Mock Turtle

It’s time to set some new rules around use of the phrase “in this economy.”

Rule number one: If the extra fee you’re talking about can be counted on your hands, “in this economy” does not apply.

Example, courtesy the Star:

Cathy Dernick’s eyes widen in surprise as she learns that come June 1, she’s supposed to start charging customers at her north Toronto women’s clothing shop five cents for every plastic shopping bag they use.

“I didn’t know that,” says Dernick, then adds: “Poop. In this economy.”

Her customers are buying clothes. And they’re going to care about 5 or 10 extra cents?

We need more rules to rein this in. More suggestions/examples?

2 Comments »

While the recession has hit home for me of late, it’s still hard to tell how bad things are out there. It’s especially hard to read if, like many others, you are avoiding shopping quite as much as you usually do: this means you miss the note of desperation in the continued discounting, the sales that have lasted since well before Christmas. Even Holt Renfrew is now well into the game now, offering a gift card worth ten percent of spending over $250.

But recent data from the Bank of Canada is evidence that not only have the wheels have come off the Canadian economy, but the wheel-less vehicle that remains is tumbling into a ditch.

First, look beyond headlines about the bump in March retail sales in Canada. From a TD Economics note on the new numbers:

So far, peak to trough, retail sales have fallen three times as fast as the 2.1% decline during the 1990’s recession. Moreover, the stronger than expected retail sales were driven price effects. Stripping
out prices, sales were down 0.3%.

And forget about Canada — with its magic banks that will save us from everything — suffering a mild sideswipe while the rest of the world suffers. This kitten has some serious claws. The contraction in the first quarter is just astonishing:”

The economy shrank at an annual rate of 7.3 per cent in the first three months of 2009, a dramatic collapse that the central bank said will force it to adopt “unconventional” methods of monetary policy making if the freefall continues.

I have to repeat this again: Seven-point-three per cent. That’s approaching Russia territory.

And am I the only one who finds the phrase ‘”unconventional” methods of monetary policy making” profoundly disturbing?

1 Comment »

All right, it’s not every day I link to a blog promoting conspiracy theories, but this one has a Canadian angle — and some connection to reality.

There has been a plethora of articles in recent months about the close ties between Goldman Sachs and the past and current presidential administrations, AIG, etc. And it’s undoubtedly true that Goldman Sachs alumni are in positions of power all over the place –such as, for one, the Bank of Canada with its oddly clueless Governor Mark Carney.

Recently, Goldman Sachs has been accused of goosing the price of oil, leading to the surge in the price per barrel to US$147 July 2008.

So there are lots of stories about Goldman Sachs floating out there, and one blogger launched what amounts to an agglomeration of them on his blog, Goldman Sachs Info, Comments, Opinions and Facts. That was at the end of March; GS is already pursuing legal action. Now, I don’t share the author’s contention that GS is “evil” — just like I didn’t buy the premise of the documentary The Corporation, either, that corporations are psychopathic. But I do see value in bringing together the many threads of information on the power that Goldman Sachs wields, because it’s noteworthy in and of itself.

Comments Off

N of only 24 on this study, but very interesting stuff:

Expert Financial Advice Neurobiologically “Offloads” Financial Decision-Making under Risk

A simple financial decision-making task involving risk was employed in the current study to investigate the behavioral and neural mechanisms by which financial advice, provided by an expert economist, affected decisions under risk. Behavioral results showed a significant effect of expert advice on probability weighting, such that probability weighting functions changed in the direction of the expert’s advice. The behavioral effect of expert messages was paralleled by changes in neural activation patterns. Of note, significant correlations with the value of the lottery were obtained in the absence of the expert’s advice (NOM), but not during its presence (MES). These results support the hypothesis that one effect of expert advice is to “offload” calculations of the value of alternative behavioral options that underlie decision-making from the individual’s brain.

Much more in the article.

Comments Off

Star today: How I lost my Bay St. job and found true happiness

It’s a familiar story — to me, at least:-) Girl gets MBA, pursues high-paying job, is laid off/gets a bonus that makes it easy to walk away, soul-searches, finds lower-paying dream job. OK, her story has a Marley-and-Me-esque dog involved. But let’s be clear: working in marketing at Bell Canada, while undoubtedly soul-sucking, is not “Bay St.”, e.g., the capital markets. Is it the Star’s mislabelling or the writer’s?

6 Comments »

The Globe’s John Doyle sums up one of the problems that plagues business television in his enjoyably tart column from Thursday:

All-business television and business news segments had to create their own iconography, mainly because business news is essentially boring and difficult to illustrate. The natural, real-world imagery of business TV is footage of some machine stamping loonies or churning out $20 bills. The only alternative is a tracking shot of shirt-sleeved traders talking on the phone and staring at computer screens.

