Why Canadian banks are doing it right

[Zebo]

HAS the world turned upside down? America, the capital of capitalism, is pondering nationalizing a handful of banks. Meanwhile, Canada, whose banking system had long been notorious for its stodgy practices and government coddling, is now being celebrated for those very qualities.

Old time values like we used to practice, highly regulated, few chartered banks, no foreign, sound lending make Canada's banks #1 in the world right now while we are 40th, like a banana republics. Canada also runs govt surplus for years.

http://www.nytimes.com/2009/02...28tedesco.html?_r=2&em

 

[little elvis]

Originally posted by: Zebo

HAS the world turned upside down? America, the capital of capitalism, is pondering nationalizing a handful of banks. Meanwhile, Canada, whose banking system had long been notorious for its stodgy practices and government coddling, is now being celebrated for those very qualities.

Old time values like we used to practice, highly regulated, few chartered banks, no foreign, sound lending make Canada's banks #1 in the world right now while we are 40th, like a banana republics. Canada also runs govt surplus for years.

http://www.nytimes.com/2009/02...28tedesco.html?_r=2&em

We will be running a deficit for at least the next two years, about $65 billion I think, first deficit since 1996.

 

[soccerballtux]

It's too cold up there.

 

[Firebot]

Originally posted by: little elvis

Originally posted by: Zebo

HAS the world turned upside down? America, the capital of capitalism, is pondering nationalizing a handful of banks. Meanwhile, Canada, whose banking system had long been notorious for its stodgy practices and government coddling, is now being celebrated for those very qualities.

Old time values like we used to practice, highly regulated, few chartered banks, no foreign, sound lending make Canada's banks #1 in the world right now while we are 40th, like a banana republics. Canada also runs govt surplus for years.

http://www.nytimes.com/2009/02...28tedesco.html?_r=2&em

We will be running a deficit for at least the next two years, about $65 billion I think, first deficit since 1996.

It's largely due to the automotive industry (Ontario is hurting very badly), and the gas and oil industry well running dry (many oil sands projects in Alberta have been cancelled or put on hold). There is far less tax dollars coming in currently then there was even 8 months ago. When the US stops buying, Canada hurts no matter how well structured out banks and economy plan is.

Canada is easily the country best equipped to weather the recession though in the world. Spending on infrastructure now, when the price of commodities is low and the economy is tanking, is the perfect time. Banks will be 'bailed out', but that is only to keep them ahead of the game and competitive among the waves of massive bailouts giving to other banks in the world, not because the Canadian banks are failing. Why should the Canadian banks be penalized for actually doing responsible banking?

If the US had followed regulation instead of the deregulation farce with the banks literally running a pyramid scheme on the backs of Americans wanting a home, the housing bubble would have melted away long ago before it got to the insurmountable size it became.

Politics aside, the deficit is badly needed, and the Liberals would have planned a very similar budget should they have gotten in power (well with Ignatieff, not Green Shaft Dion that would have bankrupted all the western provinces).

 

[OCGuy]

If we only needed to have 1 tank due to our big brother protecting us, we could run a surplus every year too.

 

[little elvis]

Originally posted by: Firebot

It's largely due to the automotive industry (Ontario is hurting very badly), and the gas and oil industry well running dry (many oil sands projects in Alberta have been cancelled or put on hold). There is far less tax dollars coming in currently then there was even 8 months ago. When the US stops buying, Canada hurts no matter how well structured out banks and economy plan is.

Canada is easily the country best equipped to weather the recession though in the world. Spending on infrastructure now, when the price of commodities is low and the economy is tanking, is the perfect time. Banks will be 'bailed out', but that is only to keep them ahead of the game and competitive among the waves of massive bailouts giving to other banks in the world, not because the Canadian banks are failing. Why should the Canadian banks be penalized for actually doing responsible banking?

If the US had followed regulation instead of the deregulation farce with the banks literally running a pyramid scheme on the backs of Americans wanting a home, the housing bubble would have melted away long ago before it got to the insurmountable size it became.

Politics aside, the deficit is badly needed, and the Liberals would have planned a very similar budget should they have gotten in power (well with Ignatieff, not Green Shaft Dion that would have bankrupted all the western provinces).

I begrudgingly agree that deficit spending is unfortunately necessary to provide stimulus for the economy. It was such a good run while it lasted though.

 

[StageLeft]

I feel bad for Canada. It has been better and hasn't been the bad prodigal son, but now like the prodigal son's pissed off brother it will see itself get shafted again by comparison because it's going to suffer this depression worse than the US simply because the US gets preferential treatment on the world stage again only by virtue of being the US. This is just how it goes. The pain will be greatly exacerbated by the oil crash, a key export for Canada that it could badly use right now.

