Pescod Says...

Cro Insiders Loading Up On Shares

The 5 Year Chart Shows
The Last Time The Stock Was This Low It Was June 2005
Cro Has A Small Float And Will Rocket Up On Any Positive Developments

The Insiders Bought Shares From The Public Markets

200,000 x .14 cents Larche

QEC Houses Today Anonumous #1 Buyer

Petrolifera Confirms Its Financial Integrity as Capital Markets Deteriorate

Petrolifera Confirms Its Financial Integrity as Capital Markets DeterioratecnwCALGARY, Oct. 9 /CNW/ - Petrolifera Petroleum Limited (PDP - TSX) wishes to comment on recent share price movements, capital and credit markets and current activity being conducted by the company.ARGENTINA AND FINANCIAL MATTERS

The company wishes to confirm that during the months of July and August in the third quarter 2008 its production has been relatively stable at approximately 8,000 boe/d, similar to levels reported for the second quarter 2008. 47.00 per barrel coverted becomes $49.87 per barrel when translations of the US dollar

There were some minor crude oil production declines in September 2008 due to adjustments being made in the Puesto Morales Norte Field with respect to pumping systems designed to handle the changing fluid mix with the water injection that is occurring at the present time as part of the waterflood program. These changes to extraction rates are expected to restore production rates in the fourth quarter in line with expectations of the impact of the waterflood as contained in our recent Fall 2008 Corporate Presentation, which is posted on our website at www.petrolifera.ca. We would note that the expected waterflood impact is occurring, offsetting normal declines that arise from the production process. We are awaiting final September natural gas sales levels and we will be reporting to our shareholders our Third Quarter 2008 operating and financial results on November 11, 2008 when our Board of Directors will convene to review these results and the company's 2009 operating and financial plan and budget.Prices have been stable in Argentina for crude oil, albeit at much below world prices, especially as has been the case since last December 2007, when the imposition of increased export taxes reduced the effective wellhead price to US$42 per barrel. This price was subsequently negotiated up to $47 per barrel without any concessions from the governing authorities.

It should also be noted that as the Canadian dollar has weakened recently, our realized price in August 2008, for example, was $49.87 per barrel when translations of the US dollar, the Argentinean peso and the Canadian dollar were incorporated into Canadian dollar reporting, which is used in Petrolifera's financial statements. All of Petrolifera's production occurs in Argentina.Operationally, we are conducting drilling operations in Argentina using one drilling rig and one service rig at the present time.

Presently, we are testing an exploratory well on Vaca Mahuida which encountered live 29 degree API oil during drilling and initial swab tests. A number of hydraulic fracs will be conducted over several intervals to determine well productivity from identified shallow Centenario sandstone reservoirs at around 800 meters subsurface. The Centenario was the primary objective of this well, labeled VM 2007. Should this well prove commercial, management anticipates early production with good follow-up potential.

Petrolifera also has another well, VM 2001, standing cased awaiting testing on the Vaca Mahuida block. The company has an effective 75 percent working interest in this project.The lone drilling rig under contract presently is drilling an exploratory well to evaluate a Centenario/Basement play on the Rinconada Norte block northeast of Puesto Morales. This is also a shallow test and the well is likely to be cased for further evaluation based on live oil shows while drilling.

The rig is scheduled to return to Puesto Morales to drill two low-risk infill wells within the Puesto Morales Field for additional near-term deliverability. These are the type of Argentinean programs and drilling Petrolifera anticipates pursuing during the next several months until further price increases or increased investment incentives emerge in that economy and more particularly until credit and capital markets stabilize or improve.Petrolifera is currently generating a healthy net operating income from its production base in Argentina. On a preliminary basis, before review by Petrolifera's auditors and the company's Audit Committee and Board of Directors, cash flow from operations before changes in working capital ("cash flow") has been exceeding monthly average cash flow reported for the second quarter of 2008. First half of 2008 cash flow and other financial results were previously reported to capital markets in August 2008.

The company is striving to reduce cash outlays to be more aligned with internally generated funds to maintain its excellent balance sheet and financial flexibility as it prepares for increased activity in Colombia and Peru.

As at August 31, 2008, Petrolifera only had $4 million of net debt, including other long term investments and assuming the asset backed commercial paper ("ABCP") resolution is completed shortly, the notes arising from the resolution are issued and the company is able to finalize a negotiated long-term credit facility, secured by the notes to be issued to replace ABCP owned by the company.

This was offered to Petrolifera by a Canadian chartered bank for approximately the equivalent of the carrying value of the ABCP on our balance sheet and would further enhance corporate liquidity. There can be no assurance that this proposed resolution and term credit facility will be finalized.In the meantime, at August 31, 2008 the company had approximately a $25 million surplus of available long-term reserve backed credit available to supplement its internally generated cash flow and with the ABCP resolution, would have access to another approximately $10 million which could become available on a long term basis, which would further improve reported working capital as all debt related to ABCP would be classified as long term. Working capital at August 31, 2008 was $11.8 million, including $16.6 million of cash and after provision for $16 million of short term borrowings which, as indicated above, would become long term debt under the ABCP resolution and finalization of the amended bank credit facility.COLOMBIAIn Colombia, Petrolifera has prepared the surface location and access road for the La Pinta well scheduled to commence drilling this year on the Sierra Nevada license in the Lower Magdalena Basin. A suitable helicopter transportable drilling rig was located in Ecuador and mobilized to Colombia where it is currently be being refurbished prior to its relocation to the La Pinta drill site.

This will occur as quickly as possible to meet the license's requirements. Thereafter a La Pinta follow-up well if warranted by success or drilling of the Brillante prospect on the same license is anticipated in 2009.A 120 square kilometer 3D seismic program on the Turpial license in the Middle Magdalena Basin is scheduled to commence shortly.PERUThe company continues to evaluate and interpret the results of its extensive 2D seismic program over Ucayali Block 107 in Peru.

We remain optimistic about the hydrocarbon potential of this block.The establishment of a seismic base camp and the line surveying program on Maranon Block 106 in northern Peru is underway following receipt of approval of the Environmental Impact Assessment conducted over the past year.Petrolifera's award of Block 133 offsetting Block 107 is awaiting Presidential decree later this year.GENERALWe remain mindful of the difficult credit and capital market conditions throughout the world, including in certain countries in South America. Over the near term, we intend to conduct a prudent program focusing on risk reduction to maintain financial strength and integrity.

This will be reflected in our proposed 2009 operating and financial plan and capital budget which will be tabled with our Board of Directors in mid-November 2008. We will endeavor in the appropriate circumstances to introduce joint venture partnerships to facilitate risk mitigation. We will also manage the timing of significant outlays while meeting obligations to ensure to the extent possible the significant participation by our shareholders in the upside potential of the oil and gas properties and assets we have secured over the past several years. We will also continue to examine new opportunities to expand and diversify the company's exposure in Latin America under the direction of our strengthened technical staff with an emphasis on lower risk opportunities which can be managed in conjunction with our risk averse approach.We are of the opinion that our shares are undervalued in relation to the net asset value of the company and that capital market forces, including the impact of the share price falling under marginable levels as set by banks and other lending institutions, have adversely and unduly influenced the price of our common shares in the stock market.

