Monday, March 30, 2009

More absurd and contradictory advice from Stephen Harper

Harper is now advocating that Canadian banks expand abroad in the face of their relative strength and exploit the world’s financial meltdown. This advice totally contradicts Harper’s earlier move to deny Canadian companies the ability to expand abroad by denying them the ability to deduct interest on foreign acquisition debt. Which is it Harper? Expand, or don’t expand?

Furthermore, advising our relatively stable banks to expand in foreign markets at a time of greatest financial uncertainty and before global bank regulations are fixed, as they desperately need to be fixed, is like advising your teenager to go out and have unprotected sex in the middle of a world wide AIDs pandemic.

As usual, Harper’s shoot from the hip policy pronouncements are absurd and contradictory and against the interests of average Canadians who benefit from the relatively stable Canadian banking industry and the ruinous consolidation moves by Canada’s banks that was previously, and wisely denied by Paul Martin when he was Finance Minister.

This idiot comment by Harper ranks right up there with his comment of September 15, 2008 of: "If we were going to have some big crash or recession, we would have had it by now" or his equally inane advice of October 8, 2008 recommending that people go out and invest money in the stock market because he thought there were some good buying opportunities out there. As if he would even know?

PM tells Canada’s banks to expand overseas

By Julie MacIntosh, Francesco Guerrera and Bernard Simon in New York
March 30 2009 21:31
Financial Times

Canada’s banks should capitalise on the relative strength of their balance sheets by acquiring assets in the US and other countries, Stephen Harper, Canada’s prime minister, told the Financial Times on Monday.

Canada’s leading banks have stayed profitable and maintained dividends throughout the collapse of financial markets in other developed countries. Five of them – Royal Bank of Canada, Toronto-Dominion, Bank of Nova Scotia, Bank of Montreal, and Canadian Imperial Bank of Commerce – now rank among the 50 largest banks in the world.

Mergers between struggling global banks have been scarce, aside from those forced by governments, because few institutions have stayed strong enough to position themselves as buyers.

Mr Harper indicated Canada’s banks could lead an eventual charge toward consolidation, and said he would support such efforts as “an opportunity for Canada to expand its role in the world financial sector”.

“I’m not going to try running banks, but I hope our banks will see this as an opportunity to build the brand – the country’s brand, their own brand – and to expand their scope and profitability over time,” Mr Harper said. “I can assure you that the steps we’re taking in the financial sector will not be designed to promote greater protectionism.”

Several Canadian banks have a US presence. Toronto-Dominion sold its US TD Waterhouse brokerage operations to Ameritrade in 2006 in exchange for a stake in the new company. It took control of Banknorth in 2007, and bought Commerce Bank in 2008. Bank of Montreal owns Chicago-based Harris.

Mr Harper said he was frustrated some countries had loosened regulations that might have prevented the need for intervention in global banking systems.

“In the name of conservatism or free markets, in some cases, governments ignored very fundamental lessons we knew from history,” he said.

“Canada itself has shown that if you have a reasonable system of regulation, there is no need for governments to be nationalising banks and directing executive compensation and trying to micromanage economic activity,” he said.

“One could say we were over-regulated, but our solution is going to lead to us having the most free-enterprise financial sector in the world. We’re the only one not nationalising or partial-nationalising or de facto nationalising.”

Still, Canadian banking shares have suffered from scepticism over whether banks can maintain their dividends.

The potential for Canada’s banks to suffer a disadvantage against government-supported institutions was a “very real worry” in the short term, Mr Harper said, but not a long-term concern.

“I think in the longer term this government intervention in the final sector, if it’s not unwound, will lead to politicisation of the sector and poor management. I just don’t think government-run or . . . partially run banks are going to be very effective institutions over time.”

Copyright The Financial Times Limited 2009


Dr Mike said...

Back in the election of 2006 Harper told us that income trusts were a "safe from government interference" investment too.

So much for that!!

On the believability meter where 0 is unbelievable & 5 is God-like Harper rates a -2.

Dr Mike

Bruce Benson said...

Mike, Harper rates a big fat Zero, Nada, Zilch, FA.

Oh and Harper back peddles on Fox News when he was quoted as saying "The war in Afghanistan isn't winnable". The liar said we took his words out of context. What an asshole. Just more lies, thats all.

Anonymous said...

Cause. Effect. Something they clearly don't teach at the U of Calgary economics school.


Dr Mike said...


That was just like when he made his famous statement about not taxing income trusts & then said after the fact that was not what he really meant.

It appears that we need to be freaking mind readers or just never believe a word he says.

I go for the latter.


Anonymous said...

As a bank shareholder, trust unit shareholder - I strongly object to SH and the CON's interfering with more of my hard earned investment money.

I think all Canadians can agree on this ... let the banks concentrate on what they were hired to do - banking. Government officials should focus on their own jobs and responsibilities. Don't they still have constituents to answer to? Government has no business making a mess of markets or advising people on how to spend money. Most don't have the background to do so.

As for the banks - after reading all my annual reports this year - they can all improve by catering to shareholders demands of following and applying the CSA's rules and not putting it off. All the schedules and agendas were exactly the same and none of them had any interest in listening to shareholders - until pressure was applied.