Could Steve Jobs Save Detroit?

In the 90's Apple shares were in the toilet; it had products sitting on stores' shelves collecting dust if any store would carry them at all; the company was losing hand over fist money; its marketshare was becoming quite obsolete; and  no other company would merge or even think about buying Apple outright.  Though it did have a small but loyal fanbase, a cult almost, which did believe in its products.

Sound familiar?  2008. General Motors.  The resemblance is astonishing.

The very idea of Apple being the largest music seller in America and the number 3 maker of smartphones was light years away in 1997; nevermind a cool $25 billion in cash and no debt; its marketshare is increasing everyday; and its savior CEO is paid $1 per year.

Here's an interesting article by Bob Cringely..  on what would happen if a visionary of the "New Economy",  aka Steve Jobs, took on a dinosaur of the"Old Economy" General Motors. 

Things would definitely be different with a plethora of new ideas and innovation; pricing would always be falling as is the nature of the tech business; depreciation would be typical as is  both industries today:  where new models once out of the salesroom floor would be worth significantly less but would mean lightspeed product cycles in the industry.. a new revamped GM 'iCar' every season?  And, with Jobs being the largest shareholder of Disney now because of the sale of Pixar, GM's future potential would be only limited to their imagination.

GM wouldn't need any bailout money at all anymore:  GM shares would skyrocket on the very announcement of Steve Jobs taking over as CEO.  GM probably could pay off the UAWs' pension debt with stock warrants and new issues alone.

The Invincible Canadian Economy??

A blog taken from renowned Canadian author and real estate guru Garth Turner's website..

He tells it like it is.. I tend to like that..

For most of this year, Canadians have been shielded from the truth about the economy. This should bother you. It should enrage you. It’s information you should have known.

We were told the banks were the strongest in the world, and yet Ottawa found it necessary to give them a $75 billion bailout. Also telling is the fact three of the Big Six – including our largest bank, RBC – are out flogging new stock right now to raise more money, despite a terrible environment on Bay Street.

We were told there’d be no deficit. But there is already. Now the prime minister calls red ink “essential,” and the Parliamentary Budget Officer says we could have a shortfall of up to $14 billion.

We were told there’d be no recession here. “This is not the United States,” Mr. Harper said pointedly during the election. But now there is, of course. The central bank made that official on Monday.

We were told the value of our homes would keep on rising, that the US real estate meltdown would pass us by. The Canadian Real Estate Association said this, and bank economists, Canada Mortgage and Housing and most urban real estate boards.

But real estate sales have fallen as much as 70% in major cities, and average prices have plunged up to $175,000 in Vancouver, $56,000 in Calgary and $45,000 in Toronto. Buyers are staying home as sellers flood the market, ensuring more price drops.

We were told the economy was strong and would stay in positive growth, boding well for jobs. And yet last month we lost more than 70,000 in a single four-week period. The central bank slashed interest rates to the lowest point since the 1950s in panicked reaction, and the car companies teetered on the brink of collapse.

We were told Canadians were safe, and our households were far less indebted than those to the south. And yet today the Bank of Canada is raising the awful spectre of widespread anguish, as more and more families face losing their homes. “With household balance sheets under pressure from weak equity markets, softening house prices, slowing income growth, and record high debt-to-income ratios, a severe economic downturn could result in a substantial increase in default rates on household debt,” the bank says. If this happens, it adds, so much for Canada’s ‘strong’ banks. “Should this scenario materialize, the banking sector would suffer significant losses from the rising vulnerability in the household sector.”

Could this be why the Royal, TD and Scotia have been selling stock in a bid to raise cash for the coming storm?

More importantly, why has this information been kept from Canadians for the past critical months? Wouldn’t a warning have helped us all give more attention to personal debt levels, to paying off mortgages or, especially, to avoid walking into new debt at absolutely the worst time?

