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Email this2:49 pm
October 21, 2013
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I don't know anything about this specific situation, but, if it was only Tangerine that was offering the high rate, then I would say it was something to do with Tangerine, not govt or BoC.
I did not encounter any such offer anywhere.
Assuming Tangerine is the root of it, then it could be a big goof which they corrected as soon as they could. Tangerine LOVES creating a buzz by offering targeted rates and rates most people can't use for one reason or another, so it's consistent with their approach to marketing. It may not have been the best idea but it did get you and presumably others to send your money over there temporarily.
3:33 pm
January 11, 2020
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Nothing escapes this web site's participants. It must be in the archived threads somewhere. It was approx in April 2020… I know as that was the date of GIC purchase. And yes a case could be made they shouldn’t allow total collapse.. but geez the little guy needs to eat too! They didn’t even let the system try… anyway enough on that. The only redeeming part of this story was after escalating the matter it was over turned. My skin was only saved as their web site was like eqbank at time which allowed you to purchase your own gic no service rep needed. But my PC or their interface was causing an issue and I engaged into an archive chat with a person that assured me the msg’s I was receiving won’t impact my purchase … when they tried to renege and told them there was a chat somewhere they made good and admitted I was left to believe all would be ok therefore contributed to my complacency.. also I jumped thru hoops pulling funds from various sources in and we all know how that goes using one company as a hub to move funds because they easily set up other institutions…
5:56 pm
April 6, 2013
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Perhaps that was the Tangerine Bank 5-year GIC's climbing to 3.2%, reported March 27, 2020 in GIC Rates Big Jump Up To The Top.
Then, its drop to 2.25% April 2, 2020 reported in Welll that didn't take long.
6:07 pm
January 11, 2020
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That’s exactly it, thanks Norman… and this site was where I would have found out about that..
8:18 pm
December 12, 2021
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Back in March 2020 Bank regulator OSFI cut the stability buffer for big banks to one per cent from 2.5 per cent, the lower level would give Canada's big banks the ability to absorb potential losses and continue to provide loans. I believed it was restore to 2.5 per cent earlier this year. That what i think why Tangerine and if not all and FI dropped the rate so fast overnight hence suddenly no more stability buffer and lot of cash on hand
4:27 am
March 30, 2017
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agit said
Back in March 2020 Bank regulator OSFI cut the stability buffer for big banks to one per cent from 2.5 per cent, the lower level would give Canada's big banks the ability to absorb potential losses and continue to provide loans. I believed it was restore to 2.5 per cent earlier this year. That what i think why Tangerine and if not all and FI dropped the rate so fast overnight hence suddenly no more stability buffer and lot of cash on hand
Yup plus when it’s clear the CBS around the world are coordinated to do whatever they need to support the economy, no more flight to quality and hoarding cash is needed.
9:50 am
April 6, 2013
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MattS said
… all you could get out of them was the situation has changed.. a friend whose opinion I respected mentioned that the government and BOC was flooding them with free money to artificially suppress real free market rates.. one google search at that time plenty of quotes from BOC and govt about “bloating their balance sheets” to “help”
The sudden lower interest rates being offered to me coincided with these announcements literally to the day…
Quantitative easing can do that.
If Bank of Canada wants interest rates to drop 1½% and the usual bond buyers don't co-operate, then the bank can do QE by offering to buy the bonds at the lower rate and leave the bond buyers empty handed. If the bond buyers don't want to come up empty-handed next week, then they will adjust their orders.
There's no free money. Any bonds, commercial paper, and bankers acceptances that the Bank of Canada ends up buying and on the bank's balance sheet pays the agreed interest and pays face value on maturity.
Deputy Bank of Canada Governor Paul Beaudry's December 10, 2020 speech Our quantitative easing operations: looking under the hood explains how QE works and that money was not really being printed.
He also corrects another common misunderstanding about what the Bank of Canada was doing:
There is a big difference between financing the government and influencing the cost of government financing. Through QE, the Bank of Canada is doing the latter—we are lowering the cost of borrowing for the government. But most importantly, we are lowering the cost of borrowing for everyone in the economy.
