Pescods chats up PDP + CDH again

Institutions NOW own 25.18% of the stock!

Petrolifera Petroleum Ltd PDP.TO (TSX)

12,621,295 institutional shares on 12/19/2007 PDP $9.14 # of Holders: 26 % Shares Owned: 25.18%
7,775,825 institutional shares on 12/01/2007 PDP $10.40 # of Holders: 24 % Shares Owned: 15.52%
7,775,913 institutional shares on 11/29/2007 PDP $10.35 # of Holders: 24 % Shares Owned: 15.52%
7,775,913 institutional shares on 11/28/2007 PDP $10.59 # of Holders: 24 % Shares Owned: 15.52%
7,775,913 institutional shares on 11/26/2007 PDP $10.23 # of Holders: 24 % Shares Owned: 15.52% PV38,055 (20%)
7,669,913 institutional shares on 11/22/2007 PDP $10.47 # of Holders: 24 % Shares Owned: 15.30% PV38,055 (20%)
7,669,913 institutional shares on 11/03/2007 PDP $10.60 # of Holders: 24 % Shares Owned: 15.30%
7,669,913 institutional shares on 11/13/2007 PDP $13.70 # of Holders: 24 % Shares Owned: 15.31%
7,669,913 institutional shares on 11/03/2007 PDP $17.10 # of Holders: 24 % Shares Owned: 15.31%

Click Here For The Institutional Holdings

Dundee Corporation Acquires Further Interest in Breakwater Resources Ltd.

Dundee Corporation Acquires Further Interest in Breakwater Resources Ltd.

ccnm



TORONTO, ONTARIO--(Marketwire - Dec. 31, 2007) - Dundee Corporation (TSX:DC.A)(TSX:DC.PR.A) announced today that it has indirectly acquired through a wholly owned subsidiary 6,122,449 flow through common shares of Breakwater Resources Ltd. ("Breakwater") at $1.96 per share, in a private transaction, which represents an approximate 1.09% interest in Breakwater. Following this transaction, Dundee Corporation will own, directly and indirectly, an aggregate of 108,002,510 common shares, representing an approximate 25.37% interest in Breakwater.


The common shares of Breakwater were acquired for investment purposes and Dundee Corporation's position in Breakwater may be increased or decreased in the future as considered appropriate in light of investment criteria, market conditions and other factors and in accordance with the provisions of applicable securities legislation.


Breakwater is a mining, exploration and development company which produces and sells zinc, copper, lead and gold concentrates to customers around the world. It's concentrate production is derived from four mines located in Canada, Chile and Honduras.


Dundee Corporation is an asset management company dedicated to wealth management, real estate and resources. Its domestic wealth management activities are carried out through its controlled subsidiary, DundeeWealth Inc., a company with $60.2 billion in assets under management and administration. Dundee Corporation's real estate activities are conducted through its 77% owned subsidiary, Dundee Realty Corporation which manages $5 billion of Canadian commercial real estate, including a land and housing business in Canada and the United States. Resource activities are carried out through its wholly-owned subsidiary, Dundee Resources Limited.



FOR FURTHER INFORMATION PLEASE CONTACT:

Dundee Corporation
Ned Goodman
President and Chief Executive Officer
(416) 365-5665

Breakwater Resources Ltd. Raises $12 Million for Exploration

ccnm



TORONTO, ONTARIO--(Marketwire - Dec. 31, 2007) - Breakwater Resources Ltd. (TSX:BWR) is pleased to announce that it has raised $12.0 million by issuing 6,122,449 flow-through common shares at a purchase price of $1.96 per common share. The shares were issued by way of a private placement to a wholly-owned subsidiary of Dundee Corporation and have a four month hold period. Dundee Corporation currently holds approximately 24% of the issued and outstanding shares of Breakwater.


The proceeds of the flow-through financing will be used for an exploration program in Quebec in 2008 which Breakwater has budgeted in excess of $13 million. Additional exploration expenditures may be incurred in Quebec depending on exploration success.



FOR FURTHER INFORMATION PLEASE CONTACT:

Breakwater Resources Ltd.
Ann Wilkinson
Vice President, Investor Relations
(416) 363-4798 Ext. 277

A Happy New Year isn't likely for the economy

Markets anticipate a light trading day

RTGAM


With light action expected for North American stock markets in the last trading day of 2007, global indicators are mixed and the Canadian dollar remains above parity with the greenback.
The loonie opened at 101.96 cents (U.S.), down just three one-hundredths of a cent from Friday's close.

Wall Street futures suggest a modestly higher open as investors await a report on U.S. home sales and look to close a volatile year.
Light sweet crude oil rose 19 cents to US$96.19 per barrel in pre-market electronic trading on the New York Mercantile Exchange.

Overseas, Britain's FTSE 100 fell 0.57 per cent and France's CAC-40 fell 0.45 per cent.
On Friday, the Toronto stock market racked up a solid gain of more than 100 points, with almost all sectors positive in a broad-based advance led by financial and energy stocks. It was a different story in New York, where early strong gains disappeared after a grim report on the U.S. housing sector.

