In conversation: James Altucher

By Colin Campbell - Tuesday, December 20, 2011 at 10:50 AM - 0 Comments

James Altucher is the managing partner of Formula Capital, and the author of several finance and motivational books based on his wild career—he has made millions, lost it all and recovered it again, suffering an emotional breakdown along the way. His website Altucher Confidential has been viewed 10 million times since its launch last year. And his latest self-published book, I Was Blind But Now I See, is among the top-ranked motivational books on Amazon’s Kindle store. Altucher, who created StockPickr.com, was also a columnist for London’s Financial Times.

Q: Your self-help books focus on your own losses and failures and how you overcame them. What has struck a nerve with people?

A: I think everybody is ashamed. Of what? That in 2009 the tide came in and they either lost their job, their marriage or they had trouble paying their mortgage, or at any time in the past 15 years they didn’t make as much money as their friends. I think my book gives permission that that’s okay. We’ve all been through it.

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Econowatch: December 2011

By Colin Campbell - Wednesday, December 7, 2011 at 12:10 PM - 0 Comments

David Paul Morris/Getty Images

Feeling down about the state of the economy? You’re not alone. According to a recent global survey, nearly a quarter of the workforce, weighed down by economic uncertainty, is depressed. In Canada, a poll found that 89 per cent of workers feel overworked, up from 64 per cent two years ago. There is not a lot of positive energy going around.

Unfortunately, this could become a chronic condition, because there’s little to suggest that the economy will spring to life any time soon. Nowadays, just as things start to look up, they drop back down. U.S. third-quarter growth was recently revised downward, from 2.5 per cent to two per cent. Markets are swinging almost daily by amounts they once moved only over a period of months.

Many observers are coming to the conclusion that this go-nowhere drift is the new normal. We could be headed for a long era of disappointment, like the one the U.S. economy fell into in the ’70s, when markets were all but dead and growth stalled. Even politicians are throwing up their arms. “Our world has entered into a time of slower growth,” warned the Ontario Liberals in their recent Throne Speech, “and we expect that slower pace of growth to continue throughout the four-year mandate given to this parliament.” A stirring message: four more years of hard times.

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Down with bosses

By Colin Campbell - Tuesday, November 29, 2011 at 9:10 AM - 0 Comments

Luis Markovic/Flickr

Imagine an office with no managers. Workers have no doubt fantasized about it once or twice in the confines of their cubicles, but it’s an idea that could actually have some useful benefits for organizations, argues Gary Hamel, a professor at the London Business School and business strategy expert. Managers are expensive, for starters. A company with 100,000 employees might have 10,000 managers, plus another 1,111 managers to manage the managers, he writes in the Harvard Business Review. All told, they could account for 33 per cent of the payroll. Big management hierarchies also up the odds of “calamitous decisions”—the bigger the decision, the smaller the number of people who can challenge decision-makers—and slow down the decision-making process. They also limit the incentive for lower-level workers to contribute ideas. Of course, in the real world, managers do offer a necessary guiding hand. Even if, as Hamel concludes, it can be “inefficient and often ham-fisted.”

Black Friday creep

By Colin Campbell - Wednesday, November 23, 2011 at 11:10 AM - 0 Comments

Daniel Acker/Getty Images

The day after Thanksgiving is a quasi-religious shopping experience in the United States. It kicks off the all-important holiday shopping season with a day of frenzied buying amounting to over $10 billion in sales. This year, many big box retailers plan to open a little earlier than the normal 4 a.m.—some on Thursday, Nov. 24, Thanksgiving Day itself. Target, Macy’s and Best Buy will all open at midnight on Thanksgiving, reports the New York Times. Wal-Mart, the hours-expanding trailblazer of the bunch, will open at 10 p.m. Thursday. Critics say this is yet another sign of the evils of consumerism. Employees will have to work on the biggest holiday of the year, while shoppers will have to head to the mall before the turkey is even carved, if they hope to beat the lineups. But with recent data showing worrying signs that retail sales are slowing leading into the holiday season, retailers appear to be wisely searching for any kind of advantage—even if it’s only an extra hour or two with the tills open.

