GM bailout could prove one of Harper's wisest moves

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During the last election campaign, in an interview with the CBC's Peter Mansbridge, Stephen Harper suggested plummeting stock markets meant there were "some great buying opportunities." He was widely rebuked for seeming indifferent to the despair that beset those watching their life savings melt away day after day.

Over the ensuing months, the Harper government pumped money into a wide variety of priming and stabilizing initiatives, to the chagrin of ardent free enterprisers and without much apparent appreciation from middle-of-the-road and left-of-centre Canadians.

One of the controversial choices Ottawa made was to join with the Obama administration in taking over the bankrupt General Motors. At the time, many observers felt this was little more than a stop gap, a way to push the painful, inevitable final chapter out by a few years - and a potential waste of tax dollars.

Now comes word that GM, which had been losing billions every year for years, and burned through another $30-billion in 2008 alone, made $2-billion dollars last quarter.

The company is about to issue shares, which look as though they will be snapped up by eager investors. Even if governments never recoup all the money they used to help the company restructure, they will have a better payday than many imagined.

There are lots of reasons for the turnaround in GM's fortunes, starting with the fact bankruptcy allowed the company to walk away from crushing debts and "legacy costs." But Americans are also now more drawn to buying an American car than they used to be. Over the last two years, there has been a nine-point rise (to 41 per cent) in the number who say they look for an American car first, and a virtually identical drop in the number of people who say they just look for the best deal. (This sentiment likely benefits Ford, which persevered without government investment, more than GM, as many Americans remain unhappy with the Obama administration's decision. But GM is likely getting some benefit from this economic nationalism too.)

This upcoming IPO will write another interesting chapter in this story, for Canada's government as well as Washington. Ottawa and Queen's Park will continue to own significant stakes in the company, and will be selling their remaining shares over the ensuing years.

If the uptick for North American cars continues, here's a great irony: one of the most successful economic choices Stephen Harper has made was one he probably least expected he would ever consider.