United against austerity

By Erica Alini - Thursday, January 13, 2011 at 12:20 PM - 0 Comments

John Kolesidis/Reuters

As Greece’s parliament approved an austerity budget on Dec. 23, trade union leaders vowed to continue the agitation that has roiled the debt-stricken country in the last year, promising more strikes in 2011. The budget, pushed through by socialist Prime Minister George Papandreou, administers more of the bitter medicine economists say is required for Greece to save itself from financial collapse: a pension freeze, health care spending cuts and new tax hikes.

Approving the new measures was essential for Greece to secure the next disbursement of a $144.5-billion bailout package by the European Union and the International Monetary Fund. But the policies are driving a wedge between the government and the unions, which have traditionally been close to the socialists, and within the ruling party itself. Tensions are so high, in fact, that some cabinet members have reportedly stopped greeting each other. And many question whether the pain will actually produce any future gain, noting that with public debt projected to hit 160 per cent of GDP in 2013 and unemployment expected to rise to 14 per cent in 2011, a Greek default may be unavoidable.

America's company

By Jason Kirby - Thursday, December 2, 2010 at 11:20 AM - 5 Comments

GM CEO Dan Akerson sits in a 2011 Chevy Camaro outside the New York Stock Exchange last week; GM’s collapse last year fit squarely with the narrative of America in decline | Rebecca Cook/Reuters; Mark Lennihan/AP

When Robert Mulcahy, a financial adviser in the Detroit suburb of Wyandotte, first learned General Motors planned to take itself public again, he was sure it would end badly. Many of his clients had once worked for GM or owned shares in the company before its spectacular bankruptcy and bailout last year, and even if they didn’t, their fortunes were inextricably linked to the automaker since it dominated every aspect of the region’s shattered economy. GM’s collapse, and its subsequent incarnation as “Government Motors,” spawned bitterness and resentment, leaving Mulcahy convinced local investors would never go near GM again.

Then, as GM’s stock market revival approached, all that changed. “It was absolutely the opposite of what I expected,” he says. “Most of my clients may not have bought on the IPO but they’re all sniffing it out, ready to get back in. There’s a sense of pride and excitement here that has not existed for quite a while.”

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Europe gets Greeced

By Jason Kirby and Danylo Hawaleshka - Friday, May 7, 2010 at 10:00 AM - 21 Comments

Yiorgos Karahalis/Reuters

Last Friday, as leaders in Europe squared off over a high-stakes bailout for Greece, Robert Mundell, the Canadian-born economist widely regarded as the father of the euro, was in Bulgaria attending the world chess championship. It’s been more than 40 years since Mundell laid out his vision for a common European currency, work that earned him a Nobel prize in 1999. And after making the ceremonial first move of the match—akin to tossing out the first pitch in baseball—Bulgarian reporters asked the 77-year-old Columbia University professor to sum up the Greek drama in chess terms. Was Greece in check, or checkmate? In other words, does the country have any hope left, or is it game over? “I would rather describe the current situation as zugzwang,” Mundell reportedly replied, using the German term to describe the moment when a player is forced to make a move even when it’s going to be harmful. This financial game cannot finish with a checkmate, he assured. There won’t be a losing side.

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The problems run deep

By Danylo Hawaleshka - Tuesday, March 23, 2010 at 12:00 PM - 1 Comment

Orestis Panagiotou/ EPA/ Keystone Press

Taxis are still reasonably priced in Greece, even though not much else is. In Athens, where an espresso can cost $6, gin and tonics $12.50, and the latest issue of Vanity Fair fetches $16, cab rides still cost about half of what they do in Toronto. It probably has a lot to do with how taxi drivers in Greece pay next to no income tax. Christos Kyriakousis, for instance, drives his own 2004 Mercedes-Benz E270 sedan. Under current tax law he simply pays an annual flat rate of less than $1,700 (1,200 euros). But now, the cash-strapped Greek government is insisting that taxi operators like Kyriakousis—horror of horrors—will soon have to issue receipts and pay tax according to how much they actually earn. In protest, drivers earlier this month staged a 48-hour work stoppage. “As far as I’m concerned, they can do it,” Kyriakousis says of the government’s intention to bring in tougher tax measures. “But we have to be able to trust them, and they have to trust us.”

