conceptwizard

Want to Solve the Housing Crisis? Look to the North

Yes, that is what the Government has said. There is a difference however in simply backing a mortgage (insure) and buying them with borrowed dollars that the taxpayer pays interest on, to re-capitalize the banks, this is called a bailout. This is an investment in tax dollars in mortgages that were not as sound as you think.

Now the Canadian Government is in the mortgage business. Sound familiar?

They were doing zero down mortgages with 35 and 40 year terms before the meltdown, sound familiar?

This left the Canadian taxpayer with a 75 Billion dollar deficit this year. Sound thinking? I don't agree.


On Dec 05 03:10 PM bob adamson wrote:

> Conceptwizard –
>
> You say that “The Canadian banking system got bailed out to the tune
> of 118 Billion dollars.” This is not strictly true and the implied
> comparison with the bailout to the key US investment banks is misleading.
>
>
> In the aftermath of the US and UK investment banking threatened meltdown
> in the last quarter of 2008 a major ripple effect was that the interbank
> lending and commercial lending markets began to freeze world wide.
> It was this that caused the deep global recession that, hopefully,
> may be lifting. The Canadian banks had weathered the banking meltdown
> crisis very well for reasons of which I assume you and the other
> readers are well aware. They were, however, impacted by global general
> credit freeze and the general uncertainty of the time and were becoming
> ultra cautious in lending to each other and to their usual individual
> and commercial customer base. To restore credit liquidity in Canada
> the Canadian Government, primarily through CMHC, made the 118 Billion
> dollars purchase to which you refer thereby ensuring that the Canadian
> banks had adequate liquidity to extend to usual customers. Consequently
> the Canadian domestic economy, while not immune to the global recession
> (How could it be when 30% of Canada’s annual GNP is based on foreign
> trade?), has fared reasonably well compared to the economies in the
> US and other advanced countries.
>
> Wasn’t this a gift by the Canadian Government to the Canadian Banks?
> Not really. The residential mortgage portfolios purchased by the
> Government were comprised of essentially sound mortgages because
> of the lending practices followed by the banks. Further, these mortgages
> were already guaranteed by the Canadian Government. In short, the
> Canadian Government will make money by holding these mortgages to
> maturity or contracted re-mortgaging date while the Banks resolved
> their short term liquidity concerns (concerns that were not threatening
> their survival at the end of 2008 but were curtailing their lending
> practices thereby threatening to deepen the growing recession then
> in Canada).
>
> Canadian real estate values, especially in communities where values
> had been booming, did as you say dip in the aftermath of the 2008
> economic meltdown. They have been strongly recovering recently, however.
> There is some concern that if mortgage rates remain at currently
> abnormally low levels, a variant of the sub-prime mortgage issue
> may build in Canada over time.
>
> bob adamson

Jobs Picture Improving in Canada, Too

Look at the percentages of unemployed in Canada compared to the US. 10% compared to 8.6%. Not so much difference here.

The Russians like the Canadian dollar as they are planning a major purchase they just announced. That will mean less for the US, this in my mind it the real issue.

Somebody is selling treasuries recently, (Japan?), this sent the yield skyrocketing on the US treasury, not good.

The US has major debt rollover and dollar devaluation issues. Most central banks are buying huge tonnage of Gold.

What do they know?

Watch what they do, not what they say.

Another V-Sign

We need all types. Extreme bearish all the way across the scale to Extreme Bullish. No problem here to determine which camp you haul your firewood to.

I for one believe you are wrong but still way down deep inside hope you are correct. I wish the real numbers agreed with you. I am a realist however and can't bring myself to jump on a burning train.

Thank you for your article.

Employment Up, Equities Down: What's Next?

BLS numbers are BS. And everyone knows it. Go to a Shadow Stats or Trimtabs, which bases its numbers on tax receipts, and have a good track record.

Their is major stuff happening right now with Bernake's confirmation and Obama's new TV ad push. They needed some good news from labor. As usual it will be revised down later.

Just look at the EXTENDED benefit numbers increases and then convince yourself that the unemployment is moving downward.

Their is also justification in the 80,000 workers hired for retail this Christmas, that will be laid off in January.

Want to Solve the Housing Crisis? Look to the North

The information carried in the Cleveland Fed's website is untrue. The Canadian banking system got bailed out to the tune of 118 Billion dollars. The population of Canada is one tenth the size of the US so, for comparison it would only be fair to times that number by ten or 1.17 trillion.

This can be confirmed in Eric Sprott's article out of Toronto's Sprott's Asset Management. This article is a good read as it breaks down the leverage positions of World banks, including the US. The article also breaks down the payouts and where the were dispersed from. CMHC the Government mortgage insurer for instance purchased 65 billion of Mortgages from the banks.