Well, I may not be sympathetic to the current government for many reasons, but I’d say this fits a pattern:

* Bring in zero down payments and 40-year mortgages at the wrong time, turning a good housing market into an unsustainable bubble.
* Cut the GST, rather than income tax, in order to encourage consumer spending, despite rapidly rising debt and a national savings rate of nothing.
* Run a federal election campaign on purpose before the economy falters badly, then lie to voters about what to expect.
* Take $75 billion in ultra-safe government securities which were backing our currency and use that to buy high-ratio mortgages from the banks, without disclosing this to Parliament.
* Bring in an economic statement that cuts spending when every other government in the world is scrambling to try and prevent deflation and a collapse.
* Shut Parliament.

Cavalier, out-of-touch, uncaring, dishonest. It underscores one reality: You’re on your own.

This economy’s in very bad shape and there’s worse to come. Doing nothing is a choice you no longer have."

For More Garth visit GreaterFool.ca

How to Save America Chavez Style...

I'm not a Michael Moore fan.  Never have been:  I find his films too bias toward crowd pleasing; and many of his facts twisted and unfounded just to swerve opinion and create shock-value.  

But, in this Larry King episode, Michael actually says a lot of things I  have to agree with about the Detroit 3 bailout.  

In fact, I  have many a Twitter about this issue where, to rescue the automakers and America's economy,  Obama should take a page out of Hugo Chavez's free car for gas-guzzlers policy ; implementing programs similar to Roosevelt's "New Deal" or other Hooveran type 'statist' programs to take control of the auto industry and more importantly save the jobs of the working masses.   Moore's ideas of making mass transport and more fuel efficient cars is very appealing too.

In any basic economic model, one of the most fundamental concepts is the relationship of supply and demand.  Because of the global crisis, demand for American made cars has dropped off the face of the Earth.  Congress, the Detroit 3, the UAW all are trying to re-structure the 'supply' side of this equation; getting costs down, closing plants,etc.

I agree a re-structure of the supply side of the American automakers is necessary due to a lot of the same reasons Moore has indicated.  But, Roosevelt's public works programs and Chavez's socialism influences the demand side of this simple economic example.  The State shall artificially create the demand for Detroit's cars, make them efficient, and buy them like any other Government contract for planes, tanks, etc.  Then swap them for the gas-guzzlers, which anyone who has travelled through California alone knows, are plentiful.

The residual effects of creating a demand for these cars will be multifold: not only will this save the environment, the compounding effect of more jobs will be created via more demand for steel, tires, technology, etc. in the building of these cars.  In addition, more consumer spending as people have more jobs, and spend on other facets of the economy.


Ignatieff One on One..

CNN Censors Peter Schiff?

Ron Paul on the bailout..

How Bad Is It?

Economists are predicting Alberta is headed for a massive economic slowdown amid plummeting oil prices.  The province's vital energy sector is ratcheting down its exploration, drilling, and expansion as it faces sub $50US a barrel oil prices taking off from a record high of $147 less than 6 months earlier.  Billions of dollars in Oilsands Mega Projects are being scaled back or cancelled due to the sharp slide in commodity prices, compounded by the global credit crisis.
Today, oil closed at $47.11 NYMEX US; the Canadian dollar closed at an Interbank rate of $0.803.

Ten years ago today, oil fell to $9.93 bbl and the Cdn dollar was $0.649.  Economists today are predicting, as OPEC could not control rapidly falling oil prices then,  the possibility of oil reaching those 1998 lows is very real. 

Ironically, only 3 years ago, in 2005, Alberta's finance minister Shirley McClellan's budget predicted a $7 billion surplus and forecasted nothing but roses and sunny skies ahead based on oil averaging $50 US a barrel. The Canadian dollar was $0.863 US. 

Of course, the largest importer of Canadian Oil, the USA, though battered by Hurricanes Katrina and Rita, was an entirely different beast in 2005. 

 Oil may be headed to $25 but will it stay there?  It took a global financial crisis with implications similar to the Great Depression to humble the energy bulls; not a 'bubble' of speculation bursting.  This commodity alone is not alone in its bottom breaking plunge; every asset available has suffered from the economic turmoil. 