This share price deterioration has also occurred for most junior Canadian oil companies engaged in international activity, regardless of financial or operating results, apparently due to the desire of many investors to sell in a search for cash or immediate liquidity in a flight to perceived quality. We also understand concerns about the risk of declining commodity prices arising from the credit crisis and the potential impact on economic activity throughout the world has led to high levels of redemptions among mutual funds holding the shares of energy companies.

These forces have overridden fundamentals and adversely affected our share price as well.We would also remind investors and shareholders that as we do not presently receive world prices for our production in Argentina, due to that country's export tax policy, we are accordingly not exposed to declining oil prices impacting on our cash flow from operations until WTI reaches a level of approximately $61 per barrel.

Buy QEC In Time For Drilling October Results

QEC should hit a TARGET of $63.00/sh based on USA Shale Gas land valued at $35,000 per acre (Joseph Schachter) . (BNN-TV [ROB-TV) .

http://watch.bnn.ca/the-close/september-2008/the-close-september-12-2008/#clip92209

Questerre Energy Corporation is engaged in the exploration for, and the development, production and acquisition of scalable natural gas projects. Its major properties include St. Lawrence Lowlands, Quebec; Greater Sierra and Beaver River Field, British Columbia; Antler, Saskatchewan, and Vulcan and Westlock, Southern & Central Alberta.

The St. Lawrence Lowlands area is prospective for natural gas in multiple horizons with targets in the Ordovician Trenton Black-River and the Lorraine and Utica. Its landholdings of over one million gross acres consist of three separate blocks.

The largest block of 711,000 acres is subject to a farm-in and participation agreement with Talisman Energy. The primary zone of interest in the Greater Sierra region is the Devonian Jean Marie.

The region is also prospective for shallower zones, including the Mississippian Debolt and Slave Point formations. In November 2007, it acquired Magnus Energy Inc. In April 2008, the Company acquired Terrenex Ltd.

Share Capitalization
Issued & Outstanding:
Common Shares:
179,127,088 (as at May 14, 2008)
Stock Options:
16,769,170 (avg exercise price $0.61)
Insider Position:
17,126,231 (9.57%)

House 111 has accumulated huge in October

This Shows 1 Month Of Buy And Sells By Brokerages

This is the most current Corporate Presentation


Questerre Energy Corporation ("Questerre" or the "Company") (OSE,TSX:QEC) is pleased to announce that Talisman Energy Canada (“Talisman”) has elected to drill the remaining three option wells under its farm-in agreement with Questerre and its minority partner in the St. Lawrence Lowlands, Quebec.

The three wells will complete the work program allowing Talisman to earn about a 75% interest in the original 719,000 acre farm-out block. Questerre also retains about a 4¼% gross overriding royalty on production from Talisman.

Michael Binnion, President and Chief Executive Officer of Questerre, commented, “We were one of the first companies to recognize the potential of the Quebec Lowlands for unconventional gas and have worked for almost ten years to get to this point. We are thrilled that Talisman, which also saw the potential early on, has decided to accelerate the exploration and appraisal program. Our joint land lies right in the heart of the Lowlands between the Yamaska growth fault and Logan’s Line and runs from Quebec City to south of Lac Saint Pierre. We continue to believe this land position proximate to the market has significant natural gas potential.”

The three-well program is expected to commence in the latter half of 2008. The wells will test multiple horizons including the Trenton Black-River and the Utica and Lorraine shale sequences.

Questerre Energy Corporation is a Calgary-based independent resource company actively engaged in the exploration, development and acquisition of high-impact exploration and development oil and gas projects in Canada.

This news release contains forward-looking information. Implicit in this information are assumptions regarding commodity pricing, production, royalties and expenses, that, although considered reasonable by the Company at the time of preparation, may prove to be incorrect. These forward-looking statements are based on certain assumptions that involve a number of risks and uncertainties and are not guarantees of future performance. Actual results could differ materially as a result of changes in the Company’s plans, commodity prices, equipment availability, general economic, market, regulatory and business conditions as well as production, development and operating performance and other risks associated with oil and gas operations. There is no guarantee made by the Company that the actual results achieved will be the same as those forecasted herein.

For further information, please contact:

Questerre Energy Corporation - Jason D’Silva, VP Finance
Tel: (403) 777-1185
Fax: (403) 777-1578
Email: info@questerre.com
Web: www.questerre.com

Short selling ban expires...now what happens?

Investors will also be watching to see what kind of an effect short selling will have on the market now that a three-week ban imposed by regulators has expired. Some analysts believe the unprecedented ban on short selling – an effort to bolster investor confidence amid the worst financial crisis since the stock market crash of 1929 – did more harm than good at a time of historic market volatility.

Wall Street set for higher open TheStar.com - Business - Wall Street set for higher open
October 09, 2008
JOE BEL BRUNO
The Associated Press

NEW YORK–Wall Street appeared headed for a strong open Thursday after IBM Corp. reaffirmed its profit outlook and investors hoped that the panic selling that cascaded through global markets a day earlier was overdone.

Stock markets around the world moved mostly higher one day after the Federal Reserve and other leading central banks cut interest rates to help fight the credit crisis and stimulate the global economy.

Asian and European markets moved higher on Thursday, and the Dow Jones industrial average futures was up 136 points ahead of the opening bell in New York.

There was hope by investors that perhaps Wall Street is getting closer to finding a bottom after the worst five-day rout since 1987. On Wednesday, the Dow gave up 189 points to close at – and is now down about 35 per cent from its high of 14,164.53 reached exactly one year ago.

While rate cuts can take up to a year to work its way through the economy, there was some positive signs Thursday that corporate earnings might come in better than expected. IBM, a Dow component, posted third-quarter results that beat forecasts and reaffirmed its full-year earnings guidance.

There might also be a bit more hope in the market on a report that the Bush administration is mulling a plan to stabilize hobbled U.S. banks. The government is considering taking ownership stakes in certain U.S. banks as an option for dealing with a severe global credit crisis.

That certainly could help motivate investors on Thursday, though early signs that the market will move higher has often been erased with trading extremely volatile during the past few weeks. Ahead of the bell, Dow futures rose 136, or 1.46 per cent, to 9,327. Standard & Poor's 500 composite futures added 17.70, or 1.80 percent, to 998.40, and Nasdaq-100 futures added 33.75, or 2.56 per cent, to 1,353.75.

Investors will also be watching to see what kind of an effect short selling will have on the market now that a three-week ban imposed by regulators has expired. Some analysts believe the unprecedented ban on short selling – an effort to bolster investor confidence amid the worst financial crisis since the stock market crash of 1929 – did more harm than good at a time of historic market volatility.

Ivanhoe signs new oil deal with Ecuador Capped at $37.00.barrel

Ivanhoe signs new oil deal with Ecuador

Wednesday, October 08, 2008
QUITO — — Ecuador on Wednesday signed a service deal with Canada's Ivanhoe Energy Inc. to exploit an oil field, marking a victory for the leftist government in its drive to boost control over the crucial sector.


Ivanhoe plans to invest up to $5-billion (U.S.) over 30 years to extract oil from the Pungarayacu field in Ecuador's Amazon jungle. Ecuadorean oil officials have said the company could produce up to 120,000 barrels a day within five years.

