Canada Follows the U.S. Terms for GM/Chrysler; Harper Still Worrying About the “Eased” ‘Buy-American’ Clause in Stimulus Package

~~By InsightAnalytical-GRL

About a month ago we posted on the subject of how GM and Chrysler were begging from bailout money from the Canadian government. (See: The SCANNER–International/Political Edition, 2/24/09 (Which Deficit is Obama “Halving”?; Canada Rubs U.S. Nose into Its Stable Banking System; GM/Chrysler Beg for Bailout Help in Canada, Too; Half of Foreign Criminals in Canada Are Fleeing to the U.S. [???]).

Here’s the relevant excerpt:

GM, Chrysler ask for billions in Canadian aid

General Motors has outlined a restructuring plan that would cut its Canadian workforce to 7,000 and seek as much as $7 billion from the federal and Ontario governments, while Chrysler is requesting around $2.8 billion in aid.

GM didn’t specify how much it will ask for, but Reuters quoted federal Industry Minister Tony Clement as saying the company is asking for between $6 and $7 billion.

The Canadian government doesn’t seem to want to bailout CAW pensions…time will tell.

MORE

Here’s an update on what’s going on now…right in tandem with what the Obama Administration is doing:

GM, Chrysler scolded but given more time to restructure

Canada, Ontario provide $4 billion in loans to troubled manufacturers

Political leaders on both sides of the Canada-U.S. border are giving General Motors and Chrysler extensions on deadlines to come up with viable restructuring plans, saying the auto manufacturers fell short in their first attempts.

(SNIP)

Disappointment in Canada

Canadian politicians also expressed regret that GM and Chrysler could not come up with viable plans.

Federal Industry Minister Tony Clement, along with Finance Minister Jim Flaherty and Ontario Economic Development Minister Michael Bryant, said GM has 60 days to come up with a plan for its Canadian division, while Chrysler has 30 days to reach a deal with the Canadian Auto Workers union and with Fiat.

At the same time, Clement said the first of the $4 billion in interim loans to the two companies is going out. Chrysler will get $250 million on Monday of the $1 billion allocated, while the first of $3 billion in funds for GM will begin to flow in early April.

“We are making this strategic investment to support an orderly restructuring of a critical industry with [the] goal of ensuring that Canada maintains its 20 per cent production share in the future,” Clement said.

(SNIP)

Canadian Auto Workers president Ken Lewenza said the union won’t reopen its collective agreement with GM Canada despite pressure from politicians that more cost restructuring is needed.

“We did it once 10 months ago and we did it again less than a month ago,” he said. “Opening up bargaining won’t resolve this problem.”

Lewenza said the union is still trying to work out a new collective agreement with Chrysler in advance of a March 31 deadline.

The email newsletter I receive from Radio Canada International sums it all up this way:

OTTAWA: GOVERNMENT OFFERS INTERIM HELP TO AUTOMAKERS

Two struggling Canadian automakers, Chrysler and General Motors, were offered help on Monday by the federal government and the government of Ontario. The two companies will receive bridge loans totalling CDN$4 billion to help them to survive. Chrysler would receive CDN$1 billion and General Motors would get $CDN$3 billion. Further government loans will depend on whether the two companies can present acceptable restructuring plans. Tony Clement, Canada’s industry minister, has rejected plans that were submitted earlier, saying that they fail to ensure the companies’ long-term survival. General Motors has until the end of May to present its new plan. Chrysler has until the end of April. Chrysler’s plan must include the company’s merger with the Italian carmaker, Fiat, that was announced on Monday. The plans will depend in large measure on negotiations with the company’s unionized workers. The Canadian Autoworkers Union welcomed the Chrysler/Fiat merger as long as it preserves the Canadian auto industry. CAW’s negotiations with Chrysler will continue, but the CAW refused to renegotiate a deal with General Motors that was arranged within the past month. The CAW also welcomed the government’s insistence that the two American-based companies commit to maintaining 20 per cent of their North American production in Canada. The government offer also requires that company executives agree to limits on their compensation.

Now, here’s another rather ironic bit from the same newsletter, considering how tightly bound together Canada and U.S. are.  (See: What’s Going On North of the Border: The Canadian Economy and Stimulus Plan & THE PROPOSED NORTH AMERICAN COMMUNITY/NORTH AMERICAN UNION: 2010 Is Just Around the Corner)

WASHINGTON: PRIME MINISTER EXPRESSES CONCERN OVER GLOBAL PROTECTIONISM

Prime Minister Stephen Harper says the danger of protectionism is one of his major concerns in the global economic crisis. He’s worried that if protectionism becomes a global option, the world could face a depression similar to the one in the 1930s when countries introduced trade barriers to save homegrown industries. The measures only accelerated and deepened the global economic downturn. Mr. Harper is concerned that the United States stimulus plan includes Buy-American clauses for recipients of government bailout money. Such a plan could hurt Canadian exports to the United States. Mr. Harper made his comments as he prepares to attend a Group of 20 summit in London this week.

