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May 31, 2009

A full load of appliance complaints

Filed under: legal — Tags: , , — Snowman @ 7:01 am

I get many complaints from people whose kitchen appliances break down after the one-year warranty runs out.

Rhonda Uretsky has a Kenmore refrigerator bought from Sears in March 2004. This March, it sprung a leak that could not be fixed.

"I was shocked when an extremely belligerent Sears agent said I would be covered for only a small portion of the cost to replace this fridge," she says.

"Her exact words were: `Mrs. Uretsky, you’re lucky that you’re getting anything at all.’"

She thought her fridge was still under warranty. Her warranty guide promised coverage for five years on the seal system and 10 years on the compressor.

Company spokesman Vincent Power said he would ask his team to take another look.

Sears later offered $450, the maximum reimbursement for a four-year-old appliance under the warranty. It also agreed to cover the $90 service call.

"It’s a lot better than just the $225 they were proposing to give me," Uretsky said.

Fiona Au has found water leaking and damaging her floor from the $6,000 Northland refrigerator she bought from Tasco Distributors just over a year ago.

Tasco persuaded Northland to replace the leaky fridge two months ago but the replacement never arrived. It was on back order.

Au finally had enough. She told Tasco she would load the fridge onto a pickup truck and demonstrate in front of the store.

That did the trick. Tasco has now agreed to reimburse her for the cost of any new refrigerator she wants.

Mary Dean Braaten bought a fridge, stove and dishwasher at the Hudson’s Bay Co. in January, paying more than $2,000 up front.

By mid-April, the stove had not been delivered. Also, she was still waiting for a dishwasher, since the first machine delivered was badly damaged when taken out of the crate and could not be used.

"This woman, a retired college professor, is cooking on a single burner hot plate and has been for three months," said her friend, Warren Bechard payday loan. "She has severe arthritis in her hands, but must do her dishes in the sink."

Stephanie Thornbury, a Bay spokeswoman, said her team would work on the matter. One day later, Bechard reported the new dishwasher and stove had been delivered and installed.

If you want to avoid problems with new appliances, I suggest buying from a retailer you trust – a store that will go to bat for you if the manufacturer refuses to help.

Sears, alas, has a conflict of interest when it comes to its house-brand Kenmore appliances. I get frequent complaints from Sears customers who find they are out of luck if such an appliance breaks after the one-year warranty expires.

Richard Patterson was told his $689 Kenmore dishwasher needed a new motor – at a cost of $450 – a year and a half after he bought it. Sears waived the labour charges when he complained, leaving him to pay about $350.

To me, this isn’t the right way to treat a customer who buys seven Sears appliances when moving into a new home in 2007 for a total cost of $9,100.

Sears president Dene Rogers did not even respond to Patterson when he wrote him in February.

"Can you convince Sears that they should answer letters from their customers? Is that not a minimal standard of civility?" he asks.

I, too, tried to get an answer from Rogers.

But spokesman Powers said, "Your only contact at Sears should be me."

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May 30, 2009

Zoellick Warns Stimulus ‘Sugar High’ Won’t Stem Unemployment

Filed under: online — Tags: , — Snowman @ 12:04 pm

World Bank President Robert Zoellick warned policy makers that fiscal-stimulus plans are insufficient to turn around the “real economy” and rising joblessness threatens to set off political unrest across the globe.

“While the stimulus has given an impulse, it’s like a sugar high unless you eventually get the credit system working,” Zoellick said in an interview yesterday with Bloomberg Television’s “Political Capital with Al Hunt.” “When unemployment increases, that’s probably the most political combustible issue.”

Zoellick’s caution is a contrast with private economists, who are raising their outlooks for growth from India to China as stimulus measures take effect. The biggest developed and emerging nations have committed spending increases and tax cuts totaling 2 percent of their combined economies, a level the International Monetary Fund recommended to end the recession.