Payments to Ivanhoe: To recover its investments, costs and expenses, and to provide for a profit, Ivanhoe Energy Ecuador will receive from Petroproduccion a payment of US$37.00 per barrel of oil produced and delivered to Petroproduccion. The payment will be indexed (adjusted) quarterly for inflation, starting from the contract date, using the weighted average of a basket of three US Government-published producer price indices relating to steel products, refinery products and upstream oil and gas equipment. Type: The contract is a Specific Services Contract under which Ivanhoe Energy Ecuador will use its unique and patented HTL technology, as well as provide advanced oil-field technology, expertise and capital to develop, produce and upgrade heavy crude oil from Block 20, which contains the Pungarayacu field. In addition, Ivanhoe Energy Ecuador has the right to conduct exploration for light oil in the contract area and to use any light oil that it discovers to blend with the heavy oil for delivery to Petroproduccion.

Term: The 30-year term may be extended by mutual agreement for two additional five-year periods. The contract has three phases. The first two phases are for evaluation of the field's production capability and the crude-oil characteristics, as well as for the construction of the first HTL plant. The third phase is for full field development and will include drilling additional exploration and development wells. Additional HTL capacity will be added as necessary for expected production. HTL is a field-located upgrading process that converts heavy oil to a transportable, upgraded liquid product. The upgrading process generates by-products that can be used on site to create steam for injection into the reservoir, thereby improving recovery, or alternatively, to generate electricity. The processed oil can be transported by pipeline without the need to add diluent and the upgraded product has a significantly higher market value than raw heavy crude.

The HTL process can be used in technically and economically scalable plants - down to as low as 10,000-30,000 barrels per day - in modular form near producing wells. For the Pungarayacu oil field and the balance of Block 20, all of these advantages are expected to come into play.

HTL's environmental advantages ------------------------------
Numerous significant environmental benefits result from using the integrated HTL process for heavy-oil production, compared with the use of conventional production methods. These include a) minimizing surface disturbance by the relatively small scale of the HTL plants; and b) significantly reducing greenhouse gases, on a full life-cycle basis, through the generation of onsite energy from the by-products of HTL processing. : Italics Ours.

President Rafael Correa, a leftist former economy minister, has pushed foreign oil companies already producing to switch to new service deals that would allow the state to keep all the oil they extract in exchange for a fee.

"Today, we have signed a contract that marks the change of times in our country," said Mr. Correa after signing the deal and replacing the country's oil chief to speed up negotiations with other companies.

"We want private companies to have a fair return, but they also have to respect the winnings of the country."

The service deal with Ivanhoe is a win for Mr. Correa's drive to increase the OPEC nation's sway over the sector, but also highlights the U.S.-trained economist's willingness to continue working with foreign oil companies to boost production.

Mr. Correa has so far refrained from oil nationalizations, but threatened to expel foreign oil companies that fail to raise production levels. Most companies have halved investment since new contract negotiations started last year.

Mr. Correa's allies in Venezuela and Bolivia have nationalized key swaths of their economies including oil and gas.

Local oil experts have charged the new deal with Ivanhoe lacks transparency and questioned the company's capacity to meet production targets with experimental technology to upgrade the quality of heavy crude on site.

Ivanhoe has operations in Canada and China, and its working on a technological innovation that potentially makes developing heavy oil fields more economical for smaller producers.
© Copyright The Globe and Mail

Zinc And Base Metal Slump worst in 50 years: Lundin

Slump worst in 50 years: Lundin
ANDY HOFFMAN
Wednesday, October 08, 2008
As the scion of the Lundin family resources empire, Lukas Lundin has both prospered and suffered through plenty of commodity sector booms and busts. Yet in all his years as a mining executive and financier he has never seen anything like this.
"I'm very surprised. This is the worst correction we have had in the last 50 years," Mr. Lundin said in an interview this week.

Just two weeks ago, the chairman of Lundin Mining Corp. and the head of the Lundin Group of Companies, still believed that the commodities boom cycle was intact. Despite a looming recession in the United States he had faith in the theory of "de-coupling," believing that the U.S. was no longer the key to commodities demand and that Europe and Asia would be able to escape the downturn.

That has all changed now as the deepening global financial crisis has led to a savage selloff of mining stocks and nose-diving commodity prices. The S&P TSX Metals and Mining Index has lost a stunning 23 per cent of its value in a week and more than 38 per cent over the past month.
Mr. Lundin is suddenly among the legions of resource investors who have resigned themselves to the notion that America's toxic debt contagion will crimp global economic growth and cut demand for commodities.

"I thought there was a decoupling in the world between us and the U.S., but I think now we've all been dragged in to the same crap," he said.

Born in Sweden and now residing in Vancouver, Mr. Lundin grew up in the commodities business. His late father, Adolf Lundin, compiled a fortune by following his own personal motto, "No guts, no glory," and taking a chance on oil and mining concessions in troubled places such as Sudan, Iran and The Democratic Republic of Congo.

Lukas put his stamp on the family empire recently by pulling off a series of aggressive acquisitions during the height of the commodity boom. But now some of the mining assets that Lundin Mining acquired are proving less profitable than hoped because of operational troubles and falling metal prices.

Lundin Mining shares have lost nearly a third of their value in a week and almost 50 per cent in a month.

Meanwhile, the price of copper plunged as much as 7 per cent Wednesday on the London Metals Exchange, hitting a 20-month low of $5,227 (U.S.) a tonne, or about $2.37 a pound. The metal later recovered slightly to close at $5,240, down from $5,625 on Tuesday. As recently as July, copper was changing hands at an all-time high of more than $4 a pound.
The price of zinc, one of Lundin Mining's key production metals, has skidded to three-year lows of about 65 cents a pound and the company is now considering cutting production from high-cost operations such as its Galmoy mine in Ireland.

"We are okay at this price, but if they go much lower we are going to have to start doing some cuts," he said, adding that the company is reviewing costs at all of its mines.
"We're cutting costs and we are making sure that operations are at least cash flow positive. If not, we will shut them down," he said.

The company is also considering revamping its troubled Aljustrel zinc mine in Portugal as a copper-focused operation. A decision could come within two weeks.
As for the Lundin Group's stable of junior exploration firms, access to outside sources of capital has all but dried up. A Lundin family trust recently had to lend one of the companies, Africa Oil Corp., $6-million to help fund day to day operations.

"The smaller companies, they are finished right now," Mr. Lundin said, adding that "the exploration game is going to be the last one to come back. That's a very tough business."
Bay Street analysts have also begun slashing commodity price assumptions and stock price targets to reflect the mining sector's new reality.

On Monday, UBS Securities analysts Brian MacArthur and Onno Rutten cut 2009 metal price assumptions by an average of 30 per cent. The target price for Lundin's shares was reduced by 59 per cent to $3.50 (Canadian).

Scotia Capital followed suit Wednesday, sharply cutting 2009 metal price assumptions and stock targets.
The new forecasts "reflect our view that the global credit crisis is likely to result in a more severe cyclical downturn than we were already forecasting," analysts Lawrence Smith and Alex Terentiew said in a report.

Scotia cut 2009 copper price assumptions by 31 per cent to $2.25 (U.S.) a pound from $3.25.
The Lundin share target price was cut to $2.75 from $6 (Canadian), a reduction of 54 per cent.
When commodities do come back, they will "come back strong," Mr. Lundin said. But he was hard pressed to predict when the recovery will take hold.

