Tuesday Musings on banks, pot, oil patch subsidies and abortion.

Well, I do know that the Canadian banks are large and profitable and I had bought the argument that we did not need to bail out our banks, because we have heavy (and required) regulation of the sector. Then, I read this article, by Murray Dobbin, which should be required reading, for Canadians especially Conservative Party supporters. If his analysis or facts are wrong, please let me know, because I expect to be quoting this for quite a while to come. In it he says that it is myth that we did not "bail out" banks in Canada, that the Harper Gov did the following:

We are, according to the IMF, actually the third worst of the G7 countries, behind the U.S. and Britain, in terms of financial stabilization costs.

First, we put up $70 billion to buy up iffy mortgages from the big five banks, through the Canadian Mortgage and Housing Corporation, taking them off the banks' balance sheets. That is almost the exact equivalent the U.S. bailout -- it spent 10 times as much, $700 billion, and its economy is about 10 times as large.

Secondly, the Harper government established a fund of $200 billion to backstop the banks -- money they could borrow if they needed it. The government had to borrow billions -- mostly from the banks! -- to do it. It's euphemistically called the Emergency Financing Framework -- implying that our impeccable banks might actually face an emergency. It is effectively a line of low-interest credit and while it has not all been accessed, it's there to be used. Could it help explain why credit has not dried up here as much as it has in the U.S.?

Third, the government now insures 100% of virtually all mortgages through CMHC eliminating risk for the banks -- and opening the door to the ridiculous flood of housing loans we have seen over the past few years. The result: housing has become unaffordable for tens of thousands of Canadians and new rental housing has dried up.

He also provides more analysis - absolutely worth a read - we are being lied to!

In addition, of course, the banks are profitable not just because of government guarantees/assistance - in fact they are about to announce big profits again (see this article in the Globe and Mail) and an increased profit rate, and just where do they make this money? From me and you - from "retail" banking profits - I cannot operate on cash these days and I pay a lot for the privilege. To have a chequing account that allows me unlimited interact withdrawals, to withdraw money from MY bank only, without charge, and to write unlimited cheques, I pay $12.95 a month plus $3.00 a month just to have an overdraft (then I pay interest on it, as well, if I use it.) That's close to $200 a year and I am sure it is over, once things like bank charges from "other" machines (at $1.50 a pop) are factored in - or interest on my overdraft, which I do use. I used to pay another $3.00 per month to have my cheques returned to me but since they now only return photocopies, and since I write so few cheques, I have cancelled that. . . At any rate, my employer uses direct deposit and unless I keep a large balance in my account, I cannot get rid of fees - our house lives kind of hand to mouth - so keeping a balance of $2-3000 is not on.

Also of note today, about banking, in Canada, is that home ownership costs are rising across Canada, and the reason is, primarily, the expected rise in Bank of Canada rates, according to this article from the Globe and Mail. Of course the banks were still charging over 5% for a 5 year mortgage when the Bank of Canada rate was near zero - so now they will be increasing to keep that 5+ % spread - and the 15% -20% that they earn on Credit cards - it makes it tough to try and keep the money from them. We do some credit union "banking" but they cannot look after everything - and since we moved to N.S. have found the credit union didn't want to do anything to get our business - and the banks treat us like "special customers" and yes I fell for it. . . I hope to slowly move everything over to a credit union again (as we did in Toronto and Vancouver) but even then the credit union's here, in Nova Scotia do not seem as progressive and consumer friendly as those we participated in (even so far as being on Board committees) in Ont. and B.C.

My last beef on financial services this morning (and it does affect other sectors) is again the Globe and mail reports (I should stop reading the financial pages it just upsets me!) an expected increase, this year, in Executive Compensation. It is also misleading in part as it says that there was "almost no increase in executive compensation", in one line, and then immediately says - Oh but cash compensation was "up" seven percent! OK - so they did not get their big stock options or they weren't worth as much because of the "meltdown" - I think that big CEO's helped create the mess and getting increases of over 7% while auto workers and others were asked to take "cuts" just demonstrates what wrong with the system! From the article:

A Globe and Mail review of pay for CEOs at Canada’s 100 largest public companies in 2009 shows top executives across Canada received, on average, almost no pay increase last year.

The cash portion of pay packages – salary and cash bonuses – did show substantial growth, with a combined median increase of 7.6 per cent. (Medians reflect the experience of the middle-of-the-pack CEO, while averages can be skewed by CEOs with particularly large or small compensation amounts.)

