Yesterday we found out from the Globe and Mail that the conservatives implemented their own subprime mortgage scheme in Canada in their first budget in 2006.Think about it, this was the ideal neoconservative, free enterprise wet dream, allowing the free market to take over the government’s role of mortgage insurance and regulation.
US mortgage insurers AIG, PMI, and others moved into the Canadian market to compete with the government run CHMC and were welcomed by our Finance Minister.
Flaherty announced that not only would Ottawa guarantee the business of U.S. insurers, it was doubling that guarantee to $200-billion.
So as the warning bells were just starting to go off in the US about the subprime mortgage crisis, the conservatives opened the Canadian market up to the same risky business practices and by October 2007 Canadians could now get insured for 40 year term, zero down mortgages.And here is where it really gets shady.
From January of this year until June when the conservatives finally headed the warnings of banking officials and banned the offering, an estimated $56 billion of risky 40-year mortgages, more than half of the total new mortgages approved by banks, trust companies and other lenders during that time took advantage of this scheme.
In September as the shit hit the fan in the US with Paulson armed with a three page plan asked for his $750 billion, Flaherty quickly stepped in with a $75 billion mortgage shuffle moving mortgages from the banks books to ours.And guess which ones he is buying with our money.
Because if Flaherty didn’t take over those risky subprime assets our banks would be screaming and sometime in the next six months facing failures as their balance sheets fell out of ratio by holding over valued assets.
Contrary to the lies we have been told by Harper and Flaherty, Canada does have a subprime crisis, one that they created and one that will increase as the real estate prices continue to fall and the interest rates adjust.I would say that is at least the same size problem and one that was made in Canada by Flaherty and Harper.
We are already getting warnings from the head of the Bank of Canada about forthcoming defaults on under financed mortgages.
Meanwhile Harper and Flaherty have been able to hide their culpability in moving this neoconservative, free enterprise, loan sharking scheme into Canada by avoiding any discussion of their economic plans in parliament and continuing their mantra that Canada has the most regulated financial institutions and the problems are not as big here.
Well anyway you look at it, Canada with less than 10% of the population of the US and a great deal less than 10% of the GDP has just spent $75 billion or 10% of the $750 billion Paulson originally asked for to clean up the US.
Originally I wanted Harper removed, replaced, sent back to Alberta, because of his ideological social conservative policies but the real threat posed by his ideology is on economic policy not cultural interference.
The Harper conservatives deregulated our mortgage insurance, and created a Canadian subprime mortgage crisis that should start to hit our economy in about six months and they are lying about.
The economy is going to get worse than both Harper and Flaherty have forecasted and it would appear our government's finances could be in worse shape than they have reported hinted (since they have to date avoided and discussion or disclosure in parliament).
Regardless of the plan presented in January the Coalition needs to replace this government, we can no longer afford their ideological incompetence or believe a word they are saying.