by Redmond Weissenberger, Mises:
The propaganda you hear about the Canadian banking sector is just that –
propaganda. Canadian banks are as leveraged up as there international
counterparts – if not more: in fact Canadian banks have no reserve requirement whatsoever, zero. Of course you needn’t worry about your deposits in the event of a banking crisis, deposits of up to $100 000 insured by the Canadian Deposit Insurance Corporation.
The CDIC doesn’t hold enough cash on hand to actually pay out the
potential claims, but it does have the Bank of Canada ready to print the
money up out of thin air to make you whole – with your own money. How
do we know that the BoC would pony up the fiat currency? We come to the
dirty little secret of Canadian Banking – the big five were bailed out just
like every other bank in the world. The report in question was prepared
by a left wing think tank, so we can question their motives, but the
reality is that Canadian bank sector is subject to the same problems of fractional reserve banking as the rest of the western banking system.
Read More @ Mises.ca
The propaganda you hear about the Canadian banking sector is just that –
propaganda. Canadian banks are as leveraged up as there international
counterparts – if not more: in fact Canadian banks have no reserve requirement whatsoever, zero. Of course you needn’t worry about your deposits in the event of a banking crisis, deposits of up to $100 000 insured by the Canadian Deposit Insurance Corporation.
The CDIC doesn’t hold enough cash on hand to actually pay out the
potential claims, but it does have the Bank of Canada ready to print the
money up out of thin air to make you whole – with your own money. How
do we know that the BoC would pony up the fiat currency? We come to the
dirty little secret of Canadian Banking – the big five were bailed out just
like every other bank in the world. The report in question was prepared
by a left wing think tank, so we can question their motives, but the
reality is that Canadian bank sector is subject to the same problems of fractional reserve banking as the rest of the western banking system.Read More @ Mises.ca
The
Volatility Index or VIX, is a useful index for measuring
investor/trader sentiment in regards to the broader stock market’s
health. It reflects option premiums and is therefore a decent way of
peering into the thinking of those who write the things and what they
are expecting/fearing in the immediate future. As with any market index,
it has its shortcomings but all in all, it is remains a good gauge of
sentiment.
When
financial markets in the United States crash, so does the U.S. economy.
Just remember what happened back in 2008. The financial markets
crashed, the credit markets froze up, and suddenly the economy went into
cardiac arrest. Well, there are very few things that could cause the
financial markets to crash harder or farther than a derivatives panic.
Sadly, most Americans don’t even understand what derivatives are.
Unlike stocks and bonds, a derivative is not an investment in anything
real. Rather, a derivative is a legal bet on the future value or
performance of something else. Just like you can go to Las Vegas and
bet on who will win the football games this weekend, bankers on Wall
Street make trillions of dollars of bets about how interest rates will
perform in the future and about what credit instruments are likely to
default. Wall Street has been transformed into a gigantic casino where
people are betting on just about anything that you can imagine. This
works fine as long as there are not any wild swings in the economy and
risk is managed with strict discipline, but as we have seen, there have
been times when derivatives have caused massive problems in recent
years. For example, do you know why the largest insurance company in
the world, AIG, crashed back in 2008 and required a government bailout?
It was because of derivatives. Bad derivatives trades also caused the
failure of 
Peter
Grandich was on with us, giving his last interview of 2012. We both
agree that the year is for all intents and purposes over. The
institutional traders have locked in their profit and therefore their
bonuses and what happens from hereon in is really just noise and
completely irrelevant. Don’t be surprised to see Da Boyz get in one last
smack down for good measure. This is what happens when markets stop
serving their price discovery function and start serving primarily
political purposes. And it could very well continue until after the
inauguration. Appearances, after all, must be maintained at all costs.
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