So now we know that Canadian banks not only received bailout funds (in other words taxpayer money) from Canada but also the US.
Let’s do a thought experiment. What are the implications of this? The loans were repaid, but what if another financial crisis arises and banks have to go begging for money again? Could the US government use it as leverage to force Canadian FIs to comply with not only FATCA but who knows what other crazy laws they come up with?
Thoughts?
As an investor, I stopped trading in banks stocks over a year ago. The problem is that their balance sheets are a black box. It was when I realized that the Bank of Nova Scotia regularly takes short positions in gold by selling unallocated gold certificates that I realized that the banks could become insolvent quickly if there was a sudden surge in the price of gold, which I think is inevitable because of the enormous amounts of new fiat money entering the system.
I don’t think that this means that the government of Canada lied, as the think tank (which is apparently left-wing) has suggested to the media. If the government indicated that there was an injection of liquidity into the banks, which the CCPA acknowledges, then they did inform the Canadian people of the bailout. This is not a scandal, unless like me, you think banks should take the fall for their own mistakes. Is CCPA saying this? If the government had let the banks go bankrupt, then the government would likely have received the ire of the left then too.
What I get from this is this: the entire world’s monetary and banking system is on shaky ground; Canada is not the exception. The policy makers, whether on the left or the right, are unable to control what happens. Look at Mark Carney: he regularly warns Canadians about the debt bubble that he himself has created through his 0% interest rate policy. Of course there is a housing bubble and consumer credit bubble. If you don’t want bubbles, stop the blabber and raise the interest rates.
Zucchero:
I wouldn’t take everything in that report at face value. However, do I think there is a view in the US Treasury(where all this stuff originates) that Canada and Jim Flaherty are unappreciative of what the US had to do back in 2008 Yes. Do they think Jim Flaherty and Mark Carney dance on the grave of the US Banking System. Yes. Are people like Manual Corwin and Emily McMahon willing to get into a public dispute with Flaherty probably not although people like MIT Economist Simon Johnson who is very tied into to left wing political circles(frequent guest on Colbert and John Stewart) in the US has denounced Flaherty, Carney, and Harper. Do I think the fact that Michael Ignatieff was associated was some of the now senior people in the US Treasury made the Harper Conservatives that much more eager to carpet bomb him in oblivion. Yes
http://www.huffingtonpost.ca/2012/02/17/volcker-rule-mark-carney-bank-canada_n_1285053.html
I’ll have more on this later. While these may someday be my famous last word but it is in fact very difficult to next impossible for a Canadian bank to “fail”. I’ll explain later.