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How the Harper government pushed financial deregulation here and abroad

Way cleared for US mortgage firms and easy credit, insured by Canadian taxpayers.

Stephen Harper and Jim Flahertyby Ellen Gould, TheTyee.ca

Listen to Stephen Harper and you might think Canada plays to our national stereotype when it comes to the world of finance. We might be boring but at least we don't stand for the risky policies adopted by our American cousins.

In response to a pessimistic Merrill Lynch report on Canada's housing market, for example, Harper said "We don't have the same situation here with the mortgages as was the case in the US with the subprime mortgages there. So, therefore, I think that our market is in a much stronger position."

There are differences in the Canadian and US housing markets, differences that can generate sharply contrasting points of view on whether Canada will experience a housing meltdown comparable to the one in the US.

The thing is, the Harper government is responsible for pushing the envelope on deregulation both domestically and internationally despite cautionary events in the U.S. clearly indicating what could go wrong.

Promoting mortgage 'innovation'

In his first budget as Harper's finance minister, Jim Flaherty invited "new players" — that is, US financial corporations into Canada's mortgage insurance market and doubled the amount of government money available to back up private insurers from $100 billion to $200 billion. Flaherty's 2006 budget states that "These changes will result in greater choice and innovation in the market for mortgage insurance, benefiting consumers and promoting home ownership."

New York Times columnist Paul Krugman has observed that "financial innovation" are two words that should henceforth strike terror into the hearts of investors. . .

To read further. . .

Links and sources
  How Harper Gov't Pushed Financial Deregulation Here, Abroad, by Ellen Gould, The Tyee, October 8, 2008

Posted: October 22, 2008

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