OTTAWA–The federal government is creating what it`s calling the Canadian Lenders Assurance Facility, guaranteeing wholesale term borrowing by the country`s banks.
Finance Minister Jim Flaherty said today the "temporary program" will support the banks "on commercial terms so there is no xpected cost to Canadian taxpayers."
For more than a year, Canada`s manufacturers have been bemoaning the disappearance of the cheap Canadian dollar.
Now that it`s back, there`s not much to celebrate.
The Canadian dollar fell another 3 per cent yesterday against the U.S. greenback, closing at 79.70 cents (U.S.), its lowest level since 2005.
The drop came as oil staged another hefty decline, which contributed to another punishing drop in stocks as the S&P/TSX composite index sank 5.7 per cent.
China moves to make it easier for people to buy their first homes
China yesterday announced a series of policy changes that will make it easier for people to buy their first homes, the latest stimulus to cushion a slowdown in the world`s fourth-largest economy.
Some weeks ago, in an editorial about the financial crisis in the main section of this paper, a writer commented approvingly that "Our currencies are no longer tied to gold, which means central banks can act to mitigate monetary deflation and interrupt the deadly feedback loop of mounting defaults, declining real wages and prices and increasingly onerous dollar-denominated debt. ... Today we are no longer in the infancy of macroeconomics."
The major banks have fallen in line, passing on to consumers the full benefit of lower central bank interest rates with a corresponding cut to prime for most loans. But squeezed by their own increased short-term borrowing costs, they are still charging large premiums of a full percentage point or more over prime on variable-rate mortgages.
Until recently, many lenders had routinely offered up to a full percentage point discount off the prime rate.
The economy will be on the verge of recession through the rest of this year and into next year with "sluggish" growth of just 0.6 per cent in 2008 and again in 2009, the Bank of Canada forecast Thursday in its quarterly Monetary Policy Update.
But the "sky is not falling," bank governor Mark Carney said at a news conference after the document`s release.
OTTAWA — Finance Minister Jim Flaherty today threw the big banks another life ring during the current credit crunch by creating a federal lending assurance program that will guarantee loans made by the major financial institutions.
"Today I am announcing that the government of Canada is taking additional action to strengthen access to international credit markets for Canadian financial institutions," Flaherty told an early morning press conference.
TORONTO -- Solid government finances, lower taxes, strong banks and a relatively healthy housing market put Canada in a good position to weather the global economic storm, Finance Minister Jim Flaherty said yesterday.
"Canada is better positioned to endure the difficult economic times than other western industrialized countries," Flaherty told the Chamber of Commerce in Niagara Falls, Ont. The minister`s remarks followed the release of yet another report predicting the economy will slow to a crawl during the next year, but will avoid a recession.
What does oil have to do with the price of bread? A lot
LONDON -- Our eyes have been fixed in horror on the price of oil, the price of gold, the price of the Canadian dollar, the price of bank shares, the price of our house, the price of credit. Fair enough: These are the yardsticks of the economic crisis, the gauges of the world`s health. But we ought to keep our eyes on the price of a loaf of bread. This, too, has been fluctuating wildly: The global price soared this spring to almost double what it was a year before, and then plunged over the summer and autumn by 40 per cent, along with most other food prices - proving, in a way we have never seen before, that food is a global commodity, completely linked to petroleum, metal and other tradable goods.
The price of gas in Toronto is falling. The cost of milk in London is rising.
The cost of everything in Argentina is going through the roof. The North American housing market continues to slide.
The U.S. dollar is surging, while gold is sinking. And the central banks are printing more money than ever before.
As the teeth of the global credit crisis sink deeper into the flesh of the global economy, it seems various assets are behaving in odd and unpredictable ways. And economists can`t agree on the big-picture consequences of trillions of dollars of government funds being pumped into the financial system. While some decry, "Inflation is coming" others insist it`s "Deflation in our time."
It seems like only yesterday -- it was, in fact, 2007 -- when our dollar soared so high so quickly that Time Magazine named it Canadian Newsmaker of the Year.
It deserves that distinction again this year for the exactly the opposite reason. From an intraday peak last November of $1.10 US, the Canadian dollar had plummeted to less than 78 cents by Monday, hitting a few milestones along the way. For instance, it has posted its steepest monthly drop on record, with a decline of more than 17 per cent, and has reached a four-year low. The buck bottomed out at 61.8 cents in January 2002 so there`s still plenty of room for further erosion.
The prosperity and growth of Canada’s lodging real estate investment trust sector is “at risk” because of reduced access to capital, according to a report from Blackmont Capital analyst Trevor Johnson.
He notes lodging sector trusts usually use a debt to equity ratio of 45% to 70% to finance acquisition growth but that type of credit is just not available today.
OTTAWA - Oil prices have bottomed, and at current levels near $60 a barrel the stage is being set for a rally that will soon restore values to more profitable levels, Scotiabank commodities analyst Patricia Mohr says.
Crude dipped below $63 a barrel Tuesday as concerns about faltering demand offset OPEC comments suggesting the producer group could throttle back output again to support prices.
Covering your assets: A guide to CDIC protectionIn Canada, you`re covered for up to $100,000 in losses if a member of the Canada Deposit Insurance Corp. goes under. Here`s a guide to how your money is protected by CDIC and other non-profit agencies doing similar work.
Q: What`s covered and what is not?
A: CDIC insures savings accounts and chequing accounts; GICs or other term deposits of five years or less; money orders, certified cheques, bank drafts and travellers` cheques issued by members; accounts that hold realty taxes on mortgaged properties.
CDIC does not insure accounts or products in U.S. dollars or other foreign currencies; mutual funds and stocks; GICs or other term deposits maturing in more than five years; bonds and treasury bills.
The Canada Pension Plan Investment Board is adding $1.4 billion of investment to its real estate portfolio, bringing the fund`s total commitments to the sector to $8.4 billion.
CALGARY -- Canada`s ski industry is bracing for one of its toughest seasons as the world economy melts down before the snow flies, giving skiers pause before dropping major coin on a winter vacation.
The part of the business expected be hit hardest is the overseas skier and snowboarder market, as skittish European and Asian consumers face falling net worth and the recent shutdown of some charter airlines, officials said.
OTTAWA -- Home-buying intentions of Canadians have remained steady despite the financial-market turmoil and cooling of the housing market, according to results of a survey conducted earlier this month.
Overall intentions to purchase a home in the next two years remain steady at 22 per cent and have not changed since January 2008, Royal Bank of Canada said in releasing the results of a survey conducted by polling firm Ipsos Reid.
The Canadian Real Estate Association says the falling average sale price nationally is a reflection of a decline in sales in high-priced markets and notes prices are still rising in a majority of markets.
OTTAWA - Prime Minister Stephen Harper surprised some observers by naming three rookie MPs to prominent portfolios in his cabinet Thursday, even as he touted the economic acumen of his new team of ministers.
As expected, Harper ensured that key economy-related files will be in the hands of his most senior ministers, keeping Jim Flaherty in Finance and appointing Tony Clement to Industry and Stockwell Day to International Trade.
