By macleans.ca - Tuesday, February 19, 2013 - 0 Comments
The tourist hot spot is full of beaches, warm weather—and debt
Sun, sand and Hollywood stars put Acapulco on the map. Crime, cartels and decapitations sent it to the scandal sheets. Now the granddaddy of Mexican destinations is attracting damaging attention again for a debt so crushing that the municipal government couldn’t pay the severance packages of 500 outgoing police officers. “Acapulco is bankrupt,” new mayor Luis Walton said recently, adding that the debt had soared 394 per cent to $123 million under his predecessor, Manuel Añorve Baños.
The revelations threaten to further ruin the reputation of a city better known for gangland gore. And it’s not the only Mexican municipality confronting problematic public finances and crime. Mexican municipalities now owe a collective $4 billion in debt, according to the federal government, up from almost nothing a decade ago. Analysts attribute it to poor incentives: Mexican mayors serve single, three-year terms with no re-election so they undertake expensive, ornamental projects (like parks and bridges) instead of fixing the waterworks or funding police departments.
How Acapulco spent so much money remains a mystery—Añorve denies the allegations of mismanagement. Little was spent on security, according to Raymundo Díaz, director of an Acapulco human rights group, who says outside the tourist strip patrolled by soldiers are barrios rife with crime and extortion.
By The Canadian Press - Thursday, December 20, 2012 at 4:33 PM - 0 Comments
Unions face mounting challenges as employers feel the pinch in a tough economy
MONTREAL — After nearly a year of searching for a job close to home, welder Garnet Cooke is preparing to leave family behind and follow the trail blazed by many other unemployed Ontario workers who have headed west in search of a new life.
“I have been in this field for 35 years (and) I don’t wish to take any more steps backwards,” says the 54-year-old laid-off Electro-Motive worker.
Dave Clark said he’s gone through various stages of grief since he too lost his job at the London, Ont. locomotive plant after 18 years.
“There’s some really bad news out there. People are splitting, families are breaking apart, some people are filing for bankruptcy already. It’s tough.” Continue…
By Chris Sorensen - Thursday, February 25, 2010 at 7:00 AM - 5 Comments
Bought by Calgary’s Shaw, Canwest could be on the move
At 33 storeys, Canwest Place in Winnipeg proudly bills itself as “the largest office tower between Toronto and Calgary,” and there’s no question its namesake tenant—Canwest Global Communications—has also helped raise the profile of the Prairie city. But now, some fear the troubled communications conglomerate could be leaving town after Calgary-based cable operator Shaw struck a deal to buy control of Canwest as it struggles to restructure under bankruptcy protection.
Details of the deal remain sparse, but Shaw says Canwest will continue to be run as a separate company, which would make it easier to retain broadcast licences (Canwest’s newspaper business was not included in the deal). But the reality is that, if the sale goes through, the decision-making power will now be in downtown Calgary, not Portage and Main. “I guess all bets are off in terms of how things are going to evolve here,” says Dave Angus, the chief executive of the Winnipeg Chamber of Commerce. While he says a strong case can be made for keeping Canwest in Winnipeg because of the city’s cheaper costs and a quality workforce, it won’t be the same as when Canwest was a homegrown success story, built by the late Israel “Izzy” Asper, who championed Manitoba at every turn and resisted efforts to move the company out east.
In addition to occupying the city’s tallest building, the company or Asper name adorns a ballpark, research hospital and business school. Asper was also the driving force behind the Canadian Museum for Human Rights, which is now under construction. Angus says the Canwest situation, while unfortunate, isn’t cause for alarm in Winnipeg, noting that Shaw has significant presence there. Besides, it’s not like anyone is talking about moving the headquarters to Toronto.
By macleans.ca - Thursday, January 28, 2010 at 9:10 AM - 0 Comments
A week in the life of Yulia Tymoshenko
A week in the life of Yulia Tymoshenko
The prime minister of Ukraine, Tymoshenko is set to face Viktor Yanukovych in second-round
voting for the country’s presidency, expected to be held next month. Tymoshenko was a leader of Ukraine’s Orange Revolution, the popular uprising against Yanukovych in the aftermath of the country’s 2004 presidential election. While Tymoshenko blamed Russian interference back then, she is now seen as being in favour of closer ties with Russian Prime Minister Vladimir Putin.
