Saturday, December 27, 2008

Today's piece of advice

Any author of a New Years wrap-up that suggests 2008 began on a prosperous and optimistic note and ended with crash is showing his/her ignorance of both the economy and current events. The meltdown in the sub-prime market (the cause of the credit collapse) and the likelihood of an ensuing recession was obvious to anyone in the know by the spring of 2007. Followers of the US credit bubble build-up saw it coming in 2003 and, especially, by 2004, when anyone who listened to US radio and watched daytime TV was bombarded with home equity loan refinancing ads aimed at very poor people. I reacted to the weirdness by finding a fairly steady job. In October, 2007, I wrote on this blog about the coming recession. By the spring of 2008, I was on about the stock market meltdown, especially as it impacted media stocks like Canwest. I also predicted an election as Harper tried to dodge the prospect of running in a recession.
Anyone who did more poorly than me -- including the "what's hot, what's not" crowd -- is either living in a Canadian dreamworld or is simply trapped in Ottawa's glorious disconnect from reality.
So, my predictions for 2009:

The Dow and TSX will likely bottom at about 4500, a figure that I came up with by calculating the 1987 Dow crash low, adjusted to inflation, adding in some real growth in the economy, and discounting for the credit bubble.

The recession will last about four years and the recovery will be very subtle, at first. Governments will, if they are smart, use this opportunity to rebuild infrastructure. In fact, the recession offers an opportunity to literally rebuild the nation.

Watch for a lot of criminal charges and litigation in response to the credit meltdown.

Labor discontent -- organized and individual -- could be strong as people and their employers struggle to determine the real value of work. One of the quandaries raised by recessions, especially those with deflation, is the inability of people to determine a value for goods and services.

There probably won't be a Canadian election next year. There probably will be one in 2010.The rape of the EI fund and the Liberals' and Tories' effective gutting of Unemployment Insurance as a useful social safety net may shape up to be one of the best election issues ever for the NDP.


The Canadian government will try to scrap barriers to foreign investment, especially in media and banking, to try to save the country's economic oligarchy, including the Aspers. It has already signalled this move.

Watch the fringes: in the economy, in politics and the arts. In recessions, new people and new ideas -- some of them quite malignant -- get pushed to the forefront, while the old and the seemingly broken get discarded.

Watch for a great cleaving between the poor and the rich, the urban and the rural, the East and the West. You'll see it caused by the collapse of oil prices, the killing off of light industry and resource extraction, and the coming deep crash in commodity prices.

Thursday, December 25, 2008

Christmas Queen

Sixty years ago, the Queen was smokin' hot, though not quite as drop-dead gorgeous as her hard-living sister Margaret. Today, she's just so damn cute I can't stop myself from posting her pic on my blog:




Have a happy Christmas. Be kind to one another and accept that each one of us is human, with our strengths and our flaws, and I hope Christmas 2009 finds you a little happier and a lot less stressed than this Christmas.

Monday, December 22, 2008

Sen. Mike Duffy

Congratulations to my friend Mike Duffy upon his appointment to the Senate. I had a great chat with him the other day, and I'm very proud that he's achieved this honour. Mike will follow in the steps of great journalists like Charles Bishop, Grattan O'Leary, Philip Gigantes, Richard Doyle, Betty Kennedy, Jim Munson, and Joan Fraser.

Friday, December 19, 2008

The best headline of 2008

While the subject of the story is rather sad, I would nominate this headline for best of year.

Thursday, December 18, 2008

Three for a buck?

CanWest stock hit 42 cents today.
Ooops, 34 cents.
Trade volume is suspiciously high, too. Someone is liquidating a big position for what they can get for it. Scary.
Six months ago, I suggested media convergence may be yesterday's news because the big convergence plays were tanking in the markets. Then, CanWest was at about $3.75, having lost more than half its value in the previous six months. Now Canwest is at about 1/20th of its summer 2007 price and about 1/40th of its recent peak. Quebecor does slightly better because of its investment in cable (though the company's newspaper interests are not integrated well into any kind of multi-use platform. CTVGlobemeia is hard to guage, since it has unusual factors such as the failed Teachers takeover of BCE and the deep pockets of the Thomson family (made a bit shallower by the tanking of Thomson Reuters).
The stock market isn't always an accurate guage of performance, but when shares in companies that adopted a model of leveraged buyouts/media convergence get stomped as heavily as CanWest, it's time to look for a new model.

So here it is, again:

Don't put anything on newsprint that readers can get on the Internet.

Don't post anything on the Internet that people can only get in your publication.

Wednesday, December 17, 2008

CanWest: practically giving it away.

You would now need two shares of CanWest stock, plus six pennies and the GST, to buy a copy of the Ottawa Citizen.
New low: 47 cents.