If the global economy recovers, which it always does, energy will roar its way back simply because it requires energy to do anything.  You need energy and massive amounts of it to build the roads and bridges in Obama's great infrastructure plan; you need massive amounts if energy to build new greener alternative energy; you need energy to solve the global hunger issues. 

When will oil recover nobody knows: it could be by Q2 next year or it may take 10 years.  But, 4 of the top 7 oil producers (Russia, Mexico, China, and the United States) will run out of oil reserves within the next 10 years, I am sure oil will rebound sooner than later.


Technical Analysis of AAPL and GOOG



Ignatieff??? Who is this guy...??

CTV is deeming new Liberal Party leader Michael Ignatieff the "Great Grit Hope"

CBCnews.ca claims he may be the "New Trudeau"..

Today Ignatieff has made it clear that he has the balls to stand up to his own caucus and listen to Harper's budget first before making a decision to vote against it;  but publicly warned Harper that he "cannot run a minority Parliament with divisive, spiteful and unproductive policies we saw in that autumn statement."or Ignatieff will be ready to topple the Tories' minority government come January 26.  
 Already he is showing he is a much stronger leader than Dion ever  was.  


We are officially in a Recession..

Friday, it was announced that Canada had lost 70,600 jobs in November.  The most in any month since 1982.

Today, the Bank of Canada lowered its overnight target rate a staggering 3/4 of a percentage to 1.5 percent, its lowest in 50 years, openly acknowledging Canada is in a recession. 

Hang on to your homes people, it's slowing down whether you like it or not.  After the last major Alberta Oil Boom in 1982,  people defaulted on homes owing of around $70,000 after recording record years of permit issued in 1980 and 1981.  Average 1982 home prices were $74,174. 
Sound familiar?  Current 2008 average home prices in Alberta is $343,000 as of August.  After 2 years of record permits issued, we are seeing quite the drop off in home sales this year.  

How much real equity do people actually have, as Albertans have been using their homes in the last 3-5 years as an ATM to finance numerous renovations, buy flat-panel televisions, and SUVs?   A Boom almost never has a soft landing does it?

John Turner days update...

Today Toronto MP Bob Rae must have read my blog or the Liberal Party caucus duct taped his mouth and slapped him upside the back of the head.  Rae officially bowed out of the Liberal leadership campaign after comments yesterday he was upset on how the interim leader would be chosen.  Rae immediately resolved to offer his "full and unqualified" support to Michael Ignatieff.
In fact this move today, instigated a response from current PM Stephan Harper, offering to meet with the new Liberal leader to discuss cooperation and "to work together" on the issue of the economy.  
Smart political strategy on Harper's part knowing Ignatieff has always been 'on the fence' to the coalition deal Dion had put together. 

All 4 parties should take a page out of the campaign of Liberal Jean Charest's historical majority win in Quebec last night.  No Premier has won 3 consecutive mandates in Quebec since Maurice Duplessis circa 1950's.   Charest's message reminded people " the economic storm in front of us won't make any distinction between federalists, sovereigntists,  and any other Quebecers".   He's right.  It won't discriminate against the rest of Canada either.

Charest's ability to win over the Quebec masses impresses me.  Formerly a Tory MP turned Liberal Premier shows his political finesse; the tact to defend the Bloc Quebecois as a legitimate political party in Canada looking after the interests of Quebecers and diffusing issues of secession impresses me even more.  What he understands best is a united people will better shield itself from the economic turmoil that lies ahead.  
Times like now reflect those reminiscent of Bush versus Gore in the 2000 election; none of the candidates in the opinion of the people were leaders anyone want to run the country.
I do not know much about Ignatieff other than he is a left-wing centre scholar that once taught at Harvard; he actively defends human rights and democracy issues, feels Canada should reduce its dependance on American markets, and most importantly, he has no ties to the Chretien Era.  

Sounds better already.


Wisdom of a Immigrant Businessman: A Money Blog.

It's funny.. sometimes looking the eyes of an immigrant changes the entire perspective of all things....  especially money.