In early February, the Senate “eased” the Buy-American” clause as Obama proclaimed he didn’t want a “trade war”…The EU, Canada, and Japan had protested; only the UK hadn’t complained at that point.

US Senate eases “Buy-American Provision in Stimulus Package”

(SNIP)

The measure had sparked fears of retaliatory measures by US trading partners and a possible spiral of protectionism in an already reeling global economy.

The requirement to favour US-made supplies to be used in infrastructure projects, included in a nearly 900-billion-dollar package being considered by the Senate, was softened to allow for exceptions as required by US trade agreements, broadcaster MSNBC reported.

Apparently, Harper isn’t completely satisfied with the changes to the clause. Maybe he doesn’t trust Obama or the U.S. Senate…probably a wise stance to take.

The Scanner-Politics: March 25, 2009 (G-20; Glenn Beck’s “The One Thing” Segment on the Dollar [Video]; “The Big Takeover”; Al Gore Releasing New Book on Election Day 11/3/2009; Augie the Dog Sends a Deposit to the U.S. Treasury)

~~By InsightAnalytical-GRL

We looked at the upcoming G-20 meeting in yesterday’s post (See: The Scanner–International Edition, March 24, 2009: Say Goodbye to the Dollar? China, Russia Proposing a New World Currency for “Non-Credit” Based Economies, Echo G-20 Agenda of Expanding IMF; China Will “Consider” Buying IMF Bonds; 10th China Develpment Forum Underway), and lo and behold, a few times during the day, I began picking up some items on the TV discussing the meeting, which will be held in London April 1-2.

I caught a few moments of Shepherd Smith on FOX during the afternoon, interviewing a woman who ticked off all the reasons why the dollar wouldn’t be replaced as the world’s reserve currency at the meeting. The discussion was in the context of how it would affect the U.S. economy and how complicated it was, and that’s why it wouldn’t happen. China’s worries about its investments in U.S. Treasury bonds was mentioned and their desire for the dollar to be dropped as the reserve, but the EU was supporting the U.S. There was absolutely no mention of Russia and its release suggesting what China suggested.

Apparently, Glenn Beck wasn’t so circumspect during his morning radio show or his FOX TV show later in the afternoon.  I didn’t hear either but my mother said he sounded EXACTLY like what we had written in our post yesterday.  Since I had printed it out for her to read, she knew what was in it.

Well, what he opined wasn’t EXACTLY what we wrote about, but he touched a whole bunch of bases in giving a general “history” of how we have gotten to where we are today.  It’s like “From Biggest Lender to Biggest Borrower 101.”  Apparently Glenn Beck and IA are on the same page, at least on this one topic.  That’s a bit weird for us, since I think Beck is pretty insufferable, to say the least, but I think the “The One Thing” segment he did yesterday evening was pretty darned clear. This is a very short segment, so do watch it all! (Note: I had trouble inserting the video from the FOX site, so I found it on YouTube. The “title” comes from FOX, however.)

The One Thing

By Glenn Beck

The incredible shrinking dollar: Where’s the outrage?

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A big hat tip to Uppity Woman who posted about the story by Matt Taibbi in Rolling Stone which actually comes out and talks about the “revolution” that is underway courtesy the big insiders.  Go to Uppity Woman to catch some of the excerpts of note.

And here’s the direct link to the piece:

The Big Takeover

The global economic crisis isn’t about money – it’s about power. How Wall Street insiders are using the bailout to stage a revolution

***

Well,  just in time for the 2009 election is…Al Gore, who issued a press release yesterday about a follow-up book to An Inconvenient Truth.  I loved the film and got a copy of the book as “payment” for my efforts in the not-so-long-distant past at a certain Chicago-based website that went crazy last May.

From the blog, Al Gore:

Our Choice March 24, 2009 : 1:07 PM

From the Press Release:

Today Vice President Gore announced that his next book, Our Choice, will be published by Rodale in the US and by other publishers internationally on November 3, 2009. Picking up where An Inconvenient Truth left off, Our Choice utilizes Mr. Gore’s forty years of experience as a student, policymaker, author, filmmaker, entrepreneur and activist to comprehensively describe the real solutions to global warming. A co-recipient of the Nobel Peace prize in 2007 for his environmental work, Mr. Gore continues to make sense of the pressing issues we face and Our Choice will unquestionably inspire and rally those ready to fight for solutions that were deemed impossible only a short time ago.

