ALL ABOUT O CANADA

[onlooker]

HOWEVER, there are pundits who are saying that Canada’s economy has an Achilles heel.  It is our Canada Mortgage and Housing Corporation (CMHC).  The American equivalent of the CMHC is Fannie Mae and Freddie Mac.

Also, I believe the Canadian government is trying to cool down the real estate market in British Columbia and Ontario with a tax called Harmonized Sales Tax, effective July 1, 2010.

There are new regulations effective on April 19, 2010, and they should cool down the current hot real estate market.

See: 

Canadian Mortgage Rules Will Change April, 2010     February 16, 2010

Earlier today, Finance Minister Jim Flaherty announced changes to mortgage lending standards for mortgages. He said that while the housing market is healthy and there’s no real evidence of a bubble, the moves are needed to “help prevent negative trends from developing.”

The changes are designed to bring stability to the lending market and head off potential problems such as those experienced south of the border with the sub-prime mortgage crisis. With interest rates almost certain to rise in the months and years ahead, the government is trying to ensure Canadian borrowers will be able to carry higher debt loads created by higher rates.

Having said that, the changes are far less than rumoured and are likely to have little impact on the average home buyer. Yes, people can still buy a home with a down payment of 5%.

The new rules are made up of three changes:

1.   Borrowers will need to meet standards for five-year fixed-rate mortgages regardless of whether they’re seeking a loan with a lower rate and shorter term. Right now, borrowers may qualify for mortgages based on lower rates as a percentage of income. Under the new rules, only the 5 year rate will apply. Why it’s not so bad: In 2009, over 85% of mortgages were for fixed terms and of those, 70% were for5 year terms. All of those would still qualify under the new rules.

2.   The maximum amount Canadians can withdraw when refinancing their homes changes from the current 95% to a maximum of 90% of the value of their homes. In many cases, refinancing options are used to transfer high credit card balances to lower rate mortgages. Under the new rules, mortgagees will have to build up at least 10% equity in their homes in order to do so.

3.   The down payment for government-backed mortgage insurance on speculative, non-owner occupied investment properties increases from 5% to 20%. This is intended to discourage real estate speculation often seen in rising markets driving house prices artificially high.

http://peterboroughrealestatenews.blogspot.com/2010/02/canadian-mortgage-rules-will-change.html

These new regulations will make the CMHC less likely to be a future crisis for Canadians - I hope.

[onlooker]

YC:

OL quote:

Still, I have taken my modest profits and made an exit out of the markets back to the sidelines.  As of today, I am about 95 percent in Canadian dollars.   

YC quote:

I am becoming more wary of having cash on hand.

Mentioned in the Peak Oil William's thread about going to all physical silver with my cash, but have not made a move yet.

You might be safer in Canada.

My money is in Canadian Dollars because we have no run on banks.

[onlooker]

YC:

YC quote:

You might be safer in Canada.

OL:

And let’s not forget that across the North Atlantic Ocean, economies are unstable and there’s civil unrest.  Looks like a global economic revolution is in progress.   

See: 

Riots across Europe fuelled by economic crisis

Tension over the global economic slump have fuelled May Day protests and riots across Europe with trouble breaking out in Germany, Greece, Austria, Turkey and France.
 
By Henry Samuel in Paris          May 1, 2009

http://www.telegraph.co.uk/news/worldnews/europe/5258634/Riots-across-Europe-fuelled-by-economic-crisis.html

Riots in Greece, 3 dead, banks are burning….

by sheikyermami on May 5, 2010

http://sheikyermami.com/2010/05/05/riots-in-greece-3-dead-banks-are-burning/

Here’s up an up-to-date article about how Canadians versus Americans are reacting to the current global financial crisis.

See:   

Economy behind seething discontent in U.S.; Canadians warned not to feel smug
By Lee-Anne Goodman    May 2, 2010 

http://www.winnipegfreepress.com/canada/breakingnews/economy-behind-seething-discontent-in-us-canadians-warned-not-to-feel-smug-92623679.html

In this article, Chris Sands, a Canada-U.S. relations expert reports that Canadians are too passive, too willing to take things sitting down on troublesome economic / political issues.   

On the other hand, Kory Teneycke, a former director of communications to Prime Minister Stephen Harper says that if Canadians were faced with the same dire economic conditions as in the U.S., Canadians would also be enraged and take to the streets to protest.

