This page has been archived and commenting is disabled.

Mark Carney Leaves Canada With 'Stealth QE' Rising At Fastest Pace Since 2009

Tyler Durden's picture


As Mark Carney steps aside from his role at the Bank of Canada to undertake all manner of easy money in the UK, we thought a reflection on the 'stealth' QE that he has been engaged with, very much under the radar, in the US' neighbor-to-the-north was worthwhile. It seems quietly and with little aplomb, Carney's BoC has grown its balance sheet by over 21% YoY - the most since 2009. If that was not enough to make someone nervous, the quantity of Canadian government bonds on the BoC's balance sheet has grown at a remarkable 46% YoY! All of this has taken place during a time when 'supposedly' the Canadian economy has been reasonably strong and foreign demand for debt high. With Canada's CAD267bn debt due in 2013, we suspect this 'stealth' QE will continue to rise.

The Bank of Canada's balance-sheet has grown at over 21% YoY...


and its ammassing of Canadian govvies has risen at over 46% YoY...


which looks set to continue as they enter 2013 with a massive CAD 267bn due...

(h/t Mark Hanson)


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Mon, 01/28/2013 - 14:41 | 3192069 mayhem_korner
mayhem_korner's picture



Canada the Cyprus of North America

Mon, 01/28/2013 - 14:55 | 3192116 Taffy Lewis
Taffy Lewis's picture

At least the Canadians have a seemingly endless supply of firewood, unlike the Greeks.

Mon, 01/28/2013 - 15:01 | 3192138 Mark Carney
Mark Carney's picture

You ain't seen nothing yet.    bitchez



Mon, 01/28/2013 - 15:04 | 3192158 Nothing To See Here
Nothing To See Here's picture

Meanwhile, Moody's just cut the ratings of 6 infallible Canadian banks. Should be on ZH in a few moments...

Mon, 01/28/2013 - 15:14 | 3192177 Fredo Corleone
Fredo Corleone's picture

The slope of that balance sheet line is simply Loonie.

Mon, 01/28/2013 - 16:13 | 3192396 James_Cole
James_Cole's picture

Loonie-tunes "Conservative" gov. Bailed out the banks in 08', just gave 50B$ to genworth (private mortgage) and of course this QE. Vancouver is the 2nd least affordable major city on Earth, Toronto currently has the most skyscrapers being built anywhere. Government is on the hook for around 1TN in mortgages. Luckily there is NO mortgage meltdown coming, will never happen because Canadian housing prices go up forever fortunately.

6 Canadian Banks just got downgraded. Alberta (oil sands Alberta) can't manage to balance it's books.

Yes that's correct - the perfect picture of financial health! Quick, buy Canadian bonds!!

Mon, 01/28/2013 - 16:30 | 3192467 Matt
Matt's picture

Canada: where the Liberals are the (fiscal) conservatives and the Conservatives are the financially reckless. Apparently, the last Conservative government to leave power with the balance sheet in better shape than when they got into power, was back in the nineteenth century.

Mon, 01/28/2013 - 16:44 | 3192529 James_Cole
James_Cole's picture

"Conservatives are the financially reckless."

Pretty common worldwide. There should be a universal rule for governments - if you spend into oblivion (doesn't matter if it's military or what) and print money like there's no tomorrow you lose the right to label yourself "conservative."

Cutting social programs, eroding envriomental regulations and championing business should not be the only criteria for being deemed conservative.

Mon, 01/28/2013 - 16:48 | 3192539 LawsofPhysics
LawsofPhysics's picture

You guys are all acting like there is a real difference.  Please, the puppet master is the same.

Mon, 01/28/2013 - 17:34 | 3192684 James_Cole
James_Cole's picture

Sure, they're all pretty similar. Just bugs me that no one cares about the labels, language does matter quite a bit imo. People don't seem to have any clue what the labels libertarian, socialist, conservative, etc. have traditionally meant.

Allows Obama to claim he is a liberal, Romney to claim he's a conservative and Ron Paul a libertarian. And encourages all Americans to rally against scoialists having clearly no clue what socialism means.

"Political chaos is connected with the decay of language.. one can probably bring about some improvement by starting at the verbal end" - Orwell

Mon, 01/28/2013 - 18:17 | 3192807 dogbreath
dogbreath's picture

There is a book Truedeau: His Pride, Our Fall.  Its small but a great read on how PET swung canada to the left HARD.   The author said that because of PET the centere moved so far to the left that all the political parties are socialist.  The conservative premier of Oilberta Allison Redford id affectionately refered to as Nanny Redford.  

Alberta is good a pissing it away.

Tue, 01/29/2013 - 00:47 | 3193980 Matt
Matt's picture

That which is attained by fortune is easily gotten, but hard to keep - paraphrasing Niccolo Machiavelli

Tue, 01/29/2013 - 01:32 | 3194053 kennard
kennard's picture

The Bank of Canada's assets are 1/4 of the U.S. Fed's assets, relative to their respective economies.

The Bank of Canada's purchases of Canada bonds over the last two years are equivent to the U.S. Fed purchasing $10 billion per month of Treasuries. Of course the U.S. Fed is purchasing $80 billion per month, not $10 billion, plus MBS, plus maturity extension, etc.

