HawthorneVillager.com

I hope this means that there will be a record number of donations by those who can afford to give this year! I know I will be dropping food and GC's for grocery stores at the local Salvation Army - I hope many of the Hawthorne Villagers will be joining me.

_________________
Christina Jackson
Mobile Mortgage Specialist
TD Canada Trust
T: 647 292 7597
F: 905 377 1634
P: 866 767 5446
email: christina.jackson@td.com

ol skool. i agree that it will be hard times for many, i have been preaching that for the last yr and ahalf.

on top of all the turmoil, it will be a great time to buy electronics, etc etc. for those who can afford it obviously.

i for one just bought a 52" sharp aquos for $1500 all in

goodluck

christina,

2001 Audio Video

just a quick note from my man Bill FLeckenstien

But rather than some garden-variety recession, this is going to be the worst one in 50 years, and in fact is the "next time down" scenario I described in June of 2004 -- with the economy, stocks and real estate all declining.

Notwithstanding the massive monetary/fiscal stimulus that the government will be throwing at the problem, 2009 is going to be very ugly. Having said all that, I find it too dangerous to be short stocks, and far too early in the downturn to be long them.


cnet is the website i use as well to get reviews

A Nightmare Before Christmas by the one and only Peter schiff


Like many pragmatic economists I have always warned that rapid expansions of government debt would result in inflation and higher interest rates. The explanation was always simple: rising supply of government debt inflates the money supply and weakens the government’s ability to service its debt through legitimate means.

But In recent months, government has flooded the market with hundreds of new Treasury obligations and telegraphed its intention to increase the deluge even more. In response, both bond prices and the dollar have risen. This benign reaction has led many to the happy conclusion that the doom and gloomers are wrong and that bailouts and economic “stimuli” can be financed with deficit spending without any adverse consequences on interest rates or consumer prices. Recent action in the foreign exchange markets suggests these hopes will prove illusory. The renewed strength in gold, together with the long overdue rupture of the correlation between the movements of foreign currencies and U.S. equities, is further evidence that recent market dynamics are changing.

When the financial crisis of 2008 kicked into high gear in September, the U.S. dollar began to rally furiously. While America’s economic ship was sinking from stem to stern, its currency was becoming the must have asset for public and private investors around the world. The dollar benefitted from the positive flows that result from massive global deleveraging. Treasuries got an added boost from a reflexive flight to “safety.” As a result, politicians were able to fill out their Christmas wish lists with complete confidence that Santa would deliver. However, as these dollar-positive forces appear to be giving way, the Grinch is about make an unwanted appearance.

Last weekend Barack Obama announced his intention to implement a New Deal-style stimulus and public works program. What he somehow forgot to mention is that the United States is wholly dependent on the willingness of foreign creditors to supply the funds. But a weakening dollar makes continued foreign purchase of U.S. Treasuries a much more difficult decision.

Once the dollar begins to collapse beneath the weight of all this new deficit spending, accumulation of contingency liabilities, and the socialization of our economy, commodity prices and interest rates will head skyward. In addition, once all the going out of business sales at U.S. retailers are over, and excess inventories have been reduced, watch for big price increases at the consumer level as well.

Once the government runs out of foreign and private sector bidders for new treasuries, the Federal Reserve will be the only buyer, and the hyper-inflation cat will be completely out of the bag. Sensing this, the Fed has recently indicated a desire to begin issuing its own bonds. However, since dollars are already recorded as liabilities on the Fed’s balance sheet (dollars are in actuality Federal Reserve Notes) the Fed already issues debt. The difference now is that they are proposing to issue interest bearing debt. Perhaps the Fed feels this will make holding its notes more appealing. However, since the interest will be paid in more of its own scrip, I do not believe this con will work.

In the end, rather than filling our stockings with Christmas goodies, our foreign creditors will likely substitute lumps of coal. Of course given how high coal prices will ultimately rise as a result of all this inflation, in Christmas Future perhaps our stockings will be stuffed with nothing but our own worthless currency. It might not burn as well as coal, but at least we will have plenty of it.

great article...by none other than my man Peter Schiff



In Madoff We Trust


As the multi-billion dollar Ponzi scheme orchestrated by Wall Street insider Bernard Madoff unravels in the media spotlight, the nation is being presented with a rare opportunity to understand the true nature of many of our most cherished financial structures. Hopefully we have the wisdom to connect the dots.

