Meet Canada's New Central Bank Head

Tyler Durden's picture

The bottomline? Economists' models cannot explain consumer bubbles, tech bubbles or commodity bubbles. Nor can they predict a post-bubble future.

- Stephen Poloz

As is well known, Goldman's Mark Carney is leaving the Bank of Canada on June 1 to take over the UK money printer in a few months, at which point he will proceed to create about GBP25 billion per month out of thin air, pushing the total monthly G-7 liquidity injection to a healthy $200 billion (an annualized rate of $2.5 trillion). Which meant that a successor had to be found. Moments ago we learned just who that is, and surprisingly it does not appear to be yet another Goldman Sachs Partner, MD or even Vice President. Carney's replacement is Stephen Poloz, the former head of Export Development Canada.

Promptly upon the announcement Poloz noted that flexible inflation targeting no threat to credibility, and Canada's monetary policy has helped through crisis, and that experience at EDC gives him a feel for Canada's economy. If nothing else, at least he has held a real job. Unlike those mandarins in the Marriner Eccles building. Either way, his monetary stance is largely unknown, although it will hardly be a hurdle to the other lunatics who have taken over the money printing asylum.

From the Times Colonist:

The appointment to a seven-year term follows a lengthy five-month search process set in motion by Finance Minister Jim Flaherty after Carney announced he would step down June 1.


"Stephen Poloz has a long and distinguished career in the public and private sectors with 30 years experience in financial markets, forecasting and economic policy,” Flaherty said in a statement.


"I am confident he has the skills and experience required to lead the Bank of Canada at a time of global economic uncertainty."


Poloz has been president and chief executive at EDC since 2011. He joined the organization in 1999 as vice-president and chief economist, and in 2004 was named senior vice-president, corporate affairs.


Poloz spent five years with Montreal-based BCA Research, and 14 years with the Bank of Canada in various capacities. He holds degrees in economics from the University of Western Ontario and Queen’s University.


"This has been an extremely thorough process as we sought the best candidates from around the world," Flaherty said.


"Mark Carney has been a visionary leader, an economic partner and a friend. Over the past few years we have faced some unprecedented economic challenges and we surmounted."


Carney, who is leaving to take over the top job at the Bank of England, won respect across the global financial community for his leadership and deft handling of the challenges wrought by the recession.


The early favourite to replace him had been Tiff Macklem, 51, the second-in-command at the bank who had apparently been groomed for the prestigious post.


The position comes with a salary of between $431,800 and $507,900.

So... not Goldman? Not even as a first year analyst? Maybe him and Kuroda went to a summer camp together, run by Robert Rubin, because this abdication to its global domination role is very much unlike Goldman.

Scotia already has a quick profile on the new head, and (not) surprisingly, it appears to be another dove.

New BoC Governor Stephen Poloz’s views on monetary policy are “unknown quantity,” Scotiabank economists Derek Holt and Dov Zigler write in client note.


Markets may take appointment as “dovish nod”; background in export sector may be seen as govt emphasizing challenges facing Canadian exporters, including elevated currency


Poloz has “generally avoided public commentary” on monetary policy; last speech was April 26, 2012, dealt with Canada-Japan trade relations

That said, anyone hoping that Poloz will be the first to buck the trend of the central bank chart presented previously, and hike rates is advised to not hold their breath. The CAD is certainly not worried, and promptly weakened to 1.01

* * *
Finally, for those curious, some thoughts on the the financial crash from none other than Poloz, where he expressed a surprisingly objective view of the world. It remains to be seen just how his G-7 colleagues will pervert this.

From BusinessEdge:

How did we fall so fast? Look back to 9/11 trauma


A better question to ask, perhaps, would be: "Where did it begin?" A fuller understanding of the fundamentals of the crisis would almost certainly provide an insight into how it might end. Many would point to the first failed rollover of mortgaged-backed commercial paper in August 2007 as the catalyst to the crisis.


Fair enough, but the root of the matter goes deeper, and much longer ago, than that.


Arguably, the turmoil we are experiencing today is linked directly to the trauma of Sept. 11, 2001. We now know that 9/11 spawned a "live for the moment" boom in U.S. consumer spending and borrowing, the likes of which have never been seen before.


This caused a major upswing in real estate prices, on the basis of which lenders created a balloon of consumer debt, including extending credit into the subprime space. Key to this lending was the presumption that any future debt service difficulties could be buried in a  refinancing package based on the rising equity value of the home.


Nor was this expansion of leverage restricted to the U.S. housing market. The extended period of strong global growth fostered a belief that investment risks had become a thing of the past.


