Does Toronto really want a financial centre?

It would bring some of the worst people on earth to our city and pressure for more neocon deregulation of the financial scammers. Below, see former top banker Nomi Prins explain how they run the government.

By Frank Touby –

It may be a monstrous mistake to do as some financial “industry” power brokers are suggesting and turn Toronto into Wall Street North. There is a proposal postulated by the Boston Consulting Group, initiated by some Bay Street types, to invite some of the biggest financial villains in the world to occupy our Downtown core.

The trouble is that most of the financial sector creates nothing. No products. Nothing but paper. No industry at all.

Were it just banks, real banks, that would be okay. Banks provide legitimate, important services to businesses and consumers. What banks do is receive deposits, safeguard them, pay interest on them, then lend money out at interest to consumers and businesses to fund desired or needed purchases. That fuels economic activity and produces goods and services.

Insurance operations also can provide legitimate financial-sector services that produce real value. Based on historic data they calculate the statistical odds of an undesired event happening, like a break in or a broken arm, and charge a premium to pay the insured in case the event occurs. They also lend money to businesses, generating economic activity.

But too many companies that call themselves banks aren’t banks: they’re at best gambling operations and at worst frauds. Also some insurance companies get involved in the same sorts of schemes.

The schemes are highly creative and go by the generic name of “derivatives.” The difference between a derivative and an investment is that in the former case for every winner there are always losers. An investment can reward winners without making anyone a loser.

Firms wanting to trade in derivatives of any nature should take a booth at Casino Niagara or wherever gamblers gather. Just don’t mix with the real financial industry that creates value.

When so-called “investment banks” on Wall Street—along with British, Swiss, German and Dutch operations—crashed the world economy, Canada’s better-regulated financial sector remained aloof from the worst of it.

So that legacy of comparative stability is one of the selling points on the idea of a Bay Street world financial centre. But the pressure to deregulate the sector and become a “world-class” financial centre would bring us all the world-class scams and misery that creates billionaires where there were once millionaires, and poverty where there was once a middle class.