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Don’t expect a Venezuela regime change to offer an economic miracle cure: Don Pittis

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While there is no question that the Venezuelan economy has been devastated under the leadership of Nicolas Maduro, experts say a regime change will offer no miracle cure.

While Maduro still has many backers — including the head of the country’s military, who announced his support yesterday — most analysts not directly aligned with the current government describe an economy that is not only in crisis, but a crisis that is deepening.

With no medicines and no money to buy them, Venezuela has become a reservoir of communicable diseases. Except for those close to the seat of power, people have trouble feeding their families. Corruption and violence, a problem familiar to Latin America, has grown worse.

Exporting skills

Venezuelans have been voting with their feet. An estimated 10 per cent of the population has already left the country, and as usual, it’s those with the resources to move and the smarts to get international visas who go.

They take with them the skills essential to a modern economy.

Canada, the U.S. and Brazil are among those backing a new self-declared alternative president Juan Guaido, an elected official who was named opposition leader and head of the National Assembly earlier this month.

Maduro’s critics insist his legal mandate ran out on Jan. 10, the date of his latest inauguration, arguing the contested president’s re-election last May was a sham and should not be recognized.

“Canada has recognized that … there needs to be at least some kind of popular mandate behind the person at the head of the government for the very difficult work that needs to be done to restore stability and bring Venezuela back to democracy,” Ben Rowswell, Canada’s former ambassador to Venezuela, told CBC Radio’s As It Happens.

People gather in support of Venezuela’s opposition leader Juan Guaido, in Bogota, Colombia. Brazil, Canada and the U.S. have also thrown their support behind the self-declared president. (Luisa Gonzalez/Reuters)

But as the world has witnessed following other regime changes, including those of the Arab Spring, political rebellion is not enough. 

In a country where the financial system required to feed its own people has been severely broken, a change in government may not keep its citizens satisfied for long.

The people now marching through the streets must begin to see their lives improve.

That will not be easy.

The first step is to tackle inflation, where Venezuela leads the world by a wide margin, says Kurt Annen, currently doing research on the economics of developing countries at the University of Geneva.

Spend crazy, print crazy

“Governments just spend crazy, and print money crazy, to finance that spending, which is what has been happening in Venezuela,” Annen said in a telephone interview.

In other countries with severe inflation, funding from the International Monetary Fund (IMF) has helped get the problem under control fairly quickly, he says.

“Other things are, I think, quite challenging,” said Annen.

Reports listing the economic deficiencies of the current government might leave the impression that before Maduro’s predecessor, the late Hugo Chavez, took power, Venezuela’s economy was in excellent health.

That just isn’t the case, Annen says.

Despite widespread opposition, President Nicolas Maduro still has many supporters, including the head of the country’s military, who announced his backing yesterday. (Miraflores Palace/Handout via Reuters)

“In 1999, when Chavez was elected, it was not that the economy of Venezuela was in good shape,” said Annen.

After the discovery of oil in the 1920, the Venezuelan economy expanded substantially until the mid-60s. But then the economy declined, he says, and inequality grew.

“The nationalization of the oil company started way before Chavez,” said Annen, who thinks the only way to get the Venezuela economy back on track is to bring in private companies to exploit its petroleum reserves, which are the world’s largest.

The resource curse

Managing its vast oil resources has proved to be a two-edged sword for Venezuela — something that Jeanne Liendo observed closely as a petroleum journalist in Caracas. 

In many ways, the wealth from oil became a crutch for the Venezuelan economy, says Liendo, who came to Canada in 2013, where she now does research on energy policy at the University of Calgary. As the country depended more and more on energy revenues, other parts of the economy withered.

Following the mismanaged privatization of the oil industry that drove foreign investors away and the sharp plunge in prices in 2014, the country’s energy revenues collapsed, with nothing to take their place.

Venezuela now imports crude to feed its refineries. To satisfy angry citizens, the government set prices for consumer goods, including gasoline, below the cost of production, driving many goods producers out of business.

People gather in support of Guaido in Lima, Peru. But even if he succeeds in changing the government, fixing Venezuela’s economy won’t be easy. (Mariana Bazo/Reuters)

“The state of the economy is so bad that whoever’s going to lead the country is going to get in trouble,” said Liendo. 

And many of the educated people who managed to escape the current economic chaos are unlikely to return and bring their skills back, she says, even if the government were to change. With her kids growing up as Canadians, she herself has no plans to return.