Toronto's S&P/TSX composite index closed up about 145 points to 13,821.
In New York, the Dow Jones industrials drifted about six points higher to 13,365. The Nasdaq composite index slipped two points to 2,674, while the S&P 500 index edged up two points to 1,478 as data showed that sales of new U.S. homes plunged last month to their lowest level in more than 12 years.

Copyright 2001 The Globe and Mail

TheStar.com - columnists - A Happy New Year isn't likely for the economy

CP PHOTO

Governor David Dodge leaves the Bank of Canada building in Ottawa, in this October 2005 file photo.

December 30, 2007

David Crane

In the New Year just ahead, our biggest challenge will be to clean up the financial mess from 2007, in the hope that 2009 will be better.

This means that 2008 won't be a fun year. Rather, it will be a year in which many people could lose their homes, while others lose their jobs and many businesses find they can't get the credit they need to survive and grow.

Canada is in a somewhat better position than the U.S., although the Bank of Canada has also had to play a supportive role in financial markets and special arrangements are having to be made to restructure $33 billion of asset-backed commercial paper in Canada.

Perhaps more importantly, Canada will feel the spillover impact of slow growth south of the border or across the Atlantic in Europe. This means our own economy will slow, with export sectors such as autos and softwood lumber especially vulnerable.

As Stephen King, the chief economist at HSBC puts it, "the excess liquidity of recent years has gone down the plughole. In its place is a credit squeeze," which indicates "a financial system in crisis."

This credit crunch – the most important economic development in 2007 – means that banks are hanging on to their cash and have become more cautious both in who they lend to and how much they want to lend.

This year, central banks like the Bank of Canada have been concerned primarily with injecting liquidity into the financial system in order to prevent a financial collapse. A liquidity crisis occurs when financial institutions cannot generate immediate cash to meet their obligations because the assets they hold cannot be quickly converted to cash.

To keep the system afloat, central banks have made more than $500 billion of cash available in loans to banks in Canada, the United States, Britain, the Eurozone and Switzerland while also cutting the interest rate they charge banks on what are supposed to be short-term loans. More financial support, and further interest rate cuts, may be needed in the coming year.

The Bank of Canada recently cut its overnight target rate from 4.50 per cent to 4.25, and some economists expect it to decline to 3.50 per cent by this time next year.

But while the focus this year has been on maintaining liquidity in the financial system, the challenge in 2008 will be all about solvency. Banks will be forced to revalue their outstanding loans and the extent to which they may need capital infusions to keep them alive. They may find that they have made billions of dollars in bad loans.

In fact, a number of large banks, including some in Canada, have already been forced to take major write-downs. But more are expected in the coming year. If the news is really bad, then governments may be forced to intervene in an even bigger way.

This revaluation has already forced some of the world's biggest banks to seek new capital from government-owned sovereign wealth funds in the Middle East, Singapore and China. This trekking is probably far from over.

Middle Eastern and Asian governments, through these funds, will end up owning significant chunks of the world's top U.S., British and Swiss banks.

What makes all of this even scarier is that no one really understands how the New Year will unfold. One reason is that we don't know how much bad debt is hidden in the books of the banks. Another is that we don't know how quickly confidence and trust can be restored.

While we all wish one another Happy New Year, the reality is that 2008 is unlikely to be a happy year.

---

David Crane's column on Global Issues appears Sundays.

Subprime fiasco to dominate early 2008 TheStar.com - Business - Subprime fiasco to dominate early 2008

TOM STATHIS/ASSOCIATED PRESS

A sign advertises a bank repossessed home for sale in San Clemente, Calif., Aug. 5 in continuing fallout from the U.S. subprime mortgage crunch

We should learn in new year the extent of fallout from crisis

December 30, 2007

Madhavi Acharya-Tom Yew
Business Reporter

The first few months of 2008 may bring some clarity on how much money will actually be lost to bad loans made to high-risk borrowers in the subprime mortgage debacle, economists and stock market watchers say.

Observers are asking, will the tally be as high as the $400 billion (U.S.) some predict, or will the actual damage come in at less than that.

Either way, the financial crisis is likely to rank as one of the biggest the U.S. has seen. On the other hand, escaping the worst-case scenario would be a boon to a U.S. economy teetering on the brink of recession.

An estimated $1.3 trillion in subprime mortgages are outstanding. About one-tenth of those are now in foreclosure. Some are predicting that foreclosures will grow to a staggering $400 billion. But will those predictions come to pass?

"We've had some defaults up until this point, but the really heavy period for resets is really in the first quarter of next year," said Mark Chandler, senior fixed income analyst at RBC Capital.

Subprime borrowers, who have poor credit histories and don't qualify for the usual bank mortgages, were allowed to "self assess" their income and ability to pay back the loans. Such borrowers have since come to be known as ninjas – no income, no jobs or assets.

Subprime mortgages carry a higher interest rate – as high as 12 per cent. But the would-be U.S. home owners were offered teaser rates – or 2/28 mortgages, which offered a low introductory rate for two years, followed by a higher one for the remaining 28.

