"We believe that in 2009 we will need to see Canadian banks stem loan and asset growth, to control their balance sheets better." [1]
If I recall correctly, a Fleet Street publisher was once asked to describe the most boring imaginable newspaper story. He replied it would be coverage of The Bank Act, or anything about Canada. Well, we’re combining both this morning. Not long ago our Finance Minster was positively gloating [2] about the dullness of our financial services industry. However behind closed doors the grownups were quietly freaking, even while Canadians continued to live in a Fool’s Paradise.[3]
Although Doomers were expected to forget by now, Flaherty sneaked down the chimney on Xmas eve with a C$1.3 billion down payment on a complete bailout of the Montreal Accord on ABCP, and in the process knocked his Nov 13th braggadocio into a cocked hat. Our country’s commercial paper market is now dead as a private enterprise, so today’s meeting is an exercise in fantasy. Canadian banks can’t lend until governments inject the money directly. It’s the same here as it is in every other Western country, and for exactly the same reasons. Wake up and smell the socialism, Jim.
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[1]: "Flaherty, bank chiefs square off on lending: Charged atmosphere sets tone for Monday meeting", by Tara Perkins and Kevin Carmichael, Toronto Globe & Mail, January 3, 2008.
[2]: "Jim Flaherty: Canada’s ‘boring’ financial tips for the world", by Ronald Nurwisah, National Post, November 13, 2008.
"Few countries are as dependent on trade or as integrated into the global financial system as Canada. Yet our financial sector continues to weather the turbulence better than many other countries. This did not happen by chance. Canadians by nature are prudent and our financial system has been characterised as unexciting. Canada’s regulatory regime ensures that stability and efficiency are balanced. As a result, Canadian taxpayers have not had their money put at risk in response to this crisis. If Canada’s financial system is boring, perhaps the world needs to be more like Canada. …"
[3]: "Consumer optimism: Can it ward off lengthy recession?", by Karen Blotnicky, Halifax Chronicle-Herald, January 4, 2009.
Possibly Canadians were more cautiously invested than their American counterparts. Perhaps they have come to realize and appreciate that Canada’s banking system is considerably more stable than its American counterpart. Maybe Canadians’ attitudes towards the economy are buoyed by government bailouts for big finance and big business both north and south of the border.
While many Americans consider such an approach too socialist to swallow, Canadians are much more likely to embrace a socialist solution to a capitalist problem.