A Canadian man who conspired to commit mass murder in the name of Islam has been handed the harshest punishment possible: life behind bars. The judge who delivered the sentence said it best: “It is difficult to put into words Zakaria Amara’s degree of responsibility. He was the leader and directing mind of a plot that would have resulted in the most horrific crime Canada has ever seen.” The confessed ringleader of the “Toronto 18”—a man obsessed with detonating truck bombs—was hoping for a 20-year term, which, with credit for time served, may have put him back on the streets by the end of the decade. But the life sentence ensures Amara will remain in prison until the day he dies, or the day the National Parole Board decides he is no longer a threat to fellow Canadians. We hope that’s a very, very long way off.
By Jason Kirby - Friday, December 11, 2009 at 8:30 AM - 7 Comments
A weekly scorecard on the state of the economy in North America and beyond
Even before Canada’s job market shifted back into high gear with Friday’s encouraging jobs report, it was clear something fundamental had changed. Never mind the recent prognostications by analysts about better days ahead. Sometimes all the cues you need can be found in the lives of the people behind the statistics.
Take the story of an employee we’ll call Janice who works at a small, struggling auto parts supplier outside Toronto. As the economy began to crumble last year, management put everyone on a four-day workweek and slashed pay, even as they rewarded themselves with bonuses. Workers weren’t happy, but what could they do? It was brutal out there.
Then a few days before the new employment data was released, the higher-ups tried to turn the screws again with more pay cuts. Only this time a couple of employees in the sales and accounting departments did something that even two months ago would have been unheard of—they told their boss to shove it. “Quitting felt so good,” Janice said, after giving her notice. And here’s the kicker: she didn’t even have another job lined up yet.
That, folks, is what economists describe as a rebound in confidence. But most people would just call it chutzpah. And it’s something we haven’t seen in the labour market for a very long time.
Make no mistake, the fact the economy added 79,000 new jobs in November doesn’t guarantee a prompt and speedy recovery. There are still vast numbers of Canadians out there fearful for their jobs. Younger workers in particular have felt the brunt of the recession, with an unemployment rate nearly twice the national average. Nor are investors convinced Canada’s economy is back on solid ground. It’s not gotten much attention yet, but Canada’s stock market has been sputtering sideways for months now, with the much-heralded rally actually ending back on Sept. 16, when the TSX closed at 11,555 points—almost exactly where it languishes today.
But put all that aside for a moment. During the recession Canadian employees were repeatedly asked to take one for the team. Yet prior to the downturn, Canada was in the throes of a labour shortage. As skilled workers begin to reassert themselves, the balance of power will shift back to its previous state. It may take some time, but you can bet many disgruntled employees are just plucking up the courage to follow in Janice’s footsteps.
THE GOOD NEWS
The Canadian real estate sector continues to drive the country’s economic recovery even as some warn of the possibility of a housing bubble. Statistics Canada said the value of building permits hit a 13-month high of $6.1 billion in October, an increase of 18 per cent. Economists had predicted a one per cent jump.
The Obama administration is planning to cut its Troubled Asset Relief Program by some $200 billion as Wall Street appears to be on the mend. The U.S. government now plans to spend just $141 billion over the next decade on the financial sector.
’Tis the e-season
U.S. online retailers enjoyed a five per cent jump in sales on the first Monday following American Thanksgiving, now known as Cyber Monday, the day when Americans return from a holiday spent window shopping and place online orders. The US$887 million that was spent equalled the busiest e-commerce day on record.
Restaurants, grocery stores and other retailers are hiring more employees, as confidence in the economic turnaround grows. In November, nearly four per cent of all job applications resulted in hires, the highest level so far this year.
