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Guest Post: Mark Carney Kicks The Can

Tyler Durden's picture




 

Submitted by James Miller of the Ludwig von Mises Institute of Canada

Mark Carney Kicks The Can

Bank of Canada Governor Mark Carney takes a lot of cues from his U.S. equivalent and fellow central banker Ben Bernanke.  Both took interest rates to anorexic levels in light of the financial crisis in 2008.  Both used their positions of power as stewards of the people’s money to bail out the big banks.  Both take credit for the gains of their respective stock markets and for guiding their economies through the global recession.  Both are forever on a quest to rid of the world of the boogeyman of deflation.

And both are sewing the seeds of their own destruction by keeping interest rates artificially low and ultimately driving unsustainable investment that must eventually be liquidated.  All around the world, the boom bust cycle continues to occur due to central banks attempting to induce economic growth with money printing.  China’s economy is continuing to come apart as manufacturing output and real estate prices plummet.  These sectors were bid up by double digit increases per annum in the country’s money supply over the past decade.  Since inflationary growth, by definition, can’t go on forever, as its continuance results in what Ludwig von Mises called the “crack-up boom” and destruction of the currency, the chickens of the People’s Bank of China’s reckless monetary policy are finally coming home to roost.  The PBOC has responded to the downturn by recently cutting interest rates for the first time since 2008 in what will likely be a vain effort to reinflate the bubble.

Over in Europe, the year over year change in the broad money supply has dropped dramatically since 2010.  This provided the spark for the sovereign debt crisis which shows no sign of slowing down unless Angela Merkel and Germany concede to further inflationary measures by the European Central Bank.  Just like her support for the big banks and the austerity measures that ensure idiotic bankers don’t take too much of a loss on their holdings of euro government bonds, Merkel will likely give in to money printing in the end as she has already endorsed the push for a political union.

And now in Canada, Mark Carney announced a few days ago the Bank of Canada will keep its benchmark interest rate steady at 1%.  This announcement comes despite his previous warnings over the enormous increase in Canadian private debt.  But of course the run up in debt couldn’t have occurred if interest rates were determined by market factors only.  Had supply and demand been allowed to function freely, interest rates would have risen as a check on the swell in debt accumulation.   Carney won’t admit this though.  Like all central bankers, he has made a habit of boasting the positive effects of his low interest rates policies while avoiding blame for the negative consequences.

He is a bartender who gleefully takes the drunk’s cash while replying with “who, me?” when said drunk drinks himself to death.

What makes the promise of continually low interest rates especially worrisome is not only does it tell the market to keep accumulating debt, but it is also an attempt to keep what some are calling a nation-wide housing bubble from deflating.  Over the past decade, Canadian home prices have shot up at a far steeper pace compared to the decades that preceded it.  In recent years, the acceleration in home prices has been fueled by the Bank of Canada’s historically low overnight lending rate which went from 3% before the financial crisis to .25% in 2009 and now rests steadily at 1%.  The BoC has already acknowledged that its interest rate policies directly affect mortgage rates.  Many Canadian media publications and investment newsletters are pointing out this trend and warning of a potential collapse.  The BBC even did a report on it.  There is nothing potential about a sharp downturn in home prices however; it will happen.  It’s only a question of when.

With China and Europe leading the pack, the world economy is beginning to take a turn for the worse.  The orgy of money printing which took place over the past few years has slowed down significantly; even in the U.S.  Central bankers are standing at a precipice in which they must decide if they will forge ahead and prime the monetary pump to paper over the various malinvestments caused by their previous interventions or actually allow for a contraction and the market to adjust to a new path of sustainable growth.  If history is any indication, the latter is not a considerable option as it would be devastating to the banking sector which is reliant on piggybacking credit expansion off of an uninterrupted flow of newly printed monies.

Carney’s decision to keep interest rates suppressed is yet another instance of a central banker unable to face reality.  The malinvestments will continue to accumulate and will have to be liquidated at another date.  What Carney has done to mitigate the looming debt and housing bubble is effectively kick the can down the road.  He has revealed through his actions the undeniable truth which holds for all central bankers: that they have no other card to play but the printing press.  As legendary investor Marc Faber has noted,

“I do not believe that the central banks around the world will ever, and I repeat ever, reduce their balance sheets. They’ve gone the path of money printing… And once you choose that path, you’re in it and you have to print more money.”

The Austrian theory of the trade cycle developed by Mises a century ago tells us that credit expansion is bound to end in depression.  To quote Herbert Stein’s Law, the business cycle theory essentially boils down to “if something cannot go on forever, it will stop.”  The debt fueled boom in Canada is a house of cards.  No matter how much money printing or interest rate manipulation Carney attempts, the collapse in inevitable.   His record, along with Ben Bernanke’s, will eventually be one of dismal failure.

 

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Sat, 06/09/2012 - 17:46 | 2511016 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

He is just like all Chairmen of the Central Banks!  He is GOldman Sachs afterall....

The Central Banks want to soak the "taxpayers" in debt and then implode the financial system.  They wish to make you their serfs once again.

Who is this Carney?  some innocent?  No.  Just because his mother was a nurse or teacher or whatever, he has sworn an oath to his banker buddies, some of whom have had their wealth in their bloodline for thousands of years, because he think he is on their side.

You are in no better shape than anyone, Canada.  Best to recognize.

Sat, 06/09/2012 - 17:47 | 2511020 Western
Western's picture

I thought he was different...... what about the time Jamie Dimon tried to fight Mark Carney in a board room?

Sat, 06/09/2012 - 17:51 | 2511024 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

It is a high school cafeteria.  Do you actually care?

Carney said he wasn't doing bailouts and has been.  He is a liar and a thief, and a Keynesian to boot.

Sat, 06/09/2012 - 18:35 | 2511092 Colombian Gringo
Colombian Gringo's picture

Stinky Mark Carney, fucking clown, should go back to stinky Canada Land from where he came.

Sat, 06/09/2012 - 20:47 | 2511295 The Monkey
The Monkey's picture

All these guys are subject to the economic cycle. Sorry.

Sun, 06/10/2012 - 08:02 | 2511819 CPL
CPL's picture

My fellow Canuck countryfolks are complete dolts when it comes to reality and just as bad at math as every other country out there.

Not to sound blaise about the situation in Canada though but we've been in a deep shit hole financially for the exact same amount of time as our southern cousins.  It's just better disguised because we are used to taking it in the ass.  Tiny population in a large land mass where less than 3% of it is inhabited.  Our biggest problem isn't debt, it's making sure we can keep the lights on and things running.  

The situation, at least where I am is simple, after 9am in the country I am lucky to get any power to run my little farm and it's just the beginning of the summer and AC units are cranked.  My neighbours are not so lucky, it's safe enough to pump diesel into equipment, milk and pasturize milk before 9 am.  After that...well, most of you have already been drinking and eating the results.  I understand Legionaires diease is making a come back which is common when refridgeration breaks down and things spoil slightly.

 

Means if you are over the age of 50, there's a good possibility that is how you're going to get your ticket punched.  As an added bonus it's completely resistant to anything on the antibiotic shelf now along with every other airborne and food borne disease and parasite out there.

