The Globe and Mail reports that the Canadian government is negotiating (with whom?) to provide $6 billion in post-bankruptcy financing to Chrysler and GM. It gets worse/better. The six bil represents a fixed percentage of a larger post-bankruptcy fund, currently under construction over at the US Treasury. That would be 15 percent. Which puts the size of the US fund at $40 billion. A pittance, apparently. “The companies had initially proposed that governments lend or guarantee a staggering $125 billion in bridge or long-term loans, but the number was whittled down over months of difficult negotiations led largely by Treasury officials in Washington. In recent weeks, sources said, talks shifted to a plan for the governments to provide financing and guarantees for debtor-in-possession, or DIP, loans. These are used for day-to-day operations while companies restructure their debt under the protection of court supervision.”
The Canadian Gov’t just can’t stop giving money to these guys….. You think that the companies are desperate for cash – it’s the politicians who are panicking at the thought that they will not be able to say “Look, I gave them $Billions – it’s not our fault…”
Meantime, they keep making Honda’s and Lexus’s in Ontario – although you’d never know it.
Canadians should be emailing/calling their MPs right the [fornicate] now.
http://www2.parl.gc.ca/Parlinfo/Compilations/HouseOfCommons/MemberByPostalCode.aspx?Menu=HOC
It gets worse/better. The six bil represents a fixed percentage of a larger post-bankruptcy fund, currently under construction over at the U.S. Treasury. That would be 15 percent. Which puts the size of the U.S. fund at $40b. A pittance, apparently.
It sounds to me that in this multi-arena’d “Game of Chicken,” the UAW and CAW “won” but will be counted on to crank out some votes in the next election.
What do you want to bet that when the bell is up next Friday, the PTFOA unbridles another teat to for GM and Chrysler to suckle?
The upside? Uh, would you believe we get yet even more entertainment value out of this?
Lets put the ‘loans’ in perspective a little bit before you demand anything from your MP.
The Ontario economy has historically been based on manufacturing and finance, of which the auto industry has played a very large role in over the years and has benefited both the provincial and federal governments in the good times. Replacing ‘domestic’ plants with ‘transplants’ will never provide the same level of benefits because parts will be brought in from where ever they can be made the cheapest rather than be made locally.
So the question becomes, As Canadians do we give up on a large number of auto jobs in Ontario (remember there are more spin offs than actual assembly jobs) because GM’s management team made mistakes
or
do we give them some support like we do to other regions/industries (forestry in BC, oil in Alberta, farmers in Sask., Quebec to buy votes, fishing in the maritimes, etc.) by having the Canadian Government redistribute money to the current ‘have nots’.
As an Albertan, whether my money goes to GM or it goes to unemployed workers in Ontario, in the end it probably doesn’t matter, the government is going to spend the money.
Re SkiD666 :
Your right, ‘the government is going to spend the money’ so it would make sense to demand that they spend it on the companies that are functional and have a future. Toyota, CAMI, Honda all come to mind. Only one problem – they’re not CAW.
Which reveals the big lie – it’s about political influence, not economics – and that is wrong.
Look at it from another perspective, +$6Bln to ChryCo and GM and in return just how many ‘jobs’? I think that it is fair to say that this number is a fraction of the number of new jobs that would be created if the Gov’t went to the other, non-bankrupt auto companies and said “We will give the same +$6Bln if you expand your operations in Canada”.
Doesn’t anyone remember the Premier of Ontario going to Italy recently and pitching Ontario to Fiat as a location for their proposed North American Alfa Romeo factory? They laughed him out of the country. That should have set off alarm bells – Canada is doing the wrong things to be economically competitive.
Punishing successful companies, and subsidizing failing companies is just the latest example of that.
CAMI is CAW and has been from the start.
Is true this is a payoff to the unions and a desperate attempt to stop the economy from collapsing.
The governments spend tens of billions on studying fairy tales like global warming. This is no biggie.
This astonishingly huge chunk of money (I suspect some grim comparison could be made: like you could provide free daycare for all of Canada, or retire all student debt with a similar amount of cash) could be spent sensibly, like making sure suppliers stay in business during the bankruptcy. Giving it all to two companies who are going to be bankrupt (and one of them as far as I know *still* has a enormous outstanding tax bill), well, you might as well set that money on fire for all the good it will do.
Y’know I remember when Harper first got elected, a lot of conservatives told me he wasn’t going to be like the Liberals with the vote buying. Oh, how it makes me laugh…
You see folks,the Ont.Premier looked out his window today,and saw 15000 pensioners on his front lawn.Hourly/Salary union and non union.Lets not forget that us old folks vote!
Find me a political leader willing to piss off seniors,and I will show you a soon to be,a former leader.
mikey :
I have no use for Dalton McGuinty (spineless jellyfish comes to mind) and you’re right: old people are crotchety and like to bitch and vote en masse.
The problem is – for them at least – who are they going to vote for if not the Liberals? Sure, they can go back to the NDP (for you American readers – these are real liberals) but all that would do is raise their minority position a few percentage points and the Conservatives (who actually aren’t really conservative, despite the name; but at least they’re not religious wackos)and the Liberals would take turns sharing power.
audience: “how bankrupt are we?!”
You see folks,the Ont.Premier looked out his window today,and saw 15000 pensioners on his front lawn.Hourly/Salary union and non union.Lets not forget that us old folks vote!
As a youngster, I have to agree. You old fogeys do bitch until you get your way. It must be because you don’t have toddlers any more. :)
Now, I’m all for insuring these pensions because the fallout, especially in and around Oshawa, would be horrible. The amount of spending power sucked away would be significant, and the ripple effect would be felt. That said, the less forward-thinking members of my generation are looking at that protest, then looking at the utter lack of any pension coverage for us, the wage erosion, the boomers stamping down hard, and asking “Why, exactly, should we mortgage our present and future to keep these old guys and gals getting their cheques when we get zip?”
Were I organizing that protest, I would have spent more time spelling out the economic fallout, and much, much less time talking about moral obligations that you’re asking future generations (who will get nothing) to foot.