Thoughts on Bailouts, Deficit Spending
January 3rd, 2009, by Jeremy Krygsman
There has been pressure in Canada to deliver stimulus packages and bailouts to every big company that needs them during the credit crisis. A wave of bailouts began in the American financial sector, and has now spread quickly to the auto sector, which appeared to be on the brink of collapse.
If Prime Minister Harper must
follow an economic policy word
for word, it should be Chancellor
Merkel’s, not President Bush’s.
But first, let’s get one thing straight. Canada’s banks were rated the strongest in the world in October. The government did not have to act to protect them, something that was deemed necessary in the United States. This is a good thing: to me, a capitalist system should not throw money at failing companies — many of which are falling because of their own risk taking. Why should the government insure stupidity?
The next thing on the table is the bailout of the automakers. They are losing money at ridiculous rates, so the American government decided to use taxpayer money to avert their imminent collapse. Perhaps such a measure was necessary given the current state of the American financial system — but it is certainly not necessary here in Canada! If the auto companies are really worthy of a “bridge loan”, they should be able to get it from our (healthy) banks. If the banks won’t even lend to them, why should our government!
Angela Merkel, Chancellor of Germany, seems to be one of the few world leaders who are making sense on the economy right now.
The Chancellor has said she won’t engage in “senseless” competition with other countries to deliver stimulus packages. [article]
This is exactly what Canada should be doing as well. Sure, if other countries want to bail out inefficient, inept, and money losing corporations, let them do it. But here in Canada, let’s keep our government out of deficit, and let hard earned cash stay in the pockets of people who have actually worked for it.
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