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May 29, 2018
12:54 am
Kidd
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Again my views differ from most.

CDIC. In my opinion, it's a useless acronym. During the last financial crisis, the bank of England had to guarantee ALL deposits because they feared a run on their banking system. https://www.ft.com/content/39199b78-6489-11dc-90ea-0000779fd2ac

Say a crisis happens here in canada, which it will.

We are using hypotheticals. Tangerine has over extended themselves, trillions of dollars in paper assets have been lost. (A. What brings down one bank, will most likely bring down many banks.) So... Tangerine put a freeze on withdrawals. Their mortgage business has been sold in an attempt to raise cash.

Loonie, Bill and Norman1 who have all of their savings at Simplii, are thinking... wow see what happened at Tangerine? I better withdraw my money, it's better to have cash at home making zero% than lose it all making 2.5%. Simplii impose withdraw limits.

I still have bills to pay but ALL of my money is locked up in tangerine, hmm. I'm obviously not paying my mortgage payment to TD.

So.... an already broke Canadian government is expected to start writing $100,000 cheques? Yeah okay.

I lose all of my savings at tangerine, while the CEO at tangerine, a person who has been paid millions of dollars each year is forced out with a very nice buyout package. Sounds about right.

Scenario 2. ALL of my savings are in Outlook and they are 100% guaranteed by an insurance company. Ever hear of an insurance company NOT paying their debt? Yeah... like every claim ever filed.

https://globalnews.ca/news/4213672/fort-mcmurray-wildfire-insurance-claims/

https://www.thestar.com/news/gta/2017/06/27/25-homes-remain-displaced-one-year-after-mississauga-house-explosion.html

Insurance company policy... everyone is covered up until the time we are expected to pay.

May 29, 2018
8:11 am
Bill
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Kidd, lots of previous discussions on this vein on here re CDIC.

One thing people can consider is to diversify their wealth, to make sure to include non-financial assets (real estate, inside or outside the country, probably being the most prominent example, though obviously there are risks there too), especially in times when domestic gov't debt levels appear uncontrollable and in countries where popular sentiment is to move towards more state-involvement in their economies - history is very clear re what happens to financial assets denominated in those currencies.

But it's human nature to think we'll be ahead of the curve, we'll see danger and get our money out before all the other people get caught in the traffic jam.

May 29, 2018
8:29 am
Top It Up
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Bill said

But it's human nature to think we'll be ahead of the curve, we'll see danger and get our money out before all the other people get caught in the traffic jam.  

The best investment advice I ever received was in the early 70s from my 1st stock broker - always leave a little something on the table for the next guy and you should make out just fine - and for a very high percentage of the time, he was absolutely correct.

May 29, 2018
9:41 am
Norman1
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Such doomsday stories are entertaining. But, that's all they are: entertainment. They bear very little resemblance to history or reality.

My earliest memory of such "entertainment" was Ravi Batra's book "The Great Depression of 1990" that hit the bookshelves after the 1987 stock crash. Maybe Batra was just 2008 - 1990 = 18 years ahead of his time? sf-laugh

No, I wouldn't be pulling my money out of Simplii/CIBC in such cases. Obviously, one has forgotten a bit of significant 2008 history about CIBC.

In late 2007, loan losses were eating into CIBC's capital. Instead of waiting for regulatory capital to fall below minimum requirements and for that call from OSFI or CDIC, CIBC was proactive and did a common share issue in January 2008.

Institutions recognized the deal they were getting and took up about $1.5 billion of the issue. Retail investors were allocated about $1.5 billion of shares as well.

Looks like there were lots of retail investors, beside me, who recognized what was being offered. I saw the press release earlier in the day. By the time I signed into my brokerage account in the evening to express my interest in some shares, the $1.5 billion for retail investors had sold out.

No problem finding takers for $3 billion of shares that have no deposit insurance coverage at all.

Not sure what the exact issue was with Northern Rock in the UK. But, that certainly was not the case with the banks here.