The third chart, maturities, include short-term paper. Well of course a huge proportion of them are due in 2013. Big deal.

This thread is a tempest in a teapot.

Wed, 01/30/2013 - 02:36 | 3197950 Deo vindice
Deo vindice's picture

"This thread is a tempest in a teapot."

Yeah, but teapots in a British Commonwealth nation are a pretty big item. So let's not minimize the size of the tempest.


Wed, 01/30/2013 - 15:22 | 3199732 Lore
Lore's picture

Canada typically lags the United States in most things by about 3-5 years, and America is certainly the largest trading partner.  Where America circles the drain, Canada follows. So expanding trade with partners who can pay their bills is a matter of national security.  The "Trans-Pacific Partnership" is rumoured to have bogged down due to some attempt to exclude the Chinese.  Fat chance.  

Post-US world born in Phnom Penh (Asia Times, 27-Nov)

Public discussion in Canada is handicapped severely by powerful trade unions, Agenda 21 brainwashing ("Industry warms the globe," "Pipelines hurt Mother Earth"), Entitlement Culture ("No industry without more royalties and social programs"), controlled media and general ignorance.  The vast majority are clueless about the urgency of the need to buffer macroeconomic turmoil.  I imagine it's the same where you live. 

Today's "conservatives" need to get back to their fiscal and monetary principles.  Live within your means, and stop creating debt.  Make trade deals while commerce is still relatively unhindered by geopolitics.  It's the same everywhere.  The electorate will do the opposite and roll in a new government dominated by socialists and drive national spending skyward.  The outcome is always the same: disastrous.  If you are Canadian, look for ways to protect your wealth.

Mon, 01/28/2013 - 15:33 | 3192269 legorf
legorf's picture

Well with the household debt-to-personal income ratio even higher than that of the US at the top of the housing market, the only hope left is to keep rates exceptionnaly low and to hope for the loonie to retreat a bit.

Mon, 01/28/2013 - 23:11 | 3193676 Northern Lights
Northern Lights's picture

Last I heard, the ratio was for every $1 net = $1.67 debt for the average Canadian household.

Most are buried in mortgage loans because of the low interest rates.

Yes, Canadian Banks were making 40 year home loans at $0 down available.  I know because an idiot I used to work with got one back in 2007.  Dude got a 40 year loan for $175,000.

Mon, 01/28/2013 - 15:19 | 3192217 Cognitive Dissonance
Cognitive Dissonance's picture


Try it again Mark. Only this time with feeling. :)

Mon, 01/28/2013 - 15:30 | 3192256 Whalley World
Whalley World's picture

But no gold, Chretien sold it all off.  When asked by Rob Kirby at a luncheon, why he sold our gold, Cretien said he did not recall that transaction.


Mon, 01/28/2013 - 16:33 | 3192480 Matt
Matt's picture

Sold gold, bought USD and equivelents. Part of the program to bring our currency to parity as phase one towards a currency union with America and possibly Mexico. This is back in 2002, when everyone was worried the Euro would take over as world's reserve currency, so they wanted to create the Amero as a competitor.

Mon, 01/28/2013 - 16:52 | 3192551 Deliverator
Deliverator's picture

Gold sellin was started by Trudeau, accelerated by Mulroney and the remnants finished off by Chretien. It was hardly his policy decision.

Mon, 01/28/2013 - 18:20 | 3192819 dogbreath
dogbreath's picture

Mulroney got the public attention for the gold sales but also for the dollar sliding into the $0.70's.   This was great for exporters.

Mon, 01/28/2013 - 23:08 | 3193657 Northern Lights
Northern Lights's picture

The Canadian dollar was never worse than it was under Chretian.  I recall at one point in early 2001 it was $0.62 USD.

Tue, 01/29/2013 - 00:41 | 3193964 Deliverator
Deliverator's picture

The vast majority of the gold was sold during the Mulroney years:

Tue, 01/29/2013 - 00:45 | 3193975 Matt
Matt's picture

When Chretien took power, the country was nearly bankrupt with 106.5% debt-to-GDP and a rising deficit. That isn't something you fix overnight, it took several years, just in time for people to forget and put the so-called Conservatives in power again.

Tue, 01/29/2013 - 00:58 | 3194005 Pareto
Pareto's picture

Actually, as much as I despised the Liberal government at the time, Paul Martin (then finance minister), did a pretty good job restoring credibility to our currency - flatly rejecting the notion that you need a weak currency for a good economy.  Bullshit.  As I recall our employment languished regardless of the debasement efforts.  Martin's hawkish view on the debt was the only sane policy to come out of the Federal government.  And because we have effectively undid all the great work that he did, we will revisit the lows of $1CDN = $0.62USD.

Wed, 01/30/2013 - 02:40 | 3197952 Deo vindice
Deo vindice's picture

Are you kidding??? Martin was a joke. He balanced the books by offloading everything onto the provinces which in turn had to offload onto the municipalities which in turn meant they coudn't keep up maintaining basic infrastructure.

Anyone who thinks Paul Martin was a great finance minister simply isn't operating with a fully-charged battery.

