This is the best 'Wikipedia' entry yet!
http://303dia.org/index.php/Pave_the_earth
31 March 2008
Greed, explained
Chaos on Wall Street
The big banks' fear of big losses is threatening to bring down the entire system, with dire consequences for all of us. Here's what's going on, and what we can do about it.
By Allan Sloan, senior editor at large
(Fortune Magazine) -- What in the world is going on here? Why is Washington spending billions to bail out Wall Street titans while leaving struggling homeowners to fend for themselves? Why are the Federal Reserve and the Treasury acting as if they're afraid the world may come to an end, while the stock market seems much less concerned? And finally, what does all this mean to those of us who aren't financial professionals?
Okay, take a few breaths, pour yourself a beverage of your choice, and I'll tell you what's happening - and what I think is going to happen. Although I expect these problems will resolve themselves without a catastrophic meltdown, I'll also tell you why I'm more nervous about the world financial system now than I've ever been in my 40 years of covering business and markets.
Finally, I'll tell you why I fear that the Wall Street enablers of the biggest financial mess of my lifetime will escape with relatively light damage, leaving the rest of us - and our children and grandchildren - to pay for their misdeeds.
We're suffering the aftereffects of the collapse of a Tinker Bell financial market, one that depended heavily on borrowed money that has now vanished like pixie dust. Like Tink, the famous fairy from Peter Pan, this market could exist only as long as everyone agreed to believe in it.
So because it was convenient - and oh, so profitable! - players embraced fantasies like U.S. house prices never falling and cheap short-term money always being available. They created, bought, and sold, for huge profits, securities that almost no one understood. And they goosed their returns by borrowing vast amounts of money.
The first shoe
The fantasies began to fade last June when Bear Stearns let two of its hedge funds collapse because of mortgage-backed-securities problems. Debt market - both here and abroad - went sour big-time. That, in turn, became a huge drag on the U.S. economy, bringing on the current economic slowdown.
And before you ask: It's irrelevant whether or not we're in a recession, which National Bureau of Economic Research experts define as "a significant decline in economic activity spread across the economy, lasting more than a few months." What matters is that we're in a dangerous and messy situation that has produced an economic slowdown unlike those we're used to seeing.
How is this slowdown different from other slowdowns? Normally the economy goes bad first, creating financial problems. In this slowdown the markets are dragging down the economy - a crucial distinction, because markets are harder to fix than the economy.
A leading political economist, Allan Meltzer of Carnegie Mellon, calls it "an unusual situation, but not unprecedented." When was the last time it happened in the U.S.? "In 1929," he says. And it touched off the Great Depression.
No, Meltzer isn't saying that a Great Depression - 25% unemployment, social unrest, mass hunger, millions of people's savings wiped out in bank collapses - is upon us. Nor, for that matter, am I. But the precedent is unsettling, to say the least. You can only imagine how unsettling it is to Federal Reserve chairman Ben Bernanke, a former economics professor who made his academic bones writing about the Great Depression.
Academics now feel that the 1929 slowdown morphed into a Great Depression in large part because the Fed tightened credit rather than loosening it. With that precedent in mind, you can see why Bernanke's Fed is cutting rates rapidly and throwing everything but the kitchen sink at today's problems. (Bernanke will probably throw that in too, if the Fed's plumbers can unbolt it.) None of this Alan Greenspan (remember him?) quarter-point-at-a-time stuff for him.
Fear is the culprit
So why hasn't the cure worked? The problem is that vital markets that most people never see - the constant borrowing and lending and trading among huge institutions - have been paralyzed by losses, fear, and uncertainty. And you can't get rid of losses, fear, and uncertainty by cutting rates.
Giant institutions are, to use the technical term, scared to death. They've had to come back time after time and report additional losses on their securities holdings after telling the market that they had cleaned everything up. It's whack-a-mole finance - the problems keep appearing in unexpected places. Since the Tink market began tanking, so many shoes have dropped that it looks like Imelda Marcos's closet.
We've had problems with mortgage-backed securities, collateralized debt obligations, collateralized loan obligations, financial insurers, structured investment vehicles, asset-backed commercial paper, auction rate securities, liquidity puts. By the time you read this, something else - my bet's on credit default swaps - may have become the disaster du jour.
To paraphrase what a top Fednik told me in a moment of candor last fall: You realize that you don't know what's in your own portfolio, so how can you know what's in the portfolio of people who want to borrow from you?
Combine that with the fact that big firms are short of capital because of their losses (some of which have to do with accounting rules I won't inflict on you today) and that they're afraid of not being able to borrow enough short-term money to fund their obligations, and you can see why credit has dried up.
The fear - a justifiable one - is that if one big financial firm fails, it will lead to cascading failures throughout the world. Big firms are so interlinked with one another and with other market players that the failure of one large counterparty, as they're called, can drag down counterparties all over the globe. And if the counterparties fail, it could drag down the counterparties' counterparties, and so on. Meltdown City.
The long-term view
In 1998 the Fed orchestrated a bailout of the Long-Term Capital Management hedge fund because it had $1.25 trillion in transactions with other institutions. These days that's almost small beer, because Wall Street has created a parallel banking system in which hedge funds, investment banks, and other essentially unregulated entities took over much of what regulated commercial banks used to do.
But there's a vital difference. Conventional banks have reason to take something of a long-term view: Mess up and you have no reputation, no bank, no job, no one talking to you at the country club.
In the parallel system a different ethos prevails. If you take big, even reckless, bets and win, you have a great year and you get a great bonus - or in the case of hedge funds, 20% of the profits. If you lose money the following year, you lose your investors' money rather than your own - and you don't have to give back last year's bonus. Heads, you win; tails, you lose someone else's money.
Bernanke and his point man on Wall Street, New York Fed president Tim Geithner, know everything I've said, of course. As does Treasury Secretary Hank Paulson, former head of Goldman Sachs (GS, Fortune 500).
They know a lot more too - such as which specific institutions are running out of the ability to borrow and have huge obligations they need to refinance day in and day out. Walk by Fed facilities in New York City or Washington, and you can feel the fear emanating from the building.
Because these aren't normal times, the Fed has tried to reassure the markets by inventing three new ways to inundate the financial system with staggering amounts of short-term money. This is in addition to the Fed's existing mechanisms, which are vast.
The three newbies - the term auction lending facility, the primary-dealer credit facility, and the term securities lending facility - total more than half-a-trillion dollars, with more if needed. Much of this money is available not only to commercial banks but also to investment banks, which normally aren't allowed to borrow from the Fed.
How can the Fed afford this largesse? Easy. Unlike a normal lender, the Fed can't run out of money - at least, I don't think it can. It can manage monetary policy while in effect creating banking reserves out of thin air and lending them out at interest.
That's how the Fed reported a $34 billion profit in 2006, the last available year, of which $29 billion was sent to the Treasury. The Fed can even add to its $800 billion stash of Treasury securities by borrowing more of them from other big players.
Then there's the Treasury. In March the Treasury - which failed this past winter to get private firms to establish a $100 billion "superfund" (please, no giggles from people who equate the term with Love Canal) to keep things called "structured investment vehicles" from having to sell their holdings in a bad market - unleashed Fannie Mae (FNM) and Freddie Mac (FRE, Fortune 500) and the Federal Home Loan Banks to buy hundreds of billions of dollars of mortgage-backed securities.
That market was seeing prices drop sharply because of large forced sales from the collapse of Carlyle Capital and from hedge funds desperate to pay off some of their borrowings. That decline, in turn, could have forced more write-downs at big firms. Bringing Fannie and Freddie back in the game eases those market problems. Letting Fannie and Freddie bulk up could create trouble down the road, the firms' pledges to raise more capital notwithstanding. But on balance, it was a smart thing to do.
How you'll pay
Still with me? Good. Now let me show you how we taxpayers are picking up the tab for much of this rescue mission to the markets - even though Uncle Sam isn't sending checks to Wall Street. Here's the math. Say the Fed extends $500 billion of emergency loans to firms in need of short-term money. They're paying around 2.5% interest to Uncle Ben (or Uncle Sam, if you prefer). That rate is way below what they'd pay to borrow in the open market, if they could borrow. The difference between the open-market price and 2.5% is a gift from us, the taxpayers.
I think that's better than letting the world financial system collapse - but it's a serious subsidy to outfits that made a lot of money on the way up and that are now whining about losses. You gotta love it - private profits, socialized losses.
Now to the infamous Bear Stearns deal. Bear shareholders are set to get $10 a share - about $1.2 billion - from J.P. Morgan Chase. That's $1.2 billion more than they were likely to realize in a bankruptcy had the Fed and the Treasury dared let Bear go broke. More important, Bear's creditors - who were asleep at the switch and ought to be forced to pay for it - got out whole because J.P. Morgan agreed to take over Bear's obligations.
The only reason Morgan did that is its deal with the Fed. The Fed is fronting $29 billion to Bear, which in turn will offload $30 billion of its financial toxic waste into a fund run on the Fed's behalf. J.P. Morgan eats the first $1 billion of losses - a concession it made to the Fed, which was embarrassed and enraged when Morgan raised the price it was paying for Bear to $10 a share from the $2 originally agreed to.
The securities that Bear is shedding aren't worth $29 billion in today's markets -if they were, Morgan wouldn't need the Fed's dough. The Fed - which is to say the taxpayers - is eating the difference between $29 billion and what that stuff is worth. It wouldn't surprise me to see the Fed end up with a $4 billion haircut - but we'll probably never know. (Once you take that haircut into account, you see why Bear shareholders should stop complaining about getting "only" $10, and why Bear debtholders should erect a statue to Bernanke.)
Fedniks tell their friends - yes, many Fed folks have both social consciences and friends - that they're furious about the Wall Street enablers of the mortgage mess and other financial excesses being able to escape the full cost of their folly, with the public picking up the cost.
The lesser evil
But as one of the players said to me, "Is it better to let Bear Stearns fail and risk setting off a market collapse that costs a million jobs?" The answer, of course, is no. Bear had about $13 trillion of derivatives deals with counterparties, according to its most recent financial filings. If Bear had croaked, large parts of the world could have croaked. And the economic damage could have been catastrophic.
Okay. Is there good news here? Indeed, there is. Sooner or later, all this money being thrown at the debt markets will stabilize things.
But the costs will be steep. Those of us who have been prudent, lived within our means, and didn't overborrow are paying a huge price for this. Income on our Treasury bills, money market funds, and CDs has dropped sharply, thanks to the Fed's rate cuts, and our wealth has eroded relative to foreign currencies and commodities.
As an indirect result of the Fed cutting short-term rates, we've already seen a loss of faith in the dollar by our foreign creditors. That's helped run up the price of commodities that are priced in dollars, and may well be stirring up inflation even as the Fed lowers retirees' incomes.
It's going to get harder and harder to finance our country's trade and federal budget deficits, with our seemingly ever-falling dollar carrying such low interest rates. The dollar has been the world's preeminent reserve currency - but I think those days are drawing to a close. Don't be surprised if in the not distant future the U.S. is forced by its lenders to borrow in currencies other than its own. It could get really ugly.
Our financial institutions will emerge from this episode weakened, compared with those in the rest of the world. It's going to take years to work out our country's excess borrowings, with lenders and borrowers - and quite likely American taxpayers all bearing the cost.
So, after all this, we end up with the same old story. Whenever you see a financially driven boom and people tell you, "This time it's different," don't listen. It's never different. Sooner or later, the bubble pops, as it has now. And you and I end up paying for it.
For more commentary by Allan Sloan, go to fortune.com/sloan.
Reporter Associate Doris Burke contributed to this article.
The big banks' fear of big losses is threatening to bring down the entire system, with dire consequences for all of us. Here's what's going on, and what we can do about it.
By Allan Sloan, senior editor at large
(Fortune Magazine) -- What in the world is going on here? Why is Washington spending billions to bail out Wall Street titans while leaving struggling homeowners to fend for themselves? Why are the Federal Reserve and the Treasury acting as if they're afraid the world may come to an end, while the stock market seems much less concerned? And finally, what does all this mean to those of us who aren't financial professionals?
Okay, take a few breaths, pour yourself a beverage of your choice, and I'll tell you what's happening - and what I think is going to happen. Although I expect these problems will resolve themselves without a catastrophic meltdown, I'll also tell you why I'm more nervous about the world financial system now than I've ever been in my 40 years of covering business and markets.
Finally, I'll tell you why I fear that the Wall Street enablers of the biggest financial mess of my lifetime will escape with relatively light damage, leaving the rest of us - and our children and grandchildren - to pay for their misdeeds.
We're suffering the aftereffects of the collapse of a Tinker Bell financial market, one that depended heavily on borrowed money that has now vanished like pixie dust. Like Tink, the famous fairy from Peter Pan, this market could exist only as long as everyone agreed to believe in it.
So because it was convenient - and oh, so profitable! - players embraced fantasies like U.S. house prices never falling and cheap short-term money always being available. They created, bought, and sold, for huge profits, securities that almost no one understood. And they goosed their returns by borrowing vast amounts of money.
The first shoe
The fantasies began to fade last June when Bear Stearns let two of its hedge funds collapse because of mortgage-backed-securities problems. Debt market - both here and abroad - went sour big-time. That, in turn, became a huge drag on the U.S. economy, bringing on the current economic slowdown.
And before you ask: It's irrelevant whether or not we're in a recession, which National Bureau of Economic Research experts define as "a significant decline in economic activity spread across the economy, lasting more than a few months." What matters is that we're in a dangerous and messy situation that has produced an economic slowdown unlike those we're used to seeing.
How is this slowdown different from other slowdowns? Normally the economy goes bad first, creating financial problems. In this slowdown the markets are dragging down the economy - a crucial distinction, because markets are harder to fix than the economy.
A leading political economist, Allan Meltzer of Carnegie Mellon, calls it "an unusual situation, but not unprecedented." When was the last time it happened in the U.S.? "In 1929," he says. And it touched off the Great Depression.
No, Meltzer isn't saying that a Great Depression - 25% unemployment, social unrest, mass hunger, millions of people's savings wiped out in bank collapses - is upon us. Nor, for that matter, am I. But the precedent is unsettling, to say the least. You can only imagine how unsettling it is to Federal Reserve chairman Ben Bernanke, a former economics professor who made his academic bones writing about the Great Depression.
Academics now feel that the 1929 slowdown morphed into a Great Depression in large part because the Fed tightened credit rather than loosening it. With that precedent in mind, you can see why Bernanke's Fed is cutting rates rapidly and throwing everything but the kitchen sink at today's problems. (Bernanke will probably throw that in too, if the Fed's plumbers can unbolt it.) None of this Alan Greenspan (remember him?) quarter-point-at-a-time stuff for him.
Fear is the culprit
So why hasn't the cure worked? The problem is that vital markets that most people never see - the constant borrowing and lending and trading among huge institutions - have been paralyzed by losses, fear, and uncertainty. And you can't get rid of losses, fear, and uncertainty by cutting rates.
Giant institutions are, to use the technical term, scared to death. They've had to come back time after time and report additional losses on their securities holdings after telling the market that they had cleaned everything up. It's whack-a-mole finance - the problems keep appearing in unexpected places. Since the Tink market began tanking, so many shoes have dropped that it looks like Imelda Marcos's closet.
We've had problems with mortgage-backed securities, collateralized debt obligations, collateralized loan obligations, financial insurers, structured investment vehicles, asset-backed commercial paper, auction rate securities, liquidity puts. By the time you read this, something else - my bet's on credit default swaps - may have become the disaster du jour.