 

We'll know systemic breakdown is completely in full swing when we are unable to make ice and some poor soul is killed by eating sealed bacon that wasn't handled properly.   Seriously it's pretty bad out there when pirates are stealing the data cables between continents for the copper content in them

Attempted subsea cable theft takes out phones and internet in Highland.

http://www.bbc.co.uk/news/uk-scotland-highlands-islands-18365150

Sun, 06/10/2012 - 21:03 | 2513106 Henry Hub
Henry Hub's picture

The question I keep asking is what happened to Canada's gold?
Canada had over 600 tons in 1980, now it all "vaporized", "apothacated", actually stolen. No one will address this question. Greece, Spain, Italy are all in big trouble, but they have vastly more gold then Canada. When will Canadian wake up and realize what's going on. If the world goes on some type of a gold standard, Canada is going to be in big trouble!

Sun, 06/10/2012 - 00:16 | 2511530 Bansters-in-my-...
Bansters-in-my- feces's picture

Hey , Gringo..... Don't  you know...???

Carney is in Canada....

He is the Govenor of the B of C.

 

Sun, 06/10/2012 - 05:32 | 2511756 Colombian Gringo
Colombian Gringo's picture

He may appear to be the governor of B of C, but is just another GS whore.

Sat, 06/09/2012 - 18:58 | 2511123 emersonreturn
emersonreturn's picture

wasn't carny the genius who basically hobbled income trusts?

Sat, 06/09/2012 - 20:48 | 2511299 Mark Carney
Mark Carney's picture

How about we talk about this over a Molson, eh?

Sun, 06/10/2012 - 00:36 | 2511579 palmereldritch
palmereldritch's picture

How was Bilderberg Mark?

Sun, 06/10/2012 - 09:15 | 2511879 debtandtaxes
debtandtaxes's picture

No real canadian talks about talking over a "Molson"! Over a Canadian or a Blue - yes. And since Carney hails from the Northwest Territories one would expect him to know better!

Sun, 06/10/2012 - 13:13 | 2512292 robertocarlos
robertocarlos's picture

We would just say "beer".

Sun, 06/10/2012 - 22:20 | 2513192 Paul Atreides
Paul Atreides's picture

Pluralize that and we have a winner.

Sun, 06/10/2012 - 01:49 | 2511654 peekcrackers
peekcrackers's picture

plus 1 Lennon

 

 

Sun, 06/10/2012 - 01:29 | 2511630 xtop23
xtop23's picture

Gotta punish those savers !!!

Get out there and spend baby. Debt is money.

Be just like the bankers. Spend into bankruptcy and then leave the bank holding the bag. Fuck those guys.

Sat, 06/09/2012 - 17:43 | 2511018 Cursive
Cursive's picture

 

His record, along with Ben Bernanke’s, will eventually be one of dismal failure.

Yeah, but until then, it's party time!  Forgive the sarcasm, I am suffering from bailout fatigue this weekend.

Sat, 06/09/2012 - 17:49 | 2511022 Sudden Debt
Sudden Debt's picture

My gold and silver supply is also becomeing a bubble. But I don't think it will form a problem anytime soon because in the end I'll be able to sell to some shithead who will pay ten times as much for it :)

Sat, 06/09/2012 - 18:41 | 2511099 Motorhead
Motorhead's picture

My stomach is becoming a bubble....way too much Duvel while watching Euro 2012.

Sun, 06/10/2012 - 08:07 | 2511822 CPL
CPL's picture

Duvel, a fine trapist pint, delicious in fact.  I would also suggest it's poor Canuck cousins Trois Pistole, Blanche du Chamblis and La Fin du Monde.  Similar hyper rich, high boozed content except maple syrup is used to act as the sugar in the brewing process.

 

It is very tasty and adds some teeth to a slow cooked pork/moose/deer/bear loin.  Very nice indeed.

Sat, 06/09/2012 - 17:52 | 2511026 GeorgeHayduke
GeorgeHayduke's picture

Kicking the can down the road seems to be the de facto plan around the world until the can falls down a sewer, over a cliff, gets run over, etc...

It may seem that it's all just delaying the inevitable and doing nothing according to us regular folks who aren't benefiting from the kick-the-can game. However, these cretins don't think like us. Any plan that keeps the wealth moving upward while piling the bankruptcies, property and wealth loss, and debt load off on the sheep and leaving the upper 7-8% as untouched and unscathed as possible while getting more and more of the pie crumbs is considered a win in their minds.

So, expect more and more of what's working for them, but not working for anyone else, to continue until the sheep start making such plans much more difficult, dangerous or undesirable for them pull off. THEN, something might change but I'm betting nothing changes much before such a tipping point.

Sat, 06/09/2012 - 17:51 | 2511027 ekm
ekm's picture

Please stop the freaking bullshit of implying that the central banker is independent.

Check here. Who do you think is the boss?

Mark doeth what Steve sayth.

 

Sat, 06/09/2012 - 18:21 | 2511077 jimmyjames
jimmyjames's picture

Mark doeth what Steve sayth.

********

I think vice versa-

Can you see the visible question marks that are forever floating above Fhalerity's head?

Sat, 06/09/2012 - 18:24 | 2511081 ekm
ekm's picture

Jimmy

Thx for the comment.

I am not able to prove it to you, but my empirical research tells me that the tables have been turned over. We are living in TOTALLITARIAN DEMOCRACY, both in Canada and USA, hence the Gov rules and the Gov has subjugated the banks.

Sun, 06/10/2012 - 00:15 | 2511563 Abrick
Abrick's picture

That is the funniest thing I have ever heard. Those bankers are raking in billions while the "mail-room" schlubs like Stephen Harper pull down a measly few hundred grand a year. If that's the way it works in the TOTALLITARIAN DEMOCRACY, count me in. I'm going to get me some of that subjugation money.

Sun, 06/10/2012 - 17:59 | 2512817 ekm
ekm's picture

Banking employees are basically high end gov workers. It's like high end union.

Unfortunately that's how it works right now and if you can get a "subjugated" employment position and hold on to it, you're lucky.

Sat, 06/09/2012 - 20:01 | 2511201 Frozen IcQb
Frozen IcQb's picture

Politicians around the world answer to their respective central banks or they're out at election time. The paper aristocracy (banks) call the shots. There is no democracy.

Sat, 06/09/2012 - 17:51 | 2511028 CClarity
CClarity's picture

OT but the ever bullish Dougie Kass is predicting S&P 500 opens up 15 on Monday due to the ebullience over the Spanish bank "fix".  

Hmmmmmm.  Fundamentals gone forever?

Sat, 06/09/2012 - 18:00 | 2511041 fonzannoon
fonzannoon's picture

I'm asking this as a US citizen...besides precious metals, is owning some CAD wise as another diversifier from the USD? I can't get to Singapore, Australia etc. too easily. This would be my best bet. Smart or dumb move?

Sat, 06/09/2012 - 18:05 | 2511050 ekm
ekm's picture

CAD is a Petrodollar. Canadian crude oil can be purchased only with CAD. Hence, whoever buys oil has to convert USD with CAD.

My forecast and money is for crude oil at $40-50 within this year. That would make 1 CAD at about 65c USD. If your horizon is 6-12 month, I think it's a bad move, unless you short CAD.

Sat, 06/09/2012 - 18:09 | 2511057 fonzannoon
fonzannoon's picture

Holy shit $40-$50? I am guessing you believe Ben does not print and deflation really starts shredding the US? I don't want to put words in your mouth but is that about right?

Sat, 06/09/2012 - 18:17 | 2511062 ekm
ekm's picture

Only temporarily. I am canadian and Canada has been surviving due to crude oil prices.