Therein lies the great dilemma. Still very much a cash-based society plagued by frequently low household incomes, Greece remains terribly corrupt, with trust between taxpayers and politicians holding little or no currency. Transparency International’s corruption index last year placed Greece 71st out of 180 countries, behind Kuwait and Ghana, and only slightly better than Burkina Faso. Little wonder then that Greeks tend to look out for themselves—with a sense of entitlement that has often undermined efforts to improve the common good. And so necessary government reforms, like recently announced austerity measures, are often met by protests like the one on March 11, when as many as 50,000 public and private employees took to the streets. And yet it is difficult to imagine a nation, particularly one belonging to the European Union, more desperately in need of economic change.

This is, after all, a country of only 11 million citizens, where one in four workers is employed by the state (many of them tenured), and where generous state pensions and early retirement provisions have the country teetering on the edge of insolvency. The country’s financial problems are dragging down the euro, the currency used by Greece and 15 other EU member states. And so, earlier this month, the government was forced to institute 4.8 billion euros worth of tax hikes and cost savings ($6.7 billion), in addition to the five billion euros in spending cuts already announced in January as part of the so-called stability and growth program demanded by Eurocrats in Brussels. “This is by far the most austere and painful set of stabilization and austerity measures that has ever been adopted by a Greek government,” says George Pagoulatos, a political economist at the Athens University of Economics and Business. “There’s a lot of fat to be scraped off the public sector. There are far too many [state] organizations that could be abolished without any welfare loss. It is clear that the total wage and pension bill of the government is unsustainable.”

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The short end of the Canwest stick

By Jonathon Gatehouse - Tuesday, October 20, 2009 at 8:20 AM - 35 Comments

If you were to ask the general public how much of a bonus Canwest Global Communications executives deserve for steering the country’s biggest media company into the ground, the answer would fall somewhere between squat and diddly. But according to their bankruptcy protection filing this month, the correct response is $9.8 million.

The Key Employee Retention Plan (KERP) already approved by Canwest’s creditors, and given an initial thumbs-up by the courts, was the subject of “extensive” negotiations from the very beginning of the company’s efforts to extract itself from under its $4-billion debt load last December. Three directors, four top executives and 13 other senior members of management will receive two hefty cash payments—one at the end of this year, the other early next spring—in exchange for sticking around until the streamlined company emerges from the process. The details of just who is receiving the bonuses and how much have been sealed by the court at the company’s request to protect “sensitive personal and financial information.” But it’s clear at least some of the “retentions” will be decidedly short-term as the agreement calls for the three unnamed directors to resign from the Canwest board once the restructuring period ends. Leonard, David and Gail Asper, the children of the late Canwest founder Izzy Asper, are all currently directors, but are expected to have a much reduced role, and ownership stake, in the new company. Continue…

Should Air Labrador get a bailout?

By Stephanie Findlay - Thursday, September 10, 2009 at 1:00 PM - 0 Comments

Since 1948, Air Labrador has been a crucial lifeline for a string of remote towns on the Labrador shore. Now they’re in danger of seeing that lifeline cut off.

Ironically, the blame may lie with the Trans-Labrador Highway, which was built to improve accessibility to the area. Since it was built, however, the airline says it has seen passenger loads plummet from 19,000 a year in 2001 to 5,000 last year, so it can no longer afford to offer the northern route. Continue…

Econowatch

By Steve Maich - Thursday, June 25, 2009 at 9:00 AM - 0 Comments

On a day when the Canadian stock market plunges by more than 450 points and the Dow Jones Industrial Average tumbles by 200, it’s a tough sell to suggest that we need to start planning for the economic recovery. And yet, there was Joaquín Almunia, economic and monetary affairs commissioner for the European Union, urging all OECD countries to start preparing exit strategies for this downturn before it’s too late. “We cannot afford to get out of this recession creating big imbalances that will be the origin of the next crisis,” Almunia said.

