Skip to comments.Is The Next Domino To Fall.... Canada?
Posted on 08/18/2011 11:33:46 PM PDT by TigerLikesRooster
Is The Next Domino To Fall.... Canada?
Submitted by Tyler Durden on 08/18/2011
While two short months ago, "nobody" had any idea that Italy's banks were on the verge of insolvency, despite that the information was staring them in the face (or was being explicitly cautioned at by Zero Hedge days before Italian CDS blew out and Intesa became the whipping boy of the evil shorts), by now this is common knowledge and is the direct reason for why the FTSE MIB has two choices on a daily basis: break... or halt constituent stocks indefinitely. That this weakness is now spreading to France and other European countries is also all too clear. After all, if one were to be told that a bank has a Tangible Common Equity ratio of under 2%, the logical response would be that said bank is a goner. Yet both Credit Agricole and Deutsche Bank are precisely there (1.41% and 1.92% respectively), and both happen to have total "assets" which amount to roughly the size of their host country GDPs, ergo why Europe can not allow its insolvent banks to face reality or the world would end (at least in the immortal stuttered words of one Hank Paulson). So yes, we know that both French and soon German CDS will be far, far wider as the idiotic market finally grasps what we have been saying for two years: that you can't have your cake and eat it, or said otherwise, that when you onboard corporate risk to the sovereign, someone has to pay the piper.
there is one place that has been very much insulated from the whipping of the market, and one place where banks are potentially in just as bad a shape as anywhere else in Europe. That place is.... Canada.
(Excerpt) Read more at zerohedge.com ...
Canada’s banking system is probably the most conservatively run system in the Western world. If it’s fooked, we really are fooked.
Canada has a thriving, WEALTH CREATING economy selling minerals, lumber and oil. You know, those things US Democrats won’t allow Americans to do anymore.
Unless oil drops below $60, they should be able to weather almost any storm.
Not unlikely. Indeed the situation is fragile.
And because of Harper there is a 16% corporate tax rate. Figure that has anything to do with their countertrend success?
I've never taken a course in economics - hell, I'm lucky to have a high school diploma. But in my near 70 year existence on this planet, one thing has become clear to me. There are only two ways a government can create wealth. Either it exploits natural resources or it exploits people.
Governments do not create wealth. They consume it.
Perhaps I should have used the term “nation” instead of “government.”
Actually though, that “consumption” is in and of itself an exploitation of the people and their labors.
At least I've gotten you thinking!
I have some diminishing modicum of wealth accumulated over the years. I have exploited no one. The only resource I've used to do so is electricity. (I write software.) A nation is just the sum of its people. As a whole our nation, like myself, exploits neither people nor resources.
You chose to exploit yourself. I'm not saying that it's a bad thing. It was your choice. After all, you could have just sat back and watched the passing parade as so many in this nation are doing. As for your use of natural resources, think about where your computer came from.
EVERYTHING we use is either mined or grown.
This nation was built on a balance of exploitation of both natural resources and people. Canada is doing that now. We on the other hand have decided to change that balance and give greater weight to the exploitation of people. The decision to become a “service economy” and the rule of the the EPA and other departments have brought us to this.
People and businesses create wealth - drop the Marxist book you’ve been reading and slowly step away...
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