Bank of Canada to drop interest rate to 0%

[Diplomat]

Re: Bank of Canada to drop interest rate to 0%

No financial institution anywhere is immune from this global meltdown, but it has been acknowledge that Canada's banks, because of federal regulations and sounder practices, are in better shape than the other G7 countries.

Why Canada's Banks Don't Need Help

[Dr.Dudd]

Re: Bank of Canada to drop interest rate to 0%

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: CEW</div><div class="ubbcode-body">No financial institution anywhere is immune from this global meltdown, but it has been acknowledge that Canada's banks, because of federal regulations and sounder practices, are in better shape than the other G7 countries.

Why Canada's Banks Don't Need Help
</div></div>That say more about out bad the other's are than it does about how strong Canada's is.
No government regulation can protect any bank from astronomical reduction of the value of assets they use for security.

Nothing ither than insurance against that will save them.

and that is if the insurers don't go belly up under the flood of claims against it.

[sagal]

Re: Bank of Canada to drop interest rate to 0%

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: B_P</div><div class="ubbcode-body"><div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: sagal</div><div class="ubbcode-body">Bank of Canada is withdrawing their controversial rosy outlook for the economy's rebound. They now suggest the recession will last longer than this summer and could hang on the entire year.&quot; Anyone could have made this prediction, everyone and I mean everyone knew that his statement last month was BS. Everything is rosy, relax don't worry and this is a great buying opportunity! These rate cuts will add nothing to the economy,Greenspans rate cutting started this whole mess and the BoC believes that this is going to add a stimulous now! This economy will stall for a long time until the US admits that it was easy credit got us in this mess and easy credit is not going to us out of it. The United States of America is BANKRUPT BABY!
</div></div>

You seem to say that with such enthusiasm, Sagal. </div></div>

Sorry this quote is actually not mine. It was taken from another source

[Diplomat]

Re: Bank of Canada to drop interest rate to 0%

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Dr.Dudd</div><div class="ubbcode-body"><div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: CEW</div><div class="ubbcode-body">No financial institution anywhere is immune from this global meltdown, but it has been acknowledge that Canada's banks, because of federal regulations and sounder practices, are in better shape than the other G7 countries.

Why Canada's Banks Don't Need Help
</div></div>That say more about out bad the other's are than it does about how strong Canada's is.
No government regulation can protect any bank from astronomical reduction of the value of assets they use for security.

Nothing ither than insurance against that will save them.

and that is if the insurers don't go belly up under the flood of claims against it. </div></div>
All of that is dependent on how leveraged the banks are, and again, unlike some others in the G7, ours are not as highly leverage. Canada isn't immune to what is going on, but at least as at right, knock on wood, we're doing alright.

[Dr.Dudd]

Re: Bank of Canada to drop interest rate to 0%

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: CEW</div><div class="ubbcode-body"><div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Dr.Dudd</div><div class="ubbcode-body"><div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: CEW</div><div class="ubbcode-body">No financial institution anywhere is immune from this global meltdown, but it has been acknowledge that Canada's banks, because of federal regulations and sounder practices, are in better shape than the other G7 countries.

Why Canada's Banks Don't Need Help
</div></div>That say more about out bad the other's are than it does about how strong Canada's is.
No government regulation can protect any bank from astronomical reduction of the value of assets they use for security.

Nothing ither than insurance against that will save them.

and that is if the insurers don't go belly up under the flood of claims against it. </div></div>
All of that is dependent on how leveraged the banks are, and again, unlike some others in the G7, ours are not as highly leverage. Canada isn't immune to what is going on, but at least as at right, knock on wood, we're doing alright. </div></div> If you know any thing about banking you will realiuze that all banks.
yes I said all banks,incliding CanaDIAN BANKS ARE ALLOWED TO LEN 10 TIMES THEIR SAAETS. aND NO REGOLATARY ENVORONMENT CAN REQUIRE SECURITY DEPOSIT OF 50% OF THISE LOANS.
sO EVEN IF THE ASSETS VALUE IS REDUCED BY 10 PERCENT THE DEPOSITS WILL BE forced to find that105 or teduce loans by 10m times that amount of lost asset value.
OK keep living in the land of make belief ...

[RichD]

Re: Bank of Canada to drop interest rate to 0%

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Dr.Dudd</div><div class="ubbcode-body">If you know any thing about banking you will realiuze that all banks.
yes I said all banks,incliding CanaDIAN BANKS ARE ALLOWED TO LEN 10 TIMES THEIR SAAETS. aND NO REGOLATARY ENVORONMENT CAN REQUIRE SECURITY DEPOSIT OF 50% OF THISE LOANS.
sO EVEN IF THE ASSETS VALUE IS REDUCED BY 10 PERCENT THE DEPOSITS WILL BE forced to find that105 or teduce loans by 10m times that amount of lost asset value.
OK keep living in the land of make belief ... </div></div> actually in Canada there is no reserve requirement...however banks do practice fairly conservative lending.

[X]

Re: Bank of Canada to drop interest rate to 0%

question - why does lowered interest rates results in strengtening loonie?
Know mi can google it, but prefer get the 411 from the people wid di knowledge

[RichD]

Re: Bank of Canada to drop interest rate to 0%

my take is FX is driven by speculation...maybe dem thing that the move is goign to cause a upswing in the canada economy so dem moving into the CAD.

traditional thinking is that a lower prime would decrease demand for the currency so it should weaken ..but these days tradition is out the window.

[diabolical_Tanya]

Re: Bank of Canada to drop interest rate to 0%

[Diplomat]

Re: Bank of Canada to drop interest rate to 0%

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Dr.Dudd</div><div class="ubbcode-body"><div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: CEW</div><div class="ubbcode-body">All of that is dependent on how leveraged the banks are, and again, unlike some others in the G7, ours are not as highly leverage. Canada isn't immune to what is going on, but at least as at right, knock on wood, we're doing alright. </div></div> If you know any thing about banking you will realiuze that all banks.</div></div>
I work in one, and as RichD pointed out, your understanding of Canadian banks operations may be a little bit off.

[Dr.Dudd]

Re: Bank of Canada to drop interest rate to 0%

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: CEW</div><div class="ubbcode-body"><div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Dr.Dudd</div><div class="ubbcode-body"><div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: CEW</div><div class="ubbcode-body">All of that is dependent on how leveraged the banks are, and again, unlike some others in the G7, ours are not as highly leverage. Canada isn't immune to what is going on, but at least as at right, knock on wood, we're doing alright. </div></div> If you know any thing about banking you will realiuze that all banks.</div></div>
I work in one, and as RichD pointed out, your understanding of Canadian banks operations may be a little bit off. </div></div> What RichD said does not contradict what I am saying. It inly added more detaoled information.
The reserve that Rich is talking about is the most effective way to keep banks conservative. well if banks want to do it on their own good for gthem. But that does not relieve them of the noemal accounying respoinsibillity od all businesses. They have to have either cash or some other transferabel assets to secure their balance sheet and keep the organization viable.
What the banks lend against becomes a part of the banks assets. As th evalue of ythose properies are reduced, those assets also lose value. There is a point where the value of these asets can become so low as a result of a downturn in the economy that or will also reduce the assets of the bank to th epoint where the bank becomes insolvent.
Unless they get an infusion from somewhere else. being conservative only postpone this, but if the economy goes low enough they will eventually go down.