Although the $50 billion loss engineered by Madoff is truly a staggering accomplishment (and was done using old-fashioned fraud rather than the mathematical wizardry that has characterized Wall Street’s recent larcenies) the size of the scheme pales in comparison to the multi-trillion dollar Ponzi structures run by the United States government. In fact, rather than looking to jail Madoff, President-elect Obama should consider making him our new Treasury secretary. If not that, at least make him the czar of something!

Madoff’s inspiration came from Charles Ponzi, the Italian-born American immigrant who promoted an investment plan in the early 1900s’ that traded postal coupons. Rather than paying investors from legitimate investment returns, Ponzi hit upon the innovative idea of paying out early investors with money collected from new investors. By creating an illusion of success, interest in his investment plan ballooned. Over time the schemes have become known by many other names, such as chain letters or pyramid schemes. They are united by the fact that they always fail in the end.

When the influx of new investors inevitably slows to the point where distributions to current investors can no longer be maintained, investors look to withdraw funds. When this happens, the entire structure falls apart. The profits received by those who “invested” early as well so any funds skimmed off by the promoter, are offset by all the losses of those who came late to the party.

To a large extent, the same concept has driven the major asset bubbles of the last decade. Given the ridiculously high valuations that were assigned to tech stocks and real estate during their respective booms, the only way the bubbles could be perpetuated was if newer “investors” could be found to pay even more outrageous prices (the greater fool). But when these new buyers balked, the whole structure crumbled. Although there was no Ponzi or Madoff to orchestrate these manias, the entire financial and economic apparatus of the country had successfully convinced the public that “investments” in tech stocks and condominiums were bullet proof and that the supply of new buyers was endless.

Unfortunately, the Ponzi economy doesn’t stop there. A chain letter is no more viable when run by governments than when run by private citizens. However, government orchestrated pyramids have the advantage of required participation. As a result, they can maintain the illusion of viability for several generations. But the longer such schemes operate the larger will be the losses when they ultimately collapse.

The Social Security Administration runs its “trust funds” with precisely the same methods used by Madoff and Ponzi. As money is collected by from current workers, the funds are then dispersed to those already receiving benefits. None of the funds collected are actually invested, so no investment returns are ever generated. Those currently paying into the system are expected to receive their returns based on the “contribution” made by future workers. This is the classic definition of a Ponzi scheme. The only difference is that Ponzi didn’t own a printing press.

The United States Government runs its own balance sheet based on the Ponzi principal as well. Our national debt always grows and never shrinks. As existing debt matures, proceeds are repaid by issuing new debt. Interest payments on existing debt are also made by selling new debt to investors. The whole scheme depends on an ever growing supply of new lenders, or the willingness of existing lenders, to continue to roll over maturing notes. Of course, as was the case with Madoff, if enough of our creditors want their money back, the music stops playing.

In Madoff’s case, the rug pulling was provided by the huge financial losses suffered by some of his clients in other non-Madoff investments. When enough of these clients looked to sell some of their apparently well-performing Madoff assets to help offset such losses, the scam collapsed. The same thing could befall the United States Government. Now that China and our other creditors are looking to spend some of their U.S. Treasury holdings to stimulate their own economies, look for a similar outcome with even more dire implications.

The main difference is that while Madoff took elaborate steps to conceal his scheme, the U.S. government operates in broad daylight. It truly is amazing how faith in government is so pervasive that many can believe that politicians will succeed where private individuals fail, and that governments are somehow immune to the economic laws that govern the rest of society. Like those unfortunate to have been duped by Madoff and Ponzi, the world is in for a rude awakening.

For a more in depth analysis of our financial problems and the inherent dangers they pose for the U.S. economy and U.S. dollar denominated investments, read my new book “Crash Proof: How to Profit from the Coming Economic Collapse

Another 50 migrant farm workers were told today they've been fired by a mushroom factory in Campbellville, Ont., near Guelph, just two days before Christmas.

That's on top of 70 Mexican and Jamaican farm workers fired earlier this month by Rol-Land Farms. And it comes just as Justicia for Migrant Workers, an advocacy group, launched a food and shelter drive for the immigrants, who are brought to Ontario on temporary permits to work in agriculture.