But there's so much crude stored around the world, that time is very close for it to be dumped into the world market, same as in 2008 in order to make space for continuous production. Nobody can afford to shut down the rigs. That's my rationale.

http://www.google.ca/finance?q=TSE:HOD

This is where all my money is.

Sat, 06/09/2012 - 18:18 | 2511071 fonzannoon
fonzannoon's picture

I appreciate the input. I am guessing you would not be in any canadian energy trusts either. I will certainly take this into consideration.

Sat, 06/09/2012 - 18:24 | 2511073 ekm
ekm's picture

I am 39 yrs young and I have no wife and no kids. Energy Trusts are for people with wife and kids.

Sat, 06/09/2012 - 18:42 | 2511101 ekm
ekm's picture

http://www.google.ca/finance?q=TSE:HOD

This is where all my money is.

Sat, 06/09/2012 - 20:24 | 2511250 geminiRX
geminiRX's picture

You're gonna get raped if there is any altercation with Iran within the next 8 weeks. For any strike to occur they need to get oil prices down (whether this decline is manufactured...is anyone's guess). There is very little 40-50 dollar oil left on this planet BTW

Sat, 06/09/2012 - 21:47 | 2511388 I am Jobe
I am Jobe's picture

u are smart and wise. Get youself a dog and a safe place to hide.

 

Sat, 06/09/2012 - 18:19 | 2511072 fonzannoon
fonzannoon's picture

that was not me who junked you, and whoever did I would be interested in knowing why

Sat, 06/09/2012 - 18:34 | 2511076 ekm
ekm's picture

I'm sure it was another fellow canadian or somebody who is long oil

Sat, 06/09/2012 - 20:32 | 2511274 geminiRX
geminiRX's picture

As the sovereign debt crisis intensifies, money will flee government debt instruments into tangible things - such as commodities - including oil. He who has the most commodities wins in a world of currencies spiraling out of control. 

Sat, 06/09/2012 - 18:37 | 2511094 ekm
ekm's picture

Do not get me wrong though, I LOVE CANADIAN OIL SANDS.

But the law of supply/demand is a NATURAL law.

Sun, 06/10/2012 - 00:35 | 2511578 FrankDrakman
FrankDrakman's picture

CAD is a petrodollar?

Whatta fucking idiot. Oil represents about 6% of canadian exports, not 100% like Saudi, or Iran, or Iraq. When oil spiked to $140/bbl a few years back, the Cdn $ was still only around 90 cents US. Oil falls back to $80, and the Cdn $ goes over $1 US. This fool's advice is about as good as Cramer's, or GS's, if you're a schlubby retail client.

Sun, 06/10/2012 - 10:30 | 2511948 jonjon831983
jonjon831983's picture

Petro/resource dolla!  Not much else in Canada aside from realestate and finance. Well there is tech, but seems to be a repeated one hit wonder that fades away with Nortel + RIM.

 

Backin the 90's with the good ol days of 65c CAD?

Sun, 06/10/2012 - 10:22 | 2511936 ootofthehoos
ootofthehoos's picture

I think they will not let you open an account unless you can prove you are a resident.

Sat, 06/09/2012 - 18:01 | 2511044 Brian
Brian's picture

The phrase "Kick the Can" drives me crazy.  It implies that there is a problem now, but that the problem can be dealt with later.

In fact, the problem is not simply delayed, but the problem becomes more difficult the longer it is delayed.  The problem may, if sufficiently delayed, become unsolvable.

Each time the "Can is kicked," it becomes a heavier can.  It will soon (long ago) become so heavy, that it cannot really be kicked any more.

I think the words that we use to describe the problems should be chosen carefully.  To the general public, there is nothing really bad with kicking the can down the road.  It's fun, and why deal with the problem today if it can be dealt with in a few months or years?  If we have an interest in alerting the public to the increasing urgency of global financial problems, perhaps it is time to come up with a better metaphore than "kicking the can down the road..."

My 2cents

Sat, 06/09/2012 - 18:10 | 2511058 Diogenes
Diogenes's picture

I like to compare it to a doctor who does not want to treat a patient with cancer. Chemotherapy and surgery are messy, expensive and painful. Far better to apply makeup, touch up the Xrays a shoot the patient full of pain killers. He will be perfectly fine.

Sun, 06/10/2012 - 08:23 | 2511078 kill switch
kill switch's picture

The problem may, if sufficiently delayed, become unsolvable.

I really hate to unfold the truth, but, it is unsolvable X 10 cubed

BTW The can is morphing into a square.

Sat, 06/09/2012 - 18:24 | 2511082 macholatte
macholatte's picture

 

Each time the "Can is kicked," it becomes a heavier can.

 

Yes. But what you are missing is that it's more like the Jolly Green Giant playing with marbles. It's going to be a long time before he gets a soccer ball and an even longer time before he gets a steel barrell.

 

Sat, 06/09/2012 - 18:48 | 2511106 CClarity
CClarity's picture

"Kick the Can" was a game we played in the neighborhood when I was growing up.  Best in yards and streets with trees, fences, hills, shrubs.   "It" tries to find and tag the other players. Any player who is caught is sent to the jail where they wait for all the captured players to congregate. Any one who has not been caught can "Kick the Can", literally a coffee can placed out in the driveway or street. If they kick the can (a noisy endeavor so everyone still hiding knows) without being caught, then one of the captured players is set free each time —  usually the first person caught is the first to be set free, the second caught the second to be set free, etc. until the person kicking the can is tagged or all the captured players are freed. If "it" catches all of the players he or she wins that round and generally a new "it" is designated for the next round. The new "it" is usually the person that has been held the longest by the time round ends.

It was lots of fun, but difficult to win when "it".  I see "it" as a metaphor for the EZ.  Hard to contain everyone.

Sun, 06/10/2012 - 10:31 | 2511955 jonjon831983
jonjon831983's picture

Once I kicked the can into someone's face.  I broke everybody outta jail and took out 1 enemy.

 

Add that into your equation.

Sat, 06/09/2012 - 20:40 | 2511286 Withdrawn Sanction
Withdrawn Sanction's picture

The phrase "Kick the Can" drives me crazy.

I quicly read the headline and thought it meant Carney was dead.  Sadly, upon reading, I was mistaken.

Everytime I see Carney's name, I hear Jackie Gleason in the background...or better still, envision someone in a red and white striped jacket and straw hat trying to fleece unwitting carnival goers.

Sat, 06/09/2012 - 18:07 | 2511053 Diogenes
Diogenes's picture

1) Why does he have to keep the interest rate so low? If he allowed it to rise investment money would flood into Canada and he would have all the economic stimulus he wants.

2) How are low interest rates fleecing us sheep? If you want to make some money borrowing at low rates makes it easy. Go buy some real estate and hang onto it. I've been investing in real estate since 1972 and have never seen such low borrowing costs, when I started mortgage rates were 9% and 10% (if I could get money at all).

Sat, 06/09/2012 - 18:40 | 2511096 Matt
Matt's picture

1) If rates went up, CAD would go up vs USD, resulting in more expensive exports, resulting in higher unemployment.

2) Buy real estate now? are you serious? Even with the low rates, if the value drops 50% how long will it take to break even? I assume you are talking about holding for some time, not just flipping. 

Sun, 06/10/2012 - 22:06 | 2513171 Diogenes
Diogenes's picture

How the hell is real estate going to drop 50% when every government in the world is pumping the inflation?

