HEATHER SCOFFIELD
Globe and Mail Update
February 23, 2009 at 6:45 PM EST
Harvard author and financial crisis guru Niall Ferguson has landed with a thud in Ottawa, spreading messages that could make even the most confident policy makers squirm.
The global crisis is far from over, has only just begun, and Canada is no exception, Mr. Ferguson said in an interview before delivering a presentation to public-policy think tank, Canada 2020.
Policy makers and forecasters who see a recovery next year are probably lying to boost public confidence, he said. And the crisis will eventually provoke political conflict, albeit not on the scale of a world war, but violent all the same.
“There will be blood.”
Will invoking the Great Depression bring it on?
The Buy America penchant pushed by the U.S. Congress in passing the recent stimulus bill was only the tip of the iceberg.
Abu Dhabi buying Nova Chemicals at bargain-basement prices on Monday is a sign of things to come, with financial power quickly being transferred over to the world's creditors – namely sovereign wealth funds – and away from the world's debtors.
And much of today's mess is the fault of central bankers who targeted consumer-price inflation but purposefully turned a blind eye to asset inflation.
The Laurence A. Tisch professor of history at Harvard University, and author of The Ascent of Money, A Financial History of the World, sat down with The Globe and Mail's economics reporter, Heather Scoffield.
Heather Scoffield: Canadian leaders frequently argue that Canada is in better financial shape than elsewhere in the world, and therefore should fare better during this crisis. Do you agree?
Niall Ferguson: Canada is [considered] a winner because its banks are less leveraged, bank regulation here has been tighter, because its housing market hasn't been in a bubble quite the same way. It's tempting to conclude from that ... that Canada will be less hard hit in the crisis than the United States. But that is unfortunately wrong. Because this is a very unfair crisis. The epicentre is the United States, but the rest of the world, and particularly America's trading partners, will get hit harder than the U.S.”
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"Canada is a winner...."??????Especially after getting rid of its gold reserves and exchanging gold for ever devaluating US dollar and Japanese yen. If any of these currencies to crash, at least all Canadians would get a lot of fancy toilet paper. Winner!?. "housing market hasn't been in a bubble quite the same way"!? Anybody knows what the hell he is talking about? Has he checked what happened to the house prices in Canada since 1997 to current time?
ReplyDeleteHe is stating that CANADA will be worse off than the US, since they are trading partners. Canadian housing will collapse just like the US. 53 BILLION in 40 yr. mortgages, 10 billion with no money down. The rest, 5% down and remortgages. Every one of these mortgages are "underwater" now. Can you imagine what will happen in 6-8 months? It will be catastrophic.
ReplyDeleteHow can Canada be in the best position, we are constantly being told down here in Australia by our "leaders" that Australia will ride out the economic storm and the country will barely enter recession it makes me sick the way they blatantly lie to the public.
ReplyDeletesorry little confused.I was under the impression the Canadian banks did not have the exposure to bad mortgages like the Us banks.Futhermore Canadian banks are heavily regulated by Government as opposed to US banks.I been led to believe there on solid ground and will not suffer same fate as American banks.Please clarify.Mainstream media in Canadian is either obscuring reality or the assertion Canadian banks are in trouble is incorrect.
ReplyDeleteI have done a lot of research on mortgages that the Canadian Banks have issued. You may also want to view their financials. The exposure to derivatives is HUGE. Check this out:
ReplyDeleteRoyal Bank ($624 billion assets) ; $4.8 trillion total derivatives ; $4.3 trillion OTC derivatives
TD ($432 billion assets) ; $2.4 trillion total derivatives ; $2.1 trillion OTC derivatives
BMO ($387 billion assets) ; $2.7 trillion total derivatives ; $2.0 trillion OTC derivatives
Scotiabank ($429 billion assets) ; $1.3 trillion total derivatives ; $1.2 trillion OTC derivatives
CIBC ($344 billion assets) ; $1.2 trillion total derivatives ; $1.1 trillion OTC derivatives
I guess the $64000 question for me is how what % of thes derivatives are toxic.It would appear from these stats the banks are either tetering or totally insolvent.
ReplyDeleteYou forgot the biggest of them all...RBC
ReplyDeleteRoyal Bank ($624 billion assets) ; $4.8 trillion total derivatives ; $4.3 trillion OTC derivatives
EDIT: Sorry I didn't see it there
ReplyDeleteEach of these banks will just print trillions of dollars out of thin air revving up massing inflation and Canada goes bye bye like the U.S.
ReplyDeleteBut, my question is, aren't a lot of these derivatives off their books? How do we know what the "real" numbers are?
how do banks print money out of thin air.Thanks a government trick
ReplyDelete"Printing money out of thin air" is a figure of speech, usually meaning that governments try to create money by simply printing money backed by nothing. Real money has some intrinsic value to it, actual worth.
ReplyDelete