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Email this8:42 pm
February 22, 2013
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Edit by admin: this thread originated here
Doug:
And PT is likely relying fully on legal counsel to draft their identity requirements and so if their lawyer(s) is(are) spooked or fail to fully read the regs then PT could subsequently sue the lawyers for all sorts of BAD.
This is also likely why one bank will accept differing documentation from another for the same type of requirement.
And the hard part is, for the customer, PT is just following legal advice. And that will probably cost them customers.
I manage an elderly aunt's finances and wanted to open an ING or Ally account for her (back when Ally was a going concern). Neither institution would open the account for me, even though I held a legally binding Power of Attorney for Property (in the Ontario style). Each had a different reason (which escapes me right now) as to why they couldn't open the account.
Greg
11:52 pm
December 12, 2009
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Yeah, that's the sad thing, Greg, particularly with these "virtual" institutions.
If it doesn't fit into their online web application "mould", they don't want to open the account whereas a "brick & mortar" institution would've opened the account. Curious, did you try opening the account in her name, having your aunt sign the cheque and then requesting for you to be added as a Power of Attorney once it's opened? If even then, and with the Power of Attorney being a certified true copy by a notary public or lawyer, they still didn't want to do it, that really sucks. 
It really varies from institution to institution, doesn't it?
On a separate note, speaking of Ally, I happened to stumble upon "ally.ca" and see that Ally Financial Inc. has taken it back from RBC Royal Bank. It now simply serves as a redirect to the parent U.S.-based "ally.com" website (no longer forwards to "rbcroyalbank.com"). This means they're probably nearing the end of their non-compete agreement as well. Could we potentially see Ally Financial re-enter the Canadian marketplace via a new "vehicle" (no pun intended), perhaps? I think Canadian Tire's still trying to sell Canadian Tire Bank and find a partner for their MasterCard portfolio...so potentially maybe they'll re-emerge there? That'd be funny! 
Cheers,
Doug
5:38 am
February 22, 2013
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Doug:
I didn't even mention it to my aunt as she is really elderly and doesn't like change.
Up to the age of 83 she had accounts at both RBC and TD in the town where she lived. These accounts were across the street from each other. Every Saturday morning, come rain, shine, snow or sleet, she bundled up and drove to do banking at TD. The she marched across the street to do banking at RBC. When asked why she was still using both banks she said her father had opened the RBC account for her (he died in 1972) and her husband had a Huron and Erie Savings and Loan Society account when they got married (which subsequently became) Canada Trust and finally TD Canada Trust) and she didn't want to change what the men in her life had set up for her.
For a couple of years after I took over her affairs I maintained the two accounts for her and the one time I suggested using only one of them she became concerned and confused and so I left things as they were. A little over a year ago I migrated everything to RBC without telling her and things are running smoothly as one would expect.
Knowing her as I do I did not want to upset her with change. She is OK financially and I will be her executor and made the decision that the extra (then) 2% I could get for her with an ING or Ally account wasn't going to change her life.
Greg
5:45 am
February 22, 2013
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Doug:
The Ally.CA domain record was last updated Oct 11, 2013 (or perhaps Nov 10, 2013). My last use of the site was 6 months ago.
Calling the 800 number leads to a recorded male voice that says the number is no longer in service and suggests one should call ones financial institution.
I'd love to hear how much RBC sold the ally.ca domain name to Ally US for.
