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G20 shows steady rise of Chinese clout and fraying U.S. ties in Latin America




It took only minutes for Argentine officials to react to the White House’s version of what was said in the meeting between U.S. President Donald Trump and his G20 host Mauricio Macri: the Americans weren’t reporting the discussion accurately.

It was spokesperson Sarah Huckabee Sanders who had described the bilateral talks in terms sure to annoy China.

“The two leaders reiterated their shared commitment to face regional challenges like Venezuela and predatory Chinese economic activity,” she said.

Well, actually they didn’t, said Argentina.

“That comment wasn’t co-ordinated with the government of Argentina and doesn’t reflect Argentina’s view” said an official. “We value our relationship with China very much.”

Argentina’s foreign minister, Jorge Faurie, chimed in, “It was not discussed in those terms.”

And from Beijing, Argentina’s ambassador, Diego Guelar, told the newspaper La Nacion, “China is an integral strategic partner of Argentina and we’re signing 37 bilateral accords with China covering every area during the state visit of President Xi Jinping.”

Sanders’s version of the meeting “must have been a mistake,” said Guelar.

And with that episode, Argentina’s relations with the U.S. frayed a little more and inched closer to China.

Trump’s indifference was on full display on Friday when he suddenly walked offstage at a G20 event and left Macri alone, visibly perplexed and discomfited, while some in the audience began to laugh.

Rather upset Washington than Beijing

There’s a good reason Argentina’s government appears more concerned about upsetting China than it is about contradicting the White House. China is investing billions of dollars in its economy. And China’s footprint here is growing.

This week, China doubled to $25 billion Cdn a line of credit to help Argentina through the latest round of its perennial financial crisis. That makes China Argentina’s biggest creditor after the International Monetary Fund.

Next week, China is expected to announce that it will construct a new nuclear power station for Argentina at a cost of about $8 billion.

“China is the second-largest economy in the world, soon to be number one, and it is looking to expand its interests, commercial and otherwise, throughout the world,” says Thomas Bernes, a former senior official with both the IMF and the World Bank who was attending the G20 as a fellow at the Centre for International Governance Innovation (CIGI). “This is similar to what the U.S. has done for decades, including throughout Asia.”

“The TPP (Trans-Pacific Partnership) was an attempt by the U.S. to build a trade agreement with countries in Asia that excluded China. Countries want to enjoy a productive relationship with both. But the world hasn’t witnessed a time before when two countries were so dominant economically and strategically at the same time. Russia was a strategic competitor but not an economic one.” 

Increasingly, Bernes told CBC, countries may be forced to choose.

“So as the power dynamic changes; how do the U.S. and China, and other countries, find a way to avoid conflict?”

Spreading wealth, buying friends

More and more, the choice is China. Chinese corporations, many with links to the state, are investing heavily, and strategically, across the region. They prefer to put their money into infrastructure, such as ports, and natural resources, such as strategic minerals, as well as energy projects.

In 2015, President Xi Jinping toured Latin America, showering money — and wherever he went, he told Latin American leaders that China was committed to spend $250 billion US in the region by 2025. He invited Latin leaders to a conference in Beijing where he told them China believes its trade with Latin America will reach $500 billion a year over the same period.

That largesse brings two kinds of risks for those who fear that authoritarian China may one day displace democratic America as the heavyweight of the hemisphere. 

The first is that the assets China is buying are creating an infrastructure of power that spans the world. Just as the U.S. once benefited mightily from control of the Panama Canal, China’s growing network of seaports potentially gives it control over the chokepoints of global commerce.

The second is the concessions China is demanding — and receiving — in return for its investments. One example is El Salvador’s decision to end its long-standing recognition of Taiwan in August, ignoring U.S. threats of retaliation, in what looks like a quid pro quo for China’s investment in a new port.

And in Argentina, China’s investments have secured for Beijing what may be its first military presence in the Western hemisphere.

PLA comes to the Andes

In the foothills of the Andes, on 200 hectares of land ceded by Argentina for 50 years, China has built a satellite tracking and monitoring station, which began operating last year. Its antenna is 16 stories high.

China first proposed the project when Argentina was experiencing the economic turmoil of the 2008-09 financial crisis.

