March 2009
38 posts
Off for the day
Sorry everyone, but being a student I am very busy with end of the year projects and exams. Please come back tomorrow as I will have a new post.
Thanks for reading businessminded.ca.
Ahren
White Collar Hero
“The new president of Quebec’s pension fund manager is giving up the performance bonus and other perks that usually come with the job. Michael Sabia sent a letter this week to the chair of the Caisse de dépôt et placement du Québec saying he will renounce bonuses for 2009 and 2010, even if the fund performs well. Sabia, 55, is also giving up the $235,000 annual pension that he...
Bye, Bye Wagnor. Hello Viability for GM?
On Sunday, GM CEO Rick Wagnor resigned after significant pressure from the Obama administration. The administration threatened to withhold the much needed bailout funds GM currently needs in attempt to “smoke out” Mr. Wagnor. Needless to say it worked. Frederick Henderson, G.M.’s president, will takeover as chief exec.
GM has used up the $13.4 billion in bailout funds it...
What's the big fuss over harmonized sales tax in...
(Photo Credit: Kranky’s cartoons)
Starting on July 1, 2010, Ontarians will start paying a single 13% sales tax. This is from the recently released provincial budget. The province will now be combining GST and PST into one tax. Many of you may be saying “who cares I already pay both GST and PST and this will just make it one tax instead of two separate ones.” Well, you may...
Smile, You're on Google Street View
“People strolling past homes, stores and even strip joints across Canada will soon be captured and frozen in time by Google’s camera, to appear in high-resolution street-level images on the internet. Google will be driving around 11 Canadian cities across the country again “in coming weeks” to take images for the Canadian version of its Street View service, which it hopes...
Hyperinflation in Zimbabwe Coming to an End
(Photo Credit:blog.iconflict.com)
For those who didn’t know, Zimbabwe has spent the past several years in hyperinflation with inflation at rates that are hard to comprehend. Here in Canada, our inflation rate hovers around 1-3%, but last July inflation was 231,000,000% in Zimbabwe. Pretty astonishing.
There is a good example to help understand how drastic inflation is in Zimbabwe, but...
CBC to Make Hard Decisions
It has been mostly banks and automakers in the news lately and their hardships in the current economic storm, but now CBC, the heart of Canadian media, has been beaten down by the recession.
CBC has projected that it will be $171 million short for the 2009-2010 year. CEO and President of CBC, Hubert Lacroix, announced that there would be 800 job cuts to help wheather the storm as well as a...
Kidnapped Children are Tax Deductible
Proof that the IRS thinks of absolutely everything. This is a post, I believe, originally from The Prestigious Internet Blog (see link at the end). I do sympathize with any parents who have had their child kidnapped. So if you have ever wondered about the tax deductibility of kidnapped child, here is the answer: “Specifically: Can I still write off a child as a deduction if they’ve...
Ontario to Spend, Spend, Spend
Evidently Premier Dalton McGuinty and company believe strongly in Keynesian economics. Under Keynesian economics, it is believed that large increases in government spending can raise an economy out of recession. This is due to the fact that government spending, if done properly, creates many jobs and these people with new jobs start spending money and that creates more jobs and the cycle...
Tax the Hell Out of Bonuses...
Today there will be a proposal to the Senate to tax bonuses of employees at institutions that receive bailout money from the government. The tax could be as high as 90%. This should be interesting. I somehow find it hard to believe this will be given the go ahead, but we can only hope. No one should receive such lucrative bonuses for helping in the destruction of America’s economy. It...
Private Sector: Buy Toxic Assets and Avoid...
As we have all seen, the U.S (and Canadian) Government has been buying up toxic assets in an attempt to clean up banks’ balance sheets. Well, they can’t do it all themselves anymore especially since there is a major problem in how to appropriately price these assets.
The new plan from Tim Geithner (U.S. Treasury Secretary) is to start a public-private investment fund. The Treasury...
What Would Obama Do? (To get us out of this...
For all you out there wondering what tools Obama and his administration are going to use to get the U.S out of this recession here is a quick synopsis:
1) Government expenditures. Increase government spending through infrastructure development and investing in new technologies like green energy. This will create new jobs, new money, and lead to more spending which will hopefully stimulate the...