Interestingly, the registrar is still Canadian
Domain name: ally.ca
Domain status: registered
Creation date: 2008/05/07
Expiry date: 2015/05/07
Updated date: 2013/10/11Registrar:
Name: CSC Corporate Domains (Canada) Company
Number: 2397937Registrant:
Name: Ally Financial Inc. - TMA828232Administrative contact:
Name: Kyle Kouchinsky
Postal address: 440 South Church Street
15th Floor
Charlotte NC 28202-2075 United States
Phone: +1.8773517626
Fax: +1.7044444754
Email: hostmaster@ally.comTechnical contact:
Name: Joseph Iacovelli
Postal address: 440 South Church Street
11th Floor
Charlotte NORTH CAROLINA 28202-2075 United States
Phone: +1.8773517626
Fax: +1.7044444754
Email: domain-administrator@ally.comName servers:
gns1.ally.com
gns3.ally.com
gns4.ally.com
gns2.ally.com% WHOIS look-up made at 2014-02-04 13:37:14 (GMT)
%
% Use of CIRA's WHOIS service is governed by the Terms of Use in its Legal
% Notice, available at http://www.cira.ca/legal-notice/?lang=en
%
% (c) 2014 Canadian Internet Registration Authority, (http://www.cira.ca/)
Greg
1:44 pm
December 12, 2009
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GS said
Doug:
The Ally.CA domain record was last updated Oct 11, 2013 (or perhaps Nov 10, 2013). My last use of the site was 6 months ago.
Calling the 800 number leads to a recorded male voice that says the number is no longer in service and suggests one should call ones financial institution.
I'd love to hear how much RBC sold the ally.ca domain name to Ally US for.
Interestingly, the registrar is still Canadian
Greg
I suspect the initial registration of "ally.ca" was done by Ally Financial Inc. anyway and only "leased" to their ResMor Trust Company and ultimately to RBC Royal Bank for a temporary period. (It's all sort of crystalizing when you read between the lines of how RBC handled the transition, in terms of it being an asset purchase deal rather than being able to acquire their entire technology platform and retaining Ally Canada clients on that book & platform, if you know what I mean.) There probably was a provision in the whole Ally Canada asset purchase agreement that stipulated the Ally trademark and, by extension, its branded intellectual property such as "ally.ca" would be transitioned back to Ally Financial Inc. for future use, after a mutually-agreed upon transition. Whether that domain name's value ultimately played in an meaningful way in terms of the calculation of what RBC agreed to buy the Ally Canada deposit and loan books, I'm not sure. I doubt it, as they weren't after the Ally Canada trademark anyway. This gives Ally Financial the opportunity to potentially re-enter Canada, perhaps doing it "right" by buying a better entry point with a better, more geographically-diversified, deposit and loan book (i.e., potentially a Canadian Tire Financial Services/Canadian Tire Bank and, on the auto lending side, a Carfinco or a RIFCO).
As for the registrar, they appear to be the Canadian wholly-owned subsidiary of Corporate Domains Inc., a large ICANN-accredited registrar and trademark management provider similar to Moniker for medium- and large-sized corporations. I assume they entered Canada through acquisition and renamed the Canadian subsidiary (it would be harder, though not impossible by any stretch, to grow organically).
Cheers,
Doug
3:49 pm
February 22, 2013
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Doug:
My suspicion as to the registration is that it was done in Canada by Canadians. I may be wrong, of course.
If I were a Canadian manager asked to get domains registered for GoodOldDoug in the US and Canada I would likely go to a Canadian registrar and register GoodOldDoug.Ca and GoodOldDoug.Com. Similarly if I were a US manager asked to get domains registered for GoodOldDoug in the US and Canada I would likely go to a US registrar and register GoodOldDoug.Com and GoodOldDoug.Ca.
We likely will never know nor does it matter.
Greg
.
1:49 pm
December 12, 2009
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I suspect where it was originally registered by a Canadian, Ally Financial, through ResMor Trust Company, would've likely paid a nice sum to the original registrant (no idea who that was, as CIRA doesn't publish registrant histories for domains!) then, since you had to be a Canadian resident or have a business presence in Canada, registered it through CSC Corporate Domains' wholly-owned Canadian CIRA-accredited subsidiary in ResMor Trust Company's name. I suspect their sale of Ally Canada's deposit and loan book to RBC likely excluded the Ally intellectual property in much the same way ING Groep excluded much of its global intellectual property from the ING DIRECT Canada sale to Scotiabank. 
