Jim Flaherty and the government of Canada is lying... on not bailing out Canadian banks

[Kuragami]

Lets ignore for the minute the billions both the Fed and Bank of Canada has been pumping into the system with hardly a mention in the press over the past few months on a weekly basis.

The bottom line is that if you break down the 700 billion the Fed gave out and the now 75 billion the Bank of Canada gave out it averages out to be between $2300-$2400 per person for both countries. Virtually identical and Flaherty is out there preaching how he doesn't have to bail out. I suppose in a sense he is right, it's not exactly a bailout by the government since the government is not giving the banks money it has. It has no money and never had, it has to take it. I think you can work out where that comes from.

I have just one question. How stupid do they think everyone is?

Regardless of what it is actually buying and what you, might, get out of it down the line it is still a bailout.

I know some of you economic experts here have a problem with what I say and like to point out the finer points of the deal but it boils down to this.

If big Bill reached into the pocket of little Jimmy and took from him his lunch money for the next 8 years all in one go and said "Listen kid, it's for your own good now sit down before you fall down." And scared little Jimmy sits and thanks big Bill for looking out for him.

Does that make it fine because that's exactly what this is. Nobody asked they just took. That's called stealing. A 10 year old can understand if his lunch money was taken but apparently the vast majority of Canadians cannot. It took Canada about 8 years to pay off that amount of debt and they blew it in under 2 months.

If I were some of you I wouldn't dare drag the government or the bank's word or good nature into this. The government has already lied and the banks lied by accepting the money. Period.

 

[sandorski]

It's not a Bailout, but an infusion of Money to get Credit flowing. Central Banks around the World have been doing the same for the same reason. Unlike the US(or the EU), no Canadian Banks have been at risk of failing. In fact, all have been Profitable up to this point.

One of the big problems right now is Inter-Bank lending(Banks lending to other Banks). This $75billion is meant to remedy that situation.

 

[frostedflakes]

Canadian banks are supposed to have some of the best capital ratios in the world and have been weathering this crisis better than most. Of course, their capital is not unlimited, so maybe that's the point behind the government handouts -- make sure they have enough to pull through the credit crunch, instead of rolling the dice and bailing them out when things start to fall apart.

It may be frustrating, but look at it this way: At least your government hasn't handed out trillions to your financial institutions. $75 billion is a drop in the bucket compared to the debt we've taken on.

 

[StageLeft]

Originally posted by: frostedflakes
Canadian banks are supposed to have some of the best capital ratios in the world and have been weathering this crisis better than most. Of course, their capital is not unlimited, so maybe that's the point behind the government handouts -- make sure they have enough to pull through the credit crunch, instead of rolling the dice and bailing them out when things start to fall apart.

It may be frustrating, but look at it this way: At least your government hasn't handed out trillions to your financial institutions. $75 billion is a drop in the bucket compared to the debt we've taken on.

linkLooks, at least based on this, that per capita federal debt in Canada is a little over 21k and in the US it's more like 27-28k.

 

[frostedflakes]

I don't think our debt is only $8 trillion anymore.

 

[Kuragami]

Originally posted by: sandorski
It's not a Bailout, but an infusion of Money to get Credit flowing. Central Banks around the World have been doing the same for the same reason. Unlike the US(or the EU), no Canadian Banks have been at risk of failing. In fact, all have been Profitable up to this point.

One of the big problems right now is Inter-Bank lending(Banks lending to other Banks). This $75billion is meant to remedy that situation.

Oh yeah? How is that working out in the US? Last I heard the banks haven't spent a penny on inter bank lending but instead on buying each other up and giving out bonuses.

What the money is used for is irrelevant and it's not my point. The point is that they took money and now we, not the government, have to pay it back with interest.

I'm not going to bother posting an "I told you so." if later we find out the money is used in some nefarious way. It already has been so that's a moot point.

I don't think that the problem is the central banking system but rather the private central banking system that uses fractional banking. In theory they can turn that 75 billion into 750 billion and lend it out to whomever and they can then charge interest not on 75 but 750 billion. If that's not a scam I don't know what is.

