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Quel choix de sujet pour l'article sur Montreal cette semaine dans la section CITIES dans The Guardian quand on compare avec l'article publie sur Toronto ! Jack Todd me déçoit beaucoup ! Welcome to the new Toronto: the most fascinatingly boring city in the world https://www.theguardian.com/cities/2016/jul/04/new-toronto-most-fascinatingly-boring-city-guardian-canada-week https://www.theguardian.com/cities/2016/jul/06/40-year-hangover-1976-olympic-games-broke-montreal-canada?CMP=fb_a-cities_b-gdncities#comments Cities Guardian Canada week The 40-year hangover: how the 1976 Olympics nearly broke Montreal The Montreal Olympics left the city with a C$1.6bn debt, a string of corruption scandals, and a creeping sense of economic and social decline. Forty years on, how did the city survive? Mayor Jean Drapeau stands in the Olympic Stadium, Montreal. Photograph: Graham Bezant/Toronto Star/Getty Cities is supported by Jack Todd in Montreal Wednesday 6 July 2016 07.30 BSTLast modified on Wednesday 6 July 201611.17 BST Shares 714 Comments 93 Save for later There is a moment before all our global sporting extravaganzas when it all seems poised on a knife edge. Helicopters hover above the stadium, keyed-up athletes shuffle and bounce with excess energy, and organisers bite their nails as they try to hold down nervous stomachs, worried that despite years of planning and the expenditure of billions, it will all go desperately wrong. Then the trumpets sound, thousands of young people take part in colourful charades, pop stars fight a losing battle with hopeless stadium acoustics – and the Games begin. The formula is pretty much set in stone, but in 1976 Montreal added a wrinkle. On 17 July, with Queen Elizabeth, Canadian prime minister Pierre Trudeau and 73,000 people looking on, the Greek athletes who traditionally led the Parade of Nations came up the ramp toward the Olympic stadium to find their way almost blocked by construction workers. Out of sight of the cameras and the throng inside the stadium, the staff were frantically wielding shovels and brooms to clear away the building debris left from the manic push to complete the facility on time. In the final scrambling months before the Games, 3,000 labourers had worked in teams 24 hours a day to make it possible for the Olympics to begin at all. They barely succeeded. Two weeks later, when the last athlete had gone home, Montreal woke up to what remains the worst hangover in Olympic history: not just a bill that came in at 13 times the original estimate, a string of officials convicted of breach of trust and the greatest white elephant of a stadium ever built, but a creeping sense of economic and social decline. Forty years on, no other Olympics has so thoroughly broken a city. Facebook Twitter Pinterest The opening ceremony of the 1976 Montreal Games. Photograph: Tony Duffy/Getty Images*** Advertisement When I arrived in Montreal five years earlier, a war resister from Nebraska with little French and less money, the city was enduring its harshest winter on record. Montreal would receive more than 152 inches of snow in 1970-71, including a March blizzard that killed 17 people. The endless snow, in a sense, was a mercy. It turned down the heat on the city’s simmering political crisis, which had boiled over the previous Octoberwhen the terrorist Front du Libération du Quebec (FLQ) kidnapped the British consul, James Cross, and the province’s minister of justice, Pierre Laporte. Prime minister Trudeau responded by imposing martial law. Armoured personnel carriers patrolled the streets and troops detained hundreds of people without charges. The FLQ would murder Laporte on 17 October. They released Cross on 3 December, effectively ending the crisis but leaving the city battered, bruised and tense. Even before the kidnappings, Montreal was jittery from a series of FLQ bombs: 95 in total, the largest of which blew out the northeast wall of the Montreal Stock Exchange. And yet, in those years, the best place to get a sense of what Montreal was and might have been was Le Bistro. It was really Chez Lou Lou, although no one called it that, and it featured more or less authentic Parisian ambience, right down to the surly French waiters. When I could afford it, Le Bistro was my favourite destination on a weekend morning. One especially frigid Saturday, Leonard Cohen sat at the next table with a blonde companion, both of them sporting deepwater tans from the Greek islands, looking blasé about it all. Facebook Twitter Pinterest Leonard Cohen was born in Westmount, Montreal. Photograph: Roz Kelly/Getty ImagesMontrealers could afford to be blasé. The city was everything that Toronto, its rival, 300 miles to the south-west, was not: urbane, sophisticated, hip, a place where you could dine well and party until the bars closed