The World Bank is monitoring private companies’ abilities to roll over “a lot” of debt in the developing world, Zoellick said. At the same time, he played down risks to the global recovery posed by rising U.S. Treasury yields, saying that “in terms of absolute levels, rates are still pretty low for most players.”

Zoellick also said that the dollar will remain the world’s main currency “for a long time,” and noted that investors flocked to the dollar as a haven during the worst parts of the financial crisis.

Reagan, Bush Terms

Zoellick, 55, took the helm of the World Bank in 2007, and served as U.S. deputy secretary of state and chief trade negotiator in the Bush administration, and in positions at the Treasury Department under President Ronald Reagan. At State, he played a central role in formulating policy toward China, before departing government for a stint at Goldman Sachs Group Inc.

Chinese officials’ comments calling for a new international currency have been “over-read” and may be more of an indication of the nation’s desire to free up its capital flows, Zoellick said. He added that China’s stimulus has helped stoke growth in the nation that “may even beat expectations a little bit.”

China this year approved a $585 billion (4 trillion yuan) stimulus plan, and the U.S. is now implementing a $787 billion package of tax cuts and spending that President Barack Obama signed in February.

“Right now, the international system appears to have a sufficient amount of stimulus,” Zoellick said. “The danger is if you spend too much government money, you create a different problem.”

Yields Climb

Benchmark 10-year U.S. Treasury yields have climbed about 1.25 percentage point so far this year to 3.46 percent, reflecting in part some investors’ concerns at faster inflation and record budget deficits. Rates on 30-year fixed mortgages exceeded 5 percent. Still, Zoellick noted that in recent days there’s been “unwinding” of some of investors’ concerns payday loans no faxing.

“In terms of financial markets, I think people have broken the fall,” Zoellick said. What’s needed now is to “focus on how to recapitalize banks and deal with the bad assets — that’s a story that’s still going forward.”

In the U.S., Treasury Secretary Timothy Geithner aims to use money from the $700 billion financial-rescue fund to help kick-start a $1 trillion effort to remove devalued loans and securities from banks’ balance sheets. The first transactions for mortgage securities aren’t expected to start for months.

Eastern Europe is one region in particular danger of a further economic decline, the World Bank president said.

Eastern Europe

“The nature of integration over the past 20 years has been unwound somewhat,” Zoellick said. He warned about “the danger of unemployment leading to protectionism as politicians sort of feel they run out of different levers.”

Eastern European nations have received more than $90 billion in international aid since September to prevent the countries shaken by the financial crisis from defaulting. Nations that have received bailouts include Romania, Hungary, Belarus, Serbia, Latvia and Ukraine.

Credit ratings companies have downgraded the outlooks for banks in the Czech Republic, Ukraine and Kazakhstan.

Foreign lenders in Romania and Hungary pledged this month to keep doing business there to help the economies weather the economic turbulence. Romanian banks, about 90 percent foreign- owned, agreed to boost their capital by a total of 1 billion euros ($1.4 billion) by March 2010 as overdue debt rises, the IMF said on May 22.

Protectionist Threat

Another threat is trade protectionism, which nations may resort to in order to protect their industries from the global slump, Zoellick said.

“The real danger is that you get into a cycle of retaliation,” he said. He estimated that 17 of the Group of 20 emerging and developing nations are considering or imposing restrictions on trade, breaking a pledge they made during an April 2 summit in London.

The World Trade Organization in March predicted a 9 percent drop in global commerce this year.

China and Brazil are researching how they can conduct trade in the yuan and real, in a signal they’re seeking to reduce their reliance on the dollar.

“You could — and you’ve already seen this over the past 20 years — have multiple currencies” used in the global system, Zoellick said. “You will see China and India playing a larger role, including in financial markets.”

Still, he added that “I just don’t believe it’s going to supplant the U.S. as a reserve currency.”


May 29, 2009

GM bondholders support revised offer

Filed under: management — Tags: , , — Snowman @ 7:04 am

DETROIT – General Motors Corp. said today a committee of bondholders has agreed to a sweetened deal proposed by the U.S. government to erase the automaker's unsecured debt in exchange for company stock.