“The station is exclusively for scientific and civic purposes, focused on monitoring, control, and data download of China’s interplanetary space missions,” Argentina’s ministry of planning said when the deal came up for ratification in Argentina’s Congress.

And Congress had to take their word for that, because the deal contains a number of secret clauses, but it is striking that the organization that operates the station is fully controlled by the Chinese People’s Liberation Army, and the antenna is the kind of dual-use technology that other countries use to intercept communications.

In recent years, China’s military has also sought liaison arrangements with some South American nations, and conducted joint exercises with the Brazilian Navy.

U.S. needlessly ceding terrain

Argentina’s President Mauricio Macri is a wealthy businessman who knows Donald Trump from New York days before he ran for president. Macri has been highly critical of his immediate predecessor’s anti-American rhetoric and her tendency to work with countries such as Russia, China, Venezuela and Iran while allowing ties with western democracies to degrade.

Argentina’s president has made his preferences clear, and has offered advantages to U.S. companies to invest in a vast and undeveloped oil and gas reservoir called Vaca Muerta in Patagonia.

In his bilateral meeting with Trump on Friday, Macri spoke at length about Vaca Muerta and encouraged the U.S. president to try to get American companies involved in developing it. Macri’s government is well aware of the dangers of becoming too beholden to China’s predatory lending practices, which have dragged vulnerable countries deep into debt only to extract concessions that can include surrenders of sovereignty.

But Trump showed little interest in Vaca Muerta, according to Argentine media reports.

It’s just one more way that the Trump administration is accelerating the decline of U.S. influence in the region and hastening the rise of China’s.

Soybeans and the byproducts are a leading commodity in Argentina and increasingly the underpinning of its government’s tax revenues. When Trump began his trade war with China, Beijing retaliated by imposing tariffs on U.S. soya and shifting more of its soy purchases to Argentina and Brazil. China is by far the biggest customer for Argentina’s soybeans, deepening the country’s dependence on Beijing.

“As we see between Canada and the U.S., having close economic ties clearly makes you more sensitive to views of the other,” says Bernes.

In stark contrast to China’s strategic nurturing of its influence in Argentina, the Trump administration has been disinterested, disorganized, and increasingly absent. And as U.S. prestige and presence wane, pro-western Macri has had no choice but to turn more to the Chinese. And they have come through for Argentina, ever eager to take on the roles Washington seems to be abandoning.


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Real Estate

5 ways to reduce your mortgage amortization




Since the pandemic hit, a lot of Canadians have been affected financially and if you’re on a mortgage, reducing your amortization period can be of great help.

A mortgage amortization period is the amount of time it would take a homeowner to completely pay off their mortgage. The amortization is typically an estimate based on what the interest rate for your current term is. Calculating your amortization is done easily using a loan amortization calculator which shows you the different payment schedules within your amortization period.

 In Canada, if you made a down payment that is less than the recommended 20 per cent of the total cost of your home, then the longest amortization period you’re allowed to have is 25 years. The mortgage amortization period not only affects the length of time it would take to completely repay the loan, but also the amount of interest paid over the lifecycle of the mortgage.

Typically, longer amortization periods involve making smaller monthly payments and having a much higher total interest cost over the duration of the mortgage. While on the other hand, shorter amortization periods entails making larger monthly payments and having lower total interest costs.

It’s the dream of every homeowner to become mortgage-free. A general rule of thumb would be to try and keep your monthly mortgage costs as low as possible—preferably below 30 per cent of your monthly income. Over time, you may become more financially stable by either getting a tax return, a bonus or an additional source of income and want to channel that towards your principal.

There are several ways to keep your monthly mortgage payments low and reduce your amortization. Here are a few ways to achieve that goal:

1. Make a larger down payment

Once you’ve decided to buy a home, always consider putting asides some significant amount of money that would act as a down payment to reduce your monthly mortgage. While the recommended amount to put aside as a down payment is 20 per cent,  if you aren’t in a hurry to purchase the property or are more financial buoyant, you can even pay more.

Essentially, the larger your down payment, the lower your mortgage would be as it means you’re borrowing less money from your lender. However, if you pay at least 20 per cent upfront, there would be no need for you to cover the additional cost of private mortgage insurance which would save you some money.

