Ontario’s ailing auto sector will get the CPR it needs from the federal and provincial governments to avoid a "doomsday scenario" that would result in thousands of job losses, Ontario Economic Development Minister Michael Bryant said today.
A report prepared for the Ontario government warning Canada could lose more than 580,000 jobs within five years if the Detroit Three automakers go out of business shows that a proposed $3-billion rescue package is needed to avoid a "catastrophic" chain of events, Bryant said.
"We are talking about CPR, literally, CPR for a company to avoid it from going under and causing a chain of events that would be catastrophic to the economy," Bryant said.
"It’s our job as government, because there is no private capital available, to step in and provide that CPR and eventually that life support to allow the intensive care to these businesses that will allow them to transform."
On Friday, federal Industry Minister Tony Clement said Ottawa and Ontario agreed to provide the equivalent of 20 per cent of whatever emergency aid the Bush administration gives to the companies – a figure proportional to the number of vehicles produced in Canada.
The aid won’t come until the U.S. makes its own plans known. The plan has been criticized by some for using taxpayer money to bailout international companies that have failed to manage their own affairs.
Bryant said the government isn’t looking to enhance or even preserve shareholder value for GM, Ford and Chrysler, nor does it want to necessarily sustain the current management.
"We’re not just talking, in that sense, about GM and Chrysler as manufactures themselves, it’s also all of their creditors, all of those workers, all of those suppliers, all of those parts manufacturers and all of those car dealerships," he said payday loans for bad credit.
"All that adds up to a massive industry.
"Auto is to Ontario what the oilsands is to Alberta, and I don’t anybody would suggest that the oilsands is expendable to our economy."
The report paints a gloomy picture if the Ontario, federal and U.S. governments do not bail out the automakers.
It warns the collapse of General Motors, Ford and Chrysler would send lasting shock waves through the economy, and that Ontario alone would lose 517,000 jobs.
If auto output by U.S.-based manufacturers in Canada was cut in half, at least 157,400 jobs would be lost right away, 141,000 of them in Ontario.
"This report says that Canada is better off providing life support to GM and Chrysler because the demise of auto in Canada is the economic equivalent of a nuclear freeze with catastrophic effects that would knock us into a deep recession," Bryant said.
He denied that the report is alarmist or that it was released to rally support for the government’s plans.
"They’re doomsday scenarios and the governments of Ontario and Canada will make sure that they don’t happen," he said.
OTTAWA–Tourism generated $19.7 billion of revenue for governments in Canada in 2007, boosted 4.3 per cent over 2006 by domestic travel.
Statistics Canada reports government revenue from domestic tourism rose 6.1 per cent to just over $14.5 billion last year, while revenue from international visitors dropped 0.6 per cent to $5.1 billion.
The agency says the share of government revenue from international visitors declined to about a quarter last year from just over a third in 2000.
Taxes on products, such as the goods-and-services tax and provincial sales taxes, were the single largest source of tourism revenue for the federal, provincial and territorial governments.
These taxes accounted for $4.7 billion for the federal government in 2007, half its revenue from tourism.
Provincial and territorial governments collected $5 payday advance services.5 billion from taxes, 60 per cent of their tourism revenue.
These tax revenues rose just 2.7 per cent in 2007, the second straight year of weak gains, largely due to one-percentage-point drop in the GST that took effect in July 2006.
Taxes on employment income and business profits were the second most important source of tourism revenue for both the federal and provincial and territorial governments.
Income taxes directly attributable to tourism rose 9.4 per cent in 2007, reflecting gains in both personal and corporate incomes and associated taxes.
These taxes brought in $3 billion for the federal government and another $1.9 billion for provincial and territorial governments.
In his victory speech on Tuesday night, President-elect Barack Obama told supporters there would be a long road ahead in fixing the nation’s problems. The construction industry hopes the first steps involve building and repairing that road.
With the economy contracting, new infrastructure construction was an underlying issue in the election campaigns, which touted it as a way to create jobs.
The topic is key for construction companies already hurt by shrinking state and federal budgets for infrastructure projects.
Obama’s platform included creating what his campaign dubbed the national infrastructure reinvestment bank — a system intended to attract public and private investment for economic development projects with an initial $60 billion infusion of federal money for construction over the next 10 years. Infrastructure could include projects such as housing.
That money could bring much-needed aid for public projects in Missouri. In June, the state’s Department of Transportation said its current transportation funds would cover just 40 percent of funding needs for the next 20 years — leaving a $938 million annual shortfall.
