Monday, September 22, 2008

Flaherty was on TV yesterday, making things up

Harper’s finance minister Jim Flaherty was on CTV yesterday, to discuss the $700 billion take over of the over valued assets by the US federal reserve.

In a statement that sends shivers down the spine of anyone that lived in Ontario during Flaherty's reign as provincial finance minister.
He doesn't expect the type of crisis that battered the American financial sector to occur in Canada and that the government has taken steps to make sure the country's financial sector will not end up in a precarious situation like that of the United States. CNEWS here.
That’s usually the first sign that anything can go wrong.

First off he doesn’t know what effect the US federal take over and expected “fire sale” type, disposal of the up to $700 billion of over valued assets will have on Canadian institutions (banks, mutual funds, insurance companies) that may or may not own a piece of those assets. No one knows yet.

Secondly, what steps did the Tories take. If sitting back and crossing their fingers counts, they are there.
He noted that the U.S. financial crisis was spawned by risky mortgages. "You know 40 per cent of the people in the United States with sub-prime mortgages were sold this product in their own homes," Flaherty added.
Well thanks for that Jim, however one of the main reasons that the US banks, investment brokers and assurance companies were able to put together a scheme of issuing risky mortgages and then issuing policies to spread that risk was deregulation.

Deregulation of the banks, deregulation of brokers and deregulation of insurance companies, where the government steps back and lets industries regulate themselves.

The same deregulation mantra that Flaherty’s own party believes in and has already demonstrated with food inspection and airline safety.
The finance minister also suggested that the tax on income trusts has helped Canada weather the economic tough times ahead. "Thank goodness we made that decision on income trusts," he said, “the move helped to make the economy "stronger today" to withstand the turmoil affecting global financial markets.
However, as the CNEWS article points out, the decision to tax income trusts doesn't actually take effect until 2011.

Way to go Jim, I can see you are right on top of it.

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