Td Canadian Money Market

Everyone thinks they are immune to the current financial crisis.

Nobody thinks they are doomed.

I am talking about Canadians, of course.

See, recently I read a lot about the superiority of the Canadian banking system. And of course, my contrarian instincts prompted to seek a way for you to make money that Canadian banks are down.

Over the past 18 months, my readers had the chance to 432% when Lehman failed, when 162% Allied Capital has come clean, and 220% for PNC Financial ... This month they are ready to make money on the bank next fall.

And I'll give you a chance to join them.

If you think that Canada escaped the downward trend in the banking sector in the U.S., think again. While the country may not have plunged headlong into subprime mortgages, it does not dip sharply in the derivatives risk. The leverage he had to have generated impressive returns on equity in good times, but even that influence is clear equity today.

Shareholders in a "security" of the Bank of Canada should rethink their loyalty. His impending solvency crisis virtually guarantees a reduction in the dividend. And it is our role as a catalyst for action this month's short play - gives us the potential for gain of 200%.

Accounting secrets have not yet erased the profits of domestic banks - like those of U.S. banks - because Canadians have not yet recognized the coming tsunami of mortgage, consumer loans, and loan losses companies.

Here's how they loaded the books ready with a hidden risk.

The basic accounting Bank

Bank shareholders leverage their capital by borrowing short term, mainly depositors. Your bank account is an asset to you, but it is a liability to your bank. For each dollar of capital, shareholders of the banks borrow 15, 20 or even $ 30 per senior creditors - meaning they could not afford to own their substantial portfolio of loans and securities. Here is the heart of the problem: the shareholders of the Bank and their agents (managers of banks) lend money to others. Thus, bankers are more loose with loans that they were lending their own savings.

The accounting process for determining the profits of commercial banks is inherently speculative, too. Banks book profits ahead of any new loans they make, minus a small allowance for loan losses - just in case some loans go bad wound. These initial benefits are in the habit of disappearing when the loans "season", and banks to discover how bad debtors owe money. In case you're wondering what that has erased most of the S & P 500 trailing earnings, here's your answer: the banks and brokers to reverse much of the profits they booked on loans and securities bought at the peak of the bubble.

The banks claimed to make good lending money to each borrower. But someone has lied, since they take the charges against these loans and securities more vintage left and right. And the provision for loan losses industrywide, which is the largest cost - and unpredictable - the return of the bank, has been soaring. Once these costs have climbed back on the provision of delinquent loans, the profit of the banking sector plunged deep into negative territory.

Add a few more explosive ingredients, such as deposit insurance, for central bank loans, syndicated loans, securitization, and we're left with a system for which the volume of sales - not risk management - is the top priority 1.

Those who claim the banking system is well capitalized - including those who designed the de-stressing stress test "- hold assumptions pink on the number of loans go bad and how much banks earn from existing loans to have a chance of outrunning their losses credit.

Many of bank stocks remain in a fragile state. This month.