The most recently fired workers, most of them women from Guatemala, were told they'll be evicted from factory housing they rent from Rol-Land and shipped back to Central America next Sunday, Monday and Tuesday, according to the United Farm and Commercial Workers union.

Many of the 120 farm workers borrow money to pay the fees and visas the federal government's temporary foreign worker program requires, and use their wages in Canada to repay those loans.

Justicia put out a call on Tuesday for donations of food and shelter for the fired workers, whose work permits are tied to Rol-land.

The company, Canada's largest mushroom farm, won court protection from creditors two weeks ago after the Bank of Montreal demanded payment Nov. 27 on a $35.3 million loan. Rol-land says the layoffs are part of its efforts to restructure.

There's No Pain-Free Cure for Recession: Peter Schiff's Editorial in The Wall Street Journal


As recession fears cause the nation to embrace greater state control of the economy and unimaginable federal deficits, one searches in vain for debate worthy of the moment. Where there should be an historic clash of ideas, there is only blind resignation and an amorphous queasiness that we are simply sweeping the slouching beast under the rug.

With faith in the free markets now taking a back seat to fear and expediency, nearly the entire political spectrum agrees that the federal government must spend whatever amount is necessary to stabilize the housing market, bail out financial firms, liquefy the credit markets, create jobs and make the recession as shallow and brief as possible. The few who maintain free-market views have been largely marginalized.

Taking the theories of economist John Maynard Keynes as gospel, our most highly respected contemporary economists imagine a complex world in which economics at the personal, corporate and municipal levels are governed by laws far different from those in effect at the national level.

Individuals, companies or cities with heavy debt and shrinking revenues instinctively know that they must reduce spending, tighten their belts, pay down debt and live within their means. But it is axiomatic in Keynesianism that national governments can create and sustain economic activity by injecting printed money into the financial system. In their view, absent the stimuli of the New Deal and World War II, the Depression would never have ended.

On a gut level, we have a hard time with this concept. There is a vague sense of smoke and mirrors, of something being magically created out of nothing. But economics, we are told, is complicated.

It would be irresponsible in the extreme for an individual to forestall a personal recession by taking out newer, bigger loans when the old loans can't be repaid. However, this is precisely what we are planning on a national level.

I believe these ideas hold sway largely because they promise happy, pain-free solutions. They are the economic equivalent of miracle weight-loss programs that require no dieting or exercise. The theories permit economists to claim mystic wisdom, governments to pretend that they have the power to dispel hardship with the whir of a printing press, and voters to believe that they can have recovery without sacrifice.

As a follower of the Austrian School of economics I believe that market forces apply equally to people and nations. The problems we face collectively are no different from those we face individually. Belt tightening is required by all, including government.

Governments cannot create but merely redirect. When the government spends, the money has to come from somewhere. If the government doesn't have a surplus, then it must come from taxes. If taxes don't go up, then it must come from increased borrowing. If lenders won't lend, then it must come from the printing press, which is where all these bailouts are headed. But each additional dollar printed diminishes the value those already in circulation. Something cannot be effortlessly created from nothing.

Similarly, any jobs or other economic activity created by public-sector expansion merely comes at the expense of jobs lost in the private sector. And if the government chooses to save inefficient jobs in select private industries, more efficient jobs will be lost in others. As more factors of production come under government control, the more inefficient our entire economy becomes. Inefficiency lowers productivity, stifles competitiveness and lowers living standards.

If we look at government market interventions through this pragmatic lens, what can we expect from the coming avalanche of federal activism?

By borrowing more than it can ever pay back, the government will guarantee higher inflation for years to come, thereby diminishing the value of all that Americans have saved and acquired. For now the inflationary tide is being held back by the countervailing pressures of bursting asset bubbles in real estate and stocks, forced liquidations in commodities, and troubled retailers slashing prices to unload excess inventory. But when the dust settles, trillions of new dollars will remain, chasing a diminished supply of goods. We will be left with 1970s-style stagflation, only with a much sharper contraction and significantly higher inflation.