What is disturbing in the Canadian banking system is now leveraged at 31:1, which is almost the largest in the world, compared to a CITI for instance which is currently leveraged 17:1. If the Canadian banks lost 3% of their leveraged positions it would wipe out their asset value, theoretically.

The Canadian housing market also experiecned a significant drop in market values in its boom townsof Calgary and Toronto.

The Canadian General public does not even know this took place nor does the Cleveland Fed obviously. That is why Canada went from a surplus last year to a 75 Billon dollar deficit.

A Half-Empty Recovery for U.S. Jobs

The big issue is the one time jump of 237,000 to extended benefits programs.

November Same Store Sales Generally Weak

Look for many retail bankrupcies in 2010, warch for store shelves for lack of inventory.

Wall Street Breakfast: Must-Know News

Now,what I want is the truth, put the mark to market rules back in place, put the derivatives back on the balance sheets, put the real values of those assets on the books.

And finally announce the banks are insolvent and break them up. Then start over, as we should have done to start with.

EPA says it expects to decide whether to boost the allowable ethanol level in fuel to 15% from 10% by mid-2010. At current consumption and mix levels, hitting the legally mandated consumption level of 15B gallons by 2012 is a mathematical impossibility.

THis stuff is blowing up snowmobile engines all over the place.

U.K. Sovereign Debt: A 'Fat Tail' Risk for 2010

Nice article. I agree.

I would like to add that I believe that smaller countries in the EU have bigger issues and higher risk of failure first.

The Author already mentioned Greece. Italy, Ukraine, Latvia, and others on a short list and bear watching. Dubai was just the beginning.

The crises is a DEBT crises and it has just been worsened and kicked down the road. Three out of four US to big to fails are now bigger than when they failed.

The UK banking system is in worse shape if that is possible.

Australia Central Bank Has It Right

Dubai World's call for a debt moratorium triggered an immediate shift away from emerging markets which rely on cheap credit to fund their projects. Credit spreads have widened on countries throughout Eastern Europe and the developing world. Investors are skittish and want to see how much red ink is on business balance sheets. The possibility of a sovereign default is more likely now than ever before. Even if Dubai escapes the chopping block, others won't be so lucky.

From the New York Times again:

"Central bankers and government officials around the world will be watching nervously for signs that the fears of contagion are contained or spreading as markets open in Europe and New York. They are looking to see if investors begin pulling money not just from companies and banks connected to Dubai, but also from other countries that may have taken on more debt than they can afford to repay.

Already, investors fled the stocks last week of banks with outstanding loans to the tiny emirate and its investment arm, Dubai World. Now, analysts will be watching to see whether investors flee highly indebted companies too.

ISM Index: Another Sign of a V-Shaped Recovery

It is general knowlege at this point that we are not even remotely facing a "V" shape it is currently an "L", with a strong prbability of a "W". With many potential crises that may or may not be avoided, to cause this.

Take the stimulus out of the GDP numbers and we were negative.


This is confirmed by Bernake himself last weelend that " there will be no significant increase for the next 5-6 years".

Nine Regional Housing Markets Now Down Below March Lows... and Counting

Housing still has 20% plus jus to get to the 1900-2009 long term trend line. History dictates it will likely overshoot. The longer the Government tries to save votes the longer the pain will be. It has to be deleveraged. There is no other way.
Housing is in the process of being socialized now, then you can really be proud of the capitalist system.

Soft 'Black Friday' Doesn't Bode Well for U.S. Retailers

Lets look at those numbers.

195 million out of 330 million total people were in the mall. So thats 59% of every man, woman and child in America were in the mall shopping. 6 out of 10 people, including babies, 2 million hospitalized, 6 million imprisoned, out of country, vacationing, shutins, unemployed and foreclosed upon.

Leaving every single person in America that is still free and could walk was in the Mall, or online.

Yea right...

This is nothing more than Obama media spin, meant to send people the its all OK BS message.

In an op-ed this weekend, Ben Bernanke worries about leading proposals in the Senate that would strip the Fed of its powers: "These measures are very much out of step with the global consensus on the appropriate role of central banks, and they would seriously impair the prospects for economic and financial stability in the U.S."

That is the problem.... We are not trying to take away the FEDS ability to do its job. We are trying to AUDIT for transparency.

If the FED can't do its job with an annual Audit to make it a legal entity, then it is an illegal entity.

If Mr Bernanke sees this differently then there is obviously something to be seen that should not be seen. If that is the case then we ought to know regardless of the consequences as it is this outright fraud. We as taxpayers are paying trillions to a private entity with no oversight. Its is ridiculous to ask taxpayers to do this blindly.

Andrew Jackson closed the FED for a reason.

As did other Presidents warn us of the pending disaster that WERE not beholden to the FED like recent including present Presidents are.

The Financial Cartels own the FED and they own us because of it. If they are doing so much behind the scenes that we cannot know.

WE MUST KNOW!