Wed, 01/30/2013 - 15:28 | 3199752 Lore
Lore's picture

I was going to say the same thing.  Martin dumped the problem on the provinces, and then basked in glory as though he was some kind of visionary.  That should be general knowledge.  Now all the provinces are deep in deficit.

Martin was like Trudeau: a natural liar.

Thu, 01/31/2013 - 03:55 | 3201738 MeelionDollerBogus
MeelionDollerBogus's picture

are you kidding? This is called de-centralizing which makes an economy stronger by removing interconnected dependency. Toronto wasn’t paying for Vancouver, Charlottetown wasn’t paying for Moosejaw.

It’s not quite free markets but de-centralizing is a good start. If 2 towns want to make an odd deal within province or beyond, let them do so without it being on all of us.

Mon, 01/28/2013 - 16:20 | 3192423 AgAu_man
AgAu_man's picture

1. At least Canada and Mexico have plenty of oil & gas to help "North American energy independence", per Mitt-the-twitt-Romney and the GOP morons.  And Quebec has plenty of hydro-electric power to keep the lights on in the NE.

2. While this stealth spending is going on, the Chinese are doing stealth buying of Canada's natural resources (Oil, Gas, Au, Ag, U235, lumber, wheat, beef, corn) and prime real estate, leveraging its Aerospace & Simulation industry (Bombardier, CAE)... while also expanding its HSBC presence.   Did you know that the highest concentrations of U235 ore is in Canada?  Yeah!  Spend some time on Canadian mining websites.

3. At least the Canucks had the brains & common sense to avoid the Toxic Bubbles that Wall St was selling to EU.  Its Bay St. know their American cousins on Wall St too well.

Mon, 01/28/2013 - 16:29 | 3192464 akak
akak's picture


At least Canada and Mexico have plenty of oil & gas to help "North American energy independence"

You can scratch Mexico off that list --- their petroleum production, and reserves, are plummeting so precipitously that within a handful of years Mexico will be a net importer of petroleum.

At least the Canucks had the brains & common sense to avoid the Toxic Bubbles that Wall St was selling to EU.

I'm guessing that you haven't looked at Canadian real estate and housing prices in, oh, the last decade or so.

Mon, 01/28/2013 - 16:37 | 3192493 Matt
Matt's picture

A sudden rise in interest rates would likely result in Canadian Federal debt doubling in order to bailout the banks via CHMC (Canadian equivelent to Fannie and Freddie, except explicitly backed by the taxpayers instead of implicitly). 

Mon, 01/28/2013 - 16:49 | 3192542 AgAu_man
AgAu_man's picture

"I'm guessing that you haven't looked at Canadian real estate and housing prices in, oh, the last decade or so."  Looked at it?  ROFLMAO.  Of course I have... I cashed it in over a year ago, when I got 15% more than I'd get today.  I "played heads up hockey" as they say up there.  Instead of watching it.  :-)

Mortgages are all Canada-internal anyway, as is 80% of their national "debt", i.e Canadians buy their own bonds and T-bills for their pension plans (RSP - Registered Retirement Plan).  Unlike the US, they don't rely on Japan, China, Saudi Arabia or Latin drug lords to buy their T-Bills and Bonds.  Admittedly their private sector debt is quite high but still payable though, as they love their consumer-driven lifestyle as much as we do.  So they will have to work through that refi-plan.  Which makes Canadian banks and Shanghai's HSBC happy and wealthier.  More so than Chase, GS or WF, who do not hold Canadian mortages or Plastic Debt.


Tue, 02/12/2013 - 10:54 | 3236507 butchee
butchee's picture

BOC Don't fear the reaper

Mon, 01/28/2013 - 14:43 | 3192070 bania
bania's picture


Mon, 01/28/2013 - 14:42 | 3192073 DavidC
DavidC's picture

Carney finally coming to the UK. Oh fuck.


Mon, 01/28/2013 - 14:50 | 3192097 Dr. Engali
Dr. Engali's picture

We have a few more we would like to ship over to you too.

Mon, 01/28/2013 - 15:04 | 3192155 DavidC
DavidC's picture

After giving the US Piers Morgan I guess we were due some retribution!


Mon, 01/28/2013 - 16:34 | 3192472 AgAu_man
AgAu_man's picture

He's just "going home"... to the Mothership.  Big Whoop!  Window-dressing the Brits & MSM.  And a wasted talking point to the ADD (Attention Deficit Disorder) portion of ZH.  His Orthodox 'world-views' dovetail those of his bosses in The City. 

Mon, 01/28/2013 - 14:43 | 3192075 Dr. Engali
Dr. Engali's picture

That chart looks sustainable.

Mon, 01/28/2013 - 14:57 | 3192121 Groundhog Day
Groundhog Day's picture

looks like a bullish catapult formation.  We have lots of room to run higher

Mon, 01/28/2013 - 14:59 | 3192133 mayhem_korner
mayhem_korner's picture



Contact your doctor if that chart is sustained for four hours or more.

Mon, 01/28/2013 - 15:45 | 3192311 robertocarlos
robertocarlos's picture

You only have to wait 6 hours with a broken hand to NOT see a doctor.