Investors - particularly professional fund managers - were therefore encouraged to leverage their investments in order to boost overall returns.


Investors competed for deals, rather than deals competing for investors, and risk premiums were driven even lower in the process.


The U.S. housing bubble broke back in 2006, but it would be August 2007 before the house of cards would really start to come down.


With home prices on the decline, sub-prime mortgage holders were better off simply walking away fromtheir houses.


Doubt crept into the mortgage-backed commercial paper market, and fromthere, into the interbank market. We now are faced with a global desire to reduce leverage, and governments have provided mountains of liquidity to keep things orderly.


There are now signs of healing and every reason to believe that the credit crunch will fade over time.


So, where will it end? The most important implication of the above interpretation of events is that the credit crisis is the product of an underlying economic downturn, not the other way around.


At the heart of that downturn is a shift in U.S. consumer psychology, away from"living for the moment" and back to "saving for tomorrow.”


That shift will take time to complete, and its real impact is now being felt everywhere, fromGermany to Chile to Russia to China and all points between.


In other words, even after the credit crunch is sorted out, we will be left with a traditional downswing in the global business cycle. Such  cycles have a lot of common characteristics: Repricing of risk, widening interest rate spreads, weak commodity prices and a rising U.S. dollar.


These symptoms are likely to persist until the global business cycle runs its course - and given the revision that has taken place in U.S. consumer psychology, that bottomis likely to be at least a year away, probably longer.


The bottomline? Economists' models cannot explain consumer bubbles, tech bubbles or commodity bubbles. Nor can they predict a post-bubble future.


However, business cycles do have a natural rhythm, and that means the outlook will remain challenging for at least the next 12-18 months.

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EscapeKey's picture

Has Goldman Sachs approved of this?

Buckaroo Banzai's picture

In unrelated news, 9mm ammo is finally starting to become available online again at something less than insane prices (i.e. only 2x pre-insanity prices). 22lr unfortunately is still very hard to find, unless you are willing to pay a stupendous markup.

flacon's picture

She looks "sexy" - she must have credibility. 



OH Fuck! I think I've seen that lady before! Holy shit! It's her!:

traderjoe's picture

Correction: they print debt-money out of thin air. Huge distinction.

The commercial banks, under fractional reserve banking, print the 'currency' (I refuse to call it money) out of thin air and then lend it back to the sovereign at interest, with the collateral of your future labor. 

I call it the scam of the century. 

Abraxas's picture

This new guy is either another lizard or a scapegoat. We'll see.

bank guy in Brussels's picture

So this Canuck central back head Stephen Poloz sez:

« ... every reason to believe that the credit crunch will fade over time ... »

And Tyler Durden calls this

« a surprisingly objective view of the world » ? !

WTF ? !

Don't sell out to the dark side on us now, Tyler !

Tyler Durden's picture

"The bottomline? Economists' models cannot explain consumer bubbles, tech bubbles or commodity bubbles. Nor can they predict a post-bubble future."

We'll take an optimist over an econo-hubrist with a delusion of grandure any day.

Womb Service's picture

Hey Tyler, sorry if this was already posted, but you may want to look at this CBC documentary that came on the heels of the "Secret World of Gold." It is called "The Monarchs of Money."

This is the official link. Not sure if it will play in the US. There are some other links available.

PS- Carney comes across as an unbelievable douche.

prains's picture

i think the word you're looking for is;  smarmy

Arkadaba's picture

I thought he came across as scared. Very defensive.

phyuckyiu's picture

Ohhhh mahhhh gawwwwd did they just promote a GOY? WTF is this world coming to. I think I just saw a pig fly outside my window.

palmereldritch's picture

Poloz's comments were insightful, candid, refreshing, abstract yet grounded.
(Translation: Non-banker)

MeelionDollerBogus's picture

Lizards and goats and bulls, oh my!!

macholatte's picture


Honey, where's my Goldman?

It's not my job to keep track of your stuff. But if I was going to look I'd check under the Wall Mart bag under the bed in the guest room.

Yup. There's Goldman.

(with apologies to "Defending the Caveman")

Colonel Klink's picture

The Medusa grows another snake head.

prains's picture


this is not a joo conspiracy it's a GIANT FOREHEAD conspiracy, I'm telling you, look at all these fuckers, you could puts lites on these guys and land cargo planes on that strip.



<notwithstanding current ZH re-seeding hairlines of course>

Jekyll_n_Hyde_Island's picture

   Conspiracy!  He's a Jew and no one knows because it's a secret canadian Jew society!  Please, please for the love of Abraham don't take me seriously.

