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Sep 09.06
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Banking
/ by Ro Econ
I had no idea banks bought advertising but here it is. Apparently there are good banks out there! 
Ok I'm joking, but really, from an institution that charges to to borrow and charges you to save and reaps billions of dollars in profit, I can't imagine how anybody is happy. It may be the long hours TD is open.... considering I know a few RBC banks open until 4PM some days... Apparently an independent survey of Canadians by market research firm Synovate has determined that TD Canada Trust ranks first among the country's five major banks in overall quality of customer service. Canadians also chose TD Canada Trust as the best in branch access and convenience; information handling and communication; ABMs; and online banking.
TD Canada Trust scored first among Canada's major banks in the following
categories:
- Overall quality of customer service
- Branch access and convenience
- Information handling and communications
- ABMs
- Online banking
The Synovate results come from a survey which took place from July 14 to August 25 using a nationally representative sample of more than 16,000 customers at banks and other financial institutions across the country. Known as the Customer Service Index, the survey has been conducted by Synovate annually since 1987.
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Sep 09.06
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Energy
/ by Ro Econ
Suncor Energy opened Canada's largest ethanol-production plant. Ontario Premier Dalton McGuinty and Patricia Davidson, Member of Parliament for Sarnia-Lambton joined Suncor Energy's Executive Vice President, Tom Ryley, and other guests to celebrate the official opening of the plant located in St. Clair Township, near Sarnia.
The $120 million facility is expected to annually produce 200 million litres of ethanol. Feedstock for the ethanol will come from 20 million bushels of corn per year, sourced primarily from Ontario farmers. The facility generated employment for 38 people. The plant was partially funded with $22 million from the Government of Canada's Ethanol Expansion Program and was also supported through an Ethanol Manufacturers' Agreement with the Province of Ontario.
From 2005 to 2007, Suncor expects to invest more than $1.4 billion in Ontario, demonstrating its commitment to developing economic growth and environmental benefits in the province. This investment includes spending to improve the environmental performance of the company's Sarnia refinery, construct and commission the ethanol facility, and build a proposed 76 megawatt wind power project near Ripley, Ontario.
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Sep 04.06
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Debt Management
/ by Ro Econ
The Globe and Mail had this article that I thought was interesting, something Calgary and probably more likely Vancouver (Tdot O as well) could face soon. Link is here:
Real estate agent Andrea Gaus knew the market was out of whack when the price of a typical four-bedroom house near good schools in the leafy Maryland suburbs of Washington shot past the $1-million (U.S.) mark.
“It got to the point where appreciation was so high that it priced people out of the market,” Ms. Gaus said.
But the peak has passed, and the consequences of the deflating bubble are buffeting the housing market, in Washington and across the United States.
What sold in a weekend here last year is taking months to unload. And increasingly nervous home sellers are slashing prices to get rid of properties before their value sinks even further. One buyer recently threatened to walk away from a signed contract on a $1.6-million house unless the seller took $100,000 off the price to reflect the drop in value since the deal was struck. The seller quickly buckled, fearing the house might be worth even less if put back on the market today.
“Look how fast prices were going up. The same thing is happening on the way down,” observed Ms. Gaus, who's been selling homes in Potomac for 16 years.
“It's a very tough market.”
The once red-hot housing market has fizzled. And the topic du jour among economists, investors and policy makers is whether the end of the housing boom signals the beginning of the end of a long run for the world's mightiest economy, and by association, the rest of the planet.
The U.S. housing crash may prove to be the economic equivalent of the canary in the coal mine — a warning of impending danger in an economy that has surged too far, too fast. Many experts are now openly speculating about a possible U.S. recession next year, brought on by consumers reacting to the shrinking value of their nest egg. If they're right, the fallout could prove to be far nastier than the collapse of the technology bubble at the start of the decade.
The housing market has been a perfect conduit for economic activity, funnelling and leveraging billions of dollars worth of household wealth into consumer spending in recent years. The U.S. savings rate is negative now, but even a relatively modest shift toward savings now could have a dramatic effect on consumption, sending the economy into reverse. Joining a growing number of anxious forecasters, Prof. Morici puts the risk of recession in 2007 at 50-50.
“The wealth effect has been very important in fuelling the recovery,” he said. “It doesn't appear like that is going to be available any more. Housing prices have finally outrun incomes.”
Runaway real estate prices, which had been growing in double digits throughout much of the country, are now pricing potential homeowners right out of the market. The ability of Americans to afford a home is the worst it's been in two decades, according to the National Association of Realtors.
The past year has been rough on consumers. First, mortgage rates began to rise. Then, there was the jolt from sharply higher energy prices. And now the apparent end of the long real estate boom is at hand. It's all combined to make Americans feeling distinctly poorer, and less confident. Mirroring other recent surveys, the U.S. Conference Board reported last week that its consumer confidence index suffered its biggest one-month drop in August since the devastation of hurricane Katrina a year ago.
Think it all doesn't matter to you? Think again. For nearly a decade now, the United States has been the economic driver for much of the world — Canada included. The United States has been sucking up excess savings and consuming everything in sight, from cars to homes and everything that goes in them.
In the early 1990s, when Ms. Gaus got into the real estate business, investment in residential real estate represented less than 3.5 per cent of the economy. Today, it makes up 6 per cent. Add in all the products and services tied to real estate — furniture, big-screen TVs, home improvements and financing — and the total contribution is much larger.
Housing has also emerged as an increasingly vital economic driver — for consumption, jobs and overall economic activity.
Economist David Rosenberg of Merrill Lynch & Co. Inc. estimated that construction activity, combined with surging home values, accounted for nearly half of U.S. economic growth over the past three years, or 1.5 percentage points of the 3.5-per-cent average annual GDP increase.