at 3am. In Toronto, they rolled up the streets at 11pm and toasted the Queen at public functions. Montreal was not just the financial capital of Canada, it was also the most European of North American cities, half English-speaking but overwhelmingly French, profoundly cultured and unfailingly elegant, where the old stone of the cathedrals met the Bauhaus steel-and-glass towers of Mies van der Rohe’s Westmount Square. The crowd at Le Bistro was a cross-section of cultural and political life in a city full of tensions, between separatism and federalism, English, French and Jewish, old money and new. There were political tensions that seemed to feed a creative ferment home that produced Cohen, the bombastic poet Irving Layton, the acerbic novelist Mordecai Richler, the politicians Pierre Trudeau and René Lévesque, the actor Geneviève Bujold and the film-maker Denys Arcand. The Olympics can no more run a deficit than a man can have a baby Jean Drapeau, in 1970 When, on 12 May 1970, during the 69th session of the International Olympic Committee held in Amsterdam, Montreal won out over competing bids from Moscow and Los Angeles to be awarded the Games of the XXI Olympiad, it seemed to signal another triumph. The city had hosted one of the most successful World’s Fairs ever in 1967, and a new baseball team, the Expos, began play in 1969, defeating the St Louis Cardinals 8-7 on 14 April at Jarry Park in the first regular season Major League game in Canada. Following those triumphs, the Olympics were sold to the Montreal public as being modest in design and, above all, inexpensive to stage. The mayor, Jean Drapeau – diminutive, autocratic, mustachioed – declared: “The Olympics can no more run a deficit than a man can have a baby.” *** Facebook Twitter Pinterest Leger (left) and Drapeau (right), listen as Taillibert describes the layout of Parc Olympique. Photograph: Bettmann/Bettmann ArchiveThe 1970 estimate was that the Games would cost C$120m (£65m) in total, with $71m budgeted for the Olympic Stadium itself. Drapeau took a personal hand in the stadium’s design. He and his chief engineer, Claude Phaneuf, selected the French architect Roger Taillibert, who had built the Parc des Princes in Paris and would also design the Olympic Village. Taillibert employed his own team of architects and engineers, and was respected for bringing in projects at, or at least near, budget. (The Parc des Princes, originally budgeted at $12m, cost $18m .) His conception for the “Big O” stadium was grandiose, in a style that might be called space-age fascist: it featured an enormous, inclined tower, the tallest such structure in the world, holding a retractable roof suspended from thick cables and looming over the stadium like a praying mantis over a turtle. There is no evidence, however, that either Taillibert or Drapeau ever had a handle on the management of the various construction sites. There were delays from the very beginning, and construction on the Olympic Park complex (including the Velodrome and Big O) began 18 months late, on 28 April 1973. This put Drapeau right where the powerful and militant Quebec labour unions (the Quebec Federation of Labour and the Confederation of National Trade Unions) wanted him: paying extravagant overtime bills. Out of a total of 530 potential working days between December 1974 and April 1976, the workers would be on strike for 155 days – 30% of the work time available. In one particularly crucial period of construction, from May until the end of October 1975, less than a year before the opening ceremonies were to commence, the unions walked off the job and no work was done at all. Oversight was utterly inadequate on every aspect of the project. During the inflationary 1970s, the price of structural steel alone tripled. In 1973, contractor Regis Trudeau, who had been awarded $6.9m in Olympic construction contracts, built a luxurious chalet costing $163,000 for Gerard Niding, who was Drapeau’s right-hand man and head of Montreal city council’s powerful executive committee. Only when a corruption commission forced his hand, five years later, did Trudeau finally produce a bill charging Niding for the house. Game off! Why the decline of street hockey is a crisis for our kids Read more By 1975, the provincial government had seen enough: they removed Taillibert and formed the Olympic Installations Board (pdf) (OIB) in an attempt to get a handle on the construction. Ironically, no one has since delivered a pithier assessment of the corruption than Taillibert himself. In 2011, he told le Devoir: “The construction of the Olympic Park and stadium showed me a level of organised corruption, theft, mediocrity, sabotage and indifference that I had never witnessed before and have never witnessed since. The system failed completely and every civil engineering firm involved knew they could just open this