To paraphrase what a top Fednik told me in a moment of candor last fall: You realize that you don't know what's in your own portfolio, so how can you know what's in the portfolio of people who want to borrow from you?
Combine that with the fact that big firms are short of capital because of their losses (some of which have to do with accounting rules I won't inflict on you today) and that they're afraid of not being able to borrow enough short-term money to fund their obligations, and you can see why credit has dried up.
The fear - a justifiable one - is that if one big financial firm fails, it will lead to cascading failures throughout the world. Big firms are so interlinked with one another and with other market players that the failure of one large counterparty, as they're called, can drag down counterparties all over the globe. And if the counterparties fail, it could drag down the counterparties' counterparties, and so on. Meltdown City.
The long-term view
In 1998 the Fed orchestrated a bailout of the Long-Term Capital Management hedge fund because it had $1.25 trillion in transactions with other institutions. These days that's almost small beer, because Wall Street has created a parallel banking system in which hedge funds, investment banks, and other essentially unregulated entities took over much of what regulated commercial banks used to do.
But there's a vital difference. Conventional banks have reason to take something of a long-term view: Mess up and you have no reputation, no bank, no job, no one talking to you at the country club.
In the parallel system a different ethos prevails. If you take big, even reckless, bets and win, you have a great year and you get a great bonus - or in the case of hedge funds, 20% of the profits. If you lose money the following year, you lose your investors' money rather than your own - and you don't have to give back last year's bonus. Heads, you win; tails, you lose someone else's money.
Bernanke and his point man on Wall Street, New York Fed president Tim Geithner, know everything I've said, of course. As does Treasury Secretary Hank Paulson, former head of Goldman Sachs (GS, Fortune 500).
They know a lot more too - such as which specific institutions are running out of the ability to borrow and have huge obligations they need to refinance day in and day out. Walk by Fed facilities in New York City or Washington, and you can feel the fear emanating from the building.
Because these aren't normal times, the Fed has tried to reassure the markets by inventing three new ways to inundate the financial system with staggering amounts of short-term money. This is in addition to the Fed's existing mechanisms, which are vast.
The three newbies - the term auction lending facility, the primary-dealer credit facility, and the term securities lending facility - total more than half-a-trillion dollars, with more if needed. Much of this money is available not only to commercial banks but also to investment banks, which normally aren't allowed to borrow from the Fed.
How can the Fed afford this largesse? Easy. Unlike a normal lender, the Fed can't run out of money - at least, I don't think it can. It can manage monetary policy while in effect creating banking reserves out of thin air and lending them out at interest.
That's how the Fed reported a $34 billion profit in 2006, the last available year, of which $29 billion was sent to the Treasury. The Fed can even add to its $800 billion stash of Treasury securities by borrowing more of them from other big players.
Then there's the Treasury. In March the Treasury - which failed this past winter to get private firms to establish a $100 billion "superfund" (please, no giggles from people who equate the term with Love Canal) to keep things called "structured investment vehicles" from having to sell their holdings in a bad market - unleashed Fannie Mae (FNM) and Freddie Mac (FRE, Fortune 500) and the Federal Home Loan Banks to buy hundreds of billions of dollars of mortgage-backed securities.
That market was seeing prices drop sharply because of large forced sales from the collapse of Carlyle Capital and from hedge funds desperate to pay off some of their borrowings. That decline, in turn, could have forced more write-downs at big firms. Bringing Fannie and Freddie back in the game eases those market problems. Letting Fannie and Freddie bulk up could create trouble down the road, the firms' pledges to raise more capital notwithstanding. But on balance, it was a smart thing to do.
How you'll pay
Still with me? Good. Now let me show you how we taxpayers are picking up the tab for much of this rescue mission to the markets - even though Uncle Sam isn't sending checks to Wall Street. Here's the math. Say the Fed extends $500 billion of emergency loans to firms in need of short-term money. They're paying around 2.5% interest to Uncle Ben (or Uncle Sam, if you prefer). That rate is way below what they'd pay to borrow in the open market, if they could borrow. The difference between the open-market price and 2.5% is a gift from us, the taxpayers.
I think that's better than letting the world financial system collapse - but it's a serious subsidy to outfits that made a lot of money on the way up and that are now whining about losses. You gotta love it - private profits, socialized losses.
Now to the infamous Bear Stearns deal. Bear shareholders are set to get $10 a share - about $1.2 billion - from J.P. Morgan Chase. That's $1.2 billion more than they were likely to realize in a bankruptcy had the Fed and the Treasury dared let Bear go broke. More important, Bear's creditors - who were asleep at the switch and ought to be forced to pay for it - got out whole because J.P. Morgan agreed to take over Bear's obligations.
The only reason Morgan did that is its deal with the Fed. The Fed is fronting $29 billion to Bear, which in turn will offload $30 billion of its financial toxic waste into a fund run on the Fed's behalf. J.P. Morgan eats the first $1 billion of losses - a concession it made to the Fed, which was embarrassed and enraged when Morgan raised the price it was paying for Bear to $10 a share from the $2 originally agreed to.
The securities that Bear is shedding aren't worth $29 billion in today's markets -if they were, Morgan wouldn't need the Fed's dough. The Fed - which is to say the taxpayers - is eating the difference between $29 billion and what that stuff is worth. It wouldn't surprise me to see the Fed end up with a $4 billion haircut - but we'll probably never know. (Once you take that haircut into account, you see why Bear shareholders should stop complaining about getting "only" $10, and why Bear debtholders should erect a statue to Bernanke.)
Fedniks tell their friends - yes, many Fed folks have both social consciences and friends - that they're furious about the Wall Street enablers of the mortgage mess and other financial excesses being able to escape the full cost of their folly, with the public picking up the cost.
The lesser evil
But as one of the players said to me, "Is it better to let Bear Stearns fail and risk setting off a market collapse that costs a million jobs?" The answer, of course, is no. Bear had about $13 trillion of derivatives deals with counterparties, according to its most recent financial filings. If Bear had croaked, large parts of the world could have croaked. And the economic damage could have been catastrophic.
Okay. Is there good news here? Indeed, there is. Sooner or later, all this money being thrown at the debt markets will stabilize things.
But the costs will be steep. Those of us who have been prudent, lived within our means, and didn't overborrow are paying a huge price for this. Income on our Treasury bills, money market funds, and CDs has dropped sharply, thanks to the Fed's rate cuts, and our wealth has eroded relative to foreign currencies and commodities.
As an indirect result of the Fed cutting short-term rates, we've already seen a loss of faith in the dollar by our foreign creditors. That's helped run up the price of commodities that are priced in dollars, and may well be stirring up inflation even as the Fed lowers retirees' incomes.
It's going to get harder and harder to finance our country's trade and federal budget deficits, with our seemingly ever-falling dollar carrying such low interest rates. The dollar has been the world's preeminent reserve currency - but I think those days are drawing to a close. Don't be surprised if in the not distant future the U.S. is forced by its lenders to borrow in currencies other than its own. It could get really ugly.
Our financial institutions will emerge from this episode weakened, compared with those in the rest of the world. It's going to take years to work out our country's excess borrowings, with lenders and borrowers - and quite likely American taxpayers all bearing the cost.
So, after all this, we end up with the same old story. Whenever you see a financially driven boom and people tell you, "This time it's different," don't listen. It's never different. Sooner or later, the bubble pops, as it has now. And you and I end up paying for it.
For more commentary by Allan Sloan, go to fortune.com/sloan.
Reporter Associate Doris Burke contributed to this article.
Tales of Woah
I say, "woah" instead of "woe" because, honestly, what are these people thinking? CNN is posting all of these 'woe is me' sub-prime fallout how-its-affecting-the-little-guy stories, but once you read them, you wonder, "how could these people delude themselves that everything was going to stay so rosy forever that they would overextend themselves like that?". It's more of the same -- these people made stupid foolish selfish decisions, and it should be them that suffer the consequences.
Careers vanish after subprime 'free fall'
Kent and Mysti Cope were well-paid executives at subprime lenders who never thought the industry could disappear overnight. Now they're just trying to get by.
By Chris Isidore, CNNMoney.com senior writer
March 31, 2008: 5:30 AM EDT
SAN CLEMENTE, Calif. (CNNMoney.com) -- Kent and Mysti Cope met and fell in love working for one of the nation's top subprime lenders. Now, their life has been turned upside down after the sudden implosion of the subprime mortgage industry.
Mysti was one of the last people out the door at New Century Financial, once the nation's No. 2 subprime lender. She had been in charge of e-commerce customer service with dozens of employees reporting to her. It was at New Century where the Copes met in 2000.
Kent worked for several of the firms that helped give birth to the industry, which specializes in making loans to people with less-than-perfect credit, in the 1990s. He has been out of work since August when he was laid off by Friedman, Billings, Ramsey Group (FBR) unit First NLC Financial Services.
"We're still both in shock that it could go from something so good to so bad so quick," said Kent, 59. "New Century in 60 days went from top of the heap to out of business."
The two didn't say exactly how much money they made at their last jobs but Kent admitted they each had six-figure incomes.
Today, they're trying to get by on his unemployment benefits of about $450 a week, which covers only about an eighth of the basic payments they owe every month.
Only $1,800 to cover $10,000 in bills
Their home equity line, mortgage, health and life insurance premiums alone cost about $10,000 a month. Still, they are trying to hang onto what they call their dream home with a view of the Pacific Ocean where they live with Mysti's 11-year old son.
Kent estimates the mountainside home in San Clemente, Calif., which they bought in 2005, is worth 20% less than it was a year ago. And in the current market, he said he's not sure he could sell it for even that amount.
"We've used up most of our reserves, cashed in her 401K," said Kent. "We're going Mach 1 into a wall. When we run into it, then we've got to decide what to do next."
Despite their financial problems, the Copes have worked hard to protect their credit rating, staying current on bills. And they've made cutbacks: trading in Kent's Corvette for a Suburban and getting rid of the gardener, for example. But the couple also has learned that it didn't need everything it used to spend money on.
"We used to eat out a lot. Now we are the leftover king and queen," said Kent.
Since he lost his job, Kent has gotten a real estate license and is trying to start a business selling the rapidly increasing inventory of foreclosed homes in Orange County, Calif. Mysti is trying to build an online business selling jewelry and beachwear, some of which she designs herself.
"Is it scary? Yeah," said Kent. "How long do you have to hold on before it starts to turn around? If anything, that piece of it is the most unnerving for us."
For Mysti, 37, all her efforts to find work since she lost her job last May have been futile. She said she believes the attention given to subprime borrowers who have run into trouble paying their mortgages work against her and other former colleagues. It's almost like having "Enron" on your resume.
"The media has somewhat tarnished the subprime industry and all the employees, and portrayed them as being dishonest," she said. "We're not dishonest. Not everybody was a bad borrower. Not every company was a bad lender."
Hopes of hanging on to jobs quickly dashed
Mysti said she and many other employees who survived the early rounds of layoffs at New Century thought they'd be able to ride out the bad times even after the firm stopped taking new mortgage applications in March of last year and filed for bankruptcy in April.
"We were New Century. We were a large corporation. We were the No. 2 subprime lender in the industry," she recalled. "You figured someone would come in and want to invest and take it over."
But the potential buyers soon disappeared as did the remaining jobs. She and her co-workers got word on May 3 that they were being laid off, effective the next day.
Kent's story is similar. Throughout last summer, he tried to keep up the morale of the 150 sales people he had reporting to him. Friedman Billings had a deal to sell First NLC Financial Services to Sun Capital Partners, the private capital firm that had sold it to them only two years before. So there was hope. Or so he thought.
"We knew we're going to lose money, we were just going to try to not hemorrhage," he said. "That's the message we all had to deliver to our troops -- Sun Capital is going to come in, they're behind us, they wouldn't be buying us if they didn't think we could ride out the storm," Kent recalled.
But by August it was apparent that deal was no longer going to happen, and he too was laid off.
For some, getting laid-off is better than still working
The Copes are just two of many in Orange County, formerly the center of the nation's subprime lending industry, now trying to move on. Nearly 9,000 jobs have been lost there in the past year, with more than 4,000 alone in Irvine, where New Century was based.
But the damage extends far beyond those like the Copes who lost their jobs.
"You can't run into someone who isn't impacted by what's going on," said Kent. "It's very expensive to live in Orange County, and you pay a lot for your home and you can't get what it's worth now."
Some of their former colleagues found jobs with other lenders, only to get laid off again when those firms closed up. Kent said some of the sales people he knows who still have jobs are actually the worst off.
"They may be employed by a company for months and months, but they can't close a deal," he said. "They've got the borrowers, but unless that thing is pure gold, it isn't made. It's a commission business. They're to the point frankly where they would rather get laid-off so they can go collect unemployment than be employed and make no money."
The subprime industry in Orange County was a close-knit close cluster of lenders. The industry rapidly expanded as executives at one firm would strike out on their own and setup shop nearby. But the industry fell apart even more quickly.
The Copes and their colleagues tracked the collapse through rumors and Web sites, such as lenderimplode.com.
"You kept looking everyday to see if your company was on there or not," said Kent. "It seemed like every day there was a company going under."
"You know you could take a roller coaster ride down," he said. "But you never envisioned it could be a free fall."
$10,000 in monthly bills? WTF? Trading in a Corvette for a Suburban? Okay - so now subprime is dead...I'd better get into real estate? Are these people for real? As much as they delude themselves that they can hold onto that Pacific Ocean view from the hills, I think they're in for a huge, hurty wakeup call. Even at a $200K combined income, $10K a month in bills? They deserve to run into that wall at Mach 1. For some people it's the only way they're going to be able to catch a grip.
Careers vanish after subprime 'free fall'
Kent and Mysti Cope were well-paid executives at subprime lenders who never thought the industry could disappear overnight. Now they're just trying to get by.
By Chris Isidore, CNNMoney.com senior writer
March 31, 2008: 5:30 AM EDT
SAN CLEMENTE, Calif. (CNNMoney.com) -- Kent and Mysti Cope met and fell in love working for one of the nation's top subprime lenders. Now, their life has been turned upside down after the sudden implosion of the subprime mortgage industry.
Mysti was one of the last people out the door at New Century Financial, once the nation's No. 2 subprime lender. She had been in charge of e-commerce customer service with dozens of employees reporting to her. It was at New Century where the Copes met in 2000.
Kent worked for several of the firms that helped give birth to the industry, which specializes in making loans to people with less-than-perfect credit, in the 1990s. He has been out of work since August when he was laid off by Friedman, Billings, Ramsey Group (FBR) unit First NLC Financial Services.
"We're still both in shock that it could go from something so good to so bad so quick," said Kent, 59. "New Century in 60 days went from top of the heap to out of business."
The two didn't say exactly how much money they made at their last jobs but Kent admitted they each had six-figure incomes.
Today, they're trying to get by on his unemployment benefits of about $450 a week, which covers only about an eighth of the basic payments they owe every month.
Only $1,800 to cover $10,000 in bills
Their home equity line, mortgage, health and life insurance premiums alone cost about $10,000 a month. Still, they are trying to hang onto what they call their dream home with a view of the Pacific Ocean where they live with Mysti's 11-year old son.
Kent estimates the mountainside home in San Clemente, Calif., which they bought in 2005, is worth 20% less than it was a year ago. And in the current market, he said he's not sure he could sell it for even that amount.
