Worthwhile Canadian Initiative

Canadian banks are typically leveraged at 18 to 1--compared with U.S. banks at 26 to 1.

By Fareed Zakaria | NEWSWEEK
Published Feb 7, 2009
From the magazine issue dated Feb 16, 2009

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  • Posted By: Lellie @ 10/01/2009 8:46:51 AM

    My comments were in response to zz333 and should have been posted as such.

  • Posted By: zz333 @ 09/17/2009 9:32:30 AM

    Then move to Canada

    • Posted By: Lellie @ 10/01/2009 8:45:25 AM

      Ahh America ... when criticized, attack!

  • Posted By: tonylee1973 @ 09/17/2009 12:31:15 PM

    Let Canada be Canada. Let the US be the US. Trade and friendship. And bring our troops home.

  • Posted By: Popsiq @ 09/17/2009 9:15:30 AM

    Canadians are every bit as capable as anybody else of running a catastrophe. Before we get all soft and weepy about our good fortune, let's take a moment to consider that it might have been more accidental than intended.

    Just because John Maynard Keynes spoke a dialect of english more recogniseable to Canadians, and J.K. Galbraith actually was a Canuck, doesn't mean that the 'Chicago School' of bigger, better, frontier economics doesn't have any great following north of 47. Canadians have cooked up BreX and a number of other 'spoofs' that took as many beavers for a ride as bulls. Canadian managers have run 'good things', like Nortel, into the ground. Canadian banks have been insulated from competition and allowed to make up losses on the backs of notorious Canadian 'savers'. Some of those 'losses' have been astronomic - particularly in the US realty market - but the loss has been buffered by quiet government interventions - or non interventiuons like 'forgiven' corporate taxes, favourable contol rulings and hedging bank profits by selling off any profitable public infrastructure.

    Joe Canadian seems more content than his southern counterpart - although when economies 'head south' blaming the recent arrivals isn't foreign to the Canadian make-up - and that nasty streak we share with our American cousins, isn't too far below ground right now.

    What is interesting to note is that like others our Liberal (tax and spenders) seem to have been the models of fiscal probity, when compared to the trickle-down wastage of profligate 'conservative' regimes. It's just a good thing that Canadians, perhaps scared off by decades of Household Finance Company depradations in the days before easy bank credit, were a little less willing to go for the Canadian dream on a Mastercard. So when it became necessary to stimulate the economy by rebuilding long-ignored infrastructure, borrowing from the banks was easier to do. Those Canadian banks were there when we needed them - because they sure as hell weren't going to throw good money after bad by 'investing' in America.

    The health system may not be as good as it could be, but it's still a vast improvement on the days of pay for use and charity hospitals.

  • Posted By: on2something @ 06/14/2009 2:24:49 AM

    A great article - I always had confidence in the Canadian banking system. Nice to see it holding up so well through the current debaucle. Same goes for health care. Some posts are praising American health care. Maybe it is a better idea to compare what happens to those with average or below average income. In the US anyone with enough money will probably make it through a medical event alive. But that isn't the issue. What about the people who cannot afford insurance and who are turned away untreated - often to die.

    BTW, what was that about us being boring - I didn't know that!? Guess it depends on who's talking, eh?

  • Posted By: PauloL @ 05/11/2009 4:54:29 AM

    Do we even deserve such good neighbors? Brilliantly practical and decent - no doubt this analysis will be ignored instead of followed by typical U.S. "leaders"

  • Posted By: PauloL @ 05/11/2009 4:53:03 AM

    Brilliant analysis sadly likely to be over-looked, I fear. We have gret neighbors, do we even deserve them?,

  • Posted By: mcgeejay @ 04/07/2009 11:43:21 AM

    Having grown up in Edmonton, and the fact that I livied for 7 years in the States, another two in Germany and am now down in Peru gives me a fairly good view point on these issues. When I lived in the US I was a pro hockey player and as such had access to the best medical care in the world. There is no question in my mind that if you have money and need care, the States is your place. Now if you are in the other side of the population without money (90% of us) Canada's system is far far better. Germany's system was wonderful in it's flexibility but lacked funding for newer equipment. In the American media the Canadian system is either painted as this "free" magical wonderland like health system, or as some kind of "Stalinist" far left system where you have no choices. The fact is in Canada you can get a level of service that rivals any country's in the world and see any Dr you like. Service is based on need so yes there are times that if you go to the clinic with a cold you may wait awhile while people needing casts go first.
    And to harrylogy, you've been brain washed. Take a breath and reread the story and you will see that no one is saying that there are fairies in Canada that somehow magicaly take care of the country's medical costs. And yes you do pay for it through taxes, the point is Canadians pay LESS and get BETTER care. Read over that a few times till you get it.
    As to banking systems I think the nimbers speak for themselves but it should also be noted that Canadian banks have tried steping in to save and or buy failing US banks and have been locked out by the regulators. Got to love double standards where US banks run around buying small banks all over the world with public bailout money and when real unsupported companies try and grab these poorly run companies, they use political power to stop it. Guess its better to give billions to Citi Group shareholders to keep their failing company alive and keep the image that its American owned (Saudis control it).

