Lawrence Schembri, Deputy Governor of the Bank of Canada is assiduously sucking up to the politicians:
From my perspective, the FSB is a unique international organization that has certain qualities that many associate with Canadians, qualities I believe will help ensure its success in making the global financial system more resilient. A resilient global financial system is not an end in itself, but a necessary foundation for strong, sustainable and balanced global economic growth, leading to higher employment and improved living standards.
The FSB was born of necessity in the aftermath of the financial crisis. Its raison d’être stems from one overarching fact: the global financial system is highly integrated.2 Financial institutions and markets are interconnected and interdependent within and across various sectors, including banking, insurance, and pension and investment funds, and, increasingly, across national jurisdictions.
Thus, to achieve a comprehensive and coherent approach to the financial regulation and oversight necessary to attain the global public good of financial stability, coordination is essential across countries, across all of the elements of the reforms, and across many different regulators and supervisors. Failure to coordinate would lead to the fragmentation of the financial system, which would impede the global recovery. This need for effective coordination is why the G-20 established the FSB in 2009.
Can’t blame him, really – it worked for Lapdog Carney!
There’s some apocalyptic commentary on the potential for a US default:
Anyone who remembers the collapse of Lehman Brothers Holdings Inc. little more than five years ago knows what a global financial disaster is. A U.S. government default, just weeks away if Congress fails to raise the debt ceiling as it now threatens to do, will be an economic calamity like none the world has ever seen.
Failure by the world’s largest borrower to pay its debt — unprecedented in modern history — will devastate stock markets from Brazil to Zurich, halt a $5 trillion lending mechanism for investors who rely on Treasuries, blow up borrowing costs for billions of people and companies, ravage the dollar and throw the U.S. and world economies into a recession that probably would become a depression. Among the dozens of money managers, economists, bankers, traders and former government officials interviewed for this story, few view a U.S. default as anything but a financial apocalypse.
…
While none of the people interviewed for this story expect the world’s largest economy to default this time either, most say the chances of it happening now are higher than in the past.
“It would be insane to default, but it’s no longer a zero-percent probability,” said Simon Johnson, a former chief economist of the International Monetary Fund who teaches economics at the Massachusetts Institute of Technology and is a columnist for Bloomberg View.
I consider it all a little hysterical – but hey! In the financial markets, the hysterics are sometimes right!
I’ve lost a lot of business over the years by admitting there are things I don’t understand – financial guys are supposed to know just precisely how the price of eggs in Spain relates to Brazilian interest rates. But I’m in good company:
Ben S. Bernanke, the world’s most-powerful central banker, says he doesn’t understand gold prices. If his peers had paid attention, they might have stopped expanding reserves that lost $545 billion in value since bullion peaked in 2011.
Bernanke, who holds economics degrees from Harvard College and the Massachusetts Institute of Technology and led the Federal Reserve through the biggest financial disaster since the Great Depression, told the Senate Banking Committee in July that “nobody really understands gold prices and I don’t pretend to really understand them either.”
I generally have a lot of respect for the OTPP. Not this time:
The Ontario Teachers’ Pension Plan is urging the province’s securities regulator to require all public companies have at least three women on their boards, or else risk being delisted from the Toronto Stock Exchange.
Teachers outlines the proposal in a letter submitted to the Ontario Securities Commission in response to its call for comments on a possible new “comply or explain” disclosure rule to boost the number of women on boards. The OSC proposal would require companies to report annually on their efforts to improve board diversity or else explain why they have opted not to make the disclosure.
This is just political nonsense. If Teachers’ really believed that more diverse boards produced better results than less diverse boards and if they were truly interested in outperforming on behalf of their beneficiaries – they would promote a laissez faire in which there were all sorts of boards and they invested in those with more diverse boards on the grounds that these companies would kick the asses of those that were less diverse. You know, in the marketplace. I am very disappointed that Teachers’ is pursuing a political agenda.
Now that Ontario has bought up all the expensive solar panels Mexico is getting the cheap ones:
Mexico, poised to allow foreign oil extraction for the first time in 75 years, is finding its abundant natural resources also appeal to investors in a much cleaner energy: sunshine.
First Solar Inc. (FSLR) of the U.S. has bought its first projects in Mexico, while more than a dozen other developers including Germany’s Saferay GmbH and Spain’s Grupotec Tecnologia Solar SL own licenses there. Local investor Gauss Energia opened Latin America’s largest photovoltaic plant in the country last month.
…
Gauss and Portugal’s Martifer SGPS SA opened a 30-megawatt plant in La Paz, Baja California, on Sept. 12 with funding from International Finance Corp. and Nacional Financiera SNC bank. While Mexico doesn’t subsidize large solar, the $100 million project offered an economic alternative to fossil-fueled power in the area, where solar radiation exceeds the national average.
No subsidies and lots of investments! Gee, Mexico must have one of those ‘competitive advantage’ thingamajigs over Ontario when it comes to sunshine! Whoever woulda thunk it?
