Month: March 2009

In Richmond, B.C., senior citizens are getting $18,500 from the federal government to hold a few “intergenerational” movie nights.
In Denzil, Sask., a seniors club will receive $25,000 to form an exercise club.
And in Beauval, Sask. — where the most recent census found just 86 people who were over the age of 60 — the federal government has set aside $20,000 so those seniors can teach others native beadwork, dancing, and storytelling.
The projects are all funded with money from a federal government program called New Horizons for Seniors Programs. The initiative has a budget of $15 million this year to help pay up to $25,000 for 800 projects across the country.
“I can call it a waste of money without ambiguity,” said Kevin Gaudet, federal director of the Canadian Taxpayers Federation.
“If someone wants art lessons or multimedia lessons or native dancing or beadmaking lessons, they can pay for it themselves,” he said.
One of the seniors projects is in Wildwood, Alta., where Rob Merrifield, minister of state for transport, is the MP. He presented a cheque last week for $21,000 to a group that will bring together children and seniors in long-term care facilities to develop a scrapbook so that seniors could share their life experiences.
“Seniors have a lot of experience and wisdom and it’s actually translating that into future generations,” said Merrifield. “It’s a great program.”
The latest grant to be announced went to a group in the Central Ontario town of Haliburton — where MP Barry Devolin is also a Conservative — who are helping seniors paint, draw, take pictures and video and then talk about their work at a local art gallery. The group received $19,000 from Ottawa to do that.
“Is this the best use of taxpayers’ money?” Liberal Judy Sgro asked. “Sounds like buying votes, to me. I suspect there are much higher priorities for Canadians today.” [Read the rest of the story]

The Montreal Gazette gives Hubert Bauch the front of its “Extra” section today to look at the case of my friend Globe and Mail reporter Daniel Leblanc.

Leblanc is not a sponsorship villain. More like a sponsorship hero. He's the reporter who broke the story of the $100-million boondoggle that ultimately brought down the federal government of the day.

It was a series of articles by Leblanc in The Globe and Mail nine years ago that first brought to public light the looting of a fund to promote Canadian allegiance in Quebec by a select group of local ad agencies which, in collusion with a corrupt senior bureaucrat, bilked the government for tens of millions of dollars, some of which was kicked back to the Quebec section of the governing federal Liberal Party.

The budget for the program, mounted in frantic haste after the 1995 referendum scare when the separatists almost won, was $250 million; it was later established that $100 million of it was simply ripped off by the clubby set of sponsorship culprits who were hired to do the job of promoting the country.

Leblanc was hailed for his sterling journalistic coup by no less than Justice John Gomery who headed the commission of inquiry into the affair. It was Leblanc's reports, the commission report acknowledges, that “made the problems affecting the program a matter of public discussion.” Yet despite this signal public service, Leblanc is due to be dragged into court for a hearing that could land him in jail, as was the case with so-far convicted sponsorship felons Jean Lafleur, Jean Brault, Paul Coffin and Charles Guité. Criminal charges are also pending against adman Gilles-André Gosselin and Benôit Corbeil, a former director-general of the federal Liberal Party's Quebec wing.

But unlike the rest, who stood before the courts in shame, Leblanc will be standing on principle at his hearing scheduled for next month. He will be asked to name, or at least provide vital clues to the identity of the source who put him on the scandal's track, one he promised to keep confidential.

And he plans to keep that promise.

Last week, it was Jeff Rubin at CIBC Capital Markets who crunched the numbers and came up with a gloomy forecast:

“Second-quarter GDP in both the US and Canada is likely to show further substantial contractions in the economy, while the banking crisis in the US is likely to continue to have spillover effects on Canadian financial stock valuations. Both factors will likely push the TSX down to 7,000 before Washington’s massive fiscal stimulus and financial rescue package gain traction.”

The TSX Composite Index was hovering around 8,400 at mid-day.

Today, Merrill Lynch economist and chief Canadian strategist David Wolf looks at some recent numbers and, for the third time since Dec. 18, revises his forecast downward.

Wolf is more bearish than Rubin though they are both in the same ballpark. Wolf has the TSX Composite bottoming at 6,900 this year. That would be a drop of nearly 18 per cent from today's mid-day level.

With global and U.S. economies still shrinking, Canada — ever vulnerable to foreign economies because our dependence on trade — is going to see its economy shrink even more. In Wolf's view, real gross domestic product will shrink this year by 3 per cent — that's huge — and the current quarter we're in will be absolutely awful — a contraction of 9.1 per cent!! Wolf believes Canada's economy will grow by 2.2 per cent in 2010.

How do those predictions translate into your investments? Rubin is moving more money out of equity and into cash.

“We need to see signs of at least stabilization, if not recovery, in the economy, before adding more weight to stocks. At the same time bonds remain a very problematic sanctuary. Quantitative monetary easing and the massive deficits ahead, both suggest reflation will be a big part of any economic recovery.