Many of those mortgages are due to reset with higher monthly payments in January and February.

But there's reason for optimism.

U.S. President George W. Bush has hammered out a relief plan that will freeze interest rates for some home owners, keeping their monthly payments manageable and helping them hang on to their homes.

"The actual realization of the performance of those loans and those mortgages is the next real hurdle," Chandler said. "The rates could be frozen and there may be less in the way of foreclosures and defaults than people think."

Given the risk of huge write-offs and foreclosures, banks have become skittish about lending to consumers, and to each other, but central banks in many Western nations, including Canada, have stepped in with emergency funds meant to keep the cash flowing.

Banks and other financial institutions, those that made subprime loans directly as well as those that invested in securities that used subprime loans as collateral, are scrambling to give themselves a cushion. They're taking huge writedowns, trying to remove billions of dollars of suspect assets from their books with the stroke of a pen, and a flurry of headlines.

Analysts said last week that Citigroup may have to write off $18.7 billion in the fourth quarter, up sharply from the $8 billion to $11 billion initially estimated.

CIBC said earlier this month its profits may take a $1 billion hit because of its investment in a U.S. company with subprime real estate exposure. That's on top of a $9.8 billion writedown already taken.

The grim accounting has some economists asking whether markets are now overestimating the damage after months of being exposed to bad news.

"It's possible the market is overestimating, as it usually does. Most of the bad news may be already discounted – and that may be the good news," said Benjamin Tal, senior economist with CIBC World Markets.

On the economic side, the picture is bleak, with many signs pointing to slowdown. In the past 12 months, sales of new homes across the United States have plunged by 34 per cent – the biggest year-over-year slide since early 1991.

And the latest economic figures show that orders for durable goods rose only slightly in November as businesses received fewer orders for machinery, computers and communications equipment.

Maurice Levi, finance professor at the University of British Columbia, is worried about the impact on consumer spending.

He says he's more concerned about the people who just barely manage to hang on to their homes. "If it were me, I wouldn't want to throw in the towel. I would find other ways to try to make those payments, not change the cars, not take a vacation. Even the others who aren't in such critical condition might be spending less. This might bring a very slow economy."

The problem the central banks face is that if they don't inject enough liquidity into the market, the country may slip into recession. If they overdo it, it creates an excess supply of money – inflation.

"Getting it right is unbelievably difficult. This is not something that is a repeated event from many times before where you've had an opportunity to learn. We've never had subprime problems before," Levi said.

Some suggest the government's intervention will only prolong the trouble. After all, the West spent the 1990s hectoring Japan to just own up to its bad loans, suffer the economic consequences – unemployment, bankruptcies – and move on. "It's always easier to tell other people to take harsh medicine," said Doug Porter, deputy chief economist at BMO Nesbitt Burns.

"I think the best thing for policy makers is try to cushion the blow but not distort the market. Let the real value of credit and homes come through and then deal with the aftermath. But that's a lot easier said than done."

Fearless forecasts for 2008 TheStar.com - Business - Fearless forecasts for 2008

Day in history

Born this date in history, this Welsh actor is best-known for his character Hannibal Lecter in Silence of the Lambs.

(Answer, reverse:

Sinkpoh Ynohtna.) =Anthony Hopkins

December 31, 2007

Caveat emptor: "Avoid making predictions – especially about the future."

–Sam Goldwyn

1. The Summer Olympics and spectacular new Beijing architecture erases the tainted-import stories of 2007.

2. Dynamic French president Nicolas Sarkozy emerges as the leading voice for Europe, abetted by British PM Gordon Brown, less of a Europhile than his predecessor.

3. The recent addition to Europe's passport-free Schengen zone of nine members, bringing the total to 24 countries with 400 million people, prods a 2008 expansion to include Switzerland, one of the world's most isolationist nations. This increases pressure on Britain to join on economic grounds of lower transport costs, and on Russia not to thwart Ukraine, Romania and other former Soviet satellite states from membership in an economic power bloc already eclipsing the U.S.

4. Afghanistan and Pakistan's western border region finally become the central front in the struggle against terrorism by Islamic extremists, as they should have been from the start. The pro-U.S. Sarkozy sends additional troops which, in contrast with the current French concentration in relatively stable Kabul, are deployed in the more dangerous east and south, bolstering Canadian and British forces in Kandahar and Hellmand provinces. Britain increases its troops in the southwest, and Australia joins the cause. The U.S. steps up its redeployment of forces from Iraq to Afghanistan.

5. In part to enhance his party's electoral prospects in Quebec, Stephen Harper unveils a revamped reconstruction and humanitarian-relief program for Afghanistan.

6. In referenda, Colombia and ethnically divided Belgium narrowly vote against national breakups. Kosovo and Chechnya continue to lack sufficient outside support to separate from Serbia and Russia, respectively, although Kosovo unilaterally declares its independence.

7. Newly elected Russian president Dmitry Medvedev, 42, is predecessor Vladimir Putin's puppet, as expected, but the Deep Purple music fan starts calling his own shots by year-end.