It was a poor day for the Canadian preferred share market, with PerpetualDiscounts down 12bp, FixedResets off 6bp and DeemedRetractibles losing 19bp. The Performance Highlights table was surprisingly short – below average even by long-term standards. Volume was average.
| HIMIPref™ Preferred Indices These values reflect the December 2008 revision of the HIMIPref™ Indices Values are provisional and are finalized monthly |
|||||||
| Index | Mean Current Yield (at bid) |
Median YTW |
Median Average Trading Value |
Median Mod Dur (YTW) |
Issues | Day’s Perf. | Index Value |
| Ratchet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.2045 % | 2,523.5 |
| FixedFloater | 4.32 % | 3.64 % | 32,450 | 18.01 | 1 | 0.0455 % | 3,847.2 |
| Floater | 2.68 % | 2.92 % | 64,982 | 19.96 | 5 | 0.2045 % | 2,724.6 |
| OpRet | 4.64 % | 3.14 % | 60,639 | 0.64 | 3 | -0.0901 % | 2,632.7 |
| SplitShare | 4.77 % | 5.23 % | 60,019 | 4.02 | 6 | -0.2293 % | 2,944.3 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.0901 % | 2,407.3 |
| Perpetual-Premium | 5.75 % | 4.04 % | 109,207 | 0.11 | 8 | 0.1883 % | 2,281.1 |
| Perpetual-Discount | 5.55 % | 5.56 % | 157,971 | 14.44 | 30 | -0.1192 % | 2,341.8 |
| FixedReset | 4.95 % | 3.68 % | 233,882 | 3.61 | 85 | -0.0580 % | 2,454.3 |
| Deemed-Retractible | 5.14 % | 4.49 % | 191,697 | 6.74 | 43 | -0.1934 % | 2,377.3 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| TRP.PR.A | FixedReset | -1.44 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-10-07 Maturity Price : 23.53 Evaluated at bid price : 24.00 Bid-YTW : 3.99 % |
| CIU.PR.A | Perpetual-Discount | -1.07 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-10-07 Maturity Price : 20.40 Evaluated at bid price : 20.40 Bid-YTW : 5.72 % |
| PWF.PR.O | Perpetual-Premium | 1.07 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2018-10-31 Maturity Price : 25.00 Evaluated at bid price : 25.60 Bid-YTW : 5.53 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| BNS.PR.Q | FixedReset | 74,616 | Nesbitt crossed 28,500 at 24.83; TD crossed 20,000 at 24.82. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.82 Bid-YTW : 3.68 % |
| CU.PR.C | FixedReset | 68,605 | Desjardins crossed 57,800 at 25.00. YTW SCENARIO Maturity Type : Call Maturity Date : 2017-06-01 Maturity Price : 25.00 Evaluated at bid price : 25.01 Bid-YTW : 4.13 % |
| RY.PR.A | Deemed-Retractible | 37,805 | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.11 Bid-YTW : 4.49 % |
| TD.PR.Y | FixedReset | 34,977 | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.79 Bid-YTW : 3.68 % |
| CU.PR.E | Perpetual-Discount | 32,200 | Nesbitt crossed 30,000 at 23.65. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-10-07 Maturity Price : 23.28 Evaluated at bid price : 23.60 Bid-YTW : 5.24 % |
| TD.PR.O | Deemed-Retractible | 27,134 | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-10-31 Maturity Price : 25.00 Evaluated at bid price : 24.95 Bid-YTW : 4.76 % |
| There were 34 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| PWF.PR.O | Perpetual-Premium | Quote: 25.60 – 26.18 Spot Rate : 0.5800 Average : 0.3626 YTW SCENARIO |
| HSE.PR.A | FixedReset | Quote: 22.67 – 23.13 Spot Rate : 0.4600 Average : 0.3053 YTW SCENARIO |
| PWF.PR.P | FixedReset | Quote: 24.29 – 24.75 Spot Rate : 0.4600 Average : 0.3104 YTW SCENARIO |
| FTS.PR.G | FixedReset | Quote: 23.50 – 23.89 Spot Rate : 0.3900 Average : 0.2677 YTW SCENARIO |
| CU.PR.G | Perpetual-Discount | Quote: 21.15 – 21.58 Spot Rate : 0.4300 Average : 0.3086 YTW SCENARIO |
| PWF.PR.M | FixedReset | Quote: 25.45 – 25.75 Spot Rate : 0.3000 Average : 0.1788 YTW SCENARIO |
Hi James, I feel that the US example of political gridlock should reinforce to Canadians how having a two house system creates deadlock after deadlock especially if each house if ruled by opposite parties. This constant grinding to a halt has prevented them from really fixing thier problems and moving ahead. We, fortunately, have neutered our second house ( Senate) thus preventing them from having any say in our future. Having Parliament controlling the decisions without political interferance has enabled us to get hrough the economic minefield that the world has been experiencing by making sound decisions and being able to enact them quickly .A three party system provides enough check and balance . If we decide we don’t like how the government is running we focus on one house and change the governing party . The last step required by Canadians is to rid the Senate completely , its a useless appendage, much like a sixth toe , serves no purpose and ugly as he–.
so Bernanke doesn’t understand Gold. that’s funny, since he didn’t understand housing bubbles either. nor does he understand what effect QE will have over the long term. he’s a funny guy. i guess an economics degree from Harvard and MIT aren’t worth much then.