AIG Bonuses - Almost a Good Idea
While away I had no internet connection, but I did have a T.V to watch CNN on. In typical CNN style, as soon as the AIG bonus scandal hit they were all over it for 24 hours each day (seriously). I do agree with CNN that it was very shady that AIG executives got paid out such extreme bonuses ($165 million in aggregate) with taxpayer money but at the same time you must understand that top level...
Current U.S. Industrial Production against the... →
Paul Krugman posted an interesting article where he compared data from industrial production now versus during the Great Depression and the results are astonishing. Industrial production is down to a rate that is almost equivalent to half of the Great Depression decline rate. In his words, we are experiencing “half a Great Depression” when looking at industrial production data.
BusinessMinded will be back on Friday...
I am currently abroad and have no internet. I found some today but I can’t do anything due to its slowness. Sorry but please come back on Friday. All the best.
Ahren
International Monetary Fund: "Canada will rebound... →
Stephen Harper will be happy that the IMF has given Canada a good economic review. This will hopefully give a little more fuel to getting his economic stimulus plan into action, which will make Finance Minister, Jim Flaherty, a happy man.
IMF has stated that Canada is in a better position than other industrialized countries due to good policy and taking the proper steps to ensure soundness in...
This is Why I Study Economics
TOP 10 REASONS TO STUDY ECONOMICS (Thanks to Bryan for this list) 1. Economists are armed and dangerous: “Watch out for our invisible hands.” 2. Economists can supply it on demand. 3. You can talk about money without ever having to make any. 4. You get to say “trickle down” with a straight face. 5. Mick Jagger and Arnold Schwarzenegger both studied economics and look...
Citibank pulls a rabbit out of its hat →
Against all odds, Citibank has announced it has had a profitable start to the year and is having the best quarter to date since quarter three in 2007. Somehow I find this hard to believe after having a plethora of bad loans and requiring lots of taxpayer dollars, but maybe they are. Or maybe in a few months or years we will find out about some off-balance sheet work that kept the bottom line...
Shame on Ontario Lottery and Gaming Corp. →
Ontario Lottery and Gaming Corp. (OLG) are evidently on a completely different page than the government of Ontario and Canada. In a time when car sales are falling like a rock and GM and Chrysler Canada are in dire need of bailout money, OLG has decided to buy foreign made cars. Is anyone even thinking at OLG?
OLG only had to go as far as Oakville to get luxury cars. Oakville is the home to...
Good idea Toyota →
Toyota is a smart company. Everyone has been talking about bailing out struggling car companies. But what about getting car sales up? This is what Toyota is trying to get the government of Canada to do. They want the government to create immediate access to credit.
With limited credit available, dealerships are having trouble financing their businesses and consumers can’t get the money...
US won't, in all likelihood, default on debt →
Interesting post by Paul Krugman on the riskiness of U.S debt increasing. Obviously, given the current circumstance it has risen in risk, but the U.S. is the richest country in the world. It won’t default and if it does that is going to be one hell of a day. If its debt was really at risk of default people wouldn’t be buying it still, but people still buy it because everyone knows...
You know you are successful when... →
…you issue bonds as a person and not as a company. David Bowie is successful. He wanted to generate enough money to buy the rights to his songs his manager owned. So he issued $55 million of 10 year bonds. These bonds were secured against royalties from all his songs prior to 1990. The royalties were used to pay the interest payments and principal when the bonds matured. Now David...
Expect Canadian Bank Stocks to continue falling →
Canadian banks - the soundest in the world. Quarter 1 has been good for Canada’s big banks (RBC announcing $3 billion in profits), but as the recession deepens all of the banks know that Q1 will be the high with profits expected to start trending down. With these falling profits, you can expect their stocks to be going with them. The rest of the world’s banks can feel a little less...
Stimulus Package needs to be expedited. →
Flaherty, Minister of Finance in Canada, is trying to urge the importance of a stimulus package being put into action now. One of his reasons is very strong. If the large inflow of dollars comes too late and the economy is recovering the money will cause a large inflation.
This is due to the fact that when the economy starts recovering the low interest rates and large amount of liquidty will...
CAW will help GM reduce costs →
A tentative agreement has been reached between CAW and GM to help reduce costs in attempt to qualify for the “pleasesaveuscanadiangovernment” loan. Currently GM Canada is eligible for $3 billion. I wish I could qualify for some money. Don’t you?