Now that no longer have a Canadian presence, I suspect they reverted the "ally.ca" domain name back to the parent company, but registered in the name of CSC Corporate Domains' Canadian CIRA-accredited subsidiary as a sort of "in trust"-type registration, earmarked for future use (if ever). A smart strategy. Let the "blowback" RBC suffered over its Ally Canada purchase subside and, in a few years, it will mostly be forgotten and they can re-enter Canada, if the market warrants it.
Hope that makes sense,
Doug
1:56 pm
December 12, 2009
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GS said
Doug:
I didn't even mention it to my aunt as she is really elderly and doesn't like change.
Up to the age of 83 she had accounts at both RBC and TD in the town where she lived. These accounts were across the street from each other. Every Saturday morning, come rain, shine, snow or sleet, she bundled up and drove to do banking at TD. The she marched across the street to do banking at RBC. When asked why she was still using both banks she said her father had opened the RBC account for her (he died in 1972) and her husband had a Huron and Erie Savings and Loan Society account when they got married (which subsequently became) Canada Trust and finally TD Canada Trust) and she didn't want to change what the men in her life had set up for her.
For a couple of years after I took over her affairs I maintained the two accounts for her and the one time I suggested using only one of them she became concerned and confused and so I left things as they were. A little over a year ago I migrated everything to RBC without telling her and things are running smoothly as one would expect.
Knowing her as I do I did not want to upset her with change. She is OK financially and I will be her executor and made the decision that the extra (then) 2% I could get for her with an ING or Ally account wasn't going to change her life.
Greg
Exactly, Greg. Such a sweet story, though - I've seen many people like your aunt in my career (so far, it's not finished yet!). A similar situation with my grandma - she's always banked with CIBC and Scotiabank (having worked at both banks herself and also because her deceased husband banked with Scotiabank). Although my dad does much of her day-to-day banking now, as her dementia is getting progressively worse, she could earn more with a "virtual" bank, but to what end and for what hassle? Additionally, one has to consider the difficulty in dealing with a "branchless" institution from an Executor's standpoint. I imagine they'd need notarized true copies of the will and death certificate whereas in a branch scenario, even if they don't process the Estate at the branch level, the staff can photocopy your original documents and certify them as true copies.
Cheers,
Doug
3:47 pm
February 22, 2013
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Doug said
[snip]
Additionally, one has to consider the difficulty in dealing with a "branchless" institution from an Executor's standpoint. I imagine they'd need notarized true copies of the will and death certificate whereas in a branch scenario, even if they don't process the Estate at the branch level, the staff can photocopy your original documents and certify them as true copies.
Cheers,
Doug
Virtual banks make it much easier when death occurs as long as the executor has all the relavent account details and passwords. Years ago it was important to have access to cash when a spouse died as the banks would freeze the accounts.
Today, one could die and the virtual (and bricks and mortar bank for that matter) bank might not know for weeks, months or years if the executor doesn't tell them.
I regularly get letters from the company who issued my aunt's annuities, asking me for proof she is alive. The banks never ask!
Greg
3:57 pm
October 27, 2013
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These posts are on an important manner many people do not think about.
I agree an executor *could* get by forever with virtual banks, or any online banking for that matter, but it is my understanding that executor would be running afoul of legal responsibilities and legislation. The accounts legally need to be changed to 'the estate of....' IOW, don't try this at home.
11:07 pm
December 12, 2009
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GS said
Virtual banks make it much easier when death occurs as long as the executor has all the relavent account details and passwords. Years ago it was important to have access to cash when a spouse died as the banks would freeze the accounts.Today, one could die and the virtual (and bricks and mortar bank for that matter) bank might not know for weeks, months or years if the executor doesn't tell them.
I regularly get letters from the company who issued my aunt's annuities, asking me for proof she is alive. The banks never ask!