"I don't know if it's six months, two years or 21/2 years, but we are definitely not out of the woods," he said.

© Copyright The Globe and Mail

Gold Is Gold And Going Higher

Debt unwinding propels gold higher

Wednesday, October 08, 2008
Here's Allan Robinson's At The Bell which you'll find in Thursday's newspaper:Deflation is in the air, yet gold rose yesterday to more than $900 (U.S.) an ounce.The S[amp]amp;P/TSX global gold index, which has been lagging bullion, soared 19 per cent yesterday to 267.35 points.Gold bullion, like the world's currencies and bond markets, is caught up in the massive unwinding of debt by speculative hedge funds, said Bill Belovay, a portfolio manager for BMO Precious Metals Fund, which has about $60-million (Canadian) under management.

“The gold price has risen due to the increase in the lease rates by the central banks,” said Mr. Belovay, who is both a geologist and a mineral economist.WHAT ARE LEASE RATES?Speculative hedge funds were borrowing gold at rates of interest below 1 per cent and the five-year average rate was 0.12 per cent, he said.

The funds would turn around and sell the gold and reinvest the proceeds in higher yielding securities such as European bonds. It was a part of what was known as the carry trade.However, the one-month gold lease rate has increased to 2.65 per cent as banks worry about the creditworthiness of the borrowers.

“Now comes the time that [the funds] have to repay the gold,” Mr. Belovay said. Gold is rising as funds have to buy the gold they need to return to the banks.Carry trades are no longer lucrative for hedge funds and the banks are clearly saying the gold lending window is closed. “It's a slow painful way of giving a message to the system.”But from the perspective of a long-term investing strategy, the changes under way are positive for bullion, Mr. Belovay said. The withdrawal of banks from the gold lending business to funds should result in less gold coming on the market, he said. “In looking further out, the credit crunch should eventually cause the gold price to rise because there is no capital available to start new mines, so the supply should diminish.

”The BMO Precious Metals Fund has good exposure to senior gold mining companies and potential merger and acquisition candidates sitting on gold deposits once the credit crunch eases, Mr. Belovay said. “But in the short term everything is high risk,” he said.

“The game is changing every hour, basically.”A PERFECT MARKETBut right now it looks like a perfect market for bullion. The fear over the financial crisis is enhancing it as a safe haven, the demand for gold coins by the general public is so strong it is outstripping the ability of various mints to produce them and there are even indications that central banks may be reconsidering their gold-selling strategies with an eye on increasing their exposure to gold, according to Dundee Wealth Management Inc.Strategists are also looking for the possible decoupling of gold from the U.S. dollar.

Traditionally, U.S.-dollar strength tends to correlate with weaker bullion prices.“Indeed, one day the gold market will be less slavishly tied to the dollar/euro rate, but I don't know when that day will come,” said Martin Murenbeeld, chief economist at Dundee Wealth.

“Both Europe and the U.S. are moving rapidly toward significant fiscal and monetary reflation, meaning gold should rise against both currencies, regardless of whether the dollar is up or down against the euro.”And there are signs that may be happening. “On Monday, the euro dropped against the dollar and gold rose $30 (U.S.),” he said. “We are starting to see some signs of the break. That is the key.”
© Copyright The Globe and Mail

'Armageddon' in the oil patch

'Armageddon' in the oil patch

NORVAL SCOTT
Wednesday, October 08, 2008
CALGARY — Jeffery Tonken has lost a fortune over the past six weeks.
“It's Armageddon out there,” Mr. Tonken, the chief executive officer of junior oil and gas company Birchcliff Energy Ltd., said Wednesday.
“I've lost millions. Everyone has.”

The value of Canada's energy companies has been devastated since oil plunged from record levels in the summer. Among the 58 companies in the S&P/TSX capped energy index, about $110-billion in market value has been wiped out in the past six weeks, calculations show.
Despite being one of the success stories of 2008 – Birchcliff has capitalized on the B.C. gas rush – the company's shares have plunged from almost $16 in July to just over $6 today.

Mr. Tonken is far from alone. While the price of oil has fallen from $147 (U.S.) a barrel in July to below $90, the value of Canada's energy firms has been hit disproportionately as hedge funds and other investors liquidate their positions in sectors in which they had bought heavily, such as energy.

“There's some chaos and panic selling, and people have lost sense of the fundamentals,” said Harvest Energy Trust CEO John Zahary.

Harvest's unit price has fallen from $26 in June to below $11, also a hit for Mr. Zahary, who said he owns about 100,000 units.

“Clearly I've participated in the downturn – there's a reduction in my net worth, and that of other employees and shareholders,” he said.

“It's a substantial sum of money that is no longer there,” Mr. Zahary said.
Given the financial climate, Harvest is now unlikely to proceed with a $2-billion project to expand its refinery in Newfoundland unless it finds a partner, because that would consume too much of the company's capital, he added.

Since Labour Day, the value of the S&P/TSX capped energy index has been cut almost in half, in comparison with the 25-per-cent loss made on the S&P/TSX composite index in the same period.

The precipitous drop isn't just affecting trusts and juniors; oil sands giant Suncor Inc., for example, has seen its market capitalization fall from just under $70-billion in May to just over $27-billion.

“Hedge funds are selling anything off their shelves that they can,” said Bill Andrew, CEO of Penn West Energy Trust. The valuation of the trust – one of Canada's largest – has been halved since June, and is now just over double its annual cash flow.

But fundamentally, and despite the panic, oil and gas prices are still strong enough for companies to make profits, Mr. Andrew said. “It changes nothing at our operations.”
One concern for investors – especially in the junior side – is that banks will reduce or even refuse to renew revolving lines of credit, stymieing the ability of companies to expand, Birchcliff's Mr. Tonken said.

While Birchcliff doesn't have any debt to pay back in the short term, the company, like other juniors, will likely just spend its cash flow or even less in 2009, he added. Juniors often spend up to five times their cash flow as they chase rapid growth.

Calgary's analysts, many of whom maintained that companies were comparatively undervalued when oil was at $140 a barrel, say there is little by rational explanation for the collapse, which means Canadian oil patch assets now appear to be hugely underpriced.
“Buy some ammunition, go to the hills and hide,” said William Lacey, an analyst at FirstEnergy Capital Corp.

“We've gone beyond doomsday scenarios. There's no logic any more and this is an outright capitulation. Investors are simply throwing up their hands and saying ‘I'm out,'” he said.
According to Mr. Lacey, the drop means that companies will be re-evaluating their future strategies, and will now increasingly buy back their own shares because “those are the cheapest barrels out there right now.”

Nexen Inc., which historically hasn't bought many of its own shares, has snapped up stock worth $300-million since the beginning of August.

Analysts are also watching plans by EnCana Corp., Canada's largest energy company, to split itself into two separate entities, one focused on gas, the other on oil sands.
Floating an oil company in the current climate means EnCana's oil sands assets, rated among the highest quality in Alberta, could be quickly poached by a larger oil company at a very low price, Mr. Lacey said.

