Month: September 2008

You can read all the gory details for yourself but here are the highlights from Don Drummond and the gang of economists at TD Bank:

• Over the next 12 months, home prices will have bottomed, the cost of funds to financial institutions will have fallen, the worst in institutional failures will be in the rear view mirror, and the process of recapitalizing the financial system will be well underway …
• …but don’t expect a return to the status quo.
• Relative to the past decade, the cost of financing will remain higher and less credit will be available. 
• A convincing and sustainable recovery in consumption and investment won’t materialize in the U.S. until 2010.
• The world economy will be in a mild recession in 2009 before bouncing back in 2010.
  The Canadian economy will resemble the American, moving sideways on output with only a shallow recovery in late 2009.

The ultimate irony of this blog post is that, within a few paragraphs of reading Nicholas Carr's diagnosis of the problem he and I apparently suffer from, I felt compelled to blog about it — with video!

“Dave, my mind is going,” HAL says, forlornly. “I can feel it. I can feel it.”

I can feel it, too. Over the past few years I’ve had an uncomfortable sense that someone, or something, has been tinkering with my brain, remapping the neural circuitry, reprogramming the memory. My mind isn’t going—so far as I can tell—but it’s changing. I’m not thinking the way I used to think. I can feel it most strongly when I’m reading. Immersing myself in a book or a lengthy article used to be easy. My mind would get caught up in the narrative or the turns of the argument, and I’d spend hours strolling through long stretches of prose. That’s rarely the case anymore. Now my concentration often starts to drift after two or three pages. I get fidgety, lose the thread, begin looking for something else to do. I feel as if I’m always dragging my wayward brain back to the text. The deep reading that used to come naturally has become a struggle.

I think I know what’s going on. For more than a decade now, I’ve been spending a lot of time online, searching and surfing and sometimes adding to the great databases of the Internet . . .

… what the Net seems to be doing is chipping away my capacity for concentration and contemplation. My mind now expects to take in information the way the Net distributes it: in a swiftly moving stream of particles. Once I was a scuba diver in the sea of words. Now I zip along the surface like a guy on a Jet Ski.

Now I happen to believe human capacity for concentration and contemplation is important, vital even. Does humanity need to do what Dave does in this video clip?

Want to be a journalist? If so, consider this piece —

… journalists write stories for their readers to tell them what is going on, to inform them, engage them, entertain them, shock them, amuse them, disturb them, uplift them. The subject matter will vary according to the nature of the publication and the intended audience. The good newspaper editor will have a clear idea of the sort of people who are reading it, and cater to their interests and preoccupations, sometimes their prejudices. And the paper will include that vital ingredient serendipity – the story you didn't expect, the “just fancy that”, the absurdities as well as the travails of the human condition.

Journalism is basically a simple game. It is about finding things out and telling other people about them. The finding out requires a variety of skills because those in power often prefer that we know only so much. Journalism is about holding such people to account, exposing their humbug and hypocrisy, the abuse of their power. This includes the control it gives them over the flow of information, the ability to bury the bad news, to spin and obfuscate. Good journalists must ask the awkward questions and question the answers, must dig to unearth and then explain, making comprehensible that which authority, by intent or verbal inadequacy, has left confused, incomplete or plain mendacious. Incomprehensible journalism is quite simply bad journalism, and therefore pointless . . .

.. journalistic writing is different from creative writing. Many young people think they would like to be journalists because they have “always loved writing” or started writing poems when they were eight. It is certainly not enough and may well be a barrier to success in journalism. The late Nicholas Tomalin famously wrote that “the only qualities essential for real success in journalism are rat-like cunning, a plausible manner, and a little literary ability.” He included writing, but he placed it third and prefaced it with a diminutive. The writing matters; but don't think of it as art. Think of it as working writing, writing doing a job, writing that puts across information in a way that makes readers want to absorb it.

Or try this piece:

The qualities essential to journalism . . .  are those of curiosity, an uninhibited mind, native cunning and an eagerness to communicate, summed up in the gift to narrate. Such is the raw material on which the story depends and without which there is nothing to say. There can be a story without journalism, but no journalism without a story.