Having Parliament controlling the decisions without political interferance has enabled us to get hrough the economic minefield that the world has been experiencing by making sound decisions and being able to enact them quickly
I don’t think that will withstand scrutiny. Canada’s relatively unscathed progress through the Credit Crunch was due largely to protectionist laws about banks; sheltering them from competition got us through this particular crisis all right, but in the first place costs us all a hell of a lot of money and in the second place leaves us vulnerable to a ‘made in Canada’ crisis.
The last step required by Canadians is to rid the Senate completely , its a useless appendage, much like a sixth toe , serves no purpose and ugly as he–.
I like a bicameral legislature, largely because I don’t want decisive government. I want a crippled government that only makes changes when there is wide consensus that these changes are desirable. I think this is particularly important in the modern era, now that election campaigns are all about the leader and the backbenchers are largely trained seals, with virtually every vote in the House being made a partisan issue.
i guess an economics degree from Harvard and MIT aren’t worth much then.
I find it refreshing. I get weary of retail stockbrokers and talking heads being more certain about the issues because they know less about them.
I find it refreshing. I get weary of retail stockbrokers and talking heads being more certain about the issues because they know less about them.
______________________________________
yes. they tend to be very myopic and self serving.
on the other hand, i can tell you for a certainty, if the Dow Jones doesn’t turn around tomorrow, very strongly, by the end of the day, it risks dropping 1500-2000 points within 2 weeks. one doesn’t need a Harvard or MIT degree to figure that out either.
to be honest, i feel sorry for Big Ben. he’s between a rock and a hard place. you can’t tell the truth, so you have to play dumb. gee.. i don’t know why gold prices are doing what they’re doing… who really knows.
the truth is, .. well.. the USdollar has collapsed since 2000, our debt and deficits have been skyrocketing, we got involved in two wars, we’ve suffered a near catastrophic collapse in the financial system, the FED has increased it’s balance sheet on pace with Zimbabwe (yes, i’m over stating).. and the economy has been in recovery since 2009, but can’t generate more than pathetic job numbers or GDP.. and we’re due for another slowdown that I (Bernanke) can’t do a damn thing about… congress and the president are dumb enough to take us to the brink of default yet again..
so,… why in heavens name would people buy gold. isn’t everything peachy keen?
but he can’t really come out and say that, can he?
i thought i did….
if the market isn’t up strongly tomorrow, then, the risk is 1500-2000 points lower on the DOW within 2 weeks.
not sure what the confusion is..
What is “strongly”?
How much of a risk there is?
80% / 20% / 0.0000001% ?
you want to see a resolution to the deadlock in Washington, and the market to move up anywhere between 150-300 points.
what’s the risk.. very high. a lot of stops will be triggered and there will be some very heavy selling. there isn’t any real support until much lower. 13,000 DOW /1400-1450 SPX.
already this morning, the market hasn’t bounced. futures are barely positive. the USD has moved up a lot, and gold has sold off. those are bad signs. the announcement of Yellen as next Fed Governor did nothing.
it’s not looking very good …
The premise of today not being a “strong” day on the upside seems to come to fruit.
I’ll take a bet that the chance of the Dow dropping more than 10% in the next 2 weeks is less than 80%; i.e. I’m betting $100 against $400 that such a drop will not happen.
Let’s see what the options market suggests: DIA (Dow based ETF) trades around $147 (a tenth of the Dow). A put option, strike $130, expiry October 25, trades at $0.17 … $0.19.
Q.e.d. …
your option would never pay you, even IF the market did the extreme. choosing a strike at the extreme of the expected move, with no time value, is asking to lose money.
Mike Duffy pays his tv repair man $65000.00 over 4 years to write speeches and we pay, this doesn’t sound like a place where sober second thought exists
Make up your mind: you wrote the risk is “very high” that the Dow will drop 1500-2000 points. As for time value, you’ve picked the time frame, and the option is what it is, time value only, no intrinsic value.
As another data point, the DIA strike price of $140 (where I would make as a bandit if your prediction comes true) trades @ $0.60. There are plenty of options strategies that would profit if your crystal ball is right, why don’t you put your money where your mouth is?
Mike Duffy pays his tv repair man $65000.00 over 4 years to write speeches
I’m not even going to try to defend Duffy; all we have so far are allegations and politics. I hope he gets his day in court soon, that’s all.
Ethically dubious, if not blatantly corrupt, people serve as MPs as well as senators – and everywhere else as well. Let’s check for babies before we throw out the bathwater.
[…] industry, such as it is. It looks like the OTPP’s foray into politics (sneered at on October 7) comes straight from the top: Ontario’s proposal to create a voluntary disclosure rule to boost […]
Nestor said, on October 8, 2013 at 5:12 pm
and the next day he clarified:
I will quote the immortal rock band Queen: Another (prediction) bites the dust!