Prime Minister Stephen Harper’s bus convoy pulls in for an afternoon rally at a Kitchener, Ont., Conservative candidate’s storefront headquarters. It’s in a strip mall anchored by the winning combination of Stop ‘n’ Cash cheque cashing and The Bettor Club off-track betting.

The idea of grabbing some quick cash while one can and playing a hunch has a certain appeal. Financial wire service reporters climb off the media bus talking agitatedly, their BlackBerries vibrating with the news that the Canadian dollar is plummeting, the TSX again digging itself a new basement.

Just this morning the Prime Minister was assuring journalists that the federal government’s decision to buy $25 billion worth of mortgages from the banks isn’t a bail-out, or even a lifeline, it’s a “market transaction that will cost the government nothing.”

Over at the Bettor Club they also like a risk-free sure thing.

I watch a young mom with a toddler stroll into Stop ‘n’ Cash. They look like they’re enjoying the unseasonably hot and sunny October weather, dressed like it’s July, unencumbered by bulletins from the markets. Maybe the misery won’t trickle down to them. Here’s hoping.

There’s a loud CAW protest going on at the curb. Stereo speakers set up outside the Tory riding office blare new country, then switch, as the PM’s big blue bus pulls up, to Harper’s theme song, Collective Soul’s “Better Now”: “Break the news out/ I’ve got to get out/Whoa, I’m feeling better…”

Harper shakes hands on his short walk from the bus to the campaign office’s side door. I can’t bring myself to follow him in, so I listen outside as his stump speech replaces the power pop on the sound system. “Friends, make no mistake, this is a close election…” He says Stéphane Dion is “telling everybody there’s going to be a recession, and then he tells everybody he doesn’t have any plan to deal with it.”

Beside the door of the claustrophobic, windowless room where Harper delivers his speech, a gray-haired, well-spoken man tells me he’s voting Conservative because the Liberals are led by one academic, Dion, who has never met a payroll, with Michael Ignatieff, another impractical university type, waiting in the wings. The man says he’s worried about his pension fund holding up as the markets tank.

Then it’s time for the Prime Minister to leave, and they crank up Collective Soul again. I take in some of the lyrics for the first time, and given what’s in the air, they don’t sound all that convincing. “The world’s done shakin’,” goes the refrain. “The world’s done shakin’ me down.”



  1. The world’s done shakin’. It was shakin’, but now it’s done. It’s in the passé hillbilly.

  2. Looks like May might be able to be able to declare victory. The dollar will be hovering above 80 cents on election day. What a ride!

  3. What I want to know and can’t find anyone to tell me is which bank got bailed out.

    Are we talking about $25B for ONE bank, TWO banks or more?

  4. John, CBC just had a blurb on with him giving this day’s stump speech and he seemed OK. Is there any indication of him tiring (more than normal) as the day goes on ?

  5. Are we talking about $25B for ONE bank, TWO banks or more?

    No bank got bailed out. The government bought healthy long-term mortgages off the banks in exchange for short term capital.

  6. Way to answer the question, Darren.

  7. Darren, I don’t understand. The Bank of Canada put some-odd number of billions on the table earlier this week, which I gathered was to cure the cash-flow problem. I don’t pretend to actually understand this, but I had assumed that a chartered bank would put up some security for this money (like, say, a healthy long-term mortgage), then use the money to make another healthy long-term mortgage or loan, so that in the end it wasn’t costing us (the taxpayers) whatever the number of billions this was.

    Then the Bank of Canada reduced the interest rate it charged the banks by 50 basis points (whatever they are). The chartered banks kindly kept half of this for themselves, lowering mortgage and loan rates by 25 basis points. Presumably so that those in need of a mortgage or loan could afford the interest rates charged. . . uh, sort of.

    And now you say that the Government bought 25 billion worth of healthy, long-term mortgages. Wouldn’t that cut down on the security the banks have to offer on the “cash flow” money available? Or do the banks not need to provide security to the Bank of Canada?

    Please help me understand. Direction to other websites, articles, anything?

  8. Stop me if you’ve heard this one before:

    A man in Calgary walks away from his mortgage because the value of his house dropped dramatically at the same time he had to renegotiate a mortgage with interests rates up around 12.5% and since he only paid a 5% down payment, his equity, even after 5 years, is gone. So the man says to CMHC, here you take it, I can’t pay for this, and CMHC goes, “like that’s so late 80’s, dude.”

  9. Darren, I don’t understand. The Bank of Canada put…

    The Bank of Canada injected money into the overnight lending system. Usually banks move money between themselves, as well as borrow from the BoC, overnight to square accounts. With banks unwilling to part with their capital overnight, the BoC made more money available in the overnight market.

    The banks do not have to provide security on the $25B of healthy mortgages bought by the Government, because those are already secured/insured by CMHC.

    Because the banks will receive short-term capital through the $25B, AND they can move capital in the overnight markets thanks to the BoC injection, now they are able to institute something closer to the half point rate cut the BoC provided earlier this week.

    At least that’s how I see it all working. ;)

  10. Thanks for the info Darren, too bad the press guys can’t explain it in simple terms like you do. Looks like Harper had a plan afterall.


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