Here is an article worth reading in the Globe and Mail today. I feel the corruption here is of higher level and bigger amounts than in the country I was born in, and why I left it!

http://www.globeinvestor.com/servlet/story/RTGAM.20081218.wdrohan1218/GIStory/" target="_blank">http://www.globeinvestor.com/servlet/story/RTGAM.20081218.wdrohan1218/GIStory/</a>

The text of the article:

6 reasons to beware of stimulus plans
Madelaine Drohan


Friday, December 19, 2008

OTTAWA — With the Harper government set to dip into our collective pocket to stimulate the flagging economy, it's worth looking at whether they are efficient and prudent manager of our money, as government ministers frequently maintain.

That old maxim – actions speak louder than words – comes to mind. Looking at what they have done recently does not inspire confidence that public funds will be well spent. There are at least six reasons why taxpayers should be wary.

1. The use of sole-source contracts

There are rumours this week that the Department of National Defence wants cabinet approval to award a contract for search-and-rescue aircraft worth an estimated $3-billion, without holding a competition.

What lends these unconfirmed rumours credence is that the Conservatives have shown a marked preference for sole-source contracts when it comes to spending billions on defence procurement. Their use has risen since 2006.

While not holding a competition may shorten the time period between deciding to buy new equipment and signing the order, it does not ensure that taxpayers receive the best deal. Sheila Fraser, the auditor general, has complained about this to no avail.

In their increased use of sole-source contracts, the Conservatives have shown they place a higher priority on bolstering the military than they do on getting the most for the public dollar.

2. The auto industry bailout

On Dec. 1, the federal and Ontario governments appointed Jim Arnett to advise them on the restructuring of the auto industry. One week later, the governments said they received the restructuring plans of General Motors, Chrysler and Ford and would now examine them carefully to ensure the companies were proposing a long-term solution.

Despite the promise of due diligence with taxpayers' money, a week later Industry Minister Tony Clement announced Ottawa would spend 20 per cent of whatever the U.S. government produced, which at that point looked to cost Canada $3-billion.

Although the Harper government talked tough – “no blank cheques” was the phrase the Prime Minister used – it has rushed to commit public funds to three failing companies without adequately investigating alternatives.

Would it not make more sense to subsidize companies like Zenn Motors of Quebec or Dynasty Electric Cars of B.C., both of which make what could be the car of the future?

What about helping Toyota or Honda, two companies that have demonstrated they can make cars consumers want, take over the best bits of the Detroit Three in Canada?

The panicked federal response does not seem likely to produce the best outcome for taxpayers, although it may turn down the political heat temporarily.

3. The sale of the Canadian embassy in London

When Finance Minister Jim Flaherty said in his economic statement that the government would be selling some of its properties, he promised to take into account the condition of markets, to ensure that “fair value can be realized by taxpayers.”

It is hard to see how the sale of Macdonald House on Grosvenor Square in London, the main office building for the Canadian High Commission, fits with this promise, given the dire state of the British property market. The British economy is in a slump and no one in his right mind would attempt to sell an office building in central London at the moment, unless it were an emergency.

The Royal Institute of Chartered Surveyors, which keeps track of market conditions, recently noted that commercial property prices had fallen 25 per cent since June, 2007, and are set to fall another 25 per cent in the next two years. It's a buyers' market.

Mr. Flaherty is planning to raise $2.3 -illion through the sale of properties such as Macdonald House. This is a fire sale pure and simple, and it is taxpayers who are being hosed.

4. The purchase of $75-billion worth of mortgages from the banks

The federal government is borrowing $75-billion to buy mortgages from the banks to make it easier for them to extend credit to Canadians. Back on Oct. 10, when the first $25-billion was announced, the Finance Minister said his action would help Canadian financial institutions “raise longer-term funds and make them available to consumers, home buyers, and businesses in Canada.”

An additional $50-billion purchase of mortgages was announced Nov. 12. Yet this past week Mark Carney, Governor of the Bank of Canada, complained the banks were not lending enough. So taxpayers are being saddled with an additional $75-billion in debt for a plan that doesn't appear to be working.

5. Providing $380-million in financing and guarantees to Davie Shipyards in Quebec

This troubled shipyard, owned by a Norwegian company, had just laid off its entire staff earlier this month when the federal government decided to provide $380-million so it could complete five ships on its books.

It's not the first time the shipyard has been on the brink. It declared bankruptcy in 1996 and again in 2001 and shut down in 2006 because it had no contracts. It was then purchased by a Norwegian firm.

The federal money is being provided through the Canada Account at the Export Development Corp., which raises a red flag. Projects funded through this account are first considered and rejected by the EDC under its corporate account and referred to the responsible minister for what amounts to a political decision.

While the political reasons for extending this financing may seem sound – the jobs are in Quebec and in the shipbuilding industry – the economic rationale is shaky.