No doubt he’s right. Over the past year, governments have pumped unprecedented mountains of stimulus into the global economy. Major banks and corporations have been bailed out, propped up and nationalized. Interest rates have been slashed to nothing. That may have averted the worst-case meltdown scenario, but it presents a lot of daunting questions as the world begins to pull out of this tailspin. Trillions of dollars in cheap money is currently sloshing through the economy. Will the system be able to soak up all that excess capital before it triggers runaway inflation? Now that governments have committed themselves to massive deficit spending over the next few years, can lawmakers find the political courage to rebalance their budgets in time to avert a massive distortion of the debt markets? Continue…

We’ll pay for this bailout for years

By Andrew Coyne - Tuesday, June 9, 2009 at 3:15 PM - 118 Comments

What is the cost of the federal and Ontario governments’ contribution to bailing out General Motors? We know what it is in dollar terms: $10.6 billion, or about one-fifth as much as the United States Treasury has kicked in. But how much is that?

Here’s one way to think about it. In exchange for their investment, the governments of Canada and Ontario will together receive 11.7 per cent of the equity in “New GM,” the slimmed-down company that, it is hoped, will emerge from Chapter 11 bankruptcy protection some months from now. On its last day of trading on the New York Stock Exchange, GM closed at US$0.75 a share, for a total market capitalization of about $494 million in Canadian funds. Subtract from that $10.6-billion price of the overall bailout package the roughly $1.6 billion in loans, and our governments paid $9 billion for an equity stake worth just under $58 million.

But it’s okay: over the next nine years, our governments have pledged to sell off their stake, a little bit at a time. So if the stock, say, quintuples in value in that period, we could get back as much as two cents on the dollar.

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Coyne v. Wells on Raitt-gate and the auto bailout

By macleans.ca - Friday, June 5, 2009 at 4:07 PM - 32 Comments

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Tony Clement and a potted plant

By Aaron Wherry - Friday, June 5, 2009 at 3:34 PM - 8 Comments

The Industry Minister talks about the GM bailout.

'Well, I'm not an expert on the automobile industry'

By Aaron Wherry - Tuesday, June 2, 2009 at 1:05 PM - 3 Comments

CTV’s Ken Shaw challenges the Prime Minister on the GM bailout.

Helping friends in need

By Jonathon Gatehouse and Philippe Gohier - Thursday, April 2, 2009 at 5:20 PM - 4 Comments

It’s a rather inauspicious date, but construction work on the Canadian Museum of Human Rights in Winnipeg is scheduled to begin April 1. There won’t be a lot of fanfare—an official groundbreaking ceremony was held just before Christmas. Heritage Minister James Moore made the trek to the frozen site at the forks of the Red and Assiniboine rivers. So did Prime Minister Stephen Harper, who paid tribute to the late Izzy Asper, the man whose audacious dream is about to become a reality. The $265-million project will be the “capstone” on the legacy of the founder of Canwest Global Communications, he said, while Gail, Asper’s daughter, proudly looked on. In creating the first national museum outside of Ottawa, the Conservative government has pledged $100 million toward construction costs, and a further $21.7 million a year in operating funds, in perpetuity. But when it comes to helping the Asper family secure its dreams, it appears the feds may still have more to give.

As Canwest, owner of 13 daily newspapers and two Canadian television networks, flirts with bankruptcy, approaching yet another make-or-break deadline with its creditors on April 7, Ottawa is readying a lifeline. Last week, Moore confirmed that the Harper government is looking at loosening broadcast regulations and changing tax rules to help give the company, and other struggling private broadcasters, some relief. And while the heritage minister was quick to add that no specific promises have been made, it’s clear what the networks have on their wish list—a reversal of CRTC policy that would see cable and satellite providers pay them “carriage fees” for the basic TV channels they now pass on for free. That arrangement would net the broadcasters an estimated $300 million a year, perhaps directly out of consumers’ pockets.