 

[sandorski]

Originally posted by: Kuragami

Originally posted by: sandorski
It's not a Bailout, but an infusion of Money to get Credit flowing. Central Banks around the World have been doing the same for the same reason. Unlike the US(or the EU), no Canadian Banks have been at risk of failing. In fact, all have been Profitable up to this point.

One of the big problems right now is Inter-Bank lending(Banks lending to other Banks). This $75billion is meant to remedy that situation.

Oh yeah? How is that working out in the US? Last I heard the banks haven't spent a penny on inter bank lending but instead on buying each other up and giving out bonuses.

What the money is used for is irrelevant and it's not my point. The point is that they took money and now we, not the government, have to pay it back with interest.

I'm not going to bother posting an "I told you so." if later we find out the money is used in some nefarious way. It already has been so that's a moot point.

I don't think that the problem is the central banking system but rather the private central banking system that uses fractional banking. In theory they can turn that 75 billion into 750 billion and lend it out to whomever and they can then charge interest not on 75 but 750 billion. If that's not a scam I don't know what is.

In Canada, the money was not just handed over to the Banks. The money was used to buy up Insured Mortgages. This freed up $75billion(or will since I don't know if the full amount has been spent yet) for the Banks to use for Lending. The Banks will certainly want to Lend, because they gave up $75billion in Accounts Payable, thus losing a portion of their Income. The only way to get that back is to make more Loans.

 

[Kuragami]

Originally posted by: sandorski

Originally posted by: Kuragami

Originally posted by: sandorski
It's not a Bailout, but an infusion of Money to get Credit flowing. Central Banks around the World have been doing the same for the same reason. Unlike the US(or the EU), no Canadian Banks have been at risk of failing. In fact, all have been Profitable up to this point.

One of the big problems right now is Inter-Bank lending(Banks lending to other Banks). This $75billion is meant to remedy that situation.

Oh yeah? How is that working out in the US? Last I heard the banks haven't spent a penny on inter bank lending but instead on buying each other up and giving out bonuses.

What the money is used for is irrelevant and it's not my point. The point is that they took money and now we, not the government, have to pay it back with interest.

I'm not going to bother posting an "I told you so." if later we find out the money is used in some nefarious way. It already has been so that's a moot point.

I don't think that the problem is the central banking system but rather the private central banking system that uses fractional banking. In theory they can turn that 75 billion into 750 billion and lend it out to whomever and they can then charge interest not on 75 but 750 billion. If that's not a scam I don't know what is.

In Canada, the money was not just handed over to the Banks. The money was used to buy up Insured Mortgages. This freed up $75billion(or will since I don't know if the full amount has been spent yet) for the Banks to use for Lending. The Banks will certainly want to Lend, because they gave up $75billion in Accounts Payable, thus losing a portion of their Income. The only way to get that back is to make more Loans.

Why is it even needed? According to the banks themselves their exposure to the sub-prime fiasco in the US was negligible at most. Why are they suddenly contracting credit? The money was always there before so why is it not there now?

No I'm sorry but I don't buy this BS song and dance.

 

[Firebot]

Originally posted by: sandorski
It's not a Bailout, but an infusion of Money to get Credit flowing. Central Banks around the World have been doing the same for the same reason. Unlike the US(or the EU), no Canadian Banks have been at risk of failing. In fact, all have been Profitable up to this point.

One of the big problems right now is Inter-Bank lending(Banks lending to other Banks). This $75billion is meant to remedy that situation.

Exactly. The Canadian banks are the most sound banks out of the G8, and there is no bad debt being bought here. The Canadian situation is nothing like the US situation.

 

[3chordcharlie]

As a rule, if Falherty opens his mouth, he's lying.

He is right when he says that our financial institutions are in better shape than many, however.

 

[sandorski]

Originally posted by: Kuragami

Originally posted by: sandorski

Originally posted by: Kuragami

Originally posted by: sandorski
It's not a Bailout, but an infusion of Money to get Credit flowing. Central Banks around the World have been doing the same for the same reason. Unlike the US(or the EU), no Canadian Banks have been at risk of failing. In fact, all have been Profitable up to this point.

One of the big problems right now is Inter-Bank lending(Banks lending to other Banks). This $75billion is meant to remedy that situation.

