The Irony

[xsbank]

Just 6 months ago, we suffered through a huge debate about whether the government should fall to a coalition based on the Harper government's seeming unwillingness to bail us out of a perceived recession with massive spending. The opposition wanted to topple the government because it was not spending fast enough.

6 months later, 50 billion in debt after giving those loser companies like GM massive subsidies, the opposition is calling for the fall of the government for trying to bail us out of a perceived recession with massive spending.

The collective memory of Canadian citizens is less than 6 months.

Cue the George Carlin quote about the average stupid person.

We are in massive debt up to our frozen asses all because we are afraid of p*ssing off a few spoilt auto-workers who might not vote for the government next time. Chances are, just like the massively subsidized plant in Quebec that closed (they were building Camaros, for f*ck sakes) without ever having paid back a dime of their loans (at least Bombardier pays back its no-interest loans and stays in Canada at the Great White Elephant, Mirabel) the southern Ontario plants could also just fold up and take their sacks of Loonies and go to Mexico.

Welcome to Canada, home of the Northern Moron.

Just keep paying those taxes, pay those user-fees, just keep sending in those beer-dollars, Canada needs your dosh to make it possible for those of you who are now unemployed to buy your very own Camaro. Or Hummer. Or Aztec. Meanwhile the sh*t keeps flowing into Halifax and Victoria's harbours, the potholes grow larger and the BC economy is floating on marijuana dollars.

Its ok though, if you don't like it you can just leave.

[Rockie]

The collective memory of Canadian politicians is less than 6 months.

I think if you asked a large group of Canadians if the deficit is necessary you would get 4 different answers:

Yes
No
Don't know
Don't care

Furthermore, those people probably won't change their minds because it reflects how they percieve society and the level of interest/disgust they have with political issues.

Politicians on the other hand will put their hand on their heart and say one thing one day, and the exact opposite the next.

[rotorhead350]

Just 6 months ago, we suffered through a huge debate about whether the government should fall to a coalition based on the Harper government's seeming unwillingness to bail us out of a perceived recession with massive spending. The opposition wanted to topple the government because it was not spending fast enough.

6 months later, 50 billion in debt after giving those loser companies like GM massive subsidies, the opposition is calling for the fall of the government for trying to bail us out of a perceived recession with massive spending.

The collective memory of Canadian citizens is less than 6 months.

Cue the George Carlin quote about the average stupid person.

We are in massive debt up to our frozen asses all because we are afraid of p*ssing off a few spoilt auto-workers who might not vote for the government next time. Chances are, just like the massively subsidized plant in Quebec that closed (they were building Camaros, for f*ck sakes) without ever having paid back a dime of their loans (at least Bombardier pays back its no-interest loans and stays in Canada at the Great White Elephant, Mirabel) the southern Ontario plants could also just fold up and take their sacks of Loonies and go to Mexico.

Welcome to Canada, home of the Northern Moron.

Just keep paying those taxes, pay those user-fees, just keep sending in those beer-dollars, Canada needs your dosh to make it possible for those of you who are now unemployed to buy your very own Camaro. Or Hummer. Or Aztec. Meanwhile the sh*t keeps flowing into Halifax and Victoria's harbours, the potholes grow larger and the BC economy is floating on marijuana dollars.

Its ok though, if you don't like it you can just leave.

That's just what i did, and now i feel much better hoarding my money every month and not giving a cent to the government. Ahhhh, i love my tax free salary!!!!!!!!!!!!!!!!!!

[BoostedNihilist]

TO be fair and accurate, it was not the CAW who put GM in this position. The CAW agreed to large concessions to keep the companies out of bankruptcy, it was the bondholders who would not re-negotiate. As much as I hate to see the union take it on the chin, they did and they had to. In fact, the CAW agreed to concessions over and above their dodge counterparts, even though the dodge deal was a perfectly workable compromise.

Though I supported the unions I did not support a bailout of any kind. I am of the opinion that if a business is not viable then it should cease to exist... this is how it is supposed to work in a capitalist society.

