Some thought on the mondern economy

I mentioned in above the sad tale of Australia, I addressed car par where let the auto industry go. I know talk the natural gas debacle in Australia.  Imagine it a situation where you an Australia native live to your soil.  Yet you pay a higher price for nature gas than customer who imports your gas.  I make sure that dear rabble viewers understand I am talking about. 

1.Australia sold there rights to natural supply to foreign countries.

2.Because of the contracts their now a shortage of gas on the domestic market.

3. I would not call myself a nationalist by any means I question  why politicians who decide export these and now refuse to cancel those contracts.  What happening there is artificially shortage of gas on the domestic market because of those exports.  You think the government would address the needs of the population of Australia first.  Whoever party runs that country is use backward thinking.  First you supply this needs of the local population then address you address the need the export market.  But this government got this idea backward, the product is supposedly held in common trust for all Australian.  Rather than it actually is held in trust foreign interests.  This lesson is all countries especially Canada who dabbling with natutal gas exports.   

Let's discuss the illusion bank safety and who pays for that safety.  There is a new bill in the implantation stage that is going solve the issue of who pays if the banks fail.  The governments says you that you the public is now for safe from bank bails bailouts.  Unfourtanely for the public they may not realize they still we be bailing outing the banks again if a crisis like 2008 returns. Despite what the government says.  

The dirty secret lies with  Canada deposit insurance corporation.   If you have certain assets in the bank you will lose those assets or them be covered in case of bank failure in case of failure.   Here the list from CDIC website.

What's Covered?

Notice: The Government of Canada has approved changes to the CDIC Act to modernize and enhance CDIC deposit protection. These changes will be reflected on this website when they take effect. Until then, current coverage rules apply.

We insure eligible deposits at each member institution up to a maximum of $100,000 (principal and interest combined) per depositor per insured category.

To be eligible for deposit insurance, deposits must be payable in Canada and in Canadian currency. We do not cover foreign currency deposits including US dollars.

Eligible deposits include:

• Savings accounts
• Chequing accounts
• Term deposits, (such as GICs) with original terms to maturity of five years or less
• Debentures issued to evidence deposits by CDIC member institutions (other than banks)
• Money orders and bank drafts issued by CDIC members
• Cheques certified by CDIC members

What's Not Covered

Uninsured financial products include:

Under the CDIC Deposit Insurance Information By-law, member institutions must notify depositors when a deposit (or deposit-like) product is not eligible for insurance. For example, if a term deposit is in a foreign currency, the deposit certificate or receipt must state that it is not insured by CDIC.

• mutual funds (including money market funds), stocks and bonds;
• term deposits, such as GICs, with original terms to maturity greater than five years;
• foreign currency deposits (e.g., U.S. dollars);
• digital and cryptocurrencies;
• treasury bills and bankers' acceptances;
• principal protected notes that are traded;
• debentures issued by banks, governments or corporations;
• deposits with receipts payable to bearer (rather than to a named person);

deposits held at financial institutions that are not CDIC members.

1 There is an official reserve that has 2ooo set aside and 2500 potential reserves. 

2.  CDIC’s second key funding resource is its ability to borrow funds, if necessary. The CDIC Act permits us to borrow from the Government of Canada or from capital markets. This limit is adjusted each year as insured deposits grow. As of December 31, 2017, the borrowing limit was $23 billion.

That's total of  28 billion to reserves the cover another 2008 event. Let assure me you that is a fraction that you need that is address another 2008 crisis event. 

3 Furthermore, Parliament could authorize additional funding if the available funds were not adequate to cover CDIC’s obligations in the event of a bank failure.

At 3 point bank failure is socialized, where the general public will pay again for the loses, but certain bank investors will walk ago.  

The solution is not socializing bank risk, rather than curtail their risky behavior.  We provide the insurance that bank to do and there risky and financial gambit.  If the Bank wins they keep the profits for there shareholders, if they lose they use government insurance they walk away free of any financial cost.  This current solution is very bad idea vs the idea of breaking up the banks and making no longer to big to fail.  More on in this later the morning.

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