Harper and Flaherty's Conversion

Ottawa faces up to reality of deficits Here is the real reason that Harper and Flaherty had their economic conversion on the road to Damascus.

Budget officer questions projected federal surplus

OTTAWA - Canada's parliamentary budget officer is publicly questioning the projected budget surpluses of the Conservative government's recent economic statement and is asking for evidence to back up the predictions.
Kevin Page asked Finance Deputy Minister Rob Wright to turn over details on the projected spending reductions in departments and asset sales that the government has said will generate $10 billion in savings over five years. These are seen as key to the maintenance of a federal surplus.
Page's letter, sent on Dec. 3, has now been posted on the budget office's website. It asks for a reply this week.
He also asked for economic data and assumptions used for the 2008 budget and recent economic statement. Finance refused to give the data for the 2008 budget even though the numbers are routinely turned over to Bay Street forecasters. The assumptions, key to estimating the impact of economic volatility, used to be published by previous governments.
In his economic statement, Finance Minister Jim Flaherty projected a budget surplus of $100 million for 2009-10 based on the sale of about $2 billion in assets that he didn't identify.
Page tabled his office's assessment of Flaherty's economic statement last week, but the report got lost in the storm of the political crisis sparked by the Liberal-NDP coalition's attempt to topple the Prime Minister Stephen Harper's Conservative minority.

But as usual they will use a red herring to distract us from their complete failure to address this crisis earlier. Just as they used the opposition coalition as a red herring to seize power in Ottawa.

Canada's banks are being set up.
Prime Minister Stephen Harper has misplayed the financial crisis from the start. The lack of political leadership in this country is staggering. Now Mr. Harper – who dictates lines to his Finance Minister – has finally woken up to the fact 2009 will be one grim year for the domestic economy. '10 doesn't look too hot either. Someone will wear responsibility for a deep recession. The Conservatives are skating hard as they prepare to pin this one on the banks. The politicians will claim the banks hoarded capital, and refused to lend, and that sent consumers and corporations over the cliff. It's nasty, it's cynical, it's destructive and it doesn't happen to be true. But that's clearly going to be Mr. Harper's line.

And despite Flaherty threatening the banks, the Harpocrites have not addressed the increased service charges on credit cards the banks have made, the fact that interest on credit cards is as high as it was during the recession in the eighties, and that banks still charge usury rates on ATM fees.

Feeling the crunch
Rising card transaction fees may mean higher prices, retailers say

Restaurant industry supports cap on credit and debit card fees

RCC applauds Alberta Premier's call to Harper for limits on credit and debit fees

Suddenly the issue raised by the NDP is no longer pie in the sky. However unlike Stelmach, the NDP called for the elimination of ATM fees, not just a cap. And we need to see a reduction in usury interest on credit cards. Banks loaning millions to capitalist enterprizes will have less effect than reducing /eliminating service charges, reducing credit card interest and eliminating ATM fees.

New Brunswick Senator Pierrette Ringuette is calling for a federal probe and stronger regulations on fees charged by credit card companies .Canadians hold 64.1 million credit cards, and 80 per cent of them are issued by the two main players in the industry, Visa and MasterCard. Consumers already pay an average of over 24 per cent interest.Visa and MasterCard have about 80 per cent of the national credit card market. Credit card companies are, therefore, extremely wealthy and powerful. Is this a 'collusion' situation because of this 'quasi monopoly' situation?" Ringuette also raised the concern felt by business and retail lobby groups that rates for debit card transactions could increase. There has been concern that the Interac Association, the non-profit group which administers debit and direct payment, could change to a "for-profit" organization. If this happens, the retail council is concerned that the private corporation could be purchased by the credit card companies and therefore create an even greater monopoly over plastic in Canada.

The Canadian Imperial Bank of Commerce said it would tighten credit card lending through 2009, as it announced its fourth-quarter profit fell by 50 per cent from the same quarter in 2007 — mainly because of higher credit card delinquencies. Some banks have also raised credit card interest rates by five percentage points for customers who are late with their payments. Art Thornton, a bankruptcy trustee in Ottawa, says the changes will mean more business for him."It's going to increase the interest rates noticeably to people who can ill-afford to pay, and it's going to render them — in many cases — insolvent."