"We've used up most of our reserves, cashed in her 401K," said Kent. "We're going Mach 1 into a wall. When we run into it, then we've got to decide what to do next."
Despite their financial problems, the Copes have worked hard to protect their credit rating, staying current on bills. And they've made cutbacks: trading in Kent's Corvette for a Suburban and getting rid of the gardener, for example. But the couple also has learned that it didn't need everything it used to spend money on.
"We used to eat out a lot. Now we are the leftover king and queen," said Kent.
Since he lost his job, Kent has gotten a real estate license and is trying to start a business selling the rapidly increasing inventory of foreclosed homes in Orange County, Calif. Mysti is trying to build an online business selling jewelry and beachwear, some of which she designs herself.
"Is it scary? Yeah," said Kent. "How long do you have to hold on before it starts to turn around? If anything, that piece of it is the most unnerving for us."
For Mysti, 37, all her efforts to find work since she lost her job last May have been futile. She said she believes the attention given to subprime borrowers who have run into trouble paying their mortgages work against her and other former colleagues. It's almost like having "Enron" on your resume.
"The media has somewhat tarnished the subprime industry and all the employees, and portrayed them as being dishonest," she said. "We're not dishonest. Not everybody was a bad borrower. Not every company was a bad lender."
Hopes of hanging on to jobs quickly dashed
Mysti said she and many other employees who survived the early rounds of layoffs at New Century thought they'd be able to ride out the bad times even after the firm stopped taking new mortgage applications in March of last year and filed for bankruptcy in April.
"We were New Century. We were a large corporation. We were the No. 2 subprime lender in the industry," she recalled. "You figured someone would come in and want to invest and take it over."
But the potential buyers soon disappeared as did the remaining jobs. She and her co-workers got word on May 3 that they were being laid off, effective the next day.
Kent's story is similar. Throughout last summer, he tried to keep up the morale of the 150 sales people he had reporting to him. Friedman Billings had a deal to sell First NLC Financial Services to Sun Capital Partners, the private capital firm that had sold it to them only two years before. So there was hope. Or so he thought.
"We knew we're going to lose money, we were just going to try to not hemorrhage," he said. "That's the message we all had to deliver to our troops -- Sun Capital is going to come in, they're behind us, they wouldn't be buying us if they didn't think we could ride out the storm," Kent recalled.
But by August it was apparent that deal was no longer going to happen, and he too was laid off.
For some, getting laid-off is better than still working
The Copes are just two of many in Orange County, formerly the center of the nation's subprime lending industry, now trying to move on. Nearly 9,000 jobs have been lost there in the past year, with more than 4,000 alone in Irvine, where New Century was based.
But the damage extends far beyond those like the Copes who lost their jobs.
"You can't run into someone who isn't impacted by what's going on," said Kent. "It's very expensive to live in Orange County, and you pay a lot for your home and you can't get what it's worth now."
Some of their former colleagues found jobs with other lenders, only to get laid off again when those firms closed up. Kent said some of the sales people he knows who still have jobs are actually the worst off.
"They may be employed by a company for months and months, but they can't close a deal," he said. "They've got the borrowers, but unless that thing is pure gold, it isn't made. It's a commission business. They're to the point frankly where they would rather get laid-off so they can go collect unemployment than be employed and make no money."
The subprime industry in Orange County was a close-knit close cluster of lenders. The industry rapidly expanded as executives at one firm would strike out on their own and setup shop nearby. But the industry fell apart even more quickly.
The Copes and their colleagues tracked the collapse through rumors and Web sites, such as lenderimplode.com.
"You kept looking everyday to see if your company was on there or not," said Kent. "It seemed like every day there was a company going under."
"You know you could take a roller coaster ride down," he said. "But you never envisioned it could be a free fall."
$10,000 in monthly bills? WTF? Trading in a Corvette for a Suburban? Okay - so now subprime is dead...I'd better get into real estate? Are these people for real? As much as they delude themselves that they can hold onto that Pacific Ocean view from the hills, I think they're in for a huge, hurty wakeup call. Even at a $200K combined income, $10K a month in bills? They deserve to run into that wall at Mach 1. For some people it's the only way they're going to be able to catch a grip.
26 March 2008
Spend, spend, spend
NEIL MACDONALD:
Surely we can't have Americans spending responsibly
March 25, 2008 CBC News
More frightening news about the economy here this week.
Housing prices are down nearly 10 per cent over the year for the first time since the Great Depression.
Consumer confidence is sagging and spending is flat. The stone fortresses of Wall Street are shaking. Some are cracking.
So completely has the economy eclipsed other concerns here in the U.S. that the 4,000th military death in Iraq and the new spasm of violence there have been drowned out in a national fit of anxiety over when the pain here will end.
You can hear the collective cry: When can we all go back to buying lots of stuff without worrying about how to pay for it?
For non-Americans, whose houses are generally in better order, it may be tempting to smile, ant-like, at the big self-pitying grasshopper. But we should all share his fear.
The rest of the developed world orbits the American economy, utterly dependent on it. Let's not pretend otherwise. The only logical hope for the rest of us is that the U.S. keeps behaving like a 13-year-old with a credit card.
Canadians, Europeans and Asians of good sense should join together and lead the cheer: Get out there, America, and shop. God love you. Borrow if you have to. Borrow even more if you can get away with it. Just keep spending and ignore the debt monstrosity that slouches down the pathway toward you, maw gaping, hands grasping.
Figure out some way to redefine the debt. Or pass it on to another generation. That has worked so far.
Because someday, Americans are going to have to do one of two things: Start paying their bills, or just walk away from them. And we should all dread either of those eventualities, especially Canadians, who sell more to the United States than anyone else. If anyone has a vested interest in voracious American consumerism, it is us.
Compound borrowing
Living within your means would seem to be a universal wisdom. Not here.
"If we do that," says Pete Morici, an outspoken professor of economics at the University of Maryland, "if we pay off our bills, we're going to consume much less than we produce. When that happens, the global economy will go into a severe recession."
Nobody wants that.
Still, if Americans had more collective fiscal sense, they would look at their aggregate consumer debt — $2.5 trillion, not including mortgages — and they would hold their credit cards over candles. They would get rid of the expensive behemoths parked in the driveway and enter into a long, sober, luxury-free period of financial detox.
They would then tell their government to stop borrowing unimaginable sums from Chinese and Middle East investors. They would try to live in their houses and enjoy them for a few years, instead of treating them like financial milking machines.
But none of this is likely to happen, thank goodness. Because Americans are addicted to the opium of leverage. They love to buy, usually without much down payment or any down payment at all and then, as a market frenzy inflates the value of the thing they have bought to nosebleed levels, siphon off the artificial wealth and spend it anew.
That siphoning requires copious amounts of borrowing, which banks here happily enable as long as the value of the underlying collateral — the house, or the stock portfolio — keeps on expanding.
Banks bundle up the loans and sell them as securities to rich foreigners, and the U.S. spending-go-round just goes merrily on its way.
Bubble bath
When the U.S. is in full-spending mode, its revelers are making us all rich, loading up on Canadian wood, oil and beef, on Japanese electronics, European clothes and cars, and the endless boatloads of low-tech stuff disgorged from the mega-factories operating round the clock in China.
Everyone is happy. Never mind that the wealth fuelling it all may not be real.
But from time to time — and now is one of those times — the party slows down to catch its breath, and the rest of the world stares, frightened out of its wits, waiting for the music to start again.
That happened after the technology-stock bubble exploded at the end of the 1990s, and it is happening again now that the real estate bubble has also blown apart.
The mess from this latest explosion is everywhere to be seen: Economic statistics are abysmal and getting worse, and the news from Wall Street suggests the people running the economy these past seven years or so weren't behaving any more responsibly than consumers.
So, as this nation of rugged individualists tends to do when things get rough, everyone is turning to the government for help.
Bailouts 'r us
The first help came in the form of a financial stimulus package early this year — $145 billion worth of direct cash handouts across the board in the form of tax rebates.
The cheques, which should be issued in a few weeks, come with an implicit government plea: This money is for spending, not for debt repayment. Please, please spend it and spend it fast.
Then came the corporate welfare, as banks on Wall Street threatened to collapse under the weight of their own bad investment decisions.
The U.S. Federal Reserve stepped in to help save Bear Stearns, which had been rendered practically worthless by its bets on subprime loans, the ones made to so many people who obviously couldn't afford them, people who were even allowed to lie about their incomes if they were willing to pay a few more interest points.
The Fed also extended an unlimited line of what is called discount credit to securities firms, which have jumped in to the tune of about $600 billion.
More bailout help is likely on the way.
Standard & Poors, the big ratings agency, is considering cutting its ratings on Goldman Sachs and Lehman Brothers, two other big-name investment banks that feasted at the subprime trough.
"This is not over," Morici predicts. The collapse of Bear Stearns, he says, "was not the big event that defines the bottom."
There is always tomorrow
So far, the Bush administration has been far more tender in seeing to the ailments of Wall Street financiers than ordinary American mortgage-holders.
Both groups made greedy, stupid decisions. But at this point anyway, only the uber-class finds a government safety net spread under it. (That may change, however, as both Hillary Clinton and Barack Obama, the Democrats running for president, are advocating expensive buyouts for homeowners, too.)
Treasury Secretary Henry Paulson, says Morici, is "running around telling small people they have to pay their mortgages, or pay as much as possible, when the Fed is letting the big banks off scot free.This is the kind of stuff that caused the French Revolution. He should just thank his lucky stars that people don't work on farms and don't have access to pitchforks anymore."
The other issue here: As the cost of the bailouts rise, as they are bound to do, where will the money come from? More borrowing, naturally.
Washington's credit is still good and foreign investors probably can't stop bailing it out even if they wanted to. It's the old adage: Lend someone a thousand dollars, he has a problem. Lend someone a million, you have the problem.
Of course, if another bubble should suddenly arise, everything will be fine again, at least for a while.
Government revenues would re-inflate, personal wealth would balloon (on paper, anyway), and Americans would once again be able to spend their way out of trouble.
One prominent publication here recently suggested green technologies will be the ones to bubble up next. The time for that is certainly now.
With energy prices up, everybody suddenly wants a green house and a green car. Toyota's unprepossessing Prius is actually something of a status symbol now.
Whatever the bubble that provides the next leverage bonanza, though, we should all start cheering for Americans to find it as soon as possible.
By all means, America, party on. Please.
Surely we can't have Americans spending responsibly
March 25, 2008 CBC News
More frightening news about the economy here this week.
Housing prices are down nearly 10 per cent over the year for the first time since the Great Depression.
Consumer confidence is sagging and spending is flat. The stone fortresses of Wall Street are shaking. Some are cracking.
So completely has the economy eclipsed other concerns here in the U.S. that the 4,000th military death in Iraq and the new spasm of violence there have been drowned out in a national fit of anxiety over when the pain here will end.
You can hear the collective cry: When can we all go back to buying lots of stuff without worrying about how to pay for it?
For non-Americans, whose houses are generally in better order, it may be tempting to smile, ant-like, at the big self-pitying grasshopper. But we should all share his fear.
The rest of the developed world orbits the American economy, utterly dependent on it. Let's not pretend otherwise. The only logical hope for the rest of us is that the U.S. keeps behaving like a 13-year-old with a credit card.
Canadians, Europeans and Asians of good sense should join together and lead the cheer: Get out there, America, and shop. God love you. Borrow if you have to. Borrow even more if you can get away with it. Just keep spending and ignore the debt monstrosity that slouches down the pathway toward you, maw gaping, hands grasping.
Figure out some way to redefine the debt. Or pass it on to another generation. That has worked so far.
Because someday, Americans are going to have to do one of two things: Start paying their bills, or just walk away from them. And we should all dread either of those eventualities, especially Canadians, who sell more to the United States than anyone else. If anyone has a vested interest in voracious American consumerism, it is us.
Compound borrowing
Living within your means would seem to be a universal wisdom. Not here.
"If we do that," says Pete Morici, an outspoken professor of economics at the University of Maryland, "if we pay off our bills, we're going to consume much less than we produce. When that happens, the global economy will go into a severe recession."
Nobody wants that.
Still, if Americans had more collective fiscal sense, they would look at their aggregate consumer debt — $2.5 trillion, not including mortgages — and they would hold their credit cards over candles. They would get rid of the expensive behemoths parked in the driveway and enter into a long, sober, luxury-free period of financial detox.
They would then tell their government to stop borrowing unimaginable sums from Chinese and Middle East investors. They would try to live in their houses and enjoy them for a few years, instead of treating them like financial milking machines.
But none of this is likely to happen, thank goodness. Because Americans are addicted to the opium of leverage. They love to buy, usually without much down payment or any down payment at all and then, as a market frenzy inflates the value of the thing they have bought to nosebleed levels, siphon off the artificial wealth and spend it anew.
That siphoning requires copious amounts of borrowing, which banks here happily enable as long as the value of the underlying collateral — the house, or the stock portfolio — keeps on expanding.
Banks bundle up the loans and sell them as securities to rich foreigners, and the U.S. spending-go-round just goes merrily on its way.
Bubble bath
When the U.S. is in full-spending mode, its revelers are making us all rich, loading up on Canadian wood, oil and beef, on Japanese electronics, European clothes and cars, and the endless boatloads of low-tech stuff disgorged from the mega-factories operating round the clock in China.
Everyone is happy. Never mind that the wealth fuelling it all may not be real.
But from time to time — and now is one of those times — the party slows down to catch its breath, and the rest of the world stares, frightened out of its wits, waiting for the music to start again.
That happened after the technology-stock bubble exploded at the end of the 1990s, and it is happening again now that the real estate bubble has also blown apart.
The mess from this latest explosion is everywhere to be seen: Economic statistics are abysmal and getting worse, and the news from Wall Street suggests the people running the economy these past seven years or so weren't behaving any more responsibly than consumers.
So, as this nation of rugged individualists tends to do when things get rough, everyone is turning to the government for help.
Bailouts 'r us
The first help came in the form of a financial stimulus package early this year — $145 billion worth of direct cash handouts across the board in the form of tax rebates.
The cheques, which should be issued in a few weeks, come with an implicit government plea: This money is for spending, not for debt repayment. Please, please spend it and spend it fast.
Then came the corporate welfare, as banks on Wall Street threatened to collapse under the weight of their own bad investment decisions.
The U.S. Federal Reserve stepped in to help save Bear Stearns, which had been rendered practically worthless by its bets on subprime loans, the ones made to so many people who obviously couldn't afford them, people who were even allowed to lie about their incomes if they were willing to pay a few more interest points.
The Fed also extended an unlimited line of what is called discount credit to securities firms, which have jumped in to the tune of about $600 billion.
More bailout help is likely on the way.
Standard & Poors, the big ratings agency, is considering cutting its ratings on Goldman Sachs and Lehman Brothers, two other big-name investment banks that feasted at the subprime trough.
"This is not over," Morici predicts. The collapse of Bear Stearns, he says, "was not the big event that defines the bottom."
There is always tomorrow
So far, the Bush administration has been far more tender in seeing to the ailments of Wall Street financiers than ordinary American mortgage-holders.
Both groups made greedy, stupid decisions. But at this point anyway, only the uber-class finds a government safety net spread under it. (That may change, however, as both Hillary Clinton and Barack Obama, the Democrats running for president, are advocating expensive buyouts for homeowners, too.)
Treasury Secretary Henry Paulson, says Morici, is "running around telling small people they have to pay their mortgages, or pay as much as possible, when the Fed is letting the big banks off scot free.This is the kind of stuff that caused the French Revolution. He should just thank his lucky stars that people don't work on farms and don't have access to pitchforks anymore."
