Monday, April 30, 2012

The great Canadian bank bailout (now in technicolor)

In case you didn't notice the plenty of black and white evidence showing you our banks are no more sound and stable than our U.S. counterparts then you are in luck. Everyone knows that black and white is ancient and many people can not maintain their attention, so a new report has been released in nice, clean, simple to understand technicolor. If you didn't find Canada's economic situation interesting before, then perhaps you will now.

Fractional Reserve Lending is fractional reserve no matter how "tight" the lending rules are. Do you notice how when people point to Canada's "sound banking policies" they can not name a single one? Ask someone what "tighter" lending rules mean. Our government has been throwing all of these generic terms about our banks at us for 4 years but not once has media stopped to ask 'what exactly does that mean and how does it make us more sound and secure?". The reality is they mean nothing, or at least nothing more than rearranging the deck chairs on the Titanic would ensure it didn't hit the ice berg.

One has to wonder if Stephen Harper with the robocall scam, plus the bank bailout lies ("Canada didn't have to bail out it's banks", remember that one?) would have been elected at all, even in a minority position. I also have to wonder how everyone who was duped feels about their "economic grand master" now? Were you duped? It's ok if you were, he did put up a coordinated (conspiratorial) campaign to fool the entire nation, and fooled we were! At least some of us were, hopefully not my readers and followers. :)

Canada's economic hits actually just keep coming. A few days ago Mark Carney released his "Economic Outlook". The Bank of Canada's outlook looks nothing like the Budget 2012 economic outlook. It's a lot more gloomy, but in my opinion still too rosy as it doesn't take the energy factor in commodity prices seriously. Alas though, our "budget" is based on the fantasy outlook depicted in Budget 2012.

I've been maintaining that interest rate hikes will hurt our economy, it appears that traders on Wall Street agree.
While international investors typically favor currencies with high rates for the potential for greater returns, traders are signaling that in Canada it would do little more than damage an economy underpinned by debt. Household borrowing was 152.9 percent of disposable income at the end of last year, climbing from about 135 percent in 2007 and exceeding the U.S.’s 145 percent, according to data compiled by Bloomberg.
“So much of Canadian growth is led by domestic demand and that domestic demand is led by consumer spending and consumer spending is linked to expanded leverage,” Shahab Jalinoos, a senior currency strategist in Stamford Connecticut at UBS AG, said in an interview April 24.
What have I been telling you? As I said in a recent post:
High energy prices are driving up the cost of living which is being supported by consumer spending that's fueled by cheap lending which is leveraged on an overvalued housing market. This problem then compounds when you consider that a large portion of Canada's anticipated GDP is based on this consumer spending.
I am now calling on Canada's media to call out our "leaders" for their economic lies. For too long now you have accepted the government's stable economic story without question. The next recession is almost here, will you again declare it "unexpected" when it happens?


The Canadian banker's association is now claiming that bailouts are not true. This is the same group which I just recently quoted.
The source of concern is a new U.S. regulation meant to deter deposit-taking institutions that receive backstopping from Washington from engaging in speculative trading for their own—not their clients’—profit, a practice known as proprietary trading. Risky trades by global banking giants were central to the banking crisis that compelled former U.S. president George W. Bush to launch a $700-billion bailout of Wall Street in 2008.
“I think the impact could be very, very negative,” said Canadian Bankers Association President Terry Campbell. “If you interfere with the ability of governments and corporations to fund themselves, if you interfere with liquidity in the marketplace, which is necessary for funding, then you could have a very severe impact on our economy.”
Lies, lies lies.

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Richard Fantin is a self-taught software developer who has mostly throughout his career focused on financial applications and high frequency trading. He currently works for CenturyLink

Nazayh Zanidean is a Project Coordinator for a mid-sized construction contractor in Calgary, Alberta. He enjoys writing as a hobby on topics that include foreign policy, international human rights, security and systemic media bias.


  1. Bank of Canada is warning of higher interest rates coming:
    Many people are maxed out with credit and will be unable to repay. Can you say "default"? Many will be defaulting on their loans due to inability to repay.

  2. I have written al ot on these interest rates, here is my latest on the subject: