Reassurance From Canada's Central Banker

Canadian deposits should be safe under global 'bail-in' system

OTTAWA -- Mark Carney says policy-makers are working diligently to devise an international "bail-in" regime to prevent big bank failures, but he offered no guarantee global depositors would be protected under all circumstances.
Canadian savers with accounts in the country's six systemically important banks need not worry, however, he said at an event in Washington hosted by Thomson Reuters.
"Canadian institutions have substantial unsecured debt obligations in the wholesale market and as well as other classes of capital, and they have substantial capital as well, so once you stack all of that up, regardless of whether one would look to reach into it ... it's hard to fathom why it would be necessary," the Bank of Canada governor said.
 Asked if this would include non-insured deposits -- those over $100,000 -- Carney referred to a statement a previous statement from Finance Minister Jim Flaherty's office that depositors were excluded.

Too much household debt will prompt higher interest rates

Bank of Canada Governor Mark Carney says the central bank might have to push up interest rates to cool the housing market if Canadians don’t refrain from taking on too much household debt.
Speaking in an online interview, Carney said household credit is losing steam but is still “at high levels.”
My view:

From statements made the Canada's finance minister, it appears that there will be no distinction between government insured and uninsured deposits in the event a bank "bail-in" is required.

While the wiley Carney implies such action is "hard to fathom", we need to ponder why it would be necessary to name all six of Canada's biggest banks as "systemically important" if Canada's banks are as robust as government officials claim.

Consider that only a few years ago the Royal Bank was the only Too Big To Fail (TBTF) bank in Canada.

So how did all the so called reforms to the financial system result in what are essentially six TBTF banks?

That is a question that can only be answered by noting who remains in authority since the financial crisis.  So far, there have been very few changes both to the people in charge and to their view of the world.

Where does that leave us?

Mr. Carney implies that interest rates will rise if the housing market doesn't cool off.

Well, the housing market has been hot for years and rates have fallen and then remained near zero in an attempt to stimulate the economy.

Mr. Carney is speaking out of both sides of his mouth.  

He warns of Canadians borrowing too much, but then continues to permit the Zero Interest Rate Policy (ZIRP) that encourages it.

Will he or his successor raise interest rates?

They do not dare.

Small interest rate rises will quickly implode the housing market rather than the slow deflating that is occurring presently.

Instead they will continue the stealth inflation policy of 2 or 3% annual wealth confiscation of savers, pensioners, and the elderly through ZIRP.  

This is slow, sneaky default on government debt in an attempt to save the present banking and fiat currency system.

How long they will succeed remains to be seen, as the bond market will eventually awaken to the ongoing robbery and demand higher yields (interest rates).

Then the shit truly hits the fan.

And perhaps this explains some of the recent action in the gold market.  Force the price of physical gold down by dumping excessive amounts of paper gold on the market.  Then the opportunity arises for the truly wealthy to accumulate large amounts of real money (gold) as a reduced price.

Watch carefully over the next few months where the gold goes and who are the largest buyers.