Or better yet, check out the whole remarkable series put together by The Guardian.

Tags: journalism, writing

The Phoenix Business Journal combs through the SEC filings of the U.S. financial institutions that have run into trouble and discovers, lo and behold, that the top executives of those firms are laughing all the way to the bank.

* Lehman Brothers Chairman and CEO Richard Fuld Jr. made $34 million in 2007. Lehman (OTC:LEHMQ) filed for Chapter 11 Bankruptcy protection earlier this month.
* Goldman Sachs (NYSE:GS), which Sunday gained Federal Reserve Bank approval to become a bank holding company, paid its Chairman and CEO Lloyd Blankfein $70 million last year. Co-Chief Operating Officers Gary Cohn and Jon Winkereid were paid $72.5 million and $71 million, respectively.
* American International Group’s chief executive Martin Sullivan got a $14 million compensation package in 2007. He was ousted in June. The insurance giant (NYSE:AIG) is on the receiving end of an $85 billion federal bailout. Edward Liddy took over as AIG’s chief executive earlier this month.
* Morgan Stanley Chairman John Mack earned $1.6 million. Chief Financial Officer Colin Kelleher got a $21 million paycheck in 2007. Morgan Stanley (NYSE:MS) also received approval to become a banking holding company, a shift that allows Morgan and Goldman to bring in bank deposit assets which offer more solid financial footing.
* Merrill Lynch CEO John Thain was paid $17 million in salary, bonuses and stock options in 2007. Merrill (NYSE:MER) is being acquired by Bank of America (NYSE:BAC). BofA CEO Kenneth Davis earned $25 million in 2007.
* JP Morgan Chase & Co. Chairman and CEO James Dimon earned $28 million in 2007. Chase (NYSE:JPM) acquired troubled investment house Bear Stearns earlier this year with the federal government promising to take on as much as $30 billion in Bear assets to help get the deal done.
* Fannie Mae CEO Daniel Mudd received $11.6 million in 2007. His counterpart at Freddie Mac, Richard Syron, brought in $18 million. The federal government announced earlier this month it was taking over the mortgage backers with Herbert Allison to serve as Fannie CEO and David Moffett the new CEO at Freddie.
* Wachovia Corp. Chairman and CEO G. Kennedy Thompson received $21 million in 2007. He was succeeded by Robert Steel as CEO in July. Steel is slated to get a $1 million salary with an opportunity for a $12 million bonus, according to CEO Watch. Wachovia (NYSE:WB) is one of the banks that could be sold in the midst of the financial crisis.
* Seattle-based Washington Mutual (NYSE:WAMU) will pay its new CEO Alan Fishman a salary and incentive package worth more than $20 million through 2009 for taking the helm of the battered bank, according to the Puget Sound Business Journal.
* CEOs of large U.S. corporations averaged $10.8 million in total compensation in 2006, more than 364 times the pay of the average U.S. worker, according to the latest survey by United for a Fair Economy. In 2007, the CEO of a Standard & Poor’s 500 company received, on average, $14.2 million in total compensation, according to The Corporate Library, a corporate governance research firm. The median compensation package received was $8.8 million.

Tags: economy, wall street, compensation

One wag in our newsroom notes that Merrill Lynch, of all firms, would certainly know about “debt out of balance”, but the firm's Canadian economist, David Wolf, is a pretty sharp cookie. His latest piece of research takes a look at level of household debt in Canada and compares it to household debt levels in the U.K. and the U.S., where rising household debt combined with rapidly falling housing prices to produce a financial crisis in those countries. His conclusion:

What worries us is that Canadian households have been running a larger financial deficit than households in either the US or the UK…. After forty years of net saving, Canadian households moved into sustained deficit in 2002. In 2007, household net borrowing amounted to 6.3% of disposable income, a wider deficit than in the UK, and not far off the peak US shortfall seen in 2005.

These data imply that the Canadian household sector is now overextending itself as much as the US or UK ever did, challenging the consensus view that Canadian lenders and borrowers have been far more conservative through the cycle. …

The clear 'tipping point' in the US was the emergence of falling house prices in the summer of 2006, kicking off the vicious circles that have brought the financial system and the wider economy to the brink. We're just now starting to see house prices fall in Canada, and sharp rises in unsold home inventories increasingly imply that this will not be a transitory phenomenon.