I agree that Canada should not be smug in thinking that it is safe from going into an economic depression should the U.S. and other countries’ economies tank.  But, of the two opposing views on Canadians’ attitudes to the current global economical crisis, I would side with Chris Sands. 

I believe the vast majority of Canadians will continue to react passively if ever an economic SHTF comes to Canada.  I cannot fathom Canadian society breaking down to the point where Canadians will trash Canada, riot in the streets, loot stores, etc…  over a failed economy.  I believe that Canadians will be sensible enough to adapt to dire economic conditions by becoming multigenerational households, file personal bankruptcy and re-built again, etc…

IMO, Canada is one of the safest developed countries to live in should a global economic meltdown occurs in the future.

[onlooker]

Has a recent violent destructive riot occurred in Canada before?  Yes.

It occurred in my home town, Montreal and was over the game of hockey.  Go figure!   

See:

There is No Game like the Good Ol' Montreal Hockey Riot!
A city whose hockey passions create a constant hunger for battling peace and the status quo.
 
by Adam Enright
 

Hockey riots are one of the best things about Montreal . . . Montrealers love great restaurants, quality microbrewed beer, explosive styles of lovemaking, lively parties, huge events . . . and they go all-out when they have a hockey riot! These traffic-halting displays of spontaneous celebration and unabashed public drunkenness are proof an un-squelched, lively spirit still burning in the hearts and minds of Quebecers!

~    ~    ~

A Montrealer's lust for public disturbance seems in strong contrast to folks in other major cities. They never seem to have real riots elsewhere. Could it be because these cities are too highly concentrated with stuck-up yuppie scum bag types who wouldn't want to have their designer slacks torn and who have long been castrated by the materials and comforts of the market economy to be able to muster any sense of mass social outrage? The urge to riot always burns bright in the hearts of the underprivileged and working classes everywhere . . . and while poor folks live in these cities, they seem strangely reluctant to run amok for social change, go berserk for global warming, and run riotous for that beautiful game of hockey. Really, where in the western world was it did you hear the last time of five cop cars getting torched in one night of rioting? In Montreal of course!

http://www.progressivewebdesign.ca/hockeyriots.html

and see:  http://www.youtube.com/watch?v=Ho3OVroEM3M

I guess we are not violently passionate about economics or politics; but we will go nuts over our national sport, hockey.   

[onlooker]

Finance ministers scrap plans for global bank tax    June 5, 2010
 

In the face of fierce opposition from Canada and several other countries, finance ministers from the Group of 20 have axed plans for a global bank tax, giving individual nations more freedom to decide how to make banks pay for any future bailouts.

~     ~    ~    ~   ~

Canada’s opposition to the bank tax was based on some key points:

• The tax would penalize countries that did not bail out their banking system. Banks in these countries would be forced pass on the cost of the tax to clients, resulting in higher financing costs.

• And the levy could create so-called moral hazard, in that banks would continue the type of risky lending new regulations are suppose to prevent, with the knowledge that authorities have money available to help the financial sector in times of trouble.

http://www.vancouversun.com/business/Finance+ministers+scrap+plans+global+bank/3117824/story.html

O Canada has a strong backbone.

[MetalMeister]

If banks fail then they should go to bankruptcy no matter what the outcome is...

Most people in the US now realize that the bailouts just kept a horrible situation prolonged and the read disaster looms just ahead of us.

Canada is smart.

Wish the US was 

[onlooker]

Toronto has been nicknamed “Toronto the good”.  Google “Toronto the good” and up the year 2010, many articles will pop up to attest that this nickname is still in play.

Here’s one such article on “Toronto the good” dated May 13, 2010, see: 
http://www.theglobeandmail.com/life/facts-and-arguments/toronto-the-good-try-great/article1568174/

But, the recent Toronto G20 summit meeting showed that Toronto is not unlike other cities in the world.  There were acts of violence from protestors and the police. 

http://www.youtube.com/watch?v=JKgFsqry6LQ

http://www.youtube.com/watch?v=FCB8v6Mt8Xo

http://www.cbc.ca/canada/story/2010/06/26/g20-saturday-protests.html#socialcomments

This past weekend, Toronto turned ugly.

Canada is not perfect.  However, in comparison to many other countries, IMO, Canadian citizens have it so good – have Medicare, have unemployment insurance, have welfare, have lower education tuition fees, have no mass killings, have no continuous oil spews, . . . . . .   So, I don’t get it – the rioting, the protests at Toronto G20 summit meeting.