The news came in a regulatory filing that spells out the Obama administration's game plan for what it hopes will be a speedy Chapter 11 bankruptcy reorganization that will leave the U.S. government as the dominant GM shareholder with a much smaller debt load.

A person familiar with GM's plans said it was "probable" that the company would file for bankruptcy protection on Monday. The person didn't want to be identified because the plans were still under discussion with the U.S. and Canadian governments.

In the filing, GM (NSYE:GM) says the Canadian and Ontario governments will receive common and preferred shares in the restructured company in exchange for providing a portion of its debt financing.

The document doesn't say how much of a stake the two governments will receive. Under Chrysler's restructuring plan, they will share a two per cent equity stake in that company in exchange for US$2.42 billion in loans.

The government proposal is similar to the approach taken in the bankruptcy reorganization approach used by Chrysler. Its plan to shed assets and sell control of a downsized carmaker to Fiat, aided by government financial assistance, could receive final approval from a bankruptcy court judge in New York before the end of the week.

The government's goal for GM is to eventually return it to profitability, allowing it to eventually sell its shares. But the risks for taxpayers are daunting, with U.S. auto sales near their lowest level in 27 years.

The revised offer to the holders of US$27 billion in unsecured GM bonds amounted to a take-it-or-leave-it ultimatum: Go along with what the government auto task force's proposal or be left holding the assets a new GM doesn't want – ones with presumably little value at all.

In addition to the 10 per cent of the stock in a newly formed GM that was originally rejected by bondholders, the new offer would give them warrants to acquire an additional 15 per cent stake at a deep discount. That would come only if they agree to support selling the company's assets to a new company under bankruptcy court protection.

The Securities and Exchange Commission filing said that if the bondholders don't agree to support the sale, then the amount of stock and warrants they get would be substantially reduced or eliminated.

Under the proposal, which has a deadline of 5 p.m. ET Saturday, GM would enter bankruptcy protection and its good assets would be separated from bad ones.

The U.S. Treasury, which already has lent GM $19 online car insurance quotes.4 billion, would get 72.5 per cent of the new company's shares and provide unspecified billions of dollars in additional financing needed to keep GM operating while its reorganization plan is reviewed by a bankruptcy court judge.

A United Auto Workers' retiree health care trust fund will get 17.5 per cent and the old GM, effectively owned by the unsecured bondholders, would get a 10 per cent stake.

The plan envisions the slimmed-down new GM, shorn of more plants and brands, would have $17 billion in long-term debt and $9 billion in debt-like preferred shares. That would represent a 61 per cent decline from its existing debt load of about $67 billion.

Only $8 billion of the existing U.S. government loans would remain on the books; the remainder would be converted into equity of the new GM.

A bondholders committee and other large debtholders agreed to the deal but still called it unfair. They collectively hold about 20 per cent of GM's unsecured debt.

"While the committee continues to remain troubled by preferential treatment that the UAW VEBA is receiving compared to the bondholder class – rejecting this offer in the expectation that the bondholders will do better in a litigated outcome was a risk the committee is unwilling to take," the committee said in a statement.

The deal would wipe out GM's $27 billion in unsecured bond debt, converting to equity a total of $50 billion in company debt.

GM's filing said that if the deal goes through, the new GM would emerge with a total of $17 billion in debt – $8 billion owed to the U.S. government, $2.5 billion to the UAW trust and $6.5 billion in mainly overseas and capital lease debt.

It was unclear what would happen to the GM's current $6 billion worth of secured debt, but the person familiar with the GM plan said the U.S. government will provide financing to operate the new company and for the old GM to be liquidated.

An Obama administration official said the holders of GM's $6 billion in secured debt would be fully repaid. The official did not want to be identified because the plans had not been made public.

Trading of GM shares was halted for a short time this morning, but resumed to rise six cents, or 5.2 per cent, to $1.21 in midday trading.

