Spending Cuts Coming in 2011

As with many European countries, Canada will be cutting back on spending in order to rein in the federal deficit.

Finance Minister Jim Flaherty did not provide details but said that the government has to scale back spending in order to eliminate the deficit by 2014.

Opposition parties are concerned that 'turning off the taps' too soon could hurt the economy and especially those most in need.

The Canadian economy is relatively strong (especially compared with other Western economies). This is in part due to the strong demand from developing nations for our natural resources.

We won't know the impact of a reduction in spending until Flaherty reveals the details.

Stay tuned.

GM going bankrupt and Chrysler all but finished

Mark Zandi, Chief Economist of Moody's Economy.com says GM will file for Chapter 11 protection and that Chrysler will broken up and sold to other companies.

Basically, Ford will remain the sole American auto manufacturer...at least on the current scale. GM will come back as a 'shadow of itself'.

What is most interesting is Zandi's final point about the lesson in all of this: if you have a fundamental problem in your business, it's better to fix it sooner rather than later.

GM was running a massive debt before the recession. All that has happened is that those companies that were poorly managed and in poor financial health have now been exposed.

The question is this: will other companies in other industries learn anything from this?