The good news is that economics is not all that complicated. The bad news is that our economy is broken and there is nothing the government can do to fix it. However, the free market does have a cure: it's called a recession, and it's not fun, easy or quick. But if we put our faith in the power of government to make the pain go away, we will live with the consequences for generations

by peter schiff

Government Panic Could Herald Dollar Panic by Euro pacific capital


One of the few things more troubling for an economy than government intervention is government intervention driven by panic. Time and again, history has shown that when governments rush to engineer solutions to pressing problems, unintended difficulties arise.

In the current crisis, there is growing evidence that Washington is in a state of increasing panic. Despite its massive cash injections, market manipulations and ‘rescue’ plans, the recession is clearly deepening and spreading. With little to show thus far, politicians don’t know if they should redouble past efforts, break ground on new initiatives, or both. However all agree, unfortunately, that the consequences of doing too little far outweigh the consequences of doing too much.

Although there are many parallels between the current crisis and the Crash of 1929, one key difference is the global profile of the U.S. dollar. In 1929, the dollar was on the rise, and would soon eclipse the British Pound Sterling as the world’s ‘reserve’ currency. Furthermore, the American economy was fundamentally so strong that in 1934 America was the only major nation able to maintain a currency tied to gold.

Ever since, the U.S. dollar’s privileged ‘reserve’ status has been a principal factor in America’s continued prosperity. The dollar’s unassailable position has enabled successive American governments to disguise the vast depletion of America’s wealth and to successfully increase U.S. Treasury debt to where the published debt now accounts for some 100 percent of GDP. The total of U.S. Government debt, including IOU’s and unfunded programs, now stands at a staggering $50 trillion, or five times GDP! If the dollar were just another currency, this never would have been possible.

In today’s crisis however, the dollar is likely making its last star turn as the leading man in the global financial drama. Other stronger, less burdened currencies are waiting in the wings for the old gent to take his final bows.

The dollar’s demise is being catalyzed by the neglect of the Federal Government. Instead of enacting policies that would restructure the U.S. economy, and restore productive, non-inflationary wealth creation, Congress is simply financing the old crumbling edifice.

Faced with the growing realization that America is not doing the work necessary to right its economic ship, it will not be long before America’s primary creditors begin to seriously question the nation’s ability to service, let alone repay, its debts.

There is now the prospect (inconceivable until recently), that America could lose its prestigious ‘triple-A’ credit rating. In today’s risk adverse market, this could cost the Treasury one percent in interest on long bonds. Each additional percentage point of interest would cost America some $10 billion a year on each trillion dollars of new debt, or some $300 billion over the life of a 30-year bond.

Many of the foreign governments who hold huge amounts of U.S. dollar Treasury debt, such as China and Japan, have announced plans to spend money on their own ailing economies. Should these foreign central banks divert to domestic initiatives some of the funds used to buy U.S. Treasuries, serious upward pressure on U.S. interest rates will result. Should they actually sell parts or all of their holdings they will likely put serious downward pressure on the U.S. dollar. Last week, a Chinese official claimed the U.S. dollar should be phased out as the world’s ‘reserve’ currency.

In the short term, as dollar ‘carry-trades’ continue to be unwound and questions of political will and falling interest rates haunt the Euro and some other currencies, the U.S. dollar may be the recipient of some upward appreciation. But with the American Government appearing increasingly to be in panic mode, a run on the U.S. dollar could develop rapidly into cascading devaluation. Even if no such panic run materializes the long-term outlook for the U.S. dollar is one of high risk and low return. This beckons major upward pressure on precious metals.

Real recovery won't be anytime soon
The gloom of recession is moving in. We'll see relief rallies but not a bull market. The bubble that spawned the current bust was huge, and so are the repercussions.


Folks are understandably trying to piece together an economic road map for these challenging times. To that end -- and to be a better investor -- I believe it's important to grasp the lessons of history.

As fine a primer as any is "The Trouble With Prosperity: The Loss of Fear, the Rise of Speculation, & the Risk to American Savings." The book's author is my good friend Jim Grant, who in 1996 (when the book was published) foresaw where artificially induced prosperity would land us.

One of Jim's premises, which I completely agree with, is that "booms do not merely precede busts. In some important sense, they cause them." That, of course, is the lesson the Federal Reserve does not understand.

The current bust is a direct consequence of a boom, but not an ordinary boom. It was a credit/real-estate bubble that caused a misallocation of capital of truly biblical proportions. Thus the pundits who think there will be any return to business as usual in the second half of 2009 are going to be very disappointed.

