Someone with a spine at long last!
Harper Rejects Debt Bailout, Putting Pressure on Canada Banks
By Theophilos Argitis and David Scanlan
Dec. 21 (Bloomberg) -- Canadian investors holding $33 billion in short-term debt that plunged in value will have to rely on commercial banks for support after Prime Minister Stephen Harper said he won't bail them out.
``If the government became the day-to-day underwriter of market risk in commercial securities markets, that's a bottomless pit,'' Harper said in an interview in Ottawa. A government rescue wouldn't be ``healthy for the long-term growth of the Canadian economy.''
Harper's refusal to shore up the market for asset-backed commercial paper -- 30- to 90-day securities backed by car loans, credit card debts and mortgages -- leaves holders at the mercy of the country's biggest banks. Some banks have already expressed reluctance to provide support and are resisting pressure from the central bank.
``If the Canadian chartered banks don't go along with what they are apparently being promoted to do by the Bank of Canada, then what? Then we have a potential financial and economic problem,'' said Dale Orr, managing director of Canadian research in Toronto for Global Insight, a Lexington, Massachusetts-based economic forecasting firm.
The Canadian commercial-paper crisis comes as the nation's economy is weakening. Harper said he's worried that a U.S. slowdown will exacerbate matters, leaving little room to stimulate the economy with spending or tax cuts in his next annual budget proposal, due in February or March. http://www.bloomberg.com/apps/news?pid=20601109&sid=a9lpYUicPdgc&refer=home