May 29, 2018
4:52 pm
Loonie
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Kidd said

Loonie, Bill and Norman1 who have all of their savings at Simplii, are thinking... wow see what happened at Tangerine? I better withdraw my money, it's better to have cash at home making zero% than lose it all making 2.5%. Simplii impose withdraw limits.

  

For the record, I've never had an account with Simplii or PC Financial, and have no plans to open one.

May 29, 2018
6:44 pm
Bill
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Kidd - from me, no problem, you said "We are using hypotheticals". Though I'm feeling you dropped the "hypothetical" a bit in your pointed reference to a multi-millionaire CEO of Tangerine getting a nice buyout!

And for the record, in my life I and family members have had a few occasions to make insurance claims and in all cases obligations were honoured in full without problem and with appropriate timeliness. Just our experience.

May 30, 2018
4:03 am
NorthernRaven
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Hypothetically, wealthy alien purple squid monsters who love maple syrup could always be counted on to arrive and rescue us.

The squid would save themselves the trouble in this case, though, by simply beaming a primer on basic financial theory; liquidity vs insolvency vs bank run distinctions; CDIC's purpose, legal obligations (and $4 billion existing reserve fund); and of course, a good recipe for chicken soup.

May 30, 2018
8:27 am
Saver-Mom
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Evidently the squid monsters would come to QC first since we have the best maple syrup. I have toadmit that I have had fantasies of burying cash under the old crab apple. But a scene in Narcos shows Pablo digging up some long hidden cash that has rotted to dust. Hmm, maybe there is another good reason behind this plastic money...

May 30, 2018
8:42 am
NorthernRaven
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Saver-Mom said
Evidently the squid monsters would come to QC first since we have the best maple syrup. I have toadmit that I have had fantasies of burying cash under the old crab apple. But a scene in Narcos shows Pablo digging up some long hidden cash that has rotted to dust. Hmm, maybe there is another good reason behind this plastic money...  

From what I've read about Quebec's maple syrup cartel, organized crime heists from the central maple syrup stockpile, etc., "Narcos" may actually be an appropriate reference point... 🙂 As someone with relatives in Nova Scotia and New England, I'm required to posit that Quebec has the most maple syrup, not necessarily the best... 🙂

May 30, 2018
8:43 am
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Saver-Mom said
maybe there is another good reason behind this plastic money...  

Until we find out that those metallic images on the polymer bills can be picked up by little Joey and his birthday present of a metal detector!

May 31, 2018
12:35 am
Joe
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NorthernRaven said

From what I've read about Quebec's maple syrup cartel, organized crime heists from the central maple syrup stockpile, etc., "Narcos" may actually be an appropriate reference point... 🙂 As someone with relatives in Nova Scotia and New England, I'm required to posit that Quebec has the most maple syrup, not necessarily the best... 🙂  

Here's a good Doc on the heist.

https://www.dailymotion.com/video/x6eeph2

Tangerine....Canada's best bank. LBC.............Canada's 2nd best bank.
Hubert.....worst bank in Canada.

May 31, 2018
5:30 am
Saver-Mom
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The documentary is on Netflix in better quality. Jokes aside, it raises the question of whether syrup producers must remain unionized to maintain viability or whether it limits their freedom and profits.

As to the topic at hand, if it gets to the point of needing to rely on CDIC, the markets will have crashed, inflation soared and we will have many more problems than collecting on CDIC. Can’t live life always fearing doomsday is nigh...

Now, go have some pancakes and syrup. The real stuff.

June 1, 2018
8:43 pm
Joe
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Saver-Mom said
The documentary is on Netflix in better quality.

  

post a link.

Tangerine....Canada's best bank. LBC.............Canada's 2nd best bank.
Hubert.....worst bank in Canada.

June 2, 2018
3:21 am
Saver-Mom
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I said Netflix, not the internet

If you have Netflix search for Dirty Money, choose episode 5

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