April 2010
- Thread starter Ally
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- Mar 24, 2009
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Where growth is and where it isn`t
As the Canadian economy recovers, showing fresh signs of life in January, the battle begins: Who did it? We can safely discount "stimulus" spending by all our governments, even though politicians will be the first to try to take credit. A better bet is monetary policy. When central banks practically give money away, it`s bound to stir up some kind of activity, even if it`s just the mad scramble of consumers to cash in on record-low interest rates and rock-bottom prices on big ticket items such as cars and housing. It works in the short term. The long-term trick in central banking is to keep the filling up the gas tank without blowing up the engine.
One place not to look for primary causes of recovery is in the currently paralyzed global plan for a new regulatory regime for financial institutions. The latest news reports suggest the G20 nations -- set to meet in Canada in June to finalize new rules for financial institutions across the globe--is bogged down in indecision. That indecision, which threatens to drag on for months if not longer, is already putting a damper on Canadian banks. Under instructions from regulators, banks are barred from increasing dividends, making acquisitions and buying back shares. In the United States, a new financial bill is making its way through Congress. So long as the U.S. government holds its financial institutions at bay and the G20 dragon stands athwart the world financial system, no economic recovery is going to go very far.
Another dubious location of economic recovery is within the moralizing self-agrandizement of the good corporate governance movement. This includes the likes of Eliot Spitzer, the former New York governor who wants to bring a fundamental shift in the financial markets by unleashing "shareholder democracy." A milder form of the shareholder democracy movement is The Canadian Coalition for Good Governance. In a recently issued document, the CCGG declared its support for increasing shareholder "say on pay," increasing the role of independent directors, separation of the CEO and chairman positions, increasing shareholder votes and making sure that corporate boards are "diverse."
Not one of these objectives has any proven impact on corporate performance. Indeed, lack of corporate knowledge on the part of outside directors has turned up as a key factor in many corporate failures and financial meltdowns. Since outside directors are likely to be clueless about a corporation, the CCGG finds it necessary to provide guidelines on the "best practices" for such directors. Board members should exude "integrity" at all times, but in case that doesn`t work, they should also be "curious" and "be willing to ask questions." And in ethical matters, there`s more advice:
Read the full article here.
As the Canadian economy recovers, showing fresh signs of life in January, the battle begins: Who did it? We can safely discount "stimulus" spending by all our governments, even though politicians will be the first to try to take credit. A better bet is monetary policy. When central banks practically give money away, it`s bound to stir up some kind of activity, even if it`s just the mad scramble of consumers to cash in on record-low interest rates and rock-bottom prices on big ticket items such as cars and housing. It works in the short term. The long-term trick in central banking is to keep the filling up the gas tank without blowing up the engine.
One place not to look for primary causes of recovery is in the currently paralyzed global plan for a new regulatory regime for financial institutions. The latest news reports suggest the G20 nations -- set to meet in Canada in June to finalize new rules for financial institutions across the globe--is bogged down in indecision. That indecision, which threatens to drag on for months if not longer, is already putting a damper on Canadian banks. Under instructions from regulators, banks are barred from increasing dividends, making acquisitions and buying back shares. In the United States, a new financial bill is making its way through Congress. So long as the U.S. government holds its financial institutions at bay and the G20 dragon stands athwart the world financial system, no economic recovery is going to go very far.
Another dubious location of economic recovery is within the moralizing self-agrandizement of the good corporate governance movement. This includes the likes of Eliot Spitzer, the former New York governor who wants to bring a fundamental shift in the financial markets by unleashing "shareholder democracy." A milder form of the shareholder democracy movement is The Canadian Coalition for Good Governance. In a recently issued document, the CCGG declared its support for increasing shareholder "say on pay," increasing the role of independent directors, separation of the CEO and chairman positions, increasing shareholder votes and making sure that corporate boards are "diverse."
Not one of these objectives has any proven impact on corporate performance. Indeed, lack of corporate knowledge on the part of outside directors has turned up as a key factor in many corporate failures and financial meltdowns. Since outside directors are likely to be clueless about a corporation, the CCGG finds it necessary to provide guidelines on the "best practices" for such directors. Board members should exude "integrity" at all times, but in case that doesn`t work, they should also be "curious" and "be willing to ask questions." And in ethical matters, there`s more advice:
Read the full article here.
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GDP beats expectations
Economic data for January -- showing the strongest one-month GDP gain in more than three years -- suggest the recovery`s profile is changing as Canadian manufacturing mounts a healthy comeback from the deep declines suffered through the recession.
Growth in January of 0.6% on a month-over-month basis was driven in large part by the goods-producing sector, as opposed to consumer spending and housing. Manufacturing produced a 1.9% gain in January, marking the fifth straight month of advances for the battered sector.
These trends need to continue, analysts say, to keep momentum going once government stimulus measures and record-low interest rates abate.