The other issue here: As the cost of the bailouts rise, as they are bound to do, where will the money come from? More borrowing, naturally.
Washington's credit is still good and foreign investors probably can't stop bailing it out even if they wanted to. It's the old adage: Lend someone a thousand dollars, he has a problem. Lend someone a million, you have the problem.
Of course, if another bubble should suddenly arise, everything will be fine again, at least for a while.
Government revenues would re-inflate, personal wealth would balloon (on paper, anyway), and Americans would once again be able to spend their way out of trouble.
One prominent publication here recently suggested green technologies will be the ones to bubble up next. The time for that is certainly now.
With energy prices up, everybody suddenly wants a green house and a green car. Toyota's unprepossessing Prius is actually something of a status symbol now.
Whatever the bubble that provides the next leverage bonanza, though, we should all start cheering for Americans to find it as soon as possible.
By all means, America, party on. Please.
The New West
Surging West leaves rural image behind
The four western provinces are moving beyond their frontier pasts and are becoming increasingly urbanized -- and are now set to attract up to three million more people through interprovincial and international moves in the next 25 years, according to a new report. "Quite a bit of activity in Canada has shifted to the West," said Brett Gartner, senior economist for the Canada West Foundation and author of the State of the West. "I think the old hinterland thing is in the past." The Calgary-based group's report, set to be released officially today, is a snapshot of demographic and economic trends in British Columbia, Alberta, Saskatchewan and Manitoba. Looking at statistics from the four provinces, the report points out that the West's share of Canada's total economic output (35%) exceeds its share of the population (30%). "It is Western Canada that is driving the Canadian economy," Gartner said.
In demographics, Gartner found that it is interprovincial migration -- mostly to BC and Alberta -- which has led to the lion's share of growth in the West, with the four provinces attracting 629,000 more Canadians than they lost between 1972 and 2007. While each of the provinces had roughly the same share of Western Canada's population in 1931, it's projected that the two westernmost provinces will account for 80% of the West's population by 2031. Through interprovincial migration, BC has gained people in each of the past four years after losing population from 1998 to 2003. In 2007, Saskatchewan gained people from interprovincial migration for the first time since 1984. Manitoba has experienced a net loss of people to other provinces for the past two dozen years, although those losses have been offset by strong immigration, thanks in part to a strong provincial nominee program. The region is still sparsely population by world standards. However, there has been what Gartner calls an "astounding" level of urbanization in the West. The rest of Canada was more urbanized than the West in 1966, but today the regions are more or less equally urbanized. Now, four in five westerners live in cities.
(Calgary Herald 080326)
Economically, it looks like the next few decades will belong to Western Canada, until everything collapses of course. Hopefully it'll be a good run!
The four western provinces are moving beyond their frontier pasts and are becoming increasingly urbanized -- and are now set to attract up to three million more people through interprovincial and international moves in the next 25 years, according to a new report. "Quite a bit of activity in Canada has shifted to the West," said Brett Gartner, senior economist for the Canada West Foundation and author of the State of the West. "I think the old hinterland thing is in the past." The Calgary-based group's report, set to be released officially today, is a snapshot of demographic and economic trends in British Columbia, Alberta, Saskatchewan and Manitoba. Looking at statistics from the four provinces, the report points out that the West's share of Canada's total economic output (35%) exceeds its share of the population (30%). "It is Western Canada that is driving the Canadian economy," Gartner said.
In demographics, Gartner found that it is interprovincial migration -- mostly to BC and Alberta -- which has led to the lion's share of growth in the West, with the four provinces attracting 629,000 more Canadians than they lost between 1972 and 2007. While each of the provinces had roughly the same share of Western Canada's population in 1931, it's projected that the two westernmost provinces will account for 80% of the West's population by 2031. Through interprovincial migration, BC has gained people in each of the past four years after losing population from 1998 to 2003. In 2007, Saskatchewan gained people from interprovincial migration for the first time since 1984. Manitoba has experienced a net loss of people to other provinces for the past two dozen years, although those losses have been offset by strong immigration, thanks in part to a strong provincial nominee program. The region is still sparsely population by world standards. However, there has been what Gartner calls an "astounding" level of urbanization in the West. The rest of Canada was more urbanized than the West in 1966, but today the regions are more or less equally urbanized. Now, four in five westerners live in cities.
(Calgary Herald 080326)
Economically, it looks like the next few decades will belong to Western Canada, until everything collapses of course. Hopefully it'll be a good run!
Buy, buy, buy
Canadians go on spending bender as Americans sober up
It's official: When it comes to shopping, Canadians are the new Americans. And that might just help our stock market avoid the growing gloom south of the border, or at least blunt the impact of a US slowdown that's looking increasingly nasty. Yesterday brought dramatic evidence of how US consumers are succumbing to the triple whammy of plunging home prices, soaring energy costs and a weakening labour market. The Conference Board's consumer confidence index sank to 64.5 in March from 76.4 in February – a staggering drop that was about 10 points bigger than economists expected. Worse, the expectations component – which measures consumers' attitudes about the future – slumped to its lowest since December, 1973. If confidence doesn't rebound, consumer spending could soon contract at a year-over-year pace of 2%, making a “severe recession” almost unavoidable, said Ian Shepherdson, chief US economist with High Frequency Economics. “In short, this is one of the most alarming economic reports we have seen in this cycle so far,” he said in a note.
But in contrast to their American cousins, Canadian consumers went on a bender in January. Spurred by a strong job market and rising wages, retail sales leaped 1.5% after a revised 0.8% advance the previous month, reflecting higher spending on cars, clothing and furniture. That compares with a 0.6% drop in US retail sales in February. “Domestic demand remains strong in Canada, and there's no sign yet of any serious cracks – certainly no sign in this report,” said Douglas Porter, deputy chief economist at BMO Nesbitt Burns. The resilience of Canadian consumers helps explain why, even as US stocks spent much of the day under water, Canada's benchmark index soared 302.5 points or 2.3% to 13,322.22. Higher commodity prices certainly helped, but the advance was broadly based, as all but one of the 10 sector indexes gained ground. Momentum seems to be on Canada's side: Over the past three sessions, the S&P/TSX has surged more than 600 points. But on Wall Street, the precipitous drop in consumer confidence proved too much for investors, as the Dow Jones industrial average finished down 16 points, even as the S&P 500 and Nasdaq made small gains. Meanwhile, the Conference Board survey wasn't the only piece of grim news rattling investors. In a sign the US housing recession is deepening, home prices in 20 of the largest US cities plunged by 10.7% in January from a year earlier, according to the S&P/Case-Shiller home-price index. It was the biggest drop on record.
(Globe and Mail 080326)
Too bad no one heeded the calls ten years ago to wean Canada's economic dependency off of exports to the U.S. We should've been negotiating trade deals with China and India a decade ago. Even if it's not as much the case as a few decades ago, we are still entrenched in the U.S. system -- what happens to them happens to us. This time around might be a bit different since we're playing the role of whore to the U.S.'s john for services and products highly valued around the world as demand soars for everything essential. Maybe we'll make it through this not that much worse for wear? From the view of the equities markets, probably not. Might as well spend ourselves into as deep a hole as the Americans are in now; it only makes sense!
It's official: When it comes to shopping, Canadians are the new Americans. And that might just help our stock market avoid the growing gloom south of the border, or at least blunt the impact of a US slowdown that's looking increasingly nasty. Yesterday brought dramatic evidence of how US consumers are succumbing to the triple whammy of plunging home prices, soaring energy costs and a weakening labour market. The Conference Board's consumer confidence index sank to 64.5 in March from 76.4 in February – a staggering drop that was about 10 points bigger than economists expected. Worse, the expectations component – which measures consumers' attitudes about the future – slumped to its lowest since December, 1973. If confidence doesn't rebound, consumer spending could soon contract at a year-over-year pace of 2%, making a “severe recession” almost unavoidable, said Ian Shepherdson, chief US economist with High Frequency Economics. “In short, this is one of the most alarming economic reports we have seen in this cycle so far,” he said in a note.
But in contrast to their American cousins, Canadian consumers went on a bender in January. Spurred by a strong job market and rising wages, retail sales leaped 1.5% after a revised 0.8% advance the previous month, reflecting higher spending on cars, clothing and furniture. That compares with a 0.6% drop in US retail sales in February. “Domestic demand remains strong in Canada, and there's no sign yet of any serious cracks – certainly no sign in this report,” said Douglas Porter, deputy chief economist at BMO Nesbitt Burns. The resilience of Canadian consumers helps explain why, even as US stocks spent much of the day under water, Canada's benchmark index soared 302.5 points or 2.3% to 13,322.22. Higher commodity prices certainly helped, but the advance was broadly based, as all but one of the 10 sector indexes gained ground. Momentum seems to be on Canada's side: Over the past three sessions, the S&P/TSX has surged more than 600 points. But on Wall Street, the precipitous drop in consumer confidence proved too much for investors, as the Dow Jones industrial average finished down 16 points, even as the S&P 500 and Nasdaq made small gains. Meanwhile, the Conference Board survey wasn't the only piece of grim news rattling investors. In a sign the US housing recession is deepening, home prices in 20 of the largest US cities plunged by 10.7% in January from a year earlier, according to the S&P/Case-Shiller home-price index. It was the biggest drop on record.
(Globe and Mail 080326)
Too bad no one heeded the calls ten years ago to wean Canada's economic dependency off of exports to the U.S. We should've been negotiating trade deals with China and India a decade ago. Even if it's not as much the case as a few decades ago, we are still entrenched in the U.S. system -- what happens to them happens to us. This time around might be a bit different since we're playing the role of whore to the U.S.'s john for services and products highly valued around the world as demand soars for everything essential. Maybe we'll make it through this not that much worse for wear? From the view of the equities markets, probably not. Might as well spend ourselves into as deep a hole as the Americans are in now; it only makes sense!
24 March 2008
Lump in your stocking
Coal crisis hits economies from South Africa to Japan
Long considered an abundant, reliable and relatively cheap source of energy, coal is suddenly in short supply and high demand worldwide. An untimely confluence of bad weather, flawed energy policies, low stockpiles and voracious growth in Asia's appetite has driven international spot prices of coal up by 50% or more in the past five months, surpassing the escalation in oil prices. The signs of a coal crisis have been showing up from mine mouths to factory gates and living rooms: As many as 45 ships were stacked up in Australian ports waiting for coal deliveries slowed by torrential rains. China and Vietnam, which have thrived by sending goods abroad, abruptly banned coal exports, while India's import demands are up. Factory hours have been shortened in parts of China, and blackouts have rippled across South Africa and Indonesia's most populous island, Java. Meanwhile, mining companies are enjoying a windfall. Freight cars in Appalachia are brimming with coal for export, and old coal mines in Japan have been reopened or expanded. European and Japanese coal buyers, worried about future supplies, have begun locking in long-term contracts at high prices, and world steel and concrete prices have risen already, fueling inflation.
Big swings in the prices of coal and other commodities are common. But while the price of coal has slipped slightly in recent weeks, many analysts and companies are wondering whether high prices are here to stay. As increasing numbers of the world's poor join the middle classes, hooking up to electricity grids and buying up more manufactured goods, demand for coal grows. World consumption of coal has grown 30% in the past six years, twice as much as any other energy source. About two-thirds of the fuel supplies electricity plants, and just under a third heads to industrial users, mostly steel and concrete makers. Coal -- a fuel from the era and pages of Charles Dickens -- is almost always dirtier to burn than are other fossil fuels. Although its use accounts for a quarter of world energy consumption, it generates 39% of energy-related carbon dioxide emissions. Climate change concerns could lead to legislation in many countries imposing higher costs on those who burn coal, forcing utilities and factories to become more efficient and curtail its use. Climatologists warn that without technology to capture and store carbon dioxide emissions, burning more coal would be disastrous. Developing countries aren't the only ones using more coal. Throughout the 1980s and 1990s, British coal consumption declined as new sources of oil and natural gas were discovered in the North Sea. However, the trend has reversed and coal consumption has climbed steadily over the past six years, including a 9% jump from 2005 to 2006. Coal has now surpassed gas once again as the leading fuel for electricity plants. However, the British mines that George Orwell described 70 years ago as "like my own mental picture of hell" are much smaller than they once were. Mine production capacity declined during the '80s and '90s "dash for gas." Now Britain imports coal from Russia, Australia, Colombia, South Africa and Indonesia.
(Calgary Herald 080322, Vancouver Sun 080324)
Everything's gone insane. Suddenly, the paradigm shift hits like a ton of coal.
Long considered an abundant, reliable and relatively cheap source of energy, coal is suddenly in short supply and high demand worldwide. An untimely confluence of bad weather, flawed energy policies, low stockpiles and voracious growth in Asia's appetite has driven international spot prices of coal up by 50% or more in the past five months, surpassing the escalation in oil prices. The signs of a coal crisis have been showing up from mine mouths to factory gates and living rooms: As many as 45 ships were stacked up in Australian ports waiting for coal deliveries slowed by torrential rains. China and Vietnam, which have thrived by sending goods abroad, abruptly banned coal exports, while India's import demands are up. Factory hours have been shortened in parts of China, and blackouts have rippled across South Africa and Indonesia's most populous island, Java. Meanwhile, mining companies are enjoying a windfall. Freight cars in Appalachia are brimming with coal for export, and old coal mines in Japan have been reopened or expanded. European and Japanese coal buyers, worried about future supplies, have begun locking in long-term contracts at high prices, and world steel and concrete prices have risen already, fueling inflation.
Big swings in the prices of coal and other commodities are common. But while the price of coal has slipped slightly in recent weeks, many analysts and companies are wondering whether high prices are here to stay. As increasing numbers of the world's poor join the middle classes, hooking up to electricity grids and buying up more manufactured goods, demand for coal grows. World consumption of coal has grown 30% in the past six years, twice as much as any other energy source. About two-thirds of the fuel supplies electricity plants, and just under a third heads to industrial users, mostly steel and concrete makers. Coal -- a fuel from the era and pages of Charles Dickens -- is almost always dirtier to burn than are other fossil fuels. Although its use accounts for a quarter of world energy consumption, it generates 39% of energy-related carbon dioxide emissions. Climate change concerns could lead to legislation in many countries imposing higher costs on those who burn coal, forcing utilities and factories to become more efficient and curtail its use. Climatologists warn that without technology to capture and store carbon dioxide emissions, burning more coal would be disastrous. Developing countries aren't the only ones using more coal. Throughout the 1980s and 1990s, British coal consumption declined as new sources of oil and natural gas were discovered in the North Sea. However, the trend has reversed and coal consumption has climbed steadily over the past six years, including a 9% jump from 2005 to 2006. Coal has now surpassed gas once again as the leading fuel for electricity plants. However, the British mines that George Orwell described 70 years ago as "like my own mental picture of hell" are much smaller than they once were. Mine production capacity declined during the '80s and '90s "dash for gas." Now Britain imports coal from Russia, Australia, Colombia, South Africa and Indonesia.
(Calgary Herald 080322, Vancouver Sun 080324)
Everything's gone insane. Suddenly, the paradigm shift hits like a ton of coal.
Don't be a Dick
Cheney On Two-Thirds Of The American Public Opposing The Iraq War: ‘So?’
