Taking the suggestion of Stephen Gordon, a practicing social scientist in the sub-discipline of economics, who runs a blog about economics I decided to check out what the Bank of Canada thinks about the unfolding global financial crisis. Gordon has a point: what could politicians possibly know about finance and the appropriate public policy approach for regulating that sector?
I mean it is not like any of them took Econ 101 or anything which is apparently where one learns the default model for economic policy making. Well Harper did in fact take a post-grad degree in economics and we all know how clever he has been: “Markets go up and they go down and they go up again.” he was quoted as saying in reference to the financial crisis. Interestingly they do not teach you that in Econ 101 you in fact have to pursue a post-grad degree in economics before that nugget wisdom is made available. I digress.
So what does the Bank of Canada have to say on the matter? They issued this press release on the 15th:
FOR IMMEDIATE RELEASE
15 September 2008
Bank of Canada issues statement on recent market developments
OTTAWA – The Bank of Canada is closely monitoring global market developments. The Bank welcomes the initiatives of the Federal Reserve System to provide support to U.S. financial markets.
The Bank will provide liquidity as required to support the stability of the Canadian financial system and the functioning of financial markets.
Reporters could be forgiven for asking the leaders of the political parties what they think given the outstanding detail of the above release. But let us work the logic through. In the last 10 day’s the FED and the US Gov have nationalized fully half the mortgage and mortgage insurance market in the US, and last night they announced plans to nationalize what by some accounts is the largest insurance company in the world, AIG.
Ok, now re-read the first sentence of the BOC press release. Simple deduction says that the BOC is in favour of the Nationalization of the Mortgage and Mortgage Insurance sectors. How 1970s indeed. Perhaps Carney was part of the waffle back in the day.