THE BAD NEWS
Cool on cars
Automakers may be seeing a faint light at the end of the tunnel as North American sales of cars, trucks and SUVs gradually pick up—but Canadians don’t seem to be doing much of the buying. Car sales in Canada were down 2.9 per cent in November after driving off a cliff in October. By contrast, vehicle sales in the U.S. market were essentially ﬂat year-over-year, with observers blaming the U.S. government’s Cash for Clunkers program for recent volatility in U.S. sales numbers.
Manufacturing levels in the U.S. did not increase as much as economists had hoped in November. The Institute for Supply Management’s manufacturing index fell two points from the month before to 53.6. Nevertheless, the index still shows an increase in output year-over-year, suggesting the economy continues to expand.
The number of U.S. companies and people being pushed into bankruptcy continues to soar. Bankruptcy petitions were up 26 per cent in November compared to the same time last year, according to data compiled from court filings by Jupiter eSources. The good news is there were slightly fewer bankruptcy petitions in November than October. Still, the first 11 months of this year resulted in 1.3 million U.S. bankruptcy filings, about 21 per cent more than in all of 2008.
Graph of the week
A real recovery • The very modest GDP growth in the third quarter suggested a recovery in Canada won’t be easy. But there are more encouraging signs that the recession is truly over. Both consumer spending and business investment posted the biggest gains since 2007.
Signs of the times
- Don’t stand between a banker and his bonus. The board of the Royal Bank of Scotland threatened to resign en masse after the British government suggested it might veto bonus payments for 20,000 investment bankers. Hundreds of the bankers have already reportedly quit in protest. The bank received a nearly $80-billion bailout last year, and has come under intense scrutiny for its bonus plans.
- Fore! Close! The game of golf has been sent running for cover by the recession. This year, 114 courses have closed in the U.S. as players cut back on green fees. Several others have been forced into bankruptcy as values of some courses have fallen as much as 50 per cent in the real estate crash. The industry has been hit by its own credit crunch, too, as golf course lenders have turned off the taps.
- Alligator farmers in Louisiana, the alligator farming capital of the world, have felt the bite of hard times. Last year, the farmers picked 500,000 wild alligator eggs. This year, they haven’t taken any as demand for luxury alligator skin products, from watch straps to hand bags, has disappeared. Their troubles have been made even worse by an oversupply of alligator skin in recent years.
- Damn the recession, it’s full speed ahead for the cruise ship industry. Royal Caribbean just launched Oasis of the Seas, a US$1.4-billion ship that rises 20 stories above the sea. Norwegian Cruise Line has an equally big ship in the works—the US$1.2-billion Norwegian Epic. Despite the downturn, the companies say they’re taking the long view with ships that will be plying the seas for 30 years.
After months of shedding workers, Canadian companies are finally hiring again. Some 79,100 jobs were created in November, including many in the key private sector. That blew by economists’ forecasts and, when combined with similarly positive U.S. jobs data, raised hopes that the economy is recovering faster than expected.
“Job numbers tend to be quite volatile, but there may be something to this.” - Eric Lascelles, chief economics and rates strategist, TD Securities
“November’s net hiring was all the more encouraging in that it included a swing back toward paid employment at the expense of self-employed jobs.” – Avery Shenfeld, chief economist, CIBC World Markets
“The solid November report offsets the prior month’s disappointing drop.” - Benjamin Reitzes, economist, BMO Capital Markets
“Canada’s economy is transitioning from recession to recovery.” - Sal Guatieri, senior economist, BMO Capital Markets
“This was a surprisingly strong report with details matching
the ‘wow’ factor in the headline print.” - Ian Pollick, strategist, TD Securities
“We consider this pace of job growth to be unsustainable.” - Millan Mulraine, economist, TD Securities
“With the unemployment decreasing and the participation rate rising, there is no doubt that the Canadian labour market is improving.” – Yanick Desnoyers, assistant chief economist, National Bank Financial
The Week Ahead
FRIDAY, DECEMBER 11: The U.S. Census Bureau will release retail sales figures for November. Sales are expected to rise slightly.
MONDAY, DECEMBER 14: The capacity utilization rate of Canadian industries will be reported by Statistics Canada. The rate hit a record low of 67.4 per cent in the second quarter of this year.
