Canada Governments: No Sale Of GM Stock
November 30th, 2012 11:33 PM
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Timing the market is a tricky matter. There are people who urge the Canadian government to dump its shares in GM at a considerable loss. And there are others who rather wait for the stock to go higher. Canada’s Finance Minister Jim Flaherty is in the second camp.
Canada has no immediate plans to sell its shares in General Motors Co, Flaherty told Reuters. Separately, Aly Vitunski, a spokeswoman for Ontario Finance Minister Dwight Duncan, said Ontario will sell its GM shares “when the time and circumstances are appropriate and in a judicious manner to ensure that Ontarians receive the best possible return on their investment”.
Translation: No sale.
There is more involved than simple buy low, sell high: Simple politics.
- Selling the stock would raise cash for governments scrounging for money to cover deficits.
- The Canadian Auto Workers union wants the governments to hold on to their stakes. The CAW wants to use them as leverage vis-a-vis GM.
- Then, there is the man behind the curtain: Finance Minister Flaherty said he has had “continuing discussions” on the subject of the GM stake with U.S. Treasury Secretary Timothy Geithner.
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When it's all said and done, Harper's an economist, not a lawyer. He's not going to get bumrushed on anything that has to do with finances no matter what anyone else wants. Flaherty follows his lead. There's a reason Canada has the strongest economy of the G8 nations. Don't expect any selling until he wants it and it probably won't be for political reasons either.
GM stock is more valuable as a GDP tool than any kind of deficit reduction tool. Historically these sales have been to benefit traders on short term gains. I'm glad we're getting past the quick buck phase. Long-term a healthy dividend combined with a rebounded stock price could net the Canadians a healthy profit. Already inflation is lessening the blow which is nice.
Geithner's a lizard!!
They ought to handle it the same way many corporate executives do, sell a certain % of the stock every year or quarter like clockwork, and announce it in advance. If the Canadian and US government each sells 2% of its holdings per quarter, the market won't get spooked or diluted, and in 12 years we'll all be out, and it will be private enterprise again (just in time for the next recession).