"There`s only so far that consumer spending and housing can take the recovery," said Douglas Porter, deputy chief economist at BMO Capital Markets. "The big issue through the rest of this year is whether we can see a bit more of a handoff from the domestic side of the economy to manufacturing and exports. That will be the linchpin of the recovery."
Early indications are the manufacturing comeback has momentum, with carmakers General Motors and Honda releasing plans to add shifts and increase output at Ontario factories.
The January GDP figure, released by Statistics Canada, surpassed market expectations of a 0.5% month-over-month gain, and helped set some new benchmarks. For instance, it was the best one-month gain in GDP in more than three years; the best six-month performance, 5% annualized, since 2000, or at the height of the dot-com boom; and growth at a robust 6.9% annualized pace for the three-month period ended Jan. 31, which compares favourably with the 5.1% expansion recorded in the third quarter of 2000 but below the record 14%gain reached in the fourth quarter of 1963.
Read the full article here.
Economic data for January -- showing the strongest one-month GDP gain in more than three years -- suggest the recovery`s profile is changing as Canadian manufacturing mounts a healthy comeback from the deep declines suffered through the recession.
Growth in January of 0.6% on a month-over-month basis was driven in large part by the goods-producing sector, as opposed to consumer spending and housing. Manufacturing produced a 1.9% gain in January, marking the fifth straight month of advances for the battered sector.
These trends need to continue, analysts say, to keep momentum going once government stimulus measures and record-low interest rates abate.
"There`s only so far that consumer spending and housing can take the recovery," said Douglas Porter, deputy chief economist at BMO Capital Markets. "The big issue through the rest of this year is whether we can see a bit more of a handoff from the domestic side of the economy to manufacturing and exports. That will be the linchpin of the recovery."
Early indications are the manufacturing comeback has momentum, with carmakers General Motors and Honda releasing plans to add shifts and increase output at Ontario factories.
The January GDP figure, released by Statistics Canada, surpassed market expectations of a 0.5% month-over-month gain, and helped set some new benchmarks. For instance, it was the best one-month gain in GDP in more than three years; the best six-month performance, 5% annualized, since 2000, or at the height of the dot-com boom; and growth at a robust 6.9% annualized pace for the three-month period ended Jan. 31, which compares favourably with the 5.1% expansion recorded in the third quarter of 2000 but below the record 14%gain reached in the fourth quarter of 1963.
Read the full article here.
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Hot Housing market may be losing steam
OTTAWA -- The once red-hot housing market - which several observers warned last month was in danger of turning into a bubble - is showing signs of losing steam as new listings climb and affordability begins to tighten, data released Monday indicate.
Concern that real-estate prices were entering dangerous territory - spurred by record-low interest rates - prompted the federal government to introduce new rules last month governing mortgage eligibility, intended to target "reckless" speculators. The rules are set to kick in April 19, but it appeared a cooldown in real-estate activity has already begun, data from the Canadian Real Estate Association suggested.
Sales of existing homes declined for a second straight month, with a 1.5% month-over-month drop in February on a seasonally adjusted basis. This followed a 3.8% decrease recorded in January. A heavy drop in British Columbia, which coincided with the Winter Olympics in Vancouver and Whistler, was partly offset by a robust activity in Toronto.
Meanwhile, the number of new listings - an indication that homeowners are looking to capitalize on demand - climbed 2.4%, marking the fifth straight month that housing supply grew. The amount of housing inventory in February stood at 5.2 months, well below where it was a year ago, at 8.8 months, but on par with 2008 levels.
"Headline price increases are drawing new supply to the market and so that`s taking some steam out of the market," said Gregory Klump, CREA`s chief economist.
The average price of all homes sold in February through the MLS system was $335,655, CREA said, up a robust 18.2% from a year ago.
Read the full article here.
OTTAWA -- The once red-hot housing market - which several observers warned last month was in danger of turning into a bubble - is showing signs of losing steam as new listings climb and affordability begins to tighten, data released Monday indicate.
Concern that real-estate prices were entering dangerous territory - spurred by record-low interest rates - prompted the federal government to introduce new rules last month governing mortgage eligibility, intended to target "reckless" speculators. The rules are set to kick in April 19, but it appeared a cooldown in real-estate activity has already begun, data from the Canadian Real Estate Association suggested.
Sales of existing homes declined for a second straight month, with a 1.5% month-over-month drop in February on a seasonally adjusted basis. This followed a 3.8% decrease recorded in January. A heavy drop in British Columbia, which coincided with the Winter Olympics in Vancouver and Whistler, was partly offset by a robust activity in Toronto.
Meanwhile, the number of new listings - an indication that homeowners are looking to capitalize on demand - climbed 2.4%, marking the fifth straight month that housing supply grew. The amount of housing inventory in February stood at 5.2 months, well below where it was a year ago, at 8.8 months, but on par with 2008 levels.
"Headline price increases are drawing new supply to the market and so that`s taking some steam out of the market," said Gregory Klump, CREA`s chief economist.
The average price of all homes sold in February through the MLS system was $335,655, CREA said, up a robust 18.2% from a year ago.