Greg
That's partially true, but banks do still generally freeze accounts if the accounts are held in a "sole" name. If they're joint accounts, they will usually and painlessly remove the deceased holder from a joint account (except in the case of HSBC Bank Canada, which due to their horrible banking systems, freezes joint bank accounts, forcing the surviving and executor for the deceased holder to open brand new bank account numbers!) and open a new bank account for the deceased as an Estate account, if the Executor so chooses.
The key, though, is not to tell the banks until after you have consolidated the assets into one institution and/or distributed the Estate, less any debts and income taxes payable, according to the will. Most banks have policies of not requiring probate where the asset balances in sole accounts are under $50,000. So essentially, even if the Estate couldn't be settled, the Executor could open a new Estate account with his/her own institution and consolidate assets there and not let the deceased's banks know until after and the balances have been wittled down to $5.00. That's the smart move. In reality, people (i.e., executors and/or survivors) are either usually too upfront and honest with their banks or you'd have some astute bank employees (myself included) that would often scan obituary pages of the local newspapers and alert the bank when they note a customer may have passed away.
AltaRed, thanks for your kind words on my and GS' posts on the Estate and Power of Attorney information.
Cheers,
Doug
11:16 pm
December 12, 2009
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Speaking of annuities, what are your thoughts on them, GS? When you have to convert your RRSPs to a source of retirement income, as it's called, will you go with an annuity or a RRIF or some combination? And do you prefer life annuities or term certain annuities?
My understanding, I believe, is generally life annuities do not pay benefits to the survivor beneficiary. So one could, in theory, have several hundred thousand dollars in a life annuity that go unpaid if they pass away suddenly.
A former colleague of mine, who was actually pursuing his Chartered Financial Analyst designation as a CFA Level 1 Candidate, suggested one strategy when buying annuities is to purchase a corresponding life insurance policy (presumably, whole life) with a named beneficiary and pay the corresponding premiums. So long as the premium is not astronomical, let's say a $500,000 annuity with a $500,000 life insurance policy at age 71 (or earlier if you can't get life insurance at all after age 70), for a non-smoker all his life, what would the life insurance premium be roughly? So long as it wasn't more than, say, $200-300 a month, it might make sense as it hedges your bets a bit by receiving retirement income and then, upon your death, the annuity issuer eats the remaining balance of your annuity but your beneficiary receives a tax-free life insurance cash payout. What are your thoughts on that strategy? Or, are we better off with a RRIF 100% of the time?
Cheers,
Doug
4:29 pm
February 22, 2013
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Doug:
I have not got that far in my planning as, while I turned 67 on Tuesday, I still have almost 5 years before I have to make a move. Mrs. GS is 2.75 years younger as well.
I will most likely go with a RIF.
I am working this month to determine what our RIFs would look like if I were 71 this year as I want to know what the tax hit will be -- rather than seeing how much we will have in income. My goal there is to determine how much RSPs could/should be collapsed prior to having to RIF them.
Annuities don't sound like something I would want, especially in today's low interest market.
(I am having to bite my tongue today while looking at bond rate 6 -8 years out. Four per cent used to be my starting point and today I have difficulty finding good, solid buys at much more than 3%. Just as an aside I am seeing Fairfax Financial and Transalta at over 4% but certainly don't want to load up on too much of any one thing. I am in the middle of my semi-annual asset allocation re-jiggle! In fact, this month is usually when I get round to doing my benchmarking, asset allocation, net worth study and retirement income and expense projections.)
I am fortunate in that I believe we have sufficient income with our existing funds that we will continue to accumulate wealth. I did our Net Worth analysis a couple of days ago and it just keeps going up. As I said, I am really fortunate and I am well aware others are not where I am.
I have been looking at an increase in charitable donations and need to re-think our estate planning. There are no little GS's in the picture so that isn't something I need to worry about or plan for.
My "biggest" issue right now is the size of our RSPs. As I said, I know many others don't have that as an issue.