Foxconn’s robot empire

By Colin Campbell - Monday, November 14, 2011 at 9:10 AM - 0 Comments

Bobby Yip/Reuters

For all the love heaped on Apple’s artful products, critics have long pointed to a dark side—the working conditions at factories where iPhones and iPads are made. Foxconn, the Taiwanese electronics manufacturer that churns out the gadgets, has struggled in recent years with over a dozen worker suicides in China. In response, it has boosted wages and even put up netting to stop employees from jumping from rooftops.

Its latest bid to solve labour woes goes a step further. Last week, Foxconn launched a $224-million project to build one million robots in the coming three years to use in its factories. The output, which has been described in Taiwan as “an empire of robots,” will double the number of industrial robots in the world and replace 500,000 Foxconn workers. The company has said the efforts will move employees “higher up the value chain.” No doubt it will also ease rising labour costs and shortages.

Econowatch: October 2011

By Colin Campbell - Tuesday, October 11, 2011 at 11:00 AM - 1 Comment

Mike Blake/Reuters

The TSX is down 20 per cent from its April high. It’s official, the bear market is back. The financial news is so bleak that even viral videos, which normally feature cute animals and footballs hitting groins, seem to have lost their sense of humour. Last week, one of the most talked-about Web videos was of a stock trader telling a BBC interviewer how the economic crisis is a cancer. “If you just wait and wait hoping it is going to go away, just like a cancer it is going to grow and it will be too late,” said Alessio Rastani, who argued that “the stock market is finished” and that people should hedge against an inevitable crash, like hedge funds are now doing.

Bloggers and business publications were quick to question Rastani’s bona fides. He’s self-employed, has modest holdings and is, in short, just an average guy. Which maybe explains why his message touched a nerve among average investors trying to make sense of the market chaos as their savings evaporate.

More importantly, it speaks to the extent that the economic crisis is one of confidence. Consumer confidence surveys show optimism has gone AWOL, even despite recent data showing there are silver linings. In the past months, companies have continued to go about their business—factories are humming in Canada and the service sector is growing. In the U.S., economists are predicting GDP will grow in the third quarter. Troubles still loom large. Employment is stalled and the eurozone is teetering. But tune out the markets for a moment, watch the likes of Rastani with all the seriousness you would a kitten slipping off a windowsill, and things aren’t so bad. Or at least, they could still be a lot worse.

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In conversation: Kevin O’Leary

By Colin Campbell - Wednesday, October 5, 2011 at 10:50 AM - 2 Comments

Jessica Darmanin/Maclean's

Before becoming one of the star investors on CBC’s Dragons’ Den and ABC’s Shark Tank, Kevin O’Leary founded the software firm SoftKey, which later became The Learning Company and merged with Mattel in a deal worth nearly $4 billion. He now heads the investment firm O’Leary Funds and also co-hosts CBC’s The Lang & O’Leary Exchange. His new memoir Cold Hard Truth hit shelves last week.

Q: You offer a lot of lessons in your book about how to succeed in business. Can entrepreneurialism be taught?

A: I actually think being an entrepreneur is a state of mind. If you’re going to be an entrepreneur, my thesis is that you have to sacrifice everything for some period in your life to be successful. You have to be myopic and completely focused and unbalanced in every way. Once you achieve success, you’re free to do whatever you like.

Q: You write about being steered into business by your stepfather and mother.

A: Well, my mom’s attitude was, you’re going to find your own path, and life is serendipitous. She wasn’t as rigorous and hardcore as my dad, who looked at me one day and said, “You’re going to amount to nothing. All you do is party and you want to be a photographer. That’s the most competitive industry on Earth. You’re not that good.” The guy was giving me the truth: you should go back to school and at least get some tools.

