[FreedomFighter777]

The World's safest Banking System


The following article came by email from a service called the Investment
U Reader. I thought it would help the people on this forum. I am sure you will agree.



FREEDOM


P.S. There is a special way to open an account at one of these banks. In fact,
summer time is the best time of the season to do it.

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Editor's Note: As the market hovers over the fate of Citibank and Bank of
America, our former Investment U Chairman and Advisory Panelist Mark
Skousen gives us some good news in a sector filled with negativity…

Dear Investment U Reader,

The U.S. financial system is a mess – according to the World Economic
Forum, the United States ranks 40th among banking systems around the
world. Without federal bailouts, the two largest banks in the country,
Citibank (NYSE: C) and Bank of America (NYSE: BAC), would be in
bankruptcy, and the good ol' USA would be headed for the Greater
Depression, as my friend Doug Casey likes to call it.

But you'll never guess where the world's No. 1 banking system is. No, it's
not fabled Switzerland nor booming Hong Kong.

While the central banks around the world are desperately trying to stem
the flow of red ink, this country's red is emblazoned on its iconic mounted
police force.

It's right next door: Canada. The land of hockey and moose has the
world's soundest banking system. While European and Asian banks are
collapsing, Canada stands out as an oasis of financial calm.

Four "Mounties" With Solid Balance Sheets

According to the Global Competitiveness Report, Canadian banks
received the highest ranking, 6.8, out of a possible 7.0 (healthy, with
sound balance sheets). The lowest ranking of 1 means insolvent and
possible government bailout.

Canada's stock has been rising quietly – the Canadians are known for their
modesty and self-restraint – as American financiers and media are
astonished to find that their northern neighbors have somehow avoided the
subprime lending scandal and the home foreclosure mess.

What's Canada's secret? With the exception of oil-rich Alberta, Canada
did not have a strong construction surge as the United States did during
the boom years. And mortgage interest is not tax deductible in Canada.

Canadian banks are national in scope; the top five banks have branches in
all 10 Canadian provinces, making them less susceptible to
downturns. They have large numbers of loyal depositors and a more solid
base of capital. They are more tightly regulated than their U.S.
counterparts, more liquid and less leveraged.

Among the top 10 largest banks in North America, four are
Canadian: Royal Bank of Canada (NYSE: RY), Bank of Nova Scotia
(NYSE: BNS) and Bank of Montreal (NYSE: BMO), and Toronto
Dominion (NYSE: TD), which bought Commerce Bank last year.

Canadian bank executives don't have to be excoriated by Parliament
before taking a pay cut. The CEOs of Canada's three-largest banks have
all voluntarily cut their own pay in response to the global economic crisis.

Canada has its share of problems – being linked to commodity prices – but
financially it's done a better job than its southern neighbor. While the
Bush administration ran up massive deficits year after year, Canadian
officials finally pushed through a stimulus package that resulted in the
government's first deficit in a decade!

Right now, the Canadian banks are selling at incredible bargains. With
operating margins exceeding 30%, and dividend yields between 6% and
8%, Canadian banks are selling at only around eight times earnings. Bank
of Montreal is my favorite – it's selling for only six times this year's
expected earnings and is yielding 10%.

During a crisis, the good investments get hit like the bad ones. But when
the markets recover, the good bank stocks will skyrocket, especially those
across the border.

Good investing,

AEIOU,

Mark

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There is a special way to open an account at one of these banks. In fact,
summer time is the best time of the season to do it.