Now Canada’s jumped into the bailout game. From Reuters, via Yahoo:
TORONTO (Reuters) – Canada will follow the United States by providing C$4 billion ($3.3 billion) in emergency loans to the Canadian arms of Detroit’s ailing automakers to keep them operating while they restructure their businesses, Prime Minister Stephen Harper said on Saturday.
The package, announced by Harper and Ontario Premier Dalton McGuinty, comes a day after the White House unveiled a $17.4 billion package to shore up Detroit’s auto industry.
Harper also announced two new federal measures to support the overall industry — one to benefit automotive suppliers and a second to help consumers get credit to buy cars.
“There are literally across the country hundreds of thousands if not millions of potentially affected families by the distress of this industry,” Harper said at a joint news conference.
“And we are obviously making sure at this Christmas time that, within the confines of our responsibility for taxpayer money, that we are also going to look after their interest.”
Christmas notwithstanding, Harper made it clear that the primary reason for this gift is competitive: the U.S. auto bailout is making Canada’s auto industry less competitive – and Canada is worried that Canadian GM and Chrysler units might relocate to the United States.
Harper said Canada would not allow a restructuring of the industry on U.S. terms in a way that might cause the relocation of Canadian facilities to the United States.
He said the Bush administration and the incoming Obama team have made it clear they would not let the companies fail.
“We may well have much smaller companies but they will not fail in my judgment,” Harper said. “The question then for Canada is to ensure that as they are restructured that we retain our market share.”
And here we begin to see the rise of protectionism, albeit in a form not seen in the past. Each country will try to shore up it’s own domestic industries by providing subsidies (something the U.S. has fought until now). This will lead to trade disputes and outright sanctions that will further undermine the global economy as the crisis deepens. In times like ours, the four horseman are increased taxes, shrinking liquidity, protectionism and central economic planning (industrial policy).
So far, we’ve avoided tax increases and the Fed’s printing presses are running overtime. It appears that outright protectionism might be the result of continued bailouts, however, and with each bailout the government will gain further direct control of the economy. The geniuses in Washington doubtless think they’re smarter than every other twit who’s tried the same thing.
But we know they’re not.
H/T on the Reuters item to HotAir.
