Welfare

High level financiers look to the state for assistance

NOT even Canadian banks, long regarded as safe harbour in stormy financial seas, seem immune to jittery high level anxiety.

Just last week international financial ratings agency Standards and Poor downgraded the longer term outlook for Canada’s biggest banks to “negative” in citing how the federal government might react in a future economic crisis.

That’s despite continued record earnings by many of the banks and a consequent rise in their stock prices.

The reason for the “negative” tag, says Standards and Poor, is the perception the federal government might not step in to financially shore up the banks should there be trouble. Instead, the banks would be required to cope by using money within their own internal structures.

To many Canadians who either hold bank stocks directly or have them contained in retirement savings plans, this news should be disconcerting.

If our regulated banks are now being viewed in such a fashion, is there any reasonably secure investment?

More importantly is that even at the highest level of financial thinking, the concept of the welfare state is solidly embedded by expecting the government to come running at the first sign of trouble.

If this is disturbing it should be for it comes from the same folk who trumpet the idea of free enterprise and often rail against state support for those less fortunate.

Editorial, The Terrace Standard, Aug. 20, 2014

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