Read the article for more detail on how they fared, and how they are expected to be back to making real increases this year. (I say - where's mine!?)

______________________________________________________________

The Chronicle Herald is running a Canadian Press story this morning, that says that Canada is mulling cuts to the oil patch subsidies (thank gawd for small mercies!!)

OTTAWA — Canada is contemplating taking the lead on a key G20 pledge by announcing the elimination of some tax breaks for the oil patch prior to the June summit in Toronto, The Canadian Press has learned

G20 leaders agreed last September in Pittsburgh they would reduce distorting fossil fuel subsidies over the medium term and pledged to present concrete national plans in Toronto.

But sources say Ottawa wants to get ahead of the pack. They say senior officials are studying a proposal that would see Ottawa announce plans to reduce tax support for the oil and gas sector prior to the summit.

As the story suggests - "If Canada took unilateral action on fossil fuel subsidies, 'I think everybody would fall over dead' with shock, he said." Me too -but I do hope it happens.

________________________________________________________________

A story from Canadian Press appeared in most big city papers yesterday and today, that is of interest - the Chronicle Herald Story can found here - but it was also covered in the Globe and the Star.

OTTAWA — The Harper government turned its back on advice from its own civil servants when it excluded abortion funding in its G8 maternal- and child-health initiative, The Canadian Press has learned.

Briefing notes prepared in January by the Canadian International Development Agency for International Co-operation Minister Bev Oda suggest access to safe abortion services could save numerous lives in developing countries.

Abortion was among the measures CIDA felt were necessary to meet the ambitious maternal health goals Ottawa plans to promote at the upcoming meeting of world leaders in Ontario next month.

________________________________________________________________

Although not a personal fan of Marc Emery, I support his business and believe that he was treated appallingly, and that his extradition should break some Canadian law, or at least break the spirit of Canadian Law, if not the rule of law explicitly. I have written and called on his behalf, and I don't actually see how this is different from say, Saudi Arabia asking for the extradition of the publisher of Victoria's Secret Catalogue shipped in, or sending alcohol to Saudi -Arabia. Not smart, but does one get extradited from Canada where these things are legal because they are illegal somewhere else? I just don't get it. Why is this different? Why are we not protecting Canadian Citizens? I was shocked that he could be extradited to the U.S. for a business that he carried on in Canada and paid Canadian taxes on, and declared his business.

I found it interesting that the Marc Emery extradition story was carried, with some question, even in the Hindu in India.
________________________________________________________________

Great article on Al Jazeera by Robert Fisk of the Independent. In part he says:

More and more today, we journalists have become prisoners of the language of power. . .

Let me show you what I mean. For two decades now, the US and British - and Israeli and Palestinian - leaderships have used the words 'peace process' to define the hopeless, inadequate, dishonourable agreement that allowed the US and Israel to dominate whatever slivers of land would be given to an occupied people.

. . .

Same again today. We western journalists - used yet again by our masters - have been reporting our jolly generals in Afghanistan as saying that their war can only be won with a "hearts and minds" campaign. No-one asked them the obvious question: Wasn't this the very same phrase used about Vietnamese civilians in the Vietnam war? And didn't we - didn't the West - lose the war in Vietnam?

Yet now we western journalists are actually using - about Afghanistan - the phrase 'hearts and minds' in our reports as if it is a new dictionary definition rather than a symbol of defeat for the second time in four decades, in some cases used by the very same soldiers who peddled this nonsense - at a younger age - in Vietnam.

Language being used to "confuse the issue" - check it out!

______________________________________________________________

Lastly this morning, I am still thinking about Facebook, privacy and data accumulation and my part in it. One article in PCWorld suggests that Facebook should use opt out of complete privacy instead of opt-in if they are really committed to privacy.

Then there is this article from the Washington Post by Mark Zuckerman - the founder of Facebook who commits to improving privacy again including:

We have heard the feedback. There needs to be a simpler way to control your information. In the coming weeks, we will add privacy controls that are much simpler to use. We will also give you an easy way to turn off all third-party services. We are working hard to make these changes available as soon as possible. We hope you'll be pleased with the result of our work and, as always, we'll be eager to get your feedback.

If they get a turn off for "all third party services" I will likely remain on FB, as that is what makes me really crazy!

Have a great day - let me know what you think about any of this . . .