And this NOT the issue that Flaherty or Mark Carney are addressing when they challenge the banks to free up credit after bailing them out and reducing the Bank of Canada rate.

Hyer Questions Gov't on Credit Card Processing Fees
Friday, 28 November 2008
Ottawa, ON -- Thunder Bay Superior North MP Bruce Hyer was up in Question Period on Thursday. Hyer was questioning the government over the cost of credit card processing fees.Here is the transcript of the exchange in the House of Commons:

Mr. Bruce Hyer (Thunder Bay—Superior North, NDP): Mr. Speaker, small businesses create a huge percentage of all the job growth in Canada. We should be helping them, not hurting them.The Canadian Federation of Independent Business is demanding that this government act before the big banks' next big cash grab. Our small businesses are facing a 10,000% increase in their Visa and MasterCard merchant fees. Is this fair?Does the government believe that it is not its problem, or that it can just not do anything about it? Which is it?

Hon. Diane Ablonczy (Minister of State (Small Business and Tourism), CPC): Mr. Speaker, the member raises an issue of real importance to small business. As he knows, the Canadian Federation of Independent Business has been speaking with the players about this issue. The fact of the matter is that the banks in this country are competitive. They are free to put forward products to all of the customers they have, including small business.The Minister of Finance has written to the banks about this issue asking them to deal with it. We are awaiting their responses momentarily, and we believe we can work on it together.

Bank of Montreal Profit Rises on Consumer Banking

Canadian consumer-banking profit rose 20 percent to C$344 million from a year earlier as personal loans rose 21 percent and it added more mortgages. Commercial loans and credit-card revenue also rose from a year earlier.

Royal Bank of Canada reports fourth quarter and 2008 results

Canadian Banking net income was $2,662 million, up 5% or $117 million from last year, reflecting solid volume growth across all businesses and effective cost management, partially offset by margin compression and increased provisions for credit losses. Net income was up 13% over last year, excluding the impacts of a $326 million ($269 million after-tax) gain related to the Visa Inc. restructuring and a $121 million ($79 million after-tax) credit card customer loyalty reward program liability charge recorded in the fourth quarter of 2007.

Scotiabank Reports Fourth Quarter and Full Year Results

Canadian Banking's average assets grew by $21 billion or 14%, primarily in mortgages. There was also strong growth in personal revolving credit and other personal loans, as well as in business lending to both commercial and small business customers. Card revenues were a record $397 million in 2008, an increase of 8% from last year. International card revenues increased 11% due to strong growth in Peru, the Caribbean and Mexico. Canadian revenues were up 6% year over year, due mainly to higher transaction volumes. Credit fees of $579 million were $49 million or 9% higher than last year. There were higher acceptance fees in Canada, from both corporate and commercial customers.

It's time to 'shift to thrift'

A recovery in consumer spending will have to wait until Canadians pay down the excess credit card and mortgage debt accumulated in the past decade. Total personal debt nearly doubled between 2002 and the first half of 2008, when it stood at $1.2-trillion. The ratio of debt to disposable income rose from 98 per cent to 130 per cent over that period, while interest payments as a share of available income were virtually unchanged.
Canadians were besieged with advertising messages that promoted borrowing over those years. With credit so cheap and housing prices surging ahead, households took on a lot of risk. Now debt burdens look much too high.
We can take some comfort from the fact that the loans outstanding here are nowhere near as risky as mortgages in the United States. According to the Canadian Housing Observer, Canada has “a negligible subprime mortgage sector; [and] it is characterized by prudent underwriting.” And in Canada, mortgage insurance to protect the lender is mandatory for high-ratio loans.
But there is no insurance to protect the borrower when housing values decline or when someone in the family loses their job. If you ask people living in homeless shelters what sent them on a downward spiral, the common theme is a combination of losing their job, being unable to work because of injury or illness, and then losing their home.
This is a terrible price to pay for doing what was advertised as the smart thing to do.

