From 2008 Blog -Canadian banks received 'secret' bailout in 2008

Canadians were never told the true cost of a $114-billion “secret bailout” for the country’s biggest banks during the financial crisis, says a report from the Canadian Centre for Policy Alternatives.
“We’ve had a false sense of security,” said study author and CCPA economist David MacDonald.
“Ever since the global financial crisis struck in 2008, Canadians have been subjected to a constant refrain: Canada has the ‘most sound banking system in the world,’” MacDonald writes in the report. “During the worst of the crisis — 2008 to 2010 — the official line was that Canada’s banks did not require the extraordinary bailout measures that were being offered in other countries, particularly in the U.S.
“At its peak in March 2009, support for Canadian banks reached $114-billion. To put that into perspective, that would have made up seven per cent of the Canadian economy in 2009 and was worth $3,400 for every man, woman and child in Canada.”

A spokesman for Finance Minster Jim Flaherty said MacDonald got it wrong.
“Despite conspiracy theories to the contrary, there was no ‘secret bailout,’” said Flaherty spokesperson Chisholm Pothier. “Even a cursory look at the facts, readily available and published many times, indicates this report is completely baseless.”
To some extent, the report and the rebuttal to it are a matter of how the facts are interpreted.
Where MacDonald says “bailout,” a finance ministry official says “liquidity support.” While MacDonald said the government tried to hide the numbers even from Access to Information requests, the official said the bank funding was “clearly, publicly laid out — repeatedly.”
MacDonald used public filings by banks, government agencies, and financial regulators to provide what he called a composite picture of the flow of money between financial institutions and the individual Canadian banks struggling in the midst of a global recession.
All of the loans provided by the government as part of its relief program for Canadian lenders have been paid back in full, said Pothier.

The problems for the banks began when the credit crunch in the United States put the squeeze on Canadian lenders in late 2007.

The Harper government stepped in and used a number of measures to free up money for Canada’s banks during the financial crisis — including buying mortgage-backed securities and providing short-term loans.
All told, the study counts $114-billion worth of guarantees and financial aid for Canada’s big banks from October 2008 to July 2010 by the Bank of Canada, the United States Federal Reserve, and the Canada Mortgage and Housing Corp.

But it’s not the amount of money that’s at the centre of the dispute —MacDonald claims the government wasn’t honest or transparent about its spending.
“The federal government claims it was offering the banks ‘liquidity support,’ but it looks an awful lot like a bailout to me,” says MacDonald. “Whatever you call it, government aid for the country’s biggest banks was far more substantial than the official line would suggest.”
MacDonald study says that, at one point, three of the country’s biggest banks — CIBC, Bank of Montreal and Scotiabank — were receiving government support that was equal to or more than the value of the company’s shares.
“Government programs could have just purchased every single share in those banks instead of providing support,” he said. “That’s not the story Canadians were told. There was a massive failure in the private-sector market.”
A spokeswoman for the Canadian Bankers Association said government support was meant to help banks lend to small business, not to protect the banks from failure.
“Not one bank in Canada was in danger of going bankrupt or required the government to buy an equity stake under taxpayer-funded bailouts,” said Rachel Swiednicki.
Swiednicki said comparing the value of a bank’s shares and their participation in a government program the banks say was aimed at boosting small-business lending is like comparing apples to oranges.
Similar efforts were made by central banks around the world when private credit markets froze in 2008 and 2009.
“Not only did these measures play an important role in supporting Canadian business during the credit crunch, they also made money for Canadian taxpayers,” said Pothier.
The CMHC’s purchase of $69 billion in home loans in 2008 and 2009 is expected to net the government $2.5-billion by 2015, according to projections in the 2012 budget.
Pothier said the government laid out its plans to support the banks in a number of public documents, most recently in the 2012 budget.

Big numbers don’t scare Canadians.
We’ve been warned so often, and for so long, about the dangers of the national debt we’re accumulating that we’ve developed something of an immunity. When it comes to debt, Canadians are like the frightening new antibiotic-resistant superbugs that can’t be killed even with the most powerful drugs.

A billion dollars? A hundred billion dollars? A trillion dollars? We shrug it off and just keep borrowing. Hasn’t killed us yet, right?
If big numbers can’t penetrate the national psyche, however, perhaps smaller ones might. As in education budgets, social service budgets, childcare budgets and security budgets that are smaller than they could be, because so much of the money collected in taxes is lost to interest payments on past borrowings.

That’s the key warning of a Fraser Institute report on Canadian debt. It has all the usual scary numbers: Combined federal and provincial debt will top $1.3 trillion this year; Ontario will soon owe $300 billion, passing Quebec as the most in-hock province; another $450 billion has been tacked onto the national credit card since the 2008 recession that Canada alone did not have according to Harper. Did Mr. Trudeau and his liberals say we were in recession?