Read the full article here.
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Mortgage rate boost signals rock-bottom era is over
Canadian banks delivered the first clear sign that the era of rock-bottom interest rates is over by suddenly hiking mortgage rates
, a move that will cost Canadians more to finance home purchases and likely hasten an expected slowdown of the red-hot housing sector.
Surging home sales and prices were already expected to cool in the second half of this year as more listings hit the market and the Harmonized Sales Tax adds to purchase costs in Ontario and British Columbia.
Hikes on fixed-rate mortgages announced by three banks Monday are expected to contribute to the slowdown as home buyers face higher costs amid a growing expectation that interest rates are likely entering a phase of higher levels.
The hikes are also expected to push some homeowners who have enjoyed ultra-low variable mortgage rates to lock in at set levels. Readings on inflation and the resurgent economy point to rate hikes within a few months by the Bank of Canada
, whose trendsetting rate influences variable mortgage rates.
Royal Bank of Canada boosted the rate on five-year fixed-rate mortgages by 60 basis points to 5.85 per cent Monday, a move matched by Toronto-Dominion Bank. Rates on three- and four-year fixed-rate mortgages also rose by between 20 and 40 basis points (a basis point is one-hundredth of a percentage point). Laurentian Bank announced similar changes. Other major banks are likely to follow with rate hikes of their own.
Read the full article here.
Canadian banks delivered the first clear sign that the era of rock-bottom interest rates is over by suddenly hiking mortgage rates
, a move that will cost Canadians more to finance home purchases and likely hasten an expected slowdown of the red-hot housing sector. Surging home sales and prices were already expected to cool in the second half of this year as more listings hit the market and the Harmonized Sales Tax adds to purchase costs in Ontario and British Columbia.
Hikes on fixed-rate mortgages announced by three banks Monday are expected to contribute to the slowdown as home buyers face higher costs amid a growing expectation that interest rates are likely entering a phase of higher levels.
The hikes are also expected to push some homeowners who have enjoyed ultra-low variable mortgage rates to lock in at set levels. Readings on inflation and the resurgent economy point to rate hikes within a few months by the Bank of Canada
, whose trendsetting rate influences variable mortgage rates. Royal Bank of Canada boosted the rate on five-year fixed-rate mortgages by 60 basis points to 5.85 per cent Monday, a move matched by Toronto-Dominion Bank. Rates on three- and four-year fixed-rate mortgages also rose by between 20 and 40 basis points (a basis point is one-hundredth of a percentage point). Laurentian Bank announced similar changes. Other major banks are likely to follow with rate hikes of their own.
Read the full article here.
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Businesses warned to brace for spending slowdown
Businesses should brace themselves for a likely slowdown in Canadian spending in 2010 as consumer fundamentals are at their weakest point in 15 years and do not match up with recent rebounds in sentiment, a new CIBC World Markets report says.
Benjamin Tal, economist with CIBC, has developed a new consumer capability index based on seven economic factors to measure the ability of Canadians to spend.
This differs from the traditional consumer confidence survey, which asks Canadians if they feel they can maintain their spending.
"The recent surge in spending is not backed up by rising consumer fundamentals," Mr. Tal said in the report. "The `V-shaped` recovery in consumer confidence we have seen throughout the second half of 2009, has actually coincided with a drop in the ability of households to spend."
He warns that if, as expected, the Bank of Canada raises interest rates in the summer, it will have an unexpected side effect on spending as Canadians have been spending through increased debt, not rising income.
"To a certain extent debt is replacing income as a major driver of consumer purchases," he said. "Given the vulnerable starting point of the consumer, the Bank of Canada will soon find that even a moderate monetary squeeze will be sufficient to drive a material deceleration in consumer spending."
In particular, Mr. Tal found that mortgage debt accounts for about 70% of the total increase in household debt in the past year due to the skyrocketing Canadian real estate market.
Read the full article here.
Businesses should brace themselves for a likely slowdown in Canadian spending in 2010 as consumer fundamentals are at their weakest point in 15 years and do not match up with recent rebounds in sentiment, a new CIBC World Markets report says.
Benjamin Tal, economist with CIBC, has developed a new consumer capability index based on seven economic factors to measure the ability of Canadians to spend.
This differs from the traditional consumer confidence survey, which asks Canadians if they feel they can maintain their spending.
"The recent surge in spending is not backed up by rising consumer fundamentals," Mr. Tal said in the report. "The `V-shaped` recovery in consumer confidence we have seen throughout the second half of 2009, has actually coincided with a drop in the ability of households to spend."
He warns that if, as expected, the Bank of Canada raises interest rates in the summer, it will have an unexpected side effect on spending as Canadians have been spending through increased debt, not rising income.
"To a certain extent debt is replacing income as a major driver of consumer purchases," he said. "Given the vulnerable starting point of the consumer, the Bank of Canada will soon find that even a moderate monetary squeeze will be sufficient to drive a material deceleration in consumer spending."