8. Kevin Rudd, new Australian PM after defeating John Howard last year, rejects Australia's George W. Bush-granted status as America's local "sheriff." The Aussies continue their decades-old humanitarian and conflict-resolution work in the Solomons and elsewhere in the region but on their own terms.

9. Stephen Harper forms a second minority government in a fall election. Stephane Dion retires from the Liberal leadership after a miserable Grit showing.

10. In narrow victory over John McCain, Hillary Rodham Clinton is elected 44th U.S. president.

11. Barack Obama accepts president-elect Clinton's offer to nominate him U.S. secretary of state.

12. Food is the new oil. Biofuel and developing-world demand will keep soaring prices for wheat, corn and other agricultural commodities high. Investors like fertilizer giant Potash Corp., grain handlers Agrium and Viterra (the former Saskatchewan Wheat Pool), and farm-equipment makers Deere, Caterpillar and Case New Holland.

13. Nuke stocks glow. North America is slowly shedding its wariness of nuclear power, also poised for big gains in Europe and Asia. Investors go for uranium producers including Canada's Cameco, and turbine makers GE and France's Alstom.

14. Safer than sorry stocks are in favour amid continuing upheaval in capital and equity markets. Sound "buy and forget" stocks include GE, Procter & Gamble, PepsiCo, Shoppers Drug Mart, United Technologies (Otis, Carrier, Pratt & Whitney) and reasonably priced utilities.

15. GM emerges as an unlikely turnaround play, as benefits begin to kick in from production cuts, reduced healthcare burden and more vehicles with showroom appeal.

16. With a massive oil discovery off its Atlantic coast this summer, Brazil is poised to attain the status of an OPEC producer, and may well join OPEC by 2010.

17. Rupert Murdoch, whose long ownership tenure at the Times of London has not restored the Times' prestige, surprises fretful journos by making only cosmetic changes to his newly acquired Wall Street Journal.

18. Ottawa raises no objections to takeover bids for Canadian-owned oilpatch giants Suncor Energy Inc. and EnCana Corp. by consortia formed among Britain's BP PLC, Anglo-Dutch producer Royal Dutch/Shell Group PLC, France's Total SA, Italy's ENI SpA and Spain's Repsol YPF.

19. A troubled Palm Inc., pioneer in PDAs and once a potentially formidable rival to Ontario-based BlackBerry maker Research in Motion Ltd., puts itself on auction block.

20. Hapless Nortel, having this year abandoned its third-generation wireless (3G) business – once a cornerstone of future growth prospects – talks merger with Cisco, the healthiest survivor of the telecom crash of 2000-02.

21. Hapless Motorola, after this year sacking its second CEO in three years, talks merger with a Nokia seeking a stronger foothold in North America.

22. Hapless French telecom giant Alcatel-Lucent wearies of CEO Patricia Russo's failure to deliver on turnaround plans; opts this time for a CEO fluent in French.

23. Amid continuing distribution woes at partner Loblaw Cos. that keep its Joe Fresh apparel boutiques out of stock, design maven Joe Mimran begins devoting most of his time to his other businesses.

24. Auto-parts investors shift into Linamar and Martinrea, two straightforward companies with appealing growth potential, and out of Magna International Inc., soon to be controlled by a convoluted partnership between founder Frank Stronach and Russian oligarch Oleg Derapaska, overly dependent on sales to Detroit's ailing Big Three, and a backdoor financier of a Stronach racetrack enterprise that seems fated never to succeed.

25. Lingerie merchant La Senza, now owned by the parent of Victoria's Secret, begins rebranding itself under the better-known VS banner, despite protestations to the contrary by La Senza CEO Irv Teitelbaum at the time of company's 2007 sale.

26. Quebecor Inc. spins off basket case Quebecor World, briefly the world's largest printer, but now close to unsalvageable after acquisition-related culture clashes, price wars and failure to keep costs down in a sector with notoriously thin margins.

27. In a bid for critical mass, Royal Bank of Canada explores merging its southeastern U.S. retail banking franchise with Atlanta-based SunTrust Banks, the dominant regional player, in exchange for a controlling equity stake in the combined firm.

28. The troika spearheading the Loblaw Cos. turnaround bid, including Galen Weston Jr., will show substantial progress in solving the firm's distribution crisis or will be replaced by year end with a distribution expert from logistics-savvy Wal-Mart or Target.

29. London widens its lead over New York as the world's financial capital as subprime-mortgage defaults and soured loans to precariously financed private-equity buyouts further weaken the balance sheets of America's largest banks and brokers.

30. Oscar loves Atonement.

---

Quotable tycoon

"The difference between a skinflint banker and a reckless banker is a recession."

–Walter Wriston, CEO of Citibank (now Citigroup Inc.) in the 1980s.

Insider Trading PDP+BWR

Markets Moving Us Back Up

For the Lions Among Us- Pescods Picks

Stochastics Top Ten List

Certainly I'm still a shareholder in BWR But Here's The Best Top Ten For The Next 3 Years IMHO :-)

Con artists turn shell companies into cash

Con artists turn shell companies into cash

JANET McFARLAND

Thursday, December 27, 2007

Oklahoma lawyer John Heskett logged onto his computer one day in late June, 2005, to check out an inactive shell company owned by his clients who were considering using it in a business deal.

