Welcome To The Depression...

[Tom O'Donnell]

Re: Welcome To The Depression...

I don't recall which car company it was, but I think the place was St. Thomas, in Ontario.

A friend of mine (who reads this board) made a passing comment about the Great Depression and how many car companies folded during that time. It is possible that Ford will turn out to be a good investment ... but in my opinion only if at least one of GM or Chrysler collapse totally. As long as the government refuses to let weak businesses fail, then those businesses will be taking some market share away from their competitors, and that makes those businesses weak.

It also causes people to take stupid risks.

Let's supposing I hand you a fair six-sided die and tell you that for a price of $50K, you can roll that die. If the number is a six, you get $250K (your original $50K back plus another $200K); if it is any other number, you get zip and I keep the $50K. A little arithmetic tells you that this is a bad investment in the long run. However, if you can then go cry to the government if you don't roll a six and they will give you your $50K back, you are going to roll that die (you can't lose). Government bailouts for businesses are as bad as for individuals; it protects them from their own stupidity. That's bad for business and in the longrun bad for the human race.

[Gary Ruben]

Re: Welcome To The Depression...

There are a lot of car companies which don't seem to be around anymore. In 1965, I think it was, I drove a couple of year old Checker station wagon for a few months. It was quite the car. Solid like a tank. Company car.

There was also American Motors. I drove a couple of their cars. Company cars. I think it was a merger of Nash and Hudson motor car. I think Chrysler ended up with American Motors.

There was also Studebaker and then Studebaker-Packard Corporation. I forget who ended up with them but it was around 1980, I think. Never drove one of them.

I don't know if GM and Chrysler will survive but suspect GM will. I have a Chrysler so hope it does as well. The thing is the place I've been buying my Chryslers closed a couple of years ago and it's a pain getting maintainance done. They still did repairs after they closed the dealership part but can't do warranty work. So my next car will be something else.

The government won't likely let the car dealers go under because of the jobs. They also like the high paying jobs because they can get more taxes from the employees.

The thing is the loss Ford turned in for 2008 is almost half the amount of the massive deficit the Conservatives will run in 2009 to try to shore up our economy. I'm reading Ford still has 23 Billion of liquidity before they have to hit up the governments for more liquidity (money).

The Canadian government doesn't have to bail out the auto industry. The problem is that if they don't do their share the jobs will go south. There is a lot of industry which goes along with auto manufacturing. I used to do service work at many of them. The plastic grills, tires, seats, etc. etc. GM makes batteries in Canada at the Oshawa location, or they did. Labour and metals go into that and they use a lot of energy.

I don't know how much appeal the electric cars will have. I wouldn't want one. I wouldn't want any dual fuel (is it called a hybrid?) vehicle. Twice as much that can go wrong and probably it would have to go to a repair shop that knows how to work on that type of car.

Anyhow, with stocks like this I take my best guess they won't burn through their cash before sales pick up and will survive in the long run. I'm not interested in anything I think the U.S. will have to bail out because they tend to take a 79% equity interest, in effect reducing the existing shareholder to almost nothing. Nationalization for the good of the citizens. Makes one think capitalism has failed.

Do you think Harper is a fiscal conservative in view of his latest budget? The only real concern Layton seemed to voice was that he felt Harpers heart wasn't really in the measures the budget put forward. That one tickles my funny bone.

[Tom O'Donnell]

Re: Welcome To The Depression...

I think almost no "conservative" is a real (fiscal) conservative. Most are social conservatives. It's why I tend not to vote for any of them (including Harper).

Government has gotten away from expecting much from its citizenry. For their part, citizens tend to expect the government to protect them more and more. Not from each other, mind you, but from their own bad choices. That's not the role of government.

Penny and I went down to the bank on Monday for one of those free financial evaluations. Penny was worried that we don't save enough for retirement. I wanted to reassure her that we are on the right track. Anyway, we are talking to the planner and she tells us that we can expect CPP and OAS at retirement age. Penny and I looked rather dubious at this, so she explained that the bank is telling people that those in our age range (in our 40s) and even people like herself (I would guess roughly 30) will be okay. However, the bank is also telling people just entering the workforce (say 20) that they shouldn't expect much when they retire and should start saving now.

I figure that when those in their 20s hit about 40 they are going to ask themselves why they should be asked to pay into a system for decades only to be shut out when they retire. So I asked her to re-run the scenario where there is no CPP or OAS for the two of us. We still will make it, but just barely. It's okay, because I don't mind the idea of working part-time even in my Golden Years. The moral: be nice to the teenagers - they will be the factor that determines if you are eating dog food in your 70s.

[Gary Ruben]

Re: Welcome To The Depression...

Probably now people want the government to protect them from the financial system. If the bank with which you deal (I assume it's one of the big 5) goes under, how is it your fault? Did you know the banks were into ABCP and had no idea what that paper actually was? Did you know they had such hugh exposure to CDO's which is essentially insuring financial products? I can see where maybe someone who walks into a financial Ponzi scheme might have seen some signs but when I deal with a big bank I don't expect it to go under. Although, with what is happening with the U.S. system, we can see the weaknesses in their less government policies. The prices of some of their bank stocks is attractive but how can we know if they are solvent? I saw a guy on TV last evening talking about buying Bank of American Stock when it gets to 5. It's been over 45 in the last 52 weeks. That's about a 90% drop from the high. I wouldn't touch it for fear it will be nationalized. The Bank of the Citizens of America.

