A year ago I was preparing to leave for the other side of the world.  On January 14, 2009 I touched down in Dhaka Bangladesh.  It was a long journey but half the time it used to be because I went from Toronto to Dubai to Dhaka.  It was a wonderful trip, what I think about a lot.

I never take that trip to0 lightly.  When you are traveling to the other side of the world, one in which is not as stable as Canada there is much to think about including your own security.  So every time I have traveled there I am very organized.  I’m also very aware of the geopolitical events swirling around me.  If there’s trouble in those far-off lands I know somebody will turn and point a finger at me.

So now that I find myself in 2010, it seems the world has changed again.  The United States announced today that there would be extra scrutiny for passengers from 14 different nations around the world.  This is partly in response to the failed terrorist attempt on Christmas day over southwestern Ontario as a Delta airliner neared Detroit Michigan.  I could just imagine today if I set off for the other side of the world the amount of security I would need to go through.  Yes, not traveling to the United States would be a bonus but surely along the way I’d be paying the price for the Christmas terrorist attempt.

That recent failed attack has certainly changed the paradigm as we stare into 2010.  Just think for a moment if it had not happened.  Air security would be off the radar and we’d be talking about other things like a resurgent American economy in 2010.  It just goes to show you it is always some isolated incident on some ordinary Tuesday that grabs the headlines and changes the world.  The question is how is 2010 shaping up and will there be some seismic change this year that makes everything different?

Of course if I knew the answer to that question, I’d be sitting on a beach somewhere with a cell phone.  For instance, today the Canadian dollar jumped over one penny on news that the American dollar was finding some weakness underneath it.  However in March of 2009 the Canadian dollar was valued at about $.77 US.  Just this afternoon I was told that many Canadian banks are expecting our currency to reach par within the next six months.  I was asked what I thought and of course I said I dunno.  The point being we don’t know what’s going to happen but we must prepare anyway.

To me that means this year in 2010 as Canadians we will need to get used to the specter of much higher interest rates.  It might not happen in 2010 but at a certain point it has to.  We cannot expect the lowest interest rates in history to be sustained into perpetuity.  The Bank of Canada Gov. Mark Carney has said that the bank will keep interest rates at this level until July 2010.  If we see renewed economic growth in Canada leading up to that, I think the Bank of Canada will move rates higher.  If our American friends ever get their economy going, I think it might happen even faster.  At a certain point, finding the money to pay all of this government debt is going to happen.  Printing money usually turns into inflation and you can bet him both the Federal Reserve in the United States and the Bank of Canada will the move in concert.

It is not like we have not been warned.  In his New Year’s message Prime Minister Harper said that it is not realistic for interest rates to stay this low.  He told people to budget accordingly based on the very realistic specter that interest rates would be going up significantly in our future.  The question is how can you prepare yourself now and what economic moves can you make to sustain yourself and maybe even profit in a higher interest rate world?

So what’s that mean?  It might mean that if you are planning some big-ticket purchases or considering a mortgage to lock-in those interest rates.  Just think if you locked in at about six or 7% and inflation took off to about 12% like it did in the 70s.  You’d be making money while you slept.

Who knows?   2009 was the year everybody was hoping for some type of recovery out of recession.  In January 2010, were still hoping.  Interest rates will be key.  We’ll see what happens post-July.