Posted on 05/07/2009 4:00:49 AM PDT by Clive
Say hello to Michael Bryant.
He's a lawyer who is currently Ontario's economic development minister.
Like many politicians with higher aspirations, Bryant has never met a microphone he doesn't like.
This week, he attracted a lot of them by telling the Canadian Club of Toronto what he's actually been saying for some time -- that governments need to decide which businesses will succeed and which will fail and invest taxpayers' money -- he's starting with $2 billion in Ontario -- in the successful ones.
This is such a great idea, one wonders why no other politician has ever thought of it before! Imagine how wonderful our lives will be when governments only invest our money in businesses that succeed!
That is as opposed to what they do now, which is to invest our money in businesses that fail all the time.
The latest example is Ontario's decision, along with the federal government, to give $3.8 billion of taxpayers' money to Chrysler, an otherwise financially insolvent automaker.
And what are the chances taxpayers will ever see this $3.8 billion in emergency loans paid back?
Not great, according to one of Chrysler's own financial advisers, who told a Manhattan court earlier this week there's only a "low likelihood" of that happening, because governments are last in line behind a slew of private sector holders of Chrysler's debt.
No payback
In Ottawa, Federal Finance Minister Jim Flaherty conceded there's a chance Chrysler will never pay back the money, much less with the reported 7% interest, although apparently drawing on his own financial expertise as a ... uh ... lawyer (like Bryant), Flaherty believes there's a "reasonable" prospect of success.
The point is neither Bryant nor Flaherty -- nor their respective governments -- is justifying these loans to Chrysler (and GM) on the grounds they are being made to successful companies, or, to use Bryant's terminology, that they are "winners" which governments should financially support, as opposed to "losers" they should shun.
Rather, they're doing it because they, and their governments, consider Chrysler and GM to be "too big to fail," and that refusing to bail them out would do more long-term damage to the Ontario and Canadian economies than spending billions of taxpayers' dollars on what are clearly very risky investments, with little chance of repayment.
Far from picking "winners" or "losers," they are in fact merely designating "survivors," since any company can survive indefinitely if it gets enough public money to keep operating, regardless of whether it ever makes a profit.
To be fair to Bryant, it's hardly anything new for governments to give loans and grants to businesses.
'Reverse Reaganism'
As he noted in his speech to the Canadian Club , since the global economic meltdown last fall, the Obama administration in the U.S. has unleashed a tidal wave of stimulus spending estimated at up to $13 trillion, a so-called "reverse Reaganism," which Bryant applauds, and which, he argues, Canada must do as well.
Only problem is, the White House isn't picking "winners" and "losers," for the simple reason that it's impossible.
Rather, it's bailing out not only the auto sector, but, to a far greater extent, a slew of financial institutions that helped set off the global economic meltdown in the first place.
They're the real "winners" Bryant is talking about. And the "losers?" That's easy. Taxpayers.
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Amen.
The proposed policies are so stupid that they seem obviously self refuting.
What happens once the gov’t picks “winners” and then we have another terrorist attack?
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