Canada thiving in the current crisis

[Blue Mountain]

Newsweek's Fareed Zakaria has an interesting opinion piece on Canada's position in the current economic crisis:

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

Canada has done more than survive this financial crisis. The country is positively thriving in it. Canadian banks are well capitalized and poised to take advantage of opportunities that American and European banks cannot seize. ...

Over the past 15 years, as the United States and Europe loosened regulations on their financial industries, the Canadians refused to follow suit, seeing the old rules as useful shock absorbers. Canadian banks are typically leveraged at 18 to 1—compared with U.S. banks at 26 to 1 ...

Canada has also been shielded from the worst aspects of this crisis because its housing prices have not fluctuated as wildly as those in the United States. Home prices are down 25 percent in the United States, but only half as much in Canada. Why? Well, the Canadian tax code does not provide the massive incentive for overconsumption that the U.S. code does ...

For most of the last 12 years, Canada has had a liberal minded government that kept the banking regulations in place and ran up budget surpluses instead of deficits. Only recently have we started flirting with the same kind of conservatism that the Americans just rejected. For now, although the Conservatives form the government, they're being held in check by our parliamentary system.

Of course, we're not going to come through this unscathed. We rely too heavily on trade with the United States. As has been noted, "When the US catches a cold, Canada gets pneumonia."

The scary thing right now is the US has a bad case of pneumonia.

 

[gtc]

I don't think Australia, New Zealand or Singapore have had to bailout their banks but I could be wrong.

 

[The Atheist]

I don't think Australia, New Zealand or Singapore have had to bailout their banks but I could be wrong.

Aussie certainly hasn't, although Rudd has pumped a lot money into the system. NZ only has two small banks, neither of which has or will require a bailout.

On the other hand, we've had 30 finance company collapses in two years.

 

[Puppycow]

Aussie certainly hasn't, although Rudd has pumped a lot money into the system. NZ only has two small banks, neither of which has or will require a bailout.

On the other hand, we've had 30 finance company collapses in two years.

Only 2 banks? That can't be right. What is the population of NZ, btw?

 

[gtc]

Only 2 banks? That can't be right. What is the population of NZ, btw?

4.29 million. The other major NZ banks are headquartered in Australia.

 

[The Atheist]

Only 2 banks? That can't be right. What is the population of NZ, btw?

Yes, and of those two, one is really only a small regional bank, while the other is a government enterprise which has only been going for a decade, being started up to pander to a socialist member of parliament who forced the Labour Gov't to do so to gain his [then necessary] support.

He is still laughing at the irony of being responsible for growing the only bank in the universe which has had no downside from the crisis, having increased market share, grown its assets and increased profitability.

I see that another crowd is also claiming to be a bank nowadays, a former credit union, PSIS. Apparently they also are a registered bank, so make that three Kiwi banks. Also extremely unlikely to require bailout, being a conservative lender only on very good margins.

 

[Texas]

Newsweek's Fareed Zakaria has an interesting opinion piece on Canada's position in the current economic crisis:


For most of the last 12 years, Canada has had a liberal minded government that kept the banking regulations in place and ran up budget surpluses instead of deficits. Only recently have we started flirting with the same kind of conservatism that the Americans just rejected. For now, although the Conservatives form the government, they're being held in check by our parliamentary system.

Of course, we're not going to come through this unscathed. We rely too heavily on trade with the United States. As has been noted, "When the US catches a cold, Canada gets pneumonia."

The scary thing right now is the US has a bad case of pneumonia.

I wouldn't call it flourishing:

http://www.financialpost.com/news/story.html?id=1236604

OTTAWA -- The recession's body count is expected to climb sharply again at the end of next week, with analysts projecting Statistics Canada will report Friday up to 40,000 more Canadian jobs were lost last month, bringing the total losses over the past three months to 145,000.

"January's labour force survey will likely reflect the numerous announcements of plant closures and the general decline in business confidence that have got employers trimming costs," said CIBC World Markets economist Krishen Rangasamy, projecting the losses will push the unemployment rate up a couple of notches to a three-year high of 6.8%, and closer to a forecast peak of 8%.

"The private sector has cut over 100,000 jobs over the last six months, most of which were full-time positions, and this trend could accelerate as the recession drags on."

 

[TriangleMan]

Yes I think the thread title is misleading. Canada's banking system is doing "okay" but the economy is on a sharp downturn. Thread title seems to imply the Canadian economy is thriving.

 

[Corsair 115]

I wouldn't call it flourishing:

http://www.financialpost.com/news/story.html?id=1236604

Unemployment is rising, certainly, but what's of note is that the rate here is still below that in the United States. In December the rate was 6.6% in Canada versus 7.2% in the U.S.; in January the rates were 7.2% versus 7.6%, respectively.

That situation is unusual, because for the last twenty-five years Canada has normally had an unemployment rate several points higher than in the U.S. as this StatsCan chart shows. But in the last few years that hasn't been the case, and the Canadian rate has been below the American.

