Warren Buffett Agrees with Harper

[Who's Doing What?]

Our banks are the strongest in the world. They don't need a bailout, and there isn't one.

OH really?

So you believe the spin?

Taking on $25 billion in bad debt seems like a bailout to me. Call it an asset swap or call it a tuna casserole, it all amounts to a huge flip flop on the part of the CPC and Harper in particular.

On Friday, Finance Minister Jim Flaherty acted to ease the tightening credit crunch with a $25-billion asset swap between the big banks and the Canada Mortgage and Housing Corp. - a deal Harper insisted did not amount to a U.S.-style bank bailout.

http://news.sympatico.msn.ca/election_08/c...mp;pagenumber=2

[Jobu]

Personally I like his FLIP-FLOP on the issue. All of a sudden our banks need a bail out. What happened to everything being all roses with our financial situation?

What bailout?

[Who's Doing What?]

What bailout?

Sheesh!

[Jobu]

OH really?

So you believe the spin?

Taking on $25 billion in bad debt seems like a bailout to me. Call it an asset swap or call it a tuna casserole, it all amounts to a huge flip flop on the part of the CPC and Harper in particular.

http://news.sympatico.msn.ca/election_08/c...mp;pagenumber=2

The problem is, you have no idea what you are talking about.

This is hardly a bailout. The government already insures all of these mortgages through CMHC. There is no transfer of risk, and no risking of tax dollars.

I suggest you learn about how the economy and banking system works before illustrating your foolishness over and over again.

[Who's Doing What?]

The problem is, you have no idea what you are talking about.

This is hardly a bailout. The government already insures all of these mortgages through CMHC. There is no transfer of risk, and no risking of tax dollars.

I suggest you learn about how the economy and banking system works before illustrating your foolishness over and over again.

Right I know nothing of the economy. I just see Harper handing $25 billion dollars to the banks only days after he says everything is fine.

"It is not a bailout!"

Riiiiiiiight. And the Oilers didn't use the trap to make to the cup finals a few years ago. They called it a press. Just like the Tories are calling a bailout an asset swap.

[Jobu]

Right I know nothing of the economy. I just see Harper handing $25 billion dollars to the banks only days after he says everything is fine.

"It is not a bailout!"

Riiiiiiiight. And the Oilers didn't use the trap to make to the cup finals a few years ago. They called it a press. Just like the Tories are calling a bailout an asset swap.

Ignorance is bliss, I guess.

I'm not sure why you just want to plug your ears and scream, but being rational is apparently not one of your traits.

Edited October 11, 2008 by Jobu

[Who's Doing What?]

Ignorance is bliss, I guess.

I'm not sure why you just want to plug your ears and scream, but being rational is apparently not one of your traits.

Attack the poster when you have nothing of substance.

The brainwashing is going well young Harperite.

[Who's Doing What?]

Point is that if everything was as rosy as Harper made it out to be he wouldn't have needed to give the banks anything.

[Jobu]

Attack the poster when you have nothing of substance.

The brainwashing is going well young Harperite.

I attacked nothing. I simply pointed out your obvious ignorance. I'm essentially arguing with a 4-year-old.

Understand the issue, then come back.

[Jobu]

Point is that if everything was as rosy as Harper made it out to be he wouldn't have needed to give the banks anything.

Everything has rosy as Harper has made it out to be? Don't you mean the IMF, World Economic Forum and StatsCan, too?

No one is saying this is a rosy environment. The point is, Canada is better positioned than any other G7 country to weather this global financial crisis that originated in the US and Europe.

There is no way for a global credit crisis not to impact Canada. The point is, the relative impact is SIGNIFICANTLY less than one would expect it to be, and we are in a much better position than everyone else.

If things are so bad, what would you recommend we do? Increase corporate taxes? Impose a carbon tax?

These things will only make everything worse!

[Bryan]

OH really?

So you believe the spin?

Taking on $25 billion in bad debt seems like a bailout to me. Call it an asset swap or call it a tuna casserole, it all amounts to a huge flip flop on the part of the CPC and Harper in particular.

http://news.sympatico.msn.ca/election_08/c...mp;pagenumber=2

You need to get yourself better informed on how international banking works.

OUR banks are solid. They are the best in the world, period. Nobody who is not an idiot is claiming otherwise.

The problem is, the banks all over the world are going under. Those banks are getting bailed out. The are receiving vast injections of cash, much of it without strings attached, to prevent them from shutting their doors permanently. These guys just don't have the liquidity to engage in transactions with other banks.

Banks all over the world, including ours, routinely buy and sell assets including mortgages. Mortgages that accrue interest pay dividends just like bonds do, so they are easily traded.

