By on November 15, 2008

When the leaders of the G20 meet this weekend, they’ll look to Canada’s conservative but durable banking model as a template for the rest of the world. Since the Liberal reign of Paul Martin as Canada’s Finance Minister, Canada’s been the “Wealthy Barber” of the developed world, deploying bland but solid fiscal policy to great effect. And now, more sense from the current Canadian Finance Minister, Conservative Jim Flaherty. CTVNews reports that Jim isn’t too keen on giving the ailing Canadian auto industry the US-style bailout that’s currently being debated in Washington. Why not? Well sometimes, the story just tells itself: “Nobody wants to see taxpayers’ money taken — and then in effect wasted — where a company is not going to survive … we want to see the plan for survivability,” he said. In order words, before the FinMin spends one cent of taxpayer dollars propping up Canadian production, he wants to see a turnaround plan. You know – the same kind of plan GM has failed to publish ever since it first bled red under its current CEO Rick Wagoner. Don’t hold your breath, Jim.

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9 Comments on “Canadian Finance Min: “No bailout”...”


  • avatar
    dougjp

    I reading essentially the same comments now from US politicians, they are all getting to the ‘same page’. Although in my opinion they are intentionally creating a “Catch 22″ of conditions that will sound good to the taxpayers, however will be impossible for Detroit to meet. NO problem! We are talking about car salesmen getting the money, they will just ignore the conditions!

    Now from the ” Can’t fool all the people all the time, but some are really good at it” file, this Canadian ” no bailout” Finance Minister just concluded the biggest per capita bailout of banks, without taking equity positions, or creating specific conditions on using the money! And he did it mostly under the radar of the press, and without details regarding what if any risk it entailed to taxpayers! Brilliant… Follow this one:

    1: $75 Billion mortgage purchase:
    http://www.financialpost.com/news/story.html?id=952775

    2: Population comparison, USA and Canada, Canada is 10.9% of US:
    http://www.indexmundi.com/g/r.aspx

    3: Therefore mortgage bailout on a per capita comparison basis with the US Wall st. bailout is $ 688 billion (Cdn $)

  • avatar
    raast

    I’m waiting for responses from my MP & MPP to my question relating to this. It was simply that if the auto sector gets bailed out, can I start a franchise operation, pay all my buddies exorbitant salaries and be asleep at the switch in general, then when it all collapses, run to the government and expect a bailout with tax money.
    Hey, I’m still waiting for that answer and commitment.

  • avatar
    eh_political

    The Finance Minister will do whatever the Prime Minister tells him to do. It is possible that Mr. Flaherty will brief Mr. Harper, but it’s a one man show in Canada at the moment.

    Closer to the action, the Premier of Ontario, Mr. MacGuinty is absolutely frantic, prepared to do anything and everything to preserve the auto industry. He won’t survive if autos don’t.

    Prime Minister Harper is a huge unknown in this process. An extremely calculating man, I suspect he will intervene, and will mirror American efforts. That way lies the least political risk, and the ability to spread the blame if the industry actually fails.

  • avatar
    psarhjinian

    When the leaders of the G20 meet this weekend, they’ll look to Canada’s conservative but durable banking model as a template for the rest of the world. Since the Liberal reign of Paul Martin as Canada’s Finance Minister, Canada’s been the “Wealthy Barber” of the developed world, deploying bland but solid fiscal policy to great effect.

    Or rather, we were until Flaherty (well, Harper, really–Flaherty’s a figurehead) used the results of Martin’s fiscal management to deliver token tax cuts. Now the government is facing deficits.

    Smart move, there.

    Did you know Flaherty was part of the Mike Harris government (a Conservative, I might add) that left Ontario with a staggering deficit and rotting infrastructure that was–and still is–cleaned up by it’s Liberal successor? Or that he was denying that Ontario’s problems have anything to do with currency fluctuations and/or a weakening US economy, but were in fact due to Ontario’s corporate tax rate?

    I’d wait a bit before giving this fellow any kudos, because his track record is utter crap.

    And now, more sense from the current Canadian Finance Minister, Conservative Jim Flaherty.