EnCana spokesman Alan Boras said that while the company is watching the situation, it's still moving towards completing its split early next year.
© Copyright The Globe and Mail

Canada's benchmark index posted gains on Wednesday for the first time this month, ending a horrendous five-day losing streak

The close: Canada sails alone

RTGAMAre we close to the turn in the stock market that everyone has been waiting for? The fact that Canada's benchmark index posted gains on Wednesday for the first time this month, ending a horrendous five-day losing streak, is certainly encouraging.The gains were slight, especially compared to steep losses in previous sessions, but who's going to complain? Then again,

U.S. indexes slipped into the red near the end of the day, after being above water throughout most of the afternoon, suggesting that U.S. stocks are still groping for stability.The Dow Jones industrial average closed at 9258.1, down 189.01 points, or 2 per cent. The broader S&P 500 closed at 984.86, down 11.37 points, or 1.1 per cent.Both indexes were volatile throughout the day as investors weighed the probability that the co-ordinated interest rate cuts by six of the world's central banks would halt the economic slide. In the end, the market's collective answer appeared to be:

Probably not - despite an upbeat assessment from Treasury Secretary Henry Paulson.In a statement, Mr. Paulson said: "Today's announcement of a co-ordinated rate cut, including Europe, China and other large economies, is a welcome sign that central banks around the world are prepared to take the necessary steps to support the global economy during this difficult time."Alcoa Inc. fell 12 per cent, General Motors Corp. fell 9 per cent and Bank of America Corp. fell 7 per cent.

But there were some winners. General Electric Co. rose 1.7 per cent and Intel Corp. rose 1.4 per cent.In Canada, the S&P/TSX composite index closed at 10,055.39, up 225.84 points, or 2.3 per cent. Commodity producers were by far the biggest winners. Among gold miners, Goldcorp Inc. and Barrick Gold Corp. surged 20 per cent and 19 per cent, respectively, following the upward trajectory of gold to $906.50 (U.S.) an ounce. Potash Corp. of Saskatchewan Inc. rose 14 per cent.

Among energy stocks, Suncor Energy Inc. rose 1 per cent and Canadian Natural Resources Ltd. rose 3.1 per cent, taking a different path than crude oil. Oil slipped to $88.95 a barrel, down $1.11.Meanwhile, financials posted slim gains. Royal Bank of Canada rose 0.8 per cent and
Toronto-Dominion Bank rose 0.1 per cent.Copyright 2001 The Globe and Mail

Markets Turn Yet again- Look At QEC

Time cover a "buy" signal?

Wednesday, October 08, 2008

If you put faith in magazine covers as contrary indicators, you'll love the latest issue of Time magazine. (Hat tip: The Big Picture.) The headline? "The New Hard Times." The picture? A vintage shot of a lineup at a soup kitchen. Could the market bottom be close?

As indicators of important turns in the market, the[amp]nbsp;track record of magazine covers is impressive. BusinessWeek put “Death of Equities” on its cover in 1979, an excellent time to buy stocks, in turned out.

More recently, The Economist, plastered a barrel of oil on its May 29 issue, with the headline “Recoil.” Then, the price of crude oil was closing in on $130 (U.S.) a barrel but the bull market in energy was a mere six weeks away from its peak. In other words, this was ideal time to dump energy stocks.

The indicator even has academics weighing in. The New York Times ran a story in 2007 that discussed the research of Thomas Arnold, John Earl and David North, all finance professors at the University of Richmond. They asked, “Are cover stories effective contrarian indictors?” and concluded that, yes, they are.

“As one might expect, positive feature stories headlined on business magazine covers follow extremely positive company performance and negative headlines follow extremely negative performance. In both cases, however, the appearance on a cover of Business Week, Fortune, or Forbes tends to signal the end of the extreme performance,” the professors wrote.

Conversely, “if an investor is short the stock of a company that is the subject of a negative cover story, the publication of the story indicates it is time to cover the short position because the stock has hit bottom.”

[amp]nbsp;
© Copyright The Globe and Mail

So, where do they get the money?

HEATHER SCOFFIELD
Tuesday, October 07, 2008

OTTAWA — Central banks around the world have pumped hundreds of billions of dollars into gummed-up credit markets over the past two weeks. On Tuesday alone, the U.S. Federal Reserve Board said it would find the financing to actually buy up commercial paper, a move that could cost up to $1-trillion (U.S.) more.

What the central banks are doing is a modern version of the old-fashioned role of monetary authorities, one that dates back to the 18th century, says David Laidler, a retired economics professor at the University of Western Ontario who has advised the Bank of Canada. They're printing money.

“When the banking system gets nervous, they tend to hold their cash. The classic response of central banks is to provide more,” Mr. Laidler said in an interview from London, Ont. “Simply put, they print it.”

An extreme example is the famous image of Germans pushing around wheelbarrows full of banknotes in the 1920s, trying to deal with hyperinflation. That's not the case this time around, economists say.

This credit crunch, in fact, is mainly deflationary. When companies and households can't borrow as they wish, and spend accordingly, economic activity contracts and prices can fall. So the central banks' money machines are trying to counteract that deflationary force.
If the global economy were running smoothly, and money were easy to get, the liquidity operations of central banks would indeed be inflationary, economists say.
But now, the supply of readily available money is insufficient to meet demand. So central banks are not indulging in oversupplying markets with money. Rather, they're trying to increase the supply merely to a point where it can meet demand.

“Concern about inflation can be put aside for the moment,” said Edwin Truman, a senior fellow at the Peterson Institute for International Economics in Washington, and long-time senior Fed official for international affairs.

Plus, the central banks are not dishing money out for free. In most cases, they are lending the money out, and taking collateral in return. Their balance sheets are holding up.
“I think the central banks, as I understand it in general, are being reasonably careful,” said Mr. Truman. “The risk of a substantial loss at a central bank is minimal.”

When central banks issue extra cash for money markets, they keep their balance sheets in good shape by taking collateral from borrowers in return. The collateral is marked down by a prescribed “haircut” decided upon by the central bank.

The central bank does not normally just hang on to the collateral. It holds it for only a short time – long enough to help the markets fund their daily operations.

It is possible, but unlikely, that the central bank could actually lose money if the value of the collateral collapses while the central bank is holding it, Mr. Truman said.

Not everyone agrees. Some fear that the financial crisis is so out of control that the Fed and other central banks don't have a hope of counteracting it with their own funds alone.
“The Federal Reserve balance sheet is about $1.2-trillion,” David Shulman, senior economist at the UCLA Anderson Forecast, told the Washington Post this week. “But we have an $11-trillion mortgage market, a $5-trillion credit-default-swaps market. The central banks are nowhere near large enough to handle this problem right now.”

Concerns about fiscal health weigh heavily, as well.
It's hard to know how much of the $700-billion rescue plan passed last week by the U.S. Congress will have to be funded by U.S. taxpayers. But pressure is growing in the United States and in Europe for governments to pledge their own money to back up banks and their troubled customers.

On Tuesday, the International Monetary Fund urged governments to inject capital, buttress troubled assets, and use their funds to prevent a “fire sale” of problem banks and their holdings.
At their meeting last weekend in Paris, the leaders of France, Germany, Italy and Britain agreed that European rules limiting government deficits and state aid should be applied flexibly given the exceptional circumstances.

And in Canada, former tough talk about deficits from political leaders has softened in the past couple of days.

But most economists say that even if Ottawa needs to come to the economy's rescue just as its revenues are diminishing because of falling commodity prices, the country can afford to run a small deficit.

