22 December 2008

HarperCo clinches deal to free up short-term debt

Anyone notice this?

Intense last-minute talks between Ottawa and major foreign banks have yielded a deal that is expected to end a 16-month crisis and head off losses of as much as $25-billion for Canadian investors.

Sources said the federal government and the banks, which include Deutsche Bank AG and Merrill Lynch & Co., reached a weekend agreement that should mean the end of the asset-backed commercial paper (ABCP) meltdown that has locked up $32-billion of money belonging to investors big and small since August, 2007.

The deal, which comes after Ottawa and three provincial governments agreed to provide about $3.5-billion in credit lines, means that investors should get access to their money in January, barring any last-minute complications.

That would be a huge relief for investors ranging from pension fund Caisse de dépôt et placement du Québec, which is stuck with about $13-billion of the debt, to individual Canadians who had sunk their life savings into the investments because they were touted as a safe alternative to government bonds.

Am no economist, but isn't this just another bailout? The timing of the announcement just strikes me as suspicious.

From the point of view of someone having to find evermore creative ways to live on $8,000 - an income which has remained the same for the past eight years, has no cost of living allowance attached to it and of which 70 percent is consumed for rent - I do wonder about all these bailouts.

And I do wonder how so many pro-market capitalists think it justified to apply "socialist" economics to extricate themselves from the results of their own greed. Apparently, market capitalism is fine for the wealthy, except when it isn't. The poor in either case be damned.

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