In other media news, Fred Kuntz is leaving the Star, making the newsroom a little merrier this Christmas. Kuntz, much-loathed company/Honderich hatchetman, chose the loser road of ditching analysis for short, soft stories. His departure comes just a few weeks after publisher Jagoda Pike walked the plank and was replaced by newsman John Cruikshank.

Tuesday, December 16, 2008

Not-So-Merry-Christmas for Haters

I suspect a fairly large number of right-wing bloggers are breaking out the Kaopectate and tapered plugs.
BTW, my legal sources, who are really quite good, tell me the simplified procedure system may soon have its limit raised from $50K to $100K.

Today in Bullshit

Sun Media cutting 600 jobs (CBC)
Quebecor-owned Sun Media said Tuesday it is cutting 600 jobs in Ontario, Quebec and Western Canada.

The company said the cuts, which are mainly expected to be made by the end of this year, work out to about 10 per cent of the workforce, excluding mailroom staff.

Sun Media blamed the cuts on the effect the soft economy is having on its print media revenue, coupled with a shift toward more free content on the internet.

"The speed at which the current economic environment is deteriorating forces us to make difficult decisions at this time of the year," said Pierre Karl Peladeau, president and CEO of Quebecor.

"This decision in no way changes our commitment to our publications, our readers and our advertisers," he said in a release.

The company said the cuts are expected to result in restructuring costs of approximately $14 million.

Sun Media has 43 paid-circulation and free dailies in Canada's major urban markets, plus more than 200 community newspapers, shopping guides and other publications.



Yea, PK, that's the way to handle increased competition.

Monday, December 15, 2008

Today's little story is tomorrow's big story

Robert Fowler knows just about every Canadian military and foreign policy secret of the past quarter century. Now he's being held by separatist rebels in Niger, along with an aide and a driver. Fowler was there working for the UN to prevent arms shipments to rebels and bandit groups. Niger, a chunk of Sahara Desert with about 14 million people, is the poorest country in the world.
Fowler is:

ex-DM at National Defence.
ex-member of CSIS's oversight board.
former advisor on military and foreign affairs to Pierre Trudeau and Brian Mulroney.
former Canadian ambassador to the UN and Italy.
well-connected member of the Ottawa mandarinate. His sister is married to former Governor-General Romeo LeBlanc.
Potentially, this is the biggest breach of Canadian security and intelligence since the end of the Second World War.

Sunday, December 14, 2008

Recession watch

Welcome to Terrace Bay, Ontario, on the beautiful shore of Lake Superior. First-class fishing, hunting and boating. A very nice 18-hole golf course. Winter sports galore. Friendly people in a cosy small-town.
After six years of an economic slump, air service to the outside world is gone. VIA took off the last train years ago. Greyhound still runs through, but these are the transcontinental buses, and after a few days some of the passengers can be a bit high-smelling and a little, um, testy.
When I was a kid, any sentient being could get a well-paying job in Terrace Bay. I schlepped beer in a basement bar there in 1977 and made as much as a newly-minted school teacher. The lumber and pulp mill paid even more. And the railway, centred eight miles away in Schreiber, paid more than the mill.
The railway has been cutting for years. The pulp and lumber industry is hurt by the McGuinty government's high Hydro rates (even though Terrace Bay has its own large Hydro generating operation built for the mill that actually covers the mill's consumption and exports power to the grid) and by the feds' inability to get a real softwood deal with the Americans (try this, guys: access to Alberta energy for fair Canadian access to the US market. Wasn't that what the FTA was supposed to be about?).
I can say with no sarcasm that, once you get over the climate, the North Shore of Lake Superior is the most beautiful part of Ontario. It's even more gorgeous than the Eastern Townships of Quebec.
Want to live there?
Sell your car and buy a house in Terrace Bay.
After all, you may well be looking at the future of us all, and people there have already learned how to live with recession.

Saturday, December 13, 2008

Ready to take on the world

A pic of Canadian auto workers from today's Toronto Star:




Now, I wonder if the aged auto plant work force, decimated and demographically warped by seniority-based layoffs, might be part of the problem?

Monday, December 08, 2008

Over-leveraging takes down the Chicago Tribune

I'll say it and write it until somebody listens: it's not the Internet that's killing newspapers, it's leveraged buy-outs.
Newspapers can adjust to the Internet, just as they did to radio and TV. But they can't adapt if they are so saddled with debt that they have to cut the quality of their journalism.

Sunday, December 07, 2008

Executive Compensation vs. Reality

Lenny Asper pulled down $900,000 in salary and bonuses while his company's stock lost more than 90% of its value.
I kinda shudder at what he would have made if the company had become completely insolvent.

