Good thing the federal government reports an incredible $14.2 Billion surplus, because they're going to need it to bail out NavCan and CMHC who carry their fair share of ABCP exposure.
So what's to blame? It seems unlike our American cousins who just lent money to anything with a pulse, we in Canada just lent willy-nilly to any business with a pulse with our LAX REGULATORY REGIME. What does this mean?
It won't be just individuals who lose their shirts and homes, it will be businesses and their employees who lose their shirts, cars and homes. On what sort of scale remains to be seen.
The National Post has this account:
"It's a made-in-Canada problem," said Claude Lamoureux, head of Ontario Teachers' Pension Plan. Many people in the market "didn't know or didn't ask questions" because they were making more profits than elsewhere, he added.$135 Billion is about ten year's worth of profit for the big six, combined. Wow.
In Canada, the market grew more quickly than in other countries, doubling between 2000 and 2007 to $120-billion, because the Canadian definition of disruption to the market was much narrower than elsewhere.
Mr. Smith calculated that Canada's big six banks are on the hook for total liquidity facilities worth $135-billion.
The more I read, the more I realize just how big and unstable this deck of cards is. All it's going to take is someone to get a bit jumpy, stop cooperating with their counterparts in other organizations, cut losses and run for this thing to get ugly real fast.
With all the recent talk of the Conservatives engineering their own defeat around the Throne Speech and heading into a fall election makes me believe they know this is going to get ugly real fast and they don't want to go down with the ship they didn't build.