This morning, on the fifth anniversary of the Iraq invasion, ABC’s Good Morning America aired an interview with Vice President Cheney on the war. During the segment, Cheney flatly told White House correspondent Martha Raddatz that he doesn’t care about the American public’s views on the war:
CHENEY: On the security front, I think there’s a general consensus that we’ve made major progress, that the surge has worked. That’s been a major success.
RADDATZ: Two-third of Americans say it’s not worth fighting.
CHENEY: So?
RADDATZ So? You don’t care what the American people think?
CHENEY: No. I think you cannot be blown off course by the fluctuations in the public opinion polls.
This opposition to the war is not a “fluctuation” in public opinion. The American public has steadily turned against the war since the 2003 invasion. According to a new CNN poll, just 36 percent of the American public believes that “the situation in Iraq was worth going to war over — down from 68 percent in March 2003, when the war began.”
Even though he doesn’t care what the American public wants, Cheney still thinks he is able — and entitled — to speak for the American public. Last month, Cheney declared, “The American people will not support a policy of retreat.” If Cheney were actually listening to the “American people,” he would know that 61 percent actually supports the redeployment of U.S. troops.
What a fucking tyrant.
This morning, on the fifth anniversary of the Iraq invasion, ABC’s Good Morning America aired an interview with Vice President Cheney on the war. During the segment, Cheney flatly told White House correspondent Martha Raddatz that he doesn’t care about the American public’s views on the war:
CHENEY: On the security front, I think there’s a general consensus that we’ve made major progress, that the surge has worked. That’s been a major success.
RADDATZ: Two-third of Americans say it’s not worth fighting.
CHENEY: So?
RADDATZ So? You don’t care what the American people think?
CHENEY: No. I think you cannot be blown off course by the fluctuations in the public opinion polls.
This opposition to the war is not a “fluctuation” in public opinion. The American public has steadily turned against the war since the 2003 invasion. According to a new CNN poll, just 36 percent of the American public believes that “the situation in Iraq was worth going to war over — down from 68 percent in March 2003, when the war began.”
Even though he doesn’t care what the American public wants, Cheney still thinks he is able — and entitled — to speak for the American public. Last month, Cheney declared, “The American people will not support a policy of retreat.” If Cheney were actually listening to the “American people,” he would know that 61 percent actually supports the redeployment of U.S. troops.
What a fucking tyrant.
23 March 2008
Does this happen anywhere else?
Sun, March 23, 2008
Faces of hate unashamedly spew message
UPDATED: 2008-03-23 04:38:22 MST
Neo-Nazis protected by police during march, in spite of brazen public intimidation tactics
By PABLO FERNANDEZ, CALGARY SUN
Whether we like it or not, the white supremacist movement in the city is growing and scoring points in its quest to spread a message of hate across Calgary.
On Good Friday, during the United Nations' International Day for the Elimination of Racial Discrimination, more than two dozen flag-waving neo-Nazis took over the city's core, publicly and loudly denying the Holocaust, referring to non-whites as an infection and touting the Aryan lineage as the builder of civilizations.
When white supremacists first started congregating publicly in Calgary, it was they who hid their faces behind masks.
But since they started posting pictures of themselves on the Internet with guns and baseball bats -- and after two recent Molotov cocktail attacks in the city were tied to possible white supremacist activity -- it's the counter-protesters who have to hide their faces. One person who knows the danger of standing up against the neo-Nazis is Bonnie Collins.
She, her four children -- aged three to nine -- and her husband, Jason, were all home when their house was fire bombed on Feb. 12.
That moment was painfully relived Friday, when Bonnie -- as part of a counter-demonstration -- confronted the neo-Nazis, who asked her, "How's your house, Bonnie?" while standing behind a cordon of police officers on the front steps of city hall.
"Is it nice and toasty in there? How's Jason and the kids?"
Apart from gaining ground in their intimidation campaign, the neo-Nazis showed they have absolute freedom of movement in Calgary.
They marched, under police escort, from one end of downtown to the other, and although Calgary Police Service members faced the counter-demonstrators the entire time, the white supremacists made it clear to their opponents police were there to protect them, not the neo-Nazis.
In a surreal twist, the Aryan Guard intended to start its march to city hall from Mewata Armoury.
The Department of National Defence installation is home to the King's Own Calgary Regiment and the Calgary Highlanders, two regiments which lost thousands of men fighting the very ideology the neo-Nazis wanted to flaunt at the regiments' front door.
More than 60 years after the fact, many veterans still suffer the memories of the wrath they felt at the receiving end of the Nazi war machine and the sacrifices they had to make to destroy it.
Ironically, it was a group of self-proclaimed anarchists, known as the flag bearers of the counter-culture, who were the most physically active in disrupting the white supremacist rally.
They also paid the highest price, as at least two were detained by cops and many others were forced to give their particulars to police.
"Every time they show up, we have to show up in force," said one of the anarchists.
"But they're growing ... the last time we confronted them, there were only eight of them."
And that's yet another small victory for the Aryan Guard, whose slogans, flags, mocking and hate towards all who are different from them also struck pain in the hearts of many that day.
Two young girls -- one blond, the other Asian -- walked slowly from the street up the steps of city hall to get a closer look at the Aryan rally.
Both pale and leaning on each other, the teens held each other tight as they took hesitant steps.
Another blond girl held tightly onto her boyfriend of Middle East descent as she watched through tears while the neo-Nazis cheered and were escorted by police onto a bus at the end of their rally.
The fact everyone has a right to think, believe and worship as they see fit is what makes Canada the best country in the world -- bar none.
Members of the Aryan Guard also have rights.
But the fact they can intimidate, threaten, recruit and feel comfortable enough to do as they please in full public view is something Calgarians cannot ignore.
What the hell is going on in this crazy world, this fucked-up city? Police escort for Neo-nazis? The city must've had some trouble approving this one, but really. Really? Has Canada become so constitutionally indefensible that we can't even stand up to bullshit like this anymore? This is very troubling and frustrating.
Faces of hate unashamedly spew message
UPDATED: 2008-03-23 04:38:22 MST
Neo-Nazis protected by police during march, in spite of brazen public intimidation tactics
By PABLO FERNANDEZ, CALGARY SUN
Whether we like it or not, the white supremacist movement in the city is growing and scoring points in its quest to spread a message of hate across Calgary.
On Good Friday, during the United Nations' International Day for the Elimination of Racial Discrimination, more than two dozen flag-waving neo-Nazis took over the city's core, publicly and loudly denying the Holocaust, referring to non-whites as an infection and touting the Aryan lineage as the builder of civilizations.
When white supremacists first started congregating publicly in Calgary, it was they who hid their faces behind masks.
But since they started posting pictures of themselves on the Internet with guns and baseball bats -- and after two recent Molotov cocktail attacks in the city were tied to possible white supremacist activity -- it's the counter-protesters who have to hide their faces. One person who knows the danger of standing up against the neo-Nazis is Bonnie Collins.
She, her four children -- aged three to nine -- and her husband, Jason, were all home when their house was fire bombed on Feb. 12.
That moment was painfully relived Friday, when Bonnie -- as part of a counter-demonstration -- confronted the neo-Nazis, who asked her, "How's your house, Bonnie?" while standing behind a cordon of police officers on the front steps of city hall.
"Is it nice and toasty in there? How's Jason and the kids?"
Apart from gaining ground in their intimidation campaign, the neo-Nazis showed they have absolute freedom of movement in Calgary.
They marched, under police escort, from one end of downtown to the other, and although Calgary Police Service members faced the counter-demonstrators the entire time, the white supremacists made it clear to their opponents police were there to protect them, not the neo-Nazis.
In a surreal twist, the Aryan Guard intended to start its march to city hall from Mewata Armoury.
The Department of National Defence installation is home to the King's Own Calgary Regiment and the Calgary Highlanders, two regiments which lost thousands of men fighting the very ideology the neo-Nazis wanted to flaunt at the regiments' front door.
More than 60 years after the fact, many veterans still suffer the memories of the wrath they felt at the receiving end of the Nazi war machine and the sacrifices they had to make to destroy it.
Ironically, it was a group of self-proclaimed anarchists, known as the flag bearers of the counter-culture, who were the most physically active in disrupting the white supremacist rally.
They also paid the highest price, as at least two were detained by cops and many others were forced to give their particulars to police.
"Every time they show up, we have to show up in force," said one of the anarchists.
"But they're growing ... the last time we confronted them, there were only eight of them."
And that's yet another small victory for the Aryan Guard, whose slogans, flags, mocking and hate towards all who are different from them also struck pain in the hearts of many that day.
Two young girls -- one blond, the other Asian -- walked slowly from the street up the steps of city hall to get a closer look at the Aryan rally.
Both pale and leaning on each other, the teens held each other tight as they took hesitant steps.
Another blond girl held tightly onto her boyfriend of Middle East descent as she watched through tears while the neo-Nazis cheered and were escorted by police onto a bus at the end of their rally.
The fact everyone has a right to think, believe and worship as they see fit is what makes Canada the best country in the world -- bar none.
Members of the Aryan Guard also have rights.
But the fact they can intimidate, threaten, recruit and feel comfortable enough to do as they please in full public view is something Calgarians cannot ignore.
What the hell is going on in this crazy world, this fucked-up city? Police escort for Neo-nazis? The city must've had some trouble approving this one, but really. Really? Has Canada become so constitutionally indefensible that we can't even stand up to bullshit like this anymore? This is very troubling and frustrating.
21 March 2008
20/20
I underwent laser eye surgery yesterday to improve my eyesight. It's something that I always contemplate when my vision care plan at work tops up, but this year I had my incentive bonus to bolster the argument to do it when contemplating the cost. Because my astigmatism was so bad, the surgery cost quite a bit more than the average person, however, now that it's done and I'm only fighting a bit of infection in my left eye, I'm amazed and blown away by the improvement. I went in for a follow-up test and I'm seeing 20/20. Incredible. I think I'm only beginning to discover the things that people with good eyesight take for granted. It's the first time in my entire life that I've been able to see without some sort of assistance through glasses or contacts, and if I can see this good today, what's it gonna be like in a month or two when everything's healed? I think this was a great decision. I'm so excited! :-D
17 March 2008
Self-sufficiency
If you don't know how to grow your own food or don't know where to begin, now's as good a time as any to start researching the topic. Start investigating community gardens in your area. The spring is the best time to gain some experience in these areas.
Check out Lawns to Gardens.
Check out Lawns to Gardens.
Monday morning delights
Stocks down, but off lows
NEW YORK (CNNMoney.com) -- Stocks cut losses Monday morning, with the Dow briefly turning higher, as shares of JP Morgan Chase rallied on bets that its bargain basement purchase of Bear Stearns was a good move for the company.
Bond prices surged, lowering corresponding yields, as investors sought the comparative safety of government debt. The dollar plunged to a 12-1/2 year low versus the yen and hit another all-time low versus the euro.
The Dow Jones industrial average (INDU) was down about 0.2% 90 minutes into the session. The broader Standard & Poor's 500 (SPX) index tumbled 0.8%, and the Nasdaq composite (COMP) shed 1.2%.
Stocks tumbled at the open after the sale of Bear Stearns and emergency moves by the Federal Reserve exacerbated fears about the fallout in financial markets.
But the declines were not as aggressive as analysts had been expecting, and select financial shares managed to bounce back as the morning continued.
Bear Stearns. Stocks tumbled Friday on news that Bear Stearns needed emergency funding to avoid a collapse, and fears about the financial sector deepened over the weekend.
On Sunday, JP Morgan Chase agreed to buy Bear for just $2 a share, or $236 million. That's less than 4% of Bear Stearns' value at the close of trading on Thursday. On Friday, Bear shares plunged 47% to close at $30 a share. One year ago, the stock was worth nearly $160. (Full story).
Bear Stearns shares tumbled 84% to less than $5 a share on Monday. But JPMorgan Chase, a Dow component, rallied 10.2%.
Federal regulators accelerated the deal-approval process and the Federal Reserve provided $30 billion in funding, the latest in the central bank's series of drastic steps to protect the financial markets amid the housing and credit crises.
Also on Sunday, the Fed cut the discount rate, a short-term bank lending rate, to 3.25% from 3.5%, as a means of making more cash available to strapped banks. The move occurred just two days ahead of the Fed's regularly scheduled policy meeting.
The central bank could cut the fed funds rate, a consumer lending rate, by as much as a full percentage point at that meeting, traders estimate. The fed funds rate currently stands at 3%.
The Fed also announced Sunday it had created another lending facility that allows big Wall Street firms access to short-term funding.
A variety of financial stocks initially tumbled as investors wondered which company would be next to face a fate similar to that of Bear Stearns, with current speculation turning to Lehman Brothers.
However, by mid-morning, select financials had turned higher, helping the broader market trim losses.
In global trade, Asian markets plunged and European markets fell in afternoon trading.
Other markets. U.S. light crude oil for April delivery fell $3.31 to $106.90 a barrel on the New York Mercantile Exchange after touching an all-time high near $112 in electronic trading.
COMEX gold for April delivery added $13 to $1,012.50 an ounce after hitting an all-time high of $1,017.50 an ounce earlier.
TSX slumps as market gloom deepens
Last Updated: Monday, March 17, 2008 | 12:30 PM ET
CBC News
The Toronto Stock Exchange was deep in negative territory Monday, with jittery investors worried about the depth of the problems in the global financial system.
The S&P/TSX composite index tumbled 300 points to 12,953 at noon ET. That amounted to a slight recovery from its worst level of the morning, when the benchmark index was down was much as 385 points.
Every sector except the gold and health-care group was lower, led by a 2.8 per cent drop in the financials group.
All six of the big banks hit new year-to-date lows. CIBC dropped $2.71 to $57.19; TD fell $1.86 to $59.43; BMO slid $1.10 to $39.07.
Energy stocks fell as oil prices retreated from an overnight record high above $111 US a barrel. Crude futures were trading at $107.15 US, down $3.06 US.
The gold sub-index gained 0.7 per cent. The April gold futures contract was up $17 to $1,016.50 US an ounce, off its overnight high of $1,033.90 US an ounce — a record high.
Bear Stearns collapse spooks markets
On the NYSE, shares of Bear Stearns plunged 85 per cent to $3.81 US as its collapse reached its full magnitude. A week ago, the stock had been trading at $70 US a share.
On Sunday, rival investment bank JP Morgan bought Bear Stearns for $2 US a share in stock after Bear Stearns faced a huge liquidity crisis that required an emergency bailout. Bear Stearns had been a major player in the imploding world of subprime mortgages.
Shares of another investment bank, Lehman Bros., slid 23 per cent as rumours swirled that it might be the next to face a liquidity crisis.
In a statement, Lehman said its cash position was "strong."
The Dow Jones industrial average was down 115 points to 11,836. Shares of JP Morgan — a component of the Dow — jumped nine per cent, helping to keep the Dow from sliding further.
There's widespread speculation the U.S. Federal Reserve will drop its key overnight lending rate by as much as a full percentage point on Tuesday.
U.S. President George W. Bush moved to reassure panicked financial markets Monday.
"We've taken strong, decisive action," Bush said after a White House meeting with U.S. Treasury Secretary Henry Paulson.
In a rare Sunday move, the Fed cut its emergency lending rate to financial institutions by a quarter of a percentage point to 3.25 per cent and expanded the list of financial institutions that can access money at that rate.
"These steps will provide financial institutions with greater assurance of access to funds," Federal Reserve chairman Ben Bernanke told reporters in a conference call late Sunday.