 

The biggest drop in RE values I have ever seen was in 1990. This was after a long period of easy money, when RE doubled and doubled again in a few years. It was totally overpriced by any standard then kept going up for another 2 years. When the boom broke, prices fell 40% in a year or 2.

Today's situation is nothing like that.

Mon, 06/11/2012 - 10:06 | 2514247 Matt
Matt's picture

I don't know which markets you are looking at. Some parts of Vancouver are obscenely priced. Toronto Condos, there are something like 65,000 more being built even though there are already 10,000s of them empty. Vancouver Island has some areas that are completely off the wall. Some of these areas are going to dive hard over the next 5 years.

I'm sure if you look carefully, there are some areas that are not out of control. They will probably be fine.

Sat, 06/09/2012 - 18:14 | 2511063 Arnold Ziffel
Arnold Ziffel's picture

Some good friends last year sold their place in Vancouver for a whopping $765,000.

They had purchased in in 2002 for $286,000.

The Looney House Bubble will burst and prices will regress to the mean.  It's a mathematical inevitability.

Sat, 06/09/2012 - 22:50 | 2511472 ootofthehoos
ootofthehoos's picture

Is a collapse of gold prices similarly inevitable? They are up five times, since 2002. (I actually think they are not going to collapse and neither is real estate).

Sun, 06/10/2012 - 00:53 | 2511595 Nage42
Nage42's picture

Too bad they prolly had to pay ~35% effective tax on their gain... high-taxes: snatching defeat from the jaws of victory.

 

Sun, 06/10/2012 - 08:27 | 2511845 memyselfiu
memyselfiu's picture

only if it was an investment property and not their primary residence- no capital gains on primaries in Canada.

Sat, 06/09/2012 - 18:29 | 2511087 Lore
Lore's picture

How might a Canadian housing correction weight on the provinces? (EconomicAnalyst.com, 23-April)

Here in BC the top is definitely in. I had lunch with realtor relatives who are crying the blues over "deflation" (repricing). Sellers are stuck mentally in the 2000s, in denial. 

Support for the provincial govt ("Liberal" = soft socialist) is tanking with scandals, bad leadership and jobs drying up. More people in the cities seem to be leaning to the hard left ("New Democrat") or Agenda 21 "Green" (left with marijuana and no pipelines). Heaven help the taxpayer if either group gets power. The NDP will probably destroy the economy like they always do and we will see a swing to hard right "Conservative" in about 10 years. Funny how the same pattern repeats everywhere you look.

I would not want to be a townhouse flipper in Vancouver right now!

Sat, 06/09/2012 - 18:44 | 2511103 Matt
Matt's picture

Most of what you said makes sense.

Explain how an oil pipeline selling Alberta Oil to China benefits BC?

Would the BC government get revenues from it?

Would there be some massive insurance in place to compensate everyone who suffers losses in the event of an oil spill?

Sat, 06/09/2012 - 21:33 | 2511359 Lore
Lore's picture

"Would the BC government get revenues from it?"

Exactly. Pipelines are a teat that everybody on the planned route gets to suck, including indians and government bureaucrats.

"Would there be some massive insurance...?"

Yes. It's standard since the days of Exxon. Pipelines are never built without insurance. (Anecdotally, take a look at the Northern Gateway website to learn more about the technology involved and the staggering amount of research that went into route planning. These people know their stuff. Trouble is, they're trying to curry support from an electorate that's brainwashed with Agenda 21.)

Another big factor supporting this initiative is a built-in defect in NAFTA that forces Canada to sell crude at a ~40% discount to WTI (e.g., $60 when WTI is pushing $100). We need to sell crude to others at MARKET PRICES. NAFTA is ANTi-MARKET.

Rgds

 

Sun, 06/10/2012 - 00:56 | 2511594 James_Cole
James_Cole's picture

 

 

First - as usual Mises Institute has no idea what they're talking about and writes a stupid piece confusing various issues. 

Anyway..

The Liberals are certainly not "soft socialists" and the pipleine is not good for Canadians but you are correct on NAFTA of course. 

"Of these loans, by far the largest has been made to CMHC under the Insured Mortgage Purchase Program, which aimed to provide liquidity in the mortgage market by buying insured mortgages off bank balance sheets when credit markets froze during the financial crisis.  Without venturing into a discussion of how likely it is that CMHC would be rendered insolvent in the event of a significant and sustained housing downturn, it seems to me that these loans would likely become on-balance sheet liabilities in such an event.  "

This is an important point Ben pulls out, and actually funny that it comes up because in another thread earlier I mentioned the hidden bank bailout the Conservatives pulled off by moving a bunch of junk from the banks into CMHC ($125 Bn worth).  

This use of the CMHC to make banks look more solvent + keep housing going is THE reason Canada looks halfway good at the moment.

Mark Carney's efforts to keep interest rates low actually makes perfect sense and is not the driver of the real estate bubble. Don't get me wrong, I'm not a fan of Carney, but the low interest rates is a no brainer. The real estate bubble itself is driven almost purely by the CMHC (something Mises doesn't bother to point out for whatever reason).

If banks didn't have sovereign backed insurance via CMHC & Genworth the low interest rates would be irrelevant. And it's a proven case, look south - extremely low interest rates, no fish for mortgages. Why? Because you can't get many high enough quality borrowers for insurance. 

When Harper said Canadians had to give up some sovereignty in exchange for prosperity he wasn't kidding, he just didn't mention it would be a LOT of sovereignty and very short-lived prosperity. 

 

 

Sun, 06/10/2012 - 18:21 | 2512842 Lore
Lore's picture

"As usual Mises Institute has no idea what they're talking about and writes a stupid piece confusing various issues."

Can you give examples?  Because otherwise your sweeping generalization just seems ignorant, a la global warmists' broad dismissal of anyone who disagrees with them.

"The Liberals are certainly not "soft socialists."

Yes they are. They tax and spend - classic welfare statism. It's all they seem to know. Worse, they're bootlickers to Agenda 21 (see "Carbon Tax" and "Pacific Carbon Trust"). I guess you could call them socio-fascists for they way they set up the IPP scam under BC Hydro. Regardless, they have to go.

"the pipeline is not good for Canadians"

It certainly will be, especially in a USD crisis.  We need to expand trade away from America for our own national security. To suggest otherwise seems absurd.  We should not be subsidizing America with cheap oil. If China will pay full price, then more power to the highest bidder.

You and I seem to be on the same wavelength re: loose criteria for mortgages. Government needs to stay out of markets. How's that for Austrian economics?  Not so stupid, huh?!  I don't see the threat to our sovereignty, though.  Debt just needs to be cleansed from the system, and banks need to be allowed to fall.  Government interference is a big, big part of the reason why things keep getting worse.

Rgds

Mon, 06/11/2012 - 03:10 | 2513604 James_Cole
James_Cole's picture

<"Can you give examples?  Because otherwise your sweeping generalization just seems ignorant, a la global warmists' broad dismissal of anyone who disagrees with them.">

I did give examples, they're connecting the low interests rates to the housing bubble and bashing Carney for it. The continuing housing bubble is mostly a result of Harpers use of CMHC circa 2008 not low interest rates currently. Carney is in a catch 22 as far as interest rates go though. 

<"The Liberals are certainly not "soft socialists."