“There is ample room to run deficits … and Canada has lots of room for lender-of-last-resort liquidity operations,” Mr. Laidler said.

The U.S. fiscal situation is another question, however. Already carrying a large debt, more stimulus packages and bailouts will take a toll, he said.
“The U.S. is extraordinarily vulnerable.”

© Copyright The Globe and Mail

Retail Panics and Yell Sell Sell Sell!

Nervous investors bombard advisers

STEVE LADURANTAYE
Wednesday, October 08, 2008

Investment advisers are being bombarded with questions from panicked clients, as each passing day makes it more difficult for the average investor to understand what's happening to their money.

“You have all these retail investors who just want to get out of the market,” said Andrew Pyle, a Peterborough, Ont.-based wealth adviser for Scotia McLeod. “They look at what's happening, and they see bailouts that aren't working, nothing seems to help. They don't see evidence of recovery in the markets, and they are just literally asking to get out.”

The credit crisis, which had been simmering for more than a year but exploded in September with the U.S. government's takeover of mortgage lenders Freddie Mac and Fannie Mae, was initially perceived as a U.S story that wasn't likely to spread into the wider global economy.

But since then, the U.S. government was forced to rescue insurer American International Group for $85-billion (U.S.), Lehman Brothers Holding Inc. declared bankruptcy and national governments around the world are bailing out their banks.

Now, less than a week after the U.S. government passed a $700-billion bailout package for the country's ailing financial sector, central banks around the world cut interest rates in a co-ordinated effort intended to get banks lending to one another again.

Yet, the Dow Jones industrial average and S&P/TSX have fallen more than 20 per cent each since the beginning of September, despite the heavy government intervention. Canadian investors, rattled by the rapid decline of their key index, pulled a record $4.6-billion from mutual funds last month.

“You're seeing all of this volatility, and retail investors need to deal with that,” said Mr. Pyle. “And they don't want to deal with it. They're willing to sell, because they aren't worried about missing out on a big rally. They think that's a small price to pay for the sanity of sleeping well at night.”

David Baskin, president of Toronto-based Baskin Financial Services Inc., which manages client assets of about $400-million (Canadian), has heard a lot questions over the course of his career, but never had a client ask him whether markets could go to zero. That is, until last week.
“It's a pretty incredible indication of how negative the market psychology is,” he said. “We're heading to a recession. But a recession doesn't mean barefoot hobos hopping trains and selling apples in the street, it means slower growth.”

He said retail investors have largely gone on what he termed a “buyer's strike,” refusing to get involved in day-to-day trading until three or four days of solid gains on major markets. Before they are interested in putting up money, he said, they want to see large institutions step up and snap up big stakes in beleaguered companies.

“Nobody wants to take a chance on stock just to watch it erode out from under them,” he said. “I have a sense that might be starting to change a little bit, but I have no great evidence and may be whistling in the dark. But clearly, they want to see some buying action out of institutions before jumping back.”

More to come
© Copyright The Globe and Mail

QEC Depth And More

Rate cuts everywhere

Rate cuts everywhere!RTGAMGet a bunch of central bankers together to discuss a co-ordinated cut to their respective key interest rates and good things can happen.On Wednesday morning, the central banks of the United States, Europe,

Canada, the U.K., Switzerland and Sweden each slashed their rate by half of a percentage point. The Fed, which had been torn between a slowing economy and rising inflation, was unanimous in voting for the measure, issuing a statement saying that "incoming economic data suggest that the pace of economic activity has slowed markedly in recent months.

"The cuts take the U.S. key rate down to 1.5 per cent. In Canada, the key rate fell to 2.5 per cent.U.S. stock index futures, which had been down sharply, reversed course after the rate decision was announced, suggesting that stocks will rise at the start of trading. With about an hour before markets open, futures for the Dow Jones industrial average were up 42 points, to 9580. Futures for the broader S&P 500 were up 14 points, to 1019.

Things weren't quite a rosy overseas, though, despite some impressive rebounds. In Europe, the U.K.'s FTSE 100 was down 0.2 per cent and Germany's DAX index was down 1.4 per cent in afternoon trading.In Asia, Japan's Nikkei 225 plunged 9.4 per cent in overnight trading.

The Bank of Japan did not cut its key rate but said it supported the action of the other banks.Copyright 2001 The Globe and Mail

House 111 Absorbing All QEC Shares RBC is Selling

Fed to buy up commercial paper: Radical Plan

Fed to buy up commercial paper JEANNINE AVERSATuesday, October 07, 2008WASHINGTON — The Federal Reserve announced Tuesday a radical plan to buy massive amounts of short-term debt in a dramatic effort to break through a credit clog that is imperilling the economy.

The Federal Reserve, invoking Depression-era power under “unusual and exigent circumstances,” will buy “commercial paper,” a short-term financing mechanism that many companies rely on to finance their day-to-day operations, such as purchasing supplies or making payrolls.

The $99.4-billion (U.S.) daily market for this crucial financing, which relies on investors rather than banks, has virtually dried up. Most investors have become too jittery to buy paper for longer than overnight or a couple days.

That has made it increasingly difficult and expensive for companies to raise money to fund their operations. Commercial paper is a way of borrowing money for short periods, typically ranging from overnight to less than a week.

The unstable situation has left many companies vulnerable.
The notion under the plan is for the government to provide a “backstop” that would give companies a new place to get cash, the Fed said. The action makes the Fed a source of credit for non-financial businesses, in addition to commercial banks and investment firms.

The Fed's action helped lift investors' spirits. The Dow Jones industrials rose 145 points in early trading, a day after a huge selloff put the Dow below 10,000 for the first time in four years.
The Fed said it is creating a new entity to buy three-month unsecured and asset-backed commercial paper directly from eligible companies.

“The commercial paper market has been under considerable strain in recent weeks as money market mutual funds and other investors” have become increasingly reluctant to buy commercial paper, especially longer-dated maturities. As the market for commercial paper shrank, the Fed said rates on the longer-term debt “increased significantly,” making it more expensive for companies to borrow.

The Treasury Department, which worked with the Fed on the program, said the action is “necessary to prevent substantial disruptions to the financial markets and the economy.”
The Treasury will provide money to the Federal Reserve Bank of New York to support the new program, the Fed said. It did not say how much.

If a company's commercial paper is not backed by assets or other forms of security acceptable to the Fed, the company could pay an upfront fee, the central bank said.
The Fed said it hoped its effort would jolt the commercial paper market back to life.
“This facility should encourage investors to once again engage in term lending in the commercial paper market,” the Fed said. That should eventually spur financial companies to lend to each other and to their customers, including consumers, the Fed said.

The Fed said it planned to stop buying commercial paper on April 30, 2009, unless the Federal Reserve board agrees to extend the program.

There was $1.61-trillion in outstanding commercial paper, seasonally adjusted, on the market as of last Wednesday, according to the most recent data from the Fed. That was down from $1.70-trillion in the previous week. Since the summer of 2007, the market has shrunk from more than $2.2-trillion.

Pressure also is growing on the Fed to reverse course and order a deep reduction in its key interest rate, now at 2 per cent. Such a move would be aimed at reviving the moribund economy by encouraging consumers and businesses to boost their spending. Many predict the Fed will act on or before its next meeting on Oct. 28-29. And, some believe it could be part of a broader co-ordinated move with central banks in other countries.