Central banks around the world — including the Bank of Canada — have pledged to inject more than $200 billion US into the global financial system to ease the credit crunch.
While the impact of the credit crunch has been much more muted in Canada, financial stocks in this country have tumbled by 20 to 40 per cent from their highs last year as many banks reported writedowns from credit problems.
It's amazing how the entire financial sector is deluding themselves into believing everything is manageable. Another bailout? Where is all this Fed money coming from? An essential firesale on Bear Stearns? An emergency fed rate change on the weekend? A predicted 100 base-point drop in the lending rate tomorrow?
Sure, there are fundamentals that are still solid, but it looks like the equity markets are going to continue taking one beating after another for some time to come yet. The Fed will keep throwing money at the problems, but this is only temporary and devastating to the American dollar at the same time. I would surmise that at this point, inflation is a minor irritant in the whole scope of things. In fact, if everything priced in USDs gets inflated, it will appear to look like it's worth more on paper...something especially poignant to those home owners in the U.S. who are losing more value on their investments by the day.
"We've taken strong, decisive action."
Yeah, George, the Fed certainly took decisive action. In fact, this is the only action they could take, so no doubt it's decisive. If JP Morgan hadn't scooped up Bear Stearns over the weekend and the assets were going to auction (has JPM shot themselves in the foot with this buy? The only thing making the putrid carcass of Bear Stearns palatable was a $30B flavor package from the Fed), can you imagine what would've unfolded this week? Meltdown, that's what. The Fed's still frantically bucketing water out of the leaky liferaft. Here's hoping it's big enough to stay ahead of the increasing leaks in the walls.
NEW YORK (CNNMoney.com) -- Stocks cut losses Monday morning, with the Dow briefly turning higher, as shares of JP Morgan Chase rallied on bets that its bargain basement purchase of Bear Stearns was a good move for the company.
Bond prices surged, lowering corresponding yields, as investors sought the comparative safety of government debt. The dollar plunged to a 12-1/2 year low versus the yen and hit another all-time low versus the euro.
The Dow Jones industrial average (INDU) was down about 0.2% 90 minutes into the session. The broader Standard & Poor's 500 (SPX) index tumbled 0.8%, and the Nasdaq composite (COMP) shed 1.2%.
Stocks tumbled at the open after the sale of Bear Stearns and emergency moves by the Federal Reserve exacerbated fears about the fallout in financial markets.
But the declines were not as aggressive as analysts had been expecting, and select financial shares managed to bounce back as the morning continued.
Bear Stearns. Stocks tumbled Friday on news that Bear Stearns needed emergency funding to avoid a collapse, and fears about the financial sector deepened over the weekend.
On Sunday, JP Morgan Chase agreed to buy Bear for just $2 a share, or $236 million. That's less than 4% of Bear Stearns' value at the close of trading on Thursday. On Friday, Bear shares plunged 47% to close at $30 a share. One year ago, the stock was worth nearly $160. (Full story).
Bear Stearns shares tumbled 84% to less than $5 a share on Monday. But JPMorgan Chase, a Dow component, rallied 10.2%.
Federal regulators accelerated the deal-approval process and the Federal Reserve provided $30 billion in funding, the latest in the central bank's series of drastic steps to protect the financial markets amid the housing and credit crises.
Also on Sunday, the Fed cut the discount rate, a short-term bank lending rate, to 3.25% from 3.5%, as a means of making more cash available to strapped banks. The move occurred just two days ahead of the Fed's regularly scheduled policy meeting.
The central bank could cut the fed funds rate, a consumer lending rate, by as much as a full percentage point at that meeting, traders estimate. The fed funds rate currently stands at 3%.
The Fed also announced Sunday it had created another lending facility that allows big Wall Street firms access to short-term funding.
A variety of financial stocks initially tumbled as investors wondered which company would be next to face a fate similar to that of Bear Stearns, with current speculation turning to Lehman Brothers.
However, by mid-morning, select financials had turned higher, helping the broader market trim losses.
In global trade, Asian markets plunged and European markets fell in afternoon trading.
Other markets. U.S. light crude oil for April delivery fell $3.31 to $106.90 a barrel on the New York Mercantile Exchange after touching an all-time high near $112 in electronic trading.
COMEX gold for April delivery added $13 to $1,012.50 an ounce after hitting an all-time high of $1,017.50 an ounce earlier.
TSX slumps as market gloom deepens
Last Updated: Monday, March 17, 2008 | 12:30 PM ET
CBC News
The Toronto Stock Exchange was deep in negative territory Monday, with jittery investors worried about the depth of the problems in the global financial system.
The S&P/TSX composite index tumbled 300 points to 12,953 at noon ET. That amounted to a slight recovery from its worst level of the morning, when the benchmark index was down was much as 385 points.
Every sector except the gold and health-care group was lower, led by a 2.8 per cent drop in the financials group.
All six of the big banks hit new year-to-date lows. CIBC dropped $2.71 to $57.19; TD fell $1.86 to $59.43; BMO slid $1.10 to $39.07.
Energy stocks fell as oil prices retreated from an overnight record high above $111 US a barrel. Crude futures were trading at $107.15 US, down $3.06 US.
The gold sub-index gained 0.7 per cent. The April gold futures contract was up $17 to $1,016.50 US an ounce, off its overnight high of $1,033.90 US an ounce — a record high.
Bear Stearns collapse spooks markets
On the NYSE, shares of Bear Stearns plunged 85 per cent to $3.81 US as its collapse reached its full magnitude. A week ago, the stock had been trading at $70 US a share.
On Sunday, rival investment bank JP Morgan bought Bear Stearns for $2 US a share in stock after Bear Stearns faced a huge liquidity crisis that required an emergency bailout. Bear Stearns had been a major player in the imploding world of subprime mortgages.
Shares of another investment bank, Lehman Bros., slid 23 per cent as rumours swirled that it might be the next to face a liquidity crisis.
In a statement, Lehman said its cash position was "strong."
The Dow Jones industrial average was down 115 points to 11,836. Shares of JP Morgan — a component of the Dow — jumped nine per cent, helping to keep the Dow from sliding further.
There's widespread speculation the U.S. Federal Reserve will drop its key overnight lending rate by as much as a full percentage point on Tuesday.
U.S. President George W. Bush moved to reassure panicked financial markets Monday.
"We've taken strong, decisive action," Bush said after a White House meeting with U.S. Treasury Secretary Henry Paulson.
In a rare Sunday move, the Fed cut its emergency lending rate to financial institutions by a quarter of a percentage point to 3.25 per cent and expanded the list of financial institutions that can access money at that rate.
"These steps will provide financial institutions with greater assurance of access to funds," Federal Reserve chairman Ben Bernanke told reporters in a conference call late Sunday.
Central banks around the world — including the Bank of Canada — have pledged to inject more than $200 billion US into the global financial system to ease the credit crunch.
While the impact of the credit crunch has been much more muted in Canada, financial stocks in this country have tumbled by 20 to 40 per cent from their highs last year as many banks reported writedowns from credit problems.
It's amazing how the entire financial sector is deluding themselves into believing everything is manageable. Another bailout? Where is all this Fed money coming from? An essential firesale on Bear Stearns? An emergency fed rate change on the weekend? A predicted 100 base-point drop in the lending rate tomorrow?
Sure, there are fundamentals that are still solid, but it looks like the equity markets are going to continue taking one beating after another for some time to come yet. The Fed will keep throwing money at the problems, but this is only temporary and devastating to the American dollar at the same time. I would surmise that at this point, inflation is a minor irritant in the whole scope of things. In fact, if everything priced in USDs gets inflated, it will appear to look like it's worth more on paper...something especially poignant to those home owners in the U.S. who are losing more value on their investments by the day.
"We've taken strong, decisive action."
Yeah, George, the Fed certainly took decisive action. In fact, this is the only action they could take, so no doubt it's decisive. If JP Morgan hadn't scooped up Bear Stearns over the weekend and the assets were going to auction (has JPM shot themselves in the foot with this buy? The only thing making the putrid carcass of Bear Stearns palatable was a $30B flavor package from the Fed), can you imagine what would've unfolded this week? Meltdown, that's what. The Fed's still frantically bucketing water out of the leaky liferaft. Here's hoping it's big enough to stay ahead of the increasing leaks in the walls.
14 March 2008
It's been a long time...
...since I've posted anything personal. Yeah, I know. Work is madness and frankly, there's enough news out there on a daily basis that I'd need two of me to absorb it all! It's great that I'm sorta kinda protected from all this financial madness that seems to be flying around all over the place. Unfortunately we are all intrinsically connected to this huge belching bloated system that almost seems to be gasping its last few breaths before collapsing into a huge pile of shit.
Frankly, the more abrupt this is, the sooner we can catch a fucking grip as a society and start to retrench back to the things that really matter - optimism, health, family and friends, nature, art. It might be better to get over the hump now before China and India start falling into the same trap. If that happens, we're not just fucked, we're doomed. DOOOOOMMMMMEEEEDDD!
Frankly, the more abrupt this is, the sooner we can catch a fucking grip as a society and start to retrench back to the things that really matter - optimism, health, family and friends, nature, art. It might be better to get over the hump now before China and India start falling into the same trap. If that happens, we're not just fucked, we're doomed. DOOOOOMMMMMEEEEDDD!
11 March 2008
Strike Three?
Markets soar as central banks act on credit crunch
Last Updated: Tuesday, March 11, 2008 | 12:32 PM ET
CBC News
North American stock markets surged Tuesday after the Bank of Canada and other central banks jointly announced they would pump more than $200 billion US into the financial system to ease a global credit squeeze.
The announcement came an hour before markets opened. By 11:45 a.m. ET, the S&P/TSX composite index was up 161 points to 13,166. The Dow Jones industrial average was up 177 points at 11,917. Both had triple-digit declines on Monday. European markets also surged.
The Bank of Canada's share of the liquidity boost is $4 billion, delivered in two installments — half on March 20 and the rest on April 3.
The move follows similar joint action taken last December when global credit markets were tightening.
"Pressures in some of these markets have recently increased again,'' the bank said in a statement on its website. "We all continue to work together and will take appropriate steps to address those liquidity pressures."
The Bank of Canada acted along with the U.S. Federal Reserve, the European Central Bank, the Bank of England, and the Swiss National Bank.
The Fed said it would make up to $200 billion US available to banks in exchange for debt that may be of less-than-stellar quality. The Fed said it would accept non-government mortgage-backed securities as collateral.
Loans would be secured for four weeks rather than the usual overnight time frame.
The lending facility "is intended to promote liquidity in the financing markets for treasury and other collateral and thus to foster the functioning of financial markets more generally," the Fed said.
The global credit squeeze has tightened in the last few weeks, making financial institutions more reluctant to make loans.
Another $200 billion, eh? Should be good to hold this creaking bloated mass together for another few weeks before everything starts to really take on water. The Fed in the U.S. can imagine up as much money as they want, offer negative interest rates, and this pile of festering shit is still going to start collapsing. It's akin to tying a horse onto the back of a 10,000 car freight train moving downhill towards a cliff and expecting it to pull the mass back to safety.
Okay the Fed's a messed-up anomaly in itself, but why are we sitting by and letting the central banks use our money to bail out all these shitty debt instruments? It's ridiculous.
Last Updated: Tuesday, March 11, 2008 | 12:32 PM ET
CBC News
North American stock markets surged Tuesday after the Bank of Canada and other central banks jointly announced they would pump more than $200 billion US into the financial system to ease a global credit squeeze.
The announcement came an hour before markets opened. By 11:45 a.m. ET, the S&P/TSX composite index was up 161 points to 13,166. The Dow Jones industrial average was up 177 points at 11,917. Both had triple-digit declines on Monday. European markets also surged.
The Bank of Canada's share of the liquidity boost is $4 billion, delivered in two installments — half on March 20 and the rest on April 3.
The move follows similar joint action taken last December when global credit markets were tightening.
"Pressures in some of these markets have recently increased again,'' the bank said in a statement on its website. "We all continue to work together and will take appropriate steps to address those liquidity pressures."
The Bank of Canada acted along with the U.S. Federal Reserve, the European Central Bank, the Bank of England, and the Swiss National Bank.
The Fed said it would make up to $200 billion US available to banks in exchange for debt that may be of less-than-stellar quality. The Fed said it would accept non-government mortgage-backed securities as collateral.
Loans would be secured for four weeks rather than the usual overnight time frame.
The lending facility "is intended to promote liquidity in the financing markets for treasury and other collateral and thus to foster the functioning of financial markets more generally," the Fed said.
The global credit squeeze has tightened in the last few weeks, making financial institutions more reluctant to make loans.
Another $200 billion, eh? Should be good to hold this creaking bloated mass together for another few weeks before everything starts to really take on water. The Fed in the U.S. can imagine up as much money as they want, offer negative interest rates, and this pile of festering shit is still going to start collapsing. It's akin to tying a horse onto the back of a 10,000 car freight train moving downhill towards a cliff and expecting it to pull the mass back to safety.
Okay the Fed's a messed-up anomaly in itself, but why are we sitting by and letting the central banks use our money to bail out all these shitty debt instruments? It's ridiculous.
10 March 2008
Blivot
From the Urban Dictionary:
blivot
Twenty pounds of shit in a ten pound bag.
A situation or item that is foolishly perceived to be simple and easily manageable when in fact it is twice as complicated and unmanageable as first foolishly perceived.
Ah, finally a term I can apply to everything happening to us!Politics, the economy, corporations, etc., etc., etc.
blivot
Twenty pounds of shit in a ten pound bag.
A situation or item that is foolishly perceived to be simple and easily manageable when in fact it is twice as complicated and unmanageable as first foolishly perceived.
Ah, finally a term I can apply to everything happening to us!Politics, the economy, corporations, etc., etc., etc.
07 March 2008
Will this one balance out soon?
Crude hits record as US dollar slides
Crude oil rose to a record US$105.97 a barrel in New York on Thursday as the US dollar fell to its lowest level ever against the euro. Energy and metals prices have surged over the past year as the dollar plunged, prompting investors to seek a hedge against inflation. The Organization of Petroleum Exporting Countries refused to increase production targets Wednesday, saying the market has sufficient supply. "As long as the funds and other speculators are seeking returns from commodities that aren't available with bonds, equities or real estate, prices will stay high," said Addison Armstrong, director of market research at Tradition Energy. Crude oil for April delivery rose 95 cents, or 0.9%. Brent crude for April settlement rose 97 cents, or 1%, to $102.61 a barrel, a record close. Futures reached $102.95 a barrel Thursday, a record intraday price. "The oil market has completely left the realm of supply and demand," said Sarah Emerson, managing director of Energy Security Analysis. "Commodities have become just one more asset class for pension funds." The euro rose to a record against the dollar after European Central Bank president Jean-Claude Trichet said there is "strong upward pressure on inflation," signalling he's in no hurry to cut interest rates. The US Federal Reserve has cut the target rate for overnight loans between banks in the US by 2.25 percentage points since September. The ECB's reluctance to follow the Federal Reserve in lowering rates pushed the euro to a record $1.5378 Thursday. "Oil has become a financial vehicle for pension funds to hedge against inflation, terrorist attacks and events in countries like Venezuela and Iran," Emerson said. "OPEC was absolutely right - there's no problem with supply." The 13-nation producer group will hold its next scheduled meeting on Sept. 9.