Q: There are professional photographers. You could have pursued that.

A: I wanted to do that. I wanted to go to Ryerson. His thesis was: what’s your competitive advantage? What’s your difference? I’ve met with and worked with many photographers now, and I realize that it’s a brutally competitive market and they are really, really good. I honestly don’t think that I have that.

Q: This was your stepdad. Your biological father you describe as being a real salesman. Do you think you inherited that from him?

A: I do. I noticed the other day in a photo of him with his arms stretched in a position I do a lot; it looks just like I do. He died when I was seven. But I remember him. He was a classic Irish partier. A very kind man but also a real renegade.

Q: He lived hard?

A: Very hard. It’s what those Irish guys did. My mother divorced him right before he died and I think he died with a broken heart.

Q: What do you think he would have made of Dragons’ Den?

A: He would have been proud of me. He really missed a lot of life. I think he drank himself to death. It’s something I’m very cognizant of.

I was driving a couple of years ago and Peter Munk, the chairman of Barrick Gold, calls me and says, “Did you know that I came over on a boat with your father from Ireland? He was my roommate.”

Q: Get out of here.

A: No I’m serious. He said, “I just wanted to call you and let you know that he was a great guy.” It was a remarkable moment.

Q: What about your mother? Did she have a chance to see any early episodes of you on television?

A: She did and she was always fascinated by television. She actually enjoyed Lang & O’Leary more than anything. She really respected Amanda.

Q: Your mom factors heavily in your book . . .

A: She was an amazing woman and went through a lot of hardship, but also gave me tremendous guidance and support. She had an investment philosophy that I didn’t appreciate then but I do now. She said, never invest in anything that doesn’t have yield. When she died three years ago, I was executor of her estate and I realized she had every single dime she’d ever made.

Q: That’s still your investment philosophy today.

A: And it works! It really works.

Q: She was a working mom too, right?

A: A working mom. Her father owned [a clothing factory] but his philosophy was that the daughters all had to work on the sewing line. She was the boss’s daughter but not treated differently than anybody else. That’s how I treat my kids, too. When I fly over to see my dad in Geneva, my son has to sit in the back of the bus because I say to him, you have no money. You can’t afford to sit in first class. It’s a good lesson. He gets it. It makes him mad.

Q: Your mom later became the CEO of the family company.

A: It was tough. I had a German nanny. My dad was gone. I had dyslexia.

Q: You write in your book, “Money is the lifeblood of family.” Explain that.

A: Unfortunately it’s the truth. You can say family can be held together by love, but the truth is if there’s no capital there you get into a very bad place. Money puts tremendous pressures on relationships if you don’t have any.

Q: But your parents would have loved you if they were broke and living in a shack, right?

A: Yeah, but you know . . . money tears families apart for lack of, and for too much. It’s a very powerful force and you have to understand it and respect it.

Q: People would probably be surprised to hear about your whirlwind childhood—living in Cambodia, where your stepdad worked for the UN, going to military college in Quebec. Was that hard?

A: It was hard. I think back and think I missed something. But at the same time it gave me an appreciation of the world. I own real estate in Cambodia because I know it’s a great place for real estate. No one else knows—but I lived there for two years and I’ve been back.

Q: What did you learn at military college?

A: The discipline of getting up at 4:30 in the morning.

Q: Do you still do that?

A: I do. I get up between 4:30 and 6:30 every day.

Q: Were you a popular kid?

A: I had good friends. What’s happened to me over time is my best friends are the ones I’ve been to war with in business. I make friends inside a company and I stay friends with them the rest of my life.

Q: In one of your early endeavours you worked in TV production, including on Don Cherry’s Grapevine, a half-hour interview show. What was that like?

A: I owned that format. I owned Special Event Television with two partners. The first time I made money was selling Don Cherry’s Grapevine to his son.

