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rb.
12-09-2008, 11:52 AM
Hope prime is dropping with it.

Bank of Canada cuts rate to 50-year low

By Ian Austen Published: December 9, 2008

OTTAWA: After acknowledging for the first time that Canada is entering a recession, the Bank of Canada cut its key interest rate on Tuesday by three-quarters of a percentage point to 1.5 percent, a 50-year low.

The lack of a mortgage and banking crisis in Canada had shielded the country somewhat from the economic downturn. But a dramatic drop in exports to the United States, particularly of automobiles and auto parts, combined with a collapse in energy and commodity prices has brought an end to the country's isolation.

"While Canada's economy evolved largely as expected during the summer and early autumn, it is now entering a recession as a result of the weakness in global economic activity," the Bank of Canada said in its announcement. "The recent declines in terms of trade, real income growth and confidence are prompting more cautious behavior by households and businesses."

The central bank's level of concern was highlighted by the extent of Tuesday's rate cut. Most economists had anticipated half a percentage point.

The announcement may further inflame an economic debate that has created political turmoil in Canada. The Conservative government of Prime Minister Stephen Harper shut down Parliament last week to avoid a vote of no-confidence in an economic program it announced in late November.

The opposition parties, which outvote the government in Parliament, condemned the plan's lack of significant economic stimulus and formed a coalition to defeat it. Had they been allowed to vote, Harper's government would have fallen.

Like American legislators, Canadian politicians are also dealing with financial assistance demands from automakers, although behind closed doors.

Automaking is a proportionately larger contributor to manufacturing in Canada than it is in the United States.

While the automakers' demands to the governments of Canada and Ontario, where most of the industry is based, are not public, media reports say that the requests for loans, loan guarantees and lines of credit from the Canadian units of Ford, General Motors and Chrysler total 6 billion Canadian dollars or $4.7 billion. Parts makers are also looking for help.

On Tuesday, The Globe and Mail, a Toronto newspaper reported that Chrysler is threatening to shut two assembly plants in Ontario, which employ about 8,000, if it does not receive 1.6 billion Canadian dollars in aid. The newspaper said that in a submission to the governments, Chrysler indicated that it would shift the plants' production to the United States.

http://www.iht.com/articles/2008/12/09/business/10canada.php

Sarrah
12-10-2008, 05:37 PM
How does public sentiment go rb?
I'd think it would be no way to the auto folks and others that tumble in their path. That and then build something new and stable in their stead.
But I've been gone a long time now. I for sure can't see the east and the west about to save 8,000 jobs in Ontario after they have all been bashed to pieces with fisheries, lumber, etc on both coasts.
What do you think?

Toner
12-10-2008, 07:05 PM
I did find it interesting that Toyota was opening a second factory in Ontario at the same time the North American automakers are asking for a bail-out.
http://www.cbc.ca/canada/story/2008/12/04/toyota-woodstock.html

rb.
12-10-2008, 07:37 PM
How does public sentiment go rb?
I'd think it would be no way to the auto folks and others that tumble in their path. That and then build something new and stable in their stead.
But I've been gone a long time now. I for sure can't see the east and the west about to save 8,000 jobs in Ontario after they have all been bashed to pieces with fisheries, lumber, etc on both coasts.
What do you think?

A-Bingo. That's how I see it, after having lived in BC, as well as northern Ontario. And from what I hear from people here, they're not happy about a possible bailout of US auto manufacturers located in Canada. To us they are ALL foreign companies. And we've been peeved about Canadian companies, like Bombardier in Quebec, getting handouts from the taxpayer for a long time, too, to appease Quebec. We have a much longer history of this kind of outrage than the US does.

rb.
12-10-2008, 07:42 PM
Toner, did you read the comments after the article? Quite interesting. And again reaffirms why we bought outside the big 3.