WEDNESDAY, DECEMBER 16: Statistics Canada will report manufacturing sales for October. Sales were up 1.4 per cent in September.
By Chris Sorensen - Thursday, December 3, 2009 at 12:40 PM - 0 Comments
A high-flying auction house is bankrupt, creditors are fuming. What went wrong?
Ira Hopmeyer is sitting on a metal chair inside a stuffy sixth-floor room in a government building in midtown Toronto. A tall man with a mane of wavy brown hair, he is wearing a black suit, white shirt and red power tie. The 51-year-old made a name for himself as the chief executive and majority owner of the Toronto auction house Ritchies, which sold rare pieces of Canadian art to billionaire collectors and had a partnership with international heavyweight Sotheby’s. Hopmeyer lived well too, driving a 2005 Jaguar XJ and calling a swanky Yorkville pad home.
But on this day, in mid-November, he is dealing in the decidedly less glamorous business of Ritchies’ bankruptcy. For the most part, Hopmeyer is attempting to deflect questions by angry consignors and creditors. He says he hadn’t been involved in the day-to-day operations of the auction house for years, and only recently became aware of the severe financial issues it faced. “I’m not blaming anybody,” Hopmeyer says when asked why he appeared to be shirking responsibility for what happened. “I’m blaming [the fact] that expenses were exceeding the revenues.”
Needless to say, such explanations aren’t going over well. One exasperated woman stands up and hurls a “F–k you” in Hopmeyer’s direction as she storms out.
Hopmeyer’s version of the events differs wildly from that of the auction house’s former chief operating officer, who unsuccessfully tried to the buy the business and accuses Hopmeyer of borrowing badly needed funds from the company—a charge Hopmeyer denies.
By Chris Sorenson - Thursday, November 19, 2009 at 11:20 AM - 4 Comments
Sales are coming back, as is the swagger. Is this rebound for real?
The idea was for Bob Lutz, the vice-chairman of General Motors, to challenge doubters of the beleaguered automaker to race him on Utah’s Bonneville Salt Flats. He would drive Cadillac’s muscular, 556-horsepower CTS-V luxury sedan while challengers would have their choice of rival production models. And, with any luck, Lutz would win and a brilliant marketing campaign would be launched.
But the ad agency’s concept apparently wasn’t bold enough for the former Marine, who, incidentally, flies fighter jets in his spare time. He pushed for having the throwdown on an actual racetrack, where the chance of damage to GM’s battered brand would rise with each twist and turn. “I said, ‘Hey, that’s an interesting idea, but let’s not use the salt flats, because going fast in a straight line isn’t proving anything to anybody,’ ” Lutz said in an interview with Maclean’s. “The world has always known that Americans can build cars that go fast in a straight line.” Continue…
By Martin Patriquin - Wednesday, October 28, 2009 at 9:40 AM - 1 Comment
Victims of Earl Jones’s alleged scam have a new target: the banks
For years, disgraced financier Earl Jones kept his alleged scam operating on little but the force of his reputation. He knew nearly all of his clients personally, rarely missing a birthday or a funeral, and was pleasant and reassuring even as he allegedly bilked them out of their life savings. Many of his former clients are still discovering the extent of the damage. “It’s absolutely incredible that he didn’t get caught,” says Susan Brown, a six-year Jones investor who lost $300,000. His clients included his brother and godson, among many others, as well as his son-in-law, from whom Jones coaxed $150,000 earlier this year—and, as Maclean’s recently learned, legendary hockey writer Red Fisher, who often wove tales of Jones’s prowess into his columns. Jones, he wrote, was a “matchless money manager” and a “superstar investment guru” who “always has been blessed with a talent of knowing a sure-thing investment when he sees one.” (Fisher won’t discuss the matter, but records show he lost a sizable amount of money.)