  However, this should be enjoyed by all:

prains's picture


what happens when the blades get dull 

palmereldritch's picture

Enjoy it while you can because soon global standardized English marketing services will sadly make that product, a thing of the past

azzhatter's picture

Fuck You Carney. You look like a pussy

Spigot's picture

He will do as he is told to do.

reader2010's picture

Wow. Another Sociopath, bitcheZ!

Buckaroo Banzai's picture

looks like a puffy-faced douchebag

freewolf7's picture

Another ornament for the lamppost.

Kirk2NCC1701's picture

NO.  Shocking, I say.  Shocking!

phyuckyiu's picture

If his wife is, then at least his kids will be allowed in the club. Jews are smart, they realize they can't depend on the Dad to be the father of the child. They can depend on the wife to be the Mother however.

NoWayJose's picture

The Canadiens at least know that you have to remove a little top soil, and dig into the dirt to find something useful.  Their main exports are found this way, so they can hope the new guy learned something.  I'm not surprised the Canadien dollar dropped a bit.  Again, if he learned anything about exports, he knows that Canada does not need a stronger dollar.  What will be interesting is whether he sets up a direct yuan exchange like the Aussies did.

Buckaroo Banzai's picture

"What will be interesting is whether he sets up a direct yuan exchange like the Aussies did."

Not if he values his life, he won't.

The day that happens, you'll know the USA is completely fucked.

Kirk2NCC1701's picture

My sources say that he would love to set up a CAN/CNY exchange, but that he has 'bosses' to answer to.  Who answer to (roll over for) bosses south of the border.

oddjob's picture

Bank of Canada answers to the City of London.

palmereldritch's picture

Bank of Canada is owned by HRM

TheCanadianAustrian's picture

"Again, if he learned anything about exports, he knows that Canada does not need a stronger dollar."


Yen Cross's picture

     Makes me want to watch the cult classic movie, " Coneheads"...

Metalredneck's picture

Meet the new boss,

Same as the old boss...

Pareto's picture

Meet the new boss.  Same as the old boss.  But, we won't get fooled again, or, its different this time.  Take you're pick.

Kaiser Sousa's picture

Fuck you Carney.....

Likstane's picture

My bad...Fuck you Stephen Poloz...

LeisureSmith's picture

These "top men" photo's seem as photoshopped as the girls in the chick mags, only leaning more towards gravitas and clean cutness instead of tall, bronzed and skinny. I laugh.

Poetic injustice's picture

Ohhh, Canada is again in capable hands and will continue saving banks.

Yen Cross's picture

   When Carney was an infant, his mother hung him[upside-down] in the closet to avoid having a "flat head". Little did she know, all the grey matter settled in his forehead.

Uncle Zuzu's picture

"I'm gonna have to go ahead and sort of disagree with you there"

YHC-FTSE's picture

"challenges facing Canadian exporters, including elevated currency", sounds ominous. Another central banker racing to the bottom?

Well, he's not a GS, JPM, or MS alumni so that's good. I'll take whatever good news I can get these days.

walküre's picture

Because the value of the USD is clearly too low right now. The USD should be priced 20% to 40% better against all other currencies because it is ultimately the best currency in the world, maybe even the universe. It is so good that even paper bills with Mickey Mouse face on it are accepted worldwide at face value. Yup, we are the best!

My advice to Stephen Poloz is to print Cdn like there's no tomorrow. Don't be shy. Beat that $85 billion a month the Fed is doing in relative terms to the Cdn situation.

That is how we might see USD appreciation against the rest. You have to outdo the Yanks at their game.

q99x2's picture

6 man cell will handle North America and Europe.

FranSix's picture

Export Development Corporation is the same as the U.S. Export Import Bank.  The money they lend is printed out of thin air to buy aircraft, which is thereby lent to the largest financial corporations of the world, notably GE Finance Capital.  GE Finance Capital then sells the leases for aircraft they generate to investors seeking a yield, mostly banks.  A normal life span is about 20 years.  Airlines generate certain debt tranches for Credit Default Swaps.

The taxpayer is essentially on the hook for the most financially unstable sector in the economy, the airline industry.  That being said, the airline index is cresting out at a high and should be turning down for the third leg of a triple waterfall crash. It's just a question of when.

It's the only index that clearly had its high in yr. 2000 and has been in a bear market ever since.  You would want to use a log scale chart to appropriately guage the chart over the long term.


FranSix's picture

A couple of notes:

The Canadian dollar became a reserve currency last year.

The Canadian housing bubble is still very vigorous: