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LBC Digital HISA interest to be tiered starting January 2020
December 23, 2019
1:44 pm
Norman1
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Bill said
By contagion I meant damage to consumer confidence in Laurentian group, depositors might flee Laurentian Bank fearing (rationally or irrationally) it's next. Hard to say, would a failure of Tangerine affect confidence in BNS? Can't know for sure how it would go.

It depends on what went wrong. If it was just a liquidity issue, like with Home Trust, I'm sure Laurentian Bank would extend a line of credit to B2B Bank. After all, the loans are good and would be repaid as expected.

Depositors under the CDIC coverage limit would not worry. If they boost their deposit rates, like Home Trust did, there may even be an inflow of deposits.

Guess it depends who's counting the debt. This NP article from early 2018 indicates Ontario per capita debt at close to $23K (total $312 billion), about $4K higher per person. And if it's really $350 billion then it's closer to $24K per person, based on today's population of about 14.5 million. Lies, damned lies and statistics, who knows?
https://nationalpost.com/news/canada/how-crushing-is-ontarios-312-billion-debt-really

If the budgetary deficit is $10 billion each year, then the debt is $10 billion higher with each passing year. So, the date of the number matters.

Another challenge is the different accounting rules and disclosures.

There was a $24 billion difference in accounting opinion in Ontario's debt number, between the previous Premier Wynne's government and the Ontario Auditor General. Government argued that the $24 billion borrowed to reduce Ontario electricity bills shouldn't count because the money was borrowed by Ontario Power Generation and not the province. The Auditor General said the $24 billion should really count as part of the province's debt. Something about Ontario Power Generation not waking up one morning and deciding to borrow the $24 billion on its own for building generating capacity.

Then there's Ontario vs. California: Who's Really in Debt? where we find out some sub-nationals don't disclose all their debt. Apparently, California only discloses debt that is financed by bonds. I guess for them, mortgages on government buildings and trade credit (buy office supplies now, pay in 90 days) don't count, for some reason.

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