veritable cash register and serve themselves.” Drapeau himself was never charged or even suspected of personal corruption, but his remark about men having babies came back to haunt him. At the time, the physician Henry Morgentaler was much in the news for openly performing abortions. As the Olympic bill nearly tripled, to $310m, Montreal Gazette cartoonist Aislin drew one of the most famous cartoons of a brilliant career: it depicted a visibly pregnant Drapeau on the phone, saying: “‘Ello? Morgentaler?” *** When the Games finally opened, problems plagued the event itself, too. As it would do with debt, corruption and construction chaos, the Montreal Olympics inspired a trend in boycotts, when 22 African nations refused to participatebecause the IOC would not ban New Zealand for sending the All Blacks rugby team to tour apartheid South Africa. It caught on: western nations boycotted Moscow in 1980 over the Soviet invasion of Afghanistan, and communist nations retaliated in Los Angeles in 1984. Facebook Twitter Pinterest Montreal’s Olympic Stadium. Photograph: Design Pics Inc/Alamy Stock PhotoMontreal also broke the mould in security. Following the terrorist tragedy at Munich four years earlier, the security bill ended up running to another $100m (more than 80% of what the entire event was initially supposed to cost), not including the cost of the Canadian forces enlisted to help keep order. Meanwhile, some of the athletes were tainted by accusations of doping, including legendary Finnish postman and distance runner Lasse Virén, who was suspected of transfusing his own blood – a practice that was legal at the time, though Viren has always denied it. Far more serious was the treatment of East German athletes, who dominated their events in part because, the world later learned, they’d been fed performance-enhancing drugs for decades, sometimes without their knowledge, under a programme known as State Plan 14.25. Many later suffered psychological problems and had children with birth defects. The struggle in Iqaluit: north and south collide in Canada's Arctic capital Read more In the end, the athletes themselves redeemed at least some portion of the Olympic expense: the Games themselves went off relatively well. If the relentlessly self-promoting American decathlon gold medalist Bruce Jenner caused a few eyeballs to roll, he was overshadowed by the refrigerator-built Soviet weightlifter Vasily Alekseyev, who repeated his heavyweight gold from Munich and set an Olympic record in the snatch while lifting 440kg. And in the first full day of competition, the 14-year-old diminutive Romanian gymnast Nadia Comăneci earned a perfect 10 on the uneven bars – she went on to become the 1976 Olympics’ unquestioned individual star. Canada, meanwhile, became the first host nation to fail to win a gold medal on home soil, a feat made no less exceptional for being repeated at the Calgary Winter Olympics 12 years later. The glow began to fade with the closing ceremonies on 1 August. The final tally of the cost for the Olympics was $1.6bn, a more than 13-fold increase, including at least $1.1bn for the stadium alone. In popular lore, the Big O had officially become the Big Owe. When all was said and done, the city was left with debt that took 30 years to pay off. Facebook Twitter Pinterest Nadia Comăneci, of Romania, dismounts during a perfect 10 performance. Photograph: Paul Vathis/AP*** On 15 November 1976, running on a platform of good government in the wake of the scandals and cost overruns, René Lévesque’s separatist Parti Québecois (PQ) won its first provincial election. The PQ’s promise to hold a referendum on leaving Canada touched off a full-scale anglophone panic in bilingual Montreal, especially within the business community. Sun Life, the huge insurance company, was the first of a stream of Montreal-based corporations to move down Highway 401 to Toronto. When the referendum was eventually held in 1980, Lévesque and the “yes” side lost decisively, but by the end of the 1980s Canada’s financial capital had shifted firmly from St Jacques Street to Bay Street, Toronto. Between 1971 and 1981, the English-speaking population of Montreal declined by nearly 100,000; over the next 20 years – which included another referendum in 1995, that only kept Quebec in Canada by a narrow margin of 50.6% to 49.4% – it would shrink by another 100,000. It would take 30 years for the city of Montreal to retire the Olympic debt Like some medieval castle under a warlock’s curse, the Olympic stadium – visible from dozens of different vantage points in the city, an inescapable reminder of what went wrong – continued to be plagued with problems. In the 1980s, the tower caught fire. In August of 1986, a chunk of it fell on to the baseball field, forcing the Expos to postpone a game. In September of 1991, a bigger 55-tonne concrete slab fell on