  • Posted By: Canuck46 @ 03/17/2009 6:56:02 PM

    As for health care comparisons: when I left Alberta in 2000, Alberta Health Care premiums were $33 every 3 months which equaled $132 a year. I have a PPO plan here in California & I have to pay co-pays every time I go to a doctors office & $35 to go to the hospital emergency.I pay $15 minimum for prescriptions. In Alberta, under my health care plan, my prescriptions were 100% covered, & I had NO co-pays & I could go to any doctor I wanted without permission from my General Practitioner. I can only go to the doctors under my specific plan & the hospital assigned to me. Now, in 2009, Alberta Health Care premiums do not exist because Health Care in Alberta is FREE. I waited 4 hours in an Urgent Care in California, only to be told I needed to go to the Emergency room at the hospital. I waited another 4 hours there. A total of 8 hours to wait to be seen. Personally, I have never waited over an hour in a hospital in Edmonton, Alberta. At least, that has been my experience. When I retire, I will return to Canada simply for the better Health Care System.

  • Posted By: Canuck46 @ 03/17/2009 6:29:26 PM

    hmm have to answer this one. I'm Canadian & have been living in California for the past 9 years. I think that has given me sufficient time to analyze both countries. I can't speak for the rest of the U.S., but as an educator, I can tell you that California has a horrific education system. Compare for example, Edmonton Catholic Schools in Edmonton, Alberta, Canada: 75% of students are at above proficiency levels on Provincial exams. Take California State exams: 2% of students are at above proficiency levels. In order to get into the University of Alberta in Edmonton, Alberta, you must have a minimum of an 85% average to get into most faculties. In California, anyone can get into the California State Universities or private colleges, if you can pay the tuition fees.

  • Posted By: jaypem @ 02/20/2009 6:02:06 PM

    Instead of spitting at someone, I would like to do somethign novel like respond to Mr. Zakaria's article. As an American from Detroit who spent much of his youth in Ontario and watching Hockey Night in Canada, I appreciate Canadians immensely, and know that we can learn some things from them, including occasional humility and caution, as with banking. But as thoughtful as this article is, it misses a huge point - the US is strained financially in part because of the size of our military protecting our friends around the world, including our Canadian neighbors. Not to excuse the greed and incompetence and idiocy of the Bush administration and those on Wall Street, but does anyone doubt that if our defense budgets were reversed, that WE would have national health insurance and a better safety net, and not Canada?

    • Posted By: MichaelT @ 03/12/2009 8:42:56 PM

      Can someone explain to me how invading Iraq made Canda safer?

      • Posted By: italkstock @ 03/17/2009 10:39:07 AM

        Can someone explain to me how invading Iraq made Canda safer? are u a moron? what does that have to do with banking?
        And as far as all the ???Technical??? differences to why some US banks are this or that???.you???re a moron too! The point is who needs help? Not Canadian banks. US banks need help. Tax payers in Canada are not bailing out their financial institutions. It ain???t too complicated or ???technical.??? Did you work for AIG? Are we completely surrounded by idiots?
        Jeremy From Vancouver BC

    • Posted By: gazzathehut @ 02/21/2009 5:40:54 PM

      This is one of the funniest comments I have ever read! I literally laughed out loud! Keep 'em coming!

    • Posted By: gazzathehut @ 02/21/2009 5:39:18 PM

      This is one of the funniest responses I've ever read!! It made me laugh out loud! Keep 'em coming!

  • Posted By: MASV @ 03/16/2009 2:58:49 PM

    The grass is not always greener on the other side:
    visit www.notcanada.com & www.canadaimmigrants.com

  • Posted By: Jamie Lewin @ 03/07/2009 11:10:05 AM

    While I believe your intent is well meaning, i.e. encourage a more responsible banking system in the US, it is too high level. First it ignores a fundamental difference between the two systems.

    The Canadian system is branch banking, which means that there is one cash flow per bank from the Atlantic to the Pacific. Individula branches might fail, because to too many bad loans or adverse economic conditions in the area, but the other 99% of the branches continue operating and absorb the loss. The US system is unitary banking. Each bank stands on its own. If a US bank fails there are no branches to funnel through extra cash resources. The weakness of the unitary system was somewhat reduced from about 1980 onward, with the arrival of the Bank Holding Corps; however these holding corps still own their subsidaries as unitary banks.