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Bank Rip Off

Gosh folks are surprised that Canada's Big Six banks are greedy and won't pass on the interest cut to you and me.

Bank slashes key rate to 1958 level
Six Canadian Banks Fail to Match Central Bank Cut (Update6)
Big banks keep slice of deep rate cut
Big 6 lag behind central bank's lead
Bah humbug to banks’ greedy actions on rates

Why I am shocked, shocked I say, shocked that the media and pundits expected these greedy bastards to act like good corporate citizens. After all the last time Carney cut the interest rates, only a month ago, they didn't pass them on. And despite Flaherty and Harper bailing them out to the tune of $75 billion, the banks increased interest rates and service charges on credit cards and have refused to loan money to credit agencies like GMAC and Ford Credit. When you give these guys money with no strings attached they use it to increase their profit and to pay off their bad debts and criminal activities.Of course Mark Carney knows this he used to work for Goldman Sachs. Flaherty knows it too. When the bank and commerce committee met to review credit card and bank card user fees and interest rates they got the cone of silence from the bankers.Truly this is a case of throwing good money after bad.
And while they will claim they are looking after the interests of their shareholders remeber who that is , why you and me of course with our mutual funds, our CPP and other public pension funds who are institutional investors in the banks. In fact we own them.
Time to socialize the banks along with the auto industry under workers control, the only solution to this crisis of capitalism is socialization of capital.


SEE:
Back To The Fifties
UBScandal
Pension Rip Off
Credit Card Rip Off
Canada's Billion Dollar Rip Off
Bank Union
Service Charges


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9/11

Not September 11, 2001 but November 9, 2007 which can also be written 9/11.

The day the U.S. stock market crashed from its current consumer credit crisis.

Stocks fell for a third session on Friday after a disappointing outlook from Qualcomm Inc triggered more weakness in technology shares and helped send the Nasdaq down to its biggest weekly point loss since the September 11, 2001, attacks.

I just thought the coincidence of the dates was one of those interesting occult significators that occurs as part of the psychology of the market. A market in a recession that many dare not admit is happening.

Adding to the negative tone, Fannie Mae , the largest source of mortgage financing in the United States, posted a third-quarter net loss that was double its loss from a year ago. Its shares ended the session down 1.6 percent at $49.00, after earlier dropping 10.6 percent to a fresh 52-week low at $44.54.

And Wachovia Corp , the fourth-largest U.S. bank, shook up financial markets some more by reporting a potential $1.7 billion loss on mortgage-related debt. Wachovia's stock fell more than 5 percent to a 52-week low at $38.05, but then rebounded to finish the day up 0.9 percent at $40.65.

And while Wall Street will continue its daily boom and bust cycle it is now part of global stock market, one which means that crashes occur not just on the street but around the globe as we witnessed with the bank crash last month in England.

The Economist cites various phenomena that are contributing to converging global markets. Among them: reduced controls on capital, a larger number of cross-border listings, and multinational mergers.

In just the past few months alone, some of the world's biggest stock exchanges have announced agreements or mergers to integrate trading systems. Back in April, NYSE Group merged with European market Euronext to create what is now NYSE Euronext. The European Union's internal market commissioner, Charlie McCreevy, said that the NYSE/Euronext union marks the beginning of stock market mergers and "at some point we will see moves toward a common pool of liquidity."

Furthermore, many companies are listed in multiple global markets in order to gain access to foreign capital. Just as some foreign companies appear on U.S. exchanges -- like GlaxoSmithKline (NYSE: GSK), Novartis (NYSE: NVS), and CNOOC (NYSE: CEO) -- U.S. companies such as IBM (NYSE: IBM), Home Depot (NYSE: HD), and General Electric (NYSE: GE) are listed on the Frankfurt and London exchanges.

Finally, a few major international mergers have taken place in the past five years, including Alcatel-Lucent and Arcelor Mittal. The effects of such unions increase global market correlation because the newly formed companies are known in multiple countries and generate revenues in multiple markets.

