You've nailed it, Ellen!

Excellent work on a subject that needs some serious light of day.

It takes me back to the debates when Harper said (I'm paraphrasings), "we've known that there were major fundamental problems with the U.S. economy in the financial sector since August of 2007" and more than a year later, we still have Canada's pox U.S. version of sub-prime.

It ranks right up there with Harpers quote about 3 weeks ago, "if the sky was falling on our economy, it would have happened by now." The Harper party is seriously out of touch and out of step. Its not hard to see why, though, considering where Harper takes his orders from.

People will be looking back and thanking their lucky stars a Conservative majority didn't happen. If Harper had taken us to the polls 2 weeks sooner... scary thought.

What Harper has planned with foreign ownership of our banking industry jumping it up from 10% to 30% and later to 49%... and his plan to increase foreign ownership from 20% to 49% in our airlines and nuclear sector is also very scary.

Why would Harper do this? New money inflates our currency and its good for energy exports for big oil that is already majority foreign owned and controlled.... but a high dollar ensures a decimated forestry sector and wipes out our manufacturing.

M & A's of our Canadian corps have been torrid for 3 years running now. Last year, foreign M & A's of our Canadian corps increased our GDP by 7.75% and inflated our dollar to all time highs. And as a result of this clear trend of which Harper has encouraged in a big way, especially with his broken promise with Income Trusts chopping market caps of our Canadian oil corps, Harper destablized the entire IT sector and created a low market cap climate that left IT's highly exposed to foreign M & A's. The result? 95 billion worth of IT market cap was bought ut by foreign M & A's, 400,000 lost manufacturing jobs mainly in Ontario and a death toll at our mills, all directly due to a high Canadian dollar jacked up by foreign M & A's.

So lets recap. Harper screwed those who needed low income housing and people who weren't smart enough to realize they couldn't afford to get into a bubble housing market with the introduction of 40/0 mortgages, he's about to screw over taxpayers that will have to foot the bill for CMHC insured defaulted mortgages and our banks that will have to deal with the negative equity an bankrupcies as a result of people walking away from a pancaked bubble, Harper screwed over Canadian corporations in the Energy, forestry and manufacturing sector, he screwed at least 200,000 manufacturing workers out of their jobs, likely permanently with a high dollar alone... and if people are dumb enough to vote him back into power, he'll screw the economy some more with reckless made in U.S.A. plans that have created a recession world wide goosestepping next to the U.S. in another resource war and in the end, we'll have everything sold off with nothing to show for it but skyrocketing debt, a devastated economy and a broken financial industry, all thanks to Harpers U.S. corporate lobbyist NCC puppet plant deregulating, privatizing, gun toting, war mongering, religous nutter ways.

Couple this with the privatization of the CBC next to a bankrupt Quebecor and just two families Aper and Woodbridge buying up the market share left behind, we'll have just two families controlling 95% of all of Canada's mainstream media through Thompson/Reuters controlling interests of CTV Globe media, the G & M and Aspers control and continued expansion of Can West through relaxed CRTC regs in favor of media concentration and a privatized CBC. Give Harper a majority, and he'll screw Canadians out of our democracy with endless propaganda as well. Oh, and did I mention that Harper will screw western farmers with the destruction of the CWB?

What a failure this Harper party has been... about the poorest leader I've ever recollected or known of that Canada has ever had. God, I hope Canadians see the light and stop this wreckless, balkanizing, me first lying corrupt ideologue before its too late.

Its not hard to imagine what I'll be saying next. Vote stratigic ABC and get the best candidate in your riding elected that won't support this sellout traitorous rat!

Nice work once again, Ellen! :-)

Caveat Emptor

The forty year mortgage was wisely ended in July, taking effect mid October. I knew of people that took out a forty year mortgage and I certainly raised my eyebrows. This was not, fortunately, a substantial portion of the Canadian market.

Finally.....

I was wondering when stuff like this was actually gonna see ink.

Good on ya Ellen!

Caveat Emptor means "Dont buy Harper's BS"

....particularly if you're making financial decisions like taking on a mortgage.

As for your "not a substantial portion"...... Can't you read, Rman? Or is it that like a typical neocon, you find it hard to assimilate unwelcome information? But OK, just to refresh your memory, here it is again :

"Competition from U.S.-based mortgage insurers meant risky products rapidly took over the Canadian mortgage sector. Forty percent of new mortgages approved in 2007 were amortized over 40 years, and in overheated markets like Alberta's, the percentage was even higher."

Those people who trusted Harper, Bush, and Co not to set them up for the financial sharks sure learned their lesson, eh? "Caveat emptor" indeed.

Stay Calm ME2

And develop a perspective. Yes, I can read. I can read into it too. These mortgages were ONLY around for one year. Therefore, they do not constitute a SUBSTANTIAL proportion of the Canadian market. The were certainly popular for a little over one year and during this time they almost comprised 40% of mortgages in some regions, so, one can say that even then the majority, six in ten, were not of this high-risk type.

"The historically prudent and cautious approach taken by Canadian financial institutions to mortgage lending, combined with a sound supervisory regime, has allowed Canada to maintain strong and secure housing and mortgage markets. Sub-prime2 mortgage origination has been low in Canada, comprising less than 5 per cent of the market in recent years. As a result of the conservative approach taken by domestic lenders, and the resulting relative strength of the domestic housing and mortgage markets, Canadians have benefited from broad access to world-class mortgage finance products at competitive prices.

Recent Developments in the Mortgage Market

Since the fall of 2006, the mortgage markets have experienced a period of accelerated financial innovation. The marketplace has been quick to adopt these innovations, which permit such features as:

* Longer amortization periods (from 25 years up to 40 years).

* Higher loan-to-value ratio loans (up to 100 per cent).".

Panic if you Must

Some people chastise the government for raising the Canadian dollar; others, of the same political stripe, chastise them for devaluing the currency. Fact is Canada is not running a budget deficit, which is in strong contrast to the other countries we currently see in the news.

Some people claim that the lowering of real-estate prices in the Vancouver market spells disaster. Others, of the same political stripe, have been crying for years that the Vancouver market is overvalued and too expensive. Shouldn't they be happy now?

Sorry R/Man

You still haven't understood what's happening here - there are a lot of people out there who believed the BS about Real Estate going up in price forever. An awful lot of people are heavily over-exposed in that market and credit is significantly oversubscribed. A lot of ordinary folks sucked in by the dream of passive flows of income; a lot of people in the investment market when they shouldn't have been.

Canadians, when the dust settles, will not have benefited any more than the 10,000 people who are losing their homes every day in the US have.

I take it you heard Gordon Brown....

So?

GWest:

"...there are a lot of people out there who believed the BS about Real Estate going up in price forever."

Lots too that believed the same about the stock price of, you-name-it. There have always been ups and downs. Do you really feel deeply sorry for those that now see their stocks; or their real-estate holdings, no longer going to stratospheric heights?

Did anyone not realize that things go down, as well as they go up?

What nobody seems to mention

What nobody seems to mention that all this mess has been caused and is the result of the brainwashing of students, including Harper, with the crap of neoclassical market economics.

As long as that garbage is being taught exclusively, without any rational debate, in our and the world's universities, there's no hope in hell for any improvement anywhere. The sacking of the Earth and the destruction of humanity will carry on.

In any case, foreign investment is a fraud and its only purpose is colonization.

I hope and pray that Harper won't get a majority, which may give Canada a slight hope for survival as an independent nation. In an case if he doesn't, I think will be the end of him in politics and good riddance.

