Macbraughton

Shares of Manulife Financial Corp. erased 6.22 per cent, or $2.24, to $33.76 after it disclosed more than $800 million (U.S.) in total exposure to troubled Lehman Brothers Holdings Inc., AIG and Washington Mutual Inc. Canada’s largest insurance company made that revelation late yesterday, adding it would take an unspecified third-quarter charge with respect to some of those holdings.

Link to the original article here.

This is only the tip of the iceberg for the spillover effects of the U.S. economy on Canada, I’m afraid.  I’ve been talking to a lot people about the financial problems south of the border over the last year and most of them have thought that Canada was immune.  The banks here were’nt giving out subprime mortgage loans (though the recently stopped practice of giving a 45-year loan with no downpayment I would argue is pretty much the same thing).  So everything was okay, right?  Wrong, because although Canadian banks weren’t giving the subprime loans, they were heavily invested in American companies that did.

It still amazes me, that the citizens of the biggest trading partner of the U.S. can think they’re not going to not be negatively effected by the economic problems down south.  Though there seems to be a bit of a delay here, the tide is coming in nonetheless.  The next dominoe to fall?  I’m betting (and I must admit hoping) on the Toronto housing market.  The “strong financial sector” here was supposedly the reason that housing prices had gone down across the country everywhere but here.  The out of control speculators here now have nothing left to prop up the overinflated housing prices.  It is going to be an interesting winter.

Tags: canada, Economics, economy, money, slowdown, toronto, trade, trading partners, USA

Categories: Economics, News

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