    A second difference between the two systems dates back the Depression of 1929. Prior to the Glass-Segal Act (1933), US banks could hold traded equity as reserves. Canadian banks were never allowed to do this. A consequence of the equity crash of 1929 was the crash of the majority of US banks, so the US banking system is relatively new as it had to be reinvented after 1933. Canadian banks on the other hand have an unbroken operating history, which pre-dates the Act of Union of 1867.

    I could give you many more technical differences between the two systems; however, I believe this is enough to show you that this is a very complex issue and not just saying that Canadian banks are better than US banks. Thanks, Jamie A. Lewin, Vancouver, BC. .

    • Posted By: Tanstaafl @ 03/13/2009 7:35:15 PM

      Posted By: Jamie Lewin @ 03/07/2009 11:10:05 AMWhile I believe your intent is well meaning, i.e. encourage a more responsible banking system in the US, it is too high level. First it ignores a fundamental difference between the two systems.

      The Canadian system is branch banking, which means that there is one cash flow per bank from the Atlantic to the Pacific. Individula branches might fail, because to too many bad loans or adverse economic conditions in the area, but the other 99% of the branches continue operating and absorb the loss. The US system is unitary banking. Each bank stands on its own. If a US bank fails there are no branches to funnel through extra cash resources. The weakness of the unitary system was somewhat reduced from about 1980 onward, with the arrival of the Bank Holding Corps; however these holding corps still own their subsidaries as unitary banks.

      A second difference between the two systems dates back the Depression of 1929. Prior to the Glass-Segal Act (1933), US banks could hold traded equity as reserves. Canadian banks were never allowed to do this. A consequence of the equity crash of 1929 was the crash of the majority of US banks, so the US banking system is relatively new as it had to be reinvented after 1933. Canadian banks on the other hand have an unbroken operating history, which pre-dates the Act of Union of 1867.

      I could give you many more technical differences between the two systems; however, I believe this is enough to show you that this is a very complex issue and not just saying that Canadian banks are better than US banks. Thanks, Jamie A. Lewin, Vancouver, BC. .

      Tell it to the IMF, please!

  • Posted By: nicol651 @ 03/10/2009 11:11:55 AM

    I've enjoyed some of the comments, but jeez, talk about having to wade through the muck...I rarely do this, but how about taking a page from the monotheistic/New Age tradition, muckers, and acknowledging that God/Universe loves each and every one of us individuals (and, dare I say, countries). Everyone has something special to offer. The US can teach us something about wealth generation. Canada can teach us something about equitable society. Sometimes these concepts may appear at odds with each other. Appearances aren't everythiing.

  • Posted By: meatcake @ 03/09/2009 7:08:44 PM

    theres some pretty huffy comments to the article , maybe the 39th place bank was ZIMBABWE.

  • Posted By: alaingauthier @ 03/08/2009 8:41:03 PM

    I am baffled by the comments. I actually saw the article as a good thing. It does explain well why our "conservatism" has kept us out of trouble.

  • Posted By: ono12 @ 03/07/2009 7:52:35 PM

    I had no idea that Canada was doing so well during this current global recession. Kudos to all the Canadians!.

  • Posted By: ono12 @ 03/07/2009 7:49:58 PM

    I am a great fan of all Ms. Begley's work. I was inspried to buy one of her books. My girlfriend is an extremely bright individual and an executive assistant to a CEO. According to her, constant interruptions during her work via email, phone calls, etc cause her to make unforced errors...probably due to the principles discussed in this article.

  • Posted By: egdell @ 03/06/2009 1:51:44 PM

    I just realized who "harrylogy" is. Rush, save your idiotic rants for your radio program and leave us thinking people alone!

  • Posted By: Omaar @ 03/01/2009 1:42:49 PM

    Everything Obama does is a Hidden Agenda....

    Everything Bush Jr. did was Transparent and on the Up and Up...

    The Straight and Narrow....

    Just like Bush's "This Economy is about to Crater... The Economy is about to tank Out"

    Ha !!

    Bailed out the Damn Banks and Wall Street and Let the Bankers and Wall Street Executives to Run Wild with the Billions given.

    Republican Talking Points: Big Government, get out of the Way and Let the Market Grow....

    Go Bankrupt and get Bailed out by the [[Tax Payers]] you Notice that the Republican Party, Never Complain about this Dump on the Tax Payers Next Generation, but You Hear the Republican Pundits Trash Obama, for Dumping this DEBT on the Nation's Next Generation, because Bush is a Republican and [[Corporate Welfare]] is Acceptable and Dumping such DEBT on the Next Generation is [[Acceptable]] and is "Free Enterprise" Justified.

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