Greg
5:29 pm
December 12, 2009
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If there are no little GS' to worry about, it sounds like your ultimate beneficiaries of your estate would like be charitable organizations. I used to "poo poo" those community foundations that administer private legacy trusts that pay out the annual income (while preserving the principal), but seeing as how anyone with even a small amount could set up such a legacy fund and their management expenses are lower than I would've thought, something definitely you may want to look into.
How worried are you about OAS clawback? My understanding it doesn't even start to kick in until something like $69,000 or $71,000 per year, per person, and is fully clawed back at like $115,000 per year, per person, which is quite a lot of money. Obviously, it's nice to get that extra money from the government, but in reality, certain segments of the population that may have been more fortunate through their working career, may have benefited from a private defined benefit company pension or just generally been very prudent at saving (or a combination of all three), it's my belief maybe they don't really need the OAS portion of their government benefits so much. Obviously, do as much as you are able to reduce your RRSP balances before you must convert to a RRIF (you have a few years from the sounds of it) but, even that, is a double-edged sword too because you're already collecting OAS and if you withdraw too much, you'll pay potentially a higher marginal tax rate on a lot of your income in those years. That's where the tax planning is so important - the last 10-12 years of one's RRSP versus when you're starting out with an RRSP, it's a bit of an issue in terms of when to maximize your RRSP contributions and what investments to put into your RRSP, almost seems like winding down an RRSP is much more difficult! What about a family trust account? What are the rules on that, can income be withdrawn from an RRSP and placed into a family trust and held indefinitely, potentially, depending on the type of trust it is and even after you and your wife pass away then distributed to the named beneficiaries? Not sure if your estate would be taxed on the withdrawal from the trust or not, but I would think only the named beneficiary would need to be taxed on the income from that trust. You see what I am getting at...reducing your required annual minimum withdrawals you and your wife must take from your RRIF. Anyway, some food for thought, for you (and others), potentially.
The bonds you mention are interesting...I've looked at Fairfax in the past from a common share standpoint, never their debt though. They have some decent insurance and reinsurance holdings.
A lot of stuff I see is looking "expensive"...I have trouble paying more than 10x forward (11x trailing) P/E and more than a 10-20% bump over book value (maybe slightly higher for tangible book value). Some of the REITs are still looking attractive, HBC is actually a recent "Market Call" top pick because it's trading at a really good valuation and its expected to proceed with spinning out much of their real estate into a REIT so could be an opportunity to acquire those REIT units at the IPO price as a result of the spin-out and its retail franchise has surprised me (to the upside) as I had always predicted (10 years ago) that Sears Canada would outperform and HBC would be out of business. I'm "too cheap" and waiting for Canadian Tire's CT REIT to pull back to $10.50 as their rent increase potential is not as limited as Loblaw's Choice Properties REIT which has to wait five years before raising rents (a negative in a rising interest rate environment). Beyond that, I like Artis REIT, H&R REIT (a bit more of a complicated capital structure, though - ironically, Bay Street consensus likes them for their office properties - I like them for their acquired Primaris retail properties as I think they'll do better at running them than everyone thinks and the stock price pullback is attractive), American Hotel Income Properties REIT, Pure Industrial REIT and maybe a RioCan REIT and an Allied Properties REIT because they're so big and so well managed. I liked Killam Properties until they recently sold substantially all of their mobile home parks in eastern Canada, which was my favourite part of their business.
On the stock side, I like Fortis, but with rising rates and a regulated environment, should I wait for a pullback or maybe buy their bonds/debentures/preferreds instead? I thought about TransAlta, but like Capital Power Corp. better, but I worry. Are they at high risk of becoming the next Atlantic Power?