Yes I think the thread title is misleading. Canada's banking system is doing "okay" but the economy is on a sharp downturn. Thread title seems to imply the Canadian economy is thriving.

The banking system here is doing better than just "okay." There are no solvency concerns, no large wave of home foreclosures, and no glut of subprime mortages infesting the financial system. The "Big Six" banks here back in December reported their 2008 financial year profits. Collectively, profits were down 38% compared to the year before due to the international financial system turmoil, but even so, the six banks posted an aggregate profit of $12.15 billion (compared to a record $19.51 billion the previous year). That's certainly more favourable that the billion dollar losses being posted by some American financial institutions.

Certainly, no one is thriving economically at the moment, but compared to the U.S. woes, things are better here. Most economists are predicting the recession in Canada will neither be as deep nor as long-lasting as it is expected to be in the U.S., and that Canada will be among the first industrialized to recover.

Mr. Zakaria did overstate economic conditions here, but the core of his point is valid. Canada avoided making some of the mistakes the United States made, and that is benefitting us in a positive manner. In this regard, perhaps the U.S. could take away a few lessons on what to do to prevent similar financial troubles as it's seen of late from happening again in the future.

 

[WildCat]

There's more people in my county than there are in all of NZ. Canada and Australia don't have large populations either.

I'm sure you can find similar-sized bits of the US that didn't have a local bank failure, so I don't know what this is supposed to prove.

 

[Blue Mountain]

There's more people in my county than there are in all of NZ. Canada and Australia don't have large populations either.

A country's population has nothing to do with its ability or inability to regulate its banks. Look at Iceland: population 319,000^WP, and it had to be bailed out to prevent a bankruptcy.

I'm sure you can find similar-sized bits of the US that didn't have a local bank failure, so I don't know what this is supposed to prove.

Maybe it shows that the total sum of any country's intelligence is a constant.

 

[Corsair 115]

There's more people in my county than there are in all of NZ. Canada and Australia don't have large populations either.

Of what significance is population size of the nation exactly?

I'm sure you can find similar-sized bits of the US that didn't have a local bank failure, so I don't know what this is supposed to prove.

Except that this is about a national financial system. No subprime foolishness, no solvency worries, and general stability. Had the U.S. had a financial system operating along similar lines to Canada's, it would not be in the mess it's in at the moment. Surely that is of some importance? Or is the implication here that the U.S. method of doing things is always the right way even when it messes up badly?

 

[T.A.M.]

There's more people in my county than there are in all of NZ. Canada and Australia don't have large populations either.

I'm sure you can find similar-sized bits of the US that didn't have a local bank failure, so I don't know what this is supposed to prove.

If that's the case, then India and China are ****ed!

TAM

 

[tomwaits]

I think Wildcat's point was that within a global economy, New Zealand is a small sample size. Therefore, the fact that they haven't had as big problems as the rest of the world doesn't necessarily mean that their policies are more effective against the crisis.

 

[Corsair 115]

I think Wildcat's point was that within a global economy, New Zealand is a small sample size. Therefore, the fact that they haven't had as big problems as the rest of the world doesn't necessarily mean that their policies are more effective against the crisis.

Given the example of Iceland, and the interconnected nature of global finance and economics, it would not seem to be a particularly strong case. Size alone isn't saving or sinking anyone.

 

[Darth Rotor]

This is extraodinarily bad news for American men.

When things were a bit less rosy in Canada, we could count on a lot of imports from Canada of the standard Shannon Tweed, Kimberly McArthur, or Pamela Anderson.

When things are well, we will get less naked wonderfullness via Hef's rag, so I suggest we do something, soon, or suffer the horrid consequences of less fleshy brilliance from the Great White North.

DR

 

[gumboot]

I think Wildcat's point was that within a global economy, New Zealand is a small sample size. Therefore, the fact that they haven't had as big problems as the rest of the world doesn't necessarily mean that their policies are more effective against the crisis.

This is true in general, however the simple fact of this case is that we have had effective policies. New Zealand was extremely well-placed to survive the financial crisis with a substantial government surplus, amongst other things.

 

[Fitter]

This is extraodinarily bad news for American men.

When things were a bit less rosy in Canada, we could count on a lot of imports from Canada of the standard Shannon Tweed, Kimberly McArthur, or Pamela Anderson.

When things are well, we will get less naked wonderfullness via Hef's rag, so I suggest we do something, soon, or suffer the horrid consequences of less fleshy brilliance from the Great White North.

DR

If it makes you feel better, we talked about it last night between the second and third period and Canada has decided that you folks can keep Celine Dion.

 

[Carnivore]

Can New Zealand have Shatner?

 

[shuize]

If it makes you feel better, we talked about it last night between the second and third period and Canada has decided that you folks can keep Celine Dion.

Speaking on behalf the United States, we'll give you all of the economic stimulus package if you agree to take her back.