CIBC joins the writedown parade
Bank will take a $463-million hit in fourth quarter on its exposure to U.S. mortgage market

The credit crunch, which has been hammering the largest U.S. financial institutions, is increasingly taking its toll on Canadian banks.

Canadian Imperial Bank of Commerce yesterday said it will take a $463-million fourth-quarter charge on its exposure to the U.S. mortgage market, bringing its total writedowns to the market to $753-million in the past six months.

In other developments late yesterday, Bank of Montreal's shares fell almost 5 per cent - much of that decline in the final hours of trading - as that bank contends with its exposure to structured investment vehicles, or SIVs. And Royal Bank of Canada's stock closed yesterday near its 52-week low.

In the sector at large, tens of billions of dollars have already dropped off the banking system's balance sheets, and the dominoes continue to fall.

It is America's Main Street, which has kept the U.S. economy going on cheap credit and the resulting consumption, is now drowning in the quicksand of rising rates, personal bankruptcies and foreclosures. Whose impact will continue through out 2008.

And both the pro-business types and the left agree that the American financial markets have an addiction to being bailed out.

The U.S. Federal Reserve Board acted "like a bartender" in lowering interest rates and its actions are contributing to a stock market bubble in the U.S., Marc Faber, the Hong Kong-based publisher of The Gloom, Boom & Doom Report, said.

"Each time you bail out, it becomes bigger and bigger, and the credit problems become much, much larger," said Faber, managing director of Marc Faber Ltd. The Fed "feeds its customers with booze, and when they get totally drunk and are about to fall off their chairs, the bartender gives them more booze to keep them going. One day, it will lead to the ultimate breakdown."

"The best for the system would be if a major player would go bust," Faber said. "Then there would be an example for investors and for the players, the Wall Street establishment, the banks, to be more prudent."

As most people now realize, the mortgage industry is on life-support. Many of the ways that the banks were generating profits have vanished overnight. The “securitization” of debt (mortgages, car loans, credit card debt etc) has ground to a halt. What had been a booming multi-billion dollar per-year business is now a dwindling part of the banks’ revenues. Investors are steering clear of anything even remotely associated to real estate.

Bloomberg News ran a story last week which sheds more light on the jam the banks now find themselves in:

Banks shut out of the market for short-term loans are finding salvation in a government lending program set up to revive housing during the Great Depression. Countrywide Financial Corp., Washington Mutual Inc., Hudson City Bancorp Inc. and hundreds of other lenders borrowed a record $163 billion from the 12 Federal Home Loan Banks in August and September as interest rates on asset-backed commercial paper rose as high as 5.6 percent. The government-sponsored companies were able to make loans at about 4.9 percent, saving the private banks about $1 billion in annual interest.

Is it possible that anyone with a pulse and a minimal ability to reason couldn’t see the inherent problems of building a financial edifice on the prospect that millions of first-time homeowners with bad credit history and no collateral would pay off there mortgages in a timely and responsible manner?

No. It is not possible. The real reason that the subprime swindle mushroomed into an economy-busting monster is that the markets are no longer policed by any agency that believes in intervention. The pervasive “free market” ideology rejects the notion of supervision or oversight, and as a result, the markets have become increasingly opaque and unresponsive to rules that may assure their continued credibility or even their ability to function properly.

The “supply side” avatars of deregulation have transformed the world’s most vital and prosperous markets into a huckster’s shell-game. All regulatory accountability has vanished along with trillions of dollars in foreign investment. What’s left is a flea-market for dodgy loans, dubious over-leveraged equities and “securitized” Triple A-rated garbage.

U.S. Financial business is crying for state intervention while their political cronies in the Republican party deny their citizens universal health-care, child care, pharma-care, and secure pensions because that smacks of socialism. But socialism for the rich is okay.

See:

Bank Smack Down

Purdy Crawford Rescues the Market

Sub Prime Exploitation

Canadian Banks and The Great Depression

Wall Street Deja Vu

Housing Crash the New S&L Crisis

US Housing Market Crash

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homes, mortgages, housing, housing bubble, US, economy, 9?11, sub-prime mortgage, Wall Street, crash, recession,

The Importance of Savings

In an a interesting article on the Austrian School of Economics and the Great Depression, the author contends that what is necessary to resolve a depression or large scale recession is to increase savings, allowing for real investment funds to accrue.

