Bank of Canada "scrambles" to "clarify" it's position....

In what appears to be a colossal public relations stumble or a huge effort at damage control we see this article in the Globe and Mail:


http://www.theglobeandmail.com/report-on-business/ottawa-clears-up-confusion-over-bank-bail-in/article10697667/

 My read of it


You know that in the absence of facts people will make up their own.

The article from the Globe and Mail is helpful in the sense that it points out the inept communications by the Finance Department. The genie is out of the bottle now and will be hard to put back.

There has been much talk about systemically important "too big to fail" banks with interwoven borrowing and lending.  This coupled with the unrestricted fractional reserve system, people are concerned about sovereign debt in places like Cyprus affecting the big banks.

Perhaps most importantly is this arcane concept of "moral hazard". I had to look it up.  There is no consequence for poor management, bad behavior or bad luck and some would prefer to call it.  After the 2008 sub prime crisis, not one prosecution.  In the US MF Global, I believe the sixth largest corporate collapse in US history did take money right out of the customers "secured" accounts.

There is fear uncertainty and doubt out there. I think most people are shaken by the current events - its even been on CBC of all places and when these things hit the main stream media, not just the blogosphere, its very hard to counteract the disquient. The entire system, after all, is based on trust - faith in the dollar so to speak.