Ed Deak.

Letter to the editors of the

Letter to the editors of the 100 Mile House Free Press, Quesnel Cariboo Observer, Prince George Free Press, and the Williams Lake Tribune.

================================================================================================

Oct,3, 2008.

Dear Editor,

As a dedicated private enterpriser, registered voter in BC since May 1956, independent business and property owner since Nov. 1957, a WW2 combat vet, work/life experience in four countries under every known ideology, a student of history for over 60 and of economics for the past 26 years, I've never been so scared of corrupt politics since the beginning of my 45 year record of fighting communist dictatorships, as I am now of a Harper majority government.

Mr. Harper and his seatwarmers are totally hooked on laissez faire, neoclassical market economics, that has now become the biggest crime wave in human history, with global corporate dictatorship destroying all public control and democracy, and the Earth's ecology, while killing tens of millions of people every year , most of them little children, through starvation and destitution.

The textbook definition of economics is “The science for the management and distribution of scarce resources”. Maynard Keynes came close, but all other theories have become the tools for oppression, colonization, enslavement and mass murder, as this now ruling Friedmanite crime wave, serving the same predator class, whether they call themselves communists, nazis, or capitalists.

The presently ongoing neo-conservative plan is for a Soviet type, global collectivization under the rule of a few mega corporations, operating under hundreds of phony names, already controlling most of the world's markets like oil and food, making huge profits by price fixing and extortion from producers and consumers alike. The disgusting cattle prices breaking our ranchers right now have long been fixed in corporate head offices in the USA, with our governments closing their eyes.

Their control over resources and lives is sold to and forced on the gullible public by the fraudulent definition of economic efficiency as “the biggest profits for the least monetary inputs”, ignoring the real definition of efficiency as “The most work done with the least physical inputs”.

The sale of resources is the sale of capital, and not an income, service jobs are not assets but liabilities, yet they all are part fraudulent of the GDP, Growth and Productivity figures. The GDP accounts all transactions, regardless how damaging to the environment and people, the repair and the funeral costs of natural disasters and accident victims, as “products” and “growth”, without any debits for losses. When human labour is replaced by huge inputs of other forms of energy, the “productivity” and “efficiency” figures jump, regardless of the damage and wasteful depletion, while the public is urged to “save energy”. .

The Harper government has long been engaged in secret negotiations with the other two NAFTA countries and the EU for the sale of Canadian sovereignty, the complete takeover of our economy, resources and the free importation of foreign labour to become “more efficient” by replacing Canadians,. The excuse is that it will open a market for our “products” to 800 million people. Another fraud, because with the deindustrialization of Canada by the FTA, NAFTA and the WTO, the only things we have left to sell are our resources and infrastructure, in short “CANADA FOR SALE”, planned to come into effect at the Oct.17. summit in Montreal.

Ed Deak.

Ed

As we all should know, Ed. The discussion of sex, religion and politics is not recommended among friends, co-workers and clients. That is why there is such success in on-line anonymous blogging. Ranting on-line does not alienate friends and acquaintances.

Customers, Ed. Customers for our finished and raw products. There's 250 years worth of coal in the BC mines currently being extracted, if the production remains at current levels. Nevermind the seams that have yet to be found. Coal will probably be redundant before it's used up.

As for the factory item Ed. This happens all over the world. Does Olivetti still make typewriters? Does anyone still manufacture radio valves?

Canada is one of the few

Canada is one of the few countries on Earth that doesn't need to rely on exports and could be self sufficient to a great degree.

Economies built on exports are recipes for economic suicide and are fraudulent.

Total self sufficiency is impossible, but a great degree can be achieved and resources traded, not sold, but traded for resources we don't have.

Trading is not commerce and vice versa.

There was a series on BCTV years ago, with Jaz Johal in India, interviewing a businessman at one point who said it with a laugh that they're planning to pull 50 million jobs out of North America and Europe.

Any government that permits this crime, should be charged with fraud and theft.

For one thing, products that could be made locally, but are imported from far away, are not "cheaper", because the waste and environmental and human damage caused by the mass manufacturing and transports offset any monetary games and tricks on the long run.

Costs can not be cut, only transferred.

40 years ago Canada had a thriving and growing manufacturing sector of thousands of small plants turning out a huge variety of products and giving decent, productive employment to millions.

We had tariffs on imports, our dollar was .05 cents above the US and we could cross the border in 30 seconds. Sometimes, when I was in rally cars, with the numbers showing, just waved through.

So, what the hell was wrong with that, except in the warped minds of ideologues and brainwashed economists ?

Have we gained, or lost with the present ideology and criminal economic system?

Now I have to go and do some real work, before the snow falls.

Sold some calves at the auction sales last week, with prices fixed and controlled by a single company in the USA. When I get the cheque, I'll put it on this blog how much the corporate mafia have stolen from our pockets, while prices in the stores are jumping by the day.

So much for "market economics" and the crooks who push it on us.

Ed Deak.

Realisticman said: "The

Realisticman said: "The forty year mortgage was wisely ended in July, taking effect mid October. I knew of people that took out a forty year mortgage and I certainly raised my eyebrows. This was not, fortunately, a substantial portion of the Canadian market"

Uhh, Realisticman did you read the article?

"Forty percent of new mortgages approved in 2007 were amortized over 40 years, and in overheated markets like Alberta's, the percentage was even higher."

That my friend is a pretty substantial number.

I never heard

Prime minister Harper telling people to buy!
Individuals who wanted in the market with no money,they knew the risk,they all thought the market would go up,up,up, and away.
If things got tight they would sell and live off their newly found spoils!
look my family managed to get through the era of 18% mortgages in the 80s.

What did you expect,the banks to tell desperate buyers,go away,the price is over inflated,you can`t protect fools!

I laugh my face off at people who bought in the GVRD over the last 2 years!

Who can,who could,who would buy,think,believe,they could afford a 600.000 house, 500.000 condo --At the same time Campbell is picking everyones pocket with ICBC-BC Hydro--Teresan--Fuel-Translink-Ferries-user fees--park fees--fuel surcharges--300.00 car levy coming this month,2 teir hydro/and now BC Hydro is asking to raise the base rate by 13%/ The BCUC is allowing them to raise the base rate 11%--Starting next month!

Pure greed by individuals/ Prices will rise through to 2010--WRONG
Blame Campbell/ Blame global news/ Blame the realters/ Blame people!

Harper didn`t invent the 40 year no down/payment mortgage---Hell at least he put a stop to them!
FOR GODS SAKE MAN, HARPER HAS BEEN IN CHARGE FOR 2-1/2 YEARS! AND ITS HIS FAULT

This Economic Downturn was forecast...

Early last year, I contacted Minister Flaherty about reducing the taxation of overtime since it was a hallmark of previous economic calmaties.

Without too much surprise the resulting answer was "NO" even though a taxation rate of %46, (Alberta Provincial rate plus Federal rate) on overtime is unjustified during a boom cycle and I did make this quite clear in my correspondence.

A response like this from a government that reduces taxes seemed to me quite odd. Revelations abounded as I did some reseach into what was actually happening early last year. Without a modicum of warning to the people of Canada, Mr. Harper and Mr. Flaherty willingly allowed this resulting debacle to finanacially hurt Canadians.

Scum of the Earth

Well done, Ellen.

From today's LA Times:

Quote:

"When the going gets tough, the tough get pedicures.