The reality of this is clear that with the Depression and after, until the late 1960's, most Canadians were savers. Today most are in debt. Which means that a serious downturn in the economy is going to be a disaster.

However as the author points out the way to mitigate that disaster is by increasing savings. The savings culture that resulted after the Great Depression attests to this. However in that case it was a harsh lesson learned the hard way. And unfortunately in our easy credit consumer culture it is one that is forgotten in this long boom.

Austrian Business Cycle Theory: A Corporate Finance Point of View

The lesson is that as long as output prices stay up (through Keynesian
policies) and the Monetarists keep interest rates from rising (or maybe push them lower), if input prices are rising (a real resource crunch), we will have a recession. And the only way out is through the painful but necessary liquidation process.

The best means to transform malinvestments into viable economic activities is
through increasing savings. This means that one of the government’s most effective
policies is to cut taxes on the savers. Those who are savers are usually labeled as “the rich.” Unfortunately, the prescriptions of “get government out of the market” or a “tax cut for the rich” tend not to be politically popular. However, the idea of “tax cuts are for the tax payers” has had some success.

And while he praises tax breaks for savers he mistakenly identifies them with the rich. Which is currently true, because only a relative handful of the population in the G20 countries have access to liquid capital. The average person who used to save, such as my parents, now has easy access to credit and thus is leveraged into debt. However to have a successful saver economy you need the masses to have access to enough surplus cash to encourage saving.

Savings by the wealthy elite while larger than the average persons, are not nearly as effective as a mass saver culture, as witnessed by Japanese savings numbers. And while various explanations are given for Japan's long recession, the reality is that what kept it from flat out crashing as bad as the Wall Street Crash of 1929, with the same global impact, was the savings accrued by the average Japanese.

The way to solve this problem of easy credit, and its recessionary effects on the business cycle is not to expand capital gains tax breaks, or give business tax breaks, or even to encourage investments in RRSPs or Income Trusts, but rather to eliminate all taxes on incomes of $100,000 or less.

The real savers, the folks who saved capitalism according to the Austrians, are our parents and grandparents who were cruelly forced to learn this lesson, to save in order to survive.

In order to encourage individual saving in a credit card debt based consumer economy, tax cuts, not tax credits, are required for the working class. Currently tax breaks for most folks put anywhere from a few hundred to a couple of thousand dollars back in their pockets come tax day, which is Monday.

Now imagine if you actually had the income tax from your income, you could invest in saving. Instead of a paltry hundred or even a thousand bucks this could be anywhere from $5000 to $10,000 to as high as $25,000 annually.

Further if EI were run as a joint investment cooperative between Employers and Workers, without the government plundering it for it's surplus costs could be reduced, And with a profitable investment strategy put more money in workers pockets, while also insuring a better and fairer process for collecting EI. This has already occurred with the CPP. Ironically it is the NDP and the Bloc who support this idea of joint ownership and elimination of the government from EI.

Furthermore such a joint cooperative EI program could offer alternative financial opportunities such as micro credit for self employment opportunities, as well as the usual Guaranteed Income that we associate with EI currently. It would allow for broader education and training opportunities, while not costing as much as the current program does, because the government would not have access to the profit, surplus.

Similarly we should eliminate Workers Compensation Boards and replace them with a joint labour employer cooperative, that would not have the government as its arbitrator or with its hands in the pockets of workers and employers as currently occurs.

A failure to come up with adequate support for an injured worker, would result in the option of the worker to sue the employer in civil court, which is currently not available with the state as the arbitrator. WCB payments would then decrease under such a joint management and investment plan.

It is often argued that labour relations is problematic because it is an adversarial relationship between workers and employers, unions and corporations. While this is true, the real advocate of this adversarial relation is the state who wishes to arbitrate between the two parties. Unions are the working classes voice in labour relations with the bosses and their associations and cartels. The state is never neutral, as we saw with the recent CN strike. It interferes in the natural social relationship between workers and their bosses.