Groups of economists at U.S. universities have been working on competing “day after” plans in the event that Maduro steps down or is ousted from power. But development economics is far from an exact science. Growing back an expunged private-sector economy will be the work of decades.

As Annen points out, in other countries where the IMF has stepped in, their demands for austerity in exchange for bailouts have led to new pain — especially for the country’s poorest — and fresh public protests.

Canada’s backing for political change and new democratic elections may be a first step. But to transform Venezuela into a strong economy with a stable government will require a much longer commitment.


Follow Don on Twitter @don_pittis 

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Real Estate

Window repair or replacement is the responsibility of the condo corporation

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If the windows in your condo are hazy, drafty, or have rotting frames, it’s an indicator that they need repairs or outright replacement.

However, under the Condominium Act, it is the responsibility of the condo’s board to carry out such changes as a replaced window is a common element.

“Under the Condominium Act, a declaration may alter the maintenance or repair obligations of unit owners and the corporation but cannot make unit owners responsible for repairs to the common elements,” said Gerry Hyman is a former president of the Canadian Condominium Institute and contributor for the Star.

“A declaration for a high-rise condominium invariably provides that the unit boundary is the interior surface of windows. That means that the entire window — whether it is a single pane or a double pane — is a common element. Necessary repairs or replacement of a broken pane is the obligation of the corporation.”

According to Consumer Reports, selecting an installing windows replacement can be very overwhelming for homeowners. Therefore, if you aren’t covered by your condo’s corporation, it would be necessary to hire professional hands.

Wood, vinyl and composite windows need to be tested on how they can withstand various natural elements. For wind resistance, a window can be very tight when it’s warm but get quite cold too—especially when it begins to leak a lot.

Whatever the case may be, the bottom line remains that replacement windows can save you heating and cooling costs, but it’s best not to expect drastic savings.

Additionally, while getting a new window might help you save on your electric and gas bills, due to their expensive cost, it may take a long time to offset their cost.

Mid-last-year, the government withdraw a $377 million Green Ontario program that provided subsidy on windows to installers and repairers. Window companies had to install energy-efficient windows in order to qualify for the government subsidy that pays for up to $500 of a $1,000 to $1,500 window.

Due to the largely generous subsidies from the government under the Green Ontario program, a lot of window dealers were fully booked for months—even after the program had ended.

“We’re fine with the program ending, we just need more time to satisfy consumers,” said Jason Neal, the executive director of the Siding and Window Dealer Association of Canada, the industry group representing window dealers in a report.

According to Neal, the Progressive Conservatives acted hastily, making massive changes with no prior notice.

“No notification was given to us by anyone,” he said, noting he learned about the change through one of his dealers.

“It’s created a ripple effect.If they had just given us notice we would have pushed that down the line from the manufacturer right into the dealer right down to the consumer.”

Neal noted that he wasn’t particularly sad to see the Green Ontario program end, as it was “the worst rebate program in the history of the window industry.”

“It’s been horrible,” he said. “$500 a window has created such hysteria.”

However, despite the program ending about a year ago, numerous homeowners have been contacting window dealers consistently with concerns that they might not be able to afford replacement windows without the government’s subsidy.

“I understand their concern,” said window dealer Chris George. “I would suggest they reach out to their local representative of the government in their riding and let them know about their concerns.”

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7 Vancouver Real Estate Buying Tips

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The real estate market in Vancouver is turning around for good for everyone looking to purchase a home.

Previously soaring prices are now beginning to ease up, making it a perfect time for buyers—with real estate agents already getting ready for a very busy spring and summer season.

However, before splashing cash on a new property, there are some very important tips you need to know to ensure you make the most of the buyer’s market.

Here are some few expert tips that would guide you when purchasing a home in the sometimes frustration Vancouver seller’s market.

  1. Get adequate financing

It is very important that before you make the move to purchase a property, you put into careful consideration your credit score.

Normally, home buyers with lower scores use the secondary mortgage market to finance their purchase, as they’re more likely to pay a higher interest rate.However, it is advisable to get loan approval long before purchasing the house. This way, you are fully aware of how much you are able to spend—but never be tempted to borrow the maximum amount of money available.

