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OfflineTedwilto
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Canada has worlds strongest banks
    #9820606 - 02/18/09 03:15 PM (15 years, 1 month ago)

http://money.canoe.ca/News/Sectors/BanksFinance/2009/02/18/8432071-ap.html

Quote:

Obama praises Canuck banks
By ROB GILLIES, Associated Press Writer
2009-02-18 08:29:36




Obama to reassure Canada on trade


OTTAWA (AP) — President Barack Obama said the United States should take note of Canada’s banks, which have avoided government bailouts and are now among the strongest in the world.

In advance of his first foreign trip, Obama said in an interview with the Canadian Broadcasting Corp. on Tuesday that Canada has shown it is a good manager of its financial system. Obama heads to Canada on Thursday.

“One of the things that I think has been striking about Canada is that in the midst of this enormous economic crisis, I think Canada has shown itself to be a pretty good manager of the financial system in the economy in ways that we haven’t always been here in the United States,” Obama said.

“And I think that’s important for us to take note of, that it’s possible for us to have a vibrant banking sector, for example, without taking some of the wild risks that have resulted in so much trouble on Wall Street.”

Canada has avoided the mortgage meltdown and banking crisis that are hitting the United States and Europe hard.

The country has not experienced the failure of any major financial institution and Canada’s banks now have the largest market capitalization’s in the world. Royal Bank of Canada has a $30 billion market cap compared to Citigroup’s $16 billion market cap

The stock prices of Canada’s banks are down but not nearly as much as U.S. or European bank stocks. Canada’s financial system is dominated by five banks, unlike in the U.S. where there are scores of banks.

The World Economic Forum said recently Canada had the soundest financial system in the world, with a rating of 6.8 out of 7.

Robert Bothwell, director of the international relations program at the University of Toronto, said government oversight has prevented the Canadians banks from behaving like U.S. banks.

“My suspicion is that the Canadian banks deeply desire to behave as badly or stupidly as the British or American banks but government wouldn’t let him,” Bothwell said.





:haha:


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Invisiblememes
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Re: Canada has worlds strongest banks [Re: Tedwilto]
    #9821681 - 02/18/09 06:05 PM (15 years, 1 month ago)

Lol, its funny when you go from being ranked 15 to top 5, without changing a thing - lolol.

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InvisibleLunarEclipse
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Re: Canada has worlds strongest banks [Re: Tedwilto]
    #9831782 - 02/20/09 06:45 AM (15 years, 1 month ago)

Isn't it interesting that in spite of having the world's strongest banks, the loonie continues to drop against the USD back to under 80 cents after having reached a brief level of parity?  Funny how that works...


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Invisiblememes
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Re: Canada has worlds strongest banks [Re: LunarEclipse]
    #9837740 - 02/21/09 09:54 AM (15 years, 1 month ago)

It makes perfect sense :smile:


Despite the strength of their banks, people still have more faith in the US government existing in the future than any other.


As far as the international investor is concerned, USD is as "good as gold"  [yes, i realize many of you disagree with this statement]

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OfflinegeokillsA
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Re: Canada has worlds strongest banks [Re: memes]
    #9837778 - 02/21/09 10:08 AM (15 years, 1 month ago)

While I believe that what meams brought up does play a hand, it is certainly not as strong of a factor as has historically been the case.  I believe that the greater deflationary force at work in our economy versus Canada is the primary cause of the relative strength of the USD (and that is not a good thing).  Of course, this stands to change in the future given all the inflationary stimulus/spending our government has in the pipe (which is also not the best thing, but preferable to a deflationary spiral).


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Invisiblememes
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Re: Canada has worlds strongest banks [Re: geokills]
    #9838031 - 02/21/09 10:57 AM (15 years, 1 month ago)

Agreed.  When I was preparing for the Federal Reserve Challenge last fall, our teacher could not stress enough the LENGTHS the Fed & government would go to in order to avoid deflation.