Q: Do you channel Don Cherry when you’re on TV now?

A: I really respect Don. When you go on television it’s because you’re trying to create something people watch. He’s very flamboyant, entertaining and I think he taught me a lot about that.

Q: On TV you have a reputation as being the mean guy. You have a story about one man who came up to you in an airport washroom after seeing you on Dragons’ Den and called you an asshole. You’ve said this kind of stuff doesn’t bother you.

A: It doesn’t bother me at all.

Q: It’s hard to believe. Everybody wants to be liked.

A: Here’s why I know I’m right about this. The reason he said that is that I’m simply telling the truth. The one thing about money is you have to tell the truth about it. It’s the only metric in life where there’s no grey. You either make money or you lose money.

Q: I think you’ve described telling someone their idea stinks as “exhilarating.”

A: Because we’ve gone through this journey together; we’ve explored an idea and we’ve come to the right conclusion: it’s stupid. That’s a good outcome. I’m not trying to make friends, I’m trying to make money. My whole theme is just tell the truth.

Q: Let’s talk about The Learning Company, which you sold to Mattel in what turned out to be an epically bad merger.

A: You know, what’s interesting is the company is back [under new ownership] with all the same brands and doing very well. I think Mattel squandered a fantastic asset. One of the big motivations in writing this book was to set right what actually happened after they acquired the company. In my mind I’ve cleared the record.

Q: Obviously you’ve heard all the criticism: that TLC wasn’t profitable, that Mattel was somehow deceived.

A: Of course, if any of that were true it would have come out in the litigation. None of it was. They had forensic accountants tear our books apart for two years.

Q: You talk about how a culture clash between your software firm and a big bureaucratic toy maker ruined what could have been a good deal. The failure must have really bothered you.

A: It made me crazy. I was out of my mind unhappy.

Q: You and the CEO of Mattel, Jill Barad, both lost your jobs.

A: Well, I mean, I wasn’t happy being an employee anyway. I had a three-year non-compete. It was the most miserable time of my life. I was making the largest salary I had ever made and I wasn’t allowed to work.

Q: You once managed to get a meeting with Steve Jobs, where you asked him to pay TLC to keep carrying Mac-compatible software. What was he like?

A: He was so abusive! Toughest guy I ever met. We were in the boardroom at Apple and he went into a diatribe like I had never heard before. But we eventually did a lot of business with Apple. He’s a tough guy. Maybe that’s why it works. And hey, there’s an asshole!

Econowatch: early September 2011

By Colin Campbell - Monday, September 12, 2011 at 11:30 AM - 0 Comments

The relative calm of markets during the first week of September brought a welcome end to a thoroughly rotten August. For several days, investors rediscovered their inner bulls, largely on reports that U.S. Federal Reserve officials are warming to the idea of buying even more government bonds to try to stimulate the economy.

But there is a wide gap between the sense of optimism that was on display and what’s happening on the ground. Unemployment remains high, with no sign of healthy job creation on the horizon in the U.S. There is still no lifeline in sight for those whose mortgages are underwater (and who couldn’t refinance even if rates keep dropping). The body of evidence suggests that the economy is teetering on the edge of another downturn. In Canada, it has already slipped into reverse as exports fell—a warning sign of what’s happening beyond our borders.

So what might a new round of so-called quantitative easing do to tip the balance in the direction of growth? If the last round, dubbed QE2, is anything to go by, probably not a heck of a lot. Launched in 2010, it sought to add $600 billion into the U.S. economy (on top of the $1.7 trillion added during QE1 to halt the 2008 financial crisis). For awhile, markets soared thanks to all the cheap money available. There were also hopes that the benefits would spill over and translate into lower interest rates, more lending and eventually more spending by businesses and home buyers.

That didn’t happen. The confidence boost from rising stock prices wasn’t enough to overcome America’s bigger economic problems: unemployment and slow growth. QE2 has also been blamed for driving up commodity prices, pushing up the cost of fuel and food. And there’s no reason to think it’ll be any different this time.