An Obama administration official said the agreement is an important step in GM's restructuring and said the government's auto task force "will continue efforts to help ensure that GM emerges from restructuring as a strong, viable company that can operate independent of government support."


May 28, 2009

GM and Chrysler: Make or break week

Filed under: management — Tags: , , — Snowman @ 10:49 am

The next seven days could be the most important in the history of the U.S. auto industry.

Whether or not General Motors (GM, Fortune 500) files for bankruptcy will be decided within the next few days. The nation’s leading automaker faces a government mandated June 1 deadline to produce a turnaround plan or file for what would be the largest industrial bankruptcy in the nation’s history.

On Wednesday morning a bankruptcy judge will hold a hearing on Chrysler LLC’s plans to join with Italian automaker Fiat and emerge as a slimmed down, more competitive automaker.

And next Tuesday, all the major automakers will release their sales figures for the month of May. That will show just how willing Americans are to buy cars from automakers that are either already in, or near, bankruptcy.

Here’s a day-by-day calendar of what to expect during the next week:

Tuesday, May 26

On Tuesday, the leadership and local presidents of the United Auto Workers union met and unanimously endorsed the tentative agreement reached last week with GM on changes to its 2007 labor deal.

A source familiar with the agreement told that the union-controlled trust fund will receive a 17.5% stake in GM as a result of the deal. But neither company nor union spokespeople are making full details of the deal public.

This is also the last day that GM bondholders, who hold $27 billion in unsecured debt from the company, can accept an offer to swap $1,000 of the debt for 225 shares of the company.

GM says it anticipates announcing how many bondholders accepted the deal on Wednesday. It must receive approval from 90% of its unsecured bondholders in order to avoid bankruptcy.

The shares would be worth about $322 based on Friday’s closing price of GM. But the bondholders could be left with far less than that as GM would have to flood the market with many additional shares as part of its reorganization plan.

Standard & Poor’s estimates that bondholders would recoup no more than 10% of their investment as part of the bankruptcy process. Still, it is widely assumed that bondholders both large and small will reject the offer.

Even GM CEO Fritz Henderson has repeatedly said that the difficulty of winning the approval of bondholders makes a bankruptcy filing "probable."

Wednesday, May 27

In addition to finding out what GM bondholders though of the company’s debt-for-stock proposal, there also could be significant news on the Chrysler front.

U.S. Bankruptcy Court Judge Arthur Gonzalez is set to hold a hearing Wednesday morning on the plan to have Chrysler emerge from bankruptcy and join with Fiat.

Under the proposal, Chrysler’s most valuable plants and dealerships, along with its newly revised labor contract, would be pulled out of bankruptcy and given to a new company that will be controlled by a union-controlled trust fund, the U.S. government and Fiat. The plants, dealerships, debt and other liabilities that Chrysler can no longer afford will remain in bankruptcy.

Gonzalez will need to approve the proposal in order for Chrysler to have any chance of becoming a more competitive company. The Chrysler decision will also be closely watched since its bankruptcy could wind up being a blueprint of the plan that GM hopes to follow if it files for bankruptcy as well.

Still. while the hearing is set for Wednesday, it’s not clear exactly when Gonzalez will rule on the motion.

Thursday, May 28

Many rank and file members of the United Auto Workers union at GM are due to vote Thursday and Friday on last week’s tentative agreement. The deal allows GM to make payments due to union-controlled trust funds with its stock rather than the cash it agreed to pay in its 2007 labor deal.

Even though bankruptcy may still be inevitable regardless of what happens with this vote, the vote is important because it could allow the union members to have a new contract that survives the bankruptcy process. The UAW membership overwhelmingly ratified a deal it reached with Chrysler just hours before company filed for bankruptcy.

Thursday is also the day that many GM suppliers are expected to get about $2 billion in payments that are currently due to be paid on June 2 bad credit pay day loans.