Just days after the federal government committed $85 billion of taxpayers' money to a bailout of insurance giant AIG last month, senior execs from the troubled company headed to Southern California's ultra-swanky St. Regis Resort in Monarch Beach for a week of wining and dining top salespeople.....

As it happens, congressional investigators released AIG documents earlier in the day showing that the company paid more than $440,000 for the event, including nearly $200,000 for rooms, $150,000 for meals, $23,000 in spa charges and almost $7,000 for golf outings."

In contrast, to use just one example:

Just think of the hard-working single mom who scrubbed seemingly endless floors and toilets for years and years, her hard-earned tax monies used to help make this billion-dollar bail-out.... and shameful luxury excursion possible for these utterly loathsome rats.

Meanwhile, she and her children go without adequate health care and housing. No money apparently available for that.

Free market, what a laugh! No, what it really is Legislated Corporate Welfare for Cowardly Corporate Bums!

Put these cowardly rats behind bars where they belong - along with the politicians that facilitate and enable them through their legislated endorsement of monopolistic and criminal behavior.

Harper's much awaited platform

A week before the election and Harper releases his plan, giving the other parties little time nor airspace for rebuttal. In his Victoria speech today, he talked about how he and the Conservative government were the saviours of the Canadian banking industry for lowering the 40 years to 35 and instituting a 5% down-payment. He didn't say that it was his government that removed the stiffer requirements in the first place. He did all of this with a smile on his face...disgusting at best!

Michael Campbell from MoneyTalks saw this coming!

Ya.. Right!

I heard him on the radio a few days ago and he was saying how he and his pals Dunnery Best from CIBC Wood Gundy and and Michael Levi his erstwhile radio "expert" were warning us about this for the last two years. Man-o-man, I just about lost my breakfast hearing that one.

The problem is, the language that they use is "witch-doctor" language and is loaded with the "trust us, we are the experts" crapola and morphs in real time to suit the immediate situation. Plus, they are all singing off the London School of Economics song sheet and refuse to let the facts get in the way of the ideology.

These guys are as phony as the Nobel Prize for Economics.

What these goons and their

What these goons and their priesthood of economists never tell us is that any form of free market can only exist between equals.

When the market is controlled by a few it is called an oligopoly, or even a monopoly.

All our markets are now in the hands of and controlled by the multinational corporate mafia, therefore we don't have any form of free markets, only a Soviet style collectivized ones.

The Soviets did it with bayonets and cattle cars, the capitalists with the perceived energy of imaginary capital "created" from the air by some bank.

By the way, what's the difference between
oligopolies and corporate conglomerates and street gangs?

They both are there to fleece and extort from the public.

Ed Deak.

Dr Alexander

I heard Michael Campbell patting himself on the back too. And no doubt the true believers that listen to him have already developed selective amnesia and will say he called it. But having listened to him beat the drum for the current system for the last 2 years I also found it hilarious he is now trying to say he was on the other side.

Anyone But Harper!

This is exactly the kind of information that needs to come to light to educate Canadian voters on the dangers of a Harper gov't, or, God forbid, majority.

Vote strategically!

www.bcandbeyond.wordpress.com

Did anybody see the article

Did anybody see the article in the Blacklistednews website about Harper being at the Council of Foreign Relations office in New York City Sept. 25th, 2007? The CNN commentator, Lou Dobbs, said that Harper is in favour of the North American Union. Jeez, how come our "experts" like Bill Bonehead Good and Michael "the weasel" Campbell pick up on that?

Over production

The more you learn about how our society has evolved the more you see that we were not meant to be lazy couch potato, wealth for nothing, neocon spewing, dominate the planet kind of species. Evolve? As we must. Industrious? Sure, efficiencies are good. Profiteers? Whoa! That goes against the definiton of economy as posted above by Ed Deak. For the kind of profit taking that has occured in the last 200 years, more so in the last 50, terrible consequences for the powerless are assured. Perhaps it's always been that way, but not on this scale. Globalization and financialization are the last attempts within the fraudulent system. The last desparate acts are these bubble to bubble illusions.

Unprecendented overproduction and growth for the sake of wealth creation is also a bubble. The problem is when it bursts, billions will die. When the bill for this activity of so called progress comes due, the cost in interest alone will put us out of business. That means if you want to eat, you better learn to grow your own food. Forget meat too, it'll be long gone. We're definately past the tipping point for ecological recovery in many species vital to sustain present numbers. We need a cap on birth rates, but that isn't eactly what they teach in business and marketing class is it?

Tick tick tick...

Good Call Van Isle

Coming hot on the heels of a Bill Good show last week where Bill said that they do not censor any news it really does point out what a pile of rubbish Bill's show is and he is acting more as an enabler than as an agent for the public good.

It amazes me how he can give short shrift and the "tinfoil hat" canard to callers who genuinely point out the NAU and CFR and Amero etc etc etc.

Those folks are better informed as to what is really going on than Bill is (except for perhaps issues relating to BC Ferries not giving him the perfect trip to his island retreat).

I don`t think any of you relize whats going on

Aig--Has spent the 85 billion they got from the US fed to pay off "prefered" betters or what AIG calls, to pay off transactions, AIG is now getting another 38 billion so they will have some liquidity!

What you don`t understand is that all the money being dumped into the finacial markets is not so they will lend you or me or anybody money--The money is paying off credit default swaps and other derivative bets!
The derivative beast will continue to consume all monies!

Here is the story

http://www.cnbc.com/ID/27090290

egmont

I think there's a lot to what you say...this little thundercloud isn't going away any time soon...and the international implications are increasingly severe.

Kaletsky is interesting today, in the Times of London:
http://www.timesonline.co.uk/tol/comment/ - columnists/anatole_kaletsky/article4909444 - .ece

The thing is, no matter how much paper is going into the furnace, there's no guarantee that we're going to build up steam any time soon....this could take years....

kl

25 year mortgages constitute the vast majority of mortgages in Canada. Guessing that the average existing length is 20 years, then for 2 years, in only the hot markets sub-primes were issued, they were around 40% of those mortgages. 40% of the 7-8% of all mortgages is around 3%.

That's about 3% of all mortgages in the country.

3% of mortgages

r-man,
I believe it is important to recognise that 3% of the mortgages in the hottest areas contitutes much more than 3% of the debt. At its peak, this last year, the median price of a detached dwelling was Vancouver: $771,321,
Calgary 506,000
Edmonton 426,000
Toronto 399,000

Other hot markets: Victoria, Ft. St John and Kelowna were also similarly high. I imagine that those higher-priced homes in those hot markets are the ones most likely to fall into default. In essence, I wouldn't doubt that your figure 3% of mortgages constitutes 15-25% of the actual value of mortgages being held.

As the loggers and mill workers start falling into long-term unemployment things will get worse. Lately, some logger acquaintences have had to take some hefty pay cuts just so their boss can keep making payments on his 10-12 million dollars worth of equipment. To compete and get his contracts out on time, he has had to purchase 3 $900,000 wood-processors along with new feller-bunchers, grapple skidders and the like. Old equipment may be cheaper, but it always breaks down, and parts get hard to come by. That logging contractor is not alone: there are at least 20 more outfits like him just in this area alone! In the end, he may have to default on those loans if there is no market for the timber and no market for his equipment. Multiply this area by 20, 30 or 40, and you can begin to see the enormity of the problem. The spin-off businesses will lay people off, those people will have trouble making payments or buying new... the values will decrease further...

Mortgages

It was obscene to bring in the 40 year 0 down mortgages. It created a false increase in real estate values.And put people in over their heads.