to an empty walkway. The OIB reassured the public no one was underneath it, prompting one columnist to ask: “How do they know?” The retractable roof never happened; instead, an orange Kevlar roof was finally installed in April of 1987. It tore repeatedly, until it was replaced in 1998 by a fixed roof, which cost another $37m. In the winter of the next year, that roof tore under a heavy snow load, sending a small avalanche of ice cascading on to workers preparing for a motor show. To this day, in a northern Canadian city that averages roughly 50cm of snow a month in winter, the Olympic Stadium cannot be used if the snow load exceeds 3cm. The OIB claims the only thing more expensive than a permanent steel roof (estimated cost: $200m-$300m) would be to tear the whole thing down (estimated cost: $1bn). Their figure has been widely debunked. The roof remains in place, and the Big O now lacks a full-time tenant: the Expos played their last game in 2004 and the franchise moved to Washington DC. Facebook Twitter Pinterest The 200,000 sq ft, 65-tonne Kevlar roof at the Olympic Stadium in Montreal was expected to last 25 years. Photograph: Shaun Best/ReutersThe stadium aside, Montreal did get some bang for its Olympic buck. The excellent Claude Robillard Sports Centre in the city’s north end is still used by thousands of athletes, and the one-time Velodrome has been converted to the Biodome, an enormously popular indoor nature museum. The claim has also been made that the Montreal Olympics proper turned a profit, which is true only if you chalk up the various purpose-built venues, the stadium in particular, to infrastructure. In any case, it would take 30 years for the city of Montreal to retire the Olympic debt. A commission headed by superior court judge Albert Malouf to probe Olympic corruption spent three years, and another $3m, before releasing a 908-page report in 1980 that laid blame squarely at the feet of the mayor. Taillibert, Phaneuf and others shared some of the responsibility, in Malouf’s view, but Drapeau was the principal culprit, with his hands-on style and his habit of turning a blind eye to the shenanigans around him. Top officials and contractors were convicted of fraud and corruption. They included Niding, Drapeau’s right-hand man, who was convicted of breach of trust and sentenced to one day in jail and a $75,000 fine, and contractor Regis Trudeau, who also received a one-day jail sentence and a $100,000 fine. Even Claude Rouleau, head of the OIB installed to stop the bleeding, was found guilty of breach of trust for accepting gifts in connection with the Olympic construction and was ordered to pay $31,000. Fining the miscreants, unfortunately, didn’t help pay off much of the debt. In order to rid itself of the Olympic burden city hall had to skimp on urban essentials for years. Even now, with a belated rush to repair its crumbling infrastructure,Montreal is still paying the price for decades of neglect. *** Forty years on, however, Montreal has endured. The sour jokes about the stadium, the corruption and the Olympic debt are now part of the culture. The separatist movement that convulsed the city in the immediate aftermath of the debacle also brought some much-needed social change. Welcome to the new Toronto: the most fascinatingly boring city in the world Read more Montreal survived by reinventing itself on a smaller, more viable scale. If Toronto seized the mantle of Canada’s financial capital, Montreal is the unquestioned capital of culture, a vibrant city of street art, sculpture and world-class jazz, fireworks, comedy and fringe festivals, the city no longer just of Leonard Cohen but of Arcade Fire and Cirque du Soleil. Le Bistro is long gone, but Montreal is still hip, the bars and restaurants and clubs the liveliest in the country, a walking city where the cafes are full all day long and joie de vivretrumps quotidian worries over such inconvenient details as bounced rent cheques and unpaid parking tickets. Montreal remains the polar opposite of money and real-estate obsessed Toronto – though where it was once a smaller, colder Paris, Montreal is now more North American, less European, less blithely certain of its position in the universe. Nevertheless, the Olympic debt is paid, separatism is a diminished force and there is even a tentative plan afoot to bring back the Expos. When spring finally comes after the long winters, there is a buoyant sense of rebirth and confidence in the future. If you can ignore the potholes and the still-simmering controversies over municipal corruption, Montreal is once again a great place to live. But you can’t escape the sense that the city might have had it all. In truth, before the Olympics, it did. Guardian Cities is devoting a week to exploring all things Canada. Get involved onTwitter and Facebook and share your thoughts with #GuardianCanada

