Canadian Banks Got $114 Billion from Governments During Recession

Canada's biggest banks accepted tens of billions in government funds during the recession, according to a report released today by the Canadian Centre for Policy Alternatives.
Canada's banking system is often lauded for being one of the world's safest. But an analysis by CCPA senior economist David Macdonald concluded that Canada's major lenders were in a far worse position during the downturn than previously believed.
Macdonald examined data provided by the Canada Mortgage and Housing Corporation, the Office of the Superintendent of Financial Institutions and the big banks themselves for his report published Monday.

This post was published at CBC News

3 Things Worth Thinking About (Vol. 7)

[‘3 Things Worth Thinking About’ is a weekly publication of ideas, usually contrarian to the consensus, to provoke thoughtful discussions and decision-making processes. As a portfolio manager and strategist, I am sharing things that I am considering with respect to current investment models and portfolio allocations. Please feel free to email or tweet me with your comments and ideas.] Surge In Sentiment Surveys
There is an interesting divergence going on between sentiment based surveys, specifically the ISM Manufacturing and Non-Manufacturing surveys, and actual underlying economic data. This week saw both surveys rise sharply to cyclically high levels despite weakness in actual new orders and consumer consumption.
It is also somewhat intriguing that two groups measuring the same data are getting vastly different results. While the Institute of Supply Management survey saw sharp increases in optimism, Markit’s surveys of the same manufacturing and services related data saw declines. This is one of those cases where only one can be right.
The chart below shows the composite index of the ISM surveys (simple average of manufacturing and services data).

There is a running pattern in the surveys which the initial decline mid-economic cycle reverses back up to cycle peaks. The next decline in sentiment is during the latter stage of the economic cycle prior to the onset of the ultimate recession. The recent surge in survey activity, ex-underlying strength in the actual data, suggests that sentiment is anticipating a recovery that may or may not occur.

This post was published at StreetTalkLive on 04 September 2014.

What Mario Draghi Really Did

New ECB actions were specifically intended to reap benefits through Euro currency devaluation. To achieve this aim, Draghi announced cuts in interest rates as well as administering Euro ‘printing’ through balance sheet expansion (1,000bln or so). The ECB has had recent success as the EUR/USD dropped over 1.5% today and has fallen 5% since July.
A weaker currency is desirable during periods of recessions and subdued inflation. Doing so, however, is not always seamless or the most ideal policy. Many global central banks, for instance, needed to follow the Fed’s lead in cutting rates after the 2008 crisis or risked having an undesirable appreciation of their home currency. Tensions can periodically arise, because two countries cannot become ‘more competitive’ at the same time (‘a race to the bottom’). Clearly, a weaker currency in one country means a stronger currency in another.
There are times, however, when currency movements are mutually beneficial. Against the USD, Draghi is maximizing his efforts to weaken the Euro by trying to utilize ideal timing; expanding the ECB balance sheet at precisely the same time that the Fed’s is flat lining. The widening of interest rate differentials also helps. The FOMC likely welcomes today’s actions. Ideally, Draghi would have also wanted a Quid Quo Pro with Italy and France regarding economic reform; this sounds good in theory, but it is not how politics work.
Despite Draghi’s vacant pleas for fiscal ‘arrows’, he had to ‘do his part’, particularly after backing himself into a corner after his Jackson Hole speech. Nonetheless, ECB actions surpassed expectations today. However, this probably means that the bazooka of sovereign QE is off the table for a while.

This post was published at Zero Hedge on 09/04/2014.

Economist: ‘This is Far From Over… They Know There Is a Problem Coming’

Well known Shadow Stats economist John Williams has warned time and again that the narrative being crafted by government statisticians, elite bankers and politicians is nothing but smoke and mirrors. With an election coming up in just a couple months, it’s highly unlikely that they’ll come out and tell us right now how fundamentally troubled our financial, economic and monetary systems really are.
But that doesn’t change the facts. The reality, as Williams notes in a recent interview with Greg Hunter’s USA Watchdog, is that the U. S. economy is in severe trouble and we may be just months away from the beginning of the next leg down, especially for the U. S. Dollar.
If we were to go back to the levels before the recession, we would need at least 11 million new jobs. That’s 11 million more than we have now. . . . We are in serious trouble here.

One of the best indicators is how people on Main Street, USA feel.
I found that those who live in the real world have a pretty good sense of what’s really going on.
If you don’t believe in the numbers coming out of the government, you’re probably right.
Over time… actual experience that trumps the romanticized numbers they’ve put together and we’re not seeing a recovery here. [We] haven’t had a recovery… the economy plunged into 2009… we had a financial panic… none of the issues have been resolved.
The economy has bottomed out. The banks are still in trouble. This is far from over.

This post was published at shtfplan on September 3rd, 2014.

Jim Rickards: 2014 Expectations

In this audio clip from Physical Gold Fund, James Rickards of Tangent Capital talks about the Fed’s alternatives in 2014 and how they may carry out their tapering plans.  Rickards reviews the Fed’s actions, and how they’ve been unable to attain their specific goals, the forces of deflation versus inflation, as well as affects of nominal GDP growth in lieu of real GDP growth.  He also discusses gold and gives some interesting comments regarding why he holds it, how much of it should be a part of any investment portfolio, and its current trading environment  (specifically, that the current set-up could yield a major short-squeeze opportunity).  Listen to mp3 audio.

And in the following Bloomberg interview, Rickards talks more about gold and how even though 2013 has seen a bad year for the metal in paper terms, there is still major demand for obtaining gold in physical form.  Physical gold has been leaving the GLD ETF and going straight to China.  That the central banks have to drain the ETF in order to get the physical metal shows that there is very little of the stuff available elsewhere.  This is a must watch interview with James Rickards.