Within our equity portfolio we are moving a percentage point of weighting from financials to gold. Bullion is likely to take another run well through $1,000 per ounce and the gold sector will continue to be perceived by investors as a safe haven against a troubled global financial sector. Our more pessimistic outlook on near-term growth prospects for the economy compels us to move a percentage point of weighting out of base metals and move it into the more defensive consumer staples sector. We continue to hold a large overweight in energy stocks, with our holdings skewed heavily to oil producers.”

The U.S. Department of Transportation reports today that: “U.S.–Canada surface transportation trade totaled US$537 billion in 2008, up 5.1 percent compared to 2007. The value of imports carried by truck was 6.0 percent lower in 2008 than 2007 while the value of exports carried by truck was 2.4 percent higher.” That would be $1.5 billion worth of goods that's going back and forth over the world's longest undefended border every day, most of which — 60 per cent — is being borne on the back of a truck. About 17 per cent of the value of that trade came and went by train and 16 per cent came and went by pipeline.

Speaking of which: The U.S. imported US$82 billion worth of goods — oil and natural gas mostly — via pipeline but exported just US$4.3 billion worth of pipeline material. The U.S. also received much more in Canadian imports by rail than exports but more goods flowed from the U.S. into Canada by truck — $179 billion — than flowed the other way – $141 billion.

The Michigan-Ontario border points were tops with $67-billion worth of goods going back and forth through 2008.

Auto analyst Dennis Desrosiers is out with his list of best-selling passenger vehicles in Canada for February, 2009. As always, small cars dominate the list. In fact, I think the top 10 is nothing but small cars. Is the Dodge Caliber (No. 8) a small car or a midsize? But perennial list-topper the Honda Civic has now dropped all the way to number 3. That's a bit of a shock.

Here's Desrosiers top five selling cars in Canada in February, with units each model sold during the month:

1. Mazda – Mazda3 – 2,932
2. Toyota – Corolla – 2,665
3. Honda – Civic – 2,605 (sales are down 57.6 per cent for Feb 09 compared to Feb 08. Only the Toyota Yaris – down 49% year-over-year is worse)
4. Hyundai – Accent – 2,178
5. Hyundai – Elantra – 1,860 (sales up, year-over-year, 95.8%!)

General Motors, incidentally, does not have a single model in the top 10 sellers in February. Chrylser had one — the Caliber — and Ford's Focus came in at number 10.

OK, how about light trucks? It's all D-3 with Ford claiming three top 10 sellers, Chyrsler claiming two, and GM claiming two top 10 sellers.

1. Ford F-Series – 4,581
2. Dodge Caravan – 2,803
3. Ford Escape – 2,162
4. Dodge Ram – 1,594
5. Hyundai Santa Fe – 1,503

And just so you can compare, Desrosiers has compiled a list of the best-selling passenger vehicles since 1990 in Canada. The Honda Civic tops that list. In fact, it's the only model that's sold more than 1 million units in Canada. Here's the top 10 best-sellers since 1990 and their units sold:

1. Honda Civic – 1,080,235
2. GM – Cavalier – 738,437
3. Toyota – Corolla – 719,414
4. GM – Sunbird/Sunfire – 596,915
5. Honda – Accord – 518,984
6. Toyota – Camry – 427,163
7. Ford – Taurus – 379,930
8. GM – Grand Am – 331,059
9. Volkswagen – Jetta – 308,928
10. Ford – Focus – 306,364

You'll notice that there is not a single Chrysler product in that top 10. The Neon was number 11 at 301,794. In fact, only one other Chrysler product, the Intrepid, made the top 30. GM had 7 in the top 30. Ford had six. Now, Chrysler might have more popular products in the selling pick-up/minivan category. The Dodge Ram and the Dodge Caravan have been very popular (if fading, now) models. Still, GM and Ford have also had strong truck and van products. Chrysler's failure to find a top-selling vehicle in the last 20 odd years may be part of the problem it's now facing …

And notice that the top 4 were all in the compact category. Canadians like their cars small. I have no idea what the top 30 in the U.S. are but everytime I've spoken to Dennis he's always said that mid-size or better makes for bigger sales down south. That has important implications for fuel efficiency regulations. Because of consumer preferences in Canada, our fleet is more fuel-efficient. Smaller cars use less gas. So if Canada decides to harmonize with U.S. fuel efficiency standards, we're not really doing much because we already are more fuel efficient. (Federal governments arrive at a fuel efficiency number by basically averaging out all the vehicles sold in a given year in a market. So, lowering a given jurisdiction's fuel efficiency is an easy matter because all you have to do is ban the gas-guzzlers.) If Canada wants to do more, then, to reduce GGE's from cars, it needs to go beyond the U.S. standards.