With twice the debt of California, Ontario is now the world’s most indebted sub-sovereign borrower. - > I'm sure Québec had that top spot before, by reading some frequent comments in mtlurb... http://business.financialpost.com/news/economy/with-twice-the-debt-of-california-ontario-is-now-the-worlds-most-indebted-sub-sovereign-borrower

http://www.montrealgazette.com/business/independent+Quebec+might+benefit+from+currency+report/9637904/story.html An independent Quebec might benefit from its own currency: report Parti Québécois leader Pauline Marois said an independent Quebec would accept the loonie, along with Canadian monetary policy, and consider asking for a seat at the Bank of Canada. Photograph by: Jonathan Hayward , THE CANADIAN PRESS An independent Quebec might be better off with its own currency rather than following Parti Québécois leader Pauline Marois’s suggestion that it keep the Canadian dollar, a report says. A Quebec currency and separate monetary policy could bring “potential benefits” in the long term to Quebec, Paul Ashworth and David Madani of Capital Economics said in a research report. “The basic problem Quebec faces is that it is a manufacturing-orientated province tied to the resource-rich provinces in the west. The energy boom has boosted the economic performance of those western provinces, saddling Quebec’s manufacturers with a high exchange rate and higher than needed interest rates.” A Quebec currency would presumably depreciate against the Canadian and U.S. dollars, particularly if interest rates were lower than the rest of Canada. The resulting boost to Quebec competitiveness should trigger a rise in exports and a reduction in imports, the report said. But a referendum on separation would have negative consequences — including on investments in Quebec and higher yields on Quebec provincial debt — while a new Quebec currency would bring additional challenges, the economists noted. “If the Quebec currency depreciated in value against the Canadian dollar, then it would make it harder for the new government to repay any debt still denominated in Canadian dollars. The same goes for Quebec households and businesses that had borrowed Canadian dollars.” Separation would bring the loss of equalization payments — $9.3 billion this year, equivalent to about 2.5 per cent of Quebec GDP — while contending with higher debt servicing costs. “The bigger problem is the legacy of provincial debt, equivalent to 49 per cent of Quebec GDP. Assuming that an independent Quebec assumed responsibility for a per capita share of federal debt, too, we estimate that its overall debt burden would rise to 89 per cent of GDP. Under those circumstances, Quebec might find its borrowing costs rising, which would only add to the budget deficit and, in conjunction with the loss of equalization payments, force the new government into a sizable fiscal consolidation. “The risk of default would also be greater if an independent Quebec allowed the Bank of Canada to control monetary policy, since it couldn’t resort to printing more currency.” On the campaign trail last week, Marois said an independent Quebec would accept the loonie, along with Canadian monetary policy, and consider asking for a seat at the Bank of Canada. Her comments sparked discussion over the economic costs of sovereignty even though polls show support for independence running well below 50 per cent. Capital Economics, known for its bearish views of the Canadian housing market, weighed in on Wednesday. “Politicians who are striving for independence, whether it is in Scotland or Quebec, know that talk of adopting a new currency makes the electorate very nervous, so they have a tendency to argue that the new sovereign state would be able to keep its existing monetary arrangements,” the economists wrote. In any event, Quebec should be looking to adopt a looser monetary policy than the rest of Canada, the report’s authors said. “The evidence is overwhelming that interest rates should be set lower in Quebec, to provide more support to the depressed economy.”