CP/iStock/Getty Images

Signs of the times:

• An Italian town has come up with a bold plan to avoid Rome’s deep austerity measures: secession. The mayor of Filettino (pop. 1,000) wants to create a sovereign principality and has already printed up a new currency—adorned with his photo, of course.
• Mere weeks after downgrading U.S. debt to AA for the first time in history, Standard & Poor’s continues to hand out superior AAA ratings to mortgage-backed securities containing subprime loans—the very same financial instruments blamed for spawning the 2008 financial crisis.
• It’s not just bottled water and batteries that fly off store shelves during hurricane season. Strawberry Pop Tarts are another emergency staple, according to an economist who studied Wal-Mart’s extensive preparations for storms.
• As the EU grapples with a deepening financial crisis and fears of a second U.S. recession grow, luxury Parisian fashion house Hermès has a different problem: meeting soaring demand for expensive handbags and silk scarves. Yet another piece of evidence that we may not all be in this together.

Big Mac-onomics

By Colin Campbell - Wednesday, May 25, 2011 at 9:10 AM - 0 Comments

Remy De La Mauviniere/AP Photo

Economists have long looked to global restaurant behemoth McDonald’s as a useful tool to mine data. The Big Mac index, for instance, was invented to measure whether world currencies are over- or undervalued. A new study suggests that McDonald’s in Europe might also be used to help gauge the entrepreneurial level of certain areas.

McDonald’s has a varied customer base, hires immigrants and, at least in Europe, is seen as a symbol of “cosmopolitanism and a modern urban lifestyle,” note economists at the University of Amsterdam. So a large number of McDonald’s in a region “may be used as a proxy for the openness and international connectedness of the region.” Researchers used that location data to help prove there is a link between innovation (measured by the number of patents filed) and areas with diverse groups of immigrants from regions with high skill levels. In other words, if you want to set up shop in an idea-rich part of Europe, McDonald’s may have already identified the best locations.

The Pale King

By Colin Campbell - Tuesday, May 3, 2011 at 9:05 AM - 0 Comments

When Wallace took his own life in 2008 at age 46, he left an unfinished novel behind in his garage office in Claremont, Calif. In the notebooks, computer parts and 12 printed chapters hauled away in a duffle bag by his editor, Michael Pietsch, was “an astonishingly full” book, but also a collection of chapters with no instruction as to their order. (Pietsch’s foreword about piecing these bits together is, therefore, essential reading, and there’s an eerie parallel to Wallace’s 1996 masterpiece Infinite Jest—a book centred on the final, lost work of a suicidal genius.)

This book, which Wallace had already titled The Pale King, is about a group of employees at an IRS tax office in Illinois. That might be a turnoff to many: David Foster Wallace writes about taxes. Imagine the footnotes! (Quite a few, it turns out.) The story is frustrating in the way the 1,000-plus-page Infinite Jest could be, with multiple narratives and a plot line you’ll only really figure out if you read long and hard enough. But the book is also philosophical and darkly funny—a group of businessmen are described at one point as “men whose soft faces fit their jobs like sausage in its meaty casing.”

Wallace is often quoted describing fiction as being about “what it is to be a f–king human being.” And The Pale King is a book about human struggles—many chapters are simply snapshots of characters’ lives, thoughts or failings. Also, to really throw readers for a loop, Wallace inserts himself as a main character, beginning in chapter nine with “Author here,” followed by a long, humorous explanation about how this is really a “vocational memoir” (made all the stranger considering the book’s “unfinished” status).

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Bright idea: While supplies last

By Colin Campbell - Friday, April 29, 2011 at 8:01 AM - 0 Comments

Alamy/GetStock

News last year that Ford will soon discontinue its Crown Victoria sedan sent police forces across North America reeling. The big, rear-wheel-drive Crown Vic has long been the go-to police cruiser. It’s relatively cheap (at under $30,000), built like a tank, and is easy to fix. So before the car disappears for good, the police in Austin, Texas, are asking the city government for US$4.5 million to buy a final supply of 176 Crown Victorias—enough to last them at least five years.