The situation is being made worse by rising materials and labor costs for highway and road projects. Nationally, materials costs for such projects were up 22 percent in September from the previous year, according to the American Road and Transportation Builders Association, or ARTBA, the industry advocacy group which has already begun clamoring for attention.
"We’re going to work with new administration to make sure they know transportation investment is not just a political priority but a national priority," said Jeffrey Solsby, the association’s director of public affairs.
The association also advocates increasing the federal fuel tax that drivers pay to fund road construction. Obama opposes that idea.
While Obama’s idea of stimulating job creation is popular in the construction industry, some are guarded in their optimism payday advance loans.
The $60 billion investment Obama proposed, when divided among states and spread over a decade, would need a significant contribution from state and local investors in order to have much impact, said Len Toenjes, president of Associated General Contractors of St. Louis. The group represents about 450 construction firms and suppliers that stand to gain from a slate of new projects.
"I’d hate to see people oversimplify this and think that a check is going to show up from the beltway and we’re going to have all these new projects going," he said.
One example of the challenges was the defeat of the local proposition that could have built a new MetroLink line into western St. Louis County, Toenjes said.
In addition to public opposition and funding shortfalls, projects also face regulatory barriers and extensive planning needed before an infrastructure project begins.
The Obama plan to use both public and private money also presents its own set of challenges.
Forming public-private funding partnerships is a painstaking process, said Susan Stauder, vice president of infrastructure and public policy for the St. Louis Regional Chamber & Growth Association.
And finding private money may be arduous given the current credit crisis, she added.
It may be better if the new president and congressional leaders launch a stimulus package that focused on public projects, such as roads and highways.
"That would be a really positive thing that most legislators in Congress could agree on," Stauder said. "As long as we’re going to be stimulating the economy, we might as well create jobs and put in infrastructure that can be used for the next 40 to 100 years."
The Associated Press contributed to this report.
cboyce@post-dispatch.com | 314-340-8345
The number of Americans filing new claims for unemployment insurance did not change from last week, remaining at an elevated level that indicates weakness in the nation’s economy.
The U.S. Department of Labor reported Thursday that initial filings for state jobless benefits rested at a seasonally adjusted 479,000 for the week ended Oct. 25.
Economists surveyed by Briefing.com expected the number to fall to 473,000 from the initially reported 478,000. Last year, there were 332,000 Americans filing new unemployment claims.
The Labor Department reported that there were 7,400 unemployment claims related to the effects of Hurricane Ike in Texas, down from the 12,000 such claims last week.
Ian Shepherdson, economist at High Frequency Economics, had hoped the fading of the impact of Ike would allow unemployment claims to fall.
Shepherdson said the fact that claims held steady shows a labor market in decline.
"There can be no question that the labor market is deteriorating; the only issue is the speed of the decline and the eventual peak in unemployment," he wrote in a note creditreports.
He said the national unemployment rate could reach 8.5%. It currently stands at 6.1%.
The four-week average of jobless claims, which smoothes out fluctuations fell to 475,500 from the week before. Last year, the average stood at 329,750.
A level of more than 400,000 was present throughout the last two recessions.
The number of American workers continuing to collect benefits for more than one week decreased by 12,000 to 3,715,000 for the week ended Oct. 18, the most recent data available. A year ago, there were 2,598,000 Americans continuing to collect benefits.
Four weeks prior, unemployment claims spiked to 499,000, the highest level recorded since the 517,000 claims filed in the wake of the Sept. 11 terrorist attacks.
Earlier this month, Labor Department reported net payroll nationwide declined by 159,000 in September, the ninth straight month the economy lost jobs.
Mutual fund company AIC Ltd., buffeted by the worldwide financial crisis, has trimmed its workforce by 20 per cent to keep costs down and better position itself in a tough economic environment.
The privately owned company, which has suffered a large number of redemptions since the market meltdown began, laid off 53 out of some 290 employees on Thursday, spokesperson Terri Oswald said.
"The areas that were affected were mostly marketing and information technology," said Oswald, adding that some employees on the investment side and in sales were also let go.
There were no layoffs of fund managers, but three analysts were cut.
"The key reason for the reduction is simply that the market conditions are so difficult right now," she said.
The company doesn’t see any more financial problems down the road and no more pink slips are contemplated, Oswald added.
"We’re trying to keep our cost structure so that we can continue to remain profitable through this storm that every other company is experiencing internet pay day loans."
AIC, which is controlled by billionaire Michael Lee-Chin, has been suffering from net redemptions for several years. Some of its stock portfolios were hit hard because of holdings in the battered financial sector.
Canadian investors redeemed a record $4.5 billion in mutual funds last month, making September the worst month for outflows since the Investment Funds Institute of Canada started collecting data in 1990.
