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What Exactly did Mark Carney do for Canada?

9 February 2013

Mark Carney hasn’t left us for the Bank of England just yet, but in just a few short months that’s exactly what he’ll do. When the news of Carney’s leaving was announced back in November, the headlines were full of fond farewells and well wishes. But apparently now that the holiday season is over, the good cheer has left many Canadians. Many have actually seemed to turn on Carney now, throwing accusations of his “not doing much” for the Canadian economy during his time here, and how the credit isn’t really his for the taking anyway.

The recent backlash Carney has been experiencing seemed sudden, and somewhat undeserved. So it had us asking, what exactly did Mark Carney do for Canada?

Kept banking system in check
It’s no secret that if our banks had experienced trouble during the recession, Canada would have been hit far harder than it actually was. The fact is that our banks were among the most stable financial institutions in the world during the recession, and that they still are. Some (such as Jim Stanford, Canadian autoworkers economist) say that “the uncompetitive nature of the Canadian banking system discouraged it from participating in this madness.”

Really? Where was Mr. Stanford during the banking bidding wars, when all but one of the Major Banks in Canada was offering mortgage rates at all-time lows? Where was he when these same banks were encouraging consumers to take on erroneous debt loads – to the point where Finance Minister Jim Flaherty had to step in and tell them to stop? Obviously Mr. Stanford had gone on a long vacation and missed the action, but someone should let him know. While Julie Dickson, head of the OSFI also deserves much credit for our banking system, so does Mr. Carney.

Low interest rates
Some argue that because the United States dropped their overnight lending rate so low after the crisis hit, that Carney had no choice but to do the same thing here. That may be true, to an extent, but let’s remember that the Bank of Canada governor’s hands are never tied. They can change the rate as they see fit, and they are the ones that must make the ultimate decision. Carney did this time and time again, and it wasn’t always easy. Remember when we were still scooping up houses like our daily coffee? A decision had to be made to stem that borrowing and keep Canadians from getting in over their heads. That decision came in the form of mortgage rules that have sucked all the steam out of the market. But can you imagine how disastrous those rules would have been if the interest rate were also higher? You can thank Carney that it’s not.

Helped alleviate recession
No, Mark Carney did not hold the recession at bay all by himself – but he did help. Many, including Mr. Stanford, argue that it wasn’t actually Carney at all that kept us from feeling the harsh effects of the recession, but rather long years of effective and conservative policy. While this latter is also certainly true, Carney also did his part in helping make sure Canadians weren’t too badly hurt during those tough years. He printed more money, again he helped keep our banks stable, and he printed more money – a move that was crucial in keeping our economy afloat. He even took the task to corporations, saying that they were sitting on “dead money” that could otherwise help the economy and investors.

Is it odd that for nearly five years when Mark Carney was the governor of Bank of Canada, most Canadians heaped praise on him, or simply didn’t refer to him all that much at all? But now that he’s leaving, we’re all so quick to turn on him and tell him that we never really needed him anyway?

As Canadians, we hope that we’d be better than that. And for those that still believe Carney did nothing, just imagine what it would have been like with a governor that was actually useless in the BoC – especially during the time of the recession. We know, it’s so far off from what we experienced, even just imagining it is very difficult.

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