Oh yeah? How is that working out in the US? Last I heard the banks haven't spent a penny on inter bank lending but instead on buying each other up and giving out bonuses.

What the money is used for is irrelevant and it's not my point. The point is that they took money and now we, not the government, have to pay it back with interest.

I'm not going to bother posting an "I told you so." if later we find out the money is used in some nefarious way. It already has been so that's a moot point.

I don't think that the problem is the central banking system but rather the private central banking system that uses fractional banking. In theory they can turn that 75 billion into 750 billion and lend it out to whomever and they can then charge interest not on 75 but 750 billion. If that's not a scam I don't know what is.

In Canada, the money was not just handed over to the Banks. The money was used to buy up Insured Mortgages. This freed up $75billion(or will since I don't know if the full amount has been spent yet) for the Banks to use for Lending. The Banks will certainly want to Lend, because they gave up $75billion in Accounts Payable, thus losing a portion of their Income. The only way to get that back is to make more Loans.

Why is it even needed? According to the banks themselves their exposure to the sub-prime fiasco in the US was negligible at most. Why are they suddenly contracting credit? The money was always there before so why is it not there now?

No I'm sorry but I don't buy this BS song and dance.

It's needed because Canadian Banks Borrow/Lend to US Banks and vice/versa(sp), Canadian Banks lend to European Banks and vice/versa, US Banks lend to European Banks....etc.

Canadian Banks don't share in the problem(sorta, see below for details) that caused the current Crisis, but they share in the consequences of it in the availability of Credit.

(from above) CIBC and 1 other Bank(don't recall which one it was) did have some exposure to the US Sub-Prime Derivatives(there are no Canadian investments of this type) that caused the problem in the US, but that exposure was small. CIBC wrote off all their exposure and still turned a Profit, albeit a small Profit. At any rate, those Bad Loans have already been removed from the Canadian Banking system and no "Bailout" was necessary to deal with that issue.

 

[Deliximus]

funny, that our banks are doing so well, yet, we are so LIBERAL!!!!! OMG SOCIALISTS!!
anyways, i think Flaherty is bullshitting us a bit, but we are probably gonna see a federal deficit for the first time in a decade or more. =( Big Thanks to the American deregulation machine.

 

[StageLeft]

Originally posted by: Deliximus
funny, that our banks are doing so well, yet, we are so LIBERAL!!!!! OMG SOCIALISTS!!
anyways, i think Flaherty is bullshitting us a bit, but we are probably gonna see a federal deficit for the first time in a decade or more. =( Big Thanks to the American deregulation machine.

Great job, blame Canada's federal deficit on the US. Canada's economy is intertwined with the US' because it wants to be and must take the good with the bad. If you're going to lay blame there you should also heap praise for centuries of trading with the US being a key reason why Canada is so rich and the US' military a key reason why Canada is so secure, right?

 

[dennilfloss]

Originally posted by: 3chordcharlie
As a rule, if Falherty opens his mouth, he's lying.

Except if he said "I screwed Ontario back then and I'll keep on screwing Ontario."

 

[sandorski]

Originally posted by: Skoorb

Originally posted by: Deliximus
funny, that our banks are doing so well, yet, we are so LIBERAL!!!!! OMG SOCIALISTS!!
anyways, i think Flaherty is bullshitting us a bit, but we are probably gonna see a federal deficit for the first time in a decade or more. =( Big Thanks to the American deregulation machine.

Great job, blame Canada's federal deficit on the US. Canada's economy is intertwined with the US' because it wants to be and must take the good with the bad. If you're going to lay blame there you should also heap praise for centuries of trading with the US being a key reason why Canada is so rich and the US' military a key reason why Canada is so secure, right?

1 Century of Trade approx. Trade with Britain/Europe was the mainstay for most of Canada's(pre/post inception) early Economy.

Let's not go down the whole "Security" BS argument.

 

[StageLeft]

Originally posted by: sandorski

Originally posted by: Skoorb

Originally posted by: Deliximus
funny, that our banks are doing so well, yet, we are so LIBERAL!!!!! OMG SOCIALISTS!!
anyways, i think Flaherty is bullshitting us a bit, but we are probably gonna see a federal deficit for the first time in a decade or more. =( Big Thanks to the American deregulation machine.