Problem is, these international banks don't have the liquidity to buy these assets, so as much as the banks here are not in any danger of losing what they have, they are hamstrung in their ability to use that asset trading to provide new capital for new loans. That very much can pose a problem for the public in the future if it continues, because people won't be able to get new mortgages, and businesses won't be able to get new loans. Allowed to happen, those things could very easily cause serious damage to our economy, job losses and the like.

So, what CMHC has done, is buy some of these assets. Good assets that are paying interest, and will make a profit for the government. Assets that are ALREADY insured by CMHC, meaning the risk to the taxpayer is the same either way. This gives the banks cash on hand to lend out without giving them any free money, or causing any strain on their ability to operate.

There's no spin, and no flip flop. This is the same cautious, measured approach that the Conservatives have been taking all along to prevent problems before they happen instead of scrambling to react to them the way the opposition leaders and the rest of the word have been.

Even if you want to go ahead and spin it the left wing way, and CALL it a bailout, realize that it would be the everyday Canadian they are bailing out here, not the banks. This makes sure that the banks are able to do things that are in your best interest too, and not just their own.

Edited October 11, 2008 by Bryan

[Who's Doing What?]

Ya, ya so solid they needed a $25 Billion injection.

[Jobu]

You need to get yourself better informed on how international banking works.

OUR banks are solid. They are the best in the world, period. Nobody who is not an idiot is claiming otherwise.

The problem is, the banks all over the world are going under. Those banks are getting bailed out. The are receiving vast injections of cash, much of it without strings attached, to prevent them from shutting their doors permanently. These guys just don't have the liquidity to engage in transactions with other banks.

Banks all over the world, including ours, routinely buy and sell assets including mortgages. Mortgages that accrue interest pay dividends just like bonds do, so they are easily traded.

Problem is, these international banks don't have the liquidity to buy these assets, so as much as the banks here are not in any danger of losing what they have, they are hamstrung in their ability to use that asset trading to provide new capital for new loans. That very much can pose a problem for the public in the future if it continues, because people won't be able to get new mortgages, and businesses won't be able to get new loans. Allowed to happen, those things could very easily cause serious damage to our economy, job losses and the like.

So, what CMHC has done, is buy some of these assets. Good assets that are paying interest, and will make a profit for the government. Assets that are ALREADY insured by CMHC, meaning the risk to the taxpayer is the same either way. This gives the banks cash on hand to lend out without giving them any free money, or causing any strain on their ability to operate.

There's no spin, and no flip flop. This is the same cautious, measured approach that the Conservatives have been taking all along to prevent problems before they happen instead of scrambling to react to them the way the opposition leaders and the rest of the word have been.

Even if you want to go ahead and spin it the left wing way, and CALL it a bailout, realize that it would be the everyday Canadian they are bailing out here, not the banks. This makes sure that the banks are able to do things that are in your best interest too, and not just their own.

Wow, someone actually knows what they are talking about.

[Smallc]

Ya, ya so solid they needed a $25 Billion injection.

This was for consumers, not for the banks. The banks do benefit though, and so do consumers, and so does the government. We all gain on this transaction.

[Jerry J. Fortin]

This was for consumers, not for the banks. The banks do benefit though, and so do consumers, and so does the government. We all gain on this transaction.

Where did that 25 billion come from? It didn't seem to be laying around anywhere visible to me. I will suggest that the government BORROWED the money, and that the tax payer is supposed to pay it back.

[Argus]

Where did that 25 billion come from? It didn't seem to be laying around anywhere visible to me. I will suggest that the government BORROWED the money, and that the tax payer is supposed to pay it back.

Yes, but the government can borrow money at a much lower rate than those mortgages are paying. So it will pay back the $25 billion with the continuing stream of return the mortgages represent. In other words, it will be the people who owe for those mortgages who will pay the government back, not the taxpayers.

[Jobu]

Where did that 25 billion come from? It didn't seem to be laying around anywhere visible to me. I will suggest that the government BORROWED the money, and that the tax payer is supposed to pay it back.

Who will pay it back? Perhaps the homeowners who hold the mortgages? At a pretty nice rate of interest, too.

[Smallc]

Where did that 25 billion come from? It didn't seem to be laying around anywhere visible to me. I will suggest that the government BORROWED the money, and that the tax payer is supposed to pay it back.

The CMHC is borrowing the money. And yes they will have to pay it back, but because the government has lowering borrowing costs than the banks, they will make money on the transaction. The money to pay off the transaction will come from mortgage payments.