A person worrying about what will happen when they hit 70 probably won't catch on at a much higher percentage than it is now. For one thing, a person has to get that far down the road. Most people are just trying to get from day to day. Without knowing how the current situation will work out, it's hard to know what to expect from the CPP and OAS.

I don't listen to banks. If they were that good at predicting the future their balance sheets would look better.

The Americans seem to be going into a Buy American mode. It happens in hard times. I wonder if Canada will go into that mode to try to rebuild our industry. Maybe we shouldn't sell natural resources but finished products instead.

[Ed Seedhouse]

Re: Welcome To The Depression...

Seems that not only the car companies can't learn from their mistakes. The (ex-)employees seem incapable of it, too.

From one example you generalize to everybody! Hardly rational Tom.

Maddoff was a CEO, so they are all crooks and we should put them all in jail, eh? Same kind of "reasoning".

[Ben Daswani]

Re: Welcome To The Depression...

Government has gotten away from expecting much from its citizenry. For their part, citizens tend to expect the government to protect them more and more. Not from each other, mind you, but from their own bad choices. That's not the role of government.

The role of government should be to render itself unnecessary - a most unfortunate incongruity.

[Ed Seedhouse]

Re: Welcome To The Depression...

The role of government should be to render itself unnecessary - a most unfortunate incongruity.

Pure Marxism!

[Ben Daswani]

Re: Welcome To The Depression...

Pure Marxism!

Is that a serious comment?

[Ed Seedhouse]

Re: Welcome To The Depression...

Is that a serious comment?

Yup. According to Marx, in a communist society there is no state. Sounds exactly like you want it to be to me.

[Gary Ruben]

Re: Welcome To The Depression...

I guess later today the Harpiggy coalition government will pass the budget in Parliament.

I've been reading the budget allows for a 34 Billion dollar deficit in the 2009 fiscal year and 30 Billion dollar deficit the following year.

Let's put this in perspective. Ford lost around 14.6 Billion in 2008. One company lost about half as much as our government thinks it will take to save our nation from the current financial crisis.

To me it looks like the Conservatives wanted no deficit. The financial update they presented a couple of months ago certainly indicated this. The Liberals probably wanted around a 65 billion deficit. It appears to me they split it and we have the current document. One persons view.

I don't think this will do much to turn around our economy. What it will do is ensure the politicians keep their jobs for a couple of years until the Conservatives get tired of the process and asks the GG to dissolve parliament for an election.

[Ben Daswani]

Re: Welcome To The Depression...

Yup. According to Marx, in a communist society there is no state. Sounds exactly like you want it to be to me.

According to your "logic" (generous usage of the term, I know), cyber-terrorism involves using a computer, and YOU'RE using a computer right now, so YOU must be a cyber-terrorist. GOOD JOB, SELF-IMPLICATOR.

[Gary Ruben]

Re: Welcome To The Depression...

According to your "logic" (generous usage of the term, I know), cyber-terrorism involves using a computer, and YOU'RE using a computer right now, so YOU must be a cyber-terrorist. GOOD JOB, SELF-IMPLICATOR.

I think you've avoided the political ideology involved in the discussion and are failing to defend your position. Is your best defence to resign?

[Ben Daswani]

Re: Welcome To The Depression...

I think you've avoided the political ideology involved in the discussion and are failing to defend your position. Is your best defence to resign?

I've "avoided the political ideology"? Clearly, you've avoided the writing coherently.

[Jason Lohner]

Re: Welcome To The Depression...

Pure Marxism!

Marx just plagiarized his ideas from Plato's Republic. Why anyone took Marx seriously is beyond me. His economic theories have been completely disproved and his ideas that government could innovate are laughable at best. I guess that's why the current lot of politicians are looking back to Keynesian economics of spend spend spend! And the boomer generation wonders why people are blaming them for the current economic crisis

http://www.theglobeandmail.com/servl.../lifeMain/home

[Paul Bonham]

Re: Welcome To The Depression...

Marx just plagiarized his ideas from Plato's Republic. Why anyone took Marx seriously is beyond me. His economic theories have been completely disproved and his ideas that government could innovate are laughable at best. I guess that's why the current lot of politicians are looking back to Keynesian economics of spend spend spend! And the boomer generation wonders why people are blaming them for the current economic crisis

Give a Capitalist enough rope and he'll hang himself.
Give a Marxist enough rope and he'll hang the Capitalist.

Either way, the Capitalist is screwed. Isn't it interesting that just as Capitalist America is in the throes of it's self-hanging, Marxist Russia is yanking the rope! They just convinced Kyrgyzstan (most difficult nation in the world to spell?) to close American bases in return for aid -- bases needed for America to surge in Afghanistan.

We celebrated the fall of the Berlin Wall, 1989.... now just 20 years later, the laugh is on us, big time. Marxist economic theories disproved? Hang on to your hats, folks, we're in for a ride!

Jason, just as an aside:

Marx and Fischer, sitting in a tree,
K-I-S-S-I-N-G

HAVE FUN WITH THAT ONE!