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Canada, Obama, and the G20

By John Parisella - Tuesday, March 31, 2009 at 6:52 PM - 14 Comments

Whether it is energy, Afghanistan, global warming, fiscal stimulus, or auto bailouts, it seems the Canadian government is constantly scrambling to adjust to the policy initiatives of Barack Obama and his administration. While Obama is unquestionably leading, we seem to be following.

On oil, Obama may be preaching energy independence and recognizing Canada as a friendly supplier, but he is no fan of Alberta’s so-called “dirty oil” from the tar sands. So Canada is now looking into reducing carbon emissions from the sands through technological means. Obama has also acknowledged our role and contribution in Afghanistan, and he is aware of Canada’s 2011 deadline for withdrawal. Yet, just last week, he announced a new strategy calling on NATO to “disrupt, dismantle, and defeat” al Qaeda, even though he tacitly acknowledged Harper’s suggestion that a clear victory against insurgents is increasingly doubtful. Harper and his minority government can’t easily reverse course on Afghanistan, but Obama’s new plan has made it so there is no way we can walk away from an active military role without consequence. Over the weekend, Obama announced he would host a 20-country forum, where Canada, along with big polluters like China and India, has been invited to discuss how to fight climate change at a post-Kyoto summit scheduled later this year. There is no way the Harper government will be able to keep its lukewarm environmental policy intact nor will it be able escape trying to sound green when that forum occurs. Finally, on stimulus and bailouts, it is hard to see where we differ. The only difference is that Obama is doing what was in his program, while the Canadian government seems to be constantly adjusting its own policies to follow Obama’s lead. Continue…

The Commons: The eternal shame of the Ivy Leaguer

By Aaron Wherry - Monday, March 30, 2009 at 6:42 PM - 45 Comments

The Scene. In preemptive move, the government side sent up another of its backbenchers before Question Period—this one named Greg Rickford—to report on the latest outrageousness of the Liberal leader.

“Mr. Speaker, Canada’s auto industry directly employs over 150,000 Canadians and another 340,000 indirectly … half a million Canadians and their families depend on the health and viability of this industry and are looking to their leaders to ensure that Canada remains a strong part of the North American automotive industry through these economic times,” Rickford began. “That is why it is absolutely shameful that the leader of the opposition has turned up his nose to auto sector workers by saying: ‘No voter in B.C. wants to throw money into the auto sector and neither do I.’”

To Rickford’s credit, this was not entirely incorrect. Mr. Ignatieff did speak those 16 words. And one assumes it was by innocent omission that the Conservative failed to note the two preceding sentences. ”I don’t believe in bailouts,” Mr. Ignatieff reportedly said. “What I believe in is fully-refundable loan packages for industries that give you a business plan that will restore them to profitability.”

Undaunted by such details, Rickford went on. “I wonder if he would repeat the same sentiment at a town hall meeting in Ontario,” he whined. “I am sure he has more savvy than that. He has shown time and time again that he is more than willing to flip-flop on the content of his message to suit whatever audience he is speaking to, whether it be in Saanich, St. Catharines or at his home in Harvard.”

This last bit was, apparently, meant as a put-down. Continue…

While you’re at it, I’d like a handout too

By Colin Campbell - Thursday, March 5, 2009 at 4:32 PM - 11 Comments

Robert Applebaum, a 35-year-old attorney from New York, was watching the TV news in late January when a piece flashed across the screen about the US$700 billion Wall Street bailout—money that seemed to him to be flowing without accountability to the very people that caused the crisis. That’s when he came up with what he figured was a much better way to rescue the economy: forgive student loan debt. “Why not free up hardworking, educated, middle-class Americans of their student loan debt, such as myself, so that we would have hundreds, if not thousands of extra dollars to spend each month?” he asks.