What he saw made no sense.

"I saw this wild trading going on, and I couldn't imagine why," he said. "I was in total disbelief. I knew there could not be that many shares in the market, not even close, not even 1/100th of those shares in the market ... I had to pinch myself and say, 'Am I crazy?' " After some online searching and a few phone calls to the company's transfer agent, Mr. Heskett contacted the U.S. Securities and Exchange Commission to report a bizarre crime: Someone, he said, had stolen his client's public company.

Sixteen months later, the SEC and the British Columbia Securities Commission announced they had reached settlements with two Canadian men who admitted to illegally taking control of Greyfield Capital Ltd. and arranging to have 600 million new shares issued using the company's ticker symbol.

Surprisingly, the unusual case is not the only one of its kind in Canada or the United States. Regulators say corporate identity theft has become another twist in the world of securities fraud, where criminals seem to find endlessly creative ways to dupe investors.

Martin Eady, director of corporate finance at the British Columbia Securities Commission, said criminals have traditionally started their own shell companies to conduct frauds. But, he said, it's far cheaper to steal a dormant shell company.

"It typically costs about $100,000 to start one of those companies," he said.

When buying a dormant shell, he added, investors want a "clean" shell with no liabilities and clear titles and assets. "So, it can be costly to rehabilitate an old shell company," he said.

While there are obvious dangers in assuming the identity of an inactive company - that the real owners will notice and complain - criminals reduce the risk by targeting virtually unknown companies that trade on the U.S. over-the-counter market and have been dormant for years, or are in default in their filings.

Earlier this year, the Ontario Securities Commission halted trading in 10 companies' shares while investigating an alleged scheme in which the companies assumed the identities of 10 dormant firms.

The dormant companies had previously traded on the U.S. over-the-counter market.

The OSC temporary order also alleged that Select American Transfer Co., acting as the transfer agent for the companies, may have participated in the scheme by issuing false share certificates.

But identity theft frauds can occur without the transfer agent knowing what's really going on.

In the Greyfield Capital case, Mervin Fiessel and Robert Doherty, both of Kamloops, B.C., admitted they forged the signature of a former company director on a letter to Greyfield's transfer agent announcing a change of directors. They also forged documents to get the transfer agent to issue new shares and allow them to trade publicly without restrictions.

The men admitted they issued a flurry of press releases, and also talked up the company on Internet bulletin boards for penny stock investors, claiming to be running a Kamloops-based car dealership. They touted it as the largest dealership in Western Canada, even though it was not even the largest dealership in Kamloops.

"We actually went to look at their operations," Mr. Eady says. "It was rather comical. Their news releases claimed [it] to be a very major going concern, and we turned up at the address and it was simply a good old-fashioned used car lot."

The scheme ended when the SEC launched its investigation following Mr. Heskett's phone call in July, 2005. The two men have been banned from trading securities in British Columbia, except in limited circumstances, and were required to make payments totalling about $325,000.

Mr. Heskett, meanwhile, says his clients were also victims, even though they did not buy the company's fake shares. Their shell company was essentially ruined for future use because so many fraudulent shares remain outstanding. His clients have abandoned plans to use the company.

"These guys trashed the shell," he said.

OSC enforcement director Mike Watson said that in some cases, criminals seem to steal shell companies to quickly flip them to other buyers, who think they are purchasing a legitimate public company.

More often, he said, they use them to conduct a pump-and-dump fraud. That means the crooks artificially inflate the value of the shares, sell their holdings at a significant profit, then disappear.

Mr. Watson said one difference with frauds conducted using a stolen company is the criminals typically arrange to get many millions of shares issued to themselves, and also arrange to have the shares issued without typical trading restrictions that accompany private placements, allowing them to trade the shares immediately.

"When it collapses, they simply pull another [shell] company off the shelf and start over again," he said.

He said brokerage firms can also become fraud victims. They are required to provide shares to complete trades, and if the shares prove fraudulent, the firms can be forced to compensate the buyer.

To target a brokerage firm, criminals set up a scheme to "sell" shares to accomplices who pose as ordinary investors. The so-called victims then pretend to "uncover" that the shares are fraudulent and insist the transaction be completed by the unsuspecting brokerage firm.

"The broker finds himself in a position where if they can't come up with the shares, they perhaps have to make cash compensation," Mr. Watson said. "What you've done is taken shares you've printed off your printer and sold them to a broker for $5-million."

Earlier this year, British Columbia regulators announced a multipronged plan to reduce the fraudulent abuse of corporate shell companies.

The new rules, which have been published for comment, would require companies trading on the pink sheets over-the-counter market to file financial statements, press releases and other disclosure documents just like other public companies trading on larger exchanges.

The BCSC will also require over-the-counter issuers to provide shareholder lists and other information. The commission has also proposed new resale restrictions on people who buy shares of an over-the-counter company before it goes public.

