How should Canada respond to the call for cash from the auto industry?

[CBC News]

The U.S. House of Representatives on Wednesday passed legislation to speed $14 billion in emergency loans to struggling U.S. automakers, but the bailout was still in jeopardy from Republicans who were setting out roadblocks in the Senate.

Democrats and the Republican administration of President George W. Bush hoped for a Senate vote as early as Thursday and enactment by week's end.

General Motors of Canada has requested loans totalling $2.4 billion, saying it needs $800 million of that amount urgently. Chrysler Canada is seeking a loan of $1.6 billion, while Ford of Canada is asking for a $2-billion line of credit that it can draw upon if necessary.

Ontario Premier Dalton McGuinty said Wednesday he wants the companies to release to the public the restructuring plans they submitted last week to the two levels of government.

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How should Canada respond to the call for cash from the auto industry?



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[JLM]

How should Canada respond.........?

NO bailouts to manufactures- any money should be paid to the purchasers of N.A. built vehicles as a cash rebate or income tax deduction on sliding scale dependinig on the "greenness" of the vehicle.

 

[Machjo]

The government has to ensure fluidity in the market. Let's say that the Federal Government gives the auto industry money to pull them through the recession just for it to go bankrupt later anyway, all that money is lost, and the workers are out of work with no other skills. So then EI or social assistance will have to pay for retraining on top of tha. Very expensive proposition indeed.

Now let's suppose instead that the govermnent simply says that it will pay for the books and tuition of any unemployed worker who needs to upgrade certain skills to be hired by some new company, then we know that this company is a growing one being held back by nothing more than a lack of skilled labour in the market. In this case, we let the inevitable happen to the car industry (if the Aamericans want this dinosaur, let them have it), and the workers laid off from it would be retrained for those industries that have proven more resilient to the recession but are merely being held back by a lack of skilled labour.

In this way, we'd be more certain that we'd be helping industies thatactu that actually have a chance of survival.

Wouldn't that make more sence?

 

[lone wolf]

I say NO BAILOUTS. The problem is, Chrysler has already announced some lines will be forced to relocate to the US if they're not subsidized in Canada. Being greed-oriented, I suspect Ford and GM will do the same.

Isn't subsidy illegal under NAFTA?

 

[Machjo]

I'm not sure of the rules on that one, but either way, if the \us wants these dinosaurs, by all means give them away and let us retrain our workers for those companies that are simply being held back by a lack of skilled labour. These will be the compabies of the future for Canada, and all we'd have to do is retrain the workers. The US, meanwhile, would find itself having to subsidize a dinosaurs for years to come until it gives up and lets it fall anyway, the US economy in debt. Let us go through the pain of restructuring now rather than later.

 

[Scott Free]

The banks got 700 billion, no strings attached, so why shouldn't the automakers get one too?

Why not let the banks fail if they can't compete?

Are bank jobs more important somehow than blue collar jobs?

 

[Machjo]

The banks got 700 billion, no strings attached, so why shouldn't the automakers get one too?

Why not let the banks fail if they can't compete?

Are bank jobs more important somehow than blue collar jobs?

Absolutely not. And it was wrong to give the banks a bail out too. If any bank should have failed, another bank could have bought it out, and its laid off workers retrained for new industries too (and that I'd be willing to pay for). It would be the responsibility of the government to study the economy to figure out out what the growing industries will be and retrain the workers for them. essentially, a recession ought to be a time to retrain workers for the industries that will take over from the old. It's a purging or purification of the economic system, and in that sence a recession can be a good thing.

But if we follow the logic that the auto sector ought to get it because the banks got it, then guess what? Everyone ought to get it. Now where's the government gonna get the money for that? Or are we going to play favourites like we're doing now?

Besides, the spending on retraining could itself serve as an economic stimulous package. The expansion of schools and their buildings, blackboards, desks, the publishing industry, hiring more teachers, etc. meanwhile, the laid off are not wasting time looking 's not there, or involved in primitive make-work jobs. Instead, they're training so that the country will be prepared for the coming economic boom. In this sence, in a boom, we should be preparing for the recession, and in a recession, we should be preparing for the boom, not subsidizing dinosaurs.

 

[Lester]

Scott this is about the big three Automakers Canadian arm. As far as I know there are no Canadian Banks going broke. We are not offering bailouts to American Banks, So why should we bailout out American Companys?

 

[#juan]

I fail to see why Canada should bailout the the branch offices of American companies. Canada had no say when plants were shut down. Canada had no say when they continued to build gas-guzzling junk that, apparently, nobody wanted. If we did do a bailout, I would want a lot of conditions imposed.

 

[bobnoorduyn]

It would be the responsibility of the government to study the economy to figure out out what the growing industries will be and retrain the workers for them. essentially, a recession ought to be a time to retrain workers for the industries that will take over from the old. It's a purging or purification of the economic system, and in that sence a recession can be a good thing.

Machjo; The problem is that governments, even if they study the economy, they can do very little about it. John Maynard Keynes advocated government intervention in the economy, and he was a very smart fellow. He designed and built a rocket that only he could fly. Governments since have had an abysmal record with fiscal interventionism.

Governments handle the economy in too hamfisted a manner and do play favourites, the squeaky wheels get greased, they create winning losers, and the possible winners fall beneath the tracks.

No one really wants to see high priced unskilled labour tossed out on the street, but throwing more money at a dysfunctional industry will not fix the systemic ailments that afflict it.

It doesn't mean the companies have to fail, but many industries and companies have returned to profitability after restructuring under Chapter 11 or CCAA.

 

[Scott Free]

Scott this is about the big three Automakers Canadian arm. As far as I know there are no Canadian Banks going broke. We are not offering bailouts to American Banks, So why should we bailout out American Companys?

I understand what you're saying and I agree except that Canadians have a way of adopting US problems as their own. I expect this is only an issue here because the Americans are struggling with it; I thought, therefore, if the hypocrisy of the American dilemma were exposed it would shed more light on this issue here.

 

[barney]

Huh, y'know there are many throughout the world who would kill for a chance to restructure and possibly plan for economic independence down the road. Not Canadians. The Canadian auto-sector is completely American owned; now Canada has the chance to get out of it and look to alternatives. What is Canada doing? A bail-out. It's enough to make you sick. This country can be so pathetic...

 

[Lester]

I'd rather we threw 6 billion to our electric car company than those three

 

[Machjo]

I'd rather we threw 6 billion to our electric car company than those three

If we did that, it would have to be fair. If you just give the money to any one company, you're not giving other companies a fair chance. Instead, if the government just retrained the unemployed to give them them the skills necessary to build electric cars, then all companies would have an equal chance to bid for these workers on the free market, with no favouritism for any one company.