Stephen Rees's blog

Thoughts about the relationships between transport and the urban area it serves

Flaherty, bank chiefs square off on lending

with one comment

So is there a credit crunch? I must admit after reading this Globe and Mail RoB story I am not at all sure. It is also clear that other governments think there is – and blame the banks – this story quotes Nicolas Sarkozy, and the Guardian has a similar story from the UK. There the banks say they are lending more – but there are fewer of them now, so the total amount of lending is down.

Here we have not seen the big shake out of lenders that has hit London and New York. And according to the Bank of Montreal’s analyst “Canadian banks are still granting credit at a very fast rate, one that could even be called irresponsible given the state of the global economy”. Becuase that is the heart of the issue. If credit worthy people and businesses cannot get credit there is a crunch. But creditworthiness is now very much in question. Many asssets – such as property, stocks and shares – are now worth quite a bit less than they were just a few months ago.  So there is less security in lending against this type of colateral. With everybody spending less, loans to finance ventures that depend on rising sales also look much more risky.

Even the availability of future revenue streams that do not depend on sales – such as the ability of governments to tax their citizens – look more dubious in a recession – or is it really a depression? If I worked for a bank as an analyst and Translink came knocking for a loan based on their prospects of a new revenue stream – so far undefined but possibly a new version of the vehicle levy – I would not be very postive in my assessment of their prospects.

So the question of the viability of possible future  P3 partnerships for all sorts of government projects including transportation infrastructure of all kinds seems to be far from resolved.

Written by Stephen Rees

January 3, 2009 at 11:42 am

Posted in Transportation

One Response

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  1. Hello Stephen
    I have watching the so called credit problems.
    Historically they are based on racism toward the black population of the U.S. From there early beginnings of the white plantation owners whipping the blacks and raping there women, the prejudice march on both sides came to a grinding halt with the Obama campaign. To this date no civil liberty laws have changes the minds of those in power having a black man in charge of the Treasury. It will be different now. Clearly the vote showed the Mason Dixon line free slave and slave states still carry the mentality. The big three tried to get free money in Bushs last days, betting now the economy goes into the heavy populated southern black states. The new york Stock market showed the trends of the white owners not trusing the black president by pulling there money off the market. Now they have to trust Obama or cause a recession and blame it on him. This trying to get him out of power through necessity.
    By the way Smith and Wesson the famous hand gun maker said sales were up 88% as the popularity of Obama rose. This is how the Civil War started in underground cells first and then it was Ft. Sumter.
    If the racism holds like it is, were in trouble financially and in peril for our lives. A powerful nation sits south of us. And free trade may start costing us. Hint Hint

    Bryan Vogler

    January 3, 2009 at 6:38 pm

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