The last segment of my letter is reproduced below, and it contains possibly some of my most relevent and topical ideas for creating a fairer, more equitable economy for all Canadians. In the wake of TARP, President Obama has been attempting to persuade the US banks (in alternating threatening and pleading tones) to start lending money to the citizens and small businesses whose generosity allowed them to continue existing. This is just one of the great unfairnesses that our system perpetuates, in Canada as well. Why is it allowed to continue? In my opinion, because we permit it. As you'll see at the end of my letter, a paltry service charge proposed by one of our banks led to such an outcry of citizen participation that they cancelled it. Impressive. But why did $35 prove so motivating, when billions of taxpayer dollars are at stake and we sit idly by?
From a Suffering Canadian Patriot - Part III
One year special tax credit for capital spending: The problem now is confidence and few are making any big decisions, unless they are forced into it. Make it too good to resist and finite in time and you will spark decision making that was put on hold out of general fear and the banks saying ‘no’. For larger projects now being mothballed, give government guarantees on deploying planned projects which should entice banks to participate. (Epilogue: Thank you Mr. Flaherty…great work on the home improvement idea. Only problem is that you are already helping trades with Infrastructure, so you might have a ‘carpenter’ shortage (see 6. Immigration))
Use it or lose it credit: up to a $1,500 credit for 2009 only, which in effect acts as a 15% savings card to be spent anywhere other than staples. (Epilogue: Mr. Flaherty…I think that this one is broader and does not get you into supply constraints, but I think we can all live with the above…your idea is also cheaper than mine!)
Low Income housing sales: Margaret Thatcher realized that selling government housing to the residents at prices the occupants could carry, was the way to go. George Bush thought he was doing a Thatcheresque thing when he let everyone own a home (whether they could afford to or not, and now we are all paying for it!)…I am certain that history will be much kinder to her than to him. She let people feel the pride of AFFORDABLE home ownership and with that pride came a huge bonus; with the pride of home ownership came less abuse and damage to property. Go figure - people respected their homes more when they were their homes.
This would have the added advantage of eliminating the burden to the cities of paying to maintain dumps and actually improve neighbourhoods. As an add on to this, coop housing developed by the future owners with financial assistance (and expertise) provided by the government, on surplus government lands and on 99 year land leases is an inexpensive way of providing low income housing that is not a future drain on city coffers-they must be eco friendly of course.
Exploration Credits: One time super credits (better than current flow through which is quite good, but not enough for today) for exploration and working capital purchases for miners. The Junior Miners have no access to capital and have been worst hit by the equity market, making them easy prey for the ‘big boys’, many of whom are not Canadian. We will see our resources plundered by off shore interests if we do not block this tidal wave. This will activate cash, help us find more resources (to put into point 3.), be spent almost entirely in Canada and help rural communities.
Small business threshold increased to $1Million: This is the life blood of our economy. These are the people that will put Canadians back to work, keep local economies buoyant and help us flourish. Bigger companies can pick up and leave at the drop of a hat…the little guys isn’t going anywhere! (Epilogue: The Small Business Loan (SBL) is based on this but it is a scam (not intentional on behalf of the government). The banks lend to people if guaranteed by the government, the businesses are generally undercapitalized (working capital is not financeable) and a large percentage end in failure, because they are doomed from the start. The banks take the set up fees, take interest for a few years and at the first sign of trouble pull the pin and ask the government for their money back).
Nationalize the banks: I alluded to the key to the current turmoil in my introduction. I toyed with the idea of setting this out first or last and opted for the latter. This may sound like heresy or lunacy but I assure you that it is well thought out. The banks are trying to tell us that they are still lending but, at the end of the day, all their capital reserves justify the lending of more money and still remaining within the Basel accords. All the plans that are being tossed about by government are centered around trying to incentivize the banks to hopefully, “pretty please” lend. These are private Corporations that do what is in the best interests of the corporation and their shareholders and we must realize that unless we make it their responsibility, they have no obligation to our population.
Do you really think that they would rather lend to small businesses or overburdened households that they are, in effect , helping destroy, rather than stockpile funds to be able to buy pieces of AIG at cents on the dollar (read BMO). The fact is that they are hoarding cash and there can only be two reasons for that: 1) they know of troubled assets buried deep on their books (or off their books-Credit Default Swaps) and are staving off certain death. In this instance we will be forced to nationalize them in any event, so why put off the inevitable. 2) (Far more likely) They are hoarding to be able to buy troubled assets at deep deep discounts at the expense of the Canadian people.
President Obama said “I will stretch out my hand in friendship but if it is met with a clenched fist….” or something like that. If our banks take on the alternative, which is to begin lending ASAP, (they don’t get to measure…we the people do) then we can assist them by touting our status as the greatest banking system in the world around the globe.
We could assist the banks in securing large foreign depositors (in exchange for minimum thresholds which must be reinvested in Canadian businesses or industry-further stimulus). This would still position them to take advantage of the great deals they are waiting for while keeping our economy sound. Remember the “carrot” and “stick” discipline that your parents invoked. Finish your homework and you will get an ice cream…don’t and you are grounded for a week. Mr. Banker’s; Lend and we will help you…don’t and there won’t be a corporation.
(Epilogue: Every Canadian should read and understand page 16 of the budget. Our government is essentially giving the countries financial resources up to the banks in hopes that they start up the economic engine, again with ZERO guarantees. At least the Americans are taking ownership in exchange. Nevertheless we are miles ahead of the Americans in staving off further degradation of our system because of the CMHC structure but there will be a substantial cost.)
When we pay for all this we should make a real push to self finance as a nation so that no one pulls the pin on Canada. If we take on foreign debt, we oblige ourselves to others who can then dictate terms to us. I hope that the demand for Government of Canada Bonds swells!
In conclusion, it is the duty of every Canadian to help provide an environment where true change is possible and where a Leader can rise and flourish. Educate yourselves, ask questions, write your members of federal or provincial parliament, attend city hall, push back on your banks, engage in debate with your family and friends, understand what the press is really saying, question what you hear and insist on productive action for today and tomorrow. Let’s all win, as one, while helping this one suffering Canadian patriot put an end to his misery.
(Epilogue: TD Bank recently pulled back on a plan to charge $35 and increase interest rates on unsecured lines of credit. They repealed this because of the outcry by their patrons. When the people speak the powers that be must listen! Few understood that they were trying to get people to cancel their lines so that they could reduce their exposure and get to claim that it was our fault that we cancelled. Most people called about the $35…If you are willing to pick up the phone over $35 then I hope that we are all willing to pick up the phone over the future of this great nation.)
Jason Evdoxiadis
Toronto, Ontario, Canada
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