http://www.mutualfundsite.org/mutualfunds/ivy-small-cap-fund-reinforces-the-importance-of-dividends/ Thu, 10 Jun 2010 09:58:27 -0500 http://wordpress.org/?v=2.8.6 hourly 1 http://www.mutualfundsite.org/mutualfunds/ivy-small-cap-fund-reinforces-the-importance-of-dividends/comment-page-1/#comment-532 Mutual Fund Site Admin Mon, 12 Apr 2010 00:26:54 +0000 http://www.mutualfundsite.org/?p=163#comment-532 Canada's banking system is certainly unique. During good times, they appear uncompetitive globally but during tough times, they look heroic. Although "bank failures" per se is extremely uncommon in Canada, it was not that long ago that they saw massive financial service firm failures (look back at the 1980's for example, which coincided with the S&L failures in the US). Also, we cannot forget that those big banks wanted to get bigger in the 90's so that they could better compete globally against the same firms that have recently had trouble -- RBS, Citi, Goldman and so on. In fact, one Canadian bank in particular was hoping to merge with a US partner. Since the Canadian government at the time refused to allow this to happen, those Canadian banks look heroic today... and the country enjoys a solid financial system, albeit an extremely conservative one. Canada’s banking system is certainly unique. During good times, they appear uncompetitive globally but during tough times, they look heroic. Although “bank failures” per se is extremely uncommon in Canada, it was not that long ago that they saw massive financial service firm failures (look back at the 1980’s for example, which coincided with the S&L failures in the US). Also, we cannot forget that those big banks wanted to get bigger in the 90’s so that they could better compete globally against the same firms that have recently had trouble — RBS, Citi, Goldman and so on. In fact, one Canadian bank in particular was hoping to merge with a US partner. Since the Canadian government at the time refused to allow this to happen, those Canadian banks look heroic today… and the country enjoys a solid financial system, albeit an extremely conservative one.

]]> http://www.mutualfundsite.org/mutualfunds/ivy-small-cap-fund-reinforces-the-importance-of-dividends/comment-page-1/#comment-521 Public Adjuster Wed, 07 Apr 2010 17:35:05 +0000 http://www.mutualfundsite.org/?p=163#comment-521 I think Greenspan is getting senile, today he said that you can stop asset bubbles by increasing capital requirements. That just increases the cost of credit. The next time you have a real estate bubble, you'll have the same problem, assuming that banks are still in the business of loaning against real estate. If you want to stop this problem, then eliminate the federal subsidies for real estate development and investment, then require people in that industry to put their own money at risk instead of someone elses. If Greenspan really wants to change the banking system, though, then simply ban 95% and 90% LTV loans. Require a bigger equity cushion. BTW, the "too big to fail" argument is a fallacious one. During the Great Depression, Canada had no bank failures. The reason was that their banks were very large. The banks closed branches, etc., but none of them failed. By contrast, the US was dominated by thousands of very small banks, and we had more than 10,000 of them fail. So there is nothing inherently unsafe about a banking system dominated by large banks. The real problem with large banks is that during good times, they don't provide enough competition for each other. I think Greenspan is getting senile, today he said that you can stop asset bubbles by increasing capital requirements. That just increases the cost of credit. The next time you have a real estate bubble, you’ll have the same problem, assuming that banks are still in the business of loaning against real estate. If you want to stop this problem, then eliminate the federal subsidies for real estate development and investment, then require people in that industry to put their own money at risk instead of someone elses. If Greenspan really wants to change the banking system, though, then simply ban 95% and 90% LTV loans. Require a bigger equity cushion. BTW, the “too big to fail” argument is a fallacious one. During the Great Depression, Canada had no bank failures. The reason was that their banks were very large. The banks closed branches, etc., but none of them failed. By contrast, the US was dominated by thousands of very small banks, and we had more than 10,000 of them fail. So there is nothing inherently unsafe about a banking system dominated by large banks. The real problem with large banks is that during good times, they don’t provide enough competition for each other.

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