AIC, Canada’s 19th largest fund company, saw net outflows of $86 million in September.
The downturn is expected to spur consolidation but AIC has said it is not up for sale.
The Canadian Press
Enterprise Financial Services Corp. of Clayton is preparing to raise up to $62 million in new capital to position the banking company for growth in a period of economic uncertainty.
Peter Benoist, Enterprise Financial president and CEO, said Thursday that the company will consider seeking the new capital from a combination of sources, including the government’s Troubled Asset Relief Program and private equity groups.
Enterprise remains well capitalized, Benoist said, but it wants to be ready to take advantage of opportunities that may arise while weathering the "uncharted waters of the financial industry.
"The financial industry is transforming right before our eyes," Benoist said, "and it’s clear to me that highly focused, well-capitalized commercial banking organizations in attractive markets will be the ultimate winners when the dust settles."
Banks must apply for the TARP funds by Nov. 14, and the process of gaining approval likely will take 30 to 45 days after a bank applies. Enterprise also has been working with investors on raising money by selling convertible trust preferred securities.
Enterprise, the parent of Enterprise Bank & Trust, also reported a 74 percent drop in third-quarter profit after it took a $5 free credit report instantly.9 million goodwill impairment charge.
The charge relates to Millennium Brokerage Group, a wholesale insurance subsidiary Enterprise bought several years ago. The charge reflects margin pressure in insurance as carriers consolidate.
Enterprise said it is looking at strategic options to improve the brokerage. Often companies talk in terms of strategic options when they are considering selling an asset.
The non-cash charge doesn’t reduce the bank’s regulatory capital, cash flow or liquidity, the company said. Enterprise bank’s earnings, which exclude the charge, were about even with last year’s.
Benoist said the bank is seeing loan growth despite the troubled economy. That growth may slow going forward, but the bank also has been able to increase pricing.
Enterprise completed the previously announced sale of its Great American Bank charter and a branch in DeSoto, Kan., to First Financial Bancshares Inc. of Lawrence, Kan. The sale generated an after-tax gain of $1.5 million or 12 cents a share.
jerristroud@post-dispatch.com
314-340-8384
Gas prices continued their decline one day after falling below $3 a gallon for the first time in nearly nine months, according to a daily survey of credit card swipes released Sunday.
The average price of unleaded regular fell to $2.95 a gallon, down 3.7 cents, according to the Daily Fuel Gauge Report issued by motorist group AAA. Prices have fallen more than 30 cents a gallon in the last week and 90 cents, or 23%, in the last 32 days.
The current national average is $1.16, or 28%, off the record high price of $4.11 that AAA reported July 17.
The last time the average price for a gallon of regular unleaded gasoline dropped below $3 a gallon was Jan. 25, when it reached $2.99.
Alaska has the most expensive gas, with prices averaging $3.90. The cheapest gas is found in Oklahoma, with prices averaging $2.54.
The decline comes as hurricane season winds down and oil prices drop over concerns that a prolonged economic slump would curb demand for energy savings account payday advance.
Oil prices rose above $74 a barrel in premarket trading Monday after settling Friday at $71.85 a barrel in New York. The rebound comes ahead of an expected production cut by the Organization of Petroleum Exporting Countries.
The cartel, which controls two-thirds of the world’s oil supplies, is set to hold an emergency meeting that begins Oct. 24 in Vienna.
OPEC ministers have expressed concern over the rapidly declining price of oil. Chakib Khelil, OPEC’s president, said Sunday that members are considering a "substantial" cut and that the oil market is oversupplied by about 2 million barrels a day.
A barrel of crude has lost roughly half its value since hitting an all-time high above $147 a barrel in July.
The global economic crisis claimed its first Japanese financial institution on Friday and the government looked to prop up smaller banks, as Tokyo shares flirted with their biggest one-day fall since the 1987 market crash.
Escalating bankruptcies in the property sector and among small businesses, along with fears of a global recession, have dragged Japan’s export-dependent economy into the crisis, sending blue chip shares sliding by a quarter so far this week.
“This is panic. New York, the currencies — there’s nothing left for us to trust,” said Takashi Ushio, head of investment strategy at Marusan Securities, as the Nikkei share average slid more than 10 percent, following sharp falls on Wall Steet.
“Investors are scurrying to convert to cash. A lack of confidence is coupling with panic.”
As unlisted Yamato Life Insurance Co failed, the government said that to help hard-hit smaller lenders it may revive a bank rescue law from the 1990s Japanese banking crisis (no fax instant cash advance). One newspaper report suggested Tokyo may set up a $100 billion fund.