Jones’s personal and business assets, seized by bankruptcy trustees in August, won’t come close to covering the losses of his alleged victims, thought to be upward of $86 million. So his former clients are parsing the mountains of what they allege are forged cheques, falsified documents and fudged powers-of-attorney, and have found another target: the banks with whom Jones did business over the years. By not paying heed to numerous irregularities in Jones’s financial activities, say lawyers for the former clients, the banks essentially allowed the fraud to continue. “His bankers seemed to trust him as his clients trusted him,” says Ginny Nelles, one of the more outspoken former clients. Continue…
By Jason Kirby - Monday, October 26, 2009 at 10:57 AM - 20 Comments
Retirement plans are being dashed by a new economic reality
Like most young men growing up in Thunder Bay, Ont., in the 1970s, or anywhere on the planet for that matter, Alex Cryderman was too focused on the next weekend to give much thought to his golden years. So, at 21, when he followed his father and brother into a job at the Abitibi paper mill, and learned that part of his paycheque would be held back to fund his pension, he was more annoyed than anything. That feeling changed over time, of course. And as the months turned into years and the years to decades, Cryderman, now 50, came to rely heavily on his pension savings for the retirement plan taking shape in his head. “I was going to be out of here in five years with a pretty good pension,” he says. “I was going to spend time on my boat, fish, travel with my wife, really live the good life like they say in the ads.”
Then one morning earlier this year, Cryderman awoke to frightening news—Abitibi-Bowater had filed for bankruptcy protection. Suddenly, his pension, along with those of 8,000 other employees at the company, was at serious risk. With the stock market collapse and the company no longer paying into the pension fund, the plan has become dangerously underfunded. Now Cryderman can only wait, and regret—wait to learn how much of his retirement savings he’ll be able to salvage, and regret not putting more money away on the side over the years. “If you’d have known what was coming down the pipe, you’d have lived your life differently,” he says. “We never thought this day would ever come.” Continue…
Businessman Peter Pocklington on the politics of envy, legal battles, and why trading Gretzky was the right thing to do
By Jonathon Gatehouse - Thursday, October 22, 2009 at 12:40 PM - 0 Comments
A conversation with Jonathon Gatehouse
Peter Pocklington has had enough ups and downs for several lives. The former Edmonton Oilers owner was once among the country’s most successful businessmen, and ran against Brian Mulroney for the leadership of the Progressive Conservatives. But to most Canadians he’ll always be the guy who dealt away Wayne Gretzky. A new book, I’d Trade Him Again: On Gretzky, Politics, and the Pursuit of the Perfect Deal (H.B. Fenn), offers Pocklington’s take on his controversial career. Today, the 67-year-old awaits trial in California on charges of concealing assets in his US$19.6-million 2008 bankruptcy—sparked by a series of lawsuits over failed health-product and golf ventures.
Q: This book’s stated purpose is to show the other side of Peter Pocklington. Do you think you’ve been unfairly portrayed over the years?
A: [Laughs.] Well, I guess if I had read the press that most had written about me, I would have hated me too.
Q: What do you think is behind that?
A: I have no idea, nor do I care. I suppose most of it is associated with the politics of envy in North America. Continue…
By Andrew Coyne - Tuesday, August 25, 2009 at 4:15 PM - 13 Comments
Whatever the merits of subsidizing Nortel’s past research, blocking the Ericsson sale won’t get the money back
Technology and nationalism are heady enough intoxicants on their own; combined, the high is very nearly fatal. Still, it’s rare that you get quite such a frenzy of nonsense as has attended Nortel’s bankruptcy proceedings. It’s not uncommon for those who inhale the techno-nationalist fumes to forget some basic principle of economics or other. But in this case they can’t even seem to get their facts straight.
As countless commentators have informed us, the issue at stake in Nortel’s sale of its wireless division to Ericsson, the Swedish telecoms giant, is whether this precious national icon and its next-generation technology will be allowed to fall into foreign hands. Unless Ottawa steps in to prevent the sale, we are warned, we risk a repeat of the Avro Arrow debacle of 50 years ago. Continue…
By Jason Kirby - Friday, June 12, 2009 at 9:40 AM - 0 Comments
Across Canada, GM dealers vow they will live to sell another day
Moray Keith is the first to admit he’s seen better days for his chain of GM dealerships in Metro Vancouver. A few weeks ago, a white truck pulled up to the door outside the Dueck on Marine Drive showroom. A group of men in black shirts from Starbucks rushed in, and with no warning began tearing apart an in-store coffee outlet—part of that company’s downsizing efforts. Not only that, the air conditioner was on the fritz, and the building’s glass walls were heating up the showroom floor like a giant greenhouse. And then, of course, there was the small matter of that bankruptcy.
