New Canadian House Prices Drop to Lowest in 12 Years in January 2009

According to new figures released today by Statistics Canada, new home prices in January dropped 0.6% from December 2008. This is the most significant fall in over 12 years, the latest being the 2.0% January drop in February 1991. Analysts were merely expecting a 0.2% fall. Year over year, new housing prices were down 0.8% in Canada.

For January 2009 over December, St. John’s and Saskatoon experienced 0.8% growth. Quebec also experienced growth at 0.6% in the country. Edmonton saw the biggest decline of 10.4% from December to January.

It is important to remember that new housing starts and new home prices are direct key indicators of where the economy is going, and with poor figures released today in recently in the U.S. things will get worse before they get better.


Capital One Cuts Dividend by 87%, Paid CEO $250M In Options

capital-oneCapital One has just announced today it will reduce its quarterly dividend by 87% to help conserve cash during this tuff economic time. The company says it will save $500 million annual as part of the reduced dividend to $0.05 per share from $0.375 per share. Capital One also said its Tier 1 capital ratio was 11% as of Feb 28, 2009.  Capital One has been hit hard, with its share price down 75% only in 2009, but the company still managed to grant 3.6 million stock option since 1997 given to Capital One CEO Richard Fairbank worth a record $250 million. In 2007, Fairbank earned $17 million in options. In 2008, he was compensated only about $70,000 for security, health benefits, and insurance, among other things, as the bank cut costs to deal with the global credit downturn.


U.S. February Unemployment Rate His 8.1%, Highest in 26 Years

The U.S. February 2009 unemployment rate has jumped to 8.1% the highest in 26 years, compared to 4.8% in February 2008. In January 2009 the U.S. economy lost 655,000 jobs and an additional 681,000 jobs in December 2008.

Companies around the world are continuing to cut jobs. WPP, the world’s second largest marketing company, announced today it is aiming to cut 2% of its global workforce, or by about 2,000 jobs, by the end of 2009.

The picture is also much worse, worker hours are being scaled back and workers are forced to work part-time. 8.6 million people in February worked part-time when in fact they wanted to work full-time but could not find a job. If these figures and discouraged worker figures were accounted, the true unemployment rate would have been closer to 15% in February, which would have been the highest ever.


Honda Sells Formula One Team to Brawn

Honda has just announced it has sold the Honda Formula One team to former owner Ross Brawn as Honda continues to cut costs during the tuff economic times. Honda initially announced in December 2008 it would sell the team to cut costs. The team is now called Brawn GP Formula One.

All of the shares were sold, the valuation was not disclosed, but Honda did say, “As a result of this sale, the team ownership has transferred to Mr Brawn, who plans to have the new team compete for this year’s FIA Formula One World Championship,”

As a result of the sale, Brawn has dropped driver Bruno Senna, and kept Jenson Button and Rubens Barrichello. Brawn said, “The vast experience and knowledge that both drivers bring to our team will prove invaluable,”

Senna told, “Ross [Brawn] was happy with my testing at the end of last year, but it just wasn’t enough for him to have the proof that I’m ready for Formula One. I respect his opinion.”


Obama wants to earmark $634B for healthcare overhaul

Obama is calling for a complete overhaul of the U.S. health care system today at the White House. Obama said medical costs are not only posing a threat to the well being of American families, but also “to the very foundation of our economy.” Obama also said the current health care system “could cause 1.5 million Americans to lose their homes,” Obama says it is now time to fix the health care system.

Obama wants to earmark $634 billion in a reserve fund over the next 10-years in an aim to bring universal health care to America, similar to the Canadian health care system which is entirely funded by the Canadian government. France also entirely pays for its health care system.

According to a recent report by Families USA, 46 million Americans do not currently have any health care, and 65% had no health care at some point between 2007-2008.


February Car Sales Down 41%, Worst in 25 Years

According to newly released data by Autodata, US car sales pumped once again in February by 41% to 688,909 cars, the lowest monthly sales figures since 1981. Deliveries for the month were up 4.9% over January.  GM had the fewest vehicle sales, down 53% to 127,296 vehicles in February. GM’s market share fell to 18.2% from 22.7% as a result of the poor sales. GM says the figures are the worst in over 40 years. GM is now seeking about $16.6 billion in new loans from the U.S. fed, on top of the $13.4 billion already approved. Ford sales fell by 48% to 96,044 cars in February, but the company says it will not seek additional federal aid.


Bell Buys The Source Circuit City Stores in Canada

bellCircuit City recently went bankrupt in the U.S. costing thousands of jobs. “The Source” stores by Circuit city have now been acquired by Bell Canada, all 750 stores. Bell President and CEO George Cope said, “With its strong national presence, brand, and management team, acquiring The Source represents a competitive and cost-effective approach to ensuring Bell’s leadership in delivering the best communications products to Canadians,” Mr. Cope said. Cope went on to say “[The] acquisition supports Bell’s strategic imperatives to accelerate wireless and leverage momentum in wire-line services like Bell TV,” The acquisitions should be completed by Q3 2009. No valuation was disclosed.


Nortel Posts $2.14B Q4 2008 Loss on Slumping Networking Equipment Sales

Still the world’s largest telecommunications equipment maker, Nortel, has announced a massive $2.135 billion Q4 2008 loss with sales down 15% to $2.72 billion given slumping demand for business and consumer networking equipment. Nortel also posted a massive $3.4 billion Q3 2008 loss, forcing the company into bankruptcy protection on January 14, 2009 because of declining cash balances.

For 2008, sales were down by 5% compared to 2007 to $10.42 billion. Nortel has not made any 2009 forecasts to date. Read the full story


AIG Posts Largest Quarterly $66B Loss in US History, $99B for 2008

aigAmerican International Group (AIG) has just posted the biggest U.S. quarterly loss ever recorded in history, a whopping $61.7 billion ($22.95 per share) Q4 2008 loss, compared to a $5.3 billion ($2.08 per share) loss in Q4 2007. The American government has also opted to give AIG $30 billion in new loans. Q4 2008 revenue was down $23.8 billion. AIG’s insurance division reported a loss of $2.8 billion with premiums down 16.3% to $9.2 billion. For all of 2008, AIG posted Read the full story


Berkshire Hathaway Reports Biggest Loss Ever, Only Second Loss in its History

Warren Buffett’s Berkshire Hathaway has just reported the worst earnings in its entire 44-year history [2008 Annual Report PDF]. In 2008, the net worth of the company declined by $11.5 billion, taking its per-share book value down by 9.6% (includes unrealized gains and losses) It is only the second ever reported loss by Berkshire, the last being in 2001 when its value fell by 6.2%

Excluding unrealized gains and losses, Berkshire Hathaway reported $3,224 per share in profits for 2008, compared to $8,548 in 2007.

Founder Warren Buffett said the dumbest investment mistake made was buying a significant stake in Conoco Philips when oil prices were at their peak. He also said no one really could have anticipated the oil price landslide. Berkshire’s total loss so far is $2.6 billion from the Conoco investment.

In 2008, Berkshire’s A stock is now trading per share at about $78,600 from last Friday’s close, compared to $151,000 in 2007.


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