His proposal, while hardly mainstream,  has been gaining a surprising amount of support lately. A Facebook group he started, called “Cancel Student Loan Debt to Stimulate the Economy” has over 100,000 members, and has been circulating a petition it plans to send to President Barack Obama. (It has over 30,000 signatures.) “I think that I’ve obviously hit a nerve,” Applebaum tells Maclean’s. Continue…

Budget '09: Bailout

By Philippe Gohier - Tuesday, January 27, 2009 at 4:38 PM - 9 Comments

Just about every industry in Canada will find at least something to smile about on budget day. From forestry to ship-building to tourism, Ottawa plans to spread its bailout around, albeit unevenly.

The auto sector—and the victims of its collapse—will take home the lion’s share of the money intended to soften the recession’s blow. Supplementing the government’s previous announcement of $2.7 billion in loans to the Big Three is a program to encourage Canadians to buy more cars. The newly-created Canadian Secured Credit Facility will have a $12 billion bankroll to help finance vehicle and equipment purchases by Canadian consumers and business. The southern Ontario communities most affected by the downturn in the auto industry will also receive over $1 billion over the next five years to help to diversify local economies.

Also at Macleans.ca
Budget ‘09: Tories take a final leap into the void
Budget ‘09: The Overview
Budget ‘09: Stimulus
Budget ‘09: Economic Outlook
Budget ‘09: Personal Finance

The forestry sector is also the target of significant government largesse. Ottawa will invest $170 million in the sector over two years in order to help its diversify its product base and introduce new processes. Though it’s not explicitly targeted to a specific region or industry, forestry towns will be able to draw from a separate $1 billion fund, paid out over two years, to help them survive the sector’s struggles. In his budget address to Parliament, Finance Minister Jim Flaherty said the Community Adjustment Fund “will help communities across Canada facing unique challenges, from the mountain pine beetle infestation to the declining demand for seafood.”

Though they don’t figure as prominently in the budgetary allocations, virtually every other major industry in Canada stands to receive government money in some form or another. Farmers will receive a $500 million boost over five years, in addition to a $50 million investment in the expansion of Canada’s slaughterhouse capacity; Canadian shipyards can count on $175 million worth of new orders from Ottawa; even the much-maligned arts and culture sector will get a boost, with an extra $20 million earmarked for the National Arts Training Contribution Program, and a $200-million allocation for the Canadian Television Fund. In one of its most understated moves, the Conservative government has also revived the sponsorship program with a $100 million commitment to support “marquee festivals and events that promote tourism” over two years.

Liberal leader Michael Ignatieff says opposition politicians can take credit for the budget’s more generous provisions. Though he wouldn’t reveal whether his party was willing to support the document, Ignatieff conceded “there are some positive sides to this budget.” Ontario Finance Minister Dwight Duncan was, for his part, enamoured with the money Ottawa plans to send his way to help struggling industries. The strategy to fund just about every sector imaginable was indeed intended to garner widespread support. That it will likely do so is at least partly due to the fact its fiercest ideological opponents are the ones who drafted it.

Is an infrastructure bailout the right move?

By Colin Campbell - Monday, January 26, 2009 at 11:29 AM - 10 Comments

The city of Oshawa, just east of Toronto, has suffered its fair share of bad economic news lately. Next month, 700 workers at the General Motors car assembly plant will lose their jobs. This spring, 2,600 more will be out of work when the local truck plant closes. And it’s not just the auto sector that’s suffering. In this corner of Canada’s manufacturing heartland, all has not been well for some time now. From local businesses to municipal governments, everyone is feeling the recession pinch. Roger Anderson is the chair and CEO of Durham Region, which encompasses Oshawa. Few are more keenly aware of the need for some form of boost to get the stalled economy firing on all cylinders again. “If GM ever closed in Durham, I don’t even want to think of the ramifications. The tax base alone from GM and spin-off companies is astronomical,” he says. The cut back in manufacturing is expected to cost Durham $2 million in revenue this year just from the decline in water consumption, he says.

But Anderson also sees a silver lining to these troubles. As far as he’s concerned, there’s never been a better time for governments to start pumping money into long-overdue building projects, like high-speed rail, a new airport and the rebuilding of the Pickering nuclear power plant. “Durham is in an enviable position,” he says. “Those three projects alone would be 10 years of jobs and a lifetime of permanent jobs after that.” Anderson also has a list of $200 million worth of construction projects—for sewers, water pumping stations and incinerators—just waiting to be built. “If they gave me $50 million tomorrow, I could have a contract sent out within 30 days to build one of those facilities.” Show Anderson the money and he’ll show you a bustling local economy.