GM is going to make the payments early because if it files for bankruptcy before June 2 without having made these payments, it would no longer be allowed to do so without court approval. And if those payments are delayed or not made, it could cause widespread bankruptcies and closures throughout the auto parts industry. That would disrupt production at most North American auto plants, including those owned by healthier companies such as Ford Motor (F, Fortune 500) and Toyota Motor (GM, Fortune 500).

Friday, May 29 through Sunday May 30

The Treasury Department has approved the early payments to suppliers by GM. Once those payments are made, the clock will start ticking on when the company may file for bankruptcy. A filing on Friday, May 29 is a distinct possibility.

But major bankruptcy filings often occur over the weekend. That happened at both Enron and Worldcom, two of the largest bankruptcies on record, as well as at Delphi, the auto parts maker and former GM unit that has been in bankruptcy since October 2005.

If bankruptcy is avoided, it would probably be due to some last minute agreement with bondholders. But even if a deal is reached, GM might still go ahead with a bankruptcy filing because it would help GM shed up to 2,400 U.S. dealerships. That’s because state franchise laws make it easier for GM to not renew contracts with dealers if it is in bankruptcy protection.

Monday, June 1

If GM makes it through the weekend without filing for bankruptcy, there is a very good chance it will do so on Monday.

In addition to being the day of the government’s imposed deadline to have a turnaround plan in place, Monday is also the day GM is due to make $1 billion in interest payments to its bondholders. The company has indicated it does not have the money necessary to make those payments.

GM is also scheduled to idle three additional U.S. assembly lines on Monday through most of June and July instead of the typical two-week summer shutdown. GM already has idled 4 of 14 U.S. assembly plants.

Seven assembly lines still due to be operating next week, along with many of GM’s other facilities, could be temporarily shut down next week if the company files for bankruptcy.

Chrysler was forced to shut down a number of plants on the day it filed for bankruptcy due to a cut-off in parts deliveries from suppliers. It also announced that it would cease all North American production for as long as it plans to be in bankruptcy.

Tuesday, June 2

The major automakers will announce their U.S. sales figures for May Tuesday afternoon and another dismal round of reports are expected. Auto industry consultant J.D. Power & Associates forecasts that industrywide sales fell 36% in the month from a year ago levels.

That would put sales just below the 900,000 level, the best figure since September. But it would still be a very weak total for May, typically a strong sales month for the industry.

"While there are some signs of stability in the automotive market, current sales rates indicate that achieving recovery will not be a quick proposition," said Gary Dilts, senior vice president of global automotive operations at J.D. Power.

Sales at Chrysler, which filed for bankruptcy court protection on April 30, will be closely scrutinized. The common assumption has been that Americans won’t buy cars from a bankrupt automaker due to doubts about both resale value and warranties. But the Chrysler bankruptcy may have eliminated some potential buyers’ fears that the company faced the risk of immediate closure.

In addition, the federal government has guaranteed warranties at Chrysler and GM. Chrysler also notified 800 dealers on May 14 that it intended to end its contracts with them in early June, forcing them to announce deep price cuts to try to clear out their inventory. That may have resulted in an unexpectedly strong month for Chrysler — and that might have affected other automakers’ sales. 


May 27, 2009

Opel board to decide on separation from GM: source

Filed under: finance — Tags: , , — Snowman @ 2:19 pm

The supervisory board of General Motors’ Opel unit is holding an extraordinary meeting on Wednesday morning to decide on the German carmaker’s legal separation from its U.S.-based parent company, a person familiar with the matter said.

The supervisory board was set to approve a transfer of Opel’s non-German European plants to German unit Adam Opel GmbH, the person said.

Financially, Opel is already separate from the parent company, a source has told Reuters.

The German government is due to decide on Wednesday which bidder or bidders it prefers as a partner for Opel. It wants to act quickly in case GM files in the United States for Chapter 11 protection from creditors cash loan.

