Tag Archives: bailouts

More Stories and Insights from the U.S.

Last week we discussed some real on-the-ground stories from Phoenix. Here are a few more insights worth sharing:

First and foremost, something very critical that separates us from the current U.S. policy. We spoke briefly last week about Prime Minister Harper traveling the country stating how well we are doing as Canadians in this economy. And he’s right. This isn’t about politics, although in the interest of full-disclosure, I’m a fiscal conservative. I believe that much of the intervention in the U.S. economy by the government is doing nothing more than creating a phony and temporary sugar high. Cash for clunkers was $3 billion of tax money to sell 700,000 cars – the car market is now dead again.

There’s an $8,000 tax credit for first time home purchasers. I guarantee you, when that expires in November, the housing market will die off again. Foreclosures are still increasing, and there are more than 17 million people out of work – and that’s still rising. The only way to get the economy back to health is to create jobs, and to reduce the killer debt load the average American is under.

If you believe the government programs are a blessing and not a temporary fix – just wait a year for them to expire, and you’ll see the results. Until then, you might not like Prime Minister Harper’s policies, but as a former economist, he knows that governments can’t be the solution to everything.

General Motors has now begun to sell new vehicles on the giant auction site e-bay. The trial with their California dealers was last month, but you can bet it’ll be back nation-wide. And GM is now working on a $4,000 vehicle. Tata Motors is selling their inexpensive one in India right now for $2,000, and they already have European certification, so you know they’re coming to North America at around $5,000 or so. Yes, GM is behind again – but not as far as usual.

Anyone who travels a fair bit will love this story: For some time now, there has been an on-going, multi-country investigation into illegal price fixing by airlines into their fuel surcharges. The CEO of Virgin Atlantic has already admitted to it. But it’s sad that any company that’s convicted will only have to pay a fine. And that fine will be way less than they made in profits from the fuel surcharges. Some of these executives should spend some jail time!

This Is Not About Politics – Sort Of…

Unfortunately, a fair bit of media coverage on the economy, as well as opinions or commentary, revolves around politics. Now, don’t read my politics into these comments, because it’s not there. But here are a couple of observations from the last month:

Before the last Federal Budget, two opposition parties announced they would be voting against it. Fair enough. But they did so a week BEFORE the budget! How is that any different from going to see your boss and he or she tells you: The answer is no, now what’s the question? How long would you enjoy that type of relationship?

If you’re not part of the solution, you’re part of the problem: Many politicians had a lot of criticism about the Federal Budget, but no alternatives or better solutions. That’s just sad. If your boss sits in on a client meeting and afterwards tells you the dozens of things you did wrong, how helpful is that? Where was he or she when you needed help? Where is the value in telling you after the meeting that it had no chance of success? Where was their feedback or suggestions when you needed them? Are there some politicians just wanting the government to fail, or the recession to get worse for political value? How sad, if that were true…

We should do more – way more in bailouts and stimulus money. OK, maybe that’s true. But would you spend $30,000 fixing your roof when you can get it done for $5,000? If it were “free” money, we would all love to get some of it. But can we please remember that the only spending the government does is with our money? There isn’t free money around, sorry. When we remember that, we appreciate it a lot more when politicians are careful with it. Plus, there is not enough money in the world, or enough printing presses, to print more to make up for an entire economic slowdown. It might seem like it, listening to some people, but it just isn’t true.

When Prime Minister Harper (who is actually an economist!) talked about value in the market, he was hammered by large parts of the media. Yet, two weeks ago, when U.S. President Obama talked about virtually the same thing, the general feedback was that his optimism was great. Excuse me? Same types of comments interpreted so differently? Only a political bias can reconcile those extremes.

Federal deficits are bad or good: Again, that depends on who you ask, and their political view. But do remember that we really don’t allow our governments to have much of a surplus before we generally demand the money be spent on this or that project, or that our taxes be lowered. While we all need to have an emergency savings account, we likely don’t allow our government to have that for bad economic times! So what choice do they have but to go into a temporary deficit?

This Weeks’ Federal Budget

I keep getting asked if this weeks’ stimulus budget is a good idea or flawed. But rather than specifics, what really concerns me is more of the big picture of the issue.

Any 100 politicians or economists in the same room wouldn’t agree what day of the week it is today. So it’s pretty easy to find large numbers of people to argue many of the items in the budget are a really bad idea that’ll never work. It’s just as easy for someone on the other side of the argument to line up the same number of people that think its’ a great idea.

What really bothered me is that two opposition parties announced they were voting against the budget weeks before it was tabled in the House of Commons. That’s sad and so wrong. If, every time you went to see your boss for something, he or she said the answer is no, now what’s the question – what would that be like?

One of the nastiest agendas is the attack on Prime Minister Harper that he should have seen all this doom and gloom coming. What? Talk about playing politics! The markets, banking problems, recession issues and housing problems in the U.S. are changing weekly. Nobody really knows what’s coming next. Yet somehow the Prime Minister should have had a crystal ball? Or is it just a political and agenda-driven attack that he is flexible enough to adapt to deteriorating circumstances in our economy? Talk about a no-win situation. Doing the right thing still gets criticized.

When we’re in the middle of a family argument and a big problem or crisis arises, you gotta know our little arguments get put aside, right? Big problems bring families and companies together to confront a common problem. Why do our politicians not care enough to do that? Why are we hearing nothing but arguments, objections and name calling instead of asking what they can do to help? We have some serious economic problems – can we cut the politics and pull in the same directions for the good of the country?

Should we run a deficit during these times? Well, if you or your partner were laid off, would you still pay the mortgage and groceries? Of course. There are times when we do whatever it takes. Why would the budget of the federal government be any different?

When many people say they support our troops, they’re told it’s terrible that they support the war in Afghanistan. What? Supporting the troops is different than supporting the war. Now we have some large economic challenges and we can’t pull together as a country, again? How sad that we can’t seem to disagree without being disagreeable.

When my car needs a boost because it’s dead, that’s not the time I really want to talk about how dirty it is or whether I should have bought a four-door. Can we just get on with allowing the government we elected to make their best efforts to get us out of the economic ditch?

Oh, and there’s one more industry in the U.S. that’s now looking for a bailout: It’s the porn industry lead by the publisher of Hustler Magazine. Yes, business is soft – but the porn industry looking for government assistance? Give me a break – talk about a stimulus package, though!