    What, like handing the completely-healthy Canadian banks a blank cheque so that they wouldn’t cut off credit? Let me reiterate: the big four banks are making money and benefit from an artificial monopoly and we gave them even more?

    Now, I won’t dispute that the Canadian banking system really is very well run, but either the government was blackmailed, or the banks are on shaky footing and not letting on.

    “Nobody wants to see taxpayers’ money taken — and then in effect wasted — where a company is not going to survive … we want to see the plan for survivability,”

    That’s ballsy talk for a guy who was elected in the Oshawa riding. You know, Oshawa: home to GM Corporate HQ as well as GM’s largest, highest quality and now bleeding-jobs-like-crazy plant. If Oshawa gets “Flint’ed” I’m sure it’s citizens will be thinking oh so very highly of Mr. Flaherty’s choices.

    Personally, I think Harper is letting Flaherty fall on his sword so that, once this is over, he’ll have a scapegoat. Flaherty has an unusual amount of visibility for a Harperite minister, and that only happens when said minister exists solely to be a bullseye.

  • avatar
    psarhjinian

    Closer to the action, the Premier of Ontario, Mr. MacGuinty is absolutely frantic, prepared to do anything and everything to preserve the auto industry. He won’t survive if autos don’t.

    No shit. He saw what happened to Bob Rae’s NDP government, or Mike Harris’ Conservative one.

    Ontario provincial goverments never, ever survive recessions. Other provinces’ governments can count on ideology (Alberta, Quebec), economic isolation (Newfoundland, Saskatchewan, New Brunswick, PEI), or Federal payoffs (Newfoundland, Quebec) to whether these incidents. Ontario gets no Federal love, and is much more integrated into the global economy it’s boutique, backwater or resource-based brethren.

  • avatar
    troonbop

    Harper’s likely behind it and knows better than to please the CAW with other people’s money. He’s an economist and at least three moves ahead of the idiots of the Canadian left, classical or otherwise. Imagine if the liberals were in power? And, forgive me for scaring my Canadian friends, what if the NDP had the reins?

  • avatar
    Gardiner Westbound

    Not to rain on naysayers’ parade, a properly managed bailout can work.

    Renault reported a 1984 deficit of 12.5-billion francs notwithstanding a moderately successful car line. The French government intervened and installed Georges Besse as chairman. He cut costs dramatically, sold off non-core assets and laid off numerous employees, halving the deficit by 1986. Murdered by left wing terrorists in November 1986 (and Wagoner thinks he has it tough), Raymond Levy continued his policies. The company was financially stable by the end of 1987.

    Renault launched several winning new cars in the early 1990s, including the phenomenally successful Clio, second-generation Espace, innovative Twingo, very successful Laguna and the R19. In the mid-1990s the highly successful Megane was the first car to achieve a EuroNCAP 4-star crash test rating. 1998 saw Renault introduce the well-received Megane Scenic. Renault powered cars won Formula One World Championships in 1992, 1993, 1995, 1996 and 1997.

    Renault was privatized in 1996 with the government retaining 15.7-percent ownership. Carlos Ghosn, also Nissan CEO, became CEO in 2005.

  • avatar
    psarhjinian

    Imagine if the liberals were in power?

    What, like Chretien or Martin? We’d have had less debt, for one. Remember who brought the Federal debt down in the first place? While we’re at it, recall what Ontario’s debt was after Harris/Eves/Flaherty left, versus what it is under McGuinty’s Liberals now.

    Fair disclosure: I’m a card-carrying New Democrat and don’t like the Liberals much, but I think people give the Conservatives far too much credit for their fiscal discipline when, in reality, they let ideology get in the way of pragmatism.

  • avatar
    mikey

    Right you are eh political.Harper runs the show and Flaherty will do what he is told.Stephen Harper is in Washington chatting it up with President Bush right now.

    If! and thats a big if, the United States coughs up some aid for the domestics.You can bet Harper will send his messenger boy Flaherty down to the SHWA check in hand.

    Fair disclosure:I’m card -carrying Liberal.


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