There will be no bail-out package paid to any of Canada’s Bank, Insurance Companies, or other Financial Institutions; Prime Minister Stephen Harper confirmed this on Friday while campaigning in Quebec.
Unlike the US who, in a last ditch attempt to save the country’s largest insurer AIG, offered a two year 85$ billion dollar loan to AIG in exchange for an 80% stake in the company, Canada is not considering any rescue efforts of its companies.
Despite this past week’s financial sector turbulence and the heightened concerns over the US economy, Harper said the Canadian Financial Institution remains in “very good shape.” All information provided to Harper’s government has indicated that while there are banks that have had significant write-downs, none near the extremity of AIG, the balance sheets of the financial sector remain strong.
Harper is further supporting Economists’ suggestions that the troubles in the US should not “spill over into Canada.” Canada has strong economic fundamentals and a government that has been prudent and pro-active. The Canadian government anticipated the US bubble would burst over a year ago and the crisis this week was not surprising, nor unexpected. It is however, not expected to affect Canada to anywhere near the extent it has affected the US.
There is no direct tie between the US housing market and the Canadian housing market and Canada’s strong economy and dearth of high-risk mortgage lending should help the real estate sector withstand the volatility that has been buffering the equity markets. Ultimately, the Canadian market should be relatively unscathed by the turbulence experienced in the US.
MBN Mortgage
CBC News
September 19, 2008