Yes they are. They tax and spend - classic welfare statism.> 

You simply don't understand what socialism is, broadly from wiki: 

<"Socialism  /?so???l?z?m/ is an economic system characterised by social ownership of the means of production and cooperative management of the economy">

The BC liberals are no socialists, examples: BC Rail, BC ferries, translink, BC Hydro and most recently a move on BC liquor. Whether you agree or disagree with the move from crown corporations to private / public or purely private companies it's clear they are by no means socialists.

The liberals tax and spend, but highly selectively. Look at any major project in BC and then look at the beneficiary, rarely is it the taxpayer but almost always it is a bank or other business.

The bc liberals are garbage, but they're not socialists. 

Here is the system Canada & to a lesser extent the USA has adopted:

"Mussolini claimed that dynamic or heroic capitalism and the bourgeoisie could be prevented from degenerating into static capitalism and then supercapitalism if the concept of economic individualism were abandoned and if state supervision of the economy was introduced.[270] Private enterprise would control production but it would be supervised by the state.[271] Italian Fascism presented the economic system of corporatism as the solution that would preserve private enterprise and property while allowing the state to intervene in the economy when private enterprise failed."

"It certainly will be, especially in a USD crisis.  We need to expand trade away from America for our own national security. To suggest otherwise seems absurd.  We should not be subsidizing America with cheap oil. If China will pay full price, then more power to the highest bidder."

China is one of many oil sands owners - it's not a hypothetical - the oil sands have already been sold off. Foreign owners simply pay a royalty fee, like maintenance fees on an apt unit.

Pipeline is simply easiest / cheapest way for asian countries to get the oil they already own out of Canada. And Canada will continue to subsidize America with supply of oil (as American companies own a huge amount of the oil sands projects). 

If you're keen to expand trade you should be praising Carney, our petro-backed dollar would skyrocket if it weren't for him. Manufacturing is a sizeable amount of the Canadian economy and a high dollar does no good for that sector, Carney is doing a decent job of keeping the dollar down. 

"Government needs to stay out of markets. How's that for Austrian economics?  Not so stupid, huh?!  I don't see the threat to our sovereignty, though.  Debt just needs to be cleansed from the system, and banks need to be allowed to fall.  Government interference is a big, big part of the reason why things keep getting worse."

You bring up the concept of "National security" favourably and immediately follow that with "Government needs to stay out of markets. How's that for Austrian economics?"

Confused there Lore? It's something I commonly see with Canadian Conservative Party supporters, on one hand they praise Harper for his supposed conservative credentials and on the other outright endorse his highly interventionist / statist activities. Leaves me scratching my head but whatever. 

Mon, 06/11/2012 - 04:01 | 2513643 Lore
Lore's picture

Thank you for the cogent response. You're right to point out the matter of foreign operators on Crown land in context of oil and gas. Nevertheless, we still think in terms of mineral rights and resources in situ as national assets, and title reflects this. Yes?

"The liberals tax and spend, but highly selectively. Look at any major project in BC and then look at the beneficiary, rarely is it the taxpayer but almost always it is a bank or other business. The bc liberals are garbage, but they're not socialists."

You're right. The public / private / "crown corporation" picture is malleable in a way that serves political expedience. "Socio-fascism" was meant to address anti-market deals that cross government and corporate lines - and national interests. I need a better label. It would be interesting to see who has controlling interest across all the major oilsands projects. I know the Chinese are taking impressive positions.

I do not speak of "national security" in the sense of interventionism. What I mean is that one hopes to sell a national resource to customers who can pay their bills. That's not statist, it's just good business.

Good trading to you.

Sat, 06/09/2012 - 18:30 | 2511088 hedgehog9999
hedgehog9999's picture

Mark Carney is just another G Sachs Alumni just as Monti and the other guy in Europe and see themselves as god in what they do, which is nothing , all they have is a hammer and everything to them is a nail so they print print and print, canadian banks reputedly the strongest in the world were bailed out quietly by Carney and the per capita indebteness of Canadians including governments at all levels is on a par with their US brethen.

The time will come to pay the Piper, Vancouver and Toronto house prices are 20 times the average yearly per capita income for those cities, it could be argued that 10 times is over extended but 20 times? the next major downturn will send the country into a tailspin.....along with their banksters......

The demographics are similar to the US maybe a bit worse so as the older population downsizes into smaller homes/retirement who are they going to sell their inflated assets?

Sun, 06/10/2012 - 00:54 | 2511596 FrankDrakman
FrankDrakman's picture

 

Toronto house prices are 20 times the average yearly per capita income for those cities

Another fucking idiot who can't be bothered to do a 10-second google before posting his blather. Average house price in Toronto is about $460,000 CAD. Average per capita income (that includes, you know, your children who don't earn anything) is $38,000, so that multiple is about 12, but the more important statistic is average household income, which for Toronto is about $110,000, so the average house price is only about 4.2 times average household income  - hardly a ridiculous figure, and hardly evidence of a bubble.

Geez, the quality of posts has nose-dived here. I yearn for the days of leo, who may have been wrong, but at least did enough research that his statistics were correct.

Sun, 06/10/2012 - 10:30 | 2511951 ootofthehoos
ootofthehoos's picture

You are so far off. I yearn for Leo and his accurate statistics? hahaha

Average Toronto home now more than 600K

 

http://www.cbc.ca/news/canada/toronto/story/2012/02/07/toronto-housing-p...

 

Sun, 06/10/2012 - 12:14 | 2512153 hedgehog9999
hedgehog9999's picture

Drakman:

I meant a real HOUSE you moron (a detached 4 bedroom 2 car garage in a decent neighbourhood!), not a shithole townhosuse in Scarberia or a two bedroom condo. Try buying one for less than $800K in the beaches area for example or in Thornhill.

and your $100K + average household income is vastly skewed by the exhorbitant income of the top 5% of Toronto residents which are mostly banksters and senior executives of companies in Canada, if you remove that, the everage schmuk makes much less than $50K and more than half of the households in the city of Toronto are renters (57 percent to be exact) for that very reason, the vast majority cannot afford to buy a house!!

So save your stupid comments for yourself!

Sun, 06/10/2012 - 13:38 | 2512341 FrankDrakman
FrankDrakman's picture

Well, if you mean (detached 4 bedroom 2 car garage) then SAY SO, you fucking fool; what am I supposed to do, read your tiny little mind? And you were the one who used the completely unrealistic "per capita" income figure - how many SINGLE people need a 4 bedroom, detached house? ZERO. Finally, your figure for what the 'average schmuck' makes is equally irrelevant. MEDIAN household income in Toronto for 2009 (last year I could find figures for) is $70k. Assuming you know a little about stats (a big if), that means half the households in Toronto make more than that. And using that 2009 figure for household income alongside the 2009 figure for housing prices, which was $420k, you still get a figure of house price/family income of around 6 - again, hardly out of reach. Finally, if the incomes of a few millionaires are enough to skew the average income of a GTA of 5 million, then surely the value of a few $3 and $4 million mansions on Russell Hill Road or Oakville or the Bridle Path also skew home prices. Or do your characterizations only work one way?

Learn some basics statistics, you godforsaken ignorant numbskull, and learn to compare apples to apples, instead of the ludicrous examples you choose.

Sun, 06/10/2012 - 14:10 | 2512416 hedgehog9999
hedgehog9999's picture

averages are different than median you stats genius!

I didn't say this:

      http://www.torontolife.com/daily/informer/to-market-to-market/2011/09/27...

over and out.

Sun, 06/10/2012 - 23:30 | 2513323 TradingTroll
TradingTroll's picture

"Vancouver and Toronto house prices are 20 times the average yearly per capita income"

 

Whose calculator?

