Tuesday, April 17, 2012

The Bank of Canada fumbles again

Carney and Co came out today with much fanfare, saying that higher interest rates may needed.

They up-graded their growth forecasts and are of course fearful of the huge amount of debt Canadian have taken on and the Real Estate bubble - so they are moving into rate hiking mode.

The only thing holding them back is the high Canadian Dollar which is damaging Ontario's manufacturing sector.

So when will they do this?

Probably not until late 2012 or 2013 and even then it will be a tiny move up from the current 1%. (with inflation running at 2-3x that)

Huh? So why all the hullabaloo now. Just do it! The result of these words is that the CAD has soared again, but rates for borrowers have remained rock solid.

This is the exact opposite of what they say they want. Now manufacturing gets hit but debtors have a free pass.

Why do we keep doing things that are the opposite of our intentions? The CMHC of course being the prime example. Say one thing but do the opposite.


  1. Fish,

    It's worse than we think. Lenders in the US are going back to the subprime well.


    It's like a big Monopoly board. When the weaker players go bankrupt and you own all the property, just tear open a new Monopoly game and use the bills from that bank enough to get them around the board one more time. You still get everyone's $200 as they pass go. Who cares that you have to print endless money to keep the game going. Especially if everyone else is doing it.

  2. Notice how all the henchmen got rewarded with big jobs, or promises of the chance to rub shoulders with royalties half the world away, while they keep dolling out lies to the masses!

  3. Just watch his reputation within the finance industry itself being captured by the media:

    VanSun: Title of their article -
    "Carney's upbeat outlook suggests rates could rise"

    Canadian bank economist:
    "It's déjà vu all over again, as the Bank of Canada has reinstated its warnings that higher interest rates are on the horizon,"

    "But when we get there, will the rate hike actually be forthcoming? We doubt it."