Last year my father, a Chinese immigrated, retired small businessman, went for a holiday tour of the country from which he was born.  Upon his return, I asked him if he ever wanted to move back there and spend the rest of his retirement years there. 

He replies in his broken English tone of voice as if I was being facetious:  

 " Are you crazy?? Too many people!! This is the land of money! There's money all over the place!  Why would I go back?  People have so much food here, they get so fat, waste so much! "  

"Money all over the place?!?" I ask, "Where?"  He replies "Right in front of you!"

So I'm thinking, here I am, working day in and out in the oil patch, eking out what I can to provide a standard of living above par for my family and my crazy dad is telling me there's money right in front of me!

He carries on:
  " That's the trouble with you Canadian-born.. All you Canadians do is close your eyes and smile and figure someone is going to give you all that money...  it's not that easy son...  All I see is the money is everywhere.. all you have to do is open your eyes and look for it! " 

Point taken.  Opportunity does exist even in these times of economic peril.

For the Love of John Turner...

 In the past, Canadian Opposition leaders Jack Layton, Stephane Dion, and Gilles Duceppe rarely agreed on any issue other than Stephan Harper is all their political enemy.  On the chance Harper was arrogant enough to govern like he had a majority government; omitting any one of the Opposition party Leaders from working together to pass anything in the House of Commons, the three Opposition Leaders would force a no-confidence vote to bring down their common enemy.  Such is commonplace in parliamentary politics when a minority government is in power.

  Within less than two months of a general federal election, the three caballeros got their opportunity; but being so close to the last election it was doubtful the end result would be different than the status quo.  Voila! the Coalition.. and the political mess we are witnessing today.  

  Instead on facing a no-confidence vote intended to be today, Harper opted to delay the calling of the House until the end of January in hopes the Coalition of Opposition parties may not even last that long to displace his tenure.  and, so far, 
the prorogation of Parliament by the Governor General on Harper's advice seems to be quite the astute strategy for his minority government to stay in power.

Today, Stephane Dion announced his plans to step aside as Liberal Party leader effective  immediately after a successor is chosen.   The Liberals hope to have a new leader before Parliament resumes in January;  a wise scheme by the Liberal party if the Tories do get toppled upon their new budget proposal and the Governor General opts for an election.  Rumors have it the Liberal Caucus is about to install leadership hopeful Michael Ignatieff as interim leader when leadership candidate Dominic Leblanc proclaimed he would drop out and throw his support behind Ignatieff.   "Still in the race" fellow candidate MP Bob Rae, joined by support from Gerard Kennedy,  sent email en mass to party members urging disapproval to allow caucus to select the Party leader as it would put an "unfair advantage" for the interim leader.

How is it possible for a coalition of Opponents and rivals expected to succeed and win over public support if members of one party, one caucus cannot even agree upon how its leader is to be chosen???   Surely this in-fighting among the Liberals will have its ramifications in the eyes of the public and in the polls.  

Harper is indeed quite the political tactician:  the Grits' internal struggles reminiscent of the John Turner days are back... and Harper knows it.  


Spending Habits of Blue-Eyed Sheiks

This weekend, my family and I went shopping for a few Christmas purchases and some necessities at Walmart, Best Buy, Toys R Us, and Costco.
 You would never think there was a global economic crisis occurring judging by the size of the line-ups at the cash registers.  I mean we're talking about people actually making big-ticket item purchases, such as big-screen plasma and LCD/ DLP TVs, pricey electronic devices such as XBoxes, Wii's, iPods and laptops,  home furnishings, and other home decor and renovation items; not just browsing around the stores.

  Yes, Albertans are coming off probably the greatest economic "Boom" in the history of the Province:  people are truly "money-ed up" around this part of the world.  The demand for workers was so incredible over the last five years, Albertans could literally quit their jobs and 

In fact, signs are still up advertising everywhere, looking
 for hired help:  McDonald's is paying $11.50 an hour starting wages, Tim Horton's up to $18 per hour to sling coffee, and 7-11 Convenience Stores are handing out hiring bonuses up to $2000!  And, Edmonton will surely be a ghost-town come this Christmas, as it seems most friends and family I have talked to plan on traveling abroad for the Yuletide holidays.