I was really ticked when the guy who delivered those stirring speeches about the press and the Constitution during the Bush years turned around and chose to endorse Obama instead of remaining a statesman for the world by staying neutral–the same Obama who took all that money from Exelon and rewrote a nuclear safety bill to please his donors and the Republicans.

So now, Gore will inject himself into the 2009 elections as all the PR push for his book in the period leading up to its Election Day release.  He’s been pretty quiet since the Inauguration and hasn’t talked about energy policy at all, although he’s supposed to be some sort of adviser to the Obama Administraiton.  Elections for governor will be held in Virginia (where Terry MacAuliffe is currently running for the Democratic nomination) and New Jersey (where Democrat Jon Corzine may be facing re-election troubles).  Frankly, I view this “book business” as manipulative and cheesy. And so damned obvious…

***

Finally, on a lighter note…

Augie the Dog and his owner make a statement of sorts about money.  I think it’s appropriate that the bag displayed near the end of the video will be going to the Treasury…Follow this  link and enjoy!


The Scanner–International Edition, March 24, 2009: Say Goodbye to the Dollar? China, Russia Proposing a New World Currency for “Non-Credit” Based Economies, Echo G-20 Agenda of Expanding IMF; China Will “Consider” Buying IMF Bonds; 10th China Develpment Forum Underway (UPDATE 1X–Geithner Supports China Proposal??)

~~By InsightAnalytical-GRL

Scroll down for UPDATE

Whos in Charge Here?

Hu Jintao--Who's in Charge Here?--Barack Obama (Photo courtesy Xinhua via CRIEnglish.com)

Late last week I came across this release from Itar-Tass.  In case you can’t place the name, the IT website tells us that this agency is:

The successor to the Soviet TASS news agency, it was re-named in 1992, when Russia proclaimed its sovereignty following the collapse of the USSR. It has retained its status of being the state central information agency.

Needless to say, when Russia’s “state central information agency” talks, I listen. I held the story up and coincidentally, found something that should grab us all.  First, the story from Russia:

Russia proposes creation of global super-reserve currency

16.03.2009, 15.15

MOSCOW, March 16 (Itar-Tass) — Russia suggests the G20 summit in London in April should start establishing a system of managing the process of globalization and consider the possibility of creating a supra-national reserve currency or a “super-reserve currency.” The Russian Federation’s proposals for ways out of the ongoing financial and economic crisis and for a post-crisis order of the world financial system have been published on the Kremlin’s website. The proposals have been dispatched to the leadership of the G20 countries, the CIS and international organizations.

(SNIP)

The Russian side believes the summit should seek and achieve accord on the main parameters of a new world financial system. It suggests calling an international conference that would produce the basic parameters of a world financial architecture and adopt international conventions regarding a new financial world order.

Russia believes that the “obsolete mono-polar structure of the world economy should give way to a system based on cooperation by several major centers.”

In the sphere of control and supervision Russia suggests drafting and adopting an international agreement setting global standards of control and supervision in the financial sector – a Standard Universal Regulatory Framework (SURF).

Russia calls for reforming the international currency and financial system with the aim to strengthen its stability and control. In that connection the Russian side suggests discussing the possibility of expanding the list of currencies to be used as reserve ones, on the basis of the adoption of agreed measures to stimulate the development of major regional financial centers, and also “the creation of a supra-national reserve currency that will be issued by international financial institutions.”

“It looks expedient to reconsider the role of the IMF in that process and also to determine the possibility and need for taking measures that would allow for the SDRs (Special Drawing Rights) to become a super-reserve currency recognized by the world community,” the document says.

MORE

The release goes on to discuss for a new mandate and more resources for the IMF.

Well, now add this piece, posted by Logistics Monster yesterday in a post entitled Quick Note About New Global Currency! Pay Attention!

The post quotes an article from the Financial Times‘ Asia-Pacific section (excerpt):

China calls for new reserve currency

By Jamil Anderlini in Beijing

Published: March 23 2009 12:16 | Last updated: March 23 2009 23:24

In an essay posted on the People’s Bank of China’s website, Zhou Xiaochuan, the central bank’s governor, said the goal would be to create a reserve currency “that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies.

I suggest readers get over to Logistics Monster for the full quote from the article, which details the “special drawing rights” that we see mentioned in the Russian Itar-Tass release.

The Russia-China discussions apparently are just megaphones for what’s up at the Official G-20 website (excerpt):

The financial markets and the world economy continue to face serious global challenges and the severity of the crisis and ongoing uncertainties demonstrate the need for urgent action. During the United Kingdoms Chair, the immediate priority will be to gain further agreements for a concerted, co-ordinated international response.

The G-20 will need to send a strong signal that it is prepared to take whatever further actions are necessary to stabilise the financial system and to provide further macroeconomic support. At the same time, the G-20 must commit to maintaining open trade and investment, to avoid a retreat to protectionism, and direct necessary additional support to emerging markets and developing countries.