The amount of liquidity the fed has been pumping out for so long through their various policy tools has hopefully eliminated the prospect of a serious deflationary cycle, but they must remain VIGILANT in observing when that liquidity gets put to use - so they can suck it right back up, and avoid the hyperinflationary environment that would surely come to be realized if they just left it out in the economy.

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Re: Canada has worlds strongest banks [Re: memes]
    #9838386 - 02/21/09 12:03 PM (15 years, 1 month ago)

Quote:

meams said:
Agreed.  When I was preparing for the Federal Reserve Challenge last fall, our teacher could not stress enough the LENGTHS the Fed & government would go to in order to avoid deflation.

The amount of liquidity the fed has been pumping out for so long through their various policy tools has hopefully eliminated the prospect of a serious deflationary cycle, but they must remain VIGILANT in observing when that liquidity gets put to use - so they can suck it right back up, and avoid the hyperinflationary environment that would surely come to be realized if they just left it out in the economy.




Well if the USD was as "good as gold" we would still be on the gold standard.  We are not on the gold standard and as more and more funny money gets printed by the fed and the debt keeps piling up gold keeps going up.  It's surprising they didn't teach you to worry about inflation since that's what's been going on for quite some time.

As to worrying about a "serious deflationary cycle" maybe you could explain just what will cause such a cycle to start.  I keep hearing about these concerns but keep seeing MASSIVE amounts of fresh funny money being "printed" every month.  In fact the scale of new funny money appears to be increasing exponentially with no signs of stopping anytime soon.  New funny money = more money in circulation = more inflation down the road.  Sure they may have taught you that funny money would prevent deflation but to my way of thinking all it does and has been doing and will be doing in a big way in the future is to create inflation.  Worrying about deflation in this environment is like worrying it will snow in July in Florida.  Possible but not too likely.


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OfflinegeokillsA
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Re: Canada has worlds strongest banks [Re: LunarEclipse]
    #9838562 - 02/21/09 12:36 PM (15 years, 1 month ago)

Quote:

LunarEclipse asked:

maybe you could explain just what will cause such a [deflationary] cycle to start [?]



In this case, it started when the housing market peaked in 2007.  The subsequent deleveraging process, fueled by the failure of Lehman Brothers, has accelerated the trend.


Quote:

I keep hearing about these concerns but keep seeing MASSIVE amounts of fresh funny money ...  more inflation down the road



Yes but as you've stated, that is down the road.  Deflation must be tackled first as whether or not it is right or wrong, our government is willfully intending to re-inflate the economy in order to maintain the current structure of our society.  The ideal holds that the Federal Reserve will be able to monitor this reflation process and control the rate of inflation through the use of its various policy instruments including but not limited to the Fed Funds Interest Rate.  Ben Bernanke (head of the Fed) has already shown us that he is not afraid to flex the power of the Reserve; so we can only hope that he will be as vigilant in using these instruments to moderate the subsequent inflation that is due to occur after the current deflationary threat has been reversed.

A delicate dance to be certain, where things can (and probably some will) go wrong along the way. 
Like it or not, that's our system.  Understand it and try to work with it / to improve it the best you can.


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Invisiblememes
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Re: Canada has worlds strongest banks [Re: geokills]
    #9838902 - 02/21/09 01:30 PM (15 years, 1 month ago)

Geokills - nicely said.

LunarEclipse:  Me saying the USD is as good as gold in the eyes of international investors does not imply we should still be in the gold standard, or that one is dependent upon the other.  That's just ignorant.

Also:

Quote:

LunarEclipse said:
  It's surprising they didn't teach you to worry about inflation since that's what's been going on for quite some time.





Lol.  They did teach us about inflation, and why increaesd levels of it are disadvantageous, and how it can be a self-fulfilling prophecy.  However, it is widely held that low levels of inflation (~2%) is the ideal for the global economy.  Yes, the current actions of the Fed COULD lead to hyperinflation - GIVEN that all the liquidity they have been pumping into the economy all starts being used, and they do nothingHowever, once they see the tides turn, and inflation begin to rise they will (as Geokills said) use their various policy instruments to suck it back up, thus eliminating the threat of hyperinflation (Yes, there will still be some inflation).


:facepalm:

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