Update: So much for only talking about buying back mortgages. They are now
buying $25 billion worth of garbage to ease 'liquidity' concerns. Too bad that our 'pride' and 'faith' in our financial system will lead us down. No debate, no policy discussions. At least in the US they ran through a charade of democratic process. Not here....the hockey season has started for sure.
- Roubini warning of ‘severe global depression’ if radical measures are not taken. Too often government actions only exacerbate the problems. I think the train of pleasing the markets by rate cuts and simple fiscal measures has long left.
- Loonie continues to plummet and is now going at a princely 85 cents. Days of rejoicing in Ontario won’t be too far, provided there is too much demand left in the US to keep the factories in Ontario running.
- Canadian banks are safest ones in the world, but based on similar surveys, so were Lehman Brothers and WaMU. And if everything is well with Canadian banks, what’s the need for ‘Paulson style’ recapitalization using the CMHC as the buyer of last resort? There’s bound to be lot of toxic garbage on the books of these banks. After all, someone lent to all the ‘property barons’ of Alberta, BC, Ontario and Saskatchewan during the ‘last commodity boom’ (if I may take the liberty of calling an end to the boom, or am I too early?). So how will this work? Apparently, the exchange program will work the same way as in the plan of Dr Evil himself- the AAA rated CMHC bonds (which we discussed a while ago here) will be swapped for the 40 year NINJA variety loans (read an anecdotal example here- international students in Edmonton buying $300k condos) so that the banks’ balance sheets are strengthened and lending to Canadians is not impacted. As if we really need more debt to buy overpriced condos, twentieth iPod and the third gas guzzling SUV in five years or take the cruises to the Caribbean.
- And on a personal note, we have not bought anything on credit since recognizing the perils of buying on debt when we bought our first new car ten years ago. And we are still driving it. And we will positively pay all cash for our house as soon as sanity returns to the markets (like it is returning to stock markets).
- As and when the markets begin to bottom, there’ll be some great opportunities for those who have a fat savings account at ATB. I don’t know when this will occur, but that day will arrive eventually.
- And finally, a happy Thanksgiving to all of you-bulls, bears, readers, optimists, pessimists and realists. Good health and strong families are way more important than material wealth. Let's count our blessings and get ready for another down week (not)!