This hoarding of cop cars should end up saving the city a lot of money, say the police. Carmakers are rushing to market replacement cruisers, mostly based on today’s smaller sedans. But police in Austin argue they don’t yet know how much those cars will cost (likely a lot more than the old Fords), and switching would mean replacing their entire stock of replacement parts for the decades-old car. Most importantly, the police point out the newer cars just aren’t “tried and true” like their beloved Crown Vics.

This is a message for…

By Colin Campbell - Thursday, April 7, 2011 at 9:45 AM - 1 Comment

When U.S. regulators charged Goldman Sachs last year in a civil fraud case, the first comments from its CEO, Lloyd Blankfein, came not via email, but in a company-wide voice mail. Blankfein may head the most sophisticated Wall Street firm, but low-tech voice mail is his communication tool of choice. Last week, testifying at an insider-trading trial, he said he typically receives daily profit-and-loss statements by voice mail. Goldman is known for its voice-mail culture (former CEO Hank Paulson once said he voice-mails a few hundred times a day). But it’s not unique. Starbucks chief Howard Schultz told Fortune that he receives sales results via morning voice mail, and he called email “a crutch that hinders person-to-person communication.” Voice mail may offer a more personal touch than email, but it has strategic advantages, too: it doesn’t leave a paper trail when regulators come knocking and can’t be easily leaked to the masses like an errant email.

Debt nation, take 76

By Colin Campbell - Tuesday, April 5, 2011 at 11:05 AM - 77 Comments

Treasury secretary Tim Geithner is warning that the United States will hit its $14.29 trillion debt limit by May 16th. And some weeks after that would begin defaulting on it debts. The money quote: “Default would cause a financial crisis potentially more severe than the crisis from which we are only now starting to recover… Default by the United States is unthinkable.” So unthinkable that in the past decade, Congress has voted to raise the debt ceiling ten times. In fact, it has done it 76 times since 1962. Lawmakers are finally threatening to get serious about tackling the budget deficit, but it seems pretty clear how this is going to end: badly.

Do you take cellphone?

By Colin Campbell - Wednesday, March 30, 2011 at 11:13 AM - 0 Comments

Noah Berger/The New York Times

PayPal, the online payment-processing system made popular by eBay, its corporate parent, is betting that its future may not be online, but in the real world. PayPal is planning a push into retail stores with a system that would involve swiping cellphones at registers to make payments, rather than using credit or debit cards. The company, which has 95 million users online, estimates expanding into physical stores could double its revenues to $7 billion within two years.

PayPal isn’t the only firm anxiously eyeing this market. Google and Apple are now reportedly working on cellphone payment systems—using a technology called near-field communications—as are cellphone makers like Research In Motion and Nokia. The systems could be useful for consumers who always have a smartphone in hand. But for cellphone companies looking to be the next Visa, it’s a market potentially worth tens of billions of dollars.

The return of economic risk

By Colin Campbell - Tuesday, March 22, 2011 at 12:06 PM - 18 Comments

Not long ago it seemed  the global economy had settled into a healthy recovery mode—albeit a fragile one.  But lately,  economic headwinds are blowing strong again. The attacks on Libya suggest oil fears will not ease anytime soon and the extent of the fallout from Japan (nuclear and economic) is still largely unknown. What’s more, a number of not unsubstantial problems that have dogged the economy in recent times threaten to flare up again. David Rosenberg, chief economist at Gluskin Sheff, outlines a few of those risks today, including:

-The chance that the foreclosure crisis in the U.S. could intensify.