What were they thinking when they thought up this crazy scheme. The frenzy they created has turned into a nightmare.

Of course they didn't care since it was all on the backs of the taxpayers who guaranteed the mortgages.

There are sure some dumb idiots in Ottawa. What was their ulterior motive, maybe to show that things were great.

Why not restrict the mortgages to 25 yr amortization and no down payment.
People would have been forced into a home savings plan where they would have been building up equity in their homes.

And the economy would have been healthy.

Misery

Harper didn`t bring in the 40 year mortgage,the bank did.

Look at those prices that SIG has posted,who in their right mind would pay that!
You can lead a horse to water!

Look at those Toronto numbers,thats what people can afford,not Vancouver!

Blame the olympic hype,blame Campbell,people who took out 40s have only themselves to blame!

When the Vancouver market crashes then people with stable jobs can afford to buy!

Would you rather the prices kept going up and up!

fools and their money

Egmont:

I think your characterization of people as being stupid for buying houses as prices were topping out has only a little truth to it. The 'conventional wisdom' touted by realtors and the media outlets who profit so much from their ads has been that real estate prices WOULD always go up. We've heard that mantra for years now. It takes a real skeptic to question a majority opinion. I know my experience proffering the suggestion that things are about to come crashing down has been met with derision and accusations of tin-foil hat wearing by many who have put faith in the supposed watchdogs of the public good.

IMO, if anyone has been stupid it's the gov't agencies that have allowed the media (present fabulouso website excepted!) to abdicate their duty to present the truth even when it hurts... and the banks, for swallowing the greed is good Kool-aid instead of showing some allegiance to the communities and average people that pay their way.

All three (gov't, media, banks) have been down on their knees doing their best impression of a Hoover on the groins of anyone who came along with promises of an eternal Golden Age, despite centuries of evidence that the good times always end for at least a while.

Considering we are told repeatedly to trust our gov't (esp. from Mr. Harper in this election) and our gov't regulates the banks (handing out mortgages like Halloween candy) and the media (where only a few corporations control the majority of access to information) you're essentially telling people not to trust the government. Frankly, I agree with that advice, but blaming people for doing so, in the face of repeated assurances from supposedly trustworthy sources that everything was going to be OK, seems (to me) a bit illogical. The real idiots are the people who are supposed to the stewards of our institutions. They have failed utterly.

two corrections

Second last sentence should read "supposed to BE the stewards...."

And in retrospect, I wish I'd titled my post:

Fools And OUR Money, because the real wealth creators in our society are the workers getting screwed in this mess, not the captains of industry and gov't who've driven the ship onto the rocks.

Decided Here:

http://www.cmhc-schl.gc.ca/en/corp/about/cogo/cogo_004.cfm

The Board at CMHC decide to allow the 40 year mortgages. Not the PMO.

STUMP:

"All three (gov't, media, banks) have been down on their knees doing their best impression of a Hoover on the groins of anyone who came along with promises of an eternal Golden Age, despite centuries of evidence that the good times always end for at least a while."

GM advertises Cadillacs and Hummers and banks loan money to those who see the ads in the media and want to buy them, just like real-estate. That's what media does. Do we feel sorry and want to bail out those that bought these vehicles too? Do we want government to control advertising?

Sharing

just found this:

April 07, "The Canadian Association of Accredited Mortgage Professionals (CAAMP) says the subprime market makes up five per cent or less of all outstanding mortgages in Canada, while in the U.S., the market is closer to 20 per cent. The overall arrears rate on mortgages in Canada is at or near record lows of less than 0.5 per cent, says CAAMP.

Canadians are a more conservative lot than Americans when it comes to mortgages. CAAMP says Canadian underwriting practices are "more prudent, as we have not been focused on a market share war for the subprime business." And it says that Canada doesn't use option adjustable rate mortgages for sub prime borrowers, as they do in the U.S. In Canada, "lenders qualify mortgages with consideration for payment variation, which has not been the practice in the U.S."

While new mortgage lenders and products have been introduced in Canada over the last few years, the Canadian mortgage market has other differences from that of the U.S., says CAAMP. It says the "vast majority" of mortgages are amortized over 25 years or less, with nearly two-thirds of mortgages set at fixed rates, with the five-year period being the most common. "

Yep Canadians are insulated all right

Just like Icelanders and Brits I guess....the idea that this mess is going to stop at the 49th parallel is absurd.

It's not all Harper's fault of course - any more than all the problems of the 90s were Paul Martin's fault.

This insanity has been building for 25 to 30 years. The idea that you can have a productive country when real wages increase a few cents a decade and executive compensation goes through the roof; when we sit on our hands while working people lose their jobs and we sell our assets for peanuts in return for increasingly worthless US dollars - these things have been building - worsened by a stupid, unfair and elitist tax system, for decades.

Iceland had to turn to the Russians for cash to save their country because our big brother was broke for Christ's sake.

Who do you think Britain is going to turn to next?

Keep those fingers crossed folks and don't think you weren't warned. When the inflationary impact of all these alleged bailouts hits the trouble will really start...

Can I remind you once again what Alistair Darling has been saying for weeks.....

I just wish that the only people who will be hurt in this mess could be the neo-con crooks like Greenspan who caused it. He and his disciples deserve the opprobrium not the poor people who are now losing their homes and jobs. International criminals, the lot of them.

Alberta 2007 mortgage debt

R-Man:
I just found this:
Alberta mortgage debt reaches $60B
Province tops growth with pricey houses
Mario Toneguzzi, Calgary Herald
Published: Tuesday, April 22, 2008

"Canada's mortgage market set another record year for growth in 2007, with total outstanding residential mortgage debt soaring by $94 billion from the previous year, according to a housing report by AltusClayton.

The report said that in percentage terms the growth rate is not as high as the peaks in the latter 1980s, "but market-wide growth of 13 per cent a year "in an 'established industry' (and low inflation environment) is still very impressive."

Total outstanding mortgage debt at the end of year in 2007 was $821.4 billion.And mortgage debt in Alberta last year increased by more than the national average.

At the end of the year, the province's outstanding mortgage debt was $60.919 billion, up 15.8 per cent from the previous year's $52.626 billion, said Richard Corriveau, economist for the Prairies and Territories region for Canada Mortgage and Housing Corp.

(Snip)

He said the main factor in that mortgage debt was the escalation in house prices in Alberta.

For example, the average MLS sale price for a resale home in the province in 2007 was $356,235, up 24.8 per cent from $285,497 in 2006.

According to Altus Group's FIRM Mortgage Survey, about one in four mortgage customers buying a home in the latter half of 2007 chose an amortization of more than 25 years.

"The popularity of lower regular payments" with longer amortizations "has definitely been established, additional interest costs be damned," said the report.

The survey indicates the majority of homeowners opting for the longer amortization periods intend to eventually shorten their remaining years to pay off the mortgage.""

I would presume similar issues with the BC market.

SIG

All this speculation over

All this speculation over who was and is at fault, causing this mess that will ruin the lives of millions is nonsense.

All this was caused by harebrained and miseducated economists, who now are jumping all over the place making excuses.

Why were they silent like cowpies in the grass, when their fellow economists, brainwashed with the same textbooks the world over, in the banks and government, were licencing and giving scriptural justifications for this crime wave ?

In any case, the main crime was done by so called "conservative" heads of states, like Reagan and Mulroney, who dereguated the banks and flooded the world with worthless, imaginary currencies.

You can't have any inflation, if there's no cash to pay for it. That simple.

