More Confirmation of U.S. Banana Republic Status

Nothing personal to all those Barbadians, Estonians and Namibians among my readership, but when the world's "sole superpower" has a banking system that is ranked behind those nations -- and 36 others -- in terms of "soundness," there is something seriously wrong with this picture. Reuters provides the gory details in "Canada Rated World's Soundest Bank System: Survey."

Canada has the world's soundest banking system, closely followed by Sweden, Luxembourg and Australia, a survey by the World Economic Forum has found as financial crisis and bank failures shake world markets.

But Britain, which once ranked in the top five, has slipped to 44th place behind El Salvador and Peru, after a 50 billion pound ($86.5 billion) pledge this week by the government to bolster bank balance sheets.

The United States, where some of Wall Street's biggest financial names have collapsed in recent weeks, rated only 40, just behind Germany at 39, and smaller states such as Barbados, Estonia and even Namibia, in southern Africa.

The United States was on Thursday considering buying a slice of debt-laden banks to inject trust back into lending between financial institutions now too wary of one another to lend.

The World Economic Forum's Global Competitiveness Report based its findings on opinions of executives, and handed banks a score between 1.0 (insolvent and possibly requiring a government bailout) and 7.0 (healthy, with sound balance sheets).

Canadian banks received 6.8, just ahead of Sweden (6.7), Luxembourg (6.7), Australia (6.7) and Denmark (6.7).

UK banks collectively scored 6.0, narrowly behind the United States, Germany and Botswana, all with 6.1. France, in 19th place, scored 6.5 for soundness, while Switzerland's banking system scored the same in 16th place, as did Singapore (13th).

The ranking index was released as central banks in Europe, the United States, China, Canada, Sweden and Switzerland slashed interest rates in a bid to end to panic selling on markets and restore trust in the shaken banking system.

The Netherlands (6.7), Belgium (6.6), New Zealand (6.6), Malta (6.6) rounded out the WEF's banking top 10 with Ireland, whose government unilaterally pledged last week to guarantee personal and corporate deposits at its six major banks.

Also scoring well were Chile (6.5, 18th) and Spain, South Africa, Norway, Hong Kong and Finland all ending up in the top 20.

At the bottom of the list was Algeria in 134th place, with its banks scoring 3.9 to be just below Libya (4.0), Lesotho (4.1), the Kyrgyz Republic (4.1) and both Argentina and East Timor (4.2).

RANKINGS

1. Canada

2. Sweden

3. Luxembourg

4. Australia

5. Denmark

6. Netherlands

7. Belgium

8. New Zealand

9. Ireland

10. Malta 11. Hong Kong

12. Finland

13. Singapore

14. Norway

15. South Africa

16. Switzerland

17. Namibia

18. Chile

19. France

20. Spain

--------------------------------------------

124. Kazakhstan

125. Cambodia

126. Burundi

127. Chad

128. Ethiopia

129. Argentina

130. East Timor

131. Kyrgyz Republic

132. Lesotho

133. Libya

134. Algeria

SOURCE: World Economic Forum Global Competitiveness Report 2008-2009.

(For the full World Economic Forum report click on: here )

Comments

[Omitted Kingdom]

George W Bush and dimwit US Labor Secretary Elaine Chao have rarely met their monthly jobs creation target in 8 years. It takes 100K-130K new jobs created per month just to absorb new graduates into the US work force. If your job has gone offshore, it's not coming back, and it's not being replaced. Republicans don't care, as long as they haven't raised taxes on CEOs. You're on your own.

Put your bills on Elaine Chao's desk. Bury her desk. When she leaves office send your bills to her via her husband, Mitch McConnell R-Ky who is up for re-election this year. Let her walk the same side of the street as your family. Notice that the Bush Tax Cuts don't work to create jobs. The labor pool available in India and China are too large.

[Martin]

I was glad to see the Netherlands at number 6. Over here, the crisis has suddenly spread from dealing rooms to the office coffee machine, now that We the People have become the proud owners of the Dutch part of Fortis -incidentally, they're still trying to find out what was included in the sale, and what is left in the Fortis holding coompany- and now that Icesave, also active in the Netherlands, has crashed. I guess I'd better stock up on those pieces of paper with bridges on them, copyrighted by the ECB. And stock up on canned foods.

[Tom I]

The report is right - Canada does have the 'soundest' banks and banking system. Despite extreme closeness to the US financial sector Canadian banks have been only very mildly hurt (total writedowns $13 billion) by loss of US mortgage related investments. Even more amazingly, Canadian banks are steady as a massive rock anchored into the mantle in the face of massive waves of financial tsunami hitting the global banking world hard. Confidence remains superbly high, and will be higher because if Canadian banks can withstand such a once-in-a-century hit looking pretty, they can take anything. As well, there is no mortgage problems of any significance, and a small housing bubble confined to the spots around the city of Calgary due to oil related economics (this bubble is now pretty much deflated). It is a model worth studying. At the government level financials are very sound, best in G7.

[Tim]

Its amazing. We destroy banking systems at the far reaches of the globe and there's still one standing on our doorstep. How did we let that happen? It's shameful.

[yoyomo]

I know this is nit-picking but people from Barbados are called Bajans, in case you wanted to know.

[Robert Nabloid]

Tom, I agree on most points about the banking system in Canada. But, Calgary doesn't have a housing bubble quite like you mention. Our home prices have fallen the fastest in Canada in the last few months. All real estate prices have fallen somewhat in Calgary. They will remain high (compared to years past) due to the strength of the economy, but they will see a slight correction.

Our home prices zoomed up in the last several years because our economy was doing very well, not because the banks started lending to everyone (which is why the US housing boom began - so the US bubble was much different!!). Yes, our oil is very much responsible for this, but there was also a shortage of housing in Calgary as well last year which made the problem twice as bad (HUGE DEMAND but no supply!). With some of the highest incomes in the world (in the Edmonton-Calgary corridor) I don't consider it a bubble but instead a hot economy for which housing will naturally be more expensive. Our real estate in Calgary is starting to settle now that fewer people are moving to Calgary and there are more houses/condo's available. We still have high income levels and low unemployment. We have a bunch of new condo's coming onto the market over the next year or two and we will naturally see a bit if a price pullback - BUT I must repeat, we have no US style Housing Bubble created by wild lending practises, nor have we ever.

If anything, I'd say Vancouver is one of the only cities in Canada that has a housing bubble.

[Rick]

In Vancouver, there is housing buble only, because everybody want to live this warm weather. However, I believe, that years to come, many peole will not want to live in Vancouver, because it is getting too full. Vancouver is very poorly planned city. Vancouver City Counsel operate their city like, " Little Country Town"
There was study about year ago, that Calgary is best City in Canada. I still live in Vancouver area, but I do not want to work in anywhere in this city, because very poor traffic planning.