Friday, December 05, 2008

CTVGlobemedia fire sale

They're ditching a chunk of their ownership in Maple Leaf Sports, giving Teachers majority control of the hapless Maple Leafs.
My grandma's sister was one of the people who put together the Teachers pension system after years of the superannuation system being plundered by the provincial government, but is anyone else as creeped out as I am that this fund seems to own just about everything?

Canwest Dust-watch

Gotta quit joking when I make posts. The other day, I snidely noted the stock was sinking towards a half a buck.

Today's reality:

52 cents, a new New all-time low.
Do I hear half a dollar?

MOVED UP:

Meanwhile, the Asper family has fallen from the list of Canada's 100 Wealthiest Canadians. Inheritance taxes should have caused that long ago. Every Western country has them, but we don't.

Can they take CanWest private?
No. They don't have the money. No one would lend against this stock and the company's already way over-mortgaged at a time when no one is lending for anything that's not a sure thing.
A friend noted something the other day: the Ottawa Citizen alone is probably worth more than the stock value of this company.
Thus is the lesson learned from this most recent leveraging bubble.
BTW, I want Niall Ferguson's new book on money and finance. If I had money to waste, I'd send copies to Lennie, Gail and Dave.

The weak shall inherit the jails

Online writers now make up the majority of imprisoned journalists.
Why?
Not because bloggers are so brave, I'd argue. It's because they don't have the clout of a major media outlet to back them. And in places like China, where there's no free media, it's because bloggers -- like the news sheet printers of the 17th century -- can lurk in the shadows and speak truth to power.

Maenwhile, in the real world

Ontario lost more than 60,000 jobs last month.
I suppose the Clampetts over at Small Dead Animals, the hillbillies born on a sea of American-owned oil, will think that's funny.
By the way, if Alberta is America's largest foreign oil supplier, why doesn't Calgary look like Dubai?

How others see us

The New York Times believes Stephen Harper's defanging of Parliament is worth a story.

Thursday, December 04, 2008

Amatuer hour

Blink.

I despise what he did today, but Harper sure has taken the measure of Stephane Dion.

Prorogation

Technically, it's legal.
A sharp reporter would call up Joe Clark (1979) and Paul Martin (2006) and ask them if it's morally right. They might have interesting explanations for their decisions to face the House.
But what the hell does morality have to do with power in this country?
Welcome to the age of Karl Rove. It's not a great time for those of us who really, truly believe that Parliamentary democracy is the best form of government. It is a great day for people who believe in electing a dictator every few years. That is, until someone finds a reason to get rid of elections. They are awfully expensive, I suppose.

Canwest Wake-Watch

New all-time low today.
Do I hear half a dollar?

Meanwhile, the Asper family has fallen from the list of Canada's 100 Wealthiest Canadians. Inheritance taxes should have caused that long ago. Every Western country has them, but we don't.

Wednesday, December 03, 2008

The Coalition

Do I like the idea of Stephane Dion as PM?
No.
But I believe in Parliamentary democracy.
We go to the polls and we elect members of the House of Commons.
The party or collection of parties that can hold the confidence of the House of Commons gets to form the government.
Stephen Harper formed a government and met the House. Very quickly, he lost the confidence of the House of Commons. In effect, he tried to form a government but is unable to do so. It can be argued this has happened through his own miscalculation, but it doesn't matter. Our system doesn't differentiate. It's about the ability to pass legislation in Parliament and the Harper government cannot do this.
Canadians do not vote for a Prime Minister, nor do they vote for a political party. They vote for members of the House of Commons.
More people voted for the Liberals, the NDP and the Bloc than voted Conservative, but the Conservatives got first chance to try to form a government.
Two parties have formed a coalition and apparently have the confidence of the House.
It is the duty of the Governor General (like the Speaker in a tie) to do what she can to preserve the life of the Parliament if it is possible, and at the present time it is certainly possible.
Therefore, she is obliged to ask Stephane Dion form a government. She should not allow Harper to dodge the obvious will of the House.
These are not technicalities, nor is it arcane. It's the Constitution, the law of the land.
We have had numerous chances to bring in proportional representation. We have had chances to change the role of the Governor General.
Maybe people are not happy with the idea of this coalition, but it's an absolutely legal and legitimate act in Parliamentary democracy.


Now, from a strictly personal point of view, how many neo-cons screamed "democracy" when George Bush took office with fewer votes than Al Gore? Bush won in 2000 in the Electoral College, but Gore won the popular vote. I suppose at Small Dead Animals everyone was thrilled with the result.
Democracy and the Constitution are not something you can embrace or put away, as needed. You have to put up with situations that, while unpalatable, are legal and proper under the law of the land.