Private banks need a lesson in Canadian Sovereignty

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By Claudia Rodrigu... on 31 August 2010 - 12:20pm

Private banks and other financial institutions, including the caisses populaires, have aided and abetted in what Canadians should consider one of the greatest crimes in the second half of the last century and continuing into the 21st. Foreign take overs have been largly financed by private banks and other financial institutions. In fact, 42% of all foreign takeovers were financed by our good old patriotic banks. CIBC was the leading lender in the Shoppers Drug Mart takeover, and the recreational division of Bombardier was financed by BMO and RBC.

Private banks are also what we owe our 566.7 billion dollar debt to. Why? Because politicians are lobbied by private banks to ignore the Bank of Canada's lending right and borrow from them instead. Canadians pay an estimated 170 million in interest a day  paid on our debt to private banks.

Not making a lot of sense? That's what they hoped for. let me explain:

First, we must distinguish between issuance and creation. Issuance is the act of producing and distributing bank notes and coinage by the Canada bank note company, under contract from your bank, the Bank of Canada. Creation, on the other hand, is what we owe our 566.7 billion debt to that is expected to grow by another 49.2 billion by the end of this year. So while the Bank of Canada issues the hard currency, private banks are creating money through debt. Debt is an acronym for despair, embezzlemnt, bribery and trepidation.

The Bank of Canada, through the Bank fo Canada Act is legislated to both issue and create. But when we weren't paying attention, private banks lobbied Ottawa to introduce a term called Fractional Reserve Banking which goes against statutory reserves. Such reserves had been abolished in a bill sneaked through parliament in 1991 by the Mulroney government. This opened the doors to debt, allowing banks to commit the fraud of only keeping 12% of total deposits in reserve while using the remaining 78% as "cheque book" money, in other words, perpetual debt. By 1993, the reserve requirement was phased out to zero.

The Green Party of Canada resolved to take leadership on this issue with passing of the Bank of Canada policy to restore our bank's legislated power of issuer and lender. Now we must introduce a policy that will resolve to allow the Bank of Canada to serve the interests of Canadians by lending to Canadian companies at risk of foreign takeovers, rather than allowing private banks and other financial institutions to finance foreign ownership of our Canadian companies.

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Once upon a time... there existed laws against foreign ownership

Submitted by Michael Kenny on 31 August 2010 - 9:28pm.

As a Green, I think it is important to take a stand against the idea of globalized or globally integrated economy.  The entire Green political movement in Canada was borne from those inspired by the works of E.F. Schumacher and his economic work Small is Beautiful, which emphasized local economics.  Our own Elizabeth May and others helped to form the first environmental party in Canada in 1980, The Small Party, whose name was inspired by the title of his book.     

Laws restricting foreign ownership have slowly been eroded in the past 40 years to the determent of our environment, our sovereignty and our long-term economic health (because of growing government and personal debt and deficits, the types of jobs being created, many of them low-paying service jobs, at the cost of losing hundreds of thousands of manufacturing jobs, and the vulnerability of a globalized economy).  

The problem we have as Greens is influencing the global economic dialogue away from the dominant neo-liberal economic ideas that have become the mainstream dominant ideas, and towards alternatives that are sustainable and just.  

The computer you used to write your comment...

Submitted by Bram Kivenko on 1 September 2010 - 7:59am.

If you want to stay out of the globalization game, then you relegate us to be like the Soviets, whose lack of ballpoint pens and computers became more pathetic with each passing year.  I am sorry that's the way it is, but not playing the globalization game is no longer a credible option.

Also, foreign ownership is not the problem, the problems are that of regulation and domestic security.  And that includes regulation of the flow of money.  But if we want to be credible on this issue, we need to be clear about what the true options are.

Economically, there is no difference between (a) a foreign company purchasing a domestic one at true fair value; and (b) a foreign company building from the ground up a new domestic company that causes the effective displacement of a domestic company of equivalent size. 

The only apparent difference is that you think the track record in the latter case implies the foreign owner is dedicated to the domestic economy.  This is a false argument.  Companies decide to move localities spontaneously, with minimal regard as to how they arrived at a particular situation.

In the end, the argument of protectionism is based on fear.  The only credible policy is one of fair regulation (whatever that ends up meaning.)   But fair has to be fair for foreigners as well as natives.