Canadian Banks Are on the Roll Again.

[SirJosephPorter]

Our banks also have the luxury of being able to remove the risk of mortgage defaults through government sponsored CHMC - They also have the EDC to insure risks on exports - (government insuarance) - There is the BDC that loans money to riskier start up business through the banks - again insured by the government.

You probably would have to be pretty stupid not to be profitable as a bank in Canada.

That may be MIT, but if it is so easy to stay out of trouble, why didn’t other counties structure their banks in a similar way? A few months ago Ireland was thinking of restructuring its banks along the line of Canadian banks, I don’t know if they did or not.

I think what sunk US, British banks was greed gone out of control. One would expect a corporation to be greedy, but when it gets out of control and banks do crazy things (like sub prime lending), that is when they get into serious trouble.

 

[CDNBear]

Sure I do, they had minimal exposure to sub prime loans. There was no sub prime lending in Canada. Indeed, there was very little sub prime lending outside USA, it seems to be uniquely an American product.

Subprime lending - Canada's dirty, little secret? | NowPublic News Coverage

I love it when I get to correct you, yet again. Please, by all means ignore me handing you your ass yet again...

However, American financial institutions bundled up the sub prime loans and sold it internationally as AAA securities. Canadian banks had the wisdom not to buy the sub prime loans, British, Irish etc. banks bought them heavily. That is why British and Irish (or Icelandic) banks were in trouble.

But Canadian banks had minimal exposure to sub prime lending. As I recall, CIBC had the most, TD bank the least. But none of them were involved in any significant way. They did suffer some losses due to sub prime mortgages, but not sufficient to affect their bottom line seriously.

Although this is true, it was a shot in the dark, not a true example of fact.

 

[lone wolf]

(British, Irish banks were fully engaged in sub prime loans).

...Indeed, there was very little sub prime lending outside USA, it seems to be uniquely an American product.

So ... um ... which one is it?

 

[CDNBear]

So ... um ... which one is it?

You notice how after you and I posted, two people who are supposedly on "ignore", joey came a wandering back in here?

 

[lone wolf]

You notice how after you and I posted, two people who are supposedly on "ignore", joey came a wandering back in here?

Methinks the man despises truth and logic ... and we keep feeding it to him ;-)

 

[CDNBear]

Methinks the man despises truth and logic ... and we keep feeding it to him ;-)

You're right. You know how I can tell?

His mouth's always open...:lol:

 

[Cannuck]

I was going to ask if you mind if I go and open a window...there's a lot of hot air in here but I see the problem has been dealt with.

Thanks guys.

 

[SirJosephPorter]

I see that half my screen is blank; the Trolls apparently are talking to each other (about me I assume, they really don’t have much of knowledge to talk about anything else).

I wonder if this has become a flaming thread. Ron?

 

[CDNBear]

I was going to ask if you mind if I go and open a window...there's a lot of hot air in here but I see the problem has been dealt with.

Thanks guys.

Not a problem Cannuck.

I see that half my screen is blank; the Trolls apparently are talking to each other (about me I assume, they really don’t have much of knowledge to talk about anything else).

joey, could it be we managed to prove you wrong, yet again? No, no way, not the high and mighty joey. He's all knowing!!! :roll:

I wonder if this has become a flaming thread. Ron?

Ya Ron. Do you think saying other member don't have the knowledge to discuss anything other then joey, is an insult..?

Seems pretty childish to me.

 

[taxslave]

As for greed, banks are not in the business of charity, they are there to make money, just like any other business. So sure they are greedy, which business isn’t? As to credit card rates, the solution is simple, don’t run up a balance, pay your bills on time.
Sir Jo: Far too simple for the average socialist. They would rather have an expensive government agency to monitor and report credit card rates. So much simpler than managing your finances you know.

 

[SirJosephPorter]

Sir Jo: Far too simple for the average socialist. They would rather have an expensive government agency to monitor and report credit card rates. So much simpler than managing your finances you know.

You are probably right, taxslave, but then Socialism never created wealth; it is the Capitalism which does that. Socialism redistributes wealth.

Unbridled Socialism is fully as bad as unbridled Capitalism. Corporations must be subjected to strict regulations (as Canadian banks are). But subject to those regulations, corporations must be left free to create wealth. It is indeed a blend of Capitalism (to create wealth) and Socialism (to distribute wealth) that works the best in practice (i.e. Social Democracy).

 

[ironsides]

Are there any poor Socialist National leaders?

 

[lone wolf]

Some folk just forget all about that lord over labour thing....

...come to think of it, didn't distant kin come here to get away from that?

 

[mit]

As for greed, banks are not in the business of charity, they are there to make money, just like any other business. So sure they are greedy, which business isn’t? As to credit card rates, the solution is simple, don’t run up a balance, pay your bills on time.

