Thursday, June 4, 2009

The GM bail out

I have been thinking about this huge American and Canadian bail out of GM. A total of $74 000 000 000 is being given to GM, though in return the company is being defacto nationalized.

This is $74 000 000 000 is just about what the Copenhagen Consensus worked with as a number to prioritize the projects that will make the biggest impact for people already the world. Nowhere in their project list is "Save badly managed car companies"

I have trouble even knowing where to start with this.

At a starting point the Canadian subsidy to GM is the same as all the GST we are going to pay in Canada between June 1st and December 31st of this year. All of it will be needed to give to GM.

Canada's biggest economic crisis is the Mountain Pine Beetle - roughly $1 000 000 000 000 will be lost to the Canadian economy because of this one pest. The feds have done almost nothing to deal with this looming disaster.

$14 000 000 000 in Canada could go a very long way to improving our economy.

The amount of infrastructure that could be built with this money is huge. The money would be able to pay for 280 km of SkyTrain/Subway. That is equal to a 20 km line for each million people in the seven largest citizens in Canada.

This could pay for upgrading the Trans-Canada through BC to freeway status - this includes the much needed new Port Mann bridge. There would be money left over to improve all the rail links through to BC to the rest of Canada.

The government could afford to not only make a much more favourable tax regime for research and development, it could provide serious grants to companies doing R and D.

How about giving a brand new laptop to every university student in Canada, there would be money left over.

How about giving the money to the provinces - that would be an extra $1 750 000 000 for BC.

The money is also going to cost year and year out until we pay it off. It is going to cost about $500 000 000 in interest cost each and every year. It will be roughly 30 years before the GM money is paid off, that means an extra $15 000 000 000 in interest that we will have to pay for this money.

The GM bail out makes no sense, it is only happening for irrational political reasons. It is only happening because Ontario and Quebec have enough seats to decide the federal election. The rest of us have to pay for this bribe.

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