A more-than-mental recession
That reality was driven home last week in both the corporate and macroeconomic arenas, as bad news poured forth across a broad front. To look at just one example: Nvidia (NVDA, news, msgs) issued dramatically lowered expectations, projecting that fourth-quarter revenue would come in 40% to 50% lower than the previous quarter. (The latter, by comparison, had declined only 5% from the second quarter.)

Watch the videos to the right for more investing news.

Meanwhile, it was reported last week (in a column by Ambrose Evans-Pritchard on the United Kingdom's Telegraph Web site) that the cost of shipping goods from Asia to Europe had "hit zero" -- which, as in the case of Nvidia, is a pretty good indication that in certain areas, business had stopped. Along those lines, Canadian telecom Nortel Networks (NRTLQ, news, msgs) announced Wednesday that it had filed for bankruptcy.

More from MSN Money
Massive forces cloud market outlook
Cost of the Bush era: $11.5 trillion
A recession the Fed can't easily fix
Which retailers are next for bankruptcy?
The market's misplaced optimism


On to the macro arena, where most were surprised by data on December U.S. retail sales, which were twice as bad as expected. According to the folks with the Liscio Report, last month's sales were the 11th-worst since 1947, with the subcategory of autos being the worst December on record.

On top of that, in midweek Goldman Sachs Group (GS, news, msgs) increased estimates on how far home prices might fall. Previously, it thought that housing would perhaps bottom out at the end of 2009, down an additional 15%. Now Goldman thinks the bottom might not be reached until mid-2010 -- and that the lows will be 20% to 25% from here. The latter is more in line with my expectations, but I think it's certainly not what most people had factored in.

Another temporary rally
Now for some thoughts on what this dark macro/corporate landscape could mean for the stock market:

Potentially, the market may continue to be weak and ugly heading into Tuesday's inauguration. However, after the inauguration -- given that company expectations have been lowered and that by then we will likely enter a relatively quiet news period -- the stage may be set for a rally that might last longer than the one that just ended.

The probability of that scenario will increase if some economic bounce, however small, begins to take shape. (As weak as the economy appears, the data now suggest it is even weaker.)

Assuming the economy does bounce, a rally could occur sometime later in the first or second quarter -- as the bullish contingent seizes on the bounce as a sign the economy is recovering for real (a belief I do not share).

Video on MSN Money
China reality check

When there's trouble with China's imports, that means there are bigger problems around the world. Jim Jubak explains how to read the latest data from Asia.
Live wires on either side
If that plays out, I suspect it will set up a very attractive short-selling opportunity because ultimately I believe that the market will work much lower again.

Later in the year, we will have a better opportunity to invest on the long side.

Obviously, anything is possible. But that's my current thinking on the most likely path for the market's twists and turns.

My goal for early in the year continues to be: Try not to get in trouble, and be patient while attempting to piece together some high-probability opportunities.

markets are down and continue there spiral downward trend, so much for the january effect....nada,,,dow was down about 7pts and the tsx down another 3-5pts.
look for the down to hit 6000 in the coming months...stay in cash

CASH IS KING

but what do i know

the guru

Just the Beginning by Peter Schiff (its grim boys and girls)

but we all knew that, stay in cash



The intense scrutiny recently paid to my investment strategy in the immediate wake of the financial crisis of the last six months has unfortunately obscured the central element of my larger economic forecast. The standard line has been that although I was able to predict the crash, in the form of the housing collapse and the credit crunch, my expected fallout of a weaker dollar and global decoupling has been proven false. However, this assumes that the crash has fully played out. In reality, all we have heard thus far is the overture.

In 2008, the bubble economy that I had meticulously described years ago finally hit the pin that I knew was out there. The corporate losses, frozen credit markets and plunging home prices were the opening salvo in the unfolding economic crisis. However, the vast majority of air has yet to leak out of the bubble. As it does, the U.S. economic crisis will kick into a much higher gear. I have positioned my clients to withstand the full fury of the gale, and when it finally comes, the question "was Peter Schiff right?" will finally be answered.

Thus far, our economy has actually been spared the worst due to the temporary strength in the dollar and the recent desirability of our Government's debt. These movements derailed the short-term performance of many of my investment recommendations (though clearly not to the extent alleged by my critics) and threw a life-line to the downing U.S. economy. The demand for U.S. Treasuries has led to one of the sharpest dollar rallies on record, which has helped bring about just as pronounced a decline in commodity prices. As a result, although consumer income has fallen, so too have prices and interest rates.