Sir Joseph - I have no problems with companies making money - Profit is not a dirty word in my books - Rather have a bank making billions than losing billions.
The problem is that many businesses - the ones listed on a stock exchange are not focused on making money - they are focused on their share price - The 2 are not linked anymore like they should be. Facebook and Twitter have not made a dime - they continue to lose money but are valued in the billions? A big global corporation swallows up a rival and takes on a huge debt but the stock price goes up even though it has been proven time and again that the proposed synergies never happen. Our inflated house prices have been used as equity to borrow against to feed mutual funds and stocks chasing paper profits based on future bets on what others will be willing to pay for the stock. Then there are the short sellers who hope the stock goes down so they make money - What happenned to selling products and services for more than the cost of delivery?

Maybe I need an MBA to figure that out - or an economic degree like our Prime Minister - He has done such a good job for my wallet and the economy - I guess I am just stupid!

 

[SirJosephPorter]

The problem is that many businesses - the ones listed on a stock exchange are not focused on making money - they are focused on their share price - The 2 are not linked anymore like they should be.

They are linked MIT. In most cases the share price reflects economic performance of the company, price to earnings ratio, future prospects etc. Sometimes what happens is that investors like a company just because of its future prospects, regardless of how it is doing at present. That explains companies like Facebook and Twitter.

However, it won’t last, if those companies eventually don’t turn a profit, their stock will collapse. Indeed, that is what the dot com hysteria was about. A company’s initial offering may be at 10 dollars, the share opens at 10 dollars, closes in the evening at 40 or 50 dollars. Such instances were not uncommon during dot com mania.

But these companies could not turn a profit, and the whole pack of cards collapsed, resulting in NASDAQ plunging from 5500 to 1100. So what you say may hold true for some companies in short term. However, if the companies don’t eventually turn profits, their stocks collapse.

Personally I don’t go for such speculative companies. Give me solid, blue chip companies (Royal Bank, IBM etc.) any day.

 

[ironsides]

FORD for the long term.

 

[SirJosephPorter]

FORD for the long term.

You really think so, ironsides?

 

[Cliffy]

So far, this recession has prolonged the inevitable ecologic disaster that capitalism has been working on for a long time. If the economy recovers without a radical change if focus from the present Rape and Pillage mentality, we can all kiss our collective asses good bye. Every day I pray that the banks and the stock markets will collapse completely.

 

[Cannuck]

11/16/99 BW Online--Commentary: The Problems with Stock Options

It's not all that difficult to increase the value of a company's stocks.

 

[Toro]

There was no sub prime lending in Canada.

That's actually incorrect. There was (and remains) subprime lending in Canada. It is just that it was never as widespread nor as large as it was in the US.

A Globe and Mail investigation into more than 10,000 foreclosure proceedings has uncovered a burgeoning subprime mortgage problem that many, including Prime Minister Stephen Harper, have insisted does not exist in Canada.

Data obtained from both the governments of British Columbia and Alberta, as well as from two private companies that specialize in tracking foreclosure proceedings, show that lenders are foreclosing on the homes of overextended borrowers at an alarming pace. Even more startling is that more than half the foreclosures in 2008 were initiated by a mish-mash of subprime lenders who targeted riskier borrowers with tarnished credit histories. The numbers tell a story of thousands of homeowners who borrowed more than they could afford from lenders who lent too readily. ...

“We have a subprime problem in Canada. Lenders dramatically reduced their lending standards in the past five years,” said Andrew Bury, British Columbia's foremost expert in foreclosure law, who has been practising for 29 years. Mr. Bury, who practises with Gowling Lafleur Henderson LLP, said that since August he has had to extend his work day to 15 hours to cope with a caseload that has tripled. Vancouver courts are so overwhelmed with the flood of foreclosure applications that it now takes six weeks to process a written order compared with one day six months ago, he said. “The subprime lenders trashed the market. They were doing loans that no one else would do and people were shaking their heads saying, ‘What are these guys doing?'” The data also revealed that scores of wealthy individuals dabbled in subprime lending at a time when many believed the real estate market was on a never-ending ride. Doctors, lawyers, stockbrokers and former bankers offered high-interest-rate mortgages to debt-laden homeowners, many of whom are now facing foreclosure proceedings. ...

The spread of subprime mortgages to Canada is one of the country's most poorly researched and misunderstood economic afflictions. Government agencies don't publish numbers on the scope of high-risk lending. Banks and other mortgage lenders do not disclose details about such loans, known in industry parlance as “non-conforming” loans.​

This page is available to GlobePlus subscribers

Canadian banks were more conservative than their global counterparts, and along with more strict regulation in Canada, were unlikely to have failed in the way they did in America, but again, I will reiterate, Canada was fortunate in that the unwind of the bubble in housing never fully played out and has been rescued by the massive global stimulus instituted by global governments and central banks. Had this not happened, home prices would have fallen more and mortgage losses would have been much greater.

http://www.theglobeandmail.com/servlet/story/RTGAM.20090313.wsubprime14/BNStory/Afghanistan/