Edited October 11, 2008 by Smallc

[Jerry J. Fortin]

You folks are missing the point. The government is borrowing money that adds to our debt. Servicing that debt costs money, more tax dollars. So lets take a step back into the problem. The government is borrowing money to buy assets that represent such a high risk to investors and are paying such a low rate of return that they now represent a bargain to the tax paying citizens? Do you really believe that?

Who benefits?

What is the return on investment?

Where are the profits?

When will this actually take place, before or after the election?

Why are these assets being sold off?

Ask yourself these questions and then consider that others have done so as well and now have some concerns with the plan.

[Jobu]

You folks are missing the point. The government is borrowing money that adds to our debt. Servicing that debt costs money, more tax dollars. So lets take a step back into the problem. The government is borrowing money to buy assets that represent such a high risk to investors and are paying such a low rate of return that they now represent a bargain to the tax paying citizens? Do you really believe that?

Who benefits?

What is the return on investment?

Where are the profits?

When will this actually take place, before or after the election?

Why are these assets being sold off?

Ask yourself these questions and then consider that others have done so as well and now have some concerns with the plan.

No, you are missing the point. There is no additional servicing of debt by virtue of this transaction and there is no re-allocation of risk.

[Vancouver King]

Yes, but the government can borrow money at a much lower rate than those mortgages are paying. So it will pay back the $25 billion with the continuing stream of return the mortgages represent. In other words, it will be the people who owe for those mortgages who will pay the government back, not the taxpayers.

For a man who has spent years railing away on govt intereference in the free economy, your defense of Harpers $25 billion market intrusion is laughable.

[Jerry J. Fortin]

No, you are missing the point. There is no additional servicing of debt by virtue of this transaction and there is no re-allocation of risk.

So according to you, the government should take over all facets of the economy utilizing the tax payers as their own private financial institute?

So according to you, the high risk facing the banks is somehow translated into low risk through this government action?

So according to you, the debt servicing having changed hands from the free market to the public pursue is beneficial to the pubic?

Why don't we just convert to communism and be done with it?

Private enterprise has risk, that is a fact. It is not the function of government to mitigate those risks at tax payers expense.

[independent]

No, you are missing the point. There is no additional servicing of debt by virtue of this transaction and there is no re-allocation of risk.

Morgages have an allocation of risk.

http://www.canada.com/vancouversun/news/st...d21&k=23523

The program lets people with solid credit histories buy homes even if they don't have enough cash to make the standard 5% minimum down payment. Scotia is teaming up with Genworth Financial Canada to offer the program. Genworth will insure the loans and take on the additional risk.

Tanya Azarchs, who oversees the credit rating of North American banks at Standard & Poor's in New York, said there is a reputational risk for Scotia.

"Can a Canadian bank do the kinds of things you need to do without getting named in the headlines as the bad guy? Like kicking some guy out of his house, those sort of techniques. You've really got to be willing to manage a different way from your ordinary loans," she said.

Offering a mortgage with no down payment is inherently risky, because it leaves the issuer vulnerable to declines in housing prices or the economy. If home prices drop or unemployment rises, consumers could choose to walk away from mortgages without paying more than the monthly interest fee.

[Slim MacSquinty]

So according to you, the government should take over all facets of the economy utilizing the tax payers as their own private financial institute?

So according to you, the high risk facing the banks is somehow translated into low risk through this government action?

So according to you, the debt servicing having changed hands from the free market to the public pursue is beneficial to the pubic?

Why don't we just convert to communism and be done with it?

Private enterprise has risk, that is a fact. It is not the function of government to mitigate those risks at tax payers expense.

You're not getting it, CMHC already insures those mortgages, so there is no change in risk, the CMHC insured mortgages were always publicly held risk, instead of underwriting the mortgage CMHC will now own the mortgage. One of the reasons our banking system is more secure than other countries is because high leverage mortgages in Canada are 99% insured by CMHC and the thresholds for qualifying are much higher than other banks. I also understand that it was not a cash transaction, the mortgages were exchanged for Canadian government bonds, which in todays environment are significantly more liquid than mortgages for the banks.

I heard today one of the other reasons our banks are in less of a crisis, US banks were leveraging their mortgage assets 40 to 1, in Canada regulations prevent the banks from going over 10 or 12.

[Who's Doing What?]

Yes, but the government can borrow money at a much lower rate than those mortgages are paying. So it will pay back the $25 billion with the continuing stream of return the mortgages represent. In other words, it will be the people who owe for those mortgages who will pay the government back, not the taxpayers.

SO when the homeowners are out of work and can't pay..... ....Mortgages are insured.... Yadda yadda yadda

Bottom line is if everything was/is ok as Harper has been saying, NOTHING would have needed to be done!