Still, in comparison to riots which have taken placed in other countries, the Toronto G20 riot had a “Toronto the good” uniqueness to it.

Storefronts were vandalized, but protesters were requested to show Canadian
courtesy by NOT looting stores’ merchandise.

See:  http://www.youtube.com/watch?v=6CKkLYYczdM&feature=player_embedded

[Depleted]

Hey Onlooker - I was working in my backyard, listening to my portable TV on CBC all last Saturday with the G20 protest "play-by-play" call by Peter Mansbridge. Although I respect the man, it seemed that he, and the CBC were desperately trying to make a story out of the LACK of extreme violence at the Summit. He spent the whole day going over, and over, and over a police cruiser that was torched, and a few broken windows. He kept referenceing that "there are reports that Tear Gas may have been used" , Come on, Peter, I only want to hear " Our reporter XXX has interviewed a witness that has indicated Tear gas has been used". Sometimes I wonder if the CBC was told to juice up the scenes of violence to help justify the security costs? I think most people around the world know Canada as a fairly good place, with mostly decent people, and severe rioting is not one of the things we are known for. The actual protesters were a completely different group that had peaceful displays, unlike the "thugs" as they were called, dressed in black with bandannas conceiling their identities, who were smashing windows, and throwing bricks. These people looked and acted like "professional" rioters that were specifically deployed to do damage there. The bigger question is, who has the most motive to have this take place? D

[onlooker]

Depleted:

The actual protesters were a completely different group that had peaceful displays, unlike the "thugs" as they were called, dressed in black with bandannas concealing their identities, who were smashing windows, and throwing bricks. These people looked and acted like "professional" rioters that were specifically deployed to do damage there.

In looking back at the Toronto G20 summit meeting riot, I agree with you saying that there were actual peaceful protesters, and then there were the faceless taunting “thugs” dresses in black.

And unfortunately for Prime Minister Stephen Harper, the "thugs" ruined his golden opportunities to nicely showcase Canada, Ontario, “Toronto the good” to the rest of the world.

See: http://www.canada.com/business/Effort+showcase+nation+flopped+Critics/3212808/story.html

~   ~   ~   ~   ~

On Canada's Peter Mansbridge.  IMO, he did well at the Toronto G20 summit meeting because he got to be the first foreign interviewer to have a lengthy one-on-one interview with the newly elected British Prime Minister David Cameron. 

Bravo to steadfast, respected Peter Mansbridge.   

See:  http://www.cbc.ca/thenational/indepthanalysis/story/2010/06/25/national-cameroninterview.html

[MetalMeister]

http://en.wikipedia.org/wiki/Black_bloc

But, the recent Toronto G20 summit meeting showed that Toronto is not unlike other cities in the world.  There were acts of violence from protestors and the police. 

[onlooker]

Onlooker’s September 30 quote:

I sold a property of mine in the spring of 2008.  So, I was flushed with cash, not with stocks during the 2008 market meltdowns.   And I soon learn that the old adage “Cash is King” in a bear market is a truism and can be very profitable.

In anticipation of a bear market coming back, I have sold all my stocks, and am now 100% in cash.  If my being in cash (only Canadian dollars) worked well once before, then it should work well a second time around, I believe.

YC’s October 5 quote:

I do not agree with Onlooker's thoughts that "cash is king", right now, or going to be king.  I believe the USD is on the way out on it's last leg.

~   ~   ~

Hi YC:

I agree with you that the USD is on the way out.  But, what about the Canadian dollar?

According to Siderwinder’s chart “Debt by country” presented at his blog, 

http://2.bp.blogspot.com/_FRL3k36WQ-E/THBFXaBetPI/AAAAAAAAAMQ/_vAmyRP0Mj0/s1600/Debt+by+country+chart8-21-2010+5-25-03+PM.png

Canada’s debt load is as bad as the USA.

According to Wikipedia, the Euro Area and United States (rank no. 1) gold’s share of national forex reserves are respectively 58.1% and 72.1%.  And Canada’s (rank no. 79) has a very insignificant total of .2%.

See:  http://en.wikipedia.org/wiki/Gold_reserve

Years ago, Canadian fools in charge of government-owned gold unloaded it for a pittance to invest the proceeds in fiat money – USD and Euros.  And by doing that, the Canadian dollar is no longer defined with reference to a weight in gold.  And Canada became an impotent player among governments holding gold reserves. 