Bah. Canadians are used to those numbers, and used to ignoring them. Who can possibly grasp numbers that come with 12 zeroes attached to the end? Most of us can hardly fathom the salaries of a first-line centre in the National Hockey League.

But the import of those numbers may be easier to absorb when put in another context. For instance, the report notes that the interest spent last year on previous borrowings –$61 billion – is almost equal to the entire cost of public education in Canada last year.
It’s $10 billion more than the total pension benefits paid out through the Canada Pension Plan and Quebec Pension Plan. Imagine: if not for the profligate borrowing of Canada’s governments, benefits to pensioners could be doubled without increasing a single tax, cutting a single program or adding a single cent to the budget.

At almost $1 billion a month, Ontario spends more on debt interest than it did on its entire welfare system. Quebec’s interest payments swallowed double the amount it spends on post-secondary education. All those Montreal street protests a year ago, by university students upset at a minor tuition hike, could have been avoided if the government wasn’t pouring money into servicing debt.
B.C.’s interest costs are double its childcare budget, Newfoundland spends more on interest than it does on elementary and secondary schools.

And remember – none of that money is going to reduce the principal. It’s just paying interest on past borrowings. The principal isn’t being reduced at all – it’s growing steadily. Ontario still spends almost $8 billion a year more than it brings in, and has a mammoth infrastructure plan to finance.

Prime Minister Justin Trudeau was elected on a promise to add $10 billion to the federal debt load every year for three years, but even his own finance minister doesn’t appear convinced he can stick to that figure. It’s more likely to be double the promised amount, unless some serious new tax, are sharp cut in spending, takes place.

Trudeau portrays it as a necessity. As does Ontario’s Kathleen Wynne, who is fond of saying the province can’t afford not to pursue her many projects, the same argument offered over the past decade, through good times and bad times, thick and thin. Is there ever a time Ontarians can afford not to borrow? Alberta’s NDP government maintains borrowing is such a necessity, it’s willing to use debt to cover operating expenses. Their views reflect the notion that Canadians consider their benefits a birthright, and budgets have to be crafted accordingly.

Borrowing is cheap at the moment, they say. We can afford it … barely … for a little while longer. God forbid interest rates should rise. Because birthrights have a way of disappearing when the lenders come around to collect.

Many Canadians struggle to put food on the table, five things about food insecurity in Canada

Food Banks Canada recently estimated food bank use for a 12-month period at 1.7 million people, yet the number of food insecure individuals living in Canada is more than double this estimate.

For many Canadians, food plays a central role in the holiday festivities. But for those experiencing food insecurity, a bountiful feast was not in the cards this year. More than four million Canadians, including 1.15 million children experience some level of food insecurity.
Food insecurity, also known as ‘food poverty,’ can cause significant anxiety over diminishing household food supplies and result in individuals modifying their eating patterns—adults skipping meals so children can eat or sacrificing quality food choices for cheaper, less healthy options, for example. Food insecurity also often results in physical hunger pangs, fatigue and lack of concentration and productivity at school, work or play.
Then there are the social impacts of food insecurity that most of us wouldn’t consider, such as not being able to invite friends and family to dinner or being unable to afford to meet people for coffee. Food poverty can also create stress and conflict in family relationships and meals are often not a happy gathering opportunity.
Here are five things Canadians need to know about food insecurity:
1.   Food insecurity significantly affects health
Evidence shows that among children, food insecurity is associated with poorer physical and mental health outcomes, including the development of a variety of long-term chronic health conditions such as asthma and depression.
For adults, research shows that food insecurity is independently associated with increased nutritional vulnerability, poor self-rated health, poor mental, physical and oral health and multiple chronic health conditions including diabetes, hypertension, heart disease, depression, epilepsy and fibromyalgia. Studies also show that food insecurity impacts a person’s ability to provide self-care and manage chronic health conditions.
Evidence also shows the health impact of food insecurity exists on a gradient—meaning adults in more severely food-insecure households are more likely to report chronic health conditions as well as receive diagnoses of multiple health conditions.
2.   Household food insecurity is a strong predictor of healthcare utilization and costs
A study in Ontario found that among adults, total healthcare costs—including inpatient hospital care, emergency department visits, physician services, same-day surgeries and home care services—increase significantly with the level of household food insecurity.
In other words, food insecurity costs us all through increased healthcare use. Compared with adults in food-secure households, annual healthcare costs were, on average 16 per cent (or $235) higher for adults in households with marginal food insecurity, 32 per cent (or $455) higher among those with moderate food insecurity and 76 per cent (or $1,092) higher among those with severe food insecurity.
3.   Food bank use is a poor indicator of food insecurity 
Food Banks Canada recently estimated food bank use for a 12-month period at 1.7 million people, yet the number of food insecure individuals living in Canada is more than double this estimate. The main reason for this discrepancy is that most people struggling to afford the food they need do not turn to charities for help. The evidence suggests that using food banks is a last resort. Because food banks rely on donated food, both the amount and type of food available for distribution is limited, and agencies are unable to provide for everyone in need.
4.   An adequate and secure level of household income is strongly linked to food security
It is perhaps surprising, but households reliant on wages and salaries make up the majority of food insecure households in Canada at 62 percent. Households whose main source of income was either pensions or dividends and interest had the lowest rate of food insecurity in 2012 at seven per cent—compared to 11 per cent for people in the workforce and 70 percent for people on social assistance (i.e., welfare and disability support programs). Researchers suggest the low rate of food insecurity among Canadian seniors reflects the protective effects of our public pension system.
5.   Relatively modest increases in income have been found to lessen food insecurity among low-income families
Studies have shown that improved incomes and changes in employment can reduce food insecurity. An example of this can be found in Newfoundland and Labrador where evidence shows that from 2007 to 2012 the rate of food insecurity among households living on social assistance in this province fell from a staggering 60 per cent to 34 percent. During this time period, the Newfoundland government made several changes to improve the circumstances of people living on social assistance, including increasing benefit levels and indexing them to inflation (until 2012).
Let’s not let another year go by without addressing food insecurity in Canada.  In a country as rich as ours, there’s no reason anyone should go hungry.
Carolyn Shimmin is a knowledge translation coordinator with EvidenceNetwork.ca and the George and Fay Yee Centre for Healthcare Innovation. Valerie Tarasuk is a professor in the Department of Nutritional Sciences and Dalla Lana School of Public Health at the University of Toronto and principal investigator of PROOF, a research program funded by the Canadian Institutes of Health Research to identify policy interventions to reduce food insecurity in Canada.