Encouraged by low interest rates, innovative mortgages and a tax system that favours maximum leverage, Americans have been using their homes as ATMs. Thanks to generous lines of credit and multiple refinancings, they've renovated, furnished their nests and moved up to ever-larger homes.
In the past decade, the percentage of U.S. household wealth tied up in homes has climbed to 48.5 per cent from 38.7 per cent.
Americans have also super-sized their abodes. From 1975 to 2005, the average size of new single-family homes grew by 48 per cent — from 1,645 square feet to 2,434 sq. ft. — even as families shrunk in size, according to new data from the U.S. Census Bureau.
These larger homes come with more bedrooms and more bathrooms, spawning a bevy of retail chains to help homeowners furnish all that space, such as Crate & Barrel, the Pottery Barn and Bed, Bath and Beyond. In 1975, only 4 per cent of homes had more than 1½ baths. Today, nearly half of new homes do.
That has changed the way Americans spend. Nearly 15 per cent of every dollar consumers spend now goes toward housing-related items. That compares with 11.5 per cent in the early 1990s.
So perhaps it's understandable that some forecasters may be underestimating the potential downside of this housing boom.
“The decline in housing will not be a mere sideshow,” warned Merrill Lynch's Mr. Rosenberg. “The housing correction has all the markings of a three-ring circus that has the potential to pull consumer spending to the brink.”
He's predicting that housing prices will fall by 5 per cent by next year, erasing $1-trillion worth of household wealth.
U.S. Federal Reserve Board chairman Ben Bernanke, for his part, has predicted an orderly deflation of the housing bubble, and a soft landing for the rest of the economy. But in the minutes of their Aug. 8 rate-setting meeting, Fed governors acknowledged that housing is “a downside risk” to the economic outlook. Prospects for the sector remain shrouded in “considerable uncertainty,” according to the minutes, released this week.
Part of the problem for economists is that while housing is now clearly in a slump, other parts of the economy are behaving as if nothing is wrong. Manufacturing, for example, continues to fair well, outside of the auto sector. Similarly, corporate profit and business investment are healthy and growing. Even retail sales and consumer spending aren't yet showing the impact of the slump.
And if there's a silver lining for Canada it is that we may not be as vulnerable to a U.S.-led recession as much of the rest of the world.
Economist Clement Gignac of National Bank Financial Inc. in Montreal argued that the price boom in oil and other commodities may keep Canada from following the United States into a recession. He said Canada escaped U.S.-driven downturns three times in the 1970s, and this time could be the same. He puts the odds of a U.S. recession at 40 per cent, but just 15 per cent north of the border.
In Potomac, Ms. Gaus lamented that too few people have fully adjusted to the harsh reality that it is now a buyer's market.
For sellers, that means accepting less, possibly waiting months to sell and being ready to make huge concessions.
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Sep 04.06
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Energy
/ by Ro Econ
Russia has won backing from Greece and Bulgaria for an oil pipeline project to link all three countries. Vladimir Putin met Greek and Bulgarian leaders to discuss the project during a visit to Athens. Proposals for the 175-mile (280km) pipeline have been under negotiation for the past 14 years.
Pressure to adopt alternative routes and political disputes have delayed the project, which would cement Russia's status as Europe's key energy supplier. The declaration paves the way for the next step in the pipeline's progress, an intergovernmental agreement, that should take place before the end of 2006. The pipeline's route would bypass Turkey and reduce the number of oil tankers that need to pass through the congested and narrow Bosphorus Straits.
Oil would be shipped from Russia across the Black Sea to Bulgaria, and then pumped via the pipeline to a port in Northern Greece. The new route would give Russian oil exports a direct path to the Mediterranean Sea for the first time. Other options for avoiding the Bosphorus have been suggested, including a US-backed scheme to ship oil through Albania.
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Jul 09.06
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Uncategorized
/ by Ro Econ
Paying Attention is paying attention to something that is being largely ignored both by British Columbians and by Ottawa.
The Mountain Pine Beetle epidemic is a slow moving disaster that will decimate this province. The treehuggers in Vancouver and Victoria would like nothing more than to see the Forestry industry vanish in this province, and it looks like they will get their wish. The trees are vanishing - turning red and falling down.
This little blighter is causing the ruckus. He bores under the bark of the tree and separates the bark from the wood. This cuts off water and nutrient flow in the tree, resulting in the needles turning red from lack of water. Then the tree dies.
This is what the forests in some areas of the interior look like right now.
Most isn't this bad... yet, but this shot is from Williams Lake 2 years ago. Keep in mind that now those trees are red. In a couple years the needles fall off and they look like standing dead. In a year or two after that they begin to fall, and then all you have is a pile of sticks. In the meantime you have really an immense fire hazard. It will make the forest fires of last summer look like a little campfire when this tinder box goes up, endangering lives and communities at an unprecendented scale.
The Mountain Pine Beetle attack really got its start about 10 years ago now - while I was in forestry school in Alberta (mid-90s), we were already hearing about Tweedsmuir Provincial Park and the outbreak there that had spread to neighbouring commercial forest. The reason the event happened was because forestry knew the beetles were breeding in the park but were not allowed to get special permission to go into the park and cut out the infected trees. The sanctity of the park meant that hundreds of thousands of hectares had to die, screwing up years of planning and work by forest engineers, jeopardizing jobs and communities, because the parks service couldn't bear to have a couple of stumps scattered in the remote trackless depths of a park with maybe a couple thousand visitors a year.
But back to the point. This needs to be dealt with. British Columbians might like to think they would get along fine without the forest industry, but even now, after being maligned and ignored for years, it amounts to over 1/3 the economy of the province. How well do you think ANYONE in this province will be doing when 1/3 of the economy evaporates?