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Bankruptcy as a way of sticking it to the man

By Andrew Coyne - Monday, December 15, 2008 at 12:31 AM - 13 Comments

More neo-con dogma. Joseph Stiglitz, 2001 Nobel laureate in economics, noted critic of “free market fundamentalism” and author of Whither Socialism, Globalization and Its Discontents, and other works, gets all ideological about the auto bailout:

Financial markets are supposed to allocate capital and monitor that it is used to good effect. They are supposed to be rewarded when they do that job well, but bear the consequences when they fail. The markets failed. Wall Street’s focus on quarterly returns encouraged the short-sighted behaviour that contributed to their own demise and that of America’s manufacturing, including the automotive industry. Today, they are asking to escape accountability. We should not allow it.

That’s neat — a market-skeptical argument for “letting the market work.” But it rather sloppily conflates “market failure” with the failure of particular players within the market. The argument for markets is not that everyone always gets things right, but that those who get things wrong are punished. Yet those who invested in the auto industry were sheltered from the consequences of their failure by decades of mini-bailouts: subsidies, voluntary export restraints, innovation funds, location incentives and the like. That looks more like government failure than market failure. Markets accurately priced in government support for the industry, just as management and labour did what government, in effect, told them to do about the industry’s problems: nothing. Whereas an unsubsidized, unprotected auto industry would have been forced to clean up its act long ago.

To be sure, Stiglitz is open, given the current state of financial markets, to some form of government backstop for the auto companies — after they have entered bankruptcy, ie erased shareholders’ equity. But

the “bridge loan to nowhere” – the down payment on what could be a sinkhole of enormous proportions – is another example of the short-sighted behaviour that got us into this mess.

Stiglitz is famous for his writings on how markets work — or don’t work — in the presence of asymmetric information, ie where buyers know much less than sellers about a product, a field he pioneered along with fellow laureate George Akerlof, whose seminal “The Market for Lemons” is much cited these days with regard to the crisis in financial markets. Basically, the problem is that no one knows whether the financial instruments they’re being offered today are “lemons,” so nobody’s buying, or not without a substantial discount.

But in Detroit’s case everyone knew they were selling lemons. Somehow that became an argument for showering them with state favours, again and again and again. You don’t suppose history could be about to repeat itself. do you?

For $55, Jim Bunning will sign your pink slip

By Michael Friscolanti - Friday, December 12, 2008 at 2:30 PM - 0 Comments

People in the Motor City certainly love their cars, but they love their sports stars, too. Unless they retire, move to another state, run for senate, and vote down a bailout package for the Big 3 automakers.

Just ask Jim Bunning, the Honourable Senator from Kentucky. The Hall of Fame pitcher who played nine seasons for the Detroit Tigers was supposed to fly back to Michigan this weekend for an autograph signing. (Not for free, of course. His John Hancock is somehow worth $55 a pop, recession be damned.) But on Thursday night, after Bunning refused to support a $14-billion federal loan package for Detroit’s desperate automakers, the organizers of the show gave him the boot. “Being a business owner in Michigan for over 30 years, I simply cannot support anyone who, in my opinion, votes against the economic well-being of our great state,” said James Koester, who owns the trade center in Taylor where the signing was supposed to take place.

On the bright side, if you already have Bunning’s autograph, it may be worth a lot more in the coming days. Especially if he ever does have the guts to step foot in Detroit again.

The Sad Reality facing General Motors

By Steve Maich - Friday, December 12, 2008 at 10:16 AM - 38 Comments

The Congressional plan to bail out the Detroit auto industry died a swift death last night, but the White House may yet swoop in with a unilateral bailout of its own. Reports surfaced this morning to suggest that the Treasury Department, on the authority of the President (and presumably the U.S. Fed) would tap the $700 billion fund to bail out Wall Street in order to get enough cash to Detroit to keep the companies afloat until next year.

