printThe Left will tell you it’s “regulation” that accounts for Canada’s strong banking system and solid economic growth. Nonsense on stilts; conservative financial practices account for the fact that Canada’s “economy grew at a 6.1 percent annual rate in the first three months of this year. The housing market is hot and three-quarters of the 400,000 jobs lost during the recession have been recovered.” (AP)
Canadian banks “aren’t as leveraged as their U.S. or European peers.” And I imagine that they did not aim to make home owners of those who cannot afford homes, and give credit to those who are not creditworthy.
The other day, CBC front man, Peter Mansbridge, reported approvingly on a Fed interest rate hike intended to prevent the distortions and the overextension that our artificially low interest rates are perpetuating. On American TV you’d have someone come on to give the Keynesian line to the contrary; government must stimulate; make up for sluggish demand, keep rates low. The CBC, as left as they come, did not present the “another side” to the interest rate hike story—-and rightly so.
There is only one correct economics, and it’s not the Keynesian kind.
It seems the people are cottoning on the the Keynesian scam. Hopefully the few drops will turn into a deluge at some point.
When I lived in Canada it was my observation that what ever the Americans did poorly the Canadians did worse. Inflation, political correctness etc. I doubt that the Canadians have improved significantly but they obviously are sticking to fundamentals,financially speaking, while Americans are falling prey to flights of politically induced fantasy. As I have said before, fundamentals are called fundamentals because they are fundamental. When dealing with the economy it’s the only way that works. Everything else is folly.
One huge irony is that the safest investments are the easiest to define, write rules for, and regulate. The regulations, in turn, encourage formation of and investment in all sorts of idiotically risky goop – hedged collateralized derivative bundles of manure that no one can really figure out.
Sadly, people with money are looking for safe investments but with governments all having the urge to counterfeit, it is very difficult to find. US Treasury Bills were safe in the past but with annual deficits going from the tens of billions to the hundreds of billions to the trillions in 30 years, they look dubious. Real-estate (Chinese, Canadian, whatever) sounds good but subsequently a flood of money only encourages prices to skyrocket which encourages more investment and overdevelopment (e.g. Las Vegas). Gold –consider its 1980 – 2005 performance. Stocks – American stocks have been lousy investments over the last decade. Best investment I made recently was buying chicken at 29 cents/pound and I have some cans of chili that I purchased at 34 cents. But why should Americans SAVE rather than purchasing frivolities on phony credit when the government can always come at gunpoint for my cans of chili to bail out the malinvestment??
I used to joke with Canadian friends in Windsor that the U.S. would buy the whole of Canada. The CDN $ was being exchanged at approx 67 cents of US $1. Well, hindsight being 20-20, just think what $100,000 CDN would be worth now! BTW…CDN Banks are are rated higher than Swiss banks. Keynesians, your “Waterloo” is on the horizon. Hello von Mises and Hayek.
Bravo! Fair and balanced only goes so far. Just because someone can articulate a theory doesn’t mean that a sieve holds water. I would even go one further. With few exceptions on American TV you get the Keynesian line without another viewpoint being offered. The exception is when Ron Paul is interviewed.
It is worth noting that during the Great Depression, no Canadian banks failed, whereas upwards of 8,000 U.S. banks failed. I doubt that the Canadian banking structure was the same then as now [I really do not know], but in the current economic downturn, again we see that no Canadian banks have failed. It seems the simple reason lies in more conservative financial practices. Despite such, there is no significant difference between the rates of home ownership in the U.S. or Canada — both countries run roughly two-thirds.
Home ownership is nice, but may actually impede economic rebound, as workers may find it more difficult to move in order to get new jobs.