We have all heard the story of how the Canadian banks weathered the storm of the post-2008 recession as a kind of Rock of Gibraltar, proving the soundness of Canada's financial sector and fiscal model. It has been pointed to, again-and-again, by the mindless financial pundits that the media trot out to tell us that the sky is not falling and the system works just fine.
In fact, when Occupy Toronto began, there was no end to the preening of the imbecilic peacocks of the business commentary community (a truly sad crowd, they are not actually rich... they just make a living kissing the asses of the rich) spouting off with a bunch of nonsense about how, to loosely paraphrase, "the people in New York may have a point but our banking sector is just fine. It is not like the USA."
In between moments of pontificating on the perils of doing anything other than what the Conservative government of Canada has done, our Finance Minister, Jim Flaherty, told the world in no uncertain terms, that, "In Canada, we did not suffer a single bank or federally regulated insurance company bailout or failure. Our country's financial institutions stood solid and steadfast, based on sound risk management and supported by a very effective regulatory and supervisory framework."
Well, it turns out Jim may have been being more than a little disingenuous.
It seems that, in fact, Canada's big banks were dipping deeply into the proverbial gravy train that populist rich kids like Toronto's pseudo-mayor like to ramble on about. To the tune of $114 billion.
Now the not unexpectedly hyper-defensive drones of the financial pages have tried to claim that this was not a bailout at all. But clearly, unless one is to succumb to near Orwellian logic, it was. The Canadian government, through the CHMC program alone, removed over $69 billion in mortgages from the balance sheets of the big banks. They did this to prevent their potential insolvency.
Anytime the federal government wants to take over my risky investments, I will have no problem, to keep the myth alive, in saying that it was not a bailout... it was actually, wink-wink, a "program" to aid my liquidity.
As it turns out, "Canadian lenders also dipped into a program set up by the U.S. Federal Reserve aimed at providing cash to keep American banks afloat. CIBC and BMO took almost $3 billion each out of the fund, RBC and TD took out $8 billion and Scotiabank drew down almost $12 billion."
Unlike in the US, however, the Bank of Canada apparently treats its numbers as being, not surprisingly, a state secret. It does seem that, in spite of this secrecy, we now know the government handed out at least $41 billion to Canada's banks under a similar "shadow" program.
The end result of all this is that, by whatever terminology you wish to use, the government of Canada aided the banks to the extent of around $3,400 a year per man, woman and child in the country and to the equivalent of 7 per cent of our country's GDP.
This means, in real terms, that they took vast amounts of money from you, as citizens, and redirected it to our banks.
Now, as we head into the austerity insanity that has begun to ruin the economies of the U.K. and Spain, this is worth remembering, even on capitalist terms.
But, it is also worth remembering that this reverse Robin Hood transfer of wealth is a form of pure class warfare. $114 billion for the banks meant, directly, $114 billion less for the poor, social programs, infrastructure, job creation, etc.
Especially due to the speculative nature of the bailout, the stimulus is not akin to the far less that Canada gave out to the auto industry. It is not only, in every obvious way, less likely to actually provide real economic stimulus, it is also more likely to put us into a loan driven personal debt crisis like the U.S. faced.
Beyond the numbers, we get to the basic moral implications of this.
We know that, for example, by all accounts between 600,000 and 1 million children live in poverty in Canada. And this is in spite of the cruel joke that in 1989 Canada's parliament unanimously promised to eliminate child poverty by the year 2000. I have little doubt that $3,400 a year to each of their parents would have a dramatic impact on their quality of life. And it would cost the government between $2 billion and $3.4 billion a year.
In other words, it would cost $110 billion less than the bank bailouts, direct or indirect, did. The money to at least start to really fight child poverty is clearly there, even if no one wants to touch it.
Genuine job creation, health and anti-poverty programs would cost a fraction of the $110 billion left over total.
All of the job and service cuts that the Tories are proposing would be covered.
There would be no deficit.
What is abundantly clear is that our political leaders, and remember that this occurred primarily in a minority parliament when there was, or should have been, far greater oversight of the actions of the Harper Tories, have decided that while we clearly have the means and the social wealth to end poverty in Canada, the far greater priority is to subsidize the liquidity of the bloated profits of our, as it turns out, incompetent and not solid financial sector.
As to the question of which side these politicians are on, they have made this quite clear, and the public is fed this not as an assault by the wealthy and the corporations on society, but as a reasonable and responsible course of action.
There is little that is worse than a class war that few are even willing to acknowledge is going on.