The stronger dollar gives the Federal Government plenty of cover to a pursue a policy of rampant monetary inflation in order to re-inflate the collapsing bubble. Even though the Federal Reserve has thrown trillions of new dollars into circulation, those dollars have actually gained purchasing power - contrary to economic law. This, along with inventory liquidations and going-out-of-business sales, has kept a lid on consumer prices. The continued, although misguided, appeal of U.S. debt has also made it possible for the government to garner cheap financing for its equally misguided and massive bails-outs and stimulus packages.

In addition to cushioning the blow for us, the dollar rally has exacerbated the pain abroad. As money has rushed to our aid it has created a global credit crunch. The rest of the world is not only dealing with losses on toxic U.S. credit instruments but is also shouldering the burden of financing our new borrowing as well. As foreign currencies have fallen, foreign consumers have not received as large a windfall as Americans have from falling commodity prices.

In effect, Americans have been using these life-lines to pull the rest of the world into the stormy seas. However, there are signs that those holding the lines are about to cast them adrift. The dollar rally has run out of steam, gold has clearly broken out, and commodity prices are moving back up. 2009 is already the worst year ever for US. Treasury bonds and foreign stock markets are once again outperforming ours.

This week President Obama claimed that failure to pass his economic stimulus bill will have catastrophic consequences for the U.S economy. The reality is the catastrophe will be far greater with his plan then without it. If the trends of January and early February of 2009 continue, the rug will be completely pulled out from beneath the U.S. economy, and the full cost of the President's "economic depressant package" will be apparent to all.

If foreign capital does not continue to pour into Treasuries, interest rates and consumer prices in the U.S. will soar. At that point, we will finally be confronted with the real crises that I have long predicted. When the day of reckoning arrives our policy response will be critical. If we continue on the course our new President has mapped out, the catastrophe will far exceed the scope of any he hoped to avoid.

game over pay the piper

with what may you ask?

good question

we can t sweep this under the rug boys

Developed primarily over the last 10 years, securitization permitted loans of all shapes and sizes to be packaged into investment-ready securities. The system worked, fueling unprecedented levels of lending in the home, auto, student, and credit card sectors. But in the last few years as the collateral underpinning these securities has collapsed in value, the trillions of dollars of securitized debt now in circulation has become the toxic sludge at the bottom of our financial pit. Geithner is making the false assumption that cleaning up and rebuilding the securitization market is a prerequisite for a healthy economy.

Our nation’s short history with wide securitization has simply shown that the process can lead to massive mispricing of assets and risk. By artificially rebuilding the securitization market, and committing taxpayer funds as collateral, the U.S. economy will be pushed farther and farther out on a leveraged limb, until no amount of market medicine can prevent a total economic collapse.

In truth, the only vital function provided by securitization was that it offered foreign savers a pathway to lend directly to American consumers, and Wall Street executives a new asset class to over-leverage for massive profits. Our economy must dispense with these gimmicks if it hopes to pursue a meaningful recovery.

After more than a decade of unsustainable borrowing and spending, the private sector is currently attempting to restore balance through reduced consumer and mortgage credit, greater savings, and lower asset prices. With its trillions of dollars of credit injections and stimulus programs, the government hopes to allay this process by force-feeding Americans a diet of more borrowing. They feel that a restored securitization market will help. It won’t. It will just grease the skids for a quicker collapse.

Credit, whether securitized or not, cannot be created out of thin air. It only comes into existence though savings, which must be preceded by under-consumption. Since savings are scarce, any government guarantees toward consumer credit merely crowd out credit that might otherwise have been available to business. During the previous decade too much credit was extended to consumers and not enough to producers (securitization focused almost exclusively on consumer debt). The market is trying to correct this misallocation, but government policy is standing in the way. When consumers borrow and spend, society gains nothing. When producers borrow and invest, our capital stock is improved, and we all benefit from the increased productivity.

