Tag Archives: bonds

Harper admits he must act on the economy – The Fundemental Flip Flop…


BRIAN LAGHI , HEATHER SCOFFIELD and STEVE CHASE AND TARA PERKINS
Globe and Mail Update
October 9, 2008 at 10:48 PM EDT

OTTAWA, RICHMOND, B.C. and TORONTO — The federal government is moving to backstop the Canadian banks’ capacity to lend money in an acknowledgment that not even the country’s sturdy banking system is immune to the global financial crisis.

A plan originally earmarked for Friday morning would see the government assume some mortgages currently held by the banks by giving them to the Canadian Mortgage and Housing Corp., a Crown corporation. In turn, the banks might receive CMHC paper – possibly bonds – against which they could use as collateral for their own loans from other banks.

In recent weeks, the big banks have faced a sharp rise in the cost of borrowing money in international markets to cover Canadian mortgages – a situation that puts them at risk of losing ever-increasing amounts of money on one of their core businesses.

Prime Minister Stephen Harper, Finance Minister Jim Flaherty and the banks say no bailout is on the table and the plan falls short of an intervention, but sources told The Globe and Mail Ottawa now recognizes the fast-changing economic landscape requires action to help the banks access cheaper funds to fuel lending.

With the double whammy of the last days of an election combining with the global economic slowdown, the federal government and senior bank executives are hypersensitive. The Conservative Party has been insisting throughout the election campaign that the fundamentals of the economy are strong. But in the past 24 hours a new reality has set in.

Mr. Flaherty, who is expected to be in Washington Friday at an emergency G7 session of finance ministers, had been preparing to make the announcement of a banking plan Thursday, but after word leaked Wednesday night, the plans were delayed, sources say, in an illustration of how important it is for the government to try to control the message.

Pressure from the banks is growing, with executives arguing their sector needs federal help immediately to ease their credit pressure.

Banks want it right now but the Harper government has to reconcile calls for immediate assistance with its insistence the Canadian banking system requires no extraordinary measures.

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Sales of Canada Savings Bonds put on hold market meltdown


Amid worldwide credit market turmoil, the federal government has postponed sales of one of the country’s favourite investments, Canada Savings Bonds.

A terse message posted on a government website says the 2008 bond campaign, scheduled to start Monday, has been put on hold. And a Department of Finance spokesperson confirmed the postponement.

“There are no bonds on sale at this time,” it says.

“The new sales date, interest rates and bond series will be announced shortly. Rates for outstanding issues of bonds will be announced at the same time.”

‘This is unprecedented as far as I know.’—Evelyn Jacks, Winnipeg-based tax expert

Federal officials would give no reason Tuesday for the delay, which presumably relates to the difficulty of setting interest rates under current conditions.

The bonds, a Canadian tradition since 1946, are backed by the government and promoted as a foolproof way for small investors to save. They are put on sale each fall.

David Gamble, public affairs director of the Department of Finance, which is responsible for CSBs, confirmed that the 2008 campaign has been delayed but would not say why.

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