That, of course, would finally destroy any notion that the U.S. Government is actually operating with a coherent plan. I know, I know…nobody really believed that anymore anyway. But the Trouble Asset Recovery Plan (TARP) was first supposed to buy up bad mortgage assets, then got converted into a giant bank account to buy bank stocks, and now, apparently, it might also branch out into the car business. This, dear friends, is what’s known as making it up as you go along.

Unlike my friend Andrew Coyne, I’m a little more sympathetic to the idea that governments can lend a helping hand to industry in times of trouble. That said, these bailout plans are disasters in the making. The best explanation of why can be found here (a column from a month ago in the Wall Street Journal by Michael Levine.) Continue…

Did GM "betray" America?

By Steve Maich - Monday, December 8, 2008 at 9:52 AM - 21 Comments

This morning marks a watershed moment in the history of GM: It has decided to dispense with spin and throw itself on the mercy of the North American People. Continue…

The bailout: Even more than you thought

By Duncan Hood - Wednesday, December 3, 2008 at 3:51 PM - 9 Comments

As this surprising graphic shows, the amount of money pledged to bail out the U.S. economy amounts to more than: the amount spent on getting a man on the moon, the Vietnam War, the Korean War, the Iraq War, NASA’s all-time budget and The New Deal, combined. (And yes, the numbers are inflation-adjusted.) Imagine what the U.S. could have done with that money if it didn’t have to bail out all those banks…

This graphic is from the Voltage Blog, and it’s based on numbers from this BoingBoing article.

The car industry crash, by the numbers

By selley - Friday, November 21, 2008 at 5:23 PM - 5 Comments

As a rule, recent years have not been kind to automakers. But amidst the general chaos, the North American car manufacturers—formerly the “Big Three,” now more accurately known as the “Detroit Three”—have sunk well below the rest. As the CEOs of Ford, General Motors and Chrysler plead for mercy from Washington, Macleans.ca presents a statistical snapshot of their nightmare.

Highest stock price of the five largest publicly traded automakers as of the Nov. 20 close on the New York Stock Exchange: $59.79 (Toyota)

Toyota’s stock price on Nov. 20, 2007: $110.07

Best performance of those five stocks over the past year: -43.9% (Honda)

Poorest performance: -89% (GM) Continue…

Trust him. He's Bob Rae.

By selley - Friday, November 21, 2008 at 2:27 PM - 13 Comments

Must-reads: Dan Gardner on the McMurtry/Curling report; Colby Cosh on bailing out the oil patch; Don Martin on Bob Rae.

A long, bumpy ride
And so dawns the new age of economic consensus…

“Maybe I should simply be happy no one’s yet suggesting we rekindle inflation and see if it helps,” a predictably outraged John Robson writes in the Ottawa Citizen. “But I’m not.” Indeed, he’s borderline apoplectic at the speed and obtuseness with which governments abandon solid economic principles—balanced budgets, not “picking winners and losers” in the corporate world, etc.—when the economy goes south. In fact, he observes, most people pushing for some kind of Detroit Three bailout on the basis that allowing them to fail would be untenable have abandoned even the “pretence that GM, Ford and Chrysler are winners,” and yet they still want to throw good billions after bad. But alas, Robson laments, we are at these people’s mercy. Just stay the hell away from the stock market until it’s over, he advises.

Colby Cosh returns to the pages of the National Post in fine form, observing that lots of potential jobs are being lost in the Alberta oil patch thanks to “purely temporary business-cycle conditions,” and yet Tony Clement’s nowhere to be seen with a bailout proposal. What gives? Partly, Cosh argues, it’s the old political truth that the visible (i.e., existing jobs at crap Detroit-based automakers) trumps the invisible (i.e., potential jobs at viable but not-yet-built oilsands facilities) no matter how illogically. And partly, he suggests, it’s because Ontarians’ “understanding of the world remains heavily influenced by the opening credits of The Beverly Hillbilies.”

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