We bought our first bungalow in Vancouver
in 1966 for about $6,000, which was around a good year's wage at the time and affordable for people.

We tore it down in 1974 and I built a new one for a material expenditure of about $15,000. Sold it for $65,000 in 1979, when we moved up here.

Then the Hong Kong immigration started, with tons of money pouring into the country and the same house was up for sale a year later for $138,000., an over 100% jump in one year.

Where did the cash come from? The same here with lands. Before the Euro came into effect, German money started pouring into this area, inflating land prices by 600 to 1,000% in the early 90s.

What benefit did Canada get from the influx of soon to become worthless Deutschmarks? Where were our clever "conservative" economists and politicians
permitting this idiocy?

People are led up the garden path by politicians and economists praising "wealth creating foreign investment", ignoring the sordid fact that it is for the purpose of inflating a country's money supply and then put the country into perennial debt.

In short, foreign investment is a fraud and the cause of most of the world's problems and mass murder of whole societies.

In any case, the buying of existing properties and businesses is not an investment, but colonization.

Now, the Canadian government, whoever it will be next week, are about to sell the rest of the country to the EU on the 17th, in Montreal.

Yet, nobody talks and warns about this planned crime, already going on full blast in the EU, with the West buying up and colonizing Eastern European countries, with their governments panting for more "deep integration" on the advice of their braindead and bought economists.

Ed Deak. Big Lake.

World Perspective

Lest we not forget. Credit where it is due.

Canada rated world's soundest bank system: survey.
October 7, 2008

"By Rob Taylor

CANBERRA (Reuters) - Canada has the world's soundest banking system, closely followed by Sweden, Luxembourg and Australia, a survey by the World Economic Forum has found as financial crisis and bank failures shake world markets. ..."

SOURCE: World Economic Forum Global Competitiveness Report 2008-2009.

Controlling Advertising

R/man said:

"GM advertises Cadillacs and Hummers and banks loan money to those who see the ads in the media and want to buy them, just like real-estate. That's what media does. Do we feel sorry and want to bail out those that bought these vehicles too? Do we want government to control advertising?"

That's not what the media does. The media (news and information programming) provides information to people. Ostensibly accurate information, in the hope that people will watch the ads aired within the programs.

I would say yes, the government should control advertising, the same way they control testimony in court. You shouldn't be able to make spurious un-verifiable claims in an ad any more than you can lie under oath. The airwaves and other means of communication are a common resource and when they are polluted by hyperbole, false claims and outright lies (the car industry being a great example) it's no different than when a company pollutes our water or air. We as a society suffer while they (shareholders) profit. It's completely reasonable to demand truth in advertising, verifiable claims, and messages that provide useful information. All else is insidious brain-washing, esp. in the urban environment where it's almost impossible to avoid the sub-conscious intake of advertising messages. Unfortunately, as we see with the current federal election campaign, political parties are among the worst of the bunch when it comes to disseminating mis-information and claiming it as fact.

"Once we have surrendered our senses and nervous systems to the private manipulation of those who would try to benefit from taking a lease on our eyes and ears and nerves, we don't really have any rights left. Leasing our eyes and ears and nerves to commercial interests is like handing over the common speech to a private corporation, or like giving the earth's atmosphere to a company as a monopoly. "
- Marshall Mcluhan

We have of course done exactly that. Corporations now control the major means by which we communicate outside of face to face conversations. Whether you are 'right' or 'left' in your economic/political viewpoint, this is a bad thing.

Stump

We do have Truth in Advertising laws. If you have any evidence that any ads were run promising an increase in the value of something being advertised then present it to the authorities and the law will take its course. Let me know and I'll take care of it.

naivete

doesn't become you R/man. Advertisers do an end run on any laws that are currently in place. Simply put they should be restricted to providing factual information about their product, the price, any special offers they may have, and how they stack up against their competitors. I have no problem with attempts to create demand based upon facts, or attempts to get consumers to switch brands based upon verifiable advantages of one product over another. All the rest is just hogwash. So-called lifestyle ads are simply lies dressed up as fantasies. The utter lack of concrete information in them is what puts them outside the laws you claim will protect us. It's (the current advertising environment) just another form of pollution and it breeds a consumerism that's just as unsustainable as any other form of environmental degradation.

Why is it....

...Conservatives( and Campbell in his Conservative clothing) accept zero culpability for their F#@d up policy changes and then want the glory when they change it back?!?

Gotta love how Flaherty took the credit for easing the current financial crisis by taking back the ruling on 40/0 mortgages when it was their ruling in the first place. They quite obviously sleep quite well as they have absolutely zero moral conscience.

This is the conservative version of giving 'credit where credit is due'. It does not become them.

As far advertising is

As far advertising is concerned, it is very easy to do false advertising appear as truth, or reality.

Politicians and economists are masters of it.
This is what mind benders and propaganda are about.

To the best of my recollection, a few years ago Nike sued in a California court for their right to lie in statements and adverstising.

In any case, one of the main weapons and tools of "economic competition" is lies fraud, to misled competitors and the public. The same as the military, built on lies to the enemies, soldiers and the public alike.

However, lies work only so long, before people get fed up, as the Soviets found out when their cardboard castle, built on lies, collapsed around their necks, just as it is now collapsing around the necks of the capitalist dictators.

Ed Deak.

Did you see this Ed?

http://www.financialpost.com/story.html?id=866521

Now the buggers want Canada to pull their chestnuts from the fire

G West

The derivative beast is still very hungry,this is such a scam I can`t believe it!
With 2 trillion dollars you could set up brand new banks all around the world with (clean) balance sheets that would be more than willing to lend money to worthy credit risks!
Who will stop this madness,is this a mass conspiracy? These monies being injected into the markets are merely paying off derivative bets/credit default swaps!

Though having said that,Might be a good time to re-negotiate NAFTA--Desperate times call for desperate measures!

New! Improved! Batteries not Included.

Interesting to note that during the 30s depression many manufacturers folded or were consolidated. Many companies stopped advertising, this, being discretionary spending. Among those that did survive were companies that continued print advertising albeit cutting back and running only black & white ads.

FP Story

An opportunity for the well managed Canadian banks to pick up some decent assets, perhaps.

Good to see that Harper and Flaherty's policies have positioned our banks to now be in such a strong position.

Yes, the Derivatives Beast is HUNGRY... lessons not learned

A little over ten years ago, Nick Leeson was able to cause the collapse of Barings Bank by the use of derivatives.

Looks like it did not sufficiently scare anyone to take a closer look at the derivatives market. This lesson unlearned is going to bite us in the a$$ very hard.

realisticman

Good to see that Harper and Flaherty's policies have wiped out hundreds of billions of Canadian's wealth.

Exactly Frank

I'm sure that the collapse of those banks in Iceland can be directly linked to Harper and Flaherty! They probably were having secret meetings with those devils at Bear Stearns too.

Did you see this Frank?

It's been one action-packed week in India. The Bombay Stock Exchange Index, or Sensex, tumbled 6% to a two-year low. For the first time in five years, the central bank cut the cash reserve ratio—the amount of funds that banks have to keep with the Reserve Bank of India—by 50 basis points, to 8.5%, on Oct. 6. The same evening, the Securities & Exchange Commission of India eased some restrictions on foreign portfolio investors—such as registering in India before buying shares and limits on offshore derivatives—it had imposed in 2007. And finance minister Palaniappan Chidambaram made yet another television appearance that day to say that India was safe from the global turmoil, and "the only fear is fear itself."

I'll bet that was all due to Stephen Harper's few months in office! Must be. Harper's destroying the world!