Mon, 01/28/2013 - 23:05 | 3193649 Northern Lights
Northern Lights's picture

You got the worst of it.  I spent 6 hours waiting in Emergency on a Sunday needing 6 stitches to close up a cut on my face from catching a hockey puck in my face from my afternoon game.


Thu, 01/31/2013 - 03:49 | 3201735 MeelionDollerBogus
MeelionDollerBogus's picture

That’s bull.

Last time a friend of mine cut his finger on a band saw, he was seen before finishing filling in his name & entry information form. All of 15 minutes.

Good news too, no lasting damage, cut wasn't deep enough. A few stitches & that's that.

Mon, 01/28/2013 - 14:44 | 3192080 walküre
walküre's picture

Canada: What the Queen wants, the Queen gets. No surprise that BOC Carney went to the BOE. Same set(s) of books, same accounting formula(s).

Mon, 01/28/2013 - 14:49 | 3192096 Canadian Dirtlump
Canadian Dirtlump's picture

I suspected as much and I'm getting tired of walking around Calgary with this goddamned "the end is nigh" sandwich board on. Good to know I may not need it much longer.

Mon, 01/28/2013 - 15:01 | 3192143 mayhem_korner
mayhem_korner's picture



Well, at least professional hockey is back in Alberta.  (And I hear the Flames are playing, too!)

(your endearing friends in Edmonton)

Mon, 01/28/2013 - 16:03 | 3192365 Canadian Dirtlump
Canadian Dirtlump's picture

I am not plagued with pride nor dignity, so I'll admit that I am at heart a Jets fan who only keeps one eye on the screen from time to time lmao.


In other news, the guy who voted me down enjoys getting raped by strap on wielding former canadian member of parliament, deputy prime minister and slut sheila copps.

"Pass the tequila, Sheila, lay down and love me again."
– John Crosby, minister for international trade, repeating a line from a song to Liberal Opposition MP Sheila Copps in February 1990.

– What Tory backbencher William Kempling called Sheila Copps in 1991.

"Sheila, that a was a shitty thing to do and confirms you are one bitch."
– Ian McClelland, Reform MP for Edmonton Southwest, to Sheila Copps during a debate in April 1997

Mon, 01/28/2013 - 16:30 | 3192463 Albertarocks
Albertarocks's picture

That was you?  I'm the guy who who bummed a smoke off ya on Friday.

Mon, 01/28/2013 - 17:27 | 3192673 Canadian Dirtlump
Canadian Dirtlump's picture

fukkeneh. Normally I'm involved in environmental terrorism in the pipeline / facility construction industry so I do that to buff my karma.

Mon, 01/28/2013 - 14:52 | 3192110 NoDebt
NoDebt's picture

It's the "IT" thing for central banks.  Everyone's doing it.  You just GOTTA have it.  Nothing else will do.  Don't be left off the VIP guest list for Davos next year because you weren't one of the cool-kids doing QE at YOUR central bank.


Mon, 01/28/2013 - 14:59 | 3192134 reload
reload's picture



Mon, 01/28/2013 - 15:03 | 3192148 FranSix
FranSix's picture

Real return bonds(think TIPS) yielding 0.48%:

Short term interest rates are still ~1%.

Mon, 01/28/2013 - 17:15 | 3192628 Radical Marijuana
Radical Marijuana's picture

"Saving money" no longer actually saves much money.

Mon, 01/28/2013 - 15:06 | 3192163 zerotohero
zerotohero's picture

The strong Canadian economy has allowed me to keep stacking PM's and paying off all debt - the longer Canada continues to roll along the way it has the better for me - but if and when it pops at least I've taken appropriate steps.

Mon, 01/28/2013 - 15:09 | 3192168 Henry Hub
Henry Hub's picture

***Carney's BoC has grown its balance sheet by over 21% YoY***

It's interesting that there is zero discussion of this in the Canadian financial press. I guess the financial press in the "Great White North" is just as slavish and sycophantic to TPTB as the American press. Let's hope this article on ZH stirs things up.

Mon, 01/28/2013 - 15:35 | 3192280 legorf
legorf's picture

Probably too busy watching hockey and US reality shows to care about that ...

Go habs go ... oops, wrong blog!


Mon, 01/28/2013 - 15:45 | 3192306 Terminus C
Terminus C's picture

This is interesting? When has the news ever appeared on the MSM in any country?

Mon, 01/28/2013 - 19:33 | 3193020 Buzz Hacksaw
Buzz Hacksaw's picture

You can't find this kind of info even if you search! We aint got no alternate news to speek of. The vast majority of MSM news is about the USA 1st, Canada a lagging 2nd. We know more about the US than a good chunk of americans.

Mon, 01/28/2013 - 19:25 | 3192998 Buzz Hacksaw
Buzz Hacksaw's picture

Ya me and my brother eh, we been sayin for years that the Canadian officials are better at lieing and concealing.