[crazy_aviator]

Booted, your an excellent example of xs banks ideas on human memories and other ailments!

It was CAW that fought and won employees "rights" and the Equivalency of 74.00/hour DUH ! NOW they are backing down and the lazy , SELFISH employee is taking a perks and pension cut BUT the union isnt going to LOOSE a cent on this one , you can be sure of that! The bondholders stand to LOOSE real MONEY ,,, the unions and employees stand to loose perks ! The reason for layoffs is 2 fold, overcapacy/lack of advancement/ and wages, perks are too high !!! Management HAD to produce + number of cars because of overhead and employee costs etc The CAW is like a higher quality mafia, it pressures the companies for "protection" money and gives some to the workers and takes the rest!!!

When a country has to bail out all the stupidly managed and unionized lazy workers ( AKA Air Canada ) we now find ourself in a socialist/ communist/ dictatorshop society with NO way to go but Down !!

[SkyWolfe]

Xs: Thank god me and Canpilot have longer memories!

We also made note of that cute irony.

[Icebound]

Well, the idea of bailing out the auto industry was not so much about saving the jobs of the "auto workers" themselves, but saving the jobs in the much broader economy.... the ripple effect across all the OTHER industries.

Of course, GM is going under, or nearly so, so all the good intentions are not going to make much difference anyway.

Massive debt is good for us. The government is going to have to borrow to cover it, so Interest rates will skyrocket and throw a few more Bay Street crooks out on their butts. Save your cash for the 18-percent bonds. Well, sure, inflation will be 25 percent, but you can always feel better by comparing your plus 18-percent return to the minus 40 or whatever last November. ....

And what the hell, the dollar will be up at 1.05 or 1.10, Oil will be 100 or 140 (just because they can), so "Canada" will think itself rich. Too bad the people won't.

By then Harper will be out on his ear and we will be able to blame it all on the Liberals again. Life will be good.

Oh, and Balsillie will not have a hockey team in Hamilton. to cross the US border you will need an electronic implant with your complete personal and financial history, and Khazakstan will begin to look like one of the more attractive permanent residency destinations.

...

[North Shore]

When a country has to bail out all the stupidly managed and unionized lazy workers ( AKA Air Canada ) we now find ourself in a socialist/ communist/ dictatorshop society with NO way to go but Down !!

not to mention all of those banks and insurance companies!

[Rockie]

When a country has to bail out all the stupidly managed and unionized lazy workers ( AKA Air Canada ) we now find ourself in a socialist/ communist/ dictatorshop society with NO way to go but Down !!

Whoa...the government bailed out Air Canada? When did this happen and where's my cut?

[BoostedNihilist]

Booted, your an excellent example of xs banks ideas on human memories and other ailments!

I guess yes, I do remember terms like sweatshop, and exploitation.

It was CAW that fought and won employees "rights" and the Equivalency of 74.00/hour DUH ! NOW they are backing down and the lazy , SELFISH employee is taking a perks and pension cut BUT the union isnt going to LOOSE a cent on this one

Hey man, GM signed those contracts. If it wasn't such a hot deal they could have fought it in court. When those contracts were signed they were viable. Only after mismanagement from those greedy buggers at the top did the formula get all messed up.

The bondholders stand to LOOSE real MONEY ,,, the unions and employees stand to loose perks ! The reason for layoffs is 2 fold, overcapacy/lack of advancement/ and wages, perks are too high !!!

Yes, the bondholders do stand to loose real money. This is what we call a bad investment. They knew, or at least should have known the state of the company when they offered up their bonds... so I don't exactly get how that is the CAW's problem. Needless to say, when the CAW seen that the deal would just simply not work they did take a pay cut. Losing a perk is the same as a pay cut. It is like taking away per diems. Perhaps it is not less money off your gross but those costs will impact your bottom line. To deny such is ignorance at its finest. Again, my point of view is that the union should not have made any sort of deal and the company being the dinosaur it is should have become extinct. But, for the government to bail out the bondholders and not the union is the height of hypocrisy. Why should the employees who have no control over the financial management of the company be the only ones to take a hit?

