The Canadian solution

[dandoros]

Good morning all,A very interesting article about how Canada can set the stage for the rest of the world.

"Guess which country, alone in the industrialized world, has not faced a single bank failure, calls for bailouts or government intervention in the financial or mortgage sectors. Yup, it`s Canada. In 2008, the World Economic Forum ranked Canada`s banking system the healthiest in the world. America`s ranked 40th, Britain`s 44th.

Canada has done more than survive this financial crisis. The country is positively thriving in it. Canadian banks are well capitalized and poised to take advantage of opportunities that American and European banks cannot seize. The Toronto Dominion Bank, for example, was the 15th-largest bank in North America one year ago. Now it is the fifth-largest. It hasn`t grown in size; the others have all shrunk."


Here is the link to the article: http://www.newsweek.com/id/183670

Regards,
Dan

 

[EdRenkema]

QUOTE (dandoros @ Feb 23 2009, 08:18 AM) Good morning all,A very interesting article about how Canada can set the stage for the rest of the world.

"Guess which country, alone in the industrialized world, has not faced a single bank failure, calls for bailouts or government intervention in the financial or mortgage sectors. Yup, it`s Canada. In 2008, the World Economic Forum ranked Canada`s banking system the healthiest in the world. America`s ranked 40th, Britain`s 44th.

Canada has done more than survive this financial crisis. The country is positively thriving in it. Canadian banks are well capitalized and poised to take advantage of opportunities that American and European banks cannot seize. The Toronto Dominion Bank, for example, was the 15th-largest bank in North America one year ago. Now it is the fifth-largest. It hasn`t grown in size; the others have all shrunk."


Here is the link to the article: http://www.newsweek.com/id/183670

Regards,
Dan


Thanks Dan,
I`ll print this one to include in my investor presentation.

 

[Lenore]

That does not sound accurate. The Canadian government has bailed out the Canadian auto industry.

 

[Cargren]

QUOTE (manager @ Feb 23 2009, 01:01 PM) That does not sound accurate. The Canadian government has bailed out the Canadian auto industry.the article states "has not faced a single bank failure, calls for bailouts or government intervention in the financial or mortgage sectors"

Nothing there about the auto industry.

 

[wealthyboomer]

QUOTE (Cargren @ Feb 23 2009, 01:56 PM) the article states "has not faced a single bank failure, calls for bailouts or government intervention in the financial or mortgage sectors"
Nothing there about the auto industry.


Didn`t CMHC buy up some of the bank mortgages that they were insuring? Isn`t that a `form` of Bailout?

 

[JohnS]

QUOTE (wealthyboomer @ Feb 24 2009, 01:48 AM) Didn`t CMHC buy up some of the bank mortgages that they were insuring? Isn`t that a `form` of Bailout?


As I understand it, which very easily could be wrong, that would have counted as "government intervention", but not a bailout. A bailout implies giving them money and getting very little in return, like they`re doing in the States by buying the paper to the defaulted mortgages. In Canada, however, they were buying the paper to mortgages which were in good standing. They got a legitimate asset for their money, while still being able to inject some much needed capital into the system, enabling the banks to extend credit to credit-worthy individuals and businesses.

Any thoughts, anyone?

Have a good one!

JohnS

 

[jarrettvaughan]

QUOTE (JohnS @ Feb 24 2009, 12:04 AM) As I understand it, which very easily could be wrong, that would have counted as "government intervention", but not a bailout. A bailout implies giving them money and getting very little in return, like they`re doing in the States by buying the paper to the defaulted mortgages. In Canada, however, they were buying the paper to mortgages which were in good standing. They got a legitimate asset for their money, while still being able to inject some much needed capital into the system, enabling the banks to extend credit to credit-worthy individuals and businesses.

Any thoughts, anyone?

Have a good one!

JohnS

I think you are exactly right John, It was more of an long term investment that could generate a profit, rather than a bailout.

 

[Cargren]

QUOTE (wealthyboomer @ Feb 23 2009, 11:48 PM) Didn`t CMHC buy up some of the bank mortgages that they were insuring? Isn`t that a `form` of Bailout?
No. They were not buying bad debt from the banks. These were good mortgages, already insured by CMHC and not defaulting mortgages. The concept was to free up banks cash to help ease the credit crunch taking place.

So quite different from the bank bailouts going on in the States.Actually, it was a good investment with the government getting the same return that the banks could expect. So, theoritically, a gain for Canadian taxpayer, not a cost.

 

[EdRenkema]

QUOTE (Cargren @ Feb 24 2009, 02:14 PM) No. They were not buying bad debt from the banks. These were good mortgages, already insured by CMHC and not defaulting mortgages. The concept was to free up banks cash to help ease the credit crunch taking place.
So quite different from the bank bailouts going on in the States.Actually, it was a good investment with the government getting the same return that the banks could expect. So, theoritically, a gain for Canadian taxpayer, not a cost.


Right, good move by Flaherty even tho he`s straying a bit from his non-intervention stance which seems to be par for the course these days!