The Shotgun Blog
Saturday, December 13, 2008
Pull the plug on terminally-ill businesses: Gwyn Morgan
In “Pull the plug on terminally-ill businesses,” former EnCana CEO Gwyn Morgan writes:
The full-court press by Detroit Three auto lobbyists for taxpayer money has fostered strong feelings across our country. B.C. Premier Gordon Campbell staked out his province's position that massive job losses in the forestry sector merit government help just as much as Ontario's auto sector. Fearing for their own jobs, Canadians employed in the services, retail, construction and other sectors ask why workers who earn much more than they do should be subsidized – and why mismanaging bosses should be bailed out.
Canada has the lowest debt-to-GDP ratio of any G8 country and is the only member going into the global meltdown without a structural deficit. Despite the gloom and doom espoused by panicky politicians, our economy is performing relatively well, so we haven't been forced into the desperate ad-hoc measures seen in the United States. While our country does have the financial capacity for well-placed temporary fiscal stimulus, spending taxpayer money in the wrong places will weaken rather than strengthen the economic future of Canadians.
Morgan is exactly right as far as bailouts are concerned.
But instead of industry bailouts, Morgan supports monetary stimulus and enhancing banking sector liquidity. This, of course, has to be done carefully in order to avoid inflation which has the effect of transferring wealth from savers to hard asset holders and punishing low income consumers and fixed income seniors in particular.
Although, if you listen to investment guru Jim Rogers here, inflation is exactly what governments and central banks are working toward.
Read “Pull the plug on terminally-ill businesses," here.
Posted by Matthew Johnston
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The Detroit car making paradigm is shot full of holes and will die regardless.
The new paradigm is built around virtual car parts designed on a computer, emailed to any number of global manufacturers, purchased and shipped to an assembly anywhere in the world on a much smaller and less capital intensive scale than the Detroit monolithic model.
You may as well fund carriage makers and their buggy whip suppliers.
The whole thing is insane, unhealthy, and violates all rules of economics and reeks of centrally planned communist dogma.
Posted by: epsilon | 2008-12-13 10:26:09 PM
I'm surprised anyone would give that little pecker a platform.
Posted by: dp | 2008-12-14 8:10:09 AM
Gordon Campbell has no shame calling for a bailout for an industry that he has ensured is an over-regulated / taxed rent-seeking serf, operating on Crown land subject to the whims of bureaucrats endeared to every green / social justice whim de jour. He is killing an industry that this market could only severely wound.
Posted by: John Chittick | 2008-12-14 6:38:50 PM
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