From this perspective, the absence of a Canadian credit crunch to date may be cause for concern, not comfort. How can it be good that mortgage debt is growing at a double digit pace against an asset class now seeing deflation?

Tags: economy, financial crisis, canada, merrill lynch, david wolf

For the second time in the campaign, Prime Minister Stephen Harper ventured to the back of his campaign plane for an informal chat with reporters.
He did it first on the very first day of the campaign, coming back for a chat before his jet took off for Quebec City.
He did it again today while his plane was on the tarmac in Iqaluit at the end of his second week.
Harper cracked a few jokes.
For example, one reporter complimented on his choice of sweaters while on campaign, including a dark-blue nordic-pattern sweater he wore today.
“Like Hillary and the pantsuits, eh?”
He wouldn't be drawn too far in on substantive issues. Asked, for example, about Republican vice-presidential candidate Sarah Palin, Harper demurred. “No opinions. I gotta work with whoever wins,” he said.
He was asked, though, how much this trip — a three-hour flight up from Ottawa and three-hour flight back — was about winning the riding of Nunavut and how much was optics for southern voters.
“It's both. It's a riding we think we have a shot at and it's something we've put a lot of time and effort into,” Harper said.
The riding of Nunavut had been held by Liberal Nancy Karetuk-Lindell but she is not running again. Conservatives say their candidate, Leona Aglukkaq, a former provincial health minister, is very strong.
Harper was in a good mood, partly because was back in the Arctic, an area of the country that he, like many prime ministers before him including Jean Chretien and Pierre Trudeau, is very fond of.
His favourite Arctic trip – and there have been at least six trips through 13 communities — was to Alert, Nunavut.
Saturday's trip to Iqaluit was special because he brought his 9-year-old daughter Rachel along (as well as his wife Laureen). Harper said Rachel enjoyed the experience but found it awfully cold.
It was -1 C today in Iqaluit with some light snow but, as is often the case here, there was a tremendous wind which made it much colder.
Rachel's older brother Ben stayed back in Ottawa. He is 13-years-old and, like many 13-year-old boys at this time of year, is busy on Saturdays at minor hockey tryouts.
Ben is not trying out for Triple-A hockey, by his own choice. Ben's complaint about Triple-A is the complaint of many families of Triple-A hockey players – too much driving.
“But I told him: Ben, the police drive you everywhere!”
The Harpers arrived in Ottawa with a minivan, Harper said, but have since sold it because the RCMP security detail that protects Harper prefers to do the driving. “They'll let me drive on the highway if I insist,” Harper said.

In the middle of Prime Minister Stephen Harper's press conference, two-and-a-half-year-old Elizabeth began to get fidgety.
She had been quiet and patient on the lap of her mother Marie-Ève Rivard for nearly half an hour while Harper announced some new tax breaks for families who are caring for relatives with a disability.
Elizabeth suffers from mitral valve stenosis. A valve in her heart doesn't work the way it is supposed to and that has affected her ability to swallow food. As a result, she requires to be fed by tube four times a day.
She and her family – mom Marie-Ève and dad Daniel Gagnon plus grandparents — were seated to Harper's right during the press conference.
And when Elizabeth became a bit noisy in the midst of it, a member of the prime minister's staff was quick to jump in and provide Elizabeth with one of his most cherished toys — his BlackBerry.
Dimitri Soudas, the prime minister's press secretary, was co-ordinating the media question-and-answer question from a microphone beside Elizabeth. Elizabeth had become fascinated by the shiny BlackBerry 8800, (left)a handheld device that lets users received and send e-mail and make phone calls. BlackBerrys are indispensable tools among political staff and journalists in Ottawa. Soudas, in fact, carries three BlackBerrys with him.
But he was happy to give one of them to Elizabeth who seemed fascinated as she turned it over in her hands and played with the keyboard on the front.
“I actually made sure to lock it so she wouldn't be able to call all my contacts by pressing all the buttons,” said Soudas.