I've been looking at the reinsurer market actually. Do you own any? And, are they inherently a better long-term performer, generally speaking, than a regular insurance underwriter? Two names that particularly stand out to me are SwissRe (the world's second largest) and Reinsurance Group of America (top 5th or 6th, I believe), though I also looked at RenaissanceRe and Third Point Re, both Bermuda-based but listed in New York. I stumbled upon Third Point Re somewhat by accident recently then realized that's the reinsurer whose "float" (the premiums collected from the insurance companies) is managed by hedge fund manager Dan Loeb. I don't know enough about them, would have to do my "homework" a bit more. That said, any idea why Zurich Financial Group's ADRs are trading so cheaply right now, nothing seems to be wrong with one of the world's largest insurers as revenues are growing but the stock is yielding 6%. They have nearly $500b in assets under management.
On the bond side, SD2013 has quoted Hydro Quebec bonds here a few times. They look appealing, so long as they're not 15- or 30-year bonds. However, one has to realize these are not government bonds and are not guaranteed by any government. Granted, the default risk is low, and even if they did default, the government may backstop them by issuing them new bonds at lower rates and paying out the existing bondholders but I think, even then, they'd have to force existing bondholders to take a bit of a haircut at only buy out at the bonds at a discount to their "par value" (they can do this, with court approval, whether as part of a creditor protection proceeding or as a normal course of business recapitalization).
Cheers,
Doug
9:05 pm
July 31, 2013
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Removed by admin: Post was unhelpful and contained a personal attack.
9:20 pm
February 22, 2013
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Doug:
After doing my net worth calculation and then dividing the number by 30 (67 today + 30 = 97 at death) I get a number that is high enough when added to my our CPP and OAS payouts that I don't bother going any further.
When I was managing my Dad's money I had a giant spreadsheet that used the past 18 months income and expenses and then projected them forward using a smaller factor for income inflation and a larger one for expenses. I had all sorts of scenarios in the sheet and pushed the sheet out to the right edge of the screen where his age became 114. At his then current age of about 80 he quietly suggested he doubted he would last till 114. I told him that was just the right edge of the screen but that even at 114 he should not run out of money.
I tried to keep the sheet current and one day realized my inflation factors and various scenarios quickly fell apart after about 5 years. So I did the next best thing. I suggested to him that if he put all his money under the mattress and just took out an amount equal to what he was currently spending he would not run out of money till he was something like 97. That did not account for income from investments.
He died at 93 (and was pissed as he wanted to get to 100) and left his children a decent and well appreciated inheritance.
I've decided I am not going to drive myself crazy with "will it last" as I THINK it will and my calculations make too many assumptions as one goes out more than a few years.
Greg
10:03 pm
February 22, 2013
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Doug:
Stocks - I learned a long time ago I cannot pick stocks. One day a long time ago when I had a spare $10000 I decided to invest in bank stocks. I forget which I chose but picked two of the big five based on their then current price of close to $50 per share, meaning I was able to buy 100 shares of two of the big five banks. Over the next two years those two were the banks that performed most poorly of the big five.
I've bought more than my share of stocks that should have done well and didn't. So, now I only buy ETFs, specifically CDZ, XIN, XIU, XSP. I also do own a good chunk of BCE and regularly hold my breath on that one. I am currently working to make sure my CDZ and XIU don't have too many common stocks.
On the US side I also own FDX (Fedex), SKT (Tanger Factory Outlets) and V (Visa). Each of those were the result of discussions with Mrs GS on trips home from the US where we were talking and she said, "why don't we own some of that?". They represent less than 5% of the total and have been doing quite nicely. My ROI% on FDX is 41%, SKT is 32% and V is 158%.
My bond holdings are in individual strip bonds, each one or set maturing over a year year period and their value is about 4% of the total. I just keep buying 7 -8 years out on those but am going to have to increase my 4% likely to 6% to keep the ladder to only 7-8 years. I own Nova Scotia, Quebec and Ontario government and Hydro strips as well as TD Bank, Molson Coors, Loblaws, BMO, Bell Canada, and now Fairfax and Transalta. I don't want any portion of my strip collection to represent more than 5% of anything, so once I have, say, 5% of, say, Molson Coors, it doesn't matter if there is more out there to buy that is paying a better return than anything else. I simply shy away from it. (I have yet another spreadsheet that tracks maturity dates, issuer type (Corp or Prov), ratings and finally maturity dates.)