In particular, Mr. Tal found that mortgage debt accounts for about 70% of the total increase in household debt in the past year due to the skyrocketing Canadian real estate market.
Read the full article here.
- Joined
- Mar 24, 2009
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Why Investors` money is growing on trees
There are lots of reasons why investors might regard forest products stocks as radioactive.
The whole sector seems cursed by lousy economics, sluggish growth prospects, ongoing trade battles, operating glitches and plain old bad luck.
The outlook for the U.S. housing market -- the biggest driver of lumber prices -- remains bleak, and it`s likely to stay that way for the rest of the year at least.
Since millions of Americans can`t find jobs or afford to buy homes, housing starts are abysmal, and demand for lumber and OSB (oriented strand board) remains soft.
On the pulp, paper and newsprint side, North American producers have long faced brutal competition from low-cost suppliers in South America and Asia, plus shrinking demand as the world goes digital.
Read the full article here.
There are lots of reasons why investors might regard forest products stocks as radioactive.
The whole sector seems cursed by lousy economics, sluggish growth prospects, ongoing trade battles, operating glitches and plain old bad luck.
The outlook for the U.S. housing market -- the biggest driver of lumber prices -- remains bleak, and it`s likely to stay that way for the rest of the year at least.
Since millions of Americans can`t find jobs or afford to buy homes, housing starts are abysmal, and demand for lumber and OSB (oriented strand board) remains soft.
On the pulp, paper and newsprint side, North American producers have long faced brutal competition from low-cost suppliers in South America and Asia, plus shrinking demand as the world goes digital.
Read the full article here.
- Joined
- Mar 24, 2009
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Mortgage-rate rise means borrowers` party is almost over
Without announcing last call, Canadian banks have taken the punch bowl away from the mortgage party that millions have enjoyed, and hangovers are looming.
Last summer, the Bank of Canada and Federal Reserve in the United States said their overnight lending interest rates would remain near zero until at least the middle of this year. The reaction by Canadians was to buy houses with rates at historic lows, and party on.
But as economies in North America began rebounding, central banks hinted rate increases could occur fairly soon, especially in Canada.
Bond rates rose in anticipation and that was the catalyst for banks to lift five-year mortgage interest rates, generally by 0.6 per cent -- the greatest single-day hike since 1994 -- to 5.85 per cent. That`s an increase of $88 in monthly payments on a $250,000 mortgage for 25 years.
And they`ve only just begun. The C.D. Howe Institute think-tank suggests the Bank of Canada should raise its overnight rate by 1.75 per cent in the next year, likely lifting five-year mortgage rates to 7.0 per cent, while other economists envision a five-year rate as high as 8.25 per cent in two years.
Read the full article here.
Without announcing last call, Canadian banks have taken the punch bowl away from the mortgage party that millions have enjoyed, and hangovers are looming.
Last summer, the Bank of Canada and Federal Reserve in the United States said their overnight lending interest rates would remain near zero until at least the middle of this year. The reaction by Canadians was to buy houses with rates at historic lows, and party on.
But as economies in North America began rebounding, central banks hinted rate increases could occur fairly soon, especially in Canada.
Bond rates rose in anticipation and that was the catalyst for banks to lift five-year mortgage interest rates, generally by 0.6 per cent -- the greatest single-day hike since 1994 -- to 5.85 per cent. That`s an increase of $88 in monthly payments on a $250,000 mortgage for 25 years.
And they`ve only just begun. The C.D. Howe Institute think-tank suggests the Bank of Canada should raise its overnight rate by 1.75 per cent in the next year, likely lifting five-year mortgage rates to 7.0 per cent, while other economists envision a five-year rate as high as 8.25 per cent in two years.
Read the full article here.
- Joined
- Mar 24, 2009
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Housing hot in China
Fan Wenbao swears he is not in the business of speculating on property. Already the owner of one home in Xinyang, a grimy city in the poor central province of Henan, China, he bought two more there last year.
"It`s an investment not to make money but to save money. Interest rates in the bank are too low," said Fan, a real estate agent. "If I buy now, the property will steadily increase in value. And at least there`s no way it can fall."
This might sound like the talk of a speculator, but Fan`s is a relatively long-term view when it comes to the Chinese housing market, one that has helped send property prices sharply higher and drawn the attention of policy-makers in Beijing.
Fan is not engaged in the kind of rapid buying and selling that has driven property prices up by 50 per cent in just a few weeks on the tropical island of Hainan, home to the country`s hottest real estate.
In Xinyang, property prices rose a mere 10 per cent last year. But that is enough to worry the central bank. Property beckons to homeowners and speculators as the one asset in China that is performing well, and authorities are intensifying efforts to prevent a housing bubble from forming.
Even the modest price appreciation seen in Xinyang outstrips the benchmark deposit rate of 2.25 per cent.
With inflation expected to reach five per cent this year, people like Fan are realizing that their savings are at risk sitting in bank accounts.