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(Reuters) - Cogeco Cable Inc, a Canadian company that serves mostly rural customers in Ontario and Quebec, said on Wednesday it will pay $1.36 billion to buy U.S. cable operator Atlantic Broadband in a move aimed at gaining a foothold in the larger U.S. market. The deal, however, quickly triggered a 15 percent decline in Cogeco's share price, with investors skeptical of Cogeco's success in foreign deals following an unsuccessful foray into Europe. In February, Cogeco sold its struggling Portuguese cable unit, Cabovisao, at roughly one-tenth the price it paid for it in 2006. Cogeco was unable to weather a harsh pricing war and the broader economic malaise in the country. Montreal-based Cogeco, which provides cable-TV, high-speed Internet and telephone services, said the Atlantic Broadband acquisition will give it sizable opportunities for growth. Atlantic Broadband is owned by private equity firms ABRY Partners and Oak Hill Capital Partners and has operations that service about 250,000 customers in Pennsylvania, Maryland, Florida, Delaware and South Carolina. "This acquisition marks an attractive entry point into the U.S. market for Cogeco Cable," said Chief Executive Louis Audet. Analysts, though, sounded dubious on a hastily arranged conference call in which Audet and other executives had to fend off tough questions about the price being offered, Cogeco's ability to succeed outside its home market, and Atlantic Broadband's growth prospects. CASH AND DEBT Cogeco said it would finance the deal with a combination of cash and debt. Cogeco plans to use $150 million in cash, along with $550 million of a $750 million credit facility to fund the deal. Bank of America Merrill Lynch is also arranging a $660 million committed debt facility to fund the deal. In a note to clients, Canaccord Genuity analyst Dvai Ghose said the sell-off in Cogeco shares might also be prompted by some investor concerns that Cogeco may have to issue equity to reduce its debt load further down the road. Cogeco Cable's share price fell 15.5 percent to C$37.60 on the Toronto Stock Exchange after the deal was announced on Wednesday morning. Shares of its parent Cogeco Inc fell 11.6 percent to C$37.50. Ghose said the offer values Atlantic Broadband at 8.3 times its estimates 2013 earnings before interest, taxes, depreciation and amortization (EBITDA). That he noted is well in excess of Cogeco Cable's own enterprise value of five times estimated fiscal 2013 EBITDA. Canada's largest mobile phone company, Rogers Communications Inc, which owns significant interests in both Cogeco Inc and subsidiary Cogeco Cable, could not be immediately reached for comment on the proposed deal. CANADA SATURATED "There is room for further U.S. growth, either through an increase in penetration ... or through tuck-in acquisitions, a number of which are available in the United States, in contrast to Canada, where the consolidation is essentially over," Audet said on the conference call. Cogeco Cable warned last week that its Canadian business would slow as tough competition makes it more difficult to sign up customers. It cut its customer growth forecasts by 10 percent as it lost television customers and recorded slower growth in Internet and telephone services. Larger rivals such as BCE Inc and Quebecor Inc operate in the same markets and are expanding into Cogeco's rural heartland. Audet said Atlantic's low penetration rate - the number of customers divided by the number of homes it would be possible to service in existing markets - means it has promising growth potential. "This transaction at this stage is not about synergies. It's about establishing a healthy, promising base from which to grow in the United States," he said. http://www.reuters.com/article/2012/07/18/net-us-cogecocable-atlanticbroadband-idUSBRE86H0VC20120718