Tue, 01/29/2013 - 00:43 | 3193969 Pareto
Pareto's picture

Its because most people, really everybody, MSM included, is financially illiterate.  When people don't know what they don't know, people like Carney can get away with murder.  I recall the CBC did a schpiel on him in the late fall.  They fucking drooled over him.  So, I wrote a piece on their blog, and it was immediately taken down.  Look, here's the deal.  Canada's in deep shit.  Certain pockets of the country are pockets of signs of more things (pain) to come.  And if the price of oil ever loses the risk premium like it did in 2008, and I think it will again since nobody in the G20 will show GDP growth much more than 1%, if that, then Canada, like its commodity index, will go into the shitter faster than any other nation (save Australia).  I'm surprised the TSX is where it is.  Every province in the country is fucking broke, or geting their, and many municipailities are killing services.  The thing about debt in Canada is that there is fewer of us fuckers around to shoulder it and pay it back.  There is no way we are going to pay that shit back.  naa uhh.  Not going to happen.  Harper is left of the Liberals of the 90's, and I remember how everybody thought that was fucked up.  The entire political spectrum in Canada has moved 3 shades further to the red.  But, people think Harper is a hard core righty.


The TSX is nowhere near its highs of 2011 (14,250) and at most will only get there just as a shitload of sellers step in.  The only thing holding up the index are the fucking banks.  Everything else has taken a Fibonnoci haircut (61.8%).  Carney has accomplished nothing here, and will accomplish even less across the pond.  "Evaporating velocity"  Fucking pinhead.  The best thing that Britain could do, is to punt that fucking Keynesian to France.  He's just going to destroy your currency, create price inflation and impoverish people and jobs further.  Its not too late to change your minds.

Austerity, is the road to financial independence, and while the Brits have endured pain and a languishing economy, it will rebound long before this country of socialists ever does.  peace.

Mon, 01/28/2013 - 15:20 | 3192220 orangegeek
orangegeek's picture

QE is a global craze.  Canada is just following the trend.


Have to keep these markets up somehow.


And in conclusion, who gives a flying fuck.

Mon, 01/28/2013 - 15:26 | 3192246 Smuckers
Smuckers's picture

You have to hit us where we stop feeling apathetic. 

Convert the charts into timbits and double-doubles, and then we might lose our shit.


Mon, 01/28/2013 - 15:33 | 3192271 css1971
css1971's picture

What on earth is the Canadian government doing with the money?

Mon, 01/28/2013 - 16:29 | 3192465 Winston of Oceania
Winston of Oceania's picture

they too have an FSA (free shit army)...

Mon, 01/28/2013 - 16:41 | 3192518 Matt
Matt's picture

Forget the FSA, that's peanuts compared to F-35s, minimum mandatory prison sentences and new prisons, during a time of all-time lowest crime, at that. That and all those G-whatever summits.

Mon, 01/28/2013 - 18:27 | 3192814 Radical Marijuana
Radical Marijuana's picture

The single greatest relative increase in the Federal government's domestic budget is to build more prisons, to put more people from the Canadian cannabis community in. The new mandatory minimum jail sentences for cannabis crimes will also force the provincial and municipal governments to spend even more on enforcing pot prohibition.

Of course, the warmongering foreign affairs budget is absolutely bigger by an order of magnitude, especially purchasing controversial new weapon systems. Canada is doing the SAME as the rest of NATO countries, backing up every manner of debt slavery with more of every kind of wars based on deceits, both at home and abroad.

Canada has not yet gone past the point where its debt slavery numbers have become debt insanity numbers. However, Canada IS headed towards that point, because it is controlled by the same international banksters' systems, while the public opposition to that in Canada is totally fragmented and ineffective, particularly because Canadians are more complacent and abysmally ignorant, since our mass media is so completely cooperative with keeping things that way. Only a few, very fringe, political parties ever even mention these issues. Of course, those are totally ignored by the mass media, and the masses of people therefore continue to be clueless.

Meanwhile, of course, the bigger picture includes the Federal government of Canada transferring money to the provincial governments, primarily to pay for "health care" which is actually a "profit from disease" system primarily paid for with public money. ... Canada was a relatively better country, by far, and still is, somewhat, but all the trends everywhere else are happening faster in Canada now that elsewhere, as Canada appears to be rushing to catch up with the globalized privatization trends, etc., with debt slavery driven towards debt insanity.

Anyone who looks at the bigger picture enough is FORCED to come to the conclusion that all the evidence and logical arguments support a nearly 100% objectively depressed and negative view of the most probable futures. That is especially the case because there is no doubt that Canadian "democracy" is dwindling and dying, if not already practically DEAD! The governing party has more money than all the other opposition parties combined! The opposition is severely split, and the government now has total power, although only about one quarter of the people actually voted for them. There are no good grounds to have any reasonable expectations that Canada will not continue to go through MORE debt slavery, backed by MORE wars based on deceits, towards debt insanities, backed by insane wars.

The rates of participation in Canadian politics and public awareness of political issues have being going down and down ... All of our politics is paid for by less than 1% of the population, while the other more than 99% pay for none of our political processes. Our governments keep on changing the elections laws in ways that, with perfect immaculate hypocrisy, continue to drive that trend to get worse! The overwhelming dominance of the mass media enables stories like this one above in Zero Hedge, and similar events since 2008, to happen with barely the slightest degree of public awareness about these things! Canadian Banks got more than $100 billion from the Canadian government during recession, back around 2008, BUT, apart from a few, very small, stories in the back pages of the financial press, the mass media deliberately ignored that, and therefore, the vast majority of Canadians never knew it happened, and still barely know anything about that, nor about stories like this one above on Zero Hedge.