Mr. Eady said the new rules have been proposed because British Columbia has a disproportionate amount of fraud involving over-the-counter shares compared to other jurisdictions.

"I know the TSX Venture [Exchange] has been quite a lot more choosy about who they will list compared to the days of the old Vancouver Stock Exchange," Mr. Eady said. "But Vancouver is still a nice place to live, and we still have people well experienced in that market, so they've simply found another home."

© Copyright The Globe and Mail

Oil jumps on Bhutto assassination

Oil jumps on Bhutto assassination

JOHN WILEN

Thursday, December 27, 2007

NEW YORK — Oil prices rose Thursday after the assassination of Pakistani opposition leader Benazir Bhutto raised concerns about stability in the Middle East.

Ms. Bhutto died in a suicide attack that also killed at least 20 others at a campaign rally, aides said.

“It's definitely instability,” said James Cordier, president of Liberty Trading Group in Tampa, Fla. “Everybody wants calm when they're talking about pricing energy (futures).”

Light, sweet crude for February delivery rose 47 cents (U.S.) to $96.44 a barrel on the New York Mercantile Exchange.

Also supporting oil prices Thursday were expectations that domestic crude supplies fell last week. In its weekly inventory report, the Energy Department's Energy Information Administration is expected to show that oil supplies fell by 1.3 million barrels last week, according to the average forecast of analysts surveyed by Dow Jones Newswires.

Analysts believe crude supplies fell because of foggy weather that at times prevented oil tankers from entering the Houston Ship Channel and delivering their cargoes.

The EIA report is also expected to show that distillate inventories, which include heating oil and diesel fuel, fell by 800,000 barrels, while gasoline stockpiles rose by 1.4 million barrels. Refinery use likely grew by 0.6 percentage point to 88.4 per cent of capacity, analysts predict.

Other energy futures were mixed Thursday. Heating oil futures rose 1.9 cents to $2.6602 a gallon while gasoline futures rose 1.39 cents to $2.4665 a gallon. Natural gas futures fell 10.2 cents to $6.944 per 1,000 cubic feet.

In London, February Brent crude futures rose 28 cents to $94.22 a barrel on the ICE Futures exchange.

© Copyright The Globe and Mail

Single-family housing market `remains grim,' index official observes

Leo (July 23 — Aug. 22)

Some days the wind blows in the right direction at just the right speed. Those good days will soon return.

U.S. home prices post their biggest drop ever TheStar.com - Business - U.S. home prices post their biggest drop ever

Single-family housing market `remains grim,' index official observes

December 27, 2007

NEW YORK–U.S. home prices fell in October for the 10th consecutive month, this time posting the biggest drop ever, according to a key index.

The record 6.7 per cent slide in the Standard & Poor's/Case-Shiller home-price index also marked the 23rd consecutive month that prices either fell or grew more slowly than the month before.

"No matter how you look at these data, it is obvious that the current state of the single-family housing market remains grim,'' Robert Shiller, who helped create the index, said yesterday.

The October decline surpassed the previous record of 6.3 per cent in April 1991. The index tracks prices of existing single-family homes in 10 metropolitan areas.

The index is considered a strong measure of home prices because it examines price changes on the same property over time, instead of calculating a median price of homes sold during the month.

Home prices could fall another 10 per cent over the next 12 to 18 months before bottoming out, said Patrick Newport, an economist with financial consultancy Global Insight.

Newport said four of the largest groups currently trying to sell homes – banks holding foreclosed properties, home builders, speculators and unemployed consumers – are typically flexible about lowering house prices.

Sales of homes will probably start to rebound late in 2008, with price appreciation to follow, Newport said.

A second, broader Case-Shiller index, which measures 20 metropolitan areas, fell 6.1 per cent in October.

Among the 20 areas used in the broader index, 11 posted record year over year declines and all 20 declined in October compared with September.

Leading the index lower was Miami, where prices fell 12.4 per cent in October compared with the same month last year. Tampa was the next-worst-performing city with a year over year loss of 11.8 per cent.

Besides those two cities, Detroit, Las Vegas, Phoenix and San Diego also posted double-digit declines.

Atlanta and Dallas, where prices had previously risen, fell a little in October at 0.7 per cent and 0.1 per cent respectively.

Only three areas – Charlotte, N.C.; Portland, Ore.; and Seattle – posted year over year appreciation in October. Charlotte posted the largest gain at 4.3 per cent.

Among the three, only Charlotte is likely to avoid declining house prices within the coming few months, Newport said. The area has not had the periods of rapid appreciation other markets have experienced.

Kevin Johnson, co-founder of Homes of the South Inc. in Charlotte, agreed.

"We never jumped very high like other areas," Johnson said, so the city won't ``have a hard fall ... "

Bob Morgan, president of the Charlotte Chamber of Commerce, said the area's strong economy is also playing a role in supporting prices. Preliminary numbers show more than 14,000 jobs were created in the Charlotte area in 2007, he said, up from more than 12,000 in 2006.