But when will we know Canada’s economy is truly out of a recessionary slump and once again batting above its dismal average recorded so far this year?

Could the coming months be a case of déjà vu all over again?
Many economists believe the chances of another dramatic downturn are slim, but still within the strike zone. Some others, like David Madani at Capital Economics, worry Canada could well have been in recession — with a minor blip or two — since the start of 2015 and might remain there a little longer.

We fear that the economy may never have escaped the recession that began earlier this year

“While non-conventional oil production rose modestly, declines elsewhere indicate that the economy is struggling to deal with the broader fallout from the oil price shock,” Madani opined in the wake of last week’s surprising no-growth reading for October.
“As things stand now, we fear that the economy may never have escaped the recession that began earlier this year,” he said in a note to investors, titled “Canada may never have escaped recession.”
After all, the economy had only a month earlier gone into reverse — contracting 0.5 per cent in September — and clearing the plate for possibly more disappointing data to crunch in November.
And given that gross domestic product had already spent the first half of 2015 in contraction — the technical threshold for recession being two consecutive quarterly declines — and with the final month of Q3 also falling back, is there any wonder some analysts are calling a timeout on future growth as well?
“Overall, with the economy now looking like it may have stagnated this quarter, the amount of excess slack will increase, creating more downside risk to the Bank of Canada’s longer-term outlook for underlying inflation,” wrote Madani.
Other analysts are also taking a pessimistic outlook at the economy. Among them is Derek Holt, vice-president of Scotiabank Capital Markets, who says Canada’s economy “is off to a difficult start to Q4.”
“It’s early yet to draw final conclusions regarding the fourth quarter, and there should be a bounce back in GDP in November and December as a good chunk of the weakness so far in Q4 is a function of weak output in the oil sector to end Q3,” Holt cautioned in an investment note.
“Still, a bounce would only pull GDP up from its current very-low level,” he said. “There will be a quite steep uphill climb for the economy to hit the 1.5-per-cent (quarter-over-quarter) annualized print forecast by the BoC for Q4.”

Madani, at Capital Economics, has consistently gone against the grain with his interest-rate forecasts, calling for the central bank to cut its key lending level well before governor Stephen Poloz did just that — beginning in January with a 25-basis-point drop and followed by a similar reduction in July, taking the rate to 0.5 per cent.
The recent performance by the economy “supports our view that another interest-rate cut is likely early next year, probably in April, though possibly sooner if oil prices fall any further,” Madani said.
Charles St-Arnaud, an economist at Nomura Global Economics, agrees that weakness in the Canadian data “increases the probability that the BoC will need to cut rates next year.”
“The fact that activity in the service sector has been virtually flat for the past four months is particularly concerning, especially if the recent decline in oil prices leads to renewed contraction in the resource sector and in manufacturing,” St-Arnaud said in note to clients.
The latest GDP tally “suggests that growth in Q4 is likely to be close to zero per cent and could even be negative.”
I guess, “the future ain’t what it used to be.”