I have to admit trying to understand the Byzantine layers of International financial transactions is something that causes the eyes to glaze over at the best of times. Really, if I can just get the cheque book to balance at the end of the month, I feel like I’ve earned a doctorate in Economics from the London School of Economics.
But this whole sub prime paper trail of disaster that has apparently now crossed over the border into Canada, leaves me wondering if maybe I need a bigger mattress for which to hide my money under.
The American economy as we have seen from the dramatic ups and downs of the stock market is on a roller coaster of emotions, all traced back to the uncertainty of the American real estate market and the exposure to sub prime loans that threaten to turn the financial lenders of North America upside down.
When the president of a large American bank declares that this is the worst housing crisis he's seen since the Great Depression, then uh, hmmm, where's that cookie jar and what do we have in it!
Canadians flush with the sudden surge in the Canadian loonie seem to believe that we have become an invulnerable colossus in the world of finance; we frequently hear that our banks are the safest in the world. That our economic standards are high and the fear should be low.
But this whole sub prime paper trail of disaster that has apparently now crossed over the border into Canada, leaves me wondering if maybe I need a bigger mattress for which to hide my money under.
The American economy as we have seen from the dramatic ups and downs of the stock market is on a roller coaster of emotions, all traced back to the uncertainty of the American real estate market and the exposure to sub prime loans that threaten to turn the financial lenders of North America upside down.
When the president of a large American bank declares that this is the worst housing crisis he's seen since the Great Depression, then uh, hmmm, where's that cookie jar and what do we have in it!
Canadians flush with the sudden surge in the Canadian loonie seem to believe that we have become an invulnerable colossus in the world of finance; we frequently hear that our banks are the safest in the world. That our economic standards are high and the fear should be low.
Reassuring words for sure, but still you have to get a little curious when the Big Banks of Canada start announcing that they are taking a financial hit for this quarter tied to their exposure to the troubles in the USA.
The Bank of Montreal on Friday announced it was taking a 320 million dollar charge (I’m not up on my financial lingo, but I think that means they don’t expect to see it ever again) tied into the sub prime troubles.
Earlier this week, the Royal Bank of Canada, the largest in the country, said it will record a $360-million charge related to the sub prime securities.
While the Bank of Nova Scotia said it will take a $190-million hit, small potatoes compared to the Canadian Imperial Bank of Commerce which outlined a $463-million charge on its exposure to the U.S. mortgage market.
Do you get the feeling that rising service charges may soon be the least of our worries!
Of course compared to the Giant lenders of Europe, Canadian banks are acting like they’re cashing in pop bottles after a fund raising drive, HSBC said that their exposure was something like 3.4 BILLION, Barclay’s bellied up to the write down bar with a 2.7 charge and the US Bank of America is topping the 3 Billion dollar mark.
All dollar amounts that I don’t relate to and can’t even comprehend what they would look like stacked up in the garage.
With those numbers popping around in the head we come to a mysterious little Canadian trading club, dealing in asset-backed commercial paper, better known for its acronym of ABCP.
A team of reporters with the Globe and Mail has done a rather thorough job of presenting the background to the Canadian side of the problem, the ABCP troubles are explained in terms that simplify the financial tsunami that seems to be cresting just off of our financial shores.
From highlighting the main players, to documenting the rather ad hoc rules and doomsday scenarios that the brokers play out makes for fairly fascinating reading, especially so for us regular folks who consider financial matters to begin and end with the ATM and the mortgage or car loan or maybe even an RR or RESP .
This video presentation called countdown to meltdown, gives those of us with a short attention span when it comes to finance a handy capsule of the troubles that have invaded the Canadian capital markets and what may still be around the corner.
A few other interactive tools help to highlight just how deep the problem goes and shows some unusual potential victims as things unravel, including the government of the Yukon and a bank and a mining company that have been involved in the economy of our corner of the country in the northwest of all places.
The Globe article (read it in detail here) is a lengthy one nine page clicks in total, with a number of informative side trips along the way. No doubt it is something that will have to be read more than a few times, before the full impact of the situation and where it may or may not lead to is a little clearer.
For the most part, we’re constantly being told that there’s not much to worry about, things will sort themselves out in the long run. Hopeful words that anyone would want to hear in a time of high drama.
But I don’t know, when you read articles like this and some of the others that have been warning about these paper loans, hedge funds and derivatives on the world scene. You get the feeling that it can’t hurt to head to the furniture stores and start pricing out larger mattresses.
You just never know do you?
The Bank of Montreal on Friday announced it was taking a 320 million dollar charge (I’m not up on my financial lingo, but I think that means they don’t expect to see it ever again) tied into the sub prime troubles.
Earlier this week, the Royal Bank of Canada, the largest in the country, said it will record a $360-million charge related to the sub prime securities.
While the Bank of Nova Scotia said it will take a $190-million hit, small potatoes compared to the Canadian Imperial Bank of Commerce which outlined a $463-million charge on its exposure to the U.S. mortgage market.
Do you get the feeling that rising service charges may soon be the least of our worries!
Of course compared to the Giant lenders of Europe, Canadian banks are acting like they’re cashing in pop bottles after a fund raising drive, HSBC said that their exposure was something like 3.4 BILLION, Barclay’s bellied up to the write down bar with a 2.7 charge and the US Bank of America is topping the 3 Billion dollar mark.
All dollar amounts that I don’t relate to and can’t even comprehend what they would look like stacked up in the garage.
With those numbers popping around in the head we come to a mysterious little Canadian trading club, dealing in asset-backed commercial paper, better known for its acronym of ABCP.
A team of reporters with the Globe and Mail has done a rather thorough job of presenting the background to the Canadian side of the problem, the ABCP troubles are explained in terms that simplify the financial tsunami that seems to be cresting just off of our financial shores.
From highlighting the main players, to documenting the rather ad hoc rules and doomsday scenarios that the brokers play out makes for fairly fascinating reading, especially so for us regular folks who consider financial matters to begin and end with the ATM and the mortgage or car loan or maybe even an RR or RESP .
This video presentation called countdown to meltdown, gives those of us with a short attention span when it comes to finance a handy capsule of the troubles that have invaded the Canadian capital markets and what may still be around the corner.
A few other interactive tools help to highlight just how deep the problem goes and shows some unusual potential victims as things unravel, including the government of the Yukon and a bank and a mining company that have been involved in the economy of our corner of the country in the northwest of all places.
The Globe article (read it in detail here) is a lengthy one nine page clicks in total, with a number of informative side trips along the way. No doubt it is something that will have to be read more than a few times, before the full impact of the situation and where it may or may not lead to is a little clearer.
For the most part, we’re constantly being told that there’s not much to worry about, things will sort themselves out in the long run. Hopeful words that anyone would want to hear in a time of high drama.
But I don’t know, when you read articles like this and some of the others that have been warning about these paper loans, hedge funds and derivatives on the world scene. You get the feeling that it can’t hurt to head to the furniture stores and start pricing out larger mattresses.
You just never know do you?
No comments:
Post a Comment