‘Not a bailout’: the great Canadian bank caper

By Ralph Surette, June 19, 2010.

You know how wonderful Canadian banks are. They didn’t fail when others did, and didn’t need to be bailed out. We are standing tall among nations in that regard, and the Harper government can stick out its chest and preach the Canadian model of prudence and caution to a profligate world. Even the Americans are agog at our fiscal virtue.

Plus, our economy has been recovering from recession faster than others just in time for the G20 meeting in Toronto. It’s wonderful, fake lake and all.

Does this sound too cute? Here’s the inevitable other side of the story. The banks were actually "bailed out" to the tune of $125 billion just before and after the 2008 election — in the form of a massive purchase of questionable mortgages and other "rotten paper," in the words of one economist, held by them. This was done through the Canada Mortgage and Housing Corporation, a federal agency. The taxpayer is now on the hook for these mortgages, 40 per cent of which are considered at risk, with more to come if interest rates rise and the economy dips again.

But the kicker is this: Hardly anybody noticed. It wasn’t an issue in the election, and the financial press said nothing. A few tried, and are still trying, to raise the alarm. Michel Chossudovsky, a retired University of Ottawa economist and head of the Montreal-based Centre for Research on Globalization, pointed out that Finance Minister Jim Flaherty had announced a $2.3-billion surplus in the offing before the election, then quickly changed it to a $64-billion deficit. He argues that the entire deficit was for the first installments of the bailout, which the prime minister described as "not a bailout" but a "market transaction."

Some other economists give the government more leeway, saying it was doing what others were doing — injecting "liquidity" into the banking system at a time when credit was threatening to seize up. But the sheer scale of the amount, plus the continuation of the banks’ excessive lending practices (despite their image of prudence relative to the Americans), have led to something else. Remember that government money was supposed to stimulate infrastructure projects. What we got instead looks like a housing and consumer credit bubble — and the illusion of economic growth while other countries faltered.

Alarmed, last winter the government and the banks clamped down on lending with new rules. The May figures show a nearly 10 per cent drop in housing values across Canada. Did they move too late and pop the bubble — and the "recovery" with it? Just in time for the G20?

That’s the economics, and we’ll wait and see on that. What’s more disturbing is the politics — this business of nobody noticing. Here’s a related story for you. Laugh or cry, as you wish.

It’s apparently just dawning, but in the 2007 budget, Parliament unwittingly gave away its right to oversee government borrowing. That’s right, it didn’t know. For 140 years, government had to bring borrowing bills before Parliament. Now it doesn’t have to. "Shame on us" for not catching it, says Senator Lowell Murray, who has introduced two private member’s bills to reverse this to no avail. Tough luck, says the government. Parliament voted and that’s that.

The fact that the Harper government has taken to presenting budgets in huge U.S.-style omnibus bills with everything but the kitchen sink in them, and daring the muddled opposition to vote them down and trigger an election, is considered the trick that led to the oversight. I have another theory. Opposition and media are so addled by scandals and other shenanigans — Mulroney/Schreiber, Guergis/Jaffer, Maxime Bernier and the biker lady etc. — that everything crucial is passing them by. Stephen Harper loves this.

As for the banks, here’s the rest of the story. Bank profits have boomed after the "not a bailout." The Big Six have made some $5 billion in each of the last two quarters. Last year, the banks gave their top dudes over $8 billion in bonuses. This year, they’ve put away $5 billion so far for this exercise in legalized theft. Meanwhile, the Harper tax cuts — which will have Canada with the lowest corporate tax rates in the G7 by 2012 — is giving the banks a gift of some $200 million per quarter at present rates of profit.

Voices in the wilderness call for banks to be regulated like a public utility, which is what they are, in order to stop this "wealth by stealth" operation. Others call on the federal government to resume borrowing, on its own behalf and that of the provinces and municipalities, from the Bank of Canada, bypassing commercial rates — as it did before 1974. With Harper in power and nobody noticing anything, good luck with that.


I have apparently wasted my time for several decades to try to do something about that situation, only to have proven, over and over again, what I have outlined above. My continuing current work on these problems only continues to PROVE what I have written above are the CORRECT SOCIAL FACTS:

Tue, 01/29/2013 - 18:02 | 3196461 debtandtaxes
debtandtaxes's picture

I am also Canadian. I have also been teling everyone who comes near me about the "not bailout" since it all started in 2008. I, too, know our media is more owned by corporations that that of the US AND we have no alternative media. I did not know about budget bills not being in parliament anymore - tho now that I think about it  I haven't seen a story about budget voting in years and now know why!

Thank you for being part of the solution.

Wed, 01/30/2013 - 15:43 | 3199841 Lore
Lore's picture

The preoccupation with marijuana exudes a peculiar nihilism that I can't relate to, and the bit about party funding is distorted, but you have some good thoughts.

Travel a bit, and you find that Canada is a pretty nice place to live.  I just wish somebody could check the spread of Agenda 21.  It's like volcanic ash, settling on everything.

Mon, 01/28/2013 - 15:36 | 3192284 Super Broccoli
Super Broccoli's picture

and last week we had that canadian DP explaining how stong the canadian economy was !!!!


it's much of the same all around the globe. how could we end up like this ? could this be due to reckless politician policies allowed by dumbass voters ????

