Flaherty pressures banks to lend

[trent]

The Canadian Finance Minister Jim Flaherty tried to pressure Canadian banks to lend to both businesses and consumers last month and will hold meetings with the CEOs of big Canadian banks this month to discuss credit availability.

Does this sound familiar to you? Wasn't that what happened down in the US a few years ago when the Congress pressured US banks to extend credit to borrowers with poor credit in attempt to put everybody in a home even if they would never be able to pay for it?

One thing that politicians do not understand is that Canadian consumers are up to their eyeballs in debt, and they cannot take on more debt.

[Canadian]

The Canadian Finance Minister Jim Flaherty tried to pressure Canadian banks to lend to both businesses and consumers last month and will hold meetings with the CEOs of big Canadian banks this month to discuss credit availability.

Does this sound familiar to you? Wasn't that what happened down in the US a few years ago when the Congress pressured US banks to extend credit to borrowers with poor credit in attempt to put everybody in a home even if they would never be able to pay for it?

One thing that politicians do not understand is that Canadian consumers are up to their eyeballs in debt, and they cannot take on more debt.

I don't think that all Canadians are tapped-out as far as credit is concerned, and many people with savings will be able to afford buying a house at reduced prices very soon.

[Steven]

I hope that we don't have US style banking crisis, and that our Canadian banks continue to lend prudently to credit-worthy borrowers.

[sunshine]

Politicians may urge the banks to lend but it is a different story if the banks will do it. I don't see how this will solve the problem. We will have to go through foreclosures and bankruptcies and when all this easy credit is cleaned up (in a couple of years) everything will come back to place.

[bullish]

I don't think will have many foreclosures here in Canada. The lending standards of Canadian banks were stricter compared to US banks, and we almost don't have subprime mortgages.

[trent]

I don't think will have many foreclosures here in Canada. The lending standards of Canadian banks were stricter compared to US banks, and we almost don't have subprime mortgages.

How is giving mortgages with 40 years with less than 5% down a strict lending? You have proved once again that you are a moron.

The idea that the subprime segment of the real estate market is solely responsible for the current real estate crash in US and Canada is simply flawed. The real problem is excessive leverage and credit, and even a borrower with pristine credit can borrow too much and go in foreclosure/bankruptcy because they are unable to service the excessive debt.

[Canadian]

I agree with Trent, that even if we don't have as many subprime mortgages here in Canada, our real estate will still be in trouble in the next few years.

[trent]

One thing that most home owners are missing is that if house prices recover after they hit bottom in a few year, then the recovery will be largely in depreciated dollars. This means that in real terms (purchasing power), we won't see a recovery for a very long time.

[bullish]

One thing that most home owners are missing is that if house prices recover after they hit bottom in a few year, then the recovery will be largely in depreciated dollars. This means that in real terms (purchasing power), we won't see a recovery for a very long time.

How do you know that the Canadian dollar will lose value in the next few years? From what I see it might actually gain value.

[trent]

How do you know that the Canadian dollar will lose value in the next few years? From what I see it might actually gain value.

Let me give you a lesson in economics. When you increase the money supply, which all western central banks are doing right now in earnest, you dilute the value of the currency. When you dilute the value of the official money, their purchasing power goes down and they can buy less.

Is that simple enough to understand for you?

[Canadian]

Bullish is so stubborn, and I guess the lack of basic economic education explains his ignorant posts...

[bullish]

Bullish is so stubborn, and I guess the lack of basic economic education explains his ignorant posts...

How did you get to the conclusion that I have no economic education? I think you are the one with poor economic knowledge.

[Canadian]

How did you get to the conclusion that I have no economic education? I think you are the one with poor economic knowledge.

I concluded that reading your moronic posts mostly :p

[chinoy99]

I don't think will have many foreclosures here in Canada. The lending standards of Canadian banks were stricter compared to US banks, and we almost don't have subprime mortgages.

Bullish well said and correctly put. During the global economic recession, Canada's banks have remained well-capitalized, well-managed and well-regulated, not to mention highly profitable, and it is this profitability that leads to banking stability and contributes significantly to the retirement savings of the overwhelming majority of Canadians.

For two years in a row, the World Economic Forum has ranked Canada's banking system the strongest and most stable in the world. This is a home-grown success story that all Canadians should be proud of.

Also the Canadian taxpayers have not had to bail out Canadian banks and have not had to set up public entities to buy toxic assets. Governments in many other countries have.

[Canadian]

Also the Canadian taxpayers have not had to bail out Canadian banks and have not had to set up public entities to buy toxic assets. Governments in many other countries have.


We did have a bank bailout of $75 billion, but it didn't receive any meaningful media coverage:

http://www.globalresearch.ca/index.php?context=va&aid=12007

[chinoy99]

Thanks for the info. It must be for the auto-sector industries. Am I correct? or was it a general 75 billion bailout monies for all sectors?

[chinoy99]

sorry "canadian", i opened the weblink which you fwd me. The bailout is for all the chartered banks!

[Richard]

Not to mention that the CMHC news was widely posted. It was in _all_ of the newspapers. The government authorized CMHC to spend an extra few billion dollars to take over mortgages that are still 100% insured and follow Canadian rules (very few of the US-style mortgages with sub-prime rates with scheduled rate hikes two years from now). And, chinoy99 said, it applies to all businesses that issue mortgages, not just banks but companies like OMAC.

Richard
[PUT URL IN YOUR SIGNATURE]

[Canadian]

Look at the personal bankruptcies increasing by almost 50% and you will know where we are going. Behind the bankruptcies numbers there are houses going in foreclosure, and this is a REALLY BAD NEWS for the Canadian RE market. Get out while you can.