Management HAD to produce + number of cars because of overhead and employee costs etc The CAW is like a higher quality mafia, it pressures the companies for "protection" money and gives some to the workers and takes the rest!!!

That argument makes no sense. Those deals came about as a result of legal collective bargaining. Likening it to 'protection' shows that you are biased. Not to mention your argument shows how little you know of how a business works. Every business on earth which produces a product works as you have described above. Yes, you do have to produce and sell x numbers of widgets before you break even and the rest is profit. Unfortunately, when you have stupid bondholders who cannot read the writing on the wall... well, the rest is history.

To re-iterate. I feel that the union workers should not have made any concessions, I also believe that the government should not have bailed anyone out ever. But please, if you are going to have your perspective, which is your right, know that you give your right up to bitch and moan about the wages in the aviation industry tanking because man, I'll tell you right now a union's job number 1 is to make sure that a shitty supply and demand argument does not lead to exploitation of workers...

When a country has to bail out all the stupidly managed and unionized lazy workers ( AKA Air Canada ) we now find ourself in a socialist/ communist/ dictatorshop society with NO way to go but Down !!

What? Taken a look at the quality of life in socialist and communist countries?! Unions are the antithesis of any of those political ideologies and indeed help make capitalism what it is. by organizing and providing solidarity they ensure that the broader society does not fall victim to exploitation. By the way, in case you actually are interested you might want to see what solidarity does to a communist society.. I suggest reading a book on poland..

I'll give you one prime example of what happens to a field of workers who have no representations.. We have first officers flying q400s into the ground while making 20k a year. Yeah, not having a union is really working out well for pilots eh?

[Rockie]

A unions job is to represent the interests of its members. The autoworkers union has done a very good job of that over the years, and from what I've seen continues to do so by taking painful steps to ensure as many of their members keep their jobs as possible. It is not a unions job to manage the business...that is managements responsibility. GM and Chrysler management have clearly done a very poor job of that.

Workers provide a service to a company in accordance with a contract negotiated just like any other service contract. If a management signs a contract they know they cannot afford then they are not doing their job properly. They should have said no to autoworker demands years ago as being unaffordable, then it would be the autoworkers choice to withdraw their services or not. But at least the corporations would have fulfilled their responsibility of properly managing the company.

[JakeYYZ]

What I find unacceptable is that we are being bullied into deficits based on our southern neighbor’s idiotic domestic policy agenda. The government should never have embarked on all this baloney Keynesian “stimulus” spending, propping up dying and poorly-run industries.
Leave tax dollars in Canadians’ hands. It has always worked out best.

[Icebound]

...

Governments, like people, save a little in good times so as to get through the bad times.

Our personal "stimulus spending" may be to repair our car, take a course, start a different business. In the government case, it's to keep a million people from losing their jobs and sleeping on a Yonge street grate..

Of course, if, like Harper, we stop saving 4 or 8 billion a year just because times are good and we don't need the money.... then we are going to have a big-time deficit (and big-time borrowing to cover it) when times DO go bad.

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No matter who the next government is, (and no matter what they promise), look for some form of GST to be re-instituted whether under that name or some other.

Economists told Harper a long time ago that scrapping the GST was a bad idea, and now it has proven so.

We elect politicians to do the right thing. The right thing is not necessarily the popular thing, nor even the "promised" thing. Most environmentalists AND economists agreed that the carbon-tax was the "right thing". Dion paid the price for its unpopularity.

Now its Harper's turn. Either he re-introduces the GST and suffers the political flak... or he gives up power to let the Liberals do it.


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[xsbank]

You know, I really don't agree with the "carbon tax" because it is just another tax. Call it whatever you wish, its just another tax. If the bozos who think up this stuff just added 3 or 4 cents a litre tax to the gas, there would be squawking and whining from every quarter, but call it something "green" and everybody gets all silly and righteous about it.

Give me a break.

Like P.T.Barnum said, there's a sucker born every minute.