Mon, 01/28/2013 - 16:43 | 3192524 Matt
Matt's picture

It's a concerted effort to demonstrate that representative democracy is unsustainable.

Tue, 01/29/2013 - 08:03 | 3194313 F-X
F-X's picture

You left out bankers as a possibility.

Mon, 01/28/2013 - 15:43 | 3192303 robertocarlos
robertocarlos's picture

There's like a 68 foot cube of gold sitting in my back yard and it only costs 5 dollars an ounce to dig it out.

Mon, 01/28/2013 - 18:27 | 3192837 hooligan2009
hooligan2009's picture

i might be touring soon...what's your address? :>)

Mon, 01/28/2013 - 15:47 | 3192323 ThreeTrees
ThreeTrees's picture

It blows my mind that this has received zero airtime from the Canadian media.  I did a back of the envelop calculation using the Nominal Bond Results .pdf from here

In terms of gross issuance it looks like Carney's been about 30% of the Canadian Government Bond Market since the BoC's holdings began rising in Jan, 2011.


This will end well...

Mon, 01/28/2013 - 15:49 | 3192329 robertocarlos
robertocarlos's picture

It's keeping interest rates down. Which is good for Ontario.

Mon, 01/28/2013 - 15:51 | 3192337 OutLookingIn
OutLookingIn's picture

Good riddance to bad rubbish.

Now he's your problem London!

The solid thing about gold is that you have to have the physical gold to back up any transaction.

If you don't have it, then you've got a big problem.

There's so much paper gold in circulation, that they couldn't possibly cover all these pieces of paper.

There will be a major short squeeze in gold, that will drive up the price to surprisingly high levels.

Of this occuring, you can be absolutely sure.

Tue, 01/29/2013 - 05:59 | 3194241 Henry Hub
Henry Hub's picture

Canadians don't have to worry about their countries gold holdings. It has all been sold off. Canada once had six hundred tons, now zilch. This is something else that wasn't reported in the corporate toady press. The Canadian dollar is now backed by...wait for it...the U.S. dollar. Sleep well Canadians.

Mon, 01/28/2013 - 16:08 | 3192378 HalinCA
HalinCA's picture

Does anyone know if Australia and New Zealand have also suffered 'stealth QE'?

Mon, 01/28/2013 - 18:24 | 3192833 hooligan2009
hooligan2009's picture

here is the MSM response for Australia:

Q. I gather quantitative easing is econ-speak for printing more money.

I'd be interested to understand what the ramifications of this are when we do it (ie will it impact my own personal investments in any way) and when other countries do it.

- PatternPrecognition via Reddit

A. Australia is highly unlikely to engage in quantitative easing, as it tends to be a last resort when interest rates are close to zero and further rate cuts would have no or little effect on lending rates or the supply of money in the economy.

In Australia, the RBA still has at least 2.5 percentage points worth of rate cuts to go before the cash rate hit 1 per cent and it would be likely to start considering quantitative easing.

Globally, the last two QEs have pushed asset prices higher, so you are likely to see any stock investments (especially in miners) bounce in the short term. However, these rallies have not proved to be sustainable in the past.

Australians are also likely to see the dollar remain stronger against the greenback than it would if the US was not increasing the supply of its currency so aggressively. A rise in inflation caused by printing money is also relatively worse for savers (as it reduces the future value of your savings) than borrowers (as it reduces the future value of your debt).

Q. Also, what are the economics conditions that would result in Australia implementing this and are these inline with the the US and Europe, and is this an RBA controlled thing or something that the parliament would enact?

- PatternPrecognition via Reddit

A. As above, the RBA is unlikely to consider quantitative easing until the cash rate falls below 1 per cent, and cannot be cut much further, or banks completely stop passing on ANY cash rate reductions implemented by the RBA. Neither of those events seem likely in the near-term.

To my knowledge, the RBA has sufficient power over its own money market operations to conduct its own version of QE without any legislative changes, however I will endeavour to confirm whether this is correct.

from here:

So, the way to read that is, for as long as Austrlias fiscal defict of around A$20 bn, does not increase too much, it prefers to use Government subsidies rather than QE to bail-out weak sectors (like housing) in the economy. Note that in Oz, new house prices don't fall, they get bigger discounts so the Oz builders don't have to mark to market the value of houses built and not sold for collateral purposes.

Same in NZ:

Quantitative easing isn't required in New Zealand despite calls for the nation to follow major economies in printing money, says new Reserve Bank governor Graeme Wheeler. The kiwi dollar dropped on his comments, marking the second straight day he has moved the currency.

from here:

Mon, 01/28/2013 - 16:08 | 3192379 100pcDredge
100pcDredge's picture

Must have worked... I didn't see it.

Mon, 01/28/2013 - 17:08 | 3192601 AgAu_man
AgAu_man's picture

In a Fiat-QE world, where all fiat-model cars must follow the Fed's "QE Pace Car" around the Fiat 500 track, this is to be mathematically expected.  It's "print or be left in Exporting Dust, with an expensive currency" that seeks to export its wares to the US.  It's classic Currency War stuff, while trying to minimize the real damage to one's domestic economy, thanks to the Fed.

