Finally, Congress does somthing right ... and rejects the Wall Street bailout, even though both McCain and Obama supported it.
Meanwhile, Wachovia is sold to Citibank. (This one is really serious but also a bit funny for me -- until recently, I thought the stock ticker WB stood for Warner Brothers!)
Also the swap facility announced just 11 days ago has gotten even larger, from $290 billion to a whopping $620 billion, with the Bank of Canada alone tripling its committment to $30 billion until April 30, 2009. Several more central banks -- Norway, Sweden, Denmark and Australia -- are dipping into their reserves for the first time; along with the other five of the "big six" centrals in the UK, Japan, Switzerland, the EU and the US which began coordinating their actions some time ago. (Sweden is an interesting one -- I though that central bank is busy right now getting ready to pick this year's winner of the Nobel Memorial Prize in Economics.)
The reserve banks do need to act every so often to tighten or loosen the money supply to avoid a catastrophe, but this makes it number six in just the last nine months. I know full well the B of C is independent, but he still answers to the Prime Minister.
Isn't it time our opposition leaders stood up to Harper and said, enough of the bailouts? Enough of the golden parachutes? Isn't it time we made this an election issue? I would not have an issue with it if good debt was being swapped for bad (as is supposed to happen under the rules); but inevitably we're throwing more bad money, reserve money in greenbacks and Euros, into the system to award rogue traders and punish ordinary lenders even more.
What say ye, gentlemen -- and madame? Canadians await your answer and we want it before the debates on Wednesday and Thursday.
UPDATE (5:55 pm EDT, 2155 GMT): As per Femme Verte's request, here's a link to the B of C announcement.
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5 comments:
My question is this - will the Bank of Canada get this money paid back in the future?
Carrie, the Bank of Canada is setting the resettlement date as April 30, 2009. Since they're the banks' bank I doubt they'd extend such terms without some assurance such as the banks' own secure assets.
Still, the fact is the interest rate is ridiculously low, much lower than we could ever get it at. The rate banks charge each other in Canada right now is 3%, and borrowings directly from the BofC is 3¼%. We're lucky if we can get a line of credit at 10%.
You're so right.
Thanks BF!
Blast Furnance;
This is obviously an area where you have more expertise than I. Can you post a link that explains the situation. I did not realize that the Bank of Canada has been bailing out anyone. Do they have to make their actions public? Can we follow what their actions are? Then, where can we find a reliable criticism or analysis of these actions.
I agree that this should be an election issue. I do not trust Mark Carney or Stephen Harper to act in the public interest. I want to hear the leaders discuss this subject openly and describe what they would do.
Carrie: NP.
Deb: I've updated the post to include the link you requested. FWIW, you overestimate my knowledge of the markets! I'm no economics major.
But I am a bit of a camp follower and I do know something is wrong when there are six bailouts in just one year apart from the one Congress voted down today. Doesn't take a genius to figure that one out.
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