The job growth is coming from a "pretty healthy" variety of sectors, including the financial industry, Morgan said. Charlotte is home to two of the country's four largest banks, Bank of America Corp. and Wachovia Corp.

Carole Brake, sales manager at Bissell Hayes Realtors SouthPark Office in Charlotte, said prices are still up despite an increase in inventory.

"Sellers are not in a mode to reduce their prices. They want a fair market price for their home," Brake said.

---

Associated Press

Anatomy of a credit crunch

TheStar.com - Business - Anatomy of a credit crunch

SHUTTERSTOCK PHOTO ILLUSTRATION

A worldwide credit crunch tied to U.S. “subprime” mortgages began in August.

The U.S. credit crunch timeline

Year-end 2006: The value of all U.S. homes, excluding rentals, peaks at 153 per cent of GDP, the highest level in at least six decades.

June 22, 2007: New York brokerage Bear Stearns Cos. spooks Wall Street in saying it will bail out one of its hedge funds due to subprime-mortgage losses. On July 18, the firm reports that its two hedge funds that invested heavily in subprimes are essentially worthless, having lost more than 90 per cent of their value, or $1.4 billion (U.S.)

Aug. 9: French bank BNP Paribas SA suspends three of its funds with U.S. subprime exposure.

Aug. 16: Troubled Countrywide Financial Corp., the U.S. No. 1 mortgage lender, draws down $11.5 billion from its credit lines to stave off insolvency.

Aug. 22: Reports show U.S. home foreclosures were up 93 per cent in July 2007 over July 2006. There were 179,599 foreclosure filings in July, up from 92,845 the previous year.

September: The Bank of England injects $55 billion into Northern Rock PLC to rescue Britain's No. 5 mortgage lender. A run on the firm by depositors is the first in memory.

Sept. 30: U.S. house prices begin to drop, a trend certain to continue as unsold homes proliferate and foreclosure rates rise.

Oct. 25: Merrill Lynch & Co. Inc. records an $8.5 billion writedown, mostly on consumer loans including subprime mortgages. CEO Stanley O'Neal is fired days later.

Nov. 5: Citigroup Inc. says subprime mortgages and related securities lost as much as $11 billion of their value in the previous month. CEO Charles Prince is forced out.

Dec. 7: CIBC discloses a whopping $9.8 billion exposure to the U.S. subprime market.

Dec. 12: Five central banks, including the U.S. Federal Reserve, the Bank of Canada and the European Central Bank, agree to inject $40 billion into the global financial system, with an additional $24 billion set aside for European buyers of scarce U.S. dollars.

Who would have thought questionable loans to Sacramento trailer-home buyers could someday trigger a global credit crisis

December 16, 2007

David Olive
Business Columnist

The cavalry rode to the rescue of the global financial system last week. We hope this unprecedented bailout works, because nothing else has since a worldwide credit crunch tied to U.S. "subprime" mortgages began in August.

The U.S. Federal Reserve Board has cut its key federal funds rate three straight times, or a full percentage point. Henry Paulson, the U.S. treasury secretary, is trying to cobble together a superfund to quarantine the big banks' soured loans, and last week unveiled a bailout plan for homeowners who can't make their mortgage payments. Retiring Bank of Canada governor David Dodge has been trying to repair a troubled financial sector – non-bank asset-backed commercial paper (ABCP) in a deal Canadian banks completed Friday. And so-called "sovereign funds," owned by state governments hailing from Dubai and Singapore, have injected capital into ailing Citigroup Inc. and Swiss banking giant UBS AG.

That's not sound and fury signifying nothing, but it might as well be. Restorative efforts to date have failed to arrest the low-grade panic on Wall Street and in other global financial centres, where expectations of further massive losses run high. Banks, brokerages and other major financial institutions bracing for an estimated $400 billion (U.S.) in subprime mortgage losses are so gun-shy they've even stopped lending to each other, and are turning away credit-worthy prospective consumer and commercial borrowers in order to shore up their balance sheets. A sustained credit freeze of this magnitude could steer the U.S. and Canada into a recession, perhaps a severe one, by the first half of next year if the financiers' confidence in their own system isn't promptly restored. Apart from the financial wreckage, an estimated 2 million Americans risk losing their homes in the next year.

"What we are witnessing is essentially the breakdown of our modern-day banking system," Bill Gross, managing director at Pacific Investment Management Co. LLC (Pimco), writes in his latest client note. Pimco manages close to $1 trillion, and the investing acumen of Gross rivals that of Warren Buffett. His latest commentary only added to fears on Wall Street that the worst of the bad-loan reporting isn't over, even after staggering writedowns declared by blue-chip financial houses including UBS, Citigroup and Merrill Lynch & Co. Inc. Last week, Bank of America Corp. and Wachovia Corp., the No. 5 U.S. bank, declared or warned of large subprime-related losses. Canadian banks have so far taken a $1.3 billion hit.

"Credit contraction, with its inevitable companion of asset destruction," Gross writes, "is spreading with the speed of an infectious disease."