Fed Chairman Ben Bernanke may offer clues on the Fed's next move when he speaks Tuesday afternoon on the economic outlook and developments in financial markets.
President George W. Bush also was set to talk about the government's $700-billion bailout effort, which lets the government buy rotten mortgages and other bad debts from banks and other financial institutions. By getting these bad debts off bank's balance sheets, they might be in a better position to raise capital and more willing to lend to each other and to customers.
The Fed pledged Monday to take “additional measures as necessary” to battle the worst credit crisis in decades.

Treasury Secretary Henry Paulson has tapped a former Goldman Sachs executive to be director of the government's bailout program. Neel Kashkari, who has worked with Mr. Paulson at the department since July 2006, was chosen Monday as the interim head of the government's unprecedented effort to unclog the credit markets.

Mr. Kashkari, who was a vice president in Goldman's San Francisco office before joining the department, is one of four former executives from the firm now working feverishly to resolve the financial crisis.

The lending lockup is a key reason why the U.S. economy is faltering. Unable to borrow money freely or forced to pay a high cost to borrow, employers are cutting jobs and reducing capital investments.

© Copyright The Globe and Mail

QEC Fraser M. still buying Retail RBC still Selling

Credit crisis losses total $1.4-trillion -- IMF

Tuesday, October 07, 2008
WASHINGTON — The International Monetary Fund Tuesday increased its estimate of global losses from the financial meltdown to $1.4-trillion (U.S.) and warned that the world's economic downturn was deepening.

“Declared losses on U.S. loans and securitized assets are likely to increase further to about $1.4-trillion,” the IMF said, increasing the loss estimate from $945-billion in April and slightly up from $1.3-trillion it cited last month.

In its quarterly assessment of global capital markets, the IMF said global economic activity is slowing down as growth in advanced economies decelerates and emerging economies start to lose momentum.

“Despite better-than-expected performance early this year, rising financial turmoil has led to a downgrade in the IMF's baseline forecast for global economic growth in 2008-09,” it said.
The IMF called for a well co-ordinated response to restore confidence and to avert a more protracted economic slowdown, but warned that central banks would need to continue injecting cash to calm the unprecedented turmoil.

“The risk of a more severe adverse feedback loop between the financial system and the broader economy represents a critical threat,” the IMF said.

“The combination of mounting losses, falling asset prices, and a deepening economic downturn has caused serious doubts about the viability of a widening swath of the financial system,” it added.

Separately, a senior International Monetary Fund official said Tuesday that globally co-ordinated policy actions are needed to address the current financial crisis, but not all measures need to be exactly the same.

“Co-ordinated action can help alleviate what is now a difficult situation in financial markets,” Jaime Caruana, director of the IMF's monetary and capital markets department, told a news conference.

© Copyright The Globe and Mail

Questerre On Verge Of Testing Utica Commerciality: Dundee
Dow Jones Newswires

TORONTO (Dow Jones)--Questerre Energy Corp. (QEC.T) is on the verge of testing commerciality of the Utica shale play in the St. Lawrence Lowlands of Quebec, leading Dundee Securities to initiate coverage of the company at buy with a stock-price target of C$8.25.

Recent improvements in horizontal drilling and completion methods have opened up many tight reservoirs and shale plays that have previously been uneconomic, including those in the St. Lawrence Lowlands, Dundee analyst Victor Rodberg said.

He added that, based on his model of the well economics of the Utica shale combined with well test data to date, he believes Questerre has the makings of a commercial project. He noted several near-term catalysts for Questerre's share price, which is at C$2.84 in Toronto Friday, up nearly 22%.

The largest near-term catalyst by far, he said, is horizontal initial production rates from Forest in the deep Utica. Drilling is underway with Forest and Rodberg expects to hear news on initial production rates in October. Additionally, Talisman Energy Inc. (TLM) has recompleted a previous well with Questerre that provided an 18-day well test of the Utica but should also give us a future glimpse at the prospectivity of the Lorraine shale.

Questerre is also drilling a well with Gastem Inc. (GMR.V) to test the shallow acreage of the Utica shale. Dundee doesn't have an investment-banking relationship with Questerre, nor does Rodberg have a stake in the Calgary company. Company Web site: http://www.questerre.com -

Tara Zachariah, Dow Jones NewsWires;

(c) 2008 Dow Jones & Company, Inc.

TSx Dives 1000 Points + QEC Houses

QEC Agoracom Board Worth Looking At Click Here For QEC Info

Capitulation nation

Monday, October 06, 2008

As an investor, Bob Hoye is as sickened by Monday's stock market selloff as anyone. But as a professional market watcher who often delves into the historical nitty gritty, the editor and chief investment strategist at Institutional Advisors, can see an upside to the market plunge.

He noted that sharp downturns in the stock market can last 55 trading days, from start to finish.
The most recent leg of the downturn, for the Dow Jones industrial average and the S[amp]amp;P 500, began in late August. That[amp]nbsp;means that this one may near its conclusion toward the end of October.

History also suggests that if you suffer through a stock market disaster in the autumn, the volatility will usually conclude – again – before the end of the October.
Third, his firm has an in-house model, using six parameters, which gives them a signal of capitulation for the Dow and the S[amp]amp;P 500. If the model sends another downward signal this week, it will show a capitulation level seen only eight times since 1900.

“It looks like this week is going to be down,” said Mr. Hoye, a long-time bear. “When we conclude this signal, the rebound can be within a week or a maybe another week after that. But the rebound is inevitable.”

[amp]nbsp;
© Copyright The Globe and Mail

Stocks in freefall as financial crisis spreads

STEVE LADURANTAYE
Monday, October 06, 2008
Stocks in Toronto plunged Monday, joining a global selloff sparked by concerns about a $700-billion (U.S.) bailout package for the U.S. financial sector and the spreading bank crisis in Europe and Asia.

The S&P/TSX - down 11 per cent earlier in the session - lost 5.95 per cent, or 642.32 points, to 10,161.03 by 11:45 a.m. (ET). The index last closed below 10,000 July 4, 2005.
The Dow Jones industrial average traded 4.38 per cent lower, down 452 points to 9,873.38 – the first time it has traded below 10,000 since April 2005. The S&P 500 fell 4.70 per cent, or 51.68 points, to 1,047.55.

“Breaking below 10,000 is a psychologically significant thing for investors,” said Kenneth Norquay, a partner at CastleMoore Inc., a portfolio-management company in Oakville, Ont. “Those big round numbers – like $1,000 gold, 10,000 on the indexes – can become very important as benchmarks. Just how important, I guess we're about to find out.”
The energy sector – which is weighted second behind financials on the S&P/TSX, fell 9.5 per cent in morning trade as oil slipped below $90 a barrel for the first time since April. It touched $88.99 a barrel early in the session, but recouped some losses to trade at $90.82 – still a loss of $3.06.

“The Canadian market is going to keep getting lower because of the effect of commodities,” said Brandon Osten, president of Venator Capital Management Inc. in Toronto. “Get the hell out of commodities - it's not too late for you. Oil can go back to $65 a barrel. Any out there who thinks $90 oil is low by historical levels needs to take another look.”