Wasn't Harper in Japan once too?

"10/7/2008 5:18 AM ET
TOP MARKET NEWS

Citigroup ends talks with Wells Fargo over Wachovia

Stocks Plunge As Investors Go Into Panic Mode; Dow Falls More Than 675 Points - U.S. Commentary

General Motors And Ford Shares Finish At Multi-Year Lows

U.S. To Shore Up Banks Through Capital Injections, Reports State

Obama Takes Aim At McCain's Mortgage Buyout Plan

(RTTNews) - The Japanese stock market closed sharply lower on Tuesday, extending losses for the fourth consecutive trading session. In the opening trade, the benchmark Nikkei 225 index briefly fell below the key 10,000 mark for the first time since December 2003."

If only Jack were there saving the world.

Harper's policies

Hmm, the TSX plunged 5% today. Who's running the country again? I guess that would be Steve and the Conservatives.

With Steve in power Canada has lost more "wealth" in a year than Layton's promises to wipe out poverty would cost for the next 100 years.

How about that.

No idea(s) and Good Information

Good, and in fact, perfect information, is required for a functioning marketplace. Unfortunately, information is controlled and contrived.

Where do we get this good information? From the media? Not on your life...

For example, this morning I was listening to CKNW and Phil Til is bantering with Vic Adair, the "derivatives expert" from MF Global and one of the usual economics "experts" that parade around the radio station. Well Phil is asking Vic to "make sense of all this economic collapse". Well Vic, how about telling us that over the last year-to-date, the share price of MF Global dropped by over 80 percent.

http://charts3.barchart.com/chart.asp?jav=adv&vol=Y&grid=Y&divd=Y&org=stk&sym=MF&data=E&code=BSTK&evnt=adv

Would be nice to know.. that is good information.

Crooks and Liars are in Power

Yesterday the Globe and Mail and the Canwest papers came out in support of a frickin' Harper majority, which just goes to show that the claims by the extreme right that our media are liberal is a bunch of BS. Of course, the National Post is Fox News in print, but the Globe? At least one of their editors is a neocon...not sure who the others are. But right after that the Cons started creeping up in the polls again after having lost points for blowing their perception of the state of the economy. You know, Harpo's reassurance that the "fundamentals of our economy are strong" (another plagiarized statement) and his advice to Canadians to buy stocks "because you can get a deal now."

I have never loathed a government more than this one. Seriously, even at the height of ad-scam, I couldn't hate a government more than I hate the Harper government.

Past this election, the Liberals had better do some soul searching and turf assholes like Iggy and any other rightwingers. We need a coalition of true liberals that unites the 70% of Canadians that do not support neoconservatism. I will choke if Canada gives Harpo another gov't. CHOKE.

its worth taking a hard look

October 9: The World Economic Forum issued a report, a survey of opinions of executives, stating that Canada has "the world's soundest banking system".

As Canada's Finance Minister Flaherty says, Canada's financial institutions are "sound, well capitalized, and less leveraged than their international peers".

One day passes.

October 10: Flaherty announced that Canada will buy $25 billion in mortgages to "help the country's banks".

Imagine what its like where the banks aren't sound. It sure is comforting to know we live in a country that has the soundest banks in the world. Yessir. Am I ever glad.

Did I tell you how glad I was?

sophisticated financial products

Harper just handed out $25 billion to the Canadian banks. These are the ones said to be the world's most sound by a recent World Economic Forum survey. Eyebrows were raised. Harper explained: he's just "exchanging assets". He's going to make a profit on it. He handed over $25 billion of our cash, and came away with some paper the banks don't want on their books. Harper says this stuff the banks "exchanged" with him for our money isn't like the bad stuff everyone is talking about that emanated from the U.S.

But what if it is?

In the US there was an entire industry, at street level they had people out there lending to no income no job no record of ever paying anything back types, one level up there were paper filers making sure the forms at least made it sound like there is a possibility the loan might be paid back. They packaged up the loans so an "instrument" was created that could be sold on to the higher level, this is now a load of loans with all the right checkmarks on the approved forms listed on a sheet now, then put a slice of each of these lists of loans onto another sheet so they created an "instrument" that was a list of tiny percentages of the lists of actual mortgages, this was the slicing and dicing stage, at this point we are in an investment bank on Wall Street where they can't get enough of this paper as the markets are clamouring for more of it every day. Moody's believed you could sort out grades of this stuff. Some of it was marked AAA. The ratings agencies never went down to the street level to discover what was going on.

This is what a sophisticated financial product is.

Everybody was making money beyond their wildest dreams, we're talking commissions on volume, and there was no risk, why Greenspan said it himself, so they "leveraged" their business, borrowing as much as 30 times more than their original total capital so the business of shovelling these securities out to the investment world could expand to a fantastic size, the standards for who to loan to dropped lower and lower, until managers started to notice that loans were being defaulted on before people could make their first payment.

Poof.

The entire industry folds up and everyone who can still pretend they are solvent is stuck with whatever paper they had on hand the day no one wanted to buy a single piece of this paper anymore.

They convinced themselves that they couldn't be starting with total dreck, even though everyone on the street making the original loans had a very good idea of what was going on, and by the time they had filled out the forms, assembled them into the groups of dreck, cut the groups into hundreds of slices of groups of dreck, shuffled them all up and reassembled them, the risk would be spread so thin it would even disappear.

Greenspan used the word "eliminated" when talking about the risk of this type of product in Congress.

But, they had actually just reassembled all the slices back into a piece of drek, not that different from what they started with. and, if house prices plummeted, the situation would deteriorate rapidly.

House prices were never going to plummet. House prices were going to skyrocket forever. House prices were going to go up fast enough people could borrow on the increased equity in their homes to make the payments to hang on to them long enough to borrow more on the increased equity.

But, if house prices ever did plummet, defaults would start piling up quickly and a lot more of this paper than anyone wants to imagine now would turn into the drek they all knew a lot of the last loads of stuff they packaged up when standards were lowest certainly was.

And no one wants it now.

I mean, ultimately, if you've got some of this paper, it might be able to be sorted out into the actual homes you can foreclose on if everyone defaults so there is value there as unlike a stock which can become absolutely worthless, a home has a value as you can live in it. The banks say they've got to get this stuff off their books or they will have to declare themselves bankrupt and in the meantime they all know exactly how badly they themselves blew it and they don't know exactly how badly the next bank blew it so they're not lending to anyone, not to each other because that next bank might be just about to go bankrupt, and not to you or me because the bank needs all the cash it can get on its books to set against all the drek it got stuck with when the day arrived and no one wanted absolute garbage that was sliced and diced and reassembled into even harder to deal with garbage any more.

I'm sure glad Canadian banks aren't holding any of this stuff.

I guess Harper will show us what the banks unloaded on him for our $25 billion after the election. We can trust him. Eh? They probably only unloaded the gilt edged mortgages they signed with their most reputable borrowers. We can trust the banks.

I'm sure glad I live in a country with the strongest banks in the world.

Do I detect a tache of doubt Mon ami?

The banks need a cash infusion so that they can distribute funds to clients that need to pay wages to hard working men and women, so they can put food on their kitchen tables.

Remember:
"The Finance Minister said the mortgage purchase does not represent a bailout of the banks. Rather, the government's CHMC will be purchasing "high-quality assets" that, in normal times, the banks would be able to use as collateral for borrowing in credit markets. The first tranche, expected to be $5-billion, will be bought at auction, scheduled for Oct. 17.