If you give a government a dollar, it means for them to have that dollar you had to actually give them 10. It takes a crate of money to collect a tax. In Quebec, the feds do it to us and so do the bloody Quebecois. 2 tax departments, duplicating the work force to collect that dollar.

If you give a government a dollar they will do something stupid with it. Cut taxation and let the citizens keep their dosh, then the government will have to find other ways to raise the money they intend to waste. A dollar in the hands of the citizens is multiplied many times its value as its passed through the economic system, buying things, hiring workers etc.

I also don't agree that any union ever killed any business - no union ever wins a contract in a vacuum, there is also the other side that must agree to it. If the company is doing well, its partly because of the workforce and why shouldn't the workers share in the profits? The CAW has done very well in the past, its members are making good money, but its total BS if you say that the big three have gone to the wall because of labour costs - they have gone to the wall because too few want to buy the crap they make. They were already undercutting the foreign makes, despite higher wages - cutting wages wouldn't have sold more cars; still not enough people wanted them.

Besides, who can stand the depreciation of a Yank Tank?

[Icebound]

If you give a government a dollar they will do something stupid with it. ...
...
A dollar in the hands of the citizens is multiplied many times its value as its passed through the economic system, buying things, hiring workers etc.

...

We wish....

A dollar spent by the government will hire a worker, create a product or service, etc., just as surely as will a dollar spent by you or me. It will build a highway to move my goods, or fund an electricity grid for the future, or cure my sick worker so that he is productive tomorrow...

The difference is that MY dollar is not directed.... it may do what you say..... .... or it may be invested with Bernie Madoff, etc....OR...worse still, my dollar can be given to a multi-billion multi-national corporation for goods and services (let's say: an automobile) and it should support all those jobs you speak of....

...only to have THEM piss it away and throw hundreds of thousands, (if not millions) out of work anyway.




...
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[Cat Driver]

A dollar spent by the government will hire a worker, create a product or service, etc., just as surely as will a dollar spent by you or me. It will build a highway to move my goods, or fund an electricity grid for the future, or cure my sick worker so that he is productive tomorrow...

Tell me how many government workers actually create a product or build a highway or build an electricity grid.

Better still how many government paper pushers are there for every private sector citizen who actually produces products and does the work that keeps things running?

[Rockie]

The vast majority of government money is spent in the private sector. Not always wisely granted. You can't deny that highways exist, and someone had to build them right? Health care workers provide an essential service as does the military don't they? Who was it built our current electrical grid, civil servants or private sector contractors? Do civil servants teach our kids in school? Who keeps the water running in our houses?

The bailout of the auto sector, as distastful as it is, is necessary. The loss of jobs beyond simply GM or Chrysler workers would be massive, and the accelerating damage to the economy would be catastrophic. It would probably cause economic activity in the country to almost grind to a halt, and the cost to a rapidly shrinking taxpayer base would grow far beyond what it currently is. We should be thankful to have dodged the bullet as long as we have.

[JakeYYZ]

Managed economies are built on quick sand. Nobody knows the correct level of demand for every industry, especially not government bureaucrats or economists. None of this should surprise anyone who is old enough to remember the Soviet Union. I guess the plan is to hope for massive USA auto sector subsidies. Spending on infrastructure I have no problem with. Extending the term and maybe increasing EI benefits, might be a better approach to GM and Chrysler’s problem.
Now what is the perceived benefit of a consumption tax (GST)? It encourages saving and investment while discouraging consumption. hmmm.
Has anybody been paying attention for the last year? In all of Icebound's posts: is the economy suffering from lack of saving, or lack of demand? Does lack of consumption encourage or discourage investment?
Even if it was a bad idea to cut the GST during a boom, isn't that what we should be doing now?