In fact one has to ask why we need the government period. We have common laws, we have workers and employers, and they can resolve their conflicts through negotiations, arbitration, strikes, or mediation. They can cooperate as well for mutual aid and benefit, such as with works councils, joint management labour pension and benefit funds, EI, Workers Compensation, etc. The State is not required for a cooperative commonwealth.

As Samuel Gompers pointed out long ago;

The worst crime against working people is a company which fails to operate at a profit

The more thoroughly the workers are organized and federated the better they are prepared to enter into a contest, and the more surely will conflicts be averted. Paradoxical as it may appear, it is nevertheless true, that militant trade unionism is essential to industrial peace.

What we have endeavored to secure in industrial relations is industrial peace. When industrial justice prevails, industrial peace will follow. It is a result and not an end in itself.

We want a minimum wage established, but we want it established by the solidarity of the working men themselves through the economic forces of their trade unions, rather than by any legal enactment. . . . We must not, we cannot, depend upon legislative enactments to set wage standards. When once we encourage such a system, it is equivalent to admitting our incompetency for self-government and our inability to seek better conditions.

To strengthen the state, as Frederick Howe says, is to devitalize the individual. . . . I believe in people. I believe in the working people. I believe in their growing intelligence. I believe in their growing and persistent demand for better conditions, for a more rightful situation in the industrial, political, and social affairs of this country and of the world. I have faith that the working people will better their condition far beyond what it is today. The position of the organized labor movement is not based upon misery and poverty, but upon the right of workers to a larger and constantly growing share of the production, and they will work out these problems for themselves.

It is not the organizations of labor which take away from the workers their individual rights or their sovereignty. It is modern industry, modern capitalism, modern corporations, and modern trusts. . . . The workingmen in modern industries lose their individuality as soon as they step into a modern industrial plant, and that individuality which they lose is regained to them by organization--they gain in social and industrial importance by their association with their fellow workmen.

Also See:

Not Your Usual Left Wing Rant

State-less Socialism

Fair Share

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The Cone of Silence Bank Presidents and the RCMP

Funny but Bank Presidents sound just like the RCMP Superintendent and Commissioners when it comes to telling the truth to Parliamentary Committees.

Deputy Commissioner George, who was suspended from duty after a previous appearance before the committee, was rebuked by MPs, who said her testimony has been evasive and incomplete.

Staff Sgt. Frizzell said the pension investigation took an unexpected turn when documents were uncovered suggesting insurance funds were being diverted with Deputy Commissioner George's approval.

But he was ordered off the case before he had a chance to follow the trail, he said.

She said she had nothing to do with the winding down of the pension-fund investigation, or the issuing of a "cease and desist order" to Staff Sgt. Frizzell directing him to return to other duties.

She did not rule out the possibility that she might have seen documents related to transferring insurance funds to the pension fund.

She did not recall this, but she said she relied on advice from another senior Mountie with expertise in insurance and financial matters that there was nothing untoward with the life-insurance funds.

Back off on ABM legislation, banks warn MPs

Whenever members of the Commons committee probing ATM fees tried to peer inside the world of banking, they were met for the most part with blank expressions or no comments."We won't comment on that," said the Royal Bank's Jim Westlake, group Head, Canadian Banking, when asked about profit margins on the ATM fees.

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Don't Bank On It.

That the banks will voluntarily concede on the issue of ATM fees.

If ATM fees were eliminated, customers would be subsidizing the customers of other banks who use their machines, argues the Canadian Bankers Association. If people want to forego the convenience fee, they should use their own bank's machine.

A red herring, a straw man, and a spurious argument since the oligopoly of the five banks already share their customers since the jointly own Interac, Cirrus, Plus etc. the ATM operating systems. And as such charge fees to stores using Interac, and to private ATM operators. They are literally cash registers for the Big 5 Banks, if not one arm bandits.

But banks don't seem to have convinced either the broader public or their political masters why a fee is necessary.

John Lawford is one lawyer eager to argue against the banks in upcoming finance committee hearings. "There is no need for fees at all," says Lawford, who represents about 4,000 Canadians through the Public Interest Advocacy Centre.