Tiens tiens..ça ne vous rappelle rien? Scotland warned it could lose the pound and be forced to join Euro as price of independence. A spokesman for David Cameron said there were no guarantees that the Scots could keep sterling if they voted against remaining affiliated with the rest of the union. Mr Cameron’s spokesman said: “Once you start asking the question about independence, one part of that is what currency to have. Would Scotland retain the pound, and if so, how does that work? Or does it join the euro? That’s one part of the independence question.” Other issues which Downing Street said would need ironing out are shared defence capabilities, the national debt and border security. A carve up of assets between England and Scotland could leave both countries facing years of legal wrangling. Today Mr Cameron told MPs that he passionately believed in the United Kingdom and accused Scottish nationalists of attempting to delay a referendum on separation indefinitely. http://www.telegraph.co.uk/news/uknews/scotland/scottish-politics/9007878/Scotland-warned-it-could-lose-the-pound-and-be-forced-to-join-Euro-as-price-of-independence.html

Bon quels sont vos films préférés de l'année? Dans un ordre quelconque The Lincoln lawyer Drive WARRIOR (mon film de l'année) Hangover 2 Hanna Barney's version The Debt Crazy Stupid Love Horrible bosses Captain America

For next rating downgrade, S&P may look at France Commentary: France has lots of debt, and dysfunctional politics LONDON (MarketWatch) — The U.S. is broke? Been there. Italy is bankrupt. Done that. Spain is teetering on the edge? Got the T-shirt. There is, however, one major industrial country that has so far managed to sail through the market turmoil without anyone seriously questioning its credit-worthiness: France. And yet, if you‘re looking for the next downgrade, and the source of the next shock to the global markets, it’s France you should be looking toward. The country’s debt is exploding. It is steadily losing competitiveness against Germany, and running up huge trade deficits. Its political system is every bit as dysfunctional as America’s. And, of course, it is about to be presented with a massive bill for bailing out Italy and Spain. A French downgrade may only be a matter of time. If it happens, it’s going to be a huge blow to already-fragile markets. The country has the fourth largest debt in the world, and its paper is heavily traded by global investors. There would be some nasty losses on a French downgrade. True, there is not much sign of it yet. Almost at the same time as it was downgrading the United States, Standard & Poor’s was reaffirming France’s status as the most rock-solid of borrowers. According to the French newspaper Liberation, an S&P spokesman stated that there were no plans to downgrade France. There were no question marks over the solvency of the nation. Really? Take a closer look and you might start to wonder. First, French debt is escalating rapidly. It might not be as big as that of some other countries yet, but it’s getting there fast. Last year it ran a deficit of 7% of GDP. French debt will total 90% of GDP this year and 95% in 2012, according to estimates by Capital Economics. That isn’t exactly running out of control — but it is getting very close. Indeed, it’s around the same levels of debt-to-GDP that earned the U.S. a downgrade. And France is racking up fresh debt at a faster rate than countries such as Italy or Spain. It is hard to see how you can feel comfortable about that. Next, France is steadily losing competitiveness against Germany — in exactly the same way that countries such as Italy and Spain have, except not quite so quickly. France, a major manufacturing center, used to run healthy trade surpluses; now it runs big deficits. The balance of trade for the six months to June showed a deficit of 37.5 billion euros compared with a deficit of 27.6 billion euros in the last six months of 2010, figures released last week showed. The deficit with Germany, its major trading partner, is running at a billion euros a month. Back in 2004, it was regularly running surpluses of a billion euros a month. Countries with big, persistent trade deficits — as any American can testify — have to borrow to fund themselves. The bigger the debts they run up, the greater the risk of a downgrade. Third, if the U.S. has a dysfunctional political system, then France is not much better. Like the U.S., it has separate elections for the president and the legislature, creating a system that is often close to paralysis. And no other country in the developed world is quite so resistant to economic reform: Any modifications to working hours or pensions or welfare plans brings out rioters and is usually swiftly abandoned. And like the U.S., it has a president who came to power on a wave of optimism, and has since turned out to be fairly ineffectual. France’s President Nicolas Sarkozy is deeply unpopular. He is scoring in the mid-20s in the polls — a slight recovery from the nadir early this year, but hardly a secure position. Marine Le Pen, the far-right National Front leader, is scoring around 20%, and she advocates pulling out of the euro and restoring the franc. Indeed, of all the main euro-area countries, France is the only one where a major (if not exactly mainstream) political movement argues for breaking up the single currency. Far-reaching ramifications Finally, if Italy and Spain have to be rescued, then it will be France that foots a lot of the bill. Germany can afford it; France can’t. Once you add Spanish and Italian debts, the French balance sheet looks in terrible shape. “With the turmoil in Europe there have been many politicians suggesting that the size of the [European Financial Stability Fund, or EFSF] has to be increased,” noted Gary Jenkins of Evolution Securities in an analysis on Monday. “But any suggestion that the EU is turning into a fiscal union (even if by default) could well have an impact on individual sovereigns’ ratings as well as the EFSF structure.” Indeed so. Every time a euro-area country has to be bailed out, it puts more pressure on the finances of the few that remain completely solvent. Add it all up, and if the U.S. is getting downgraded there is no reason for the ratings agencies not to turn their fire on France next. That matters hugely for the financial system. While countries such as Greece and Portugal are largely irrelevant to the global system, France is very important. The country has a lot of paper out there — the government has total outstanding debts of $1.7 trillion, making it the fourth largest debtor in the world after the U.S., Japan and Italy. And that debt is far more widely held — 38% of French debt is held internationally, which is a lot more than Italy (24%), the U.S. (21%) or Japan (2%), according to calculations made by the research house TheCityUK. The cost of insuring against a French default is starting to rise. The markets have started to notice the country’s dire position. It can’t be that long before the rating agencies catch up. If France does get downgraded, then it is going to be a very serious blow to the markets. Just about every bank and every bond portfolio in the world is going to take a hit. Matthew Lynn is a financial journalist based in London. He is the author of "Bust: Greece, the Euro and the Sovereign Debt Crisis," and he writes adventure thrillers under the name Matt Lynn. Il y a déjà des milliers de français qui viennent vivre au Québec chaque année, je crois que cela laisse présager que le mouvement va encore plus s'accentuer...