Investment alternatives are few in China. The stock market has been sluggish for nearly half a year and foreign investments are all but closed to ordinary people.
Read the full article here.
Fan Wenbao swears he is not in the business of speculating on property. Already the owner of one home in Xinyang, a grimy city in the poor central province of Henan, China, he bought two more there last year.
"It`s an investment not to make money but to save money. Interest rates in the bank are too low," said Fan, a real estate agent. "If I buy now, the property will steadily increase in value. And at least there`s no way it can fall."
This might sound like the talk of a speculator, but Fan`s is a relatively long-term view when it comes to the Chinese housing market, one that has helped send property prices sharply higher and drawn the attention of policy-makers in Beijing.
Fan is not engaged in the kind of rapid buying and selling that has driven property prices up by 50 per cent in just a few weeks on the tropical island of Hainan, home to the country`s hottest real estate.
In Xinyang, property prices rose a mere 10 per cent last year. But that is enough to worry the central bank. Property beckons to homeowners and speculators as the one asset in China that is performing well, and authorities are intensifying efforts to prevent a housing bubble from forming.
Even the modest price appreciation seen in Xinyang outstrips the benchmark deposit rate of 2.25 per cent.
With inflation expected to reach five per cent this year, people like Fan are realizing that their savings are at risk sitting in bank accounts.
Investment alternatives are few in China. The stock market has been sluggish for nearly half a year and foreign investments are all but closed to ordinary people.
Read the full article here.
- Joined
- Mar 24, 2009
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Manufacturers ask Flaherty to extend investment tax break until 2016
Canada`s manufacturers have asked Jim Flaherty, the Minister of Finance, to extend a tax break that allows companies to quickly write off investment by another five years. The measure is set to expire at the end of 2011. The tax measure "accelerates capital investment in both production facilities and equipment -[and] for that reason, it is an important and positive tax measure that will help close Canada`s productivity gap with other countries, a policy objective that we know is a priority for you and for the government," wrote Jayson Myers, head of the Canadian Manufacturers and Exporters, in a letter to Mr. Flaherty.
Read the full article here.
Canada`s manufacturers have asked Jim Flaherty, the Minister of Finance, to extend a tax break that allows companies to quickly write off investment by another five years. The measure is set to expire at the end of 2011. The tax measure "accelerates capital investment in both production facilities and equipment -[and] for that reason, it is an important and positive tax measure that will help close Canada`s productivity gap with other countries, a policy objective that we know is a priority for you and for the government," wrote Jayson Myers, head of the Canadian Manufacturers and Exporters, in a letter to Mr. Flaherty.
Read the full article here.
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Bargain Hunting: when six and five are smaller than two
Think you hear a hot deal? Your ears and brain may be deceiving you, new research shows.
Certain consonants and vowel sounds convey a sense of "smallness" while others suggest "bigness" to our brains, and a new study shows this gives consumers a misleading sense of the bargain when they comparison-shop for items with prices containing those sounds.
"The sounds themselves convey largeness or smallness," says Keith Coulter, an associate professor of marketing at Clark University in Massachusetts.
"When you`re dealing with a comparison of a sale price to a regular price, we found that if the sound itself conveys smallness, then that smallness essentially transfers to the sale price and the sale price is perceived as small in comparison to the regular price, which increases the size of the perceived discount."
"Front vowels" sound light and airy like the letter "i" in the word "six," and they convey a sense of smallness, he says.
"Backvowels," on the other hand, convey a sense of bigness and sound more guttural, like the letter "o" in the word "two."
Read the full article here.
Think you hear a hot deal? Your ears and brain may be deceiving you, new research shows.
Certain consonants and vowel sounds convey a sense of "smallness" while others suggest "bigness" to our brains, and a new study shows this gives consumers a misleading sense of the bargain when they comparison-shop for items with prices containing those sounds.
"The sounds themselves convey largeness or smallness," says Keith Coulter, an associate professor of marketing at Clark University in Massachusetts.
"When you`re dealing with a comparison of a sale price to a regular price, we found that if the sound itself conveys smallness, then that smallness essentially transfers to the sale price and the sale price is perceived as small in comparison to the regular price, which increases the size of the perceived discount."
"Front vowels" sound light and airy like the letter "i" in the word "six," and they convey a sense of smallness, he says.
"Backvowels," on the other hand, convey a sense of bigness and sound more guttural, like the letter "o" in the word "two."
Read the full article here.
- Joined
- Mar 24, 2009
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The next big scam: Carbon Dioxide
Deloitte Forensic calls it "the white collar crime of the future." Kroll, a business risk subsidiary of Marsh & McLennan, the global professional services firm, calls it "a fraudster`s dream come true."
These two global financial services firms are referring to carbon trading markets, a business that is estimated to explode from $132-billion in 2009, mostly in the European Union, to $3-trillion by 2020 as jurisdictions around the world join in carbon trading, part of the "cap and trade" system that governments are embracing.
