Canada is sitting on a huge oil field if the price gets high enough to start to make the separation of the oil from the sand (shale) worth it. But that’s not all they have going for them. They are more than just natural resources. I like Canada a lot. Been there many times, especially when Vancouver was booming. Oh, if it was just a bit warmer… 😉
Global banks
Can you be a global bank with no Chinese operations? Today, yes. Tomorrow, ???. So take a shot or two at getting in. It’s a risky business but they probably think they have to try, at least the conventional wisdom says you have to try. Time will tell, as the conventional wisdom used to say you needed to be an internet business. Disney put money into Go.com and Time Warner ate the sour AOL apple. Thinking about the internet changed, quickly. China has a LONG way to go to have a market like ours, so only time will tell if now is the right time, and if Citigroup and others made the right deal.
A savings account like a bond
Think of a savings account like a bond. One loans money to a bank (essentially a bond) and they get paid interest. The interest rate reflects the risk of not getting repaid. There is no risk with a bank unless the entire country collapses, but with corporate – including junk bonds – there is risk and the interest rates reflect that. The banks are getting a free pass on paying the proper amount of interest given the risk they are taking as the government is subsidizing them with insurance. The underlying problem is that the FDIC insurance corp. doesn’t collect in premiums from banks what it should to cover the losses. Therefore it’s taxpayers that are left with the risk.
Dr. Douglas Rice 