Car dealers are an inherently optimistic lot. But the past few months have been enough to test the mettle of even the most exuberant salesman. Car sales have collapsed, and after weeks of speculation, so too has the General, in a spectacular US$172-billion flame-out. Yet, across Canada this week, GM dealers like Keith (whose family owns three GM dealerships with total sales of around $400 million) remained remarkably upbeat about the upheaval going on around them. “I think it’s the best thing that could happen because you have people looking forward now at what GM is going to be like as a new entity,” he say. “In GM’s strong times, this store has always been the big store in Canada. We’d like to get back to that point.”
By Patricia Treble - Thursday, April 23, 2009 at 4:40 PM - 6 Comments
Riots and strikes are hitting Athens as Greece’s debt balloons
Greece’s economy will post zero growth this year, according to Bank of Greece governor George Provopoulos, and concern is growing that the Mediterranean nation is perilously close to bankruptcy. “The country is dancing on a volcano,” political scientist Kalliope Amyg told Der Spiegel. “Nobody wants to see it, but everyone is afraid of it.”
Years of corruption, bloated budgets and bureaucracies have left Greece with a public debt worth 95 per cent of its GDP. (In the U.S., by comparison, public debt just topped 50 per cent.) In January it was the first euro-zone nation to have its sovereign debt rating downgraded by Standard & Poor’s. This summer, its tourism sector is expected to be devastated, and there are fears that its banks, which invested heavily in central and eastern Europe, will be dragged down by that region’s severe contraction.
By Cathy Gulli - Tuesday, January 20, 2009 at 1:19 PM - 1 Comment
One study shows filing for Chapter 11 may be Nortel’s saving grace
Going broke is rarely considered a gift from the gods, but it’s possible that Nortel Networks has just been blessed. The telecom titan recently filed for bankruptcy protection in Canada, the U.S., and Europe—and a recent study shows that may have been exactly the right thing to do to finally turn the company around. “It gives them some breathing room to reorganize and focus on the business changes that might need to be made,” says Mike Lemmon, a finance professor at University of Utah and a one of the study’s authors. “Rather than worrying about having to generate enough cash just to make next month’s interest payment.”
The study, published online by the Social Sciences Research Network, looked at 530 companies that declared bankruptcy between 1991 and 2004, and classified each in one of two ways. “Financially distressed” companies were good businesses that would be profitable if their debt were removed. “Economically distressed” companies wouldn’t be. The study found that 80 per cent of the former group emerged from bankruptcy with only seven per cent fewer assets—so they were the stronger for it. Meanwhile, only 37 per cent of the economically distressed companies managed to reorganize with less than half of their original assets. The rest were liquidated or bought up. “The bankruptcy process seems to be doing what it’s supposed to do,” says Lemmon, “which is allowing good firms with financial problems to restructure and keep their businesses going. And getting rid of bad firms.”
By Steve Maich - Thursday, August 28, 2008 at 3:33 PM - 0 Comments
I really feel for all the hundreds of passenger who’ve been left stranded by…
I really feel for all the hundreds of passenger who’ve been left stranded by Zoom Airlines’ shut down today. Undoubtedly, there will be people who miss vacations, or family reunions because of the carrier’s demise.
Of course, this will come as no consolation to people stuck in airport terminals, much less the employees likely to lose their jobs, but this really is a good thing in the long term, both for the airline industry and for the public. As I argued a couple of weeks ago, we need to see more airlines shut down, and for others to get swallowed up through mergers and acquisitions.
The fact that Zoom was unable to secure new financing to keep flying is, in a way, an encouraging sign, even though its a total drag for those directly affected.