Ottawa has announced it will pledge up to $2.8 billion in aid to the auto-sector in Canada, a proportional amount in terms of Canada’s 20% North American auto sector share. However, there is one big catch. Washington must budge first for those funds to become available. Canadian Industry Minister, Tony Clement, said at a conference the other day “we expect the American administration to announce something very soon,” and he also said that he believes a US bailout is imminent. Most recently, yesterday, the US Congress failed to pass $14 billion bailout, and GM subsequently announced massive production cuts that saw the temporary layoff of 3,000 people. I do believe a US bailout will come very soon, but the question remains, can GM, Chrysler, and Ford remain competitive and cut costs, or is this bailout going to lead to a cyclical pattern of more bailouts? The question remains, but I know one thing for sure, the people and the economy will suffer a great pain if they go under, and that’s why there will be a bailout. Please see my thoughts on bailing out GM here.