Good Friday Free-for-all!
Happy weekend everyone! It’s time to do our end of the week news round up. Here are a few stories I’ve noticed lately:
-Vancouver house prices take a steep dive
-We’re #1: Vancouver has biggest price drops in first quarter
-We’re #1: BC leads nation in job loss
-BC housing starts down 70%
-Cruise visits drop off, hammering Vancouver
-Council expedites 2010 rental rules
-We’re #8: Calgary named ‘best city on the planet’
-Peter Schiff on mark to market: Lets play pretend
So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent long weekend!
RSS 2.0 comments feed. Both comments and pings are currently closed.
April 14th, 2009 at 3:51 am
Anyone know what will happen to Global News if Canwest seeks bankruptcy protection?
April 13th, 2009 at 11:14 pm
asp:
During this little credit crisis, is the money supply shrinking because less borrowers are maxing out their lines of credit?
NO, because all the money (apart from reserves) is loaned out all the time, as I have already said. If it’s not loaned out to someone’s LOC it’s loaned out to someone else. The banks are not sitting on big bags of money.
Isn’t it self-evident that if banks are willing to pay x% interest on deposits, they must be lending the money out to somebody?
Money supply is contracting because of loan losses, which reduce bank reserves, which reduce the amount of money they can lend out.
April 13th, 2009 at 10:38 pm
I was just trying to illustrate in an extremely simplified example how money is destroyed and created by borrowers. Of course, there are thousands of credit unions and other financial institutions involved, and money is being created and destroyed thousands of times per day.
During this little credit crisis, is the money supply shrinking because less borrowers are maxing out their lines of credit? Are we then in period when money is being destroyed faster then it is being being created?
April 13th, 2009 at 9:58 pm
asp:
Your fallacy is in assuming that the credit union has a bag of money sitting around that it loans out in drips and drabs to people like you.
In fact the credit union loans out all its money all the time, subject to reserve requirements. If it hadn’t loaned the money to you it would have loaned the money to someone else. That’s what the bond markets all are about. All the money loaned out, all the time.
April 13th, 2009 at 9:37 pm
The way borrowers create money has been explained to me like this:
My parents and aunts and uncles save some of their money and deposit it in the local credit union. All together, they deposit 10,000. that is the base money supply. I use my credit card to buy a cheap flight to Mexico. The credit union transfers $400 to the bank account of the airline. The credit union now has 9600 in cash plus 400 in debt owed to it. All counts as “money” assets. The airlines bank has 400. Total money supply $10,400. By going to Mexico, I have created money.
When I get back, I get a job with the airline unloading luggage. They pay me $400 from their bank account. I pay that back to the credit union. Now the credit union has $10,000 cash again, the airlines bank has $0. Total money supply is $10,000 again. By unloading luggage, I have destroyed money.
April 13th, 2009 at 9:20 pm
Canada’s Money Supply: http://www.bankofcanada.ca/en/.....bg-m2.html
“Commercial banks and other financial institutions provide the greater part of assets used as money through loans made to individuals and businesses. In that sense, financial institutions are creating money.”
Or, to put the shoe on the other foot, borrowers create money when they take out a loan, use their line of credit or credit card. And then destroy money (supply) when they pay off those loans.