The flood of speculative investment into oil markets is inflating a price bubble that could pop and send crude prices sharply lower if US petroleum demand continues to slump, analysts warned yesterday. The boom could be setting the stage for its own undoing, many analysts argue, since it is being fuelled by speculators looking to hedge against a declining US dollar and devalued financial assets. Some analysts are forecasting a sharp correction in the price of crude this spring. “It's hard to argue that prices should be higher [now] than they were not too long ago,” said Michael Lynch, president of Strategic Energy and Economic Research, who has forecast that crude markets are set for a massive correction that could eventually bring prices as low as $50 a barrel. “I think this is definitely a bubble because it is financial investors who are putting money into the market, not oil traders.” But others argue that oil prices are heavily influenced by non-market factors, and those factors could extend the crude rally. Unlike other recent bubbles – involving mortgage-backed securities or dot-com stocks, for example – the oil market is often driven by geopolitical concerns, from turmoil in the Middle East to the threat of a war involving Venezuela, by weather-related shocks and by the manipulations of a powerful production cartel that is determined to defend high prices. The stunning price rise has been driven almost exclusively by investors who were bailing out of the dollar and other financial assets and pouring into commodities, Judith Dwarkin, chief economist at Ross Smith Energy Group, said yesterday. “The fundamentals don't support prices at $80, let alone $100,” Dwarkin said. She said global demand growth has slowed in recent years, while spare capacity among members of OPEC has expanded somewhat, even as inventories of gasoline are at robust levels. “The greater prices diverge from what is fundamentally supportable, and the longer they stay at a distance from what is fundamentally supportable, the greater the risk of a correction, and a large one.” She has forecast an average price of $75 a barrel for this year.
(Calgary Herald, Globe and Mail 080307)
This roller coaster ride the oil futures market has been on over the past few months probably won't level out until it is official that the US is in a recession....and of course, the powers that be won't admit that until it is absolutely the last resort. What price oil will level out at is anybody's guess...I just wonder if this $105 bbl price is going to trickle down to consumers across the board, or whether the price will settle somewhere lower before the pressure of this price does have a global impact. I think the US economy is in the toilet already, thus will every other nation's economy be within the next two years.
"Oil has become a financial vehicle for pension funds to hedge against inflation, terrorist attacks and events in countries like Venezuela and Iran."
Why do you think this is, and why is it having such an effect on the price of oil? My take on this is that with Peak oil either having passed or being on the horizon, there's no slack in the system to absorb any sort of unknown, so now that is continuously being factored into the price of ALL commodities, not just oil, because extraction of all other commodities are collectively dependent on, you guessed it, oil. Without gobs and gobs of cheap oil to flood the system, the fundamental economics of everything are being forced to change. We're only seeing the beginning of this trend...
Crude oil rose to a record US$105.97 a barrel in New York on Thursday as the US dollar fell to its lowest level ever against the euro. Energy and metals prices have surged over the past year as the dollar plunged, prompting investors to seek a hedge against inflation. The Organization of Petroleum Exporting Countries refused to increase production targets Wednesday, saying the market has sufficient supply. "As long as the funds and other speculators are seeking returns from commodities that aren't available with bonds, equities or real estate, prices will stay high," said Addison Armstrong, director of market research at Tradition Energy. Crude oil for April delivery rose 95 cents, or 0.9%. Brent crude for April settlement rose 97 cents, or 1%, to $102.61 a barrel, a record close. Futures reached $102.95 a barrel Thursday, a record intraday price. "The oil market has completely left the realm of supply and demand," said Sarah Emerson, managing director of Energy Security Analysis. "Commodities have become just one more asset class for pension funds." The euro rose to a record against the dollar after European Central Bank president Jean-Claude Trichet said there is "strong upward pressure on inflation," signalling he's in no hurry to cut interest rates. The US Federal Reserve has cut the target rate for overnight loans between banks in the US by 2.25 percentage points since September. The ECB's reluctance to follow the Federal Reserve in lowering rates pushed the euro to a record $1.5378 Thursday. "Oil has become a financial vehicle for pension funds to hedge against inflation, terrorist attacks and events in countries like Venezuela and Iran," Emerson said. "OPEC was absolutely right - there's no problem with supply." The 13-nation producer group will hold its next scheduled meeting on Sept. 9.
The flood of speculative investment into oil markets is inflating a price bubble that could pop and send crude prices sharply lower if US petroleum demand continues to slump, analysts warned yesterday. The boom could be setting the stage for its own undoing, many analysts argue, since it is being fuelled by speculators looking to hedge against a declining US dollar and devalued financial assets. Some analysts are forecasting a sharp correction in the price of crude this spring. “It's hard to argue that prices should be higher [now] than they were not too long ago,” said Michael Lynch, president of Strategic Energy and Economic Research, who has forecast that crude markets are set for a massive correction that could eventually bring prices as low as $50 a barrel. “I think this is definitely a bubble because it is financial investors who are putting money into the market, not oil traders.” But others argue that oil prices are heavily influenced by non-market factors, and those factors could extend the crude rally. Unlike other recent bubbles – involving mortgage-backed securities or dot-com stocks, for example – the oil market is often driven by geopolitical concerns, from turmoil in the Middle East to the threat of a war involving Venezuela, by weather-related shocks and by the manipulations of a powerful production cartel that is determined to defend high prices. The stunning price rise has been driven almost exclusively by investors who were bailing out of the dollar and other financial assets and pouring into commodities, Judith Dwarkin, chief economist at Ross Smith Energy Group, said yesterday. “The fundamentals don't support prices at $80, let alone $100,” Dwarkin said. She said global demand growth has slowed in recent years, while spare capacity among members of OPEC has expanded somewhat, even as inventories of gasoline are at robust levels. “The greater prices diverge from what is fundamentally supportable, and the longer they stay at a distance from what is fundamentally supportable, the greater the risk of a correction, and a large one.” She has forecast an average price of $75 a barrel for this year.
(Calgary Herald, Globe and Mail 080307)
This roller coaster ride the oil futures market has been on over the past few months probably won't level out until it is official that the US is in a recession....and of course, the powers that be won't admit that until it is absolutely the last resort. What price oil will level out at is anybody's guess...I just wonder if this $105 bbl price is going to trickle down to consumers across the board, or whether the price will settle somewhere lower before the pressure of this price does have a global impact. I think the US economy is in the toilet already, thus will every other nation's economy be within the next two years.
"Oil has become a financial vehicle for pension funds to hedge against inflation, terrorist attacks and events in countries like Venezuela and Iran."
Why do you think this is, and why is it having such an effect on the price of oil? My take on this is that with Peak oil either having passed or being on the horizon, there's no slack in the system to absorb any sort of unknown, so now that is continuously being factored into the price of ALL commodities, not just oil, because extraction of all other commodities are collectively dependent on, you guessed it, oil. Without gobs and gobs of cheap oil to flood the system, the fundamental economics of everything are being forced to change. We're only seeing the beginning of this trend...
Go Saskabush Go!
$4B project would be biggest in SK history
Reginans got a close-up look at what could be the single biggest capital project in the province's history at an open house at the Hotel Saskatchewan Thursday, "If we go ahead with it, it will be the largest single capital investment in the province to date,” said John Jenkins, commercial manager of the Belle Plaine polygeneration project for TransCanada. The $4-billion project would convert petroleum coke - likely from northern Alberta - into 300 megawatts of electricity, as well as hydrogen, nitrogen, steam and carbon dioxide for industrial use. "It's industrial-chemical facility on top of a power plant,” Jenkins said prior to Thursday evening's open house. "That's really what it is." The polygeneration project would also be the first of its kind in Canada, although the technology of gasification is used in about 140 plants worldwide. What makes this plant different is the use of petroleum coke which will shipped by rail to Belle Plaine from Fort McMurray, AB. Jenkins said TransCanada looked at other potential feedstock, including lignite coal from southern Saskatchewan and petroleum coke from the Consumers' Co-operative Refineries refinery-upgrader complex in Regina. But neither of those could generate the same range of industrial product streams at the same price as petroleum coke from Alberta. Another unique aspect of the Belle Plaine project is its location in the middle of a major industrial complex, consisting of the Saskferco nitrogen fertilizer plant, Mosaic's solution potash mine and the soon-to-be producing Terra Grain Fuels ethanol plant. Jenkins said both Mosaic and Saskferco would be major customers of the plant's outputs, including hydrogen, steam and electricity. Water would be readily available from Buffalo Pound Lake through SaskWater, pending approval from environmental authorities, he said. Jenkins noted Belle Plaine is also "close to the oilpatch,” which would be major customer of the CO2 produced by the polygeneration plant for use in enhanced oil recovery projects. "There's good confidence that there will be a market for the CO2 in the province." But Jenkins said TransCanada would like to see a more defined regulatory regime and carbon market in place before giving the go-ahead for the project. "It's a delicate balance between having the rules and regulations in place versus moving with the expectation that they will be put in place,” he said.
(Regina Leader-Post 080307)
It's great to see that fate might be smiling on Saskatchewan these days after decades of neglect.
Reginans got a close-up look at what could be the single biggest capital project in the province's history at an open house at the Hotel Saskatchewan Thursday, "If we go ahead with it, it will be the largest single capital investment in the province to date,” said John Jenkins, commercial manager of the Belle Plaine polygeneration project for TransCanada. The $4-billion project would convert petroleum coke - likely from northern Alberta - into 300 megawatts of electricity, as well as hydrogen, nitrogen, steam and carbon dioxide for industrial use. "It's industrial-chemical facility on top of a power plant,” Jenkins said prior to Thursday evening's open house. "That's really what it is." The polygeneration project would also be the first of its kind in Canada, although the technology of gasification is used in about 140 plants worldwide. What makes this plant different is the use of petroleum coke which will shipped by rail to Belle Plaine from Fort McMurray, AB. Jenkins said TransCanada looked at other potential feedstock, including lignite coal from southern Saskatchewan and petroleum coke from the Consumers' Co-operative Refineries refinery-upgrader complex in Regina. But neither of those could generate the same range of industrial product streams at the same price as petroleum coke from Alberta. Another unique aspect of the Belle Plaine project is its location in the middle of a major industrial complex, consisting of the Saskferco nitrogen fertilizer plant, Mosaic's solution potash mine and the soon-to-be producing Terra Grain Fuels ethanol plant. Jenkins said both Mosaic and Saskferco would be major customers of the plant's outputs, including hydrogen, steam and electricity. Water would be readily available from Buffalo Pound Lake through SaskWater, pending approval from environmental authorities, he said. Jenkins noted Belle Plaine is also "close to the oilpatch,” which would be major customer of the CO2 produced by the polygeneration plant for use in enhanced oil recovery projects. "There's good confidence that there will be a market for the CO2 in the province." But Jenkins said TransCanada would like to see a more defined regulatory regime and carbon market in place before giving the go-ahead for the project. "It's a delicate balance between having the rules and regulations in place versus moving with the expectation that they will be put in place,” he said.
(Regina Leader-Post 080307)
It's great to see that fate might be smiling on Saskatchewan these days after decades of neglect.
Polluted
The world's dirtiest cities
Tiffany M. Luck Yahoo! News
Unless you're in the oil business, there's little reason to brave the choking pollution of Baku, Azerbaijan. Fetid water, oil ponds and life-threatening levels of air pollution emitted from drilling and shipping land the former Soviet manufacturing center at the bottom of this year's list as the world's dirtiest city.
Baku is bad, but far from alone. For residents of the 25 cities on this year's list, black plumes of smoke, acid rain and free-flowing sewage are part of everyday life. Not as immediately visible: the impact on the population's health and life expectancy.
To see which cities in the world were dirtiest, we turned to Mercer Human Resource Consulting's 2007 Health and Sanitation Rankings. As part of their 2007 Quality of Life Report, they ranked 215 cities worldwide based on levels of air pollution, waste management, water potability, hospital services, medical supplies and the presence of infectious disease.
All cities are positioned against New York, the base city with an index score of 100. For the Health and Sanitation Rankings, the index scores range from the worst on the list--Baku, Azerbaijan, with a score of 27.6--to the best on the list--Calgary, Canada, with a score of 131.7.
Lead-poisoned air lands Dhaka, Bangladesh, the No. 2 spot on the list. Traffic congestion in the capital continues to worsen with vehicles emitting fatal amounts of air pollutants daily, including lead. The World Bank-funded Air Quality Management Project aims to help.
"Addressing air pollution is the easiest way to be able to fix someone's well-being because we're always breathing, and there are all sorts of harmful particulates in the air," says Richard Fuller, founder of the New York-based Blacksmith Institute, a non-profit dedicated to solving the pollution problems of the developing world. "In fact, the biggest pathway for lead poisoning is particulates in the air. So in areas with a lot of air pollution, shutting down the worst forces of these types of pollution really does make a difference."
Nos. 3 and 4 on this year's list are the capital cities of Madagascar and Haiti, respectively. Antananarivo, Madagascar and Port au Prince, Haiti, both face the challenge of a rapidly growing urban population and the ever-growing need for efficient water and waste management.
Mexico City, Mexico, ranks No. 5 on this year's list. Residents can thank industrial and automobile emissions for air quality so bad that city ozone levels fail to meet World Health Organization standards an estimated 300 days of the year. But things could be worse.
"Mexico City has actually seen great improvement recently in terms of air pollution," says Dave Calkins, founder of the Sierra Nevada Air Quality Group and former chief of the Air Planning Branch of the U.S. Environmental Protection Agency in San Francisco. "So much so that the government actually has to campaign to let everyone know that pollution is still a problem."
Economies suffer, too. Health care costs and lost productivity drag on business. Companies also face added costs in the form of remuneration packages when relocating employees and their families to some of these cities, noted Slagin Parakatil, senior researcher at Mercer. Cost-benefit analysis certainly suggests making progress toward cleanup. According to a study done by WaterAid, for every US$1 spent on improved sanitation, the benefit equals US$9 resulting from decreased cost of health care and increased productivity.
"If you do the numbers," says Fuller, "to clean up the worst of it doesn't really cost that much. It's the 90/10 rule. To do 90% of the work only costs 10% of the money. It's the last 10% of the cleanup that costs 90% of the money. For relatively little, we can do an awful lot to save a whole lot of lives."
Calgary #1? Guh? What? The stench of car exhaust permeates this city's air most of the time too. It's only those mighty 24/7 winds that are our saving grace. When the winds aren't blowing, there's that lovely ozone bowl that hangs over the valley much like any other city. If we're the best, I can't even imagine what Baku or Mexico City or Beijing are like. Modern society is fucking nuts. Nothing is more important than quality of life (or maybe that is the modern civilization part of me talking there? Most of our ancestors lived in misery), yet we seem complacent to put that irritating detail to the side for the sake of 'progress' and 'profit'. Seems like a horrible price to pay for greed and affluence far beyond what we need or deserve. Ironically, the pollution we put up with is partly responsible for the affluence we enjoy in Western society. Only that today we've been clever about it as we've offshored it all to the poorer nations in order for us to not have it in our collective consciousness all the time. And we still feel that there's too much pollution.....wow.
Tiffany M. Luck Yahoo! News
Unless you're in the oil business, there's little reason to brave the choking pollution of Baku, Azerbaijan. Fetid water, oil ponds and life-threatening levels of air pollution emitted from drilling and shipping land the former Soviet manufacturing center at the bottom of this year's list as the world's dirtiest city.
Baku is bad, but far from alone. For residents of the 25 cities on this year's list, black plumes of smoke, acid rain and free-flowing sewage are part of everyday life. Not as immediately visible: the impact on the population's health and life expectancy.