6. Government spending to date

Although the Prime Minister and Finance Minister are pointing to the global financial and economic crises as reasons why the federal government will post a budget deficit next year, they were already heading that way before the global situation deteriorated this past fall.

The global crisis has become a convenient cover for having frittered away through spending increases and tax cuts the surplus they inherited. With such demonstrated incompetence, how can they be trusted with emergency funds?

All of the above means that whatever measures the Harper government eventually produces to stimulate the economy should be subject to the most intense scrutiny. The crisis atmosphere should not be used as an excuse to rush a stimulus package through. We will be paying for mistakes made in haste for many years to come.

-----------------------------------------------------------------
Chandresh

Advice is free – lessons I charge for!!

Thanks for sharing the Article Chandreshji.

We have an auditor general whose scrutiny and recommendations are swept aside by the party in power. Why then have the office in the first place - save the money.

We have a tax payers association - who sleeps most of the days. They have never challenged any spending by the government.

There has been 'ineffective' opposition party at federal or even at provincial/municipality level. Harper, McGuinty and Miller seem to running thier own private business.

We have read similar reports of unchecked spendings from other provinces as well - a recent one being the free give aways at councillors meeting in Manitoba. The 'goody' bags given to each attendee was values at $2400.00 - all from taxpayers money.

Crows are black all over...

IMO, majority of the canadians are taken in with attractive packaging and reporting, without looking inside the report. The news reporters want to move around in high class vehicles, need latest technology, swanky offices and studios, high fashion sponsors etc...to report about 'new releases' from companies and governments.

I also do not understand the logic of any 'spending' thier way through recession. Investment in infrastructure is good - always - BUT to overspend during recession - is foolishness.

IMO, it is high time the banks should be nationalised. They need funding and bailouts from Govt., but do not want to pass on the reduced interest rates to customers and declare record profits every year for thier shareholders, mulitmillion $$ bonuses for thier executives and management.

Falling of GM, FORD and Chrysler will give a sort of monopoly to Honda and Toyota. I believe the 3 should be merged into a single entity and thier production and models should be rationalised according to market demand. GM could continue making trucks and concentrate in the semi-urban and rural market where these products have more demand. Ford should concentrate on SUV and passenger vans. Chrysler should concentrate on small cars only.

Sorry for the rant...just wanted to vent the frustration.

Feel free to disagree, these are just my humble opinions.

Hiren

Quote:

---

Originally posted by chandresh

Here is an article worth reading in the Globe and Mail today. I feel the corruption here is of higher level and bigger amounts than in the country I was born in, and why I left it!

********
***********
years to come.

---

-----------------------------------------------------------------
I am a Gents and not a Ladies.

This is a once in a generation opportunity for the capital industry to raid the pockets of the common man via tax money, and at the same time, get rid of all messy regulation, govt oversight and due process.
It has been proven beyond any shadow of doubt that the current situation is caused by irresponsible business practices, corporate greed by a small group of people, leaving the common masses to deal with the consequences.
Govt is equally to be blamed for this - they have participated in the swindle and received kickbacks time and again.
The regulatory authorities (SEC, etc.) are a classic case of the fox guarding the hen-house.

The difference between the Canadian and US situation is one of scale, nothing more.
Actually, Europe is worse off than Canada because of its obsession with US.
Iceland is essentially bankrupt as a country.
Common, hard working people in all parts of the world are overnight left with no social net, no savings and no one to trust.

On the other hand, the top executives of large banks, investment firm and companies have enjoyed ridicolous amounts of wealth for last 20 years.
Multi-million $ bonuses, private jets/boats, palacial houses, etc. that put to shame medieval robber barons.

All of this at the cost of the present and future generations.
The debt we are creating and the excess money supply we are printing is essentially a loan that we are taking from future generations.
The environmental resources that we are exploiting for oil, coal and lumber is essentially pillaging the wealth of future generations.

Once all this blows over, we will end up with a situation where -
- More consolidated monopolies in each industry by merging large corporations (like BoA+Merrill Lynch, GM+Chrystler+Ford, Lyods+HBOS, etc.)
- Large corporations that are larger and more powerful than the govt of a country
- Less regulation, no transparency, no visibility into the functioning of large corporations and even the govt
- These large corporations using govt like puppets on a string, controlling tax money, monetary and fiscal policy
- The myth of "free market" will be blown once and for ever. The "market" will essentially be controlled by a small number of multi-billion dollar corporations.

The consolidation of capital in the hands of a few, a process that started after the WWI period, is finally reaching conclusion.
It's like a TV soap opera that's been running for about 80 years.
It's playing it's last season now.
Get the popcorn and coke, and get ready to enjoy the show.

-----------------------------------------------------------------
"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."

-- Rhett Butler in "Gone with the Wind"

Very meaningful argument given the disaster we are heading to.

-----------------------------------------------------------------
The cowards never started,
The weak died on the way,
Only the strong arrived.
http://www.youtube.com/watch?v=_yK1i9cLAMM