The Canadians are going to supply Chrysler and General Motors (NYSE: GM) with a little over $3 billion in loans to help them through financial trouble that could put both companies into bankruptcy. The nation faces the same issue as America. If the car companies go bust,, tens of thousands of people will lose their jobs early next year. That would be a huge strain of the Canada tax base and the cost of its social services for the unemployed.
The money being offered to the two American cars companies is barely enough to last them for a couple of weeks based on the rate at which they are burning cash, so decisions by the U.S. Congress and the Obama administration will still be the sole determinant of what happens to the big firms.
According to Reuters, "General Motors of Canada Ltd is eligible for loans of up to $C3 billion and Chrysler Canada Inc for up to C$1 billion." The U.S. aid package is $17.4 billion, so capital coming from north of the border is barely a drop in the bucket.
The Canadians better start lobbying Washington and lobbying successfully. Otherwise their auto industry will go down with the one in the U.S.
Douglas A. McIntyre is an editor at 247wallst.com.
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