“What’s your mortgage payment that you’re comfortable with? And take into the fact the taxes you’re going to have to pay, if it’s a strata – what the maintenance fees are, if it’s a home what type of maintenance are you going to have to pay in the future?” said Phil Moore, president of the Real Estate Board of Greater Vancouver in a report.

Always be careful of the type of loan you secure and ensure that you can comfortably afford it over a long period of time.

  1. Get a real estate agent

Buying a property without professional help is a very risky move and can be likened to choosing to represent yourself in court without a lawyer. While you might trust your negotiation skills, only realtors are permitted to present offers directly.

Therefore, it is necessary to get a professional real estate agent in the area to represent you. So, screen a few agents and select the best one who has in-depth knowledge of the markets and has a great reputation.

“They’re there to protect you. They’re there to walk you through each step of the process,” Moore said.

  1. Sign up for automated alerts

Most—if not all—realtors have access to the Vancouver real estate board’s database which is updated approximately two days before the public MLS website.

Therefore, you can request from your realtor to sign you up for automatic real-time alerts of all new listings. Doing this gives you an edge as you’re among the very first to know about new properties.

  1. Do a thorough inspection

After receiving an alert for a new listing, it is necessary to push almost immediately for an inspection from your realtor. In this current market, buyers now have time to make an inspection.

Making a quick inspection eliminates any surprises—as there could be major maintenance or repair issues that could spring up. Therefore, you can now table your offer based on the outcome of the inspection, with clauses about claiming your damage deposit back if everything isn’t as was advertised.

Additionally, if you notice that renovations were done, you need to be sure that it was permitted work and carried out appropriately. Failing to do this would ultimately lead to further cost down the line and simultaneously affect the resale value.

  1. Have a back-up plan

There’s always the possibility that everything may not go as smoothly as you’d want. From the inspection being a failureto the property not living up to your expectations—or not being able to agree on the closing date that matches with your needs.

However, a professional real estate agent will definitely help you get past all of these things. If you plan on selling the property as you buy, you can table that and make it part of the deal.

“You’ve got an option, especially in a buyer’s market: you can put in an offer subject to selling your place. So maybe you want to have a place lined up,” Moore added.

Additionally, building contingencies into your buying plan is necessary. Things such as unexpected delays in closing the deal, closing cost and moving costs that could result in added living expenses if that’s your permanent home.

  1. Don’t fall for the buyer frenzy

The Vancouver market buying frenzy that caused a serious climb in the prices a couple of years ago has ended. Thus, it is important not to get caught up in bidding wars with properties that have been deliberately under-priced—with the hope of initiating multiple offers.

“Some of the sellers have been on the market for over a year and they’re eager to sell. So what I’m saying to consumers is: you have a lot of choices, you’re in the driver’s seat, let’s go out and take a look at what’s available,” said Moore.

  1. Never be wary of multiple offers

When purchasing a property, don’t be afraid of multiple offers as you have the same opportunity as anybody else.

Typically, there are just a few offers below the asking price: a couple priced fully, and two or three above the asking price—depending on how close the fair market value is from the asking price.

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Do you know what kind of condo you’re buying?

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(NC) Condominiums can come in all shapes and sizes. But it’s important to know that not all condos are created equal when it comes to warranty coverage.

Whether you’re buying a condominium townhouse, loft-style two-bedroom or a high-rise studio, they are all classified as condominiums if you own your unit while at the same time share access (and the associated fees) for facilities ranging from pools and parking garages to elevators and driveways, otherwise known as common elements.

The most common types of condos are standard condominiums and common elements condominiums. The determination of how a condominium project is designated happens during the planning stage when the builder proposes the project and the municipality approves it.

When you’re in the market to buy, you need to know how your chosen condo is classified because it affects the warranty coverage under the Ontario New Home Warranties Plan Act. Standard condominiums have warranty coverage for units and common elements, but common elements condominiums only have unit coverage.

How could this affect you as the owner? If your condo complex has underground parking and, for example, there are problems with leaks or a faulty door, the condo designation will determine whether there’s warranty coverage.

If your unit is a standard condominium development, then the common elements warranty may cover the repairs. If it’s a common element condominium development, then repairs might have to be covered by the condo corporation’s insurance, which could impact your condo fees or require a special assessment on all the owners.

To avoid surprises, you should have a real estate lawyer review the Declaration and Description attached to your purchase agreement to be sure that you know the designation and boundaries of the unit you’re looking to purchase. Find more information on the types of condos and their coverage at tarion.com.

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