The G-20 should also lay the foundations to move beyond the crisis to a sustainable recovery. In 2009, it will be important to understand the roots of the international financial crisis and identify the lessons that we can learn to ensure that a crisis of this kind does not happen again. The G-20 should develop proposals that will restore global growth in the medium term, including the unwinding of emergency measures taken in response to the crisis.

Coincidentally, with the proposal to bolster the mandate of the IMF, we see this article from the Chinese news agency,
Xinhuanet/China View:

Central bank official: China “will actively consider” buying IMF bonds

www.chinaview.cn Special Report: Global Financial Crisis

BEIJING, March 23 (Xinhua) — China’s central bank said Monday it will “actively consider” buying bonds issued by the International Monetary Fund (IMF).

Hu Xiaolian, vice governor of the People’s Bank of China (PBOC), made the comment during a briefing about President Hu Jintao’s coming visit to the G20 financial summit in Britain, scheduled for April 1 to 2.

“China supports the IMF’s innovative financing attempts, and a more efficient and timely financing mode can effectively ease the IMF’s cash shortage,” said the PBOC’s Hu.

“If the IMF finances itself by issuing bonds, China will actively consider buying” those bonds, Hu stressed.

Of course, the Chinese have already indicated that they are “worried” about U.S. Treasury bonds and a recent China Daily headline reads:  “Allure of US Treasuries Set to Fade”

“Although China is unlikely to massively cut its existing holdings of US Treasuries, it will try to reduce purchases,” said Yu Yongding, president of the Institute of World Economics and Politics at the Chinese Academy of Social Sciences.

The table is set.

I’m sure the G-20 will toast the dollar with fond reminiscences…

MEANWHILE, ahead of the G-20 meeting, China is now holding its 10th China Development Forum (excerpt):

Chinese premier: World should have faith in China

www.chinaview.cn

Special Report: China Development Forum 2009Special Report: Global Financial Crisis

China has launched plans to expand domestic consumption and promote economic growth. It will try its best to achieve the goal of eight-percent economic growth set for this year, according to Wen.

With timely efforts, the economy in some areas and industries in China is now witnessing better signs, Wen said.

“China can’t achieve self-development without rest of the world,” the Premier said, adding that China hopes to deliver confidence to the world and the world should have faith in the country.

SNIP

High-level officials, entrepreneurs, scholars and leaders from international and non-governmental organizations attended this year’s forum with the theme of China’s Development and Reform in the Global Financial Turmoil.

Remember the days when other countries sought “closer ties” to the U.S.? Well, Obama wants a “closer relationship” with China.

When these two meet at the G-20 session, who will be setting the pace?

And lest we forget Putin: he’s doing some saber-rattling…

Russian PM Putin Threatens to Review Relations with EU

SOCHI, March 23 (RIA Novosti) – Russia will start reviewing its relations with the European Union should Moscow’s interests be ignored, Prime Minister Vladimir Putin said on Monday.

SNIP

Russia had been effectively excluded from talks at an international investment conference in Brussels on the modernization of the Ukrainian gas pipeline network, adding that the conference, convened by the European Commission, was limited to discussions between Ukraine and the EU.

“If Russia’s interests are ignored, we will also have to start reviewing the fundamentals of our relations,” Putin said. “We would very much like for things not to reach this point.”

Interesting times, indeed…frightening times.

***

UPDATE March 26, 2009

EXCERPT:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aAHStUZFitk8&refer=home

Treasuries Fall on Supply Concern as Seven-Year Sale Looms

By Dakin Campbell and Susanne Walker

March 25 (Bloomberg) —

snip

‘Poor Communication’

The Fed joins central banks in the U.K. and Japan in extraordinary purchases of government debt. U.S. policy makers announced the decision last week to buy $300 billion of government debt in the next six months along with a plan to more than double purchases of housing debt to $1.45 trillion, hoping to reduce rates on home loans.

The dollar fell the most in almost a week against the euro on concern Treasury Secretary Timothy Geithner supported a Chinese plan to blunt demand among global central banks for the U.S. currency. The dollar weakened as much as 1.2 percent to $1.3651 per euro, the biggest intraday decline since March 19, before trading at $1.3601 at 4:20 p.m. in New York.

Geithner later affirmed the dollar’s role as the world’s reserve currency.

“The poor communication from the Treasury department has complicated the market for Treasuries,” said Baker Group’s Caughron.

More

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ADDITIONAL INFORMATION

China Optimistic about Hu-Obama London Meeting (CRIEnglish.com report 3/23/09)

Official G-20 website

International Monetary Fund (IMF) website

CIS: Overview (from the Commonwealth of Independent States)

THE CIS –Executive Committee website

CIS Wikipedia article