2. Make bi-weekly payments

Most homeowners make monthly payments which amount to 12 payments every year. But if your bank or lender offers the option of accelerated bi-weekly payment, you will be making an equivalent of one more payment annually. Doing this will further reduce your amortization period by allowing you to pay off your mortgage much faster.

3. Have a fixed renewal payment

It is normal for lenders to offer discounts on interest rate during your amortization period. However, as you continuously renew your mortgage at a lower rate, always keep a fixed repayment sum.

Rather than just making lower payments, you can keep your payments static, since the more money applied to your principal, the faster you can clear your mortgage.

4. Increase your payment amount

Many mortgages give homeowners the option to increase their payment amount at least once a year. Now, this is very ideal for those who have the financial capacity to do so because the extra money would be added to your principal.

Irrespective of how small the increase might be, in the long run, it would make a huge difference. For example, if your monthly mortgage payment is about $2,752 per month. It would be in your best interest to round it up to $2,800 every month. That way, you are much closer to reducing your mortgage amortization period.

5. Leverage on prepayment privileges

The ability for homeowners to make any form of prepayment solely depends on what mortgage features are provided by their lender.

With an open mortgage, you can easily make additional payments at any given time. However, if you have a closed mortgage—which makes up the larger percentage of existing mortgages—you will need to check if you have the option of prepayments which would allow you to make extra lump sum payments.

Additionally, there may also be the option to make extra lump sum payments at the end of your existing mortgage term before its time for renewal.

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Real Estate

Mortgage insurance vs. life insurance: What you need to know




Your home is likely the biggest asset you’ll ever own. So how can you protect it in case something were to happen to you? To start, homeowners have a few options to choose from. You can either:

  • ensure you have mortgage protection with a life insurance policy from an insurance company or
  • get mortgage insurance from a bank or mortgage lender.

Mortgage insurance vs. life insurance: How do they each work?  

The first thing to know is that life insurance can be a great way to make sure you and your family have mortgage protection.

The money from a life insurance policy usually goes right into the hands of your beneficiaries – not the bank or mortgage lender. Your beneficiaries are whoever you choose to receive the benefit or money from your policy after you die.

Life insurance policies, like term life insurance, come with a death benefit. A death benefit is the amount of money given to your beneficiaries after you die. The exact amount they’ll receive depends on the policy you buy.

With term life insurance, you’re covered for a set period, such as 10, 15, 20 or 30 years. The premium – that’s the monthly or annual fee you pay for insurance – is usually low for the first term.

If you die while you’re coved by your life insurance policy, your beneficiaries will receive a tax-free death benefit. They can then use this money to help pay off the mortgage or for any other reason. So not only is your mortgage protected, but your family will also have funds to cover other expenses that they relied on you to pay.

Mortgage insurance works by paying off the outstanding principal balance of your mortgage, up to a certain amount, if you die.

With mortgage insurance, the money goes directly to the bank or lender to pay off the mortgage – and that’s it. There’s no extra money to cover other expenses, and you don’t get to leave any cash behind to your beneficiaries.

What’s the difference between mortgage insurance and life insurance?

The main difference is that mortgage insurance covers only your outstanding mortgage balance. And, that money goes directly to the bank or mortgage lender, not your beneficiary. This means that there’s no cash, payout or benefit given to your beneficiary. 

With life insurance, however, you get mortgage protection and more. Here’s how it works: every life insurance policy provides a tax-free amount of money (the death benefit) to the beneficiary. The payment can cover more than just the mortgage. The beneficiary may then use the money for any purpose. For example, apart from paying off the mortgage, they can also use the funds from the death benefit to cover:

  • any of your remaining debts,
  • the cost of child care,
  • funeral costs,
  • the cost of child care, and
  • any other living expenses. 

But before you decide between life insurance and mortgage insurance, here are some other important differences to keep in mind:

Who gets the money?

With life insurance, the money goes to whomever you name as your beneficiary.

With mortgage insurance, the money goes entirely to the bank.

Can you move your policy?

With life insurance, your policy stays with you even if you transfer your mortgage to another company. There’s no need to re-apply or prove your health is good enough to be insured.

With mortgage insurance, however, your policy doesn’t automatically move with you if you change mortgage providers. If you move your mortgage to another bank, you’ll have to prove that your health is still good.

Which offers more flexibility, life insurance or mortgage insurance?

