Saturday, April 20, 2013
Sunday, April 14, 2013
Friday, April 5, 2013
Canada Unexpectedly Sheds 54,500 Jobs in March; Worst Job Loss in 4 Years; Canadian Dollar Tumbles
Our neighbor to the North also suffered from an unexpectedly weak jobs report today, the worst monthly job losses in more than four years.
Canada shed 54,500 positions in March, more than wiping out the 50,700 jobs that were added in February, Statistics Canada said on Friday. Market operators had expected a modest gain of 8,500 jobs.It was the biggest monthly jobs loss since February 2009, when the economy shed 69,300 positions. The March unemployment rate rose to 7.2 percent from 7.0 percent.
“The employment numbers did seem to be defying gravity up until March and were not lining up with the underlying growth numbers,” said Doug Porter, chief economist at BMO Capital Markets. “We knew one of them had to give way and it looks as if employment has given way.”
Adding to the gloom were trade figures for February that showed Canada’s deficit increased to C$ 1.02 billion on both lower exports and higher imports. Traders had expected a surplus of C$ 200 million.
Canadian Dollar Tumbles
Bloomberg reports Canadian Dollar Tumbles After Unexpected March Employment Loss
The Canadian dollar fell in its biggest decline in nine months against its U.S. peer after the nation unexpectedly lost jobs last month by the most since the last recession four years ago.The loonie, as the Canadian dollar is known for the image of the C$ 1 coin, fell 0.6 percent to C$ 1.0183 at 2:09 p.m. in Toronto. Earlier, it fell 1.1 percent to C$ 1.0236 per U.S. dollar, the largest drop since June 28. One loonie buys 98.20 U.S. cents.
I think we have seen the end of good jobs reports here and in Canada for quite some time.
Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
Mish’s Global Economic Trend Analysis
Canada Unexpectedly Sheds 54,500 Jobs in March; Worst Job Loss in 4 Years; Canadian Dollar Tumbles
Saturday, March 30, 2013
The Canadian Government Offers "Bail-In" Regime, Prepares For The Confiscation Of Bank Deposits To Bail Out Banks
Continuing my series of banks ready to “Cyprus” their depositors, I offer this reader contribution from Don from Canada 2013-03-29 23:11:
Source: budget.gc.ca/…/…
Page 145
“The [Canadian] Government proposes to implement a “bail-in” regime for systemically important banks. This regime will be designed to ensure that, in the unlikely event that a systemically important bank depletes its capital, the bank can be recapitalized and returned to viability through the very rapid conversion of certain bank liabilities into regulatory capital. This will reduce risks for taxpayers. The Government will consult stakeholders on how best to implement a bail-in regime in Canada. Implementation timelines will allow for a smooth transition for affected institutions, investors and other market participants. Systemically important banks will continue to be subject to existing risk management requirements, including enhanced supervision and recovery and resolution plans.
This risk management framework will limit the unfair advantage that could be gained by Canada’s systemically important banks through the mistaken belief by investors and other market participants that these institutions are ‘too big to fail’.”
A depositor is an unsecured creditor to a bank. The Canadian government presents its position to be one of shielding the taxpayer from the need to pay for bailing out a failing bank. As a taxpayer that is comforting.
However as a depositor, the phrase “rapid conversion of certain bank liabilities into regulatory capital” concerns me. My deposit is the bank’s liability. Could depositors’ funds fall under the definition of ‘certain bank liabilities’?
I searched the entire 442 page document and I cannot find where the term ‘certain bank liabilities’ is defined.
The prudent approach I believe would be to assume that under certain conditions, certain bank liabilities will include depositors’ funds; at least those funds in excess of CAD 100,000 which is our so-called insured amount.
Even if it has noble intentions now, under a credit and derivatives collapse scenario, it is conceivable that the Canadian government could be coerced or bullied by external agents into grabbing depositors’ funds just like what is happening in Cyprus.
I find the newest ‘bail-in’ term being used since the Cyprus debacle quite amusing. It reminds me of the ‘sit-in’ and ‘love-in’ terms of the peace/hippie generation.
We all seem to be floating on the bathwater of fiat currency liquidity. The tub is being drained at the opposite end from where we are floating. The EU is circling the drain. The central banks are feverishly trying to replenish the tub with thimbles full of water, but it appears inevitable that some will go down the drain, whilst others will be left high and dry. The central bankers only have thimbles, not a drain stopper.
A radical new option for the financial rescue of Cyprus would force losses on uninsured depositors in Cypriot banks, as well as investors in the country’s sovereign bonds, according to a confidential memorandum prepared ahead of Monday’s meeting of eurozone finance ministers.The proposal for a “bail-in” of investors and depositors, and drastic shrinking of the Cypriot banking sector, is one of three options put forward as alternatives to a full-scale bailout. The ministers are trying to agree a rescue plan by March, to follow the presidential elections in Cyprus later this month.
By “bailing in” uninsured bank depositors, it would also involve more foreign investors, especially from Russia, some of whom have used Cyprus as a tax haven in recent years. That would answer criticism from Berlin in particular, where politicians are calling for more drastic action to stop the island being used for money laundering and tax evasion.