[Icebound]

Managed economies are built on quick sand. Nobody knows the correct level of demand for every industry, especially not government bureaucrats or economists. None of this should surprise anyone who is old enough to remember the Soviet Union. I guess the plan is to hope for massive USA auto sector subsidies. Spending on infrastructure I have no problem with. Extending the term and maybe increasing EI benefits, might be a better approach to GM and Chrysler’s problem.
Now what is the perceived benefit of a consumption tax (GST)? It encourages saving and investment while discouraging consumption. hmmm.
Has anybody been paying attention for the last year? In all of Icebound's posts: is the economy suffering from lack of saving, or lack of demand? Does lack of consumption encourage or discourage investment?
Even if it was a bad idea to cut the GST during a boom, isn't that what we should be doing now?

I don't think anybody is advocating "managed economies" in the sense of the old Soviet Untion. But neither can we totally accept the "just cut my taxes, I know best how to spend my money" approach. Neither produces the best results.


Is the economy suffering from lack of demand or lack of saving?

Perhaps neither.

Maybe it is just a matter than consumers have totally changed their spending style and have stopped spending on crap? And are just waiting to see when (or if) some QUALITY is going to show up.

Maybe it is just a plain lack of trust. lack of confidence.

1. Why should they invest in the ownership of "best" companies in North America, if they see such shares disintegrate to pennies?
2 Why should they loan money to the "best" companies in North America, if they will simply run to bankruptcy court to cut their liabilities to bondholders?
3. Why should they buy if they can't be sure that they will have a job tomorrow ... not to mention, will the company be here to stand behind their product???


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By the way....

I am happy to see some acknowledgement of infrastrcture spending as being a good thing.

I am happy to seem some acknowledgement thay maybe cutting the GST was not the best idea.

What was the benefit of a GST? For one, it kept the government solvent and eliminated the need of massive borrowing. If the governments' deficits persist, interest rates will skyrocket as they attempt to find the money to cover. You can choose which evil businesses would rather have, a solvent government and very slow, growth, or 18-percent interest rates, and runaway inflation.


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[xsbank]

The problem with government is the same as for private industry. Give them windfall profits (the GST) for a long time and they get fat - they build bigger bureaucracies to administer the dosh and the lion's share of the GST goes to running the agencies that collect it. Cut them back and they cut back on all the excess and lay off useless drones who shuffle paper and administer the money. That's why governments are so inefficient at running things - it takes them entire ministries of paper-shufflers to collect the taxes, then other ministries to dole it all out. The inefficiency is staggering. When I worked with a certain forestry department, they spent every penny of their budget each year because if they didn't, next year's budget would be smaller.

If I take a buck down to the corner store and buy milk, the dollar goes to the owner who pays his milk supplier and the girl at the front counter and his book-keeper. The rest is his. If I give a buck to the government, probably less than 5 cents makes it out to fix potholes.

Government should only be in areas that the private sector cannot manage - military/rescue, police, E.I.

Ever wonder why the tax form is so byzantine? Because if it was simplified, thousands of tax department people would have to be laid off, thousands of tax accountants and lawyers would have to find a real job, all of those outfits that produce tax software would have to produce something useful.

Why does it take hours and hours and hours to do a tax form?

[JakeYYZ]

Infrastructure investment is investment, and I feel a lot happier borrowing for investment than borrowing for consumption. (NO. I don’t see a decrease in the GST as borrowing for consumption).And infrastructure is one of the things that the government does, and is supposed to do. The only question is when. Last year would have been a very bad time. Later this year, and next year, might be a good time, or might not, but it is unlikely to be a worse time than average. At worst, we get infrastructure we need when the economy isn't operating below capacity. At best, we prevent tens of thousands of construction workers using 50 weeks of EI (at substantial expense), and get the spin-off benefits of new infrastructure.
Budgets are supposed to be about finding the best cuts and the best new programs. Supporting GM and Chrysler, just doesn’t make sense to me. I really don’t know whether the UAW or management is more incompetent and I quite honestly don’t care. All I know is that as an ordinary taxpayer, it’s not my fault that the automakers are in the shape they are and I don’t take kindly to anyone who insists that I pay for anything to do with this mess. It makes me sick that both sides think that digging into my pocket is their right. The fact of the matter is that these companies are on life support and its management’s and labor’s problem to fix it and stop pointing fingers at each other. If they can’t get it done, screw ‘em.