Great job, blame Canada's federal deficit on the US. Canada's economy is intertwined with the US' because it wants to be and must take the good with the bad. If you're going to lay blame there you should also heap praise for centuries of trading with the US being a key reason why Canada is so rich and the US' military a key reason why Canada is so secure, right?

1 Century of Trade approx. Trade with Britain/Europe was the mainstay for most of Canada's(pre/post inception) early Economy.

Let's not go down the whole "Security" BS argument.

Fair enough, but Canada's economy is intertwined with the US' now because it wants it to be. It could have completely avoided this current situation if it was entirely stuck behind its own borders, but of course it would be far worse off. Basically, this is no different from a bunch of guys waking up in the morning with a big hangover and sure it was one guy who encouraged them to start doing double shots at 2am for the next hour, but nobody had to put a gun to their head!

 

[Kuragami]

You can say what you want but inter bank lending hasn't happened and it's been over a month since they started pouring money into the banks around the world. With the money that is freed up they can create 10 X that and lend it out so as of right now there could be tens of trillions made available for lending. Where is our money?

 

[sandorski]

Originally posted by: Kuragami
You can say what you want but inter bank lending hasn't happened and it's been over a month since they started pouring money into the banks around the world. With the money that is freed up they can create 10 X that and lend it out so as of right now there could be tens of trillions made available for lending. Where is our money?

It's not an instant fix and Credit has began to flow again.

 

[Stunt]

Canadian banks are still competing with American institutions and the $75 billion was to assist those institutions involved in the poor lending practices in the US. While the Canadian banks were largely unaffected by these loans, some were still involved and to maintain a level playing field it only makes sense that the Bank of Canada assist these institutions as other countries are doing around the world. With all the consolidation of financial companies around the world, it's important for Canada to maintain its competitive edge especially with merger limitations set by the government. In all other 1st world nations banks have been allowed to consolidate to create global players in this sector. This has created some powerhouses like HSBC, Deutche Bank, Credit Sussie, RBS, Citi, etc.

Also due to the lack of lending between institutions, the banks lack the capital required for a functioning economy. I suppose the banks could lower dividends to free up some capital but this wouldn't be near enough cash to continue operations. Obviously a reduction in the dividend would reduce capital even further as fund managers and retirees who depend on the dividends as a sound flow of cash.

 

[Kuragami]

Originally posted by: Stunt
Canadian banks are still competing with American institutions and the $75 billion was to assist those institutions involved in the poor lending practices in the US. While the Canadian banks were largely unaffected by these loans, some were still involved and to maintain a level playing field it only makes sense that the Bank of Canada assist these institutions as other countries are doing around the world. With all the consolidation of financial companies around the world, it's important for Canada to maintain its competitive edge especially with merger limitations set by the government. In all other 1st world nations banks have been allowed to consolidate to create global players in this sector. This has created some powerhouses like HSBC, Deutche Bank, Credit Sussie, RBS, Citi, etc.

Also due to the lack of lending between institutions, the banks lack the capital required for a functioning economy. I suppose the banks could lower dividends to free up some capital but this wouldn't be near enough cash to continue operations. Obviously a reduction in the dividend would reduce capital even further as fund managers and retirees who depend on the dividends as a sound flow of cash.

That is a very eloquent way to completely sidestep the question. Where is our money?

First it is explained that the money is going to guarantee already existing Canadian "safe" mortgages so that it frees money up for the banks but now some of you are saying it's basicly heading to the U.S. Perhaps some of it is heading indirectly into some banker's bank bonus account. It may as well.

Up to this point the money for banks, for the purpose of lending, have primarily been coming from a number of places including: individual deposits, possibly tax revenue deposits, foreign deposits, trusts and other group investments and finally plain old borrowing from the Bank of Canada. However this was never enough for them to satisfy their thirst for money, at least not for over 100 years, and therefore they use fractional banking to exponentially increase the amount of money they can charge interest on.