Fearful selling also sent Hong Kong and South Korean shares down 7 percent while Singapore declared its first recession in six years as the U.S. stock plunge heaped pressure on economic powers to halt a global spiral of financial distress and slowing growth.
Financial policy makers from the Group of Seven major industrial nations, including Japan, are to meet in Washington later on Friday to consider what to do next, as bank bailouts, liquidity injections and interest rate cuts across the world have failed to quell investor anxiety.
After arguing for months that Japan had avoided the worst of the global financial crisis, its leaders acknowledged they were increasingly worried about the stock falls.
The dollar opened the week up on the euro amid bailout plans for two key European lending institutions, as the effects of the financial crisis on Wall Street were keenly felt across the Atlantic.
The 15-nation euro slid to $1.4406 in early European trading Monday, down from the $1.4618 it bought in late New York trading Friday.
Germany’s financial regulators and several banks stepped in Monday to throw a line of credit to Hypo Real Estate Holding AG in a multibillion euro move aimed at shielding Germany’s No. 2 commercial property lender from going under.
That came a day after Dutch-Belgian bank and insurance company Fortis NV was given a $16.4 billion lifeline to avert insolvency as part of a wider bailout plan agreed to by Belgium, the Netherlands and Luxembourg.
"The dollar (is) finding upside off the back of the progress from the Fed’s bail out plan whilst the euro and pound are both under pressure as the credit crisis once again casts a shadow on this side of the Atlantic," said Gary Thomson, a currency trader with CMC Markets.
"With (U.K payday loans. bank) Bradford & Bingley being nationalized and Fortis being multi-nationalized, it’s a clear reminder that the problem continues to roll on and most certainly isn’t ring fenced across the Atlantic."
In other currencies, the British pound bought $1.8188, down from the $1.8426 on Friday. The dollar held largely steady against the Japanese yen to ¥106.30 from ¥106.06 Friday.
Wall Street isn’t finished yet.
In a two-day span, Lehman Brothers (LEH, Fortune 500) filed for bankruptcy, Bank of America (BAC, Fortune 500) snapped up Merrill Lynch (MER, Fortune 500) and American International Group (AIG, Fortune 500) received an $85 billion government loan.
On Wednesday, rumors swirled about other banks pairing up.
Washington Mutual (WM, Fortune 500) reportedly has put itself up for sale, hiring Goldman Sachs (GS, Fortune 500) to advise it. Possible suitors include JPMorgan Chase (JPM, Fortune 500), HSBC (HBC), Citigroup (C, Fortune 500) and Wells Fargo (WFC, Fortune 500), according to published reports.
However, a person close to the situation told CNNMoney.com that JPMorgan Chase is not bidding on WaMu.
A WaMu spokesman declined to comment on the merger reports. But the bank did say that TPG Capital, its biggest shareholder, is now allowing it to raise money or sell itself without compensating TPG. The private equity firm invested $7 billion in the struggling savings-and-loan in April.
"It became clear that it would be in the best interests of Washington Mutual and our investors to waive the price reset payment provisions that were agreed to with the bank at the time of our original investment in April 2008, TPG Capital said in a statement. "Our goal is to maximize the bank’s flexibility in this difficult market environment."
This removes a big barrier for WaMu, whose shares have tumbled over the past week as two credit rating agencies downgraded it to junk status over concerns it could not raise much-needed capital.
Meanwhile, Wachovia (WB, Fortune 500) is said to be considering a merger with Morgan Stanley (MS, Fortune 500), whose share price has been battered despite reporting better-than-expected earnings late Tuesday afternoon payday loans in 1 hour. Morgan Stanley is one of only two stand-alone investment banks left on Wall Street.
Still, Wachovia has also been hit hard by the mortgage meltdown. The company reported a $9 billion loss in the second quarter — the company’s second consecutive loss — and also slashed its dividend by 87%
Wachovia’s problems cost then CEO Ken Thompson his job in June. He was replaced a month later by Robert Steel, a former Treasury undersecretary.
Spokespeople for Citigroup, Washington Mutual, JPMorgan Chase, Goldman Sachs, Wachovia and HSBC declined to comment. Morgan Stanley did not immediately return calls seeking comment.
The flurry of activity signals the financial industry is testing the waters, said Jason Tyler, a senior vice-president at the Chicago-based Ariel Investments, which manages about $9 billion. But he cautioned that not every merger report will turn out to be true.
"You have bankers throwing rumors around trying to see how the market would react to things," Tyler said. "It is going to be impossible to tell rumor from fact for a while. We are going to hear 10 times as many rumors for every serious conversation."
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