In contrast, he noted, U.S. and European governments have launched massive programs to buy non-performing loans and subprime mortgages from lenders in an effort to keep them afloat and to keep the credit system functioning.

Ottawa maintained that the plan will not cost taxpayers any money because the loans were already insured by Canada Mortgage and Housing Corp. The government will be earning an unspecified rate of return on the mortgages.

The share of mortgages in arrears remains near historic lows in Canada.

U.S.
Q2 2008: 4.5%

Canada
Q2 2008: 0.3%"

The Society Page

" Who will spend our $700 billion? Meet 35-year-old Neel Kashkari

Posted Oct 8th 2008 2:30PM by Michael Rainey - bloggingstocks.com

His name is not exactly familiar and his official title is a bit much -- Interim Assistant Secretary of the Treasury for Financial Stability and Assistant Secretary of the Treasury for International Economics and Development -- but 35-year-old Neel Kashkari is now one of the most powerful people in the global economy. As the head of the new Office of Financial Stability, it's his job to start spending the $700 billion Congress approved to stabilize the financial system.

As some commentators enjoy pointing out, Kashkari is a former rocket scientist, having earned Bachelor's and Master's degree in engineering from the University of Illinois and worked as a mechanical engineer at TRW, where he developed latches for the the Next Generation Space Telescope. He left engineering for finance, parlaying an MBA from Wharton into a gig at Goldman Sachs (NYSE: GS), where he rose to Vice President, specializing in information technology investment banking. "

cash infusion

"The banks need a cash infusion so that they can distribute funds to clients that need to pay wages to hard working men and women, so they can put food on their kitchen tables."

If the gov't is truly serious about this, then why not give vouchers for supermarkets to these hard-working men and women. Cut out the middle-man (banks that have proven they aren't capable of managing money). I'd sooner have a five hundred dollar credit with Safeway than see the same money left in the hands of management types who evoke the Peter Principle. Let the companies go cap in hand to the banks instead of Harper spending our money to prop up a corrupt and flawed system.

It can't happen here....

"The Finance Minister said the mortgage purchase does not represent a bailout of the banks".

Obviously.

Now, if I was in a sinking lifeboat, and the rest of the passengers didn't really understand why I was frantically removing water from the bottom of the boat, I would announce that I was NOT bailing out the boat. I would say I was "exchanging" the water in the bottom of the boat for some air from the atmosphere. The first rule I was taught at bailout school was to never, never use the word bail.

I would say that in "normal times" I could leave the water in the bottom of the boat and nothing would happen. But I'm a slinking stinking rat, the type of guy who would think $17 trillion in tar sand was worth killing the planet for. I'm not like Harper and Flaherty. If I told the truth, that the boat was going down and I believed I might not be able to bail fast enough, panic would break out and the boat would sink for sure. This wouldn't leave me time to put on my golden lifejacket and survive.

I take one look at the photo of Harper and Flaherty standing side by side up there and I breathe a sigh of relief they are in no way like me.

You see, "the government's CHMC will be purchasing 'high quality assets' that, in normal times, the banks would be able to use as collateral for borrowing...".

In normal times, according to a risk manager from a "large global bank" published anonymously in The Economist under the headline "Confessions of a risk manager" "a 20% drop on assets with virtually no default risk seemed inconceivable", and such assets i.e. secured debt obligations, could be used for exactly what Flaherty says, i.e. collateral for borrowing. The drop "did eventually occur" notes the risk manager, summing up the reason banks all over the world are in trouble today. "A large global bank" in this case, is very liable to be far larger than anything we've got in Canada, employing risk managers who were very likely to be regarded by Canadian bank risk managers as gods.

The assets this risk manager confessing his sins in The Economist was talking about eventually became not possible to value as there was no market for them, and this risk manager approved these assets as suitable for the bank to keep on its books itself as they were as good as gold, better in fact as revenue flowed from them as mortgage payments flowed in. They sold onwards the absolute garbage they had the slightest suspicions about to the investors who were their customers.

Canadian banks, it would go without saying except these are not normal times, didn't touch a drop of this toxic waste, as this paper is now called in the US. Canadian banks are the soundest in the world. Right? Any time I have the slightest doubt about this I just take another look at the photo of the smiling twins up there in the article.

"The share of mortgages in arrears remains near historic lows in Canada"
"U.S. Q2 2008 4.5%"
"Canada Q2 2008 0.3%"

We'll find out how valuable whatever Harper and Flaherty bought is after whatever price drop Canada's housing market goes through is over.

The pressure to default mounts if you own a $500,000 home with a $500,000 mortgage, as the price drops, say, by 20% to $400,000. Reputable people with good jobs and credit ratings walk away from losing situations like this in droves. That's why no bank ever loaned $500,000 on a house worth only $400,000 even at the peak of the subprime loan frenzy. That's why you always had to put up a down payment in the quaint old days. 20% down left some leeway for market drops, the cost of foreclosure if you defaulted, etc. If you took a 10% loss just after you bought in, you'd still have 10% equity in there you'd have an interest in protecting so you'd soldier on making the payments.

The banks protected themselves back then, because they didn't have sophisticated financial instruments to magically do it for them.

"Ottawa maintained that the plan will not cost the taxpayers any money because the loans were already insured by CMHC..."

Now me, I'm a big insurer, like AIG. I insure mortgage backed paper and make a lot of money on it. When it dawned on me that all the banks that held this paper had decided they had been taken to the cleaners by the titans of Wall Street and they were lining up outside my door demanding that I pay off on their policies, I lost $20 billion in one quarter, then I phoned up Bernanke and said I was going down and I was going to take the entire financial system in the world with me. When Paulson realized that meant the end for Goldman Sachs, they came around, and I'm still here. Thank god for Goldman Sachs.

Bush is going to "exchange" the $700 billion Congress coughed up, for the "high quality assets that in normal times...blah blah". Its great, I get to keep all the money I made from selling the insurance and I don't have to pay off on the policies as the entire world teeters on the brink financial collapse.

So when I hear the CMHC, because it issued the insurance on the mortgages, isn't taking any risk when it now buys up all the mortgages, I'm totally reassured. That wouldn't have worked for me, because that would have meant I would have had to cough up $700 billion instead of getting Congress to do it. No one was coming to me asking me to buy paper that was worth something, they were coming with worthless toxic waste demanding I pay off on my bet, that they paid for in premiums, that this could never happen. Everything they've got that is actually worth something they are hanging on to, and they've got to find someone to palm off what they have that is not marketable or they will collapse. I wouldn't buy an apple from these banks now, and I have been their close personal friend for as long as I've been alive.

Obviously, the mortgage backed paper insurance business is a completely different thing in Canada. Completely different. House prices probably can't drop there, it has to be impossible. The Canadian dollar is held to be so strong that the clowns who are fleeing away from it into US Treasuries causing a 25% drop from the peak last year are the stupidest people in the world. I hear the banks are the strongest in the world up there.

Canada should do whatever it takes to backstop the Canadian financial system, and pitch in with Britain, the US, Japan, and whoever else steps up to the plate to backstop the financial system of the entire world and do it quickly. But it would be so nice for a change if all the politicians either shut up or started to think a tiny bit bigger than whatever their preposterously short sighted view of what their own interest has been up to now.

Obviously, it is too much to ask of Harper that he stop b*llsh*tt*ng the troops.