GM being Choked by Union →
God Unions are incredibly inefficient. If I was the head of GM I would not have many kind words for CAW President Ken Lewenza, who is saying that labour costs are not GM’s major problem. Hello Ken, anyone home? Obviously, the major problem is the nose dive in auto sales, but the fact that they can’t adjust their operations appropriately due to the Union’s choke hold is a...
Car Sales in free fall →
I just was shown this data (thanks Andrew Baker) and it is astonishing. Monthly Car sales for February 2009 vs. February 2008 are down 51.1% for GM, 44.8% for Ford, and 49.1% for Chrysler. Toyota, not down as much, has had 35.9% reduction in sales. Hyundai is up 4.9% due to their strategy of lower pricing, but maintaining comparable quality. Have a look at the data, you can download it on the...
Unemployment numbers to quantify the U.S.... →
The Bureau of Labour Statistics in the U.S. just released their Employment Situation Summary and it is grim. Number of unemployed increased by 851,000 to 12.5 million in the month of February, causing unemployment rate to raise to 8.1%. People have been saying 10% won’t come, but I think it definitely will. It gets worse before it gets better. At least that is the saying. But it will...
ABC should do their homework. →
Apparently ABC doesn’t understand that the tax system is progressive in the U.S. They believe people have an incentive to get into lower income brackets to pay less tax and therefore have a higher income. People with higer income pay more tax only on their income in higher tax brackets. They therefore still have more after-tax income. So please don’t try to reduce your income so...
Facebook will get you fired. →
Girl from England got fired for saying work was boring in her facebook status. Scary that your work can find out this stuff. I don’t know how they saw her status, but know that people might just fall onto something on your profile that may get you in trouble. On that note I will once again contemplate deleting my facebook…for the millionth time. Love hate relationship.
Flaherty - the guy who doesn't waste taxpayer... →
This should be his outlook all the time - don’t waste taxpayer dollars. I am fairly certain the government has wasted a fair chunk of change in the past, but at least Canada isn’t just going to hand over 6 units (billions) to GM to allow them to stay a float a little longer. GM isn’t looking all that viable right now with wages beyond sustainable and car sales in the...
Auto industry in ruins →
Chrysler has cut 1200 jobs in Windsor. It shouldn’t suprise many. Unfortunate news. I personally don’t think the future auto industry will look anything like the one we have now. I think soon it will fall apart and the future will consist of a larger more competitive industry not hindered by large inefficient bureaucracies coupled with blood sucking unions.
The government will...
Unchartered Territory →
Interesting article. This recession is of its own breed. Past recessions have been orchestrated by central banks through money supply reductions to control inflation. This one has been caused by poor lending practices leading to free falls in consumer and investor confidence. Who knows how it will all play out.
Canada = trade deficit →
“”Simply put, Canada’s trade position has feasted for decades on a backdrop of ravenous U.S. demand. With that appetite now on the strictest diet imaginable, our trade outlook has withered accordingly.”
First montly trade deficit since March 1976. The deficit is only $458 for the December 2008, but still significant as our economy is almost always in a surplus position.
Sure,...
As predicted...bank cuts interest rate to 0.5% →
Yikes: “Output is falling as global demand for Canadian automobiles and lumber plunges and prices drop for the commodities the country exports. Reports have also shown a record job loss and the first trade deficit since 1976. The central bank said yesterday that such figures mean the economy may contract more than expected in the first half of this year.” Carney’s last ditch...
He won a nobel price, so "it is right to expect... →
Greg Mankiw has contested the Obama Adminstration’s belief that because the economy is depressed now that we should expect higher than normal growth. The Theory (Okun’s law) behind this is that because we are seeing higher than normal unemployment (predictions saying it will reach 10% in the U.S.), we should expect unemployment to fall and therefore faster real GDP growth.
Mankiw’s nutshell...
Carney expected to cut rates →
Expect the overnight rate to drop to about 0.5% in another attempt to get commercial banks extending credit. There are other ideas using fiscal policy through increasing government expenditures. Also, further buying of bank assets and corporate bonds. But none of this matters if the global economy is still suffering. Canada’s economy depends on the U.S and Europe. Even if we implement...
Cruise Lines - Recession Proof? →
You would think vacations like cruises are luxury goods, and that given these economic conditions that sales would be dropping like flies. Well, think again. Cruise Lines International Association is predicting 2.3 percent growth this year. How have they been doing it? Effective deals. Maybe this could be extrapolated to other businesses. People like deals after all. It is just figuring out...