Chancellor Angela Merkel’s government has been considering offers from Italian carmaker Fiat, Canadian supplier Magna International and Belgium-listed industrial holding RHJ International.

In an unexpected twist, Chinese carmaker Beijing Automotive Industry Holding Co (BAIC) has emerged as a last-minute contender.

(Reporting by Angelika Gruber; Writing by Maria Sheahan, Editing by Michael Shields)

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May 26, 2009

Stackhouse new Globe and Mail editor-in-chief

Filed under: legal — Tags: , , — Snowman @ 6:37 am

The Globe and Mail announced a shakeup of its senior management team today, appointing veteran journalist John Stackhouse its new editor-in-chief as the national newspaper strives to navigate an increasingly tumultuous industry environment.

Stackhouse replaces outgoing editor-in-chief Ed Greenspon who is moving on to unspecified "new challenges" after nearly seven years in that top post, publisher Phillip Crawley said in an internal memo to staff.

Greenspon joined the paper in 1986.

For his part, Stackhouse has been editor of Report on Business since 2004. An award-winning journalist and author, the 46-year-old has held a number of high-profile roles since joining the newspaper in 1989.

"He brings a high-class pedigree to the Editor-in-Chief position, having been a distinguished foreign correspondent before taking up executive roles as Foreign Editor and National Editor," Crawley wrote in his note.

"He has raised Report on Business to levels of excellence in print and online which are unsurpassed."

Paul Knox, chair of the School of Journalism at Ryerson University, described Stackhouse as "very driven," adding his appointment signals the newspaper's desire to "push forward" and tackle the incredible challenges rocking the industry.

"I think that he will apply a tremendous amount of energy to this enterprise," he said pay day loans.

Stackhouse's promotion comes during an extremely turbulent time for newspapers. The Globe, like all newspapers, is vulnerable to an advertising decline because of the recession. Moreover, traditional dailies are grappling with shifting consumer preferences as readers increasingly migrate to the Internet and other new media platforms.

Crawley alluded to those challenges in his memo, noting the need for "new skills and different styles of leadership." He could not be reached for comment and it was unclear who would replace Stackhouse at Report on Business.

"The priorities of the current year have been to restructure our business to meet the challenges of the current economic environment and the rapid changes in media consumption habits," Crawley stated in a subsequent news release.

"We are building on a position of strength not enjoyed by many of our competitors and want to ensure the Globe and Mail is in the prime spot to take advantage of the market opportunities that will arise when the recession eases."

In that regard, he also announced other personnel changes affecting IT, digital and business development.


May 25, 2009

China group in NBA deal

Filed under: management — Tags: , — Snowman @ 8:24 pm

ORLANDO, Fla.–The Cleveland Cavaliers have signed an agreement with an investment group from China to become minority owners of the NBA franchise and its arena, a partnership that could impact superstar LeBron James’ future with the team.

The Asian conglomerate, which includes JianHua Huang, a Chinese businessman who has brokered sponsorship deals with the New York Yankees and other sports franchises in the U.S., could acquire up to 15 per cent of Cavaliers Operating Company, the entity that owns the team and operates Quicken Loans Arena.

The deal, completed by the sides in recent days, must be approved by the league’s board of governors.

Team president Len Komoroski said the group approached Cavs principal owner Dan Gilbert about the partnership and called the business venture "an exciting new opportunity free credit score.”

Gilbert’s role in overseeing the organization and 20,000-seat arena will not be affected by the new partners.

The NBA has been pushing for an international group to become involved in ownership on a minority level. And with a huge fan base already in China the league has entered into several ventures with the nation to develop players and build arenas to NBA specifications.

Associated Press


May 24, 2009

Tunnel project to cost more, take longer

Filed under: management — Tags: , — Snowman @ 10:33 am

Turns out nuclear plants aren’t the only projects in Ontario to run late and over budget.

The Niagara Tunnel Project, an ambitious effort to boost hydroelectric generation at the Sir Adam Beck station in Niagara Falls, will be $600 million over budget and four years late, Ontario Power Generation confirmed yesterday.