The "real" trouble starts when Canada too joins the ranks of growing list of nations who make direct currency deals with China:  Canada buys stuff 'Made in China', and the Chinese buy "Resource from Canada".  No USD wanted or required in that perpetual "do-while-loop".  Unlike Germany & Friends, Canada has enough gold -- in the ground, if not 'hypothicated' or Corzined by Carney -- to back the fiat-CAD.

Mon, 01/28/2013 - 17:20 | 3192644 andyupnorth
andyupnorth's picture

Canadian Central bank is purposely weakening the Canadian Dollar.  This is just the beginning.

Hedge accordingly.

Mon, 01/28/2013 - 17:28 | 3192669 Babushka
Babushka's picture

Who gives a monkey about canada this guy works for UK!

And British publik is getting preped up through MSM for what will come !

New Bank of England head Mark Carney hints at big shift in policy

he will order a policy revolution to jump-start the stalled British economy as fears grow of a triple-dip recession....

he said that central bankers should be prepared to take aggressive measures to help economies achieve what he called "escape velocity"...

There remains considerable flexibility – which includes the use of communications(LIBOR like style?), which includes the use of unconventional measures....


Can't wait.


Mon, 01/28/2013 - 20:22 | 3193186 Bansters-in-my-...
Bansters-in-my- feces's picture

Fuck YOU Jimbo Flapherty.

Oh ya,you too Mark Goldman Carney.

Mon, 01/28/2013 - 21:30 | 3193385 JimmyCDN
JimmyCDN's picture

Gee, is that why Bacon was nine dollars a pound at the local butcher on the weekend?

Another laughable sign of the times is the government letters posted at fast food chains (Tim Hortons) about the Canadian mint discontinuing the penny.


Where is Jim 'No Inflation' Flaherty now?


Oka is gonna look like a bike ride Harper...


Mon, 01/28/2013 - 22:00 | 3193452 freedogger
freedogger's picture

"At least the Canadians have a seemingly endless supply of firewood, unlike the Greeks."

Damn beetles are getting all the wood.

Tue, 01/29/2013 - 00:21 | 3193887 jonjon831983
jonjon831983's picture

No worries 6 CDN banks downgraded by Moody's today.

Tue, 01/29/2013 - 08:24 | 3194306 smacker
smacker's picture

Given that the current BoE governor (King) was party to the crashing of the UK economy since the early 2000s and also heavily implicated in Libor rigging, it looked like a half-decent idea to appoint Carney in his place.

But it now looks like Carney is the wrong guy.

After hearing what Carney wants to do when he takes office in June, it looks like he will be at least as bad as " Mervyn "King of Inflation". " He's already said he wants to target "nominal GDP" and also that he's prepared to tolerate "more inflation". This is not acceptable and if he is allowed to proceed, the UK govt might find people minimising their tax obligations in defiance.

Tue, 01/29/2013 - 08:01 | 3194309 caShOnlY
caShOnlY's picture

Canadian central bank does QE on the stealth? no surprise really.   In fact the surprise to me has been why the CAD has only been 2 or 3 cents higher than the U.S. with all the U.S. QE and debasement while Canada has had a credit fueled economic boom along with excellent resources Canada sells world wide (oil, potassium, etc...).   Canada has way to many jobs in manufacturing that depend on exporting their goods to the U.S. The spice must flow!!   What is that policy called again............. oh yes:

                                         "beggar thy neighbor"

Tue, 01/29/2013 - 13:29 | 3195281 riskmgmt
riskmgmt's picture p222

When the new liquidity plan is fully implemented, ... To accomplish this, over the next three fiscal
years, government deposits held with financial institutions and the Bank of
Canada will increase by about $25 billion. Liquid foreign exchange reserves
will increase by US$10 billion over the next fiscal year, and subsequently rise
sufficiently to maintain their level at or above 3 per cent of nominal gross
domestic product. In total, prudential liquidity will increase by about
$35 billion by the end of 2013–14.

Here is the funny part:
The financing activity necessary to increase prudential liquidity will have no
material impact on the budgetary balance or the federal debt as the cost of
the additional borrowing will be offset by a corresponding increase in returns
on interest-bearing assets.

Sun, 02/10/2013 - 08:58 | 3230279 JenniferS
JenniferS's picture

Mark Carney could easily be pulling in much more money working for a private company in New York, London, etc (think 2 million plus). Further, the cost of living in London is extremely expensive. Short term financial assistance there is even more popular than Canada online payday loans for poor credit.  For someone who they want to be in charge of one of the most important central banks in the world, they deserve good compensation.

Tue, 02/12/2013 - 10:42 | 3236468 riskmgmt
riskmgmt's picture

Page 222 explains the growth of the balance sheet


When asked to clarify the % of funds that will be held at the Bank of Canada and the % to be held at the chartered banks, the Dept of Finance did not reply.  Liquidity injection???


When asked to clarify the funding source(s) for this program, they did not reply.

Tue, 02/12/2013 - 11:01 | 3236538 bubbleshooter
bubbleshooter's picture

i see why they want him to come to the UK now

Do NOT follow this link or you will be banned from the site!