I think Newfoundland actually ran a surplus last year, but now this year is back to its normal spot of basically being an economic slum.

 

[sandorski]

Originally posted by: Ocguy31
If we only needed to have 1 tank due to our big brother protecting us, we could run a surplus every year too.

Canada doesn't need military Protection, but does need Economic protection.

 

[bamacre]

Originally posted by: Ocguy31
If we only needed to have 1 tank due to our big brother protecting us, we could run a surplus every year too.

While there is a small amount of merit in your statement, our military expenditures go ridiculously way beyond protecting ourselves and our neighbors. Well over 800 military bases overseas and unnecessary wars cost the American people an extremely high amount of money. Call it what you will, but we are maintaining a global empire. An expensive one, and we are going broke.

 

[StageLeft]

Originally posted by: bamacre

Originally posted by: Ocguy31
If we only needed to have 1 tank due to our big brother protecting us, we could run a surplus every year too.

While there is a small amount of merit in your statement, our military expenditures go ridiculously way beyond protecting ourselves and our neighbors. Well over 800 military bases overseas and unnecessary wars cost the American people an extremely high amount of money. Call it what you will, but we are maintaining a global empire. An expensive one, and we are going broke.

On the other hand it could be the vast US paws in all the cookie jars that has allowed it to keep this global super power status for more than half a century now

 

[Drift3r]

Screw Canada !! Look closer to home at North Dakota. Their banks stayed out of the housing mortgage fiasco and they are running a surplus.

 

[rudder]

Originally posted by: Drift3r
Screw Canada !! Look closer to home at North Dakota. Their banks stayed out of the housing mortgage fiasco and they are running a surplus.

There are plenty of banks that are not in trouble. They just happen to be smaller, more cautious banks. There was a time when lending was all done within a closer community. Before the boom you could goto www.givemealoannowdammit.com and get whatever you needed from a bank 3000 miles away.

 

[little elvis]

Originally posted by: Skoorb
I feel bad for Canada. It has been better and hasn't been the bad prodigal son, but now like the prodigal son's pissed off brother it will see itself get shafted again by comparison because it's going to suffer this depression worse than the US simply because the US gets preferential treatment on the world stage again only by virtue of being the US. This is just how it goes. The pain will be greatly exacerbated by the oil crash, a key export for Canada that it could badly use right now.

I think Newfoundland actually ran a surplus last year, but now this year is back to its normal spot of basically being an economic slum.

I'm going to have to disagree.

Even though Alberta is seeing a slowdown there are still $241 billion dollars of projects on the books that are going ahead, yes it's down $97 billion dollars, but, definitely not that bad.

Saskatchewan is projected to have GDP growth of 1% for 2009

All the Atlantic provinces are except Nova Scotia, are projecting positive GDP for 2009 with Newfoundland leading the bunch at 0.7%. In 2008, Newfoundland had a $1.3 billion dollar surplus, and early reports are that they are projecting a $291 million surplus for 2009

Unfortunately, Ontario and Quebec are likely going to be hit hard by the recession, especially since both economies are largely manufacturing based.

The recession is going to and has already hit Canada hard, it will be interesting to see how well we are able to weather it.

 

[Vic]

There was a housing bubble in much of Canada too.

 

[SickBeast]

Originally posted by: Vic
There was a housing bubble in much of Canada too.

In what city? To what extent? The values have dropped by 10% at most here in Toronto. Perhaps there is the odd town or whatever that had a bigger drop than that, but as a whole you can't even call what we've experienced a "bubble".

 

[Vic]

Originally posted by: SickBeast

Originally posted by: Vic
There was a housing bubble in much of Canada too.

In what city? To what extent? The values have dropped by 10% at most here in Toronto. Perhaps there is the odd town or whatever that had a bigger drop than that, but as a whole you can't even call what we've experienced a "bubble".

A 10% drop is comparable to what most of America has experienced.

 

[little elvis]

Originally posted by: Vic
There was a housing bubble in much of Canada too.

Last year average house prices drop only about 1% across Canada. Compared to much steeper drop in U.S. house prices.



In 2009, the average price drop across Canada is predicted to be about 10%. A bubble? Likely, but no where near what the US is experiencing.

Article

 

[RbSX]

Originally posted by: SickBeast

Originally posted by: Vic
There was a housing bubble in much of Canada too.