To see which cities in the world were dirtiest, we turned to Mercer Human Resource Consulting's 2007 Health and Sanitation Rankings. As part of their 2007 Quality of Life Report, they ranked 215 cities worldwide based on levels of air pollution, waste management, water potability, hospital services, medical supplies and the presence of infectious disease.
All cities are positioned against New York, the base city with an index score of 100. For the Health and Sanitation Rankings, the index scores range from the worst on the list--Baku, Azerbaijan, with a score of 27.6--to the best on the list--Calgary, Canada, with a score of 131.7.
Lead-poisoned air lands Dhaka, Bangladesh, the No. 2 spot on the list. Traffic congestion in the capital continues to worsen with vehicles emitting fatal amounts of air pollutants daily, including lead. The World Bank-funded Air Quality Management Project aims to help.
"Addressing air pollution is the easiest way to be able to fix someone's well-being because we're always breathing, and there are all sorts of harmful particulates in the air," says Richard Fuller, founder of the New York-based Blacksmith Institute, a non-profit dedicated to solving the pollution problems of the developing world. "In fact, the biggest pathway for lead poisoning is particulates in the air. So in areas with a lot of air pollution, shutting down the worst forces of these types of pollution really does make a difference."
Nos. 3 and 4 on this year's list are the capital cities of Madagascar and Haiti, respectively. Antananarivo, Madagascar and Port au Prince, Haiti, both face the challenge of a rapidly growing urban population and the ever-growing need for efficient water and waste management.
Mexico City, Mexico, ranks No. 5 on this year's list. Residents can thank industrial and automobile emissions for air quality so bad that city ozone levels fail to meet World Health Organization standards an estimated 300 days of the year. But things could be worse.
"Mexico City has actually seen great improvement recently in terms of air pollution," says Dave Calkins, founder of the Sierra Nevada Air Quality Group and former chief of the Air Planning Branch of the U.S. Environmental Protection Agency in San Francisco. "So much so that the government actually has to campaign to let everyone know that pollution is still a problem."
Economies suffer, too. Health care costs and lost productivity drag on business. Companies also face added costs in the form of remuneration packages when relocating employees and their families to some of these cities, noted Slagin Parakatil, senior researcher at Mercer. Cost-benefit analysis certainly suggests making progress toward cleanup. According to a study done by WaterAid, for every US$1 spent on improved sanitation, the benefit equals US$9 resulting from decreased cost of health care and increased productivity.
"If you do the numbers," says Fuller, "to clean up the worst of it doesn't really cost that much. It's the 90/10 rule. To do 90% of the work only costs 10% of the money. It's the last 10% of the cleanup that costs 90% of the money. For relatively little, we can do an awful lot to save a whole lot of lives."
Calgary #1? Guh? What? The stench of car exhaust permeates this city's air most of the time too. It's only those mighty 24/7 winds that are our saving grace. When the winds aren't blowing, there's that lovely ozone bowl that hangs over the valley much like any other city. If we're the best, I can't even imagine what Baku or Mexico City or Beijing are like. Modern society is fucking nuts. Nothing is more important than quality of life (or maybe that is the modern civilization part of me talking there? Most of our ancestors lived in misery), yet we seem complacent to put that irritating detail to the side for the sake of 'progress' and 'profit'. Seems like a horrible price to pay for greed and affluence far beyond what we need or deserve. Ironically, the pollution we put up with is partly responsible for the affluence we enjoy in Western society. Only that today we've been clever about it as we've offshored it all to the poorer nations in order for us to not have it in our collective consciousness all the time. And we still feel that there's too much pollution.....wow.
06 March 2008
Billionaire Watch 2008
The world's billionaires
Luisa Kroll, Yahoo! News
The number 13 has long been considered unlucky by superstitious people around the globe. How fitting, then, that Bill Gates' reign as the world's richest person ends after his 13th year at the top.
Despite being worth CA$57.2 billion, CA$1.97 billion more than last year, Gates is now just the world's third-richest person, ceding the top spot ranking to his good friend and partner in philanthropy, Warren Buffett, whose net worth jumped CA$9.86 billion to CA$61.15 billion. (All stock prices and net worth valuations were locked in on Feb. 11.) Ranked No. 2 is Mexican telecom tycoon Carlos Slim Helú, whose fortune has doubled in just two years to CA$59.18 billion.
It is certainly a dawning of a new era. But not just because of Gates' fall. The 22nd annual rankings of the World's Billionaires reflects all sorts of upheavals in the list's makeup. Two years ago, half of the world's 20 richest were from the U.S. Now only four are. India wins bragging rights for having four among the top 10, more than any other country.
For the first time ever, the number of billionaires Forbes could identify crossed into four figures, reaching 1,125. The total net worth of the group is CA$4.36 trillion, up CA$892 billion from last year. Despite the turbulence in the U.S. markets, Americans account for 42% of the world's billionaires and 37%, of the total wealth; those shares are down two and three percentage points, respectively, from last year.
Sixteen years after the collapse of the Soviet Union, Russia, with 87 billionaires, is the new No. 2 country behind the U.S., easily overtaking Germany, with 59 billionaires, which held the honor for six years.
The rankings include 226 newcomers. Seventy-seven of the new faces come from the U.S., half of whom made their fortunes in finance and investments, including John Paulson and Philip Falcone, both of whom became wealthy shorting subprime debt. Another third of the new billionaires comes from Russia (35), China (28) and India (19). Two of the most noteworthy new entrants are South Africa's Patrice Motsepe and Nigeria's Aliko Dangote, the first black Africans to make their debut among the world's richest. Dangote is also the first-ever Nigerian billionaire.
It is also a record-breaking year for young billionaires, with Forbes finding 50 under the age of 40, 25 of whom are new to the list. Sixty-eight percent of these under-age-40 tycoons built their 10-figure fortunes from scratch, including Google co-founders Sergey Brin and Larry Page; former Enron trader John Arnold, who now runs a hedge fund; India's Sameer Gehlaut, who started online brokerage Indiabulls; and, last but not least, Facebook founder Mark Zuckerberg, who at age 23 might just be the youngest self-made billionaire in history.
Zuckerberg is probably destined to be the most talked about newcomer of the year because of his age and ingenious social-networking site, but there are fascinating entrepreneurs of all ages climbing into the ranks. Some of the more notable ones include China's Gao Dekang, who is one of the world's biggest makers of down jackets and vests; Portugal's Americo Amorim, who turned his grandfather's small cork operation into the world's largest; and Brazil's Eike Batista, who built and lost a gold mining fortune, before hitting it big in iron ore. He is now the world's richest mining billionaire.
With all the rosy news of the past year and the overall gains, it is easy to lose sight of the volatility that has been wreaking havoc on these fortunes on a daily basis for months. For instance, Hong Kong's richest person, Li Ka-shing, lost CA$5.45 billion of his net worth, all tied to publicly held stocks, in the 37 days between Jan. 4 and Feb. 11.
Meanwhile, mainland China's richest person, 26-year-old Yang Huiyan, fell from CA$17.15 billion in September to CA$7.33 billion in the rankings. Google co-founder Sergey Brin's fortune touched CA$25.27 billion in the past year but is now down to CA$18.53 billion. Others were hit much harder, falling off the list entirely, including Lehman Brothers chief Richard Fuld and Bear Stearns ex-chief James Cayne (he was sacked), both victims of the world's credit crunch, and Pulte Homes' William Pulte, whose stock collapsed along with the housing market.
What will happen in the next 12 months as we continue our wealth watching? There will likely be some big losers, some big winners and a lot of ups and downs in between. The only certainty is change itself.
The only certainty is that a handful of people will always control a majority of the world's wealth and power while a huge majority (like, 99.9% of humanity) will only be ekeing out enough of a living just to keep food on the table. What a weird world we live in...
Luisa Kroll, Yahoo! News
The number 13 has long been considered unlucky by superstitious people around the globe. How fitting, then, that Bill Gates' reign as the world's richest person ends after his 13th year at the top.
Despite being worth CA$57.2 billion, CA$1.97 billion more than last year, Gates is now just the world's third-richest person, ceding the top spot ranking to his good friend and partner in philanthropy, Warren Buffett, whose net worth jumped CA$9.86 billion to CA$61.15 billion. (All stock prices and net worth valuations were locked in on Feb. 11.) Ranked No. 2 is Mexican telecom tycoon Carlos Slim Helú, whose fortune has doubled in just two years to CA$59.18 billion.
It is certainly a dawning of a new era. But not just because of Gates' fall. The 22nd annual rankings of the World's Billionaires reflects all sorts of upheavals in the list's makeup. Two years ago, half of the world's 20 richest were from the U.S. Now only four are. India wins bragging rights for having four among the top 10, more than any other country.
For the first time ever, the number of billionaires Forbes could identify crossed into four figures, reaching 1,125. The total net worth of the group is CA$4.36 trillion, up CA$892 billion from last year. Despite the turbulence in the U.S. markets, Americans account for 42% of the world's billionaires and 37%, of the total wealth; those shares are down two and three percentage points, respectively, from last year.
Sixteen years after the collapse of the Soviet Union, Russia, with 87 billionaires, is the new No. 2 country behind the U.S., easily overtaking Germany, with 59 billionaires, which held the honor for six years.
The rankings include 226 newcomers. Seventy-seven of the new faces come from the U.S., half of whom made their fortunes in finance and investments, including John Paulson and Philip Falcone, both of whom became wealthy shorting subprime debt. Another third of the new billionaires comes from Russia (35), China (28) and India (19). Two of the most noteworthy new entrants are South Africa's Patrice Motsepe and Nigeria's Aliko Dangote, the first black Africans to make their debut among the world's richest. Dangote is also the first-ever Nigerian billionaire.
It is also a record-breaking year for young billionaires, with Forbes finding 50 under the age of 40, 25 of whom are new to the list. Sixty-eight percent of these under-age-40 tycoons built their 10-figure fortunes from scratch, including Google co-founders Sergey Brin and Larry Page; former Enron trader John Arnold, who now runs a hedge fund; India's Sameer Gehlaut, who started online brokerage Indiabulls; and, last but not least, Facebook founder Mark Zuckerberg, who at age 23 might just be the youngest self-made billionaire in history.
Zuckerberg is probably destined to be the most talked about newcomer of the year because of his age and ingenious social-networking site, but there are fascinating entrepreneurs of all ages climbing into the ranks. Some of the more notable ones include China's Gao Dekang, who is one of the world's biggest makers of down jackets and vests; Portugal's Americo Amorim, who turned his grandfather's small cork operation into the world's largest; and Brazil's Eike Batista, who built and lost a gold mining fortune, before hitting it big in iron ore. He is now the world's richest mining billionaire.
With all the rosy news of the past year and the overall gains, it is easy to lose sight of the volatility that has been wreaking havoc on these fortunes on a daily basis for months. For instance, Hong Kong's richest person, Li Ka-shing, lost CA$5.45 billion of his net worth, all tied to publicly held stocks, in the 37 days between Jan. 4 and Feb. 11.
Meanwhile, mainland China's richest person, 26-year-old Yang Huiyan, fell from CA$17.15 billion in September to CA$7.33 billion in the rankings. Google co-founder Sergey Brin's fortune touched CA$25.27 billion in the past year but is now down to CA$18.53 billion. Others were hit much harder, falling off the list entirely, including Lehman Brothers chief Richard Fuld and Bear Stearns ex-chief James Cayne (he was sacked), both victims of the world's credit crunch, and Pulte Homes' William Pulte, whose stock collapsed along with the housing market.
What will happen in the next 12 months as we continue our wealth watching? There will likely be some big losers, some big winners and a lot of ups and downs in between. The only certainty is change itself.
The only certainty is that a handful of people will always control a majority of the world's wealth and power while a huge majority (like, 99.9% of humanity) will only be ekeing out enough of a living just to keep food on the table. What a weird world we live in...
05 March 2008
There is more of a connection than I thought...
Moses was high on drugs: Israeli researcher
Tue Mar 4, 7:03 AM
JERUSALEM (AFP) - High on Mount Sinai, Moses was on psychedelic drugs when he heard God deliver the Ten Commandments, an Israeli researcher claimed in a study published this week.
Such mind-altering substances formed an integral part of the religious rites of Israelites in biblical times, Benny Shanon, a professor of cognitive psychology at the Hebrew University of Jerusalem wrote in the Time and Mind journal of philosophy.
"As far Moses on Mount Sinai is concerned, it was either a supernatural cosmic event, which I don't believe, or a legend, which I don't believe either, or finally, and this is very probable, an event that joined Moses and the people of Israel under the effect of narcotics," Shanon told Israeli public radio on Tuesday.
Moses was probably also on drugs when he saw the "burning bush," suggested Shanon, who said he himself has dabbled with such substances.
"The Bible says people see sounds, and that is a clasic phenomenon," he said citing the example of religious ceremonies in the Amazon in which drugs are used that induce people to "see music."
He mentioned his own experience when he used ayahuasca, a powerful psychotropic plant, during a religious ceremony in Brazil's Amazon forest in 1991. "I experienced visions that had spiritual-religious connotations," Shanon said.
He said the psychedelic effects of ayahuasca were comparable to those produced by concoctions based on bark of the acacia tree, that is frequently mentioned in the Bible.
Isn't it fascinating that an entire religion could be fundamentally driven by the relationship between psychotic drugs and 'divine intervention' -- talking trees, animals, seeing sounds, hearing colors....it actually makes a lot more sense that this is what actually happened than some of the strict interpretations that go on to defend and uphold the tenets of the major religions.
The three best things in the world...Joe, Juicy Fruit weed, and the Jesus Action Figure with REAL GLIDING ACTION! PRAISE THE LORD! HALLELUJAH!
Tue Mar 4, 7:03 AM
JERUSALEM (AFP) - High on Mount Sinai, Moses was on psychedelic drugs when he heard God deliver the Ten Commandments, an Israeli researcher claimed in a study published this week.
Such mind-altering substances formed an integral part of the religious rites of Israelites in biblical times, Benny Shanon, a professor of cognitive psychology at the Hebrew University of Jerusalem wrote in the Time and Mind journal of philosophy.
"As far Moses on Mount Sinai is concerned, it was either a supernatural cosmic event, which I don't believe, or a legend, which I don't believe either, or finally, and this is very probable, an event that joined Moses and the people of Israel under the effect of narcotics," Shanon told Israeli public radio on Tuesday.
Moses was probably also on drugs when he saw the "burning bush," suggested Shanon, who said he himself has dabbled with such substances.
"The Bible says people see sounds, and that is a clasic phenomenon," he said citing the example of religious ceremonies in the Amazon in which drugs are used that induce people to "see music."
He mentioned his own experience when he used ayahuasca, a powerful psychotropic plant, during a religious ceremony in Brazil's Amazon forest in 1991. "I experienced visions that had spiritual-religious connotations," Shanon said.
He said the psychedelic effects of ayahuasca were comparable to those produced by concoctions based on bark of the acacia tree, that is frequently mentioned in the Bible.
Isn't it fascinating that an entire religion could be fundamentally driven by the relationship between psychotic drugs and 'divine intervention' -- talking trees, animals, seeing sounds, hearing colors....it actually makes a lot more sense that this is what actually happened than some of the strict interpretations that go on to defend and uphold the tenets of the major religions.
The three best things in the world...Joe, Juicy Fruit weed, and the Jesus Action Figure with REAL GLIDING ACTION! PRAISE THE LORD! HALLELUJAH!
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