Under cap and trade, companies need permits for the right to emit CO2 as part of their operations. The permits, in effect, guarantee that excess carbon emissions will be "offset" by third parties that will, for example, sequester carbon by growing trees. These permits, which are being traded on carbon exchanges, akin to stock exchanges, have caught the attention of law enforcement officers, who have seen an upsurge in fraud.
Says Chris Perryman of Europol`s Criminal Finances and Technology section in The Hague, in referring to the $7.4-billion in fraud that have occurred in the last 18 months in the EU`s carbon market: "It is clear that [carbon trading] fraudsters are fully aware of the potential that trading in intangible commodities has to further their ends. Such goods or services can be traded without the need to be physically moved or transported, which represents an obvious opportunity to frustrate Law Enforcement efforts to track and trace transactions." So much fraud has been occurring that, Europol estimates, up to 90% of all carbon market volume in some EU nations was related to fraudulent activities.
Read the full article here.
Deloitte Forensic calls it "the white collar crime of the future." Kroll, a business risk subsidiary of Marsh & McLennan, the global professional services firm, calls it "a fraudster`s dream come true."
These two global financial services firms are referring to carbon trading markets, a business that is estimated to explode from $132-billion in 2009, mostly in the European Union, to $3-trillion by 2020 as jurisdictions around the world join in carbon trading, part of the "cap and trade" system that governments are embracing.
Under cap and trade, companies need permits for the right to emit CO2 as part of their operations. The permits, in effect, guarantee that excess carbon emissions will be "offset" by third parties that will, for example, sequester carbon by growing trees. These permits, which are being traded on carbon exchanges, akin to stock exchanges, have caught the attention of law enforcement officers, who have seen an upsurge in fraud.
Says Chris Perryman of Europol`s Criminal Finances and Technology section in The Hague, in referring to the $7.4-billion in fraud that have occurred in the last 18 months in the EU`s carbon market: "It is clear that [carbon trading] fraudsters are fully aware of the potential that trading in intangible commodities has to further their ends. Such goods or services can be traded without the need to be physically moved or transported, which represents an obvious opportunity to frustrate Law Enforcement efforts to track and trace transactions." So much fraud has been occurring that, Europol estimates, up to 90% of all carbon market volume in some EU nations was related to fraudulent activities.
Read the full article here.
- Joined
- Mar 24, 2009
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Mortgage rates creep up as RBC, TD get the ball rolling
For Canadians now accustomed to rock-bottom mortgage rates, a harsh reality looms.
Rates are officially on the upswing, an indication the country`s housing market is finally poised to cool off, and the beginning of the end to historically low rates.
It`s a move being closely monitored by those with variable-rate mortgages trying to cling to minimal monthly payments for as long as possible.
Is now the time to lock in to a fixed rate?
"That`s the million-dollar question," mortgage broker Paula Roberts said Monday. "We`ve had a great ride for the longest time, and we know the ride`s almost over."
Variable-rate mortgages have recently dipped as low as 1.5 per cent, Roberts said.
Read the full article here.
For Canadians now accustomed to rock-bottom mortgage rates, a harsh reality looms.
Rates are officially on the upswing, an indication the country`s housing market is finally poised to cool off, and the beginning of the end to historically low rates.
It`s a move being closely monitored by those with variable-rate mortgages trying to cling to minimal monthly payments for as long as possible.
Is now the time to lock in to a fixed rate?
"That`s the million-dollar question," mortgage broker Paula Roberts said Monday. "We`ve had a great ride for the longest time, and we know the ride`s almost over."
Variable-rate mortgages have recently dipped as low as 1.5 per cent, Roberts said.
Read the full article here.
- Joined
- Mar 24, 2009
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Carney says investors signal stimulus `limits` as deficits grow
Bank of Canada Governor Mark Carney said investors are beginning to warn governments that there are "limits to stimulus" and adding pressure that may force policy makers to keep budget deficits in check.
"What we`re seeing on the sovereign side is the first signs of the limits to stimulus," Carney, 44, said in a Bloomberg Television interview yesterday. "Market signals are not necessarily unhelpful in this regard because they will help ensure sustainable fiscal balance over time."
Carney spoke as European leaders tried to persuade investors that Greece, with the European Union`s largest budget deficit, won`t default. The interview comes a week after Group of Seven finance chiefs concluded talks in Carney`s native Canada, pledging to keep stimulating their economies this year and cut budget gaps later.
Failure to restore fiscal sustainability risks creating an "unattractive" outlook in which "growth is higher in the short term, but lower in the longer term," Carney said after attending a Reserve Bank of India conference in Mumbai.
"Different countries have different fiscal capacities," he said. "Some of them are approaching those capacities, market signals are being given, governments are having to adjust."
Read the full article here.
Bank of Canada Governor Mark Carney said investors are beginning to warn governments that there are "limits to stimulus" and adding pressure that may force policy makers to keep budget deficits in check.
"What we`re seeing on the sovereign side is the first signs of the limits to stimulus," Carney, 44, said in a Bloomberg Television interview yesterday. "Market signals are not necessarily unhelpful in this regard because they will help ensure sustainable fiscal balance over time."