-The unresolved European debt crisis (banks are still carrying billions in toxic loans and there remains the possibility that “some combination of Greece, Portugal, and Ireland will be defaulting at some point in the future”)

-The sorry state of U.S. finances (and the possibility that “its interest expense to revenue ratio will trigger a downgrade within the next seven years”).

-And onging geopolitical troubles in the Middle East.

2010 had its shares of ups and downs. 2011 could be even worse.

How to eat like an economist

By Colin Campbell - Friday, March 18, 2011 at 12:49 PM - 13 Comments

That is to say, how to eat the most expensive foods for the least amount of money. This piece from the New York Times, offers some useful strategy for the salad bar, where the price of a meal is based on weight (not the ingredients you chose):  “Avoid romaine ($3.06 per pound off the shelf) at all costs — and consider baby spinach ($6.67) and mesclun ($7.99) your friends.” Also avoid carrots, beets (heavy and cheap) and opt for blue cheese dressing over Italian. And if you find bacon bits, load up. They’re worth “a whopping $21.28 per pound.”

Here are some similar strategies for eating at an Indian buffet, including sticking to items that, when served as entrees on the menu, are most expensive—typically meat dishes.  “You should be good at fishing out only the high-value bits from the curry with an elegant, clean Azharuddin-worthy flick of the wrist. If a cooked-to-order masala dosa is offered, you are permitted to eat the dosa, but not the potato-based masala. The rationale behind this is that even though the dosa is made from cheap ingredients, it is a value-added product because of the specialized expertise and time required to make it properly… If others stare at you, it is their problem, not yours.”

More deep thoughts on the economics of eating out, from the Marginal Revolution blog.

Inshoring jobs

By Colin Campbell - Thursday, March 17, 2011 at 10:08 AM - 1 Comment

Ym Yik/Epa/Corbis;

For decades, manufacturing jobs offshored from North America have fuelled the massive Chinese economy. But as wages in China rise, at least one firm is taking the next logical step to hold its cost advantage: “inshoring” jobs away from coastal manufacturing areas to even cheaper provinces inland.

Foxconn Technology, one of the world’s largest electronics makers, has started shifting 200,000 workers from its home base in the coastal city of Shenzhen, near Hong Kong, to lower-cost provinces. The company plans to eventually move all of its manufacturing jobs out of Shenzhen and turn its facilities there into “an engineering campus,” reports the Financial Times.

The company has struggled recently with a series of suicides at its plants, which it responded to by raising wages. But it is also credited with helping transform Shenzhen into a global manufacturing centre, and it is expected to similarly boost the economies of new regions it pushes into.

Chart of the week: Feel-good economy

By Colin Campbell - Monday, March 14, 2011 at 10:16 AM - 12 Comments

Source: CFID

Canadian small and mid-sized businesses are brimming with confidence again. Optimism is at its highest level since the recession.

When only the rich get richer

By Colin Campbell - Monday, March 7, 2011 at 5:12 PM - 12 Comments

The U.S. Economic Policy Insititute offers this fascinating (but also scary) interactive graph. Set the slidders to the dates 1970 and 2008, and it reveals that while average incomes in the U.S. grew by US$12,320, all of the growth went to the richest 10 per cent of the population. Income for the bottom 90 per cent actually declined over that time.

The EPI’s The State of Working America publication sums up: ”This fragmenting of income growth has been accompanied by other fissures—for example, those at the bottom of the income distribution are not only less likely to get ahead financially, but they have also been left behind when it comes to recent gains to overall life expectancy. In the past three decades, it has been impossible to answer the basic question of ‘how’s the economy doing’ without first specifying for whom.”

So much for the American Dream. But this, of course, isn’t unique to the United States. A report by the Canadian Centre for Policy Alternatives found that between 1997 and 2007, the richest 1 per cent of Canadians (246,000 people) accounted for 32 per cent of all income growth.