See: 

Canada Sells Gold, Keeps Shift Into Euro Reserves by Randall Palmer, January 2002
 

OTTAWA, Jan 6 (Reuters) - Canada took advantage of the sizzling price of gold last month with the sale of one-eighth of its remaining gold reserves, part of a long-standing drive to get a bigger bang for its foreign reserve bucks.

A finance ministry official said the decision to sell was not explicitly tied to a specific gold price, but added: "When the price of gold is enjoying some lift, we may conduct more sales at that time."

Canada has been selling gold from foreign reserves since 1980, investing the proceeds in bonds and foreign-currency securities that yield a return which "far exceeds the return that the government gets on gold," the official said.

~   ~   ~

"We certainly feel that obviously the euro is one of the major reserve currencies of the world, along with U.S. dollars and yen, and that's why it's one of the three eligible currencies for us," the official said.

http://www.ratical.org/ratville/CAH/linkscopy/Cshift2euro.html

Canadian government fools had so little regard for their “non-productive” gold reserves that the gold was used to produce 100-kg gold bullion coins.  They were interested in getting bragging rights for having produced the biggest purest gold coins in the world.   

See: 

World's Largest 100-kg Gold Coin Issued By Canadian Mint
 
The coin is worth C$2.42 million ($2 million) by Diamond World News Service

According to reports, The Royal Canadian Mint (RCM) is making news all over with its launch of world’s first 100-kg, 99999 pure gold bullion coin with a face value C$1 million ($903,518).
At the current gold price of $681.13 an ounce, the coin is worth C$2.42 million ($2 million) – more than twice its face value.

Theoretically speaking, the coins is 20 inches in diameter and 1 inch thick -- mostly to seize the bragging rights from Austria, which had the record with a 70-pound, 15-inch wide coin.

According to experts, they are not implementing this because there is big demand for 100-kilo gold coins. As a matter of fact, they're doing it because of the simple reason that it gives them some bragging rights in having the biggest purest gold coin in the world.

http://www.diamondworld.net/contentview.aspx?item=1399

I suspect that producing the biggest purest gold coins in the world fits in with our Canadian national obsession with producing the largest monuments.   

See:

BIG THINGS   The Monuments of Canada

"Where it is not just the size but the thought that counts"

http://www.bigthings.ca/

Here's some other examples of BIG THINGS produced in Canada:

http://www.bigthings.ca/bc/pictures/cache1.jpg
http://www.bigthings.ca/newbruns/pictures/salmon1.jpg
http://www.bigthings.ca/newbruns/pictures/harveya1.jpg
http://www.bigthings.ca/ontario/pictures/chair1.jpg
http://www.bigthings.ca/manitoba/pictures/hydrant1.jpg

I digress.  Back to “And by doing that, the Canadian dollar is no longer defined with reference to a weight in gold.  And Canada became an impotent player among governments holding gold reserves.”

What will happen to the Canadian dollar with no linkage to a significant gold reserve, if the unthinkable happens, the present global financial system built around the world’s principal reserve currency, the US dollar finally collapses?  Will the Canadian dollar still be a safe haven currency? 

Given what I have noted about Canada’s high debt load, and nonexistence gold reserve; is holding the Canadian dollar that much safer than holding US dollars or Euros?

Don’t know. 

But, I think the day of a complete global financial meltdown is still years away from today. 

So, for now, I am holding 100% in Canadian cash and I think the “Cash is King” adage will still be applicable for the soon-to-come markets shake down.   

[punter]

The CDN government shifted the risk from the banks onto the taxpayer with the CHMC taking on all the mortgage files. You can't get an 'uninsured' loan now even if you do qualify. The banks have fallen in love with the new zero risk model. The government has been hiding new debt all over the place to try and hide Canada's debt to GDP ratio...so far it has been able to fool most in the media who have little economic education.


Where Canadians will suffer is in the form of higher taxes as this debt moves up the intrest rate ladder. The government hopes for the off set of higher GDP....in other words gambling that the intervention works in their favour. Right now they are piling on massive debt at low rates...its a recipe for disaster.

[MetalMeister]

http://www.zerohedge.com/article/guest-post-yukon-fever-today%E2%80%99s-hottest-area-play

[onlooker]

Hi Depleted:

Depleted’s December 1 quote:

Cash is a position, and knowing what we think we know now, may not be the safest place to be.

You could take a percentage of your cash, and turn it into a safety net. Have you ever thought of Canadian Maple Leafs?