Carney spoke as European leaders tried to persuade investors that Greece, with the European Union`s largest budget deficit, won`t default. The interview comes a week after Group of Seven finance chiefs concluded talks in Carney`s native Canada, pledging to keep stimulating their economies this year and cut budget gaps later.
Failure to restore fiscal sustainability risks creating an "unattractive" outlook in which "growth is higher in the short term, but lower in the longer term," Carney said after attending a Reserve Bank of India conference in Mumbai.
"Different countries have different fiscal capacities," he said. "Some of them are approaching those capacities, market signals are being given, governments are having to adjust."
Read the full article here.
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Real estate group will ask members to widen access to MLS
The Canadian Real Estate Association will ask its members to bow to the demands of the Competition Bureau of Canada and allow easier and possibly cheaper access to its Multiple Listing Service (MLS).
Association president Dale Ripplinger said Wednesday its 98,000 members will be asked to allow agents to list a home on MLS without forcing customers to accept a bundle of other real estate-related services, such as the agent presenting all offers.
Ripplinger said he has had intense discussions with the bureau to address its claims that the real estate industry has become anti-competitive. The changes to MLS are among "the rule clarifications that the commissioner had identified, and we agreed with the commissioner that we would take steps to clarify that rule," he said.
Earlier this week, the Competition Bureau said CREA`s control of access to MLS "limits consumer choice" and prevents real estate agents from being more "innovative" in their services.
After a lengthy investigation, the bureau announced it would proceed with its case and haul CREA before the federal Competition Tribunal to force an end to the practices.
Read the full article here.
The Canadian Real Estate Association will ask its members to bow to the demands of the Competition Bureau of Canada and allow easier and possibly cheaper access to its Multiple Listing Service (MLS).
Association president Dale Ripplinger said Wednesday its 98,000 members will be asked to allow agents to list a home on MLS without forcing customers to accept a bundle of other real estate-related services, such as the agent presenting all offers.
Ripplinger said he has had intense discussions with the bureau to address its claims that the real estate industry has become anti-competitive. The changes to MLS are among "the rule clarifications that the commissioner had identified, and we agreed with the commissioner that we would take steps to clarify that rule," he said.
Earlier this week, the Competition Bureau said CREA`s control of access to MLS "limits consumer choice" and prevents real estate agents from being more "innovative" in their services.
After a lengthy investigation, the bureau announced it would proceed with its case and haul CREA before the federal Competition Tribunal to force an end to the practices.
Read the full article here.
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- Mar 24, 2009
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- 16,743
Housing resales to hit annual record in 2010, realtors say
Housing resales and prices will rise to annual records in 2010, surging to 527,300 units, the Canadian Real Estate Association said Monday.
The gain would represent a 13.3-per-cent advance from 2009, and surpass by 1.2 per cent the previous peak in housing resales in 2007, the realtors group said.
B.C. and Ontario are expected to lead, boosted by low interest rates and buyers motivated to avoid the harmonized sales tax that will come into effect in those two provinces in July.
First-half activity is expected to remain strong, although the group expects national activity to trend lower as the last of pent-up demand is exhausted, borrowing costs rise and new tax regimes come into effect.
That slower pace will extend into 2011, as rising rates will continue to dampen activity. CREA now forecasts the level of sales in 2011 will drop 7.1 per cent to 490,100 units.
Read the full article here.
Housing resales and prices will rise to annual records in 2010, surging to 527,300 units, the Canadian Real Estate Association said Monday.
The gain would represent a 13.3-per-cent advance from 2009, and surpass by 1.2 per cent the previous peak in housing resales in 2007, the realtors group said.
B.C. and Ontario are expected to lead, boosted by low interest rates and buyers motivated to avoid the harmonized sales tax that will come into effect in those two provinces in July.
First-half activity is expected to remain strong, although the group expects national activity to trend lower as the last of pent-up demand is exhausted, borrowing costs rise and new tax regimes come into effect.
That slower pace will extend into 2011, as rising rates will continue to dampen activity. CREA now forecasts the level of sales in 2011 will drop 7.1 per cent to 490,100 units.
Read the full article here.
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- Mar 24, 2009
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It`s not the mortgages, it`s the borrowers
our of every 10 first-time home buyers who arrange financing with mortgage broker Mike Loleski are putting down as little as possible and taking the maximum time to pay what they owe.
That`s life in the housing market of early 2010. Houses cost a mint and many people can`t afford them unless they`re allowed to put just 5 per cent down and stretch payments over 35 years.
At Mr. Loleski`s company, Homefund Corp. in Toronto, nearly 42 per cent of first-time buyers have a down payment of 5 to 7 per cent. Another 12 per cent put just 10 per cent down. Most of the people in these groups go with a 35-year amortization.
"People want to own property, and from the affordability standpoint they have to go this route," Mr. Loleski said.