Welcome to the new Econowatch blog, where we're all business

By Colin Campbell - Thursday, March 3, 2011 at 2:00 PM - 2 Comments

Welcome to our new business blog, Econowatch, featuring Maclean’s senior business writers Jason Kirby and Chris Sorensen, and business editor Colin Campbell. Like the Econowatch feature that appears in the magazine once a month, we’ll bring you the latest economic news as well as insights into the state of the Canadian economy and beyond. We’ll also try to keep you up to speed on the day-to-day happenings in the business world, spanning the important to the entertaining.

Bright idea: Money for nothing

By Colin Campbell - Friday, February 18, 2011 at 1:29 PM - 2 Comments

Ryan McVay/Getty Images

A federal task force on financial literacy released its report last week, and along with typical industry warnings about the need for better financial planning and education was some simpler advice on how to get more money: just ask for it. According to the report, there are billions of dollars in government benefits that Canadians are entitled to but aren’t taking. Roughly 160,000 seniors, for instance, aren’t receiving social security benefits worth almost $1 billion. Only 40 per cent of eligible families have taken advantage of grants the federal government makes to registered education savings plans. And there are 55,000 Canadians who aren’t receiving their Canada Pension Plan benefits.

In Quebec, however, the number of people missing out on their provincial pension plan is almost zero, notes the report. The province uses computer databases to identify eligible seniors, who are phoned or even visited in person to make sure they receive what they’re entitled to.

Grading the Internet

By Colin Campbell - Friday, February 4, 2011 at 12:17 PM - 3 Comments

The movie-streaming service Netflix reported last week that it now has 20 million subscribers, up from 12.3 million one year ago. Netflix’s growth has quickly made it a force in the entertainment business, but its increasingly popular service is putting steep demands on the Internet service providers responsible for delivering all those movies to customers’ homes­—and prompting a simmering battle over who should carry the data costs.

Last week, Netflix released a report card ranking ISPs in the U.S. and Canada and their ability to handle Web video offered by the company. Measuring streaming rates in kilobits per second, Netflix ranked Charter and Comcast highest in the U.S. But it was the Canadian providers who stood out, with the top-ranked Shaw and Rogers (which owns Maclean’s) and the third-placed Bell beating out all the American ISPs.

The company says it will offer the reports monthly, keeping tabs on which ISPs remain Netflix-friendly.

Ethical economists

By Colin Campbell - Thursday, January 20, 2011 at 4:40 PM - 2 Comments

In the wake of the Great Recession, economists were accused of missing the obvious warning signs of the financial meltdown. More recently, critics have suggested an even more sinister failure—that conflicts of interest clouded many economists’ forecasts. A study of 19 economists by the University of Massachusetts Amherst found that the majority failed to disclose paid affiliations with financial organizations while offering expert advice to the media and in their research. It concluded that the profession should establish a code of ethics.

This month, 300 economists signed a letter to the American Economic Association calling on the group to adopt such a code, requiring members to disclose “relevant sources of financial support and relevant personal or professional relationships.” Last week the AEA agreed to raise the issue at its annual meeting. While there is still reluctance to police the profession, the debate is a small step toward rehabilitating the dismal science.

A wider Web

By Colin Campbell - Thursday, December 16, 2010 at 1:20 PM - 0 Comments

In early 2013, a small company called O3b Networks plans to launch eight satellites capable of offering low-cost Internet and cellphone service to much of the developing world. O3b, which refers to the “other three billion” people in the world without reliable broadband access, said last week that it has raised US$1.2 billion, enough to put its first satellites into orbit. Google is one of the firm’s chief backers, along with several investment firms and banks.

The satellites, which will orbit four times closer to Earth than traditional satellites, will be able to quickly transmit data to local Internet service providers and telecom companies in as many as 150 countries (or 70 per cent of the world’s population), says O3b. While the company maintains it will turn a profit, it has more virtuous aims too: by connecting developing countries to telecom systems in the rest of the world, it hopes to provide a big boost to business and investment in emerging markets.