Silver and Gold Coins. The silvers are slick.... 0.999 pure Silver minted $5 coin, legal tender as $5 (should paper money be a problem), but true value locked into silver, that very precious completely UNDERVALUED metal. I have some I bought a few years ago, worth $12 at the time, now they are over $29, more than a double, a SAFE DOUBLE, and still safe to keep, long term.

Details here.....http://www.mint.ca/store/mint/about-the-mint/investing-1300002

and here.....   http://en.wikipedia.org/wiki/Canadian_Silver_Maple_Leaf

The Canadian Economy is somewhat stable, at least compared to the Mayhem going on in other countries, and the minted Silver and Gold Coins are of excellent Quality, the highest Content of the precious metals that can be minted.

~     ~     ~

Is having a cash holding consisting only of Canadian dollars a good one?

Here are some positive articles about the Canadian Dollar:

See:

Canadian Dollar to be part of Russia's foreign exchange reserve   
By Sayan Guha   Posted 28 November 2010

Alexei Ulyukayev, the Deputy Chairman of the Russian Central Bank said on Wednesday that Canadian dollars have been added to the international currency reserve of the country.

http://www.bsr-russia.com/en/banking-a-finance/item/1274-canadian-dollar-to-be-part-of-russias-foreign-exchange-reserve.html

and see:

The New Safe Havens
The Russians are investing in Canada and Australia. Should you?

By Dan Caplinger   Posted November 26, 2010

The more interesting move came later in the week, when Russia said it had added the Canadian dollar to its basket of foreign exchange reserves. In addition, a Russian central bank official reportedly said the Australian dollar would likely be the next addition to the currency basket.

There's nothing remarkable about the Russians' stance toward the U.S. dollar. Plenty of people have been worried about the dollar's long, steady decline for a long time, and especially in light of 2008's financial crisis and the spending spree that the U.S. government has embarked upon. What is remarkable, though, is that Russia has identified particular economies that could benefit from dollar destabilization.

Hard assets aplenty 

The key to understanding the Russian move lies in the economic underpinnings of the currencies it added to its forex basket. Canada and Australia have seen both their currencies and their stock markets gain strength, due in large part to their vast natural resources. Australia's mining resources include iron ore, alumina, coal, and gold, while Canada has vast energy reserves, as well as gold, platinum group metals, and diamonds, among many other minerals.

With commodity investing gaining popularity in light of higher prices, both Canada and Australia have benefited. Canada has regularly run budget surpluses for more than a decade now. And both currencies recently popped above the value of the U.S. dollar, albeit temporarily.

http://today.msnbc.msn.com/id/40381171/ns/today/

and see: 

IMF Reduces Weighting of Dollar, Yen in SDR Basket
By Candice Zachariahs    Posted November 16, 2010

UBS AG, the world’s second-largest foreign-exchange trader, said in June the IMF may include the Australian and Canadian dollars in the SDR basket this year.

http://www.businessweek.com/news/2010-11-16/imf-reduces-weighting-of-dollar-yen-in-sdr-basket.html

Despite these positive developments for the Canadian dollar, I should not be smug in thinking that holding only Canadian dollars is completely safe.

The Canadian reserve holdings are not based on an existing substantially large gold reserve because our Canadian government had foolishly depleted tons of it decades ago.      

See: 

WHEN IRISH EYES ARE SMILING       
By Ed Steer

http://www.lemetropolecafe.com/Pfv1.cfm?pfvID=2612&SearchParam=Shamrock+Summit

The Canadian reserve holdings now consist of other weakening currencies like the US dollar, and the Euro. 

See: 

Diversification and Canada's Reserve Holdings    by Marc Chandler  Posted January 8, 2010

Canada's reserve assets include dollar, euro, yen, gold, SDRs and its IMF reserve position. Taking these all into account, about 44% of Canada's reserves were in US dollars at the end of 2009 and, as of the end of June, the US dollar accounted for about 52% of Canada's reserves.

http://seekingalpha.com/article/181598-diversification-and-canada-s-reserve-holdings?source=feed

Global economies and currencies are now all interconnected.  Therefore, a financial meltdown starting from the US or a European country will create a domino effect to currencies around the world.  I suspect that the Canadian Loonie will not be immune from the domino effect.

So, I think your suggestion to get some Canadian Maple Leaf silver and gold coins is indeed a very good one.   

[sidewinder]

No currency is immune to fluctuations.  But we have to consider that some will fare better than others.  The question is which will be the survivor in your lifetime.  After all past that point it is someone else's problem.