Paradoxium's Financial 'Tao of Fail' Extravaganza!

[The Overlord]

Talking about politics is not the same as participating in politics.

But its not as much fun as talking about Spider-Man.

 

[Paradoxium]

Spider-Man comes across as to self pitying whiny nincompoop.

Batman even when being an uber dick just for the hell of it, has the redeeming quality of being a deux ex machina badass of epic hilarity.

Take that

Part of me wants to see the inhuman Batgod on film.

 

[Paradoxium]

A Chinese friend of mine who had been active in the democracy movement explained..."Before Tianenmen, we believed that freedom is 90 percent political and 10 percent economic. A few years later, we came to realize that freedom is 90 percent economic and 10 percent political." You may find my friend's change of heart troublesome, but think about your own daily life and then try to tell me that second formula isn't a better description of how things really work for the vast majority of Americans. (p.129) --- The Pentagon's New Map

 

[redhawk23]

They need to build Robocop.

unfortuanately most of the robotic components would most likley come from Japan, a further slap to the face.

 

[redhawk23]

i believe unions can serve a purpose, in balancing the needs of companies and workers but when they become too powerful they defeat their own purpose

 

[hippie_hunter]

unfortuanately most of the robotic components would most likley come from Japan, a further slap to the face.

I was thinking not if OCP built it, but then I realized that the majority of OCP's stock was bought by Kanemitsu, a Japanese corporation, in RoboCop 3

 

[Paradoxium]

S&P lowers California debt rating, cash crunch looms

 

[Paradoxium]

Was browsing over Mish's blog and found this.

Regardless of how you slice it, both California and Ontario are fiscal disasters. A case can be made that Ontario is much worse than California. So when you hear all this talk about how much worse California is than Greece, just remember, so is Ontario.

Population
Ontario: 11,410,046
California: 36,961,664

Deficit
Ontario: $21 Billion
California: $20 Billion

Per Capita Deficit
Ontario: $1,840
California: $541

Ontario’s Record Debt Level May Pressure Spreads: Canada Credit

Oh but there is MOAR!

The Canadian Banking Fallacy

Despite supposedly tougher regulation and similar leverage limits on paper, Canadian banks were actually significantly more leveraged – and therefore more risky – than well-run American commercial banks. For example JP Morgan was 13 times leveraged at the end of 2008, and Wells Fargo was 11 times leveraged. Canada’s five largest banks averaged 19 times leveraged, with the largest bank, Royal Bank of Canada, 23 times leveraged. It is a similar story for tier one capital (with a higher number being safer): JP Morgan had 10.9% percent at end 2008 while Royal Bank of Canada had just 9% percent. JP Morgan and other US banks also typically had more tangible common equity – another measure of the buffer against losses – than did Canadian Banks.

If Canadian banks were more leveraged and less capitalized, did something else make their assets safer? The answer is yes – guarantees provided by the government of Canada. Today over half of Canadian mortgages are effectively guaranteed by the government, with banks paying a low price to insure the mortgages. Virtually all mortgages where the loan to value ratio is greater than 80% are guaranteed indirectly or directly by the Canadian Mortgage and Housing Corporation (i.e., the government takes the risk of the riskiest assets – nice deal if you can get it). The system works well for banks; they originate mortgages, then pass on the risk to government agencies. The US, of course, had Fannie Mae and Freddie Mac, but lending standards slipped and those agencies could not resist a plunge into assets more risky than prime mortgages. Let’s see how long Canada resists that temptation.

The other systemic strength of the Canadian system is camaraderie between the regulators, the Bank of Canada, and the individual banks. This oligopoly means banks can make profits in rough times – they can charge higher prices to customers and can raise funds more cheaply, in part due to the knowledge that no politician would dare bankrupt them. During the height of the crisis in February 2009, the CEO of Toronto Dominion Bank brazenly pitched investors: “Maybe not explicitly, but what are the chances that TD Bank is not going to be bailed out if it did something stupid?” In other words: don’t bother looking at how dumb or smart we are, the Canadian government is there to make sure creditors never lose a cent. With such ready access to taxpayer bailouts, Canadian banks need little capital, they naturally make large profit margins, and they can raise money even if they act badly.

Proposing a Canadian-type model to create stability in the U.S. is, to be blunt, nonsense.

There’s no doubt that during the coming months many people will advocate some form of a Canadian banking system in America. Our largest banks and their lobbyists on Capitol Hill will love the idea. For some desperate politicians it may become a miracle drug: a new “safer” system that will lend to homeowners and provide financing to Washington, while permitting politicians and regulators to avoid tough steps. Let’s hope this elixir doesn’t gain traction; smaller banks with a lot more capital – and able to fail when they act stupid – are what U.S. citizens and taxpayers really need.

As I pointed out months ago, the CMHC is basically Canada's own version of Fannie and Freddie. As summed up by the end of the article from Mish, Canada didn't avoid a crisis, their bubble hasn't blown up yet. t:

Can I haz a "time to hedge against Canada and make filthy money off of their misery and failure"?

 

[Paradoxium]

$$$$ Can I haz money money money, shake it baby $$$$

 

[StorminNorman]

Fantastic

 

[Humphrey Bogart]

 

[Paradoxium]

Ontario Premier McGuinty and Ontario Education Minister Kathleen Wynne wants to haz schools teach financial literacy.

I **** YOU NOT.

 

[The Overlord]

Why don't you ever talk about failure in areas like the Red States?