 

My calculator says BC Bud and other pill farms are a $4bn+/yr business. Those cash businesses accumulate cash almost twice as fast as a taxable business.

 

At $1,000/yr per capita cash thast $2,000 per capita taxed.

 

Published avg income in BC, $68k/yr. Make it $70k

 

Avg house price, $751k. Thats barely 11x. Not 20x

Sat, 06/09/2012 - 18:34 | 2511090 Weyland_Yutani
Weyland_Yutani's picture

Here in Sweden the Central Bank has the interest at 1,25% and the big banks as well as the prominent Keynesian economists here are urging for the interest rate to be lowered.

We truly live in a f'd up world.

Sat, 06/09/2012 - 18:40 | 2511097 FranSix
FranSix's picture

Mark Carney was until lately patting himself on the back for keeping interest rates @1%.  If the trade in bonds were allowed to function in a free market sense, as all bond markets do eventually, then Canada would have seen much lower interest rates by now, especially at the short end of the curve.  Rates at the long end of the curve have gone past historical lows for months. 

Carney does not have his hand on a switch which selects the interest rate, he can only claim voodoo if he gets his calls right.  He's just hoping that his 1% call is correct, but 3mo. treasury bill rates are already dipping below.  And with a housing bubble said to be bursting, there's no justification for raising interest rates.

The next step in the playbook is banking bailouts.

http://www.bankofcanada.ca/rates/interest-rates/t-bill-yields/

Call it, friendo

 

Sat, 06/09/2012 - 19:33 | 2511157 jimmyjames
jimmyjames's picture

The next step in the playbook is banking bailouts.

*************

Mark already has it handled-we likely will only see the drawdown numbers once a year or whenever they decide to release the data-

I cannot find the guarantee-in-force numbers but they were at 326 billion for 2010-

The last rumored numbers I've heard is total now 1.2 trillion-

CMHC’s total insurance-in-force, which represents the
risk exposure of the CMHC Mortgage Loan Insurance
Activity, increased to approximately $567 billion

 

page 46- (insurance in force)

CMHC’s insurance-in-force (iiF) –

prudent risk management1

CMHC’s total insurance-in-force at the end of 2010

was $514 billion,

Page 51 (gaurantee in force)

, CMHC’s guarantees-in-force were $326 billion

as at December 31, 2010.

http://bit.ly/KjXSyK

 

Sat, 06/09/2012 - 19:52 | 2511182 ekm
ekm's picture

Bank bailout is explicit in Canada. That's why there are only 6 national retail banks. This is not news.

 

Canadian Banks are practically Government Owned Banks Under Private Management.


Sat, 06/09/2012 - 21:32 | 2511358 jimmyjames
jimmyjames's picture

This is not news.

************

Oh ok--can you show me or point to me the missing piece (guarantee-in-force) of the 2011 CMHC financial data?

Sat, 06/09/2012 - 21:44 | 2511378 ekm
ekm's picture

Oh. You were quoting the other guy.

No objections on this one.

Sat, 06/09/2012 - 22:55 | 2511476 ootofthehoos
ootofthehoos's picture

That analysis is incorrect. The central bank can raise interest rates by selling tbills and raising capital or reserve requirements.

Sat, 06/09/2012 - 18:50 | 2511109 Global Hunter
Global Hunter's picture

As a Canadian I just want to say: Fuck you Mark Carney you deviant pervert!

Sat, 06/09/2012 - 20:56 | 2511311 Mark Carney
Mark Carney's picture

Lol

 

Sun, 06/10/2012 - 12:22 | 2512175 hedgehog9999
hedgehog9999's picture

you should be on the lol show! assuming you're the real carney snooping around here ! you corrupt moron!

Sat, 06/09/2012 - 18:50 | 2511110 AgentOfNaturalS...
AgentOfNaturalSelection's picture

I thought the Canadian dollar would be a currency haven. I might end up boating to Cuba when the Malthus Catastrophe begins. At least there I know I can become president with relative ease.

Sat, 06/09/2012 - 18:59 | 2511124 Bansters-in-my-...
Bansters-in-my- feces's picture

Carney....

Just another Goldmanite doing Gods work.....

Fuck YOU Carney.

Sat, 06/09/2012 - 20:18 | 2511179 JR
JR's picture

Not many years ago, the tiny pieces of information about the secret meeting of the group known as Bilderberger were laughed at as the very height of ridiculous conspiracy theory. No more, for now it can be seen that the attendees of this annual meeting are the connecting links to the banking cartel that uses central banks to control economic and political activities of Western nations. Great and telling article.

Bank of Canada Governor Mark J. Carney, an attendee at “the ‘1%’s’ elite Bilderberg meeting” that concludes today is a perfect example - former Goldman Sachs VP mentioned as a possible successor to Meravyn King as Governor of the Bank of England, who at today's meeting willl be associating with the Goldmans and JP Morgan people and the bought politcians busy institutiing the policy that will keep them in control of much of the world's financial enterprises. If this isn't a conspiracy to deprive citizens of their independence, sovereignty and treasure, then the word conspiracy has no meaning.

According to a news report today on SpyGhana,“The ‘emperor has no clothes’ obvious conclusion regarding Bilderberg is that the 1%’s policies in war and money are unlawful, annually kill in the millions, harm billions, and loot trillions of the 99%’s wealth. The only ethical, rational, and lawful response is to arrest obvious leaders to end these crimes:

“The wars are Orwellian unlawful because war law makes armed attack illegal unless first attacked by another nation’s government. Using debt as a so-called money supply is economic criminal fraud because it creates ever-increasing aggregate debt that can never be repaid (because that’s what we use for money). This is just one cartel of many that shift trillions of the 99%’s wealth to the 1%.The crimes and lies are only possible through corporate media’s complicity.”

I agree.

Video Rebel’s Blog, says SG, “brilliantly documents Bilderberg participants’ biographies (SG acknowledges it has not verified all facts). Video Rebel’s documentation begins with this summary statement:

“The 2012 members list released by the Bilderbergers is most remarkable for what it does not mention. The incoming chairman runs one of the biggest insurance companies in the world. Many members own banks. Europe requires banks and insurance companies to buy toxic national bonds. Wouldn’t it be nice if Ben Bernanke would print up 10 or 20 trillion dollars and swap out toxic assets for international bonds. Kevin Warsh who is listed as a college professor is a former member of the Bush Plunge Protection team and a former member of the Federal Reserve Board. Warsh is highly recommended by his friend Bernanke. That is good news for billionaires but might not be good news for you.

Professor Lipsky just happened to be ex-Managing Director of the IMF and is an expert on Greek finances and European bailouts. Daniel Estulin says Bilderberg will discuss devaluing the dollar....

Chairman   France  Castries, Henri de   Chairman and CEO, AXA Group, the insurance giant is the 9th largest company in the world. He replaces Viscount  Etienne Davignon whose company Suez killed poor people in the Third World by privatizing public water supplies. He was involved in a weapons scandal in Africa and gave way to the new chairman.”

The list begins alphabetically:

Ackermann, Josef    Germany     Chairman of the Management Board and the Group Executive Committee, Deutsche Bank AG. Deutsche bank is key to manipulating currencies and gold.

Agius, Marcus   GB    Chairman, Barclays plc. His wife is Katherine de Rothschild. Her father is Evelyn de Rothschild who was a co-founder of Bilderberg. Agius began his career at the Rothschild  associated Lazard bank.