Consumers default on credit much more frequently than businesses. This is because businesses typically use loans to expand, and then have greater cash flow to repay the debt. In contrast, consumers typically borrow to consume and in the process do not improve their ability to repay. As a result, one would expect consumer credit to be harder and more expensive to obtain. But that is currently not the case. Government guarantees have altered the playing field, so that now consumers are still being offered credit while businesses are being shown the door. By shifting credit away from producers, fewer goods and services will be produced for consumers to buy and fewer employment opportunities provided for them to earn money with which to buy the goods.

To restore prosperity, credit (derived from savings rather than a printing press) must flow to producers. Greater liquidity for business will lead to legitimate job creation, increased production, and rising living standards. By further encumbering the economy with burdensome regulation, and by transferring business decisions to vote-seeking politicians who will bail out the irresponsible, reward failure and punish success, the government will create a society destined for misery.

In an interview following his announcement, Geithner stated that government should replace the demand lost by the private sector. However, those with even a marginal grasp of economics know that demand is unlimited. It is the ability to spend that is not. While Americans still want all the things they wanted years ago, they have made the rational choice that they can no longer afford to buy at the same levels they once did. Using a printing press to replace this lost ‘demand’ will simply cause consumer prices to rise. Printed money does not create new purchasing power, but merely redistributes it from savers to borrowers. And since the plan will severely undermine the real productive capacity of our economy, there will not be much purchasing power left to redistribute!

to close to home

The company that initiated the rise of Milton into a major player in the auto parts manufacturing sector will shut down for good, after 55 years in operation.
Meritor Suspension Systems Co. has announced that it plans to close permanently the Steeles Avenue plant by the end of 2009, putting 165 people out of work.

Thursday’s announcement by Meritor is the second major blow in recent days to Milton’s auto parts sector, which employs up to a fifth of the town’s residents and accounts for 35 per cent of the private sector jobs.

The local stamping plant of SKD Automotive, an insolvent company currently under creditor protection, will likely close following the sale of its assets, according to the union representing the approximate 200 hourly employees at the company’s Milton operation.

Meritor and SKD are two of Milton’s top 10 employers, employing close to 650 people in 2007, according to Town data.

The top two employers remain Magnaowned plants Karmax and Modatek, which together employed 1,700 jobs in 2007. Seat manufacturer Johnson Controls also has a plant in Milton, providing 200 jobs in 2007, and there are numerous other smaller auto parts suppliers.

However, it’s the Meritor-owned plant that first set up shop in Milton, back when it was a small town and not Canada’s fastest growing community. The facility, which makes coil springs for vehicles, started life in 1954 as Ontario Steel Products and at one time provided employment for about 500 people.

“Disbelief” was the reaction of long-time employee Pat Soulier upon hearing the news.

“I grew up in Milton and I remember this place being built,” said the 60-year-old sanitation worker.

“It built Milton,” added a set-up operator, who did not want to give his name.

The 50-year-old native Miltonian said his father and uncles had previously worked at the parts plant.

“It’s like a family history here. It’s a big blow to everybody.”

That family connection also exists for 28-year Milton Mayor Gord Krantz, whose wife worked for Ontario Steel in the late 1950s and early ’60s.

“I’m very sorry to hear it,” Krantz said Friday of the plant’s closing. “It’s been a fabric of this community.”

Meritor spokesperson Lin Cummins said the decision to close the Milton plant was made to reduce overall capacity and cost. The facility, which supplied the Big 3 American car companies as well as Honda and Toyota, has been running at only 20 per cent capacity, due to falling vehicle sales.

“Since 2006, globally around the world, we’ve closed 17 plants,” Cummins said.

The company recently announced its plant in Tilbury, Ontario would close by this June.

Cummins said the company is negotiating a closure agreement with the local branch of the Canadian Auto Workers, which represents the hourly plant employees. The union’s local representative hadn’t returned the Champion’s calls for comment as of press time.

Dealing with contraction, rather than constant expansion, is something new for most Miltonians, but Krantz vowed the town’s economy isn’t on the verge of collapse, as it has diversified its economy in recent years and attracted non-auto related industry to town.

“Milton will not become a Windsor or Oshawa,” he said.

The mayor said the town faced a similar recession in the early 1980s and he “cast a net” by sending 1,000 letters and brochures to businesses asking them to consider hanging their shingle in Milton.

Of the few that responded affirmatively was Magna, Krantz noted.

“In those tough times, they bought into this community,” he said.