Skip to main content

€1 trillion euros to ward off private finance crisis

Now even Canadian Finance Minister Jim Flaherty and Bank of Canada president Mark Carney are flagging the peril of a bank crisis in Europe (or, more accurately, a bank crisis starting in Europe).

The CBC reports "Flaherty has been pressuring his European colleagues to move faster on measures to shore up the cash reserves of the biggest European banks. Carney has warned the region is "extremely vulnerable" to recession if bank cash isn't adequate.  Those banks hold large numbers of loans made to Greece and other troubled governments, and the value of those assets could drop substantially should Greece default."

But, the CBC adds,  recent moves by credit rating agencies have underscored the need for action soon to prevent a loss of confidence from undermining the governments and banks of larger European economies:

  • On Thursday, Standard & Poor’s cut Spain’s credit rating for the third time in three years.
  • Moody's Investors Service has warned Belgium its ratings might be cut in the next three months, in part because of its exposure to troubled bank Dexia (Note: Dexia has extensive public private partnership [P3] investments in Ontario, BC, and Britain.) 
  • Moody’s has also downgraded a dozen British and nine Portuguese banks.
  • And S&P has also cut the ratings of the Italian government and seven Italian banks, while Fitch Ratings has downgraded Italy’s and Spain’s government bonds.

Turmoil in the financial sector drives up private financing and P3 costs.  But so far, there is no sign from the Ontario government that it will reconsider its multiple P3 projects  on the go -- all of which rely heavily on private financing from private financial institutions, including European banks.

With new pressure on Europe from US Treasury Secretary Timothy Geithner to develop a more comprehensive package to avert financial melt down, Bank of Canada president Mark Carney told CBC last night that €1 trillion ($1.4 trillion CDN) "or a little bit more" should help ward off the banking crisis. The goal, it seems, is to convince business people ("the markets") that the governments will go to the mat to support the private financial system.

Apparently, Carney hopes that one thousand billion euros (or "a little bit more") will do the trick.

This as governments in nation after nation impose public service cuts on working people.   We can't afford them, apparently.

Update: 1:21 am 15/10: George Osborne, the British Chancellor of the Exchequer, apparently thinks Mark Carney underestimates the problem as he believes that a €2 trillion fund is necessary. 

Do I hear €3 trillion?

Update 9:56 am 15/10:  Goldman Sachs now says at least 50 of the 91 European banks tested previously by the banking authority are likely to fail revised stress tests.  The previous stress test approved Dexia -- which then promptly went down the drain.   


Also yesterday:  Standard & Poor’s downgraded the credit rating of the biggest French bank, BNP Paribas and Fitch says it is reviewing the ratings of more banks.


But, never mind, Ontario continues to look to P3 private financing for public infrastructure...



Labels:

Comments

Post a Comment

Popular posts from this blog

Ford government fails to respond to 72% increase in COVID inpatient days, deepening the capacity crisis

COVID infections continue to drive up hospital costs and inpatient hospitalizations in Ontario. For the most recent fiscal year (April 1, 2022- March 31, 2023) hospital stays related to COVID cost $1.221 billion, according to new CIHI data.   This is about 4% of total hospital spending, creating a very significant new cost pressure beyond the usual pressures of population growth, aging, inflation, and rising utilization.   Costs for COVID related hospitalizations increased 22.2% in Ontario in 2022/23 from the previous fiscal year, rising from $999 million to $1.221 billion.  That rise is particularly notable as the OMICRON spike of late 2021 and early 2022 had passed by the the 2022/23 fiscal year.   The $222 million increase in COVID hospitalization costs came in the same year as the Ford government cut special COVID funding and, in fact, cut total hospital funding by $156 million.     In total, there were 60,653 COVID hospitalizations...
Post a Comment
Read more

The hospital crisis: No capacity, no plan, no end

While Canada has achieved universal public healthcare coverage, that does not mean conservative forces have given up trying to erode that coverage and expand corporate care where it does not currently exist. The battle has become particularly intense in Ontario under the Ford Progressive Conservative government, which is implementing serious cuts to the level of care and moving to bring in for-profit mini-hospitals. Inadequate Staffing.   Less and less of hospital spending is on staff.   Employee compensation as a share of hospital expenditures has consistently shrunk in Ontario. This is not some immutable law of hospital development.  It is in stark contrast with the rest of Canada, where compensation has become a larger share and now accounts for 67.1%. Hospitals in provinces other than Ontario now have 18 percent more staff per capita than hospitals in Ontario. Overall, if Ontario had the same staffing capacity as the other provinces and territories, there would be another...
Post a Comment
Read more

The long series of failures of private clinics in Ontario

For many years, OCHU/CUPE has been concerned the Ontario government would transfer public hospital surgeries, procedures and diagnostic tests to private clinics. CUPE began campaigning in earnest against this possibility in the spring of 2007 with a tour of the province by former British Health Secretary, Frank Dobson, who talked about the disastrous British experience with private surgical clinics. The door opened years ago with the introduction of fee-for-service hospital funding (sometimes called Quality Based Funding). Then in the fall of 2013 the government announced regulatory changes to facilitate this privatization. The government announced Request for Proposals for the summer of 2014 to expand the role of "Independent Health Facilities" (IHFs).  With mass campaigns to stop the private clinic expansion by the Ontario Health Coalition the process slowed.   But it seems the provincial Liberal government continues to push the idea.  Following a recent second...
Post a Comment
Read more