Ajami, Fouad    USA     Lebanese born. Senior Fellow, The Hoover Institution, Stanford University. He defended the Iraq invasion as a Noble. His name Ajami means non-Arabic speaker. He is a Shiite. His doctoral thesis was written on world government. He was an adviser to Condoleeza Rice. ….

Warsh, Kevin    USA    Distinguished Visiting Fellow, The Hoover Institution, Stanford University. He is a lawyer. He was Vice President and Executive Director in ‘Morgan Stanley’s Mergers and Acquisitions Department. He then worked for President Bush in the Plunge Protection Team. This group tries to make dumb billionaires look smart by buying stocks and sending share prices higher. This disguises bad policies for the government as well. In 2006 he was appointed to the Federal Reserve Board of Governors (has since resigned). Some said he was too young. Bernanke liked him and he performed well in the 2009 crisis. (Translation: He was as honest as Bernanke and Jamie Dimon had hoped.) The Bilderbergers will need Warsh and Bernanke as well to get a handle on those bank runs over in Europe which will come to America soon enough. His wife Jane is an heiress to the Estee Lauder family fortune. …

ET CETERA.

http://spyghana.com/world-news/the-uk-guardians-video-report-the-1-elite-bilderberg-member-bios-in-2012/

Sat, 06/09/2012 - 20:00 | 2511198 Stuck on Zero
Stuck on Zero's picture

Low interest rates don't benefit individuals. We're all too afraid to borrow. 

It doesn't benefit corporations because they're too afraid to invest in production. 

It does benefit M&A and stock speculation by Wall Street.

F U Bernanke.

 

 

Sat, 06/09/2012 - 23:05 | 2511493 ootofthehoos
ootofthehoos's picture

That is not true. Credit growth is huge. House buying is one such example of borrowing.

Sat, 06/09/2012 - 20:07 | 2511212 Precious
Precious's picture

You mean the fucking doucebags Soros and Buffett aren't telling him and the Canadians what's best for their poor, little ignorant minds?

I really hate Sumner Redstone.  MTV is a pile of shit.  Probably responsible for more American degeneracy than anything in recent history.

But one thing you can say about Sumner Redstone.  While may be a mercenary dollar whore, he doesn't tell everyone else what to do.

PS.  Fuck the pontificator Bloomberg too.  Fucker thinks his bank account represents his fucking IQ.  What a NY cunt.

Sat, 06/09/2012 - 20:50 | 2511304 Withdrawn Sanction
Withdrawn Sanction's picture

Fuck the pontificator Bloomberg too.

I prefer "blowhard" but pontificator is nice too.  Slight OT: The real irony in Blowhard Bloomberg's 16oz soda limit, is that people will simply buy 2 cokes instead of one.  Creating a new litter problem while doing nothing about obesity.

Maybe we should impose oxygen limits on blowhards?

Sat, 06/09/2012 - 20:09 | 2511221 AUD
AUD's picture

stewards of the people’s money

This seems a contradictory statement from someone at the Ludwig Von Mises Institute.

What is he, a communist? And what the fuck does he expect when he calls the irredeemable obligations of government "people's money"?

Sun, 06/10/2012 - 23:24 | 2513314 MeelionDollerBogus
MeelionDollerBogus's picture

DUDE. People from the Von Mises institute don't end their articles or insert anywhere in there this phrase:

/sarc

Therefore SMART people are supposed to understand when it's implied.

Wow. What the fuck.

Sat, 06/09/2012 - 22:11 | 2511417 billwilson
billwilson's picture

This moron needs to learn some economics.

Carney’s decision to keep interest rates suppressed is yet another instance of a central banker unable to face reality.

It has more to do with not having the $C soar into the stratosphere. Raise rate and the $C will become the go to currency, with all that will do to harm the Canadian economy. When you live next to the elephant, you ahve less room to manuveur than you might wish for.

 

Tyler ... please stop posting this drivel. It does not befit a site that is as good as your is.

Sat, 06/09/2012 - 23:04 | 2511491 ootofthehoos
ootofthehoos's picture

The Canadian economy needs to be harmed to spot the inflation and the too fast credit growth.

Your reasoning is why these central banks dig a hole and never know when to slam on the brakes.

It is a shame you call this article drivel. It means you don't understand how these European problems started, like Canada's current path, and your incorrect excuse, which every country proclaimed.

Sun, 06/10/2012 - 01:01 | 2511607 James_Cole
James_Cole's picture

Bill Wilson is right, it seems you just don't understand what he's saying.

I'm not a fan of Carney, but considering all the things he's juggling in Canada at the moment he's doing a reasonable job. 

Sun, 06/10/2012 - 01:15 | 2511616 FrankDrakman
FrankDrakman's picture

It means you don't understand how these European problems started,

No, douchebag, it means you don't. Canadians for the most part don't have jobs that give them 5-6 weeks vacation per year, or that let them retire with full benefits and a fat pension after 20 years, unlike many PIIGS. Tax evasion in Canada is very small overall, and non-existent compared with say, Greece or Italy. Canada is hardly undergoverned, but we only have 3 levels of government (muni, provincial, fed) compared to four (our three plus the Brussells Touts) for Europe. Canada doesn't have quite the sclerotic demographics of most Euro-zone nations (we're still having babies, unless you're a Quebec frog), but our PM has faced up to the problem by withholding some pension benefits for a couple of years. In our last three federal elections, we've chosen a Conservative PM (narrowly the first two times, a majority the last), not out of touch socialists like Hollande, or quasi-Tories like Cameron, or community organizers like SCOAMF. Harper is cautious, prudent, and a trained economist, who I'd put up against any G20 leader for competence. 

Canada is not without problems - our spendthrift provinical governments, currently in the hands of tax more, spend even more political parties are a particular cause for concern, and because the Canadian economy is so closely entwined with America's, their humungous problems become ours, willy-nilly. But we're in much better shape than virtually every country in Europe, and we're not on the hook for idiots like the Greeks or Spaniards.

Why do you think so many rich Chinese are buying up all the choice spots in Vancouver, driving up housing prices? Because they see us as a decent haven with a secure rule of law, a prudent federal government, and few of the racial problems of the US. They're voting with their money; you're just spewing blather into the ether.

Sun, 06/10/2012 - 01:38 | 2511639 James_Cole
James_Cole's picture

Sorry Frank but Harper is none of these: "Harper is cautious, prudent....who I'd put up against any G20 leader for competence." 

Canadians are in a disastrous position, a lot of it thanks to him and Flaherty (elections to win I guess).

Fortunately, Canada has a lot of great resources and the Conservatives have no issues about exploiting those (a little too easy with foreign ownership imo) otherwise his government is a total shitshow. 

Sun, 06/10/2012 - 08:52 | 2511867 BidnessMan
BidnessMan's picture

Mindless blather and claims.  How are Canadians in a disastrous position?  Why is the government a total shitshow?  You will have to do better than that to not be considered a fool on ZH.  

Sun, 06/10/2012 - 12:40 | 2512213 James_Cole
James_Cole's picture

I've written this too many times in the last couple days here so I get tired of repeating it (for some reason Canadian economy has come up a few times).

People are vastly underestimating the real estate bubble's effects on the Canadian economy, something Harper + company set into overdrive when they opened the floodgates at CMHC in order to shift toxic waste off of the major bank balance sheets + give the illusion of a good economy during the financial crisis (all to win a majority government).