To halt the contagion, five central banks – the U.S. Fed, the Bank of Canada, the Bank of England, the European Central Bank (ECB) and the Swiss National Bank – joined Wednesday to inject as much as $64 billion of liquidity into the world financial system.

The funds will be distributed in four auctions, beginning tomorrow and stretching into January. Twenty-four billion dollars of the amount represents greenbacks the Fed is making available to the ECB and the Swiss National Bank for European clients who've coped most of this year with a scarcity of U.S. dollars. It's the biggest central-bank intervention in the global system since the aftermath of the attacks of Sept. 11, 2001, and is described by one U.S. analyst as "revolutionary" for the impressive degree of co-operation among the central banks.

"As always with central banking, the most important message is in the signal that central banks are sending," Bruce Kasman, an analyst at JPMorgan Chase & Co. wrote in his blog Wednesday. "They are telling us they are now prepared to take an aggressive and co-ordinated approach to dealing with this issue."

To get the banks lending again, the U.S. Fed-led initiative will lend money to banks at discount rates and, in an unorthodox move, accept as collateral a wide range of assets including securities not backed by government entities. "More than lowering rates in the economy, just having this banking system liquefied will make a huge difference," Wachovia CEO Ken Thompson said in a Wednesday conference. Financiers "are still fearful of each other, and everybody is worried about counter-party risk and so [banks] are hoarding their balance sheets, and this will help that."

Financiers have had ample grounds for fear. Write-down announcements by the world's biggest financial institutions have been a bad penny for months. UBS has alarmed the market more than once with fresh revelations of soured mortgage-related loans on its books. Banks thought to be free of the contagion, including London-based giant HSBC Holding PLC, have dismayed rivals with news of subprime-infected balance sheets. Canadian Imperial Bank of Commerce stunned Bay Street on Dec. 7 by revealing its $9.8 billion exposure to the U.S. subprime market.

The deep-seated problem is that no one knows exactly where the debt is, in what amount, and in what state of repair. Since the U.S. housing bubble began to inflate in 2004, something like $2 trillion worth of mortgages have been granted, in many cases to "ninjas" (no income, no job, no assets). In the case of low-income borrowers with spotty credit histories, mortgages were sold at "teaser" rates as low as 7 per cent that would eventually "reset" at as much as 13 per cent.

Foreclosures are now mounting, as the dubious mortgages begin to reset. The toxic loans, which should have been labeled "junk mortgages" yet inexplicably bore Triple-A ratings from credulous credit-rating agencies, were bundled into packages of $100 million or more and labeled ABCP and "collateralized debt obligations" (CBOs). They were then swapped and re-swapped among global banks, brokerages, hedge funds and other investors who each garnered a fee as the hot potatoes made their way around the globe.

The outcome has been one of the biggest fiascos in the financial system in modern times. "What is happening in credit markets today is a huge blow to the credibility of the Anglo-Saxon model of transactions-oriented financial capitalism," veteran money-market observer Martin Wolf wrote last week in the U.K. Financial Times. "A mixture of crony capitalism and gross incompetence has been on display in the core financial markets of New York and London."

The system itself appears long ago to have grasped the enormity of its troubles, and thus failed to react positively to the remedial actions preceding last week's dramatic central-banks bailout scheme. As recently as the day it was announced, Wall Street initially jumped for joy, pushing the Dow Jones Industrial Average up 270 points, before coming to its senses and closing the day up just 41 points, or 0.3 per cent.

The jolt has had some salutary effects, in the realm of central-bank practices. The stigma of the Fed's "discount window" has kept banks from borrowing there for fear of appearing desperate. Under last week's bailout scheme, banks are encouraged to borrow at discount rates knowing their identities won't be revealed.

Regional lenders far smaller than the New York-based "money-centre" banks will be urged to deal directly with the Fed for the first time, bypassing intermediaries. A humbled Fed is adopting tools used by the European Central Bank and the Reserve Bank of Australia, which include lending to a much wider variety of institutions and accepting a more diverse range of collateral.

Both the Fed and the Bank of Canada have hinted strongly that assistance will continue beyond January if necessary. That's not enough to satisfy Gross, who says a federal funds rate cut to 3 per cent from the current 4.25 per cent is required to head off a recession. And when the system is able finally to exhale, there will be a need to debate regulatory and other reforms – including more transparency about the quality of assets on bankers' books.

The current calamity arises from a systemic failure over, of all things, home mortgages – one of the most dead-simple financial transactions in existence. When the housing bubble was gaining altitude, lenders, regulators, debt-rating agencies, buyers of bundled mortgages and central bankers couldn't imagine that questionable loans to Sacramento trailer-home buyers could someday trigger a global credit crisis.

Even those relatively few optimists about last week's dramatic bailout efforts are counseling patience about recovering from a catastrophic blunder that has come close to crippling the global financial system.

"The big, big picture is that a bunch of people basically accepted much more debt than their balance sheets could afford," Jeff Bronchick, chief investment officer at Reed Conner Birdwell, a Los Angeles money management firm, told the Wall Street Journal last week.

"That has to be cured and it can only be cured with time."