(Courtesy of the Financial Post) :confused: Okay, I pay the bank like what $4 a month. That 0.13% for someone that has $50 million the bank, is going to lose like $65,000 per month ($780,000 per year). I have a feeling many people that deal with custodian banks, will look somewhere else. I guess the banks had to go after their largest customers.

By my math, that is 142,000 pallets.

(Courtesy of The Montreal Gazette) Hopefully they don't lose $40 billion again, but at least they almost regained everything they lost.

The Economist Total debt as % GDP 1. Japan @ 196.3% 2. Greece @ 128.5% 3. Italy @ 118.2% Canada pretty high on the list @ 82.3% The lowest total debt is Russia. Its under 9-10%.

(Courtesy of the Financial Post)

(Courtesy of The Financial Post)

(Courtesy of The Globe and Mail)

(Courtesy of The Baseline Scenario)

(Courtesy of The Canadian Press via. Canadian Business)

Interesting video from a MIT economy teacher: http://wallstreetpit.com/13455-simon-johnson-says-the-crisis-is-just-beginning http://www.smh.com.au/business/call-that-a-crisis-stand-by-for-the-worst-is-yet-to-come-20100108-lyzc.html World leaders and central bankers cannot count their chickens yet, writes Ambrose Evans-Pritchard. The contraction of the money supply in the US and Europe over the past six months will slowly puncture economic recovery as 2010 unfolds, with the time-honoured lag of a year or so. Ben Bernanke, the chairman of the US Federal Reserve, will be caught off guard, just as he was in mid-2008 when the Fed drove straight through a red warning light with talk of imminent rate rises - the final error that triggered the implosion of Lehman, American International Group and the Western banking system. As the great bear rally of 2009 runs into the greater Chinese Wall of excess global capacity, it will become clear that we are in the grip of a 21st-century depression - more akin to Japan's lost decade than the 1840s or 1930s, but nothing like the normal cycles of the postwar era. The surplus regions - China, Japan, Northern Europe (or Germania), the Gulf - have not increased demand enough to compensate for belt-tightening in the deficit bloc - the Anglo-sphere, Southern Europe (or Club Med), Eastern Europe - and fiscal adrenalin is already fading in Europe. The vast East-West imbalances that caused the credit crisis are no better a year later, and perhaps worse. Household debt as a share of gross domestic product sits near record levels in two-fifths of the world economy. Our long purge has barely begun. That is the elephant in the global tent. Yields on AAA German, French, US and Canadian bonds will slither back down for a while in a fresh deflation scare. Exit strategies will go back into the deep freeze. Far from ending the practice of central banks buying their own governments' bonds (known as quantitative easing, or QE), the Fed will step it up. Bernanke will get religion again and ram down 10-year US Treasury yields, quietly targeting 2.5 per cent. The funds will try to play the liquidity game yet again, piling into crude oil, gold and Russian equities but this time returns will be meagre. They will learn to respect secular deflation. Weak sovereign wealth funds will buckle. The shocker will be Japan, our Weimar-in-waiting. This is the year when Tokyo finds it can no longer borