Are the banks schizo?

On the one hand we have a parade of bank CEO's and economist falling over each other daily to say housing may be in a bubble and care is needed, consumer debt is too high and self-control is needed and yet on the other hand they are trying to stuff as much debt down the throats of consumers as they can.

What is this - good cop, bad cop?

They run 'money porn' adds saying your are richer than you think (huh didn't you just say I was over-indebted?) and showing folks taking money out of their home equity to go on exotic beach holidays.

The message is simple - do not deny yourself anything. Do not build savings or equity in house, just borrow and spend. You can pay it off, or someone can. Banks have become crack pushers.

The latest in this series of bank inducements to spend is the Bank of Montreal's, lowest ever mortgages. 2.99% for five years. Lets get the last few folks who cannot afford to buy these over-priced bricks and timber into debt and then we can sink the whole ship.

Now I know that mortgage rates usually follow Canada bonds, and Canada bonds have been going down as money tries to find a safe home. However it also depends on many other factors including how easy it is to access money by banks and their risk tolerance and forecasts for the asset they are lending on.

If they have room to play with rates, how about giving more than the near zero % they are giving savers in their deposit accounts. They are basically stealing the savers net returns and giving it to the borrowers.

Where is the fairness in that?

Mark Carney wants us to save more...and do what with it? Put it into a savings account or a bond and LOSE 2% a year to inflation! Or throw it into the stock-market and hope for the best or what exactly.... just save it so Carney can feel better and point to a graph showing higher savings so he can garner another international job.

How about increasing rates to match inflation and then see what happens.

In fact why don't we just get rid of the dorks that run the Central Banks and just allow a computer program to set interest rate policy. Some economists have run models and have shown that it would work better than the emotional and often wrong-but-worshipped suits like Greenspan or Bernanke or Carney who respond to crises in knee jerk ways, setting the stage for the next even bigger crisis and bubble.