian Couch Potato podcast Dan Bortolotti looks at the future of robo-advice.

Dan’s partner in crime, PWL’s Justin Bender, compares bond ETFs and GICs in the most boring battle ever.

Ever wondered what you were thinking after making a bad decision? Daniel Kahneman explains:

Behavioural economists Shlomo Benartzi and Richard Thaler on the secret to getting workers to save more for retirement.

No defined benefit pension? Alexandra Macqueen shares some unorthodox advice on how to save for retirement.

Jonathan Chevreau explains how annuities can beef up retirement cash flow.

I enjoyed John Heinzl’s five important investing lessons from Bitcoin fever:

“Given the risks and uncertainties, I wouldn’t invest the cost of a roll of hockey tape on bitcoin. But I do think it has tremendous value in one respect: as a teaching tool.”

Fed up with delivery companies that drop your online parcels at the front door? Shoppers vent about doorstep stealing and delivery security.

Finally, my friend Barry Choi left a secure job in television after 18 years to pursue the freelance life and spend more time with his family. Best of luck to you, Barry!

Have a great weekend, everyone!