As well I did buy some bond ETFs, specifically, CLF, XBB, ACM and ZLC. I rolled RQF, RQG and RQH into the mix when rates started going south but recently liquidated the RQF and will likely liquidate RQG and RQH and buy more strips after I get the asset allocation finished.
I also own one mutual fund CIB519 for Emerging markets. It is now of a size where I might sell it and buy an ETF that matches the investment objectrive.
I also hold cash in RBF2010 and the High Interest Savings Accounts we all know and love.
My first mutual fund was Bernie Cornfeld's IOS which I bought in 1966 at the tender age of 19. Riding that through a number of iterations taught me I knew nothing about what I was doing.
Greg
2:45 pm
February 22, 2013
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SD2013 said
Peter, from Admin, who is responsible for pointing out there is incorrect information on this particular topic in this forum?
I made a general statement so other people would do their own research to confirm what is being stated and to make sure they are not being misinformed.
Your help will be much appreciated on this very important matter.
Thanks, from SD2013.
SD:
Seeing as how Doug and I are the authors of about 80% of the posts in this thread why not make a simple statement along the lines of:
"I do not think xxxx is correct." or "You have said xxxx but the website at this link says yyyy which seems to differ."
I know I do not know everything and also know I have mis-spoken/typed more than once. I don't want to lead anyone down any garden paths and welcome constructive direction as to incorrect information.
Having said that, if I offered an opinion and it differs from the opinions of others then I am more than happy to defend my position, taking into account we all have different investment needs and timelines and risk profiles.
GS
5:11 pm
May 15, 2007
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SD2013 said
Peter, from Admin, who is responsible for pointing out there is incorrect information on this particular topic in this forum?
I made a general statement so other people would do their own research to confirm what is being stated and to make sure they are not being misinformed.
Your help will be much appreciated on this very important matter.
Thanks, from SD2013.
Hi SD2013,
We rely on the community (that is, anybody who reads anything on this site) to point out incorrect information. However, if you know that something is incorrect, please point out specifically what is incorrect.
12:46 pm
December 12, 2009
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SD2013: I'd prefer that you link to any relevant posts I made, rather than pointing out my apparent factual "faux pas" in a thread on Estates and Powers of Attorneys).
I'll state that I never said Hydro Quebec bonds weren't government bonds.
If I said they weren't guaranteed, I never meant to say they weren't guaranteed. Let me clarify: the fact is, I'm not certain to what level they would be guaranteed in the event of default. The Canadian government guarantees Canadians savings up to $100,000 per unique depositor through CDIC and by providing a "back-up" guarantee in the extremely unlikely event all of Canada's banks were to fail in unison and CDIC could not backstop that guarantee with its collected premiums. It also guarantees Canadians mortgages, to a maximum of 100% of the 95% LTV of a mortgage insured through CMHC (five percent down payment on a home is required, hence the 95% LTV), but also by guaranteeing (up to 75% of the 95% LTV) of mortgages insured through Genworth MIC Canada and Canada Guaranty Corporation (private corporations). As well, even if your mortgage isn't subject to mortgage default insurance whereby you've paid a premium at the outset, mortgage companies that participate in the Canada Housing Bond and other CMHC securitization programs, can, through "bulk portfolio insurance," pay the CMHC premiums themselves (at no direct cost to the consumer) and those mortgages become backstopped/guaranteed by the Canadian government. One could easily make the case, therefore, that since CMHC/Genworth/Canada Guarantee mortgages are guaranteed, to varying levels, that in terms of what investment carries less risk to an investor, I'd rather be invested in securities that invest in CMHC securitization programme mortgages since at least I'd feel confident knowing that, in the event of a total housing market collapse, the bonds I'm invested in would get anywhere from 75% to 100% of their money back either from the mortgage insurer, CMHC or the Canadian government (if one failed, the