Credit doesn't suddenly vanish without the bank's doing and in this case it would need to be every bank that is a member of a Central Bank. Lets assume for a moment that the banks haven't suddenly purposefully contracted credit but instead are simply withholding it. Considering the numbers involved in lending that should be massive amounts of money, all electronic but it's still there. Now if you are telling me that this isn't a question of having money to lend out but simply confidence then why are banks saying they don't have money to lend out and need more to lend out? This is a dictionary definition of a contradiction.

So perhaps the better question is not "Where is our money?" but "Where is the money?"

 

[Kuragami]

I have little doubt something similar took place prior to the Canadian government giving our money to the banks. Wish someone would leak that too.

This is the little known audio conference call to 800 financial industry insiders lead by Neel T. Kashkari who is in charge of TARP at the Treasury that was recorded just prior to the failed vote on the 700 billion. It is clearly his voice and he is leading the conference call. You can listen to the entire thing but you will need to close your eyes and listen hard because it's hard to make it all out due to the poor audio.

http://uk.youtube.com/watch?v=ynwtOJpO8Lg

Go to the 6:45 mark in the video for the best 2 parts.

1 It clearly states that Kashkari intends to give money not to the to failing or troubled banks but to the healthy ones as they feel it is more likely that they will "deploy the capital" and so their intention is to "try to help the healthy banks become even healthier". And so they have, by buying up the troubled banks in question.

2 It clearly states that the only leash on executive compensation is that they cannot guarantee compensation for 18 months to 2 years. Prior to this if you listen to the entire recording, Kashkari clearly states that the Treasury has a wide margin in terms of how to use the bailout money.

1 + 1 = 2

By the way if you doubt the authenticity you are in for a rude awakening.

EDIT: This probably deserves its own thread but I'll leave it to one of you Americans to deal with that. If anyone actually cares anymore.

 

[Kuragami]

I should correct something I was wrong about. The Bank of Canada does not create money and it is owned not privately but by the people of Canada. Money is created at its direction (at the insistence of the government) but it's done so by the 5 major banks that have a virtual monopoly over the banking system in Canada. It would be much better if the money we print was done so by the Bank of Canada at little interest that would revolve back to the people anyway than directly into the pockets of privately owned banks. The reverse is true in the US where the Fed is privately owned.

I found a neat video that explains this best and I thought I share it.

Basically this:

http://uk.youtube.com/watch?v=...fumzQ0&feature=related

Leads to this:

http://uk.youtube.com/watch?v=_hB63qSMhQ0

For no good reason what so ever. At least not for us.

Here is an expanded video from the first one that gives a lot more detail and explains what happened when the money was printed by the government and not the private banks. It also explains how it's illegal for private banks to do so:

http://uk.youtube.com/watch?v=...Wax8MI&feature=related

Oh and here is part 2:

http://uk.youtube.com/watch?v=...uN2v08&feature=related

 

[Kuragami]

Would be nice to get feedback since I'm so wrong and earlier needed to be shown the light.

Now I feel like someone who turned on the light at night and everyone scatters. Funny that.

 

[sandorski]

Originally posted by: Kuragami
Would be nice to get feedback since I'm so wrong and earlier needed to be shown the light.

Now I feel like someone who turned on the light at night and everyone scatters. Funny that.

You turned on the Light? Hardly. You went from discussing the current situation to discussing some Ideological view of Banks/Banking from a fringe Retired High School Teacher.

 

[Firebot]

Originally posted by: Kuragami
Would be nice to get feedback since I'm so wrong and earlier needed to be shown the light.

Now I feel like someone who turned on the light at night and everyone scatters. Funny that.

It's not that hard to contemplate. Canadian government liquid money -> illiquid assets
Canadian banks illiquid assets -> liquid money.

This is not the same situation as the US. This is not bad debt, there is no such thing as the subprime housing crisis in Canada. People see the unregulated mess in the US and expect that this 75$ billion dollar bailout will be similar to the US giving out free money for executive bonuses, but it's not. Canadian banks are heavily regulated, this is why they are not in trouble. They STILL have to deal with the illiquid market right now, and are at a distinct disadvantage despite being profitable compared to other banks who just had an influx of cash at a time when credit is non-existant.

That is why the 75$ billion dollar is needed. It's a preemptive move to keeps the Canadian banks ahead of the rest of the world, and I think it's a very wise move.