Cue the anxiety about a real estate bubble. The ultimate nightmare is that when interest rates rise, maxed-out home buyers will default on their mortgages and other debts. Next step: The housing market plunges, taking the economy down with it.
Read the full article here.
our of every 10 first-time home buyers who arrange financing with mortgage broker Mike Loleski are putting down as little as possible and taking the maximum time to pay what they owe.
That`s life in the housing market of early 2010. Houses cost a mint and many people can`t afford them unless they`re allowed to put just 5 per cent down and stretch payments over 35 years.
At Mr. Loleski`s company, Homefund Corp. in Toronto, nearly 42 per cent of first-time buyers have a down payment of 5 to 7 per cent. Another 12 per cent put just 10 per cent down. Most of the people in these groups go with a 35-year amortization.
"People want to own property, and from the affordability standpoint they have to go this route," Mr. Loleski said.
Cue the anxiety about a real estate bubble. The ultimate nightmare is that when interest rates rise, maxed-out home buyers will default on their mortgages and other debts. Next step: The housing market plunges, taking the economy down with it.
Read the full article here.
- Joined
- Mar 24, 2009
- Messages
- 16,743
No U.S.-Style market seen in MLS push
The Competition Bureau`s move to force the real estate
industry to loosen its rules governing the multiple listing service will not bring to Canada the huge range of house-hunting tools available in the United States.
That`s because the bureau`s actions - if successful - are designed specifically to let sellers cheaply list their properties on MLS and avoid full-service commissions, not to broaden the availability of MLS data.
The bureau`s challenge, to be heard by the quasi-judicial competition tribunal, addresses the Canadian Real Estate Association`s (CREA) rules that force sellers to buy a full range of agents` services, and thus pay full commissions, if they list on MLS.
The bureau decided it would not push for further changes that would allow brokers or others to repackage MLS data with ancillary data, creating the kind of feature-rich websites that Americans have grown to love.
Currently, Canadian brokers cannot take MLS listings, enhance them with more information, and provide that to the public on a searchable website.
Read the full article here.
The Competition Bureau`s move to force the real estate
industry to loosen its rules governing the multiple listing service will not bring to Canada the huge range of house-hunting tools available in the United States.That`s because the bureau`s actions - if successful - are designed specifically to let sellers cheaply list their properties on MLS and avoid full-service commissions, not to broaden the availability of MLS data.
The bureau`s challenge, to be heard by the quasi-judicial competition tribunal, addresses the Canadian Real Estate Association`s (CREA) rules that force sellers to buy a full range of agents` services, and thus pay full commissions, if they list on MLS.
The bureau decided it would not push for further changes that would allow brokers or others to repackage MLS data with ancillary data, creating the kind of feature-rich websites that Americans have grown to love.
Currently, Canadian brokers cannot take MLS listings, enhance them with more information, and provide that to the public on a searchable website.
Read the full article here.
- Joined
- Mar 24, 2009
- Messages
- 16,743
Owners with children can defer property taxes
As announced in the throne speech last month, homeowners with children under 18 will be allowed to defer their property taxes, an option that people over 55 or in financial hardship already have.
Under the program, a homeowner can postpone paying property tax if he or she financially supports at least one child under the age of 18 and there is at least 15 per cent equity in the home. The owner must have lived in the province for at least a year before applying and must have fire insurance on the home.
Simple interest at the prime bank rate is charged on the deferred taxes.
Read the full article here.
As announced in the throne speech last month, homeowners with children under 18 will be allowed to defer their property taxes, an option that people over 55 or in financial hardship already have.
Under the program, a homeowner can postpone paying property tax if he or she financially supports at least one child under the age of 18 and there is at least 15 per cent equity in the home. The owner must have lived in the province for at least a year before applying and must have fire insurance on the home.
Simple interest at the prime bank rate is charged on the deferred taxes.
Read the full article here.
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- Mar 24, 2009
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Column: New property tax deferral a boon or a bane?
Odds are that the families who might get the biggest boost from B.C.`s new property tax deferral scheme will be the careful money managers — the ones least likely to need help.
But what this program offers the many who habitually spend their way into trouble, is yet another temptation to dig themselves deeper into debt.
Because the "property tax deferment program for families with children" is really a loan.
It`s a safe loan — for the lender, at least — as it`s secured by a family home, and the borrower must have at least 15-per-cent equity to qualify.
But for the borrower, it`s just a reverse mortgage, and it has serious built-in pitfalls.
Read the full article here.
Odds are that the families who might get the biggest boost from B.C.`s new property tax deferral scheme will be the careful money managers — the ones least likely to need help.
But what this program offers the many who habitually spend their way into trouble, is yet another temptation to dig themselves deeper into debt.
Because the "property tax deferment program for families with children" is really a loan.
It`s a safe loan — for the lender, at least — as it`s secured by a family home, and the borrower must have at least 15-per-cent equity to qualify.
But for the borrower, it`s just a reverse mortgage, and it has serious built-in pitfalls.
Read the full article here.