No sector was untouched – utilities and health care were each off about 7 per cent, industrials fell 5.6 per cent and consumer staples 6.8 per cent. Technology was faring the best, down 1.12 per cent.

The American bailout plan was created to get banks lending to each other again, after the subprime-mortgage crisis wreaked havoc on American financial markets.
The U.S. government was forced to take over mortgage lenders Freddie Mac and Fannie Mae in September to protect $5-trillion in mortgages, and also rescued insurer AIG Corp. with an $85-billion investment.

Meanwhile, Lehman Brothers Holdings Inc. declared bankruptcy, Merrill Lynch & Co. Inc. was taken over, and Goldman Sachs and Morgan Stanley restructured into depository institutions.
The ripple effects extended deeper into Europe over the weekend, with Germany bailing out Hypo Real Estate AG, and France's BNP Paribas throwing a lifeline to financial group Fortis. The European Central Bank flooded markets with $50-billion Monday, while the Bank of England contributed another $10-billion.

Losses on major indexes around the world Monday included 4.5 per cent drops in China and Japan, a 5 per cent drop in London, and a 5.1 per cent drop in Germany. Norway's commodity-heavy index was off 9.95 per cent.

“There are worries rushing round the banking sector as markets try to account for the potential disparity that could be seen in savers' trust in deposit accounts and the knock on effect this will potentially have on the viability of institutions,” said London-based CMC Markets dealer Jimmy Yates. “All told it's not looking pretty and it does seem as if we may now have to resign ourselves to seeing further casualties along the way.”

More to come
© Copyright The Globe and Mail

Global markets shaken by new bank woes

TheStar.com - Business - Global markets shaken by new bank woes

KAI PFAFFENBACH/REUTERS
Share trader Dirk Mueller reacts as he stands in front of the German share prize index DAX board on the trading floor of the Frankfurt stock exchange, October 6, 2008.

WALL ST POISED TO DROP
U.S. stock index futures slid Monday as concerns about the widening fallout from the credit crisis fueled a global equities sell-off and bank rescues in Europe heightened fears about the stability of major financial institutions.

S&P 500 futures dropped 27.70 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures slid 219 points and Nasdaq 100 futures shed 33.25 points.
Financial firms, oil, drag down global bourses

October 06, 2008 EMILY FLYNN VENCATAssociated Press

LONDON–Asian and European stock markets plunged Monday as government bank bailouts in the U.S. and Europe failed to alleviate fears that the global financial crisis would depress world economic growth.

Investors took scant comfort from Washington's passage of a $700 billion plan to buy bad assets from banks and other institutions to shore up the financial industry on Friday because of the uncertainty still hanging over the details of the deal and the degree to which it will help.
Britain's benchmark stock index, the FTSE 100, lost 220.11 to 4,760.14 – a 4.42 per cent fall. The declines were led by the banking industry, with the mining and oil industries also suffering drops. HBOS PLC's share price dropped 15.7 per cent, while the Royal Bank of Scotland Group PLC fell 13.6 per cent.

Germany's DAX index fell 4.22 per cent to 5,552.27. France's CAC-40 index dropped 4.85 per cent to 3,882.81. In Russia, the RTS stock index tumbled more than 7 per cent in first 20 minutes of trading.

Over the weekend, many European governments moved to save troubled banks, and made more promises to protect depositors from the credit crisis.

Germany on Sunday agreed a $68 billion package to bail out Hypo Real Estate, the country's second-biggest commercial property lender, after a rescue plan by private lenders fell apart.
France's BNP Paribas SA committed to taking a 75 per cent stake in troubled European bank Fortis, and Sweden and Denmark followed Ireland and Britain in raising the amount of savers' deposits guaranteed by the government.

Britain's treasury chief Alistair Darling said he was "ready to do whatever it takes" to get the country through the credit crunch, and was looking at a "range of proposals."

But analysts said that, like the U.S. plan, the lack of detail in many of Europe's moves failed to restore investors' confidence, resulting in the stock market tumbles. "What the markets need are some more details about exactly when and how these plans are going to come in," said Richard Hunter, head of British equities at Hargreaves Lansdown Stockbrokers, "And they need some proof that some of these measures are taking hold."

Across Asia, all markets were also in the red. Tokyo's Nikkei 225 index fell to its lowest level in 4.5 years, sinking 4.25 per cent to 10,473.09.

Hong Kong's Hang Seng index slid 5 per cent to 16,803.76. Markets in mainland China, Australia, South Korea, India, Singapore and Thailand also fell sharply. Indonesia's key index plummeted 10 per cent, it's biggest one-day drop ever.

"Everyone is losing confidence," said Mark Tan, who helps manage about $20 billion of equities and bonds at UOB Asset Management in Singapore. "The problem now is that the lack of foreign confidence could affect the Asian consumer, which would lead to a bigger slowdown in Asia than expected."

"This credit crunch looks like it's not going away any time soon," said Alex Tang, head of research at brokerage Core Pacific-Yamaichi in Hong Kong. "Apart from a credit crunch in Europe, investors are quite concerned about the worsening outlook on the U.S. economy."
Investors appeared spooked by a series of developments out of Europe over the weekend.
Belgian Prime Minister Yves Leterme said Sunday that France's BNP Paribas SA had committed to taking a 75 per cent stake in troubled European bank Fortis NV. British treasury chief Alistair Darling also said he was ready to take "pretty big steps that we wouldn't take in ordinary times" to help the country weather the credit crunch.

The outlook for the U.S. economy darkened after figures released Friday showed that 159,000 jobs in the U.S. were lost last month, the fastest pace in more than five years.

Such concerns overshadowed any investor optimism over the U.S. House of Representatives' approval Friday of a massive bailout plan that will allow the U.S. government to buy distressed mortgages and securities backed by mortgages from banks and other financial institutions.
Investors questioned how long it would take for the package to unfreeze credit markets, restore bank lending and generally shore up the U.S. economy.

"The market had already figured in the package's passage," said Yukio Takahashi at Shinko Securities Co. in Tokyo. "There are strong doubts about its implementation."
Japanese financial companies and industries dependent on exports, such as steel, were especially hard hit Monday. Nippon Steel Corp. stock tumbled 9.8 per cent, while Mizuho Financial Group was down 8.3 per cent in morning trading.

Trading in mainland China resumed after a weeklong holiday break with the benchmark Shanghai Composite Index sinking 5.2 per cent to 2,173.
Banks and other financial shares saw heavy declines. Shanghai Pudong Development Bank fell 7 per ent and Bank of China slipped 3.6.

Shares of Ping An Insurance Co. rose even after it said Monday it will record a $2.3 billion loss on its stake in European bank Fortis in the biggest blow yet to a Chinese institution from the global credit crisis. Ping An's shares were up 1.6 per cent.

U.S. stock index futures were nearly 2 per cent lower, suggesting Wall Street would open lower Monday. The Dow Jones industrial average fell 157.47, or 1.5 per cent, to 10,325.38 on Friday.
In currencies, the euro slid to $1.3570 from $1.3774 late Friday. But the U.S. dollar was weaker against the yen, falling to 103.66 from 105.30 yen late Friday.

Oil prices tumbled on speculation that slower global growth will cut crude demand. Light, sweet crude for November delivery was down $3.23 to $90.65 a barrel in Asian electronic trading on the New York Mercantile Exchange.