Friday, January 9, 2009

What Flaherty doesn’t tell you, can only hurt ya

A few short months ago, in the last election during a debate at the Father Leo Austen High School, Jim Flaherty was trying to pump happy gas into the high school students in attendance by arguing that Canada was basically immune from the problems going on in the US and that our banks had none of the problems that were going on south of the border. He then revealed that the problems of Canada’s banks were confined to the arcane “bank to bank” lending market and that consumers and businesses would be unaffected.

Upon hearing this nonsensical argument being advanced by Canada’s Finance Minister in a roomful of young and impressionable students, I did my best to lace into Flaherty’s preposterous argument and asked the students where do they think their parents borrow money for their credit card bills or borrow money for their mortgages from, if not the banks? I then went to point out that if the banks are having difficulty funding one another (as Flaherty was arguing), then how long do you suppose it will be before these difficulties make their way into Canadians’ every day lives? I said that Flaherty was being delusional. Maybe that’s why Flaherty wouldn’t agree to have the videotape of this high school debate released to the public, since he was knowingly feeding these kids a litany of hogwash.

Now we have Flaherty creating a panel to deal with the very situation that was infinitely foreseeable three months ago, at which point Flaherty was in full denial mode. Now he claims that availability of credit is his “No. 1 concern”?

Flaherty forms team to revive credit market

Paul Vieira, Financial Post
January 06, 2009

The Minister of Finance, Jim Flaherty, said Tuesday he is considering introducing measures in the coming budget aimed at increasing the flow of credit to firms and householdsGreg Pender/Saskatoon Star PhoenixThe Minister of Finance, Jim Flaherty, said Tuesday he is considering introducing measures in the coming budget aimed at increasing the flow of credit to firms and households

MONTREAL -- The Minister of Finance, Jim Flaherty, said Tuesday he is considering the introduction of measures in the coming budget aimed at increasing the flow of credit to firms and households.

He told reporters in Montreal that a working group, consisting of banking and government officials, has been assembled to address "gaps" in credit markets. Among the issues the group is looking at is resuscitating the securitization and commercial paper markets, and "policy options" aimed at doing that are expected to be part of the Jan. 27 federal budget.

"We have had discussions about ways in which we can accomplish the goal of making sure the commercial paper works and functions. Those discussions are ongoing and there are a number of policy options there," Mr. Flaherty said.

The Finance Minister was in Montreal as part of his cross-country consultations toward designing the pending budget to be delivered in three weeks. He said the No. 1 issue being addressed in the consultations is access to long-term financing.

In efforts to date at boosting credit availability, the federal government has pledged to buy up to $75-billion of mortgages off banks' portfolio, as well as offer temporary insurance on interbank lending. However, firms, particularly small to mid-sized and those in the struggling manufacturing sectors, have complained that financing is not available, or it is on more onerous terms.

Mr. Flaherty said he "would expect to address in the budget" the issue of credit access, "as it is the No. 1 concern."

Mr. Flaherty's comments about resuscitating securitization and commercial paper markets came after he, Bank of Canada governor Mark Carney, and the federal bank regulator met with the chief executives of the country's big banks about tightness in Canadian credit markets.

The big banks argued in their meeting that their lending has increased on a year-over-year basis. However, they argued a number of players have fled from the small to mid-sized field and the big banks can't be expected to pick up the slack, while at the same time protect consumers' deposits in the face of the most serious financial crisis since the Great Depression. This was something Mr. Flaherty acknowledged Tuesday, noting there had been some "exits" from the financing scene, by players such as foreign banks and the financing arms of the Detroit car makers.

"Banks in Canada have been prudent lenders and, because of this, largely avoided the financial difficulties and subprime mortgage issues that have plagued banks in other countries," Nancy Hughes Anthony, president of the Canadian Bankers Association, said in a statement Monday. "It is in everyone's best interest that banks stick to these sound, fundamental principles of prudent lending."

Mr. Flaherty said he wanted to "encourage" the CEOs of the big chartered banks to work with Ottawa to ensuring robust credit flows, adding it was a team effort.

"We all have responsibility to ensure the financial system functions properly, in support of the Canadian economy. And the government has a role to play in that."

1 comment:

Dr Mike said...

Oh goody another panel of elite nincompoops who only have their best interests in mind.

This guy has more panels than the Home Depot.

Where are the ordinary citizens who need to be consulted---we are not just a bunch of idiots who are too stupid to breath without the governments help.

Flaherty just think about it--we are the consumers--we make money , we buy , we keep the economy healthy.

Who causes the problems in the economy , big business & government.

Who is on these panels , big business & government.

Screwed again!!

Thanks Jim for nothing.

Dr Mike Popovich.