The U.S. financial bailout - NAFTA, GATT, etc

[daleo]

I note that there has been no talk yet about how the taxpayer bailout of the financial industry amounts to a taxpayer subsidy by the U.S. government. How can other nation's financial sectors compete if the U.S. government is backstopping its sector?

[Caradoc]

1. Excellent question...

...to which there is probably no clear answer. The US financial system seems to have a considerable amount of rot to it. Other G8 nations such as Canada (and with the exception of Britain) seemed to sense that the whole sub-prime mortgage scheme was fishy from the get-go and so their exposure to it is mercifully limited. Yet another thing that the Chretien liberals did correctly: stopped the major banks from merging and denied them permission to promote such schemes up here. Canada's problems (and there will be problems) will stem from a drying up of orders for resources and durable goods from the US. Canada should exercise considerable efforts towards broadening our trade partnerships not with the US or China, but rather Europe and South America whose economies of scale are much more in line with ours. By all accounts, the US is hair-close to a total bust of its financial system and mechanisms. Canada will not be required to 'bail' anyone out, and if the need did arise, it would be met with considerable public scorn.

But, in the end, the financial markets seem to operate with little rhyme or reason and anything could happen. If there's a panic, it could get bad all round. Maybe not 'Mad Max' bad, but more like 'Grapes of Wrath' bad.

[Caradoc]

2. clarification

I stand corrected...we're screwed...

http://www.informationclearinghouse.info/article20811.htm