In what city? To what extent? The values have dropped by 10% at most here in Toronto. Perhaps there is the odd town or whatever that had a bigger drop than that, but as a whole you can't even call what we've experienced a "bubble".

Look further west to Vancouver, drops are even more significant.

 

[DukeN]

These people talking about a housing "bubble" are on crack, atleast for the lower priced (300K or lower) homes. In 2008, the average price of a home actually *went up* in some Toronto area suburubs by 2-3%. The number of total transactions is smaller, and the # of days on average its taking a home to sell is higher (something like 37 days to 30 days previously) but in places like Toronto there's more of a slight slowdown than anything else. Only thing that has suffered are the bigger, 500k+ to luxury type homes and even those are still selling.

Also, as for the current PM (Harper) touting the banking system - that is totally hypocritical. The last person to resist deregulation was Liberal PM Paul Martin (who by the way is also an aspiring capitalist worth 100s of millions at last check) despite pressure from guess who to deregulate - you guessed it, the Tories led by Harper!

 

[StageLeft]

Originally posted by: little elvis

Originally posted by: Skoorb
I feel bad for Canada. It has been better and hasn't been the bad prodigal son, but now like the prodigal son's pissed off brother it will see itself get shafted again by comparison because it's going to suffer this depression worse than the US simply because the US gets preferential treatment on the world stage again only by virtue of being the US. This is just how it goes. The pain will be greatly exacerbated by the oil crash, a key export for Canada that it could badly use right now.

I think Newfoundland actually ran a surplus last year, but now this year is back to its normal spot of basically being an economic slum.

I'm going to have to disagree.

Even though Alberta is seeing a slowdown there are still $241 billion dollars of projects on the books that are going ahead, yes it's down $97 billion dollars, but, definitely not that bad.

Saskatchewan is projected to have GDP growth of 1% for 2009

All the Atlantic provinces are except Nova Scotia, are projecting positive GDP for 2009 with Newfoundland leading the bunch at 0.7%. In 2008, Newfoundland had a $1.3 billion dollar surplus, and early reports are that they are projecting a $291 million surplus for 2009

Unfortunately, Ontario and Quebec are likely going to be hit hard by the recession, especially since both economies are largely manufacturing based.

The recession is going to and has already hit Canada hard, it will be interesting to see how well we are able to weather it.

I have not looked at numbers, but Canada is not going to see GDP growth for 2009, abso-freaking-lutely not, no ifs ands or buts. It lost jobs in January at twice the rate of the US per capita and is going to "enjoy" this recession at least as much as the US.

I did just find one thing on GDP projections made in January and it said -1.5-2 % GDP for Canada. It may end up being worse as things have gotten worse since. I cannot envision a scenario in which Canada shrinks and Newfoundland grows, especially with its one-trick pony now down and out (oil).

ALso without googling I think Canada's housing bubble was more like housing running hot than outright scalding fantasy land like in the US. The loans were not given away in cereal boxes. A guy told me yesterday that housing values actually went up a reasonable bit in parts of eastern Canada in the last year (halifax, NS, and bits of newfoundland). Even if his data was old they are not seeming to implode. This is similar to parts of the US where housing did not snort lines of coke and go partying all night; their hangover is much easier than parts of California and Florida, for example.

 

[yllus]

They're doing okay. Keep in mind that if AIG went down, so would the vast majority of those Canadian banks. It's incredible how deep that company is in the hole.

 

[sandorski]

It defintely wasn't a Housing Bubble like what the US had.

 

[soulcougher73]

Originally posted by: Ocguy31
If we only needed to have 1 tank due to our big brother protecting us, we could run a surplus every year too.

Maybe if we stopped trying to police the world we could get by with 1 tank as well. But we have too many haters now because of this, so now we need more tanks.

 

[StageLeft]

Addendum to the above, median home prices in the US are down 20%.

 

[silverpig]

Originally posted by: RyanSengara

Originally posted by: SickBeast

Originally posted by: Vic
There was a housing bubble in much of Canada too.

In what city? To what extent? The values have dropped by 10% at most here in Toronto. Perhaps there is the odd town or whatever that had a bigger drop than that, but as a whole you can't even call what we've experienced a "bubble".

Look further west to Vancouver, drops are even more significant.

No, it's about the same here.

Look at Japan in the early 90s for a housing bubble. Prices dropped over 80%.

By and large, houses here are fairly well valued, it's all the stupid little 465 sq ft 1 bedroom condos in yaletown going for $425k that are overpriced. The condo market will crash harder than the housing market.