 

[Paradoxium]

I was thinking of doing that. But you pointed out how awesome Canada was in regulation, so I decided to show how awesome they are.

BTW, do you have an account with Royal Bank? If you do, get the **** out of it. They are in the top 10 worst banks of North America (in terms of risk exposure).

 

[Pink Ranger]

McGuinty reminds me of everything I hate about Liberals. But I just can't vote for Tim Hudak either, no matter what.

Next election, I'm likely going to throw my vote away on the Green Party.

 

[Paradoxium]

What are the odds between McGuinty and Hudak?

 

[8Diagrams(WU)]

If California decriminalizes marijuana sucesfull in the nov ballot as an attempt to cut deficit, Ontario will follow ship immediately.

 

[Pink Ranger]

What are the odds between McGuinty and Hudak?

McGuinty will likely win another term, because there hasn't really been a big-time reason for people to vote him out, which usually is good for a Liberal.

My concern is that Hudak stands a good chance of being premier two elections from now.

 

[Kelly]

If California decriminalizes marijuana sucesfull in the nov ballot as an attempt to cut deficit, Ontario will follow ship immediately.

What is "follow ship", do you mean "follow suit"? as in do the same thing?

 

[The Overlord]

I was thinking of doing that. But you pointed out how awesome Canada was in regulation, so I decided to show how awesome they are.

BTW, do you have an account with Royal Bank? If you do, get the **** out of it. They are in the top 10 worst banks of North America (in terms of risk exposure).

And yet Canada gets attention from foreign investors and declared more of good place to invest then America:

http://www.cbc.ca/money/story/2010/03/18/securities-transactions.html

Why is that?

also your whole argument depends on the Canadian housing bubble crashing, when is that going happen, because my aunt is looking for a new house and says they are all expensive, maybe that crash will help her, when is it going happen, I can let her know when it will be cheaper to buy houses.

Also if you are so above the whole left vs. right conflict, as you claim to be, shouldn't you post something about the failure of the red states sooner rather hen later? What's the big hold up?

 

[Kelly]

Chill TO, damn...

 

[8Diagrams(WU)]

What is "follow ship", do you mean "follow suit"? as in do the same thing?

Yes you are 100% correct. Please excuse me for that.

 

[Kelly]

No problem, I just wanted to make sure I understood you correctly...

 

[Pink Ranger]

A housing decline in Canada could happen, but on a much smaller scale than the US. I shudder when I think of the zero down mortgages that Scotiabank and other banks were offering less than 3 years ago. It will take some time for these birds to come home to roost, and it won't be pretty when they do (our central rates are going to rise this year, and likely into next). A "crash" is too dramatic a word to use, even for Vancouver and Calgary, but it's not out of the question that something bad is going to happen in the next couple of years.

If there is a bubble, it's going to be because of the Energy sector. A lot of things have to transpire globally for this to happen (Middle East tensions ease off, albeit slightly, Russia gets its act together and further develops its energy sector and China's overinflated growth finally pops) but when it does, it will be ugly for this country.

If I had more money, I'd be putting a fair bit away into unhedged U.S. bonds and blue-chip stocks, but unfortunately I don't.

 

[Paradoxium]

And yet Canada gets attention from foreign investors and declared more of good place to invest then America:

http://www.cbc.ca/money/story/2010/03/18/securities-transactions.html

Why is that?

also your whole argument depends on the Canadian housing bubble crashing, when is that going happen, because my aunt is looking for a new house and says they are all expensive, maybe that crash will help her, when is it going happen, I can let her know when it will be cheaper to buy houses.

Also if you are so above the whole left vs. right conflict, as you claim to be, shouldn't you post something about the failure of the red states sooner rather hen later? What's the big hold up?

It's called diversification, particularly out of American Bonds and equities. It is worth noting that very same article notes foreign investment in Canadian equities is down. That is not a vote of confidence in Canadian companies.

Really the only redeeming quality about Canada has nothing to do with politics, it's the exploitable natural resources. That's sheer dumb luck and circumstances. Kind of like Britain and the North Sea Oil (which is going to run dry - just like the Sterling). And there are tons of gold mining companies as well.

But what? 10 provinces, 3 territories ... only 3 are haves the rest are all have-nots who relies on these 3 provinces. That being Ontario, British Columbia and Alberta. The three of which are all in deficits. Quebec is recently off the list IIRC. Those idiots don't have the economic base secede so it's pretty hilarious everytime I see one of their seperatist scream their lungs off

Here is a paper I am about to read in the next day or two. It was featured at zerohedge, written by some student Alexandre Pestov from the Schulich School of Business. You might want to give it a go.

http://www.zerohedge.com/sites/default/files/Canadian-Housing-Bubble.pdf

I am spending some more time researching this actually - so I might be able to get a rough number in. The tipping point is when they raise rates (and/or if you hear rumors of this). That will really hurt exports and people with the mortgage resets (and high interest) are going to be toast (just like what happened in America). Dunno when the central bank of Canada will do this though. All that is certain is they cannot keep rates this low forever. Rumored rate hikes might occur this June. By how much I dunno. Again RUMORED. AND it doesn't mean it will all fall downhill in June.

And right now, the worst place to buy any housing is in Vancouver (BC Province). Toronto (Ontario) is a little better in a lesser evil sense - but still inflated. Those are two the more well known and popular cities... that's why I put those down here in this post. But bottom line it is a renters market.

And I wasn't kidding about Royal Bank. They have the most derivative exposure of the big banks in Canada. If you have an account with them, you need put that into consideration.