Sept. 9 (Bloomberg) -- Canada’s banking system was ranked the world’s soundest for the third straight year by the World Economic Forum.Why? Because banks do not take the risk on any mortgage they provide: the government does. It's like if all the mortgages in the US were underwritten by Fannie and Freddie. We know what happened to Fannie and Freddie, so we know what will happen to the Canadian sovereign debt and currency: default and collapse.
The study, released today by the Geneva-based organization, places Canada’s banks ahead of New Zealand, Australia, Lebanon and Chile in its executive opinion survey.
Canadian lenders including Royal Bank of Canada and Toronto-Dominion Bank withstood the financial crisis without taking government bailouts, and recorded only a fraction of the $1.3 trillion in writedowns taken by banks and brokers worldwide.
“It’s good to be number one,” Canadian Finance Minister Jim Flaherty told reporters today in Kitchener, Ontario. “It has made a big difference in terms of Canada’s reputation in the world, and our leadership in the world in the G8 and the G20, particularly with respect to fiscal matters.”
Canada slipped one notch in the forum’s Global Competitiveness Index to 10th place. The report noted that “improving the sophistication and innovative potential of the private sector,” would help to increase competitiveness.
Look how foolish their Finance Minister is. "It's good to be number one". Well of course, it's good for the banks to have all their debt 100% guaranteed by the government. But then, it cannot possibly be any good to the state or the citizens. The bubble is going to burst sooner rather than later, and both Canadian sovereign debt and canadian sovereign currency will take a major major, very likely historical, hit.