With life insurance, your beneficiaries have the flexibility to cover the mortgage balance and more after you die. As the policy owner, you can choose how much insurance coverage you want and how long you need it. And, the coverage doesn’t decline unless you want it to.

With mortgage insurance through a bank, you don’t have the flexibility to change your coverage. In this case, you’re only protecting the outstanding balance on your mortgage.

Do you need a medical exam to qualify? 

With a term life insurance policy from Sun Life, you may have to answer some medical questions or take a medical exam before you’re approved for coverage. Once you’re approved, Sun Life won’t ask for any additional medical information later on.

With mortgage insurance, a bank or mortgage lender may ask some medical questions when you apply. However, if you make a claim after you’re approved, your bank may ask for additional medical information.* At that point, they may discover some conditions that disqualify you from receiving payment on a claim.

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Real Estate

5 common mistakes Canadians make with their mortgages




This article was created by MoneyWise. Postmedia and MoneyWise may earn an affiliate commission through links on this page.

Since COVID-19 dragged interest rates to historic lows last year, Canadians have been diving into the real estate market with unprecedented verve.

During a time of extraordinary financial disruption, more than 551,000 properties sold last year — a new annual record, according to the Canadian Real Estate Association. Those sales provided a desperately needed dose of oxygen for the country’s gasping economy.

Given the slew of new mortgages taken out in 2020, there were bound to be slip-ups. So, MoneyWise asked four of the country’s sharpest mortgage minds to share what they feel are the mistakes Canadians most frequently make when securing a home loan.

Mistake 1: Not having your documents ready

One of your mortgage broker’s primary functions is to provide lenders with paperwork confirming your income, assets, source of down payment and overall reliability as a borrower. Without complete and accurate documentation, no reputable lender will be able to process your loan.

But “borrowers often don’t have these documents on hand,” says John Vo of Spicer Vo Mortgages in Halifax, Nova Scotia. “And even when they do provide these documents, they may not be the correct documentation required.”

Some of the most frequent mistakes Vo sees when borrowers send in their paperwork include:

  • Not including a name or other relevant details on key pieces of information.
  • Providing old bank or pay statements instead of those dated within the last 30 days.
  • Sending only a partial document package. If a lender asks for six pages to support your loan, don’t send two. If you’re asked for four months’ worth of bank statements, don’t provide only one.
  • Thinking low-quality or blurry files sent by email or text will be good enough. Lenders need to be able to read what you send them.

If you send your broker an incomplete documents package, the result is inevitable: Your mortgage application will be delayed as long as it takes for you to find the required materials, and your house shopping could be sidetracked for months.

Mistake 2: Blinded by the rate

Ask any mortgage broker and they’ll tell you that the question they’re asked most frequently is: “What’s your lowest rate?”

The interest rate you’ll pay on your mortgage is a massive consideration, so comparing the rates lenders are offering is a good habit once you’ve slipped on your house-hunter hat.

Rates have been on the rise lately given government actions to stimulate the Canadian economy. You may want to lock a low rate now, so you can hold onto it for up to 120 days.

But Chris Kolinski, broker at Saskatoon, Saskatchewan-based iSask Mortgages, says too many borrowers get obsessed with finding the lowest rate and ignore the other aspects of a mortgage that can greatly impact its overall cost.

“I always ask my clients ‘Do you want to get the best rate, or do you want to save the most money?’ because those two things are not always synonymous,” Kolinski says. “That opens a conversation about needs and wants.”

Many of the rock-bottom interest rates on offer from Canadian lenders can be hard to qualify for, come with limited features, or cost borrowers “a ton” of money if they break their terms, Kolinski points out.

Mistake 3: Not reading the fine print

Dalia Barsoum of Streetwise Mortgages in Woodbridge, Ontario, shares a universal message: “Read the fine print. Understand what you’re signing up for.”

Most borrowers don’t expect they’ll ever break their mortgages, but data collected by TD Bank shows that 7 in 10 homeowners move on from their properties earlier than they expect.

It’s critical to understand your loan’s prepayment privileges and the rules around an early departure. “If you exit the mortgage, how much are you going to pay? It’s really, really important,” Barsoum says.

She has seen too borrowers come to her hoping to refinance a mortgage they received from a private or specialty lender, only to find that what they were attempting was impossible.

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