Now Canadian taxpayers are sitting on a trillion dollars in mortgage debt (CMHC + genworth) and economic growth & health are tied to real estate, welcome to Ireland! 

And that's just one of the shitty things Harper has done. 

http://www2.macleans.ca/2012/05/01/how-the-housing-market-is-pumping-up-...

http://www2.macleans.ca/2012/05/24/the-real-canadian-bank-bailout/

Sun, 06/10/2012 - 23:21 | 2513308 MeelionDollerBogus
MeelionDollerBogus's picture

Harper's allowing sell-out of our resources at rates which aren't good for citizens while trying to harmonize our better laws to become horrific police-state laws of the USA. That's real bad.

The ONE good thing the decepti-CONs did is create TFSA brokerage & savings accounts. You're a knob to use ONLY the savings account but it's better than having no such thing.

Sun, 06/10/2012 - 10:08 | 2511898 ootofthehoos
ootofthehoos's picture

What a dope you are for starting with "douchebag". Hahahaha  You discredit yourself with your anger.

Credit binges like Canada now, and USA before it, and Europe (as we see uncovered now), enable the sins of the politicians and their deficit spending for a long while, no matter what you think is the underlying cause. USA is different than European socialism policies and is destroyed by the debt, too. 

There are lots of country histories where central banks fail to act because they see a so-called weak economy. That is why price inflation and asset inflation gets out of hand.  I didn't have to name Europe. It is just front and center now. 

You probably think the students have no reason to protest in Quebec.

It is the INFLATION of student fees and NEXT they face HOUSE PRICES inflated by Carney and a huge debt burden.

My message is to James, Ill_tempered_Frank, and Bill: Wake up. Economics is deeper than what you are fed, that Canada's banking is better.

By the way, Australia's currency rose more than Canada's. Canada had room for more upside, every year, without harm. USA central banking is run incompetently by the Bernank and needs to be opposed.

Sun, 06/10/2012 - 23:16 | 2513292 TradingTroll
TradingTroll's picture

"Why do you think so many rich Chinese are buying up all the choice spots in Vancouver, driving up housing prices?"

 

Because I live in Vancouver and work in Asian finance, mainly mining

 

Chinese deals arent driven so much by economics as a bribe. The VP inside the SOE in China gets a house in a Western nation. The problem is that the US aggressively checks the source of such funds and once flagged as a bribe, that house purchae cant be funded.

Canda simply doesnt have as robust a vetting process.

 

So whats the largest, nearest city to Asia? Vancouver. Hence Vancouver houses are in demand. And, 'they' have been calling for the bubble to pop after the last rise in 1987, when HK Chinese were buying as a Plan B in case HK turned into something else after its return to China. Prices are up, oh, 15x since then. Fukushima radiation, Stanley Cup riots and all.

Sun, 06/10/2012 - 23:18 | 2513298 MeelionDollerBogus
MeelionDollerBogus's picture

ex-douche-me

I mean excuse me

You are in error.

 

Sun, 06/10/2012 - 23:17 | 2513293 MeelionDollerBogus
MeelionDollerBogus's picture

Incorrect. The Canadian economy can be boosted by imports at cheaper rates with a stronger dollar then used to further boost innovation and export of that innovation.

Mon, 06/11/2012 - 10:39 | 2514474 Matt
Matt's picture

" further boost innovation and export of that innovation"

Like Nortel, RIMM, etc? Innovation Fail. It doesn't help if it all just gets snatched up by companies in other countries.

Sun, 06/10/2012 - 00:59 | 2511603 kedi
kedi's picture

Interest rates can't rise till wages begin to rise and catch up in real terms. And people begin to pay down existing debt. Otherwise too many people just quit being able to pay. While wages rise, the interrest rates must remain low but the hurdles to be able to borrow must increase. Credit has to be taken more out of the realm of impulse buying by borrowing. It is hoped that the average person would do this on their own, but the current crop has been taught the opposite.

It's time to play catch up. In wages and in debts paid back. We have bought too much, too far ahead in time. This makes even the wealthy have to pay with debt that is considered wealth. Spending even further ahead.

Our financial time warp is stretched too far into the future. To raise interest rates would cause a bad snap back. The way things are now, it would be those least able to deal with it, that would suffer the most to cusion those that already have the most. But would they stand for the kind of raping that an interest hike would deal them? After handing the banks free money already? Every debt a person is paying can already be multiplied in interest rate when considering the continuous bailout of those that lent the money coming out of their pockets now and in the future. What is the real interest rate for the average wage slave, when you add up all that they and their descendants will be paying back?

Sun, 06/10/2012 - 08:46 | 2511860 BidnessMan
BidnessMan's picture

Regarding your comment:

The way things are now, it would be those least able to deal with it, that would suffer the most to cushion those that already have the most.

Those least able to deal with it - retirees who counted on interest on their hard-earned savings - are already suffering.  No matter what happens from here on out, it is clear the average person will be thrown under the bus to save the banks.  Ultimately the banks will fail anyway, so the suffering will have been in vain.  

Let's stop pretending there is a solution that the banking and political class will accept.  It will all need to crash - the only thing that will ever force a real change.  This is a Situation, and it is clear that the banking and political class are going to do anything and everything to save their own necks, regardless of consequences to everyone else.  There is no "Solution" that has any chance of being implemented.  So let's do something useful and talk about how to deal with the Situation we are in.

Sun, 06/10/2012 - 10:04 | 2511911 ootofthehoos
ootofthehoos's picture

I side with bidnessMan. I am sympathetic to Kedi. But it is not correct reasoning. Borrowing at any interest rate, to fill in for low wages, just does not work. Those low interest rates drive up house prices. That is not helping those with low wages, even if they think the low monthly payments are great.

Sun, 06/10/2012 - 05:25 | 2511754 Davalicious
Davalicious's picture

Jewish Central Banker Mark Carney keeps interest rates low to create bubbles. The rest of the tribe are wise to coming crashes, so they all profit at the expense of destroying a great nation. The same thing is happening in Australia.

Of course they are concurrently going full steam ahead bringing third worlders into Canada to keep themseves in power and to rob native Canadians of the chance of fighting these parasites.

Sun, 06/10/2012 - 08:46 | 2511864 memyselfiu
memyselfiu's picture

what? fuck those bastards! My friends on the reserve will be very angry about this!

Sun, 06/10/2012 - 10:47 | 2511973 shovelhead
shovelhead's picture

D'ya think my Jewish plumber is in on it too?

I'll have to ask him the next time he's here up to his elbows in shit.

Sun, 06/10/2012 - 14:50 | 2512109 JeffB
JeffB's picture

I think most governments are now of the mindset that they're forced into this destructive course to keep up with the profligate Joneses.

They're afraid if they make rational economic decisions the currencies of their trading partners will devalue relative to their own steady currencies and their balance of trade will suffer. Their own goods will become expensive relative to everyone else whose governments are in effect reducing their citizen's wages, and the prices of their resources, and their imports will become cheaper, resulting in fewer exports, rising imports and therefore rising unemployment.

So they'll all tie on tightly to the sinking ships and all go down together.

 

Sun, 06/10/2012 - 13:35 | 2512331 robertocarlos
robertocarlos's picture

We're still the 51st State. Why else would our flag be flying inside American hockey rinks?  

Mon, 06/11/2012 - 03:18 | 2513614 Floodmaster
Floodmaster's picture

Most houses in Canada have a  Bernanke shrine, the Canadian god of prosperity.

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