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)

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Mon, 01/28/2013 - 14:41 | 3192069 mayhem_korner
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Canada the Cyprus of North America

Mon, 01/28/2013 - 14:55 | 3192116 Taffy Lewis
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At least the Canadians have a seemingly endless supply of firewood, unlike the Greeks.

Mon, 01/28/2013 - 15:01 | 3192138 Mark Carney
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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
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The slope of that balance sheet line is simply Loonie.

Mon, 01/28/2013 - 16:13 | 3192396 James_Cole
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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
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"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
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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
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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
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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
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That which is attained by fortune is easily gotten, but hard to keep - paraphrasing Niccolo Machiavelli

Tue, 01/29/2013 - 01:32 | 3194053 kennard
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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
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"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
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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
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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
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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
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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
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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
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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
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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
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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
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The vast majority of the gold was sold during the Mulroney years:

Tue, 01/29/2013 - 00:45 | 3193975 Matt
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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
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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
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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
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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
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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
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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
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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
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"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
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BOC Don't fear the reaper

Mon, 01/28/2013 - 14:43 | 3192070 bania
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Mon, 01/28/2013 - 14:42 | 3192073 DavidC
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Carney finally coming to the UK. Oh fuck.


Mon, 01/28/2013 - 14:50 | 3192097 Dr. Engali
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We have a few more we would like to ship over to you too.

Mon, 01/28/2013 - 15:04 | 3192155 DavidC
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After giving the US Piers Morgan I guess we were due some retribution!


Mon, 01/28/2013 - 16:34 | 3192472 AgAu_man
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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
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That chart looks sustainable.

Mon, 01/28/2013 - 14:57 | 3192121 Groundhog Day
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looks like a bullish catapult formation.  We have lots of room to run higher

Mon, 01/28/2013 - 14:59 | 3192133 mayhem_korner
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Contact your doctor if that chart is sustained for four hours or more.

Mon, 01/28/2013 - 15:45 | 3192311 robertocarlos
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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
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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
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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
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That was you?  I'm the guy who who bummed a smoke off ya on Friday.

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