Now, I’ve spent many hours trying to find interesting footage to accompany stories on accounting malfeasance and drops in GDP, so I know exactly what he’s talking about. However, I’d question his assertion that business news is boring. In defence of business newscasters everywhere, some of us are fascinated by the market, which overreacts as much as it underreacts to events and whose moods are buffeted by geopolitical activity as much as by actual corporate earnings. Watching the ups and downs of stock indexes in real time can be as weirdly fascinating as watching an ant — or a toddler — make its incomprehensibly chaotic way on the sidewalk. That’s why people watch business television — and, importantly, why there must always be a market update every fifteen minutes.

3 Comments »

The current issues of the New Yorker and Vanity Fair both have good features on the end of Iceland’s short tenure as finance superpower. Both are worth reading, but if you only have time for one, Vanity Fair‘s piece, by Liar’s Poker author Michael Lewis, better captures the insanity that took hold:

I spoke to another hedge fund in London so perplexed by the many bad LBOs Icelandic banks were financing that it hired private investigators to figure out what was going on in the Icelandic financial system. The investigators produced a chart detailing a byzantine web of interlinked entities that boiled down to this: A handful of guys in Iceland, who had no experience of finance, were taking out tens of billions of dollars in short-term loans from abroad. They were then re-lending this money to themselves and their friends to buy assets—the banks, soccer teams, etc. Since the entire world’s assets were rising—thanks in part to people like these Icelandic lunatics paying crazy prices for them—they appeared to be making money. Yet another hedge-fund manager explained Icelandic banking to me this way: You have a dog, and I have a cat. We agree that they are each worth a billion dollars. You sell me the dog for a billion, and I sell you the cat for a billion. Now we are no longer pet owners, but Icelandic banks, with a billion dollars in new assets.

Comments Off

Local real estate agents have assured would-be sellers that the real estate market will pick up in the spring, and judging by the number of new listings on MLS, many gullible (and/or cash-strapped) homeowners are taking them at their word.

Guava.ca tracks the actual reduction in listing prices in Toronto (for single-family houses only) by cross-referencing new listings to the original ones that were pulled. While the majority of price decreases continue to be minimal (and no more than might be expected to be presented in a competitive offer to purchase), there are some significant reductions beginning to appear, like this one, for a Mimico home on the market since November that’s been reduced by more than 30%:

W1512095 – W06 – 2656 LAKE SHORE BLVD W,TORONTO, Ontario, Canada – $295,000

Price Change. Feb 23: $295,000 Jan 25: $299,900 Dec 21: $319,900 Nov 15: $429,000
Olde Mimico Charmer Built In 1928! One Of The Largest 4 Br Semi-Detached Homes Ever Built On A 40 Ft Lot With Private Driveway For 4 Cars! Renovated Kitchen, Bath,Flooring,Waterproofing,Newly Paved Driveway! W/O To Newly Built Wood Deck! (Opportunity For Duplex,Triplex Or Rooming House To Be Confirmed By Buyers!)Across From Lake Ontario And Homes From 1 To 5 Million Dollars! Hurry****

I guess those hundred Iranians don’t like Etobicoke.

Guava also charts several indicators, including months of inventory, which sits at about 8 months right now, or double what it’s been in any January for the last five years.

1 Comment »

For morning news, the BBC podcast wins, hands down. Yesterday in an interview about bailouts, an interviewee’s comment on bankers:

…put on airs and graces not justified by talent or industry

Ouch!

Beat that, Globe and Mail, source of the morning’s most blathery podcasts…

Comments Off

Somehow, the Canadian Association of Retired People — CARP — has moved from being, well, an association of retired people, to “50-plus”, to — wait for it — 45 and over.

45 and over? At a time when Freedom 55 is stretching to Freedom 65 and there is debate about moving out the qualifying age for the Canada Pension Plan to 70, what’s the rationale behind this? Being inclusive of dot-com millionaires? Do people really want to be considered seniors for a full half of their lives? With “youth” stretching into the thirties, this moving of the goal posts leaves a mere decade or so of pure, unprefaced adulthood.

If you’re really that eager to move into what will surely feel like an endless last phase of your life, good news! According to the CARP website, “you don’t need to be 45+ or retired to join CARP.” Wow — you mean I can start fretting about my golden years RIGHT NOW? Fantastic.

It’s all kind of explained by the fact that Moses Znaimer — who actually is 65+, I believe, though not retired — is now the executive director of CARP (new slogan: A New Way of Aging). He’s after readers for his magazine, Zoomer — free with your CARP membership! — and, it seems, has adjusted the CARP catchment to match the desired demographics of his magazine. I frankly think he runs the risk of turning off a lot of people in the process — retired people who feel like they’re being shoved aside in favour of courting younger, hotter-looking adults, and the younger, hotter-looking adults who are in the middle of raising elementary school-aged children and not really feeling they are in the same place as their parents. But maybe Moses knows something I don’t.

Comments Off