The project, originally pegged at $985 million with a completion date of late 2009, is now expected to cost $1.6 billion and be finished by the end of 2013, more than twice as long as first promised.

"As the owner of the plant we will have to bear the cost," OPG spokesman Ted Gruetzner said, adding that the company will have to ask the Ontario Energy Board if the overrun can be rolled into the regulated electricity rate.

Ultimately, it means electricity consumers will be paying the tab.

There was much excitement when the project was launched in late 2006. OPG spent $30 million to build "Big Becky," a massive boring machine designed to chew through 10.4 kilometres of rock about 140 metres under the city of Niagara Falls.

The 14-metre wide tunnel, when complete, will last more than 100 years and divert enough additional water from the Niagara River to power 160,000 homes annually.

But about a third of the way into her mission, Big Becky hit some fine-grained Queenston shale. The rock was brittle and loose and began to fall as the machine inched forward, creating a safety hazard for the crew and slowing down the tunnel-building process.

OPG and its contractor, Austrian engineering company Strabag AG, have since put Big Becky on a new course that will take longer, and cost more. It is currently about 4,175 metres into its journey, or 40 per cent of the way there.

A dispute review board concluded that Strabag AG is not responsible for the miscalculation of rock conditions, so OPG is covering the overrun. A new contract with Strabag should be finalized in the second quarter, OPG said.

The Ontario-owned utility argues that the project, even with the added cost and expanded timeline, is a good deal for the province because it will provide a stable source of emission-free, fixed-price electricity for generations to come, against a backdrop of rising fossil-fuel prices cash advance loans.

OPG also reported yesterday its second quarterly loss in a row. It lost $9 million in its first quarter, compared with a loss of $31 million in the previous quarter and a profit of $162 million a year ago.

"OPG’s results were significantly affected by a reduction in electricity generation, higher fuel prices, and an increase in expenses related to planned maintenance outages at our nuclear generating stations," president and chief executive Jim Hankinson said.

The company generated 25.6 terawatt-hours (25.6 million megawatt hours) of electricity in the first quarter, a plunge of 13 per cent compared with the previous year’s first quarter. Fossil-fuel stations took the biggest hit, generating 39 per cent less electricity compared with a year ago.

Gruetzner said the economic contraction, including the shutdown of major industrial operators in the province, explained part of the fall. But coal generation was also being displaced by natural gas and wind generation, he said.

"There’s been a lot of natural gas on the system," he said, explaining that OPG buys much of its coal in advance, while private natural-gas generators can be more nimble with their purchases, allowing them to take advantage of lower natural gas prices. "And the price of natural gas has really dropped substantially."

Toronto Hydro also reported this week that the economic downtown is resulting in lower electricity consumption.

The company said power use is down about 3 per cent compared to the same period a year ago, though industry observers say conservation efforts are also playing a role.


May 23, 2009

Jobless claims: It’s still tough out there

Filed under: money — Tags: , , — Snowman @ 4:33 pm

In two indications of continuing job market weakness, a drop in the government’s weekly reading of initial unemployment claim filings failed to match the surge of the prior week, and the number of people filing on an ongoing basis rose to a record high for the 16th straight week.

A total of 631,000 people filed new claims for jobless benefits in the week ended May 16, the Labor Department said. That’s a decrease of 12,000 from an upwardly revised 643,000 in the previous week.

The total was less than expected. Economists surveyed by had forecast 625,000 initial claims, according to a consensus estimate.

The 4-week moving average, which smoothes out volatility in the labor market reading, was 628,500, a decline of 3,500 from the previous week’s revised average of 632,000.

Initial jobless claims surged by 38,000 the previous week in the wake of the Chrysler bankruptcy and General Motors (GM, Fortune 500) restructuring proposal. Last week’s easing did not make up for that gain.