Banks collect an estimated $154 million annually in convenience fees, based on figures supplied by the Canadian Bankers Association – a tiny sliver of their overall profits. But it's an issue that gets Canadians' blood boiling.

A drop in the bucket, but don't forget this is only one set of user fees. There are service charges and exorbitant credit card charges which the Banking Committee needs to look at. Since the banks love to get us to pay for their screw ups.

But if the government were successful at getting the banks to eliminate fees, it might not solve consumers' pocket-book problem.

Banks might just shift the fees to another service, says U of T's Booth. Previously, banks raised service fees to recoup losses on 1970s loans to foreign countries such as Brazil, Argentina and Mexico, he says.

While the banks and others advocate you take out large amounts of money at one time from the ATM to avoid withdrawal charges, I point again, that this is simply shifting the burden on the consumer who is being gouged. You are charged by your branch, the ATM you use and further a monthly service charge. The ATM's were instituted to reduce branches and staff costs. The private ATM's were approved by the Competition bureau to provide competition to bank ATM's, though the Big 5 run Interac/Cirrus/Plus that ATM's use.

In February, the Toronto marketing research firm TNS Canadian Facts announced that 81 per cent of Canadian adults surveyed in the fall of 2006 had used a bank machine during the previous month, up from 78 per cent a year earlier, and that nine out of every 10 cash withdrawals had been made at a bank machine.

Furthermore, deposits of cheques and cash at ABMs doubled those made in branches, and in fact only 53 per cent of Canadian adults had visited a branch in the previous month, the lowest percentage since 1994.

So the solution is that the Big 5 banks eat the costs and make it back from stores that use ATM for your purchases, which they charge .50 for. And from the private ATM's, who can charge you whatever they want.

And if this is not solved by the Bank Act Review, it will be real money in your pocket issue that will dwarf any tax break promises the Conservatives make in the next election.

See

Banks

Monopoly

Service Charges

ATM

Bank Profits

Credit Cards


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Cry Me A River

Canada's Banking Cartel is crying about politicians bashing them, cry me a river.

At a time when the federal finance minister is asking Canada's big banks to justify a raft of ATM banking fees, Canada's second-largest bank is reporting its first quarterly profit of more than $1 billion.

Bank of Nova Scotia reported Tuesday morning a first quarter profit that smashed all expectations at $1.01 billion, or $1.01 a share, up almost 20 per cent from $844 million, or 84 cents a share, a year ago.

Last week Canada's largest bank, Royal Bank of Canada, posted first-quarter net earnings of $1.5 billion or $1.14 per diluted share, a 27.6-per-cent increase from the same quarter last year

Let us review the facts; ATM fees are set by a cartel of Canada's six banks. Not credit unions or foreign banks. The Banking Cartel owns Interac, it implemented ATM's as a way of closing branches and reducing front line staff.

Credit Cards, Visa and MasterCard, are owned by the same Banking Cartel. They set the interest charges and fees for the use of credit cards.

Bank fees themselves are then charged on top of this. For instance the banks charge you a service fee for having an account, and for any cheques used, or for any ATM withdrawls, and for use of their credit cards.

So when they claim that they need to charge you ATM fees for withdrawing money from their branch and not your own, well thats a little white lie. Since the cartel owns Interac, the fact is they have colluded in a monopolistic fashion to set fees.

That would be illegal in the United Sates. It is not illegal in Canada.

So you get charged for your ATM withdrawal three times, once when you use an ATM that is not your bank, next a charge by your bank for doing so and then they charge you a monthly service charge for having done so. Sounds like usury to me.

The Finance Committee will be reviewing Banking operations later this month, they need to look at all service charges as well as ATM fees. And they need to look at the impact of the Banking Cartels in operating Interac and the Credit Card business.

It has been a long standing libertarian tradition to oppose cartels and monopolies especially in the banking industry. A fact most conservatives forget, including the ones who claim to be libertarians.

See

Banks

Monopoly

Service Charges

ATM

Bank Profits

Credit Cards


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