Labelled “strictly confidential” and distributed to eurozone officials last week, the memo says the radical version of the plan – including a “haircut” of 50 per cent on sovereign bonds – would shrink the Cypriot financial sector, now nearly eight times larger than the island’s economy, by about one-third by 2015.
Senior EU officials who have seen the document cautioned that imposing losses on bank depositors and a sovereign debt restructuring remain unlikely. Underlining the dissuasive language in the memo, they said that bailing in depositors was never considered in previous eurozone bailouts because of concern that it could lead to bank runs in other financially fragile countries.
But the authors warn such drastic action could restart contagion in eurozone financial markets…
In what appears to be drastically worse than many had hoped (and expected), uninsured depositor in Cyprus’ largest bank stand to get no actual cash back from their initial deposit as the plan (expected to be announced tomorrow) is:
- 22.5% of the previous cash deposit gone forever (pure haircut)
- 40% of the previous cash deposit will receive interest (but will never be repaid),
- and the remaining 37.5% of the previous cash deposit will be swapped into equity into the bank (a completely worthless bank that is of course.)
So, theoretically this is 62.5% haircut but once everyone decides to ‘sell’ their shares to reconstitute some cash then we would imagine it will be far greater. Furthermore, at what valuation will the 37.5% equity be allocated (we suspect a rather aggressive mark-up to ‘market’ clearing levels).
Critically though, there is no cash. None. If you had EUR150,000 in the bank last week (net of insured deposits which may well be impaired before all is said and done) you now have EUR0,000 to draw on! But will earn interest on EUR60,000 (though we do not know at what rate); and own EUR56,250 worth of Bank of Cyprus shares (the same bank that will experience the slow-burn leak of capital controlled outflows).
In the post “EU Bank Depositors: Your Mattress Is Starting To Look Awfully Attractive – Bank Risk, Reward & Compensation“, I offered a way to calculate what return you should expect to receive to take on the risk of a potential 40% haircut. The second tab offers what recent Cyprus bank rates were. Do you see a disparity??? To bring things up to date, up the haircut to 63% and you will find that no bank in the world will compensate you for the risk you assume in banking there. Banco Posturepedico shares: Strong BUY!!!!
- The collapse of Bear Stearns in January 2008 (2 months before Bear Stearns fell, while trading in the $ 100s and still had buy ratings and investment grade AA or better from the ratings agencies): Is this the Breaking of the Bear?
- The warning of Lehman Brothers before anyone had a clue!!! (February through May 2008): Is Lehman really a lemming in disguise? Thursday, February 21st, 2008 | Web chatter on Lehman Brothers Sunday, March 16th, 2008 (It would appear that Lehman’s hedges are paying off for them. The have the most CMBS and RMBS as a percent of tangible equity on the street following BSC.
- The collapse of the regional banks (32 of them, actually) in May 2008: As I see it, these 32 banks and thrifts are in deep doo-doo! as well as the fall of Countrywide and Washington Mutual
- The collapse of the monoline insurers, Ambac and MBIA in late 2007 & 2008: A Super Scary Halloween Tale of 104 Basis Points Pt I & II, by Reggie Middleton, Welcome to the World of Dr. FrankenFinance! and Ambac is Effectively Insolvent & Will See More than $ 8 Billion of Losses with Just a $ 2.26 Billion
- The ENTIRE Pan-European Sovereign Debt Crisis (potentially soon to be the Global Sovereign Debt Crisis) starting in January of 2009 and explicit detail as of January 2010: The Pan-European Sovereign Debt Crisis
- Ireland austerity and the disguised sink hole of debt and non-performing assets that is the Irish banking system: I Suggest Those That Dislike Hearing “I Told You So” Divest from Western and Southern European Debt, It’ll Get Worse Before It Get’s Better!
The Banks Are Bigger Than Many of the Sovereigns
Ready! Set! Bank Run!!!
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Sovereign Contagion Model – Retail (961.43 kB 2010-05-04 12:32:46)
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The Canadian Government Offers "Bail-In" Regime, Prepares For The Confiscation Of Bank Deposits To Bail Out Banks
Monday, February 18, 2013
US Quietly Ramps Up Security Along the Canadian Border
This story first appeared on the TomDispatch website.
Before September 11, 2001, more than half the border crossings between the United States and Canada were left unguarded at night, with only rubber cones separating the two countries. Since then, that 4,000 mile “point of pride,” as Toronto’s Globe and Mail once dubbed it, has increasingly been replaced by a US homeland security lockdown, although it’s possible that, like Egyptian-American Abdallah Matthews, you haven’t noticed.
The first time he experiences this newly hardened US-Canada border, it takes him by surprise. It’s a freezing late December day and Matthews, a lawyer (who asked me to change his name), is on the passenger side of a car as he and three friends cross the Blue Water Bridge from Sarnia, Ontario, to the old industrial town of Port Huron, Michigan. They are returning from the Reviving the Islamic Spirit conference in Toronto, chatting and happy to be almost home when the car pulls up to the booth, where a blue-uniformed US Customs and Border Protection (CBP) agent stands. The 60,000-strong CBP is the border enforcement arm of the Department of Homeland Security and includes both customs and US Border Patrol agents. What is about to happen is the furthest thing from Matthews’s mind. He’s from Port Huron and has crossed this border “a million times before.”
US Quietly Ramps Up Security Along the Canadian Border