Harper bought mortgages, Treasury's buying banks instead

"Two weeks after persuading Congress to let it spend $700 billion to buy distressed securities tied to mortgages, the Bush administration has put that idea aside..." (NYTimes Oct 11)

They're going to buy the banks themselves now. The plan is to "inject" capital into the banks in a different way. They don't think buying up paper the banks currently have no way to value because no one wants to buy a single piece of it is that hot of an idea any more.

Buying a piece of the bank itself sounds a lot easier than buying up sliced and diced collateralized debt obligations and trying to figure out how to foreclose on some of the houses you'd be entitled to foreclose on if the owners defaulted. Under the new plan, the banks worry about what to do about all that.

This new plan forces the banks to hand over a percentage of all their future profit and possibly, a percentage of future control. If they don't like this they can always buy out the government at some future time, after the bailout has stabilized the global financial system and they are making money again. Or the government could sell their stake after things calm down.

Apparently the Republicans had an aversion to nationalizing the banks.

I'm still wondering what Harper has done. The banks certainly got an "injection" of capital, $25 billion in US terms, given that the US is 12 times the GDP of Canada is $300 billion, and no one could spend that kind of chump change down there, say what Harper is saying, and not touch off some kind of debate over it.

He's not bailing out the banks he says, but he obviously is. There is no additional risk he says.

The risk is that this move might not prove to have been the most effective thing to do.

When Flaherty says by handing over $25 billion the banks will be in a "better position" to pass on interest rate relief handed to them by the Bank of Canada, if he owned the banks he could just tell them what to do. If the problem is that the banks won't loan to each other and credit has frozen, the owner of all the banks could just dictate an order to start lending again.

I wish there wasn't an election going on and a real debate could occur over what is happening now.

Egmont Rapids

You ask :

"HOW COME THE BC GOVERMENT IS PUTTING THE PEOPLE`S MONEY IN THE MARKET--Why would they not just put it into a low interest but safe investment vehicle like the bank of Canada!"

The Gov't accounts you mention are trust funds, and these are supposed to put their money in the most conservative, (non-speculative) investments possible. Typically these have been with firms managing mortgages, since they yield the highest low-risk return on investment.

One Of the very first things Harper did when he came into power was to loosen up these requirements, along with directing CMHC to begin issuing 40 yr, no money down mortgages, the very thing that has fueled the crisis in the US.

Contrary to popular wisdom, senior executives are not the shrewd independently thinking geniuses portrayed by the press. Rather, they are like a bunch of lemmings constantly playing follow-the-leader. If a Big Lemming does something, the rest all follow suit, and we've seen it with "vertical integration", "downsizing", "outsourcing", and more lately with "hedging" and the derivatives mortgage market.

So don't kid yourselves, folks, everybody and his dog has followed the "smart money" into this derivatives market, and as most analysts say, the shakeout is going to take at least a year or two to work its way through.

Addendum.

The thing I forgot to mention is that there are many private mortgagors other than the publicly owned CMHC, and because they had been giving out 40/0 mortgages big-time and were backed by the banks, buying up their now grossly devalued paper is indeed a bailout, since unless the homes involved regain their over-inflated value, the gov't loses money.

ME 2

Harper took office in Feb. 06, 40 year mortgages were introduced in Nov. 06. It wasn't, "One of the very first things Harper did".

egmont: "I have no evidence but knowing the way Campbell operates he probably put this money in investments promising great returns but riskier."

"RBC GLOBAL SERVICES REAPPOINTED BY BRITISH COLUMBIA INVESTMENT
MANAGEMENT CORPORATION TO PROVIDE GLOBAL CUSTODY SERVICES

bcIMC is a Canadian leader in global funds management with C$57 billion in
institutional assets under administration across a diversified portfolio: Canadian, U.S. and international public equities, fixed income (money market and bonds), mortgages, real estate and private equity."

Like all pension funds the investments are diversified and they are not decided in the office of the Premier.

for a laugh until the pictures sway

Check out subprime, Bird and Fortune, on the youtube, if after all this excellent information, you need a good laugh. I mean laugh until the pictures sway.

If it says this vid is no longer available, disbelieve and try again later.

Fiat lux on teaching economics

Great article, Ellen!

Ed, you're on the mark when you criticize how economics is taught. I recently saw biologist Paul Ehrlich (The Population Bomb, etc.) speak at UBC. He talked about trying to build bridges with economists.

One jointly-written article was accepted by a prominent journal. Some informal feedback referred to the article by KA (economist) and his 'Communist friends'.

Further, Ehrlich pointed out economists are not taught the idea of limits. He has had highly-educated economists ask him why the earth cannot support an infinite population.

Based on hearing Ehrlich, all economists should be required to take an ecology course. In nature, resources limit population size.

RMan

My error, RMan. I knew Harper had loosened up the requirements for trust fund investments ca 01, since we discussed it then when I was on a trust fund board. So I erroneously assumed that the 40/0 thing was done at the same time.

I am shocked, however, that Harper would have ordered the CMHC to accept 40/0 mortgages in 06 just when the subprime bubble burst was being predicted. But then, perhaps he was just preparing the way for the CMHC to be the bailout mechanism for the banks and private mortgagors?

While Egmont Rapids clearly needs to read up on how trust and investment funds are managed, you are somewhat disingenuous in failing to note that a large part of the securities bcIMC and other gov't agencies parked their money in were/are derivatives or closely related. These were considered very safe by the Big Lemmings I mentioned, and so the boards/the gov't can't really be blamed if these have now turned out to be lemons.

Dave 49

At least twenty years ago I read an a article by an economist that the natural resources of a country should be counted as "Capital", and so as they are used should be seen as withdrawals from that country's capital accounts.

Seen this way, natural resources would not be viewed as valueless unless "investments" gives them their value. If resources were viewed as having an intrinsic value of their own, it would change our current permissive attitudes towards the resource raper's denial of financial responsibilities to the public.

Lets' be CLEAR

All this crap about Gordon Campbell investing in risky funds is just not true. This is an at-arms-length body distant from the Premier's office and is obliged to invest for their security of its contributors.

"$85 billion of assets (as of March 31, 2008)

In accordance with the Public Sector Pension Plans Act (Act), bcIMC's Board of Directors consists of seven members. The trustees of the four statutory pension plans (College Pension Plan, Public Service Pension Plan, Municipal Pension Plan and the Teachers Pension Plan) are each responsible for appointing one director. The Minister of Finance appoints three directors, two of whom must be representative of bcIMC's other clients. The third appointee by the Minister is designated under the Act as the Chair of the Board. To be nominated in the capacity of Board Director, the nominee must satisfy certain criteria.

Directors of bcIMC are legislatively prohibited from getting involved in investment decisions. Investment professionals, hired by bcIMC, make these decisions, in accordance with the policies established by the clients."

http://www.bcimc.com

Wrong stats quoted in article!!!

I don't mean to sound like I'll selling anything here, but so many articles ignore the other side of the coin when discussing 40 year mortgages. For one, the "40% of new mortgages are 40 years" has been recycled incorrectly over and over. It's actually 40% of new mortgages were more than 25 years and only 15% had amoritization periods of 36-40 years.

Also, this mortgage offers many benefits and increased flexibility. Borrowers can actually choose to pay off the mortgage much sooner than the 40 years, but when going through tough times, they can stick to the minimum payments. This is probably why small business owners were so upset when this program was cancelled.

source

Source of the mortgage stats mentioned in my previous comment:
Canadian Association of Accredited Mortgage Professionals' 2007 "Annual State of the Residential Mortgage Market in Canada".
http://www.caamp.org/download_docs/Survey-Report_CAAMP-Fall-2007.pdf