But I can't help thinking, with the collapse in commodity prices as of late, the financial turmoil transpiring down south, and Alberta being a primarily export Province, are we that 
rich we can be apathetic to current affairs?  Or, do we really feel that the Oil Boom will never end and that the crisis our neighbors to the south are enduring could never possibly happen here?
With the current Parliamentary crisis befalling upon us, slews of people all over Canada are in an uproar;  including Albertans, who have passionately shown concern or at least acknowledgement that there is an economic circumstance at hand; hence, pure ignorance to the situation is out of the question.  
 Consumer confidence is at an all-time high here in Alberta.  However, another Oilsands Project is being scrapped as of a Dec. 4/ 2008 press release: adding StatoilHydro's plans for a $12.6 billion upgrader to the long list, which includes Nexen Inc., Suncor Energy Inc., CNRL, Value Creation Group, Royal Dutch Shell PLC, and Petro-Canada/ UTS/ Teck Cominco, that have backed off or slowed expansions or new projects.  Can Albertans be so presumptuous that their incomes will not be affected and the Boom will not go suddenly Bust?  And, with oil prices dropping a staggering 70%+  in just a few months, it is not difficult to see why these Oilsand Company heavies may opt to postpone their projects and expansions indefinitely.

Perhaps it is just me, locked-in to my puny Steamfitter Trade-Union contract, happy in my starter Bungalow home, and content driving a beater to work, that is oblivious to the fact salaries in Alberta have gone up that much and Albertans have profited that much from their homes and real estate ventures in the last 5 years, they can ride out any economic storm ahead. But as I witness friends, colleagues, and acquaintances buy up 3/4 million dollar homes, buy brand new SUVs, ATVs, and out of province vacation homes, I am left thinking they must make that kind of money; I don't even have that kind of credit!
  But consider this:  is saving a net amount of $1000 per week a lot of money?  That is, after all taxes, bills, and purchases is paid for;  an unencumbered amount of $1000 can be put away, I think, is substantial savings for just about anyone regardless of salary unless of course, you are Warren Buffett or Carlos Slim Helu.  But, in one year, that kind of savings only amounts to $50,000 given that you take a 2-week unpaid vacation each year.  And, it's not a whole lot of cash considering home buyers around here have been upping their antes for houses of $100,000 or more like it was nothing for the past two years and Albertans are buying new SUVs starting at $30,000 to pull their new $18,000 quads or sleds.
It has been suggested by many of my peers that most of these purchases have been bought on credit: whether it be on their Visas, Mastercards, or lines-of credit.  This is a very alarming notion considering the credit crisis of our American friends was started by those people who chose to live beyond their means via maxing out their easily obtained credit in the first place.  Yes, we made more money but we spent more too.  Research and studies have shown for every dollar an Albertan earns, he owes five: meaning, even with all those big wage increases we have seen in the last 5 years and the highest employment levels ever, we have only paid off our monthly minimum balance due on our Visas.  Americans, last year at this time, have been paying their Visas' minimum balance with their Mastercards.  

Surely then, to think the credit crunch will never happen to Albertans is indeed pure ignorance.  It is coming; be wary.  Even the slightest slowdown will have an impact on those who got a little too comfortable making those big overtime pay cheques; then figured they were getting ahead in life keeping up with the Jones'.  Going back to a normal 40 hours a week or even 37 and a half hours per week may prove to be a drowning experience for those with their credit max-ed out.

As for now, as exemplified by our Prime Minister Stephen Harper proroguing Parliament, we'll defer our minimum payment to the next month, go home and enjoy our Holidays with our loved ones, lavishing them with posh electronic gifts.  We'll deal with our finances and problems next month; and, hopefully by then, the credit card companies will forget what has transpired, or even disband as easily as Harper thinks the Coalition will.