11:17 am
March 30, 2017
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Norman1 said
MattS said
… all you could get out of them was the situation has changed.. a friend whose opinion I respected mentioned that the government and BOC was flooding them with free money to artificially suppress real free market rates.. one google search at that time plenty of quotes from BOC and govt about “bloating their balance sheets” to “help”
The sudden lower interest rates being offered to me coincided with these announcements literally to the day…Quantitative easing can do that.
If Bank of Canada wants interest rates to drop 1½% and the usual bond buyers don't co-operate, then the bank can do QE by offering to buy the bonds at the lower rate and leave the bond buyers empty handed. If the bond buyers don't want to come up empty-handed next week, then they will adjust their orders.
There's no free money. Any bonds, commercial paper, and bankers acceptances that the Bank of Canada ends up buying and on the bank's balance sheet pays the agreed interest and pays face value on maturity.
Deputy Bank of Canada Governor Paul Beaudry's December 10, 2020 speech Our quantitative easing operations: looking under the hood explains how QE works and that money was not really being printed.
He also corrects another common misunderstanding about what the Bank of Canada was doing:
There is a big difference between financing the government and influencing the cost of government financing. Through QE, the Bank of Canada is doing the latter—we are lowering the cost of borrowing for the government. But most importantly, we are lowering the cost of borrowing for everyone in the economy.
The simple way the media used to explain QE is to increase money supply, thus everyone uses the phrase "printing money".
In reality, once money is printed, its in circulation "forever", while QE can be reversed by as simply as selling the bonds back out or dont replace them at maturity.
11:28 am
September 11, 2013
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Norman1 deserves major kudos for explaining QE and the bond-buying process all along, the only one to do so here, much appreciated by me for one. Too bad more financial journalists don't do the same.
12:27 pm
April 18, 2022
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I was taken aback to hear CiBc economist Benjamin Tal say at a meeting the other day that he lobbies the Bank of Canada and a BoC official remarked to him they used his figures. He followed up by saying with a chuckle it shows "nobody knows what's going to happen". At the meeting he touted housing supply theory which has been debunked by experts and Statscan. Interestingly he said to the audience "I'll tell you a secret" BoC actually wants to see more unemployed to cool off inflation.
3:38 pm
October 21, 2013
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That's not really a secret. He's just being cute. It's in the nature of the way our economy is organized, for better or worse.
1:28 pm
April 18, 2022
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Why do interest rates matter anymore western central banks still have runway to print when business complains about high rates they'll give them grants to fill the gap. Business can borrow at any rate and get forgivable loans like the autos did. Interest rates don't have to matter to homeowners send them rent subsidy cheques. Cancel their mortgages. See my point looks to me like the gov has ways to squirrel out of their liabilities by making excuses to save humanity. A better solution maybe restructure their debts in exchange for crown lands or other assets. In hindsight the sky wasn't falling in 09 we know now they had the capacity to print. Paulson's tale was a lie. BoC isn't being honest with its disclosure it takes some direction from elsewhere and one of its goals is to inflate debt away. Nobody believes they are independent.
11:32 am
March 18, 2021
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AllanB said
mechone said
Canada will do what the US does and have a higher rate or the dollar will crash.Old school thinking
In today's Globe Cibc economist Andy Grantham thinks BoC will slow hikes to rescue housing (investors). Can you believe this clown where does he think people are going to live in favelas. They hide inflation in housing while the CPI didn't weight it enough.
If they don't bring down home prices immigrants will stop coming here as minimum wage doesn't even cover rent anymore. By crashing the housing market it will also cause rents to plunge albeit with a lag period of time.
12:42 pm
March 15, 2019
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Immigrants come here for quality of life and a better life for their children. They will come even if it means living 2 or 3 families to a house.
They will make sacrifices like postponing that trip to Hawaii until next year.
1:05 pm
May 26, 2022
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COIN said
Immigrants come here for quality of life and a better life for their children. They will come even if it means living 2 or 3 families to a house.They will make sacrifices like postponing that trip to Hawaii until next year.
I remember immigrants in my Vancouver neighbourhood living 2-3 to a house when houses were < $20,000 (yes, twenty thousand). They saved up built another house moved in had more kids, rinse and repeat.
Please write your comments in the forum.