Negative Interest

Is Canada next in line to enter That Bizzaro World?

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Wondering why the stock market has gone through the roof this past week? Here on the west coast of BC all we have to do is look across the ocean to Japan. Japan has just announced they will join The European Central Bank, The Swiss National Bank, along with the central banks in Denmark and Sweden in slashing bank interest rates into negative interest territory. An article in the Financial Post entitled (Canada is flirting with a bizzaro world of negative interest rates) John Shmuel warns us that Canada could be next in line to embrace this banking anomaly.  He writes: “Bank of Canada Governor Stephen Poloz discussed negative rates at a luncheon in Toronto last month, putting it on the radar here.”

Shmuel also cites Moshe A. Milevsky (Professor at the Schulich School of Business at York University). “What you might see happening is a negative interest rate masquerading as higher fees” Milevsky said.  “No bank in their right mind would tell a consumer, give us your hundred dollars and we’ll give you 95.  That will never happen”.  But whose idea was this, anyway, this negative interest rate business?

It seems to have come from European bankers, having indulged in many Quantitative Easings (QE’s) to no avail in quick-starting the entire Western economy (how could it, when printing presses run overtime to pour money into banks and the banks just sit on the money).  Something more needs to be done to get the larger banks to make more loans to businesses and customers.  So, the central banks will charge the other banks money for the privilege of parking their money instead of loaning it out.  In turn the regular banks that we know in our communities will pass on the fees to us, the consumers.  Instead of a miniscule amount of interest money being paid by the banks to people with banking accounts, we will be forced to pay the banks for keeping our deposits at all.  And that’s the big goal.  Then people will start spending their money instead of paying to have it stored in a bank and voila, the economy will bloom.  But will it?  More next time.

 Donald Trump and Canadian Fortunes

In the US, polls show that the main followers of Donald Trump are white, middle aged and under educated men. Working-class people. But I have enormous respect for working-class people.

Because it was working class people, both black and white, and immigrants from all over the world  who created the enormous capital wealth in the US and Canada. These men worked like beasts in the mines, in the forests, on railroads and fishing boats, on oil rigs and in the smokestacks.  And now a few generations later these men feel that while they and their ancestors built this wealth, the wealth holders have turned their backs on them. And they have.  The wealth holders, and most of their governments, are more concerned with keeping the wealth holders happy than the welfare of working people.

Donald Trump points his finger at Muslims, Hispanics and women.  And even the women in his 

audience applaud his disgusting sexist remarks.  It’s eerie.  But the women can be a threat, too, to their own men’s sense of identity, because the women are usually working, even if at some below poverty wage job.  But we have to try to understand the women’s fears. If their families are being threatened economically, or think they will be, and Trump promises to fix it, they don’t care about feminism.  What is political correctness to them if they see other foreign men who they think are taking (or will take) their husband’s and son’s jobs while they are trying to exist on their own measly below poverty wages?

I think Germany mainly turned to Hitler because he promised to put men to work and also convinced people that the Jews were stopping this.   If we will remember, Hitler rose to power when the country was desperately poverty stricken.  As the winners of World War One, the Allies demanded huge amounts of money from Germany in war reparations. There was hunger in Germany, and massive malnutrition.  Poverty, and fear of it, is always the main driver and breeder of racism. And if times get really tough now, many Canadians without jobs or worried about their jobs, may also sink into racism against any foreign group.  But I think Justin Trudeau, and the people with him, will do their very best to prevent this from happening.  Let’s give him our support.