"The uncomfortable suggestion must be that the underlying pace of claims is not slowing as much as appeared to be the case a few weeks ago, though the volatility of the numbers means we need to see more data to be sure," said Ian Shepherdson, Chief U.S. Economist at High Frequency Economics, in a research note.

While the pace of initial claim filings does not signal an imminent recovery, Shepherdson also does not see the measure getting significantly weaker free health insurance quotes.

"We’d be very surprised if the underlying trend in claims were to start rising again, but these latest numbers do not encourage the idea that the pace of layoffs is dropping sharply," he said.

Unable to get back in the market: Continuing claims have remained at a record high, even as initial jobless claims dipped on a weekly basis, because unemployed workers are having a hard time finding a new job once they lose their job.

In the week ended May 9, the most recent data available, 6.66 million continuing claims were filed. That’s the highest number since the Labor Department started tracking the data in 1967 and an increase of 75,000 from the revised level for the previous week.

The 4-week moving average for continuing claims was 6.48 million, an increase of 131,000 from the previous week’s revised average of 6.35 million.

The Labor Department’s monthly jobs report for April, released May 8, showed the unemployment rate at 8.9%, a 25-year high.

The report showed that 27% of 13.7 million unemployed Americans have been out of work for more than six months. That marks the highest percentage of long-term unemployed compared to the overall pool of in the 61 years that reading has been tracked. 


May 22, 2009

Obama: Long-term joblessness a concern

Filed under: business — Tags: , — Snowman @ 12:21 pm

President Barack Obama, speaking to a high-level advisory panel of economic experts, said Wednesday that U.S. financial markets had improved recently but he was concerned the country would face higher unemployment for some time.

"We’re pleased that we’ve seen some progress, that there is some return to normalcy in certain aspects of the financial markets," Obama said at a White House meeting of his 16-member Economic Recovery Advisory Board headed by former Federal Reserve chief Paul Volcker.

"We expect that there is going to be some stabilizing in the economy … will begin to turn again," he added. "The concern that we have is that even in a stabilized situation there is the prospect of higher unemployment for some time to come."

Obama told the group he remained committed to looking beyond the immediate crisis and wanted to put the economy on a sounder footing by promoting clean energy and "green jobs" to help spur economic recovery in the longer term.

The president said the House Energy and Commerce Committee was "making more progress than we would have ever expected" on climate change legislation.

He led the panel, which includes GE (GE, Fortune 500) chief executive Jeffrey Immelt and Caterpillar (CAT, Fortune 500) CEO Jim Owens, in a discussion of green energy issues, including proposals for reducing greenhouse gases emissions with a market-based cap and trade system.

Panel member Richard Trumka, secretary-treasurer of the AFL-CIO labor federation, said there was great potential for the United States to lead in job-creating clean energy exports but voiced concern that free trade agreements the administration was considering would "disadvantage" American business in global competition faxless payday advances.

First quarterly meeting

Obama announced the creation of the Economic Recovery Advisory Board in February, but its work had been entirely behind-the-scenes until Wednesday’s first quarterly meeting, which was carried live by Internet feed on the White House Web site.

Volcker’s role in advising Obama is of keen interest to many on Wall Street, where the 81-year-old former central banker remains a towering figure known for breaking the back of runaway inflation during the 1980s.

Volcker has continued to weigh in on public policy matters since leaving the Fed in 1987. He was a key adviser to Obama during the campaign and speaks frequently with White House officials on financial-regulatory and other issues.

But he has vented some frustration to associates about his level of access within the White House economic power center.

Obama’s inner circle on economic policy consists of National Economic Council director Lawrence Summers, a former Treasury secretary; current Treasury Secretary Timothy Geithner; Christina Romer, chairwoman of the Council of Economic Advisers; and Austan Goolsbee, a longtime Obama adviser who sits on the Council of Economic Advisers and is also chief of staff on the Volcker panel.

The economic recovery panel, which includes Democrats and Republicans and people from business, academia, public policy and labor union backgrounds, is intended to give Obama some outside perspective on economic issues. 


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