Did Carney short Canada at the top of our credit bubble?

When news broke yesterday that Bank of Canada’s Mark Carney had accepted a position as the Bank of England Governor starting in 2013, my immediate thought was that he had timed this exceptionally well.

After 13 years with Goldman Sachs where he and his colleagues orchestrated the global debt/derivatives bubble, Mr. Carney then moved to a role with the Canadian Finance Department in 2004 and the Bank of Canada in 2007, becoming its Chairman in February 2008 just as the global credit bubble was imploding.  As monetary policy figurehead, Carney then benefited from a wave of favorable press amid the 2008 financial crisis, because Canadian banks had come into the crisis more regulated and less levered than other countries.  This made them more stable and resilient in the storm. It also left them more capitalized and able to lend coming out of the recession.  Which they did in spades.

Having timed the credit bubble perfectly for his resume, Mr. Carney is once again ahead of the curve, now leaving the Bank of Canada just as the economy here is weakening into the next global downturn and domestic debt is forging record highs.  Canadian consumers are today some of the most indebted in the world, levered off of Canadian realty prices that are some of the most over-valued on the planet.

Mr. Carney takes the Bank of England helm as a White Knight when Britain’s credit and property bubbles have already burst, and the country is already mired in recession.  And since he is new to the picture there, none of this can be linked to his dovish, banker trained, add-credit-and-stir policies.  Genius indeed.

Squawk Box Europe discusses whether the appointment of ex Goldman, Mark Carney as Bank of England Governor will be a breath of fresh air or another central banker from the same school of thought. Here is a direct link.

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10 Responses to Did Carney short Canada at the top of our credit bubble?

  1. JW says:

    I thought he is the ideal candidate for the job. (I am sure lots people disagree with me.)

    1. He is not a radical.
    2. His GS relationships may work to his advantage.
    3. He is a non-British candidate which means less political baggage.
    4. He handles press well.
    5. He has a proven track record.

    It is an excellent career move for him. To sit ABOVE the big boys in the “CITY”. Besides, who could say NO to a Million $? How many people in the public section make that kind of money? He probably make more than his boss. They want him. And, they know it is a tough job. Being a Canadian, I am more concerned with whom is going to replace him. Am I going to lose my 1.25% interests on my HISA? Langley, BC

  2. michael says:

    Yes ,very smooth…… I guess for his next gig he will be cast as James Bond.

  3. michael says:

    Yes ,very smooth…… I guess for his next gig he will be cast as James Bond.

    I wonder if he will have to give up his Canadian citizenship when he applies for British citizenship as Conrad “the Black”was forced to do by that beacon of light Jean Chretien?….Right.

  4. fullup says:

    Central Banking is a fraud so blatant only an intellectual would fall for it!

  5. Mel says:

    Danielle:

    You are right. I was thinking the same thing when I heard about Mr. Carney.

    He is made from the same cloth like the rest. Under his watch, we have the same mortgage debt like the rest of the world. Perhaps, when his five years will be over in Britain, he can come back to Canada to face his own mess that he created here.

    However, we know these same people NEVER take responsibility for their mess.
    It is truly tragic for the world that we have people like him running the finance world.

    No shame!

  6. dave says:

    Danielle I was thinking the same thing, Carney is selling high here.

    Carney is a smart man but his record was helped immensely by having a country riding a commodities boom for one and a country that has always had a conservative banking policy when compared to other countries especially the USA. In addition it appears this commodity boom that has benefited Canada this past decade or so would appear to be losing steam.

    http://www2.macleans.ca/wp-content/uploads/2011/03/commodity-chart11.jpg

  7. dave says:

    Actually I think this appointment of Carney will turn out to be an approximate top in commodity prices, and the strong Canadian dollar. The commodities boom is already long in the tooth and when Carney himself tabled a report recently calling this commodities boom “a paradigm shift” (as in this time it’s different) I think this is a signal that a correction of commodities back to it’s long term moving averages is imminent.

  8. Joseph says:

    Did he not raise interest rates three times in 2010? The global financial system had recently narrowly avoided a catastrophic collapse, devastating major economies around the world, and in his profound judgement it was time to raise interest rates because Canada will ostensibly not face any further repercussions. Genius indeed.
    Well at least he was not as bad as John Crow and his anti-inflation fetish (he pioneered the “inflation targets” policy) who continued to stubbornly raise interest rates in the early 1990s despite the most severe downturn (at the time) since the Depression.
    In my opinion Carney is overrated and I think that will become apparent soon enough as he faces a real test with the terrible UK situation. Making matters even worse, the main pillar of their economy is finance, and in a post financial crisis world, that sector will likely not be able to contribute anywhere close to the same extent as in the past.

  9. Jon Evan says:

    Good riddance! Canada is awash with debt….. even Alberta !!
    “That without the support of the Bank of England’s quantitative easing programme, and its very low lending rates – all effectively backed by British taxpayers – Britain’s banks would effectively be insolvent. And so Carney will continue with quantitative easing……”
    http://www.guardian.co.uk/commentisfree/2012/nov/26/mark-carney-appointment-bank-england
    How disastrous for England!

  10. wjk says:

    Carney – the guy who dropped interest rates to nothing, then chided Canadians for taking on too much debt. Thanks a lot for the mess you are leaving behind.

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