next level up provides the guarantee). This is evidenced by the fact that so-called CMHC/Genworth/Canada Guarantee-insured "mortgage bonds" carry a lower coupon rate than Hydro Quebec bonds. Obviously the market puts a much higher "risk premium" on Hydro Quebec's bonds versus the Canada Mortgage Bond program. Get my meaning? My point being: you cannot say "x" is a bond of a provincial Crown corporation guaranteed by the province that owns that Crown corporation therefore it is safer than the highest investment-grade corporation. That's simply not the case. You have to look at the credit ratings of that provincial Crown corporations bonds in relation to other similar corporations. If Hydro Quebec were to fail, it's true the government of Quebec (or likely the Canadian government, since the government of Quebec is in no financial shape to bail out Hydro Quebec), may provide some backstop but, you can bet, if a large publicly-traded energy corporation like Exxon Mobil were to default on its debts, the government would step in, just as they did in 2008, so effectively, if that's what you classify as a "guarantee" (I call it a "backstop"), then one could state that any multinational corporation's AAA rated investment grade corporate bonds are "guaranteed" (they aren't but, would they be backstopped, yes). If you can show me, in writing, on the government of Quebec's and's Hydro Quebec's website that either of them hold sufficient capital to fully repay all shareholders (since, in this case, the province of Quebec is sole shareholder and would not themselves rank behind the bondholders for repayment and proceeds of asset sales, as would normally be the case in a normal bankruptcy) and bondholders and that bondholders would receive 100% of the par value (excluding future coupon payments, since those are never guaranteed) of all series of outstanding Hydro Quebec bonds, I may look at revising my statement further. Until then, I stand by my clarification that they (or the government of Canada) would likely "step in" to "backstop" Hydro Quebec bonds, but not without demanding bondholders take even a small "haircut" in the par value of their bonds, just as any other bondholder in a bankruptcy would, in order to prevent a financial markets catastrophe.
As for me saying whether Italy has defaulted on its bonds, if they didn't, they sure came close. I'd argue it was, at a minimum, a technical default (i.e., a missed or delayed coupon payment) but not a total default (i.e., a bankruptcy that resulted in a loss of a bond's par value). I should point out, the U.S. government had a technical default on its U.S. treasury bonds in the 1970s. And, by delaying some coupon repayments in the fall of 2013, I would argue that's classified as a technical default as well. Their bonds are also rated AA+, I believe, by S&P and Fitch Ratings, one notch below the ratings of several major multinational conglomerates. (Microsoft, Johnson & Johnson, Automatic Data Processing and Exxon Mobil are the only corporations in the U.S. to rate higher than the U.S. government - AAA versus AA+, according to this About.com article. I'm not suggesting the U.S. government is near a total default on its bonds anytime soon, but if they aren't able to substantially boost GDP [and hence, their tax revenues), drastically cut expenditures or a combination of all three soon, I'm reasonably confident in saying that within the next 50 to 75 years [perhaps sooner], the U.S. government will be completely "maxed out" and won't be able to borrow further to repay its bills, resulting in a total default. This could happen sooner if the, among a number of factors, holders of U.S. government debt [i.e., the foreign central banks and governments] decide to "bite the bullet" [because it would make them less attractive as an exporter] and let the value of their currencies rise by selling that debt and converting it back to their local currencies or if they were stop showing up at a future U.S. treasury bond auction, the result of which would cause an imminent U.S. default on its debt. That's actually the scarier scenario to me. The former may simply stagnate economic growth and cause slowing or even negative GDP growth; the latter would make Lehman Brothers look like a small "mom & pop" business going out of business in an orderly bankruptcy filing.)
That said, because you've posted in this thread, I'm under no obligation to go into these unlinked threads and edit each of those posts. This clarification will have to suffice.
Hope that clarifies,
Doug
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