Saturday, May 29, 2010

Canadian Model Works

Many financial experts say that the reason Canada was shielded from the hard part of the recession was because of our regulations. If we had become more deregulated, we might have ended up like the US. It was the regulations that saved us. We do not need to lessen the rules in the economic sector, it works fine as it is. We need to keep our country this way to protect our country from future economic disasters.
The sharp contrast between the Canadian experience and how negatively the financial crisis affected the United States, and much of Europe, reflects different regulatory regimes, as well as different corporate governance systems, financial institution lending practices and different structures. Interestingly, in the halcyon years before the financial crisis, Canadian practices were often criticized in New York and London as being too conservative, too prudent and too unwelcoming of the new financial innovations that were sweeping global balance sheets.
Read more at the Globe and Mail.

1 comment:

  1. Although not mentioned in the Globe opinion piece we were fortunate that our previous governments both Liberal & Progressive Conservatives did not deregulate our financial institutions, despite pressure from the US and the Reform and Alliance opposition parties in parliament,

    Unfortunately when Harper did get power he changed the rules on mortgage lending: 40 year terms at zero down in October of 2008. He had to back track in June of 2009 when the sub-prime mess in the US started to gain momentum.

    That nine month experiment at Harper economics ended up costing us $75 billion. The following October they were forced move $75 billion of sub prime, high risk mortgages from the five national banks balance sheets to the federal balance sheet. They claimed it didn't cost anything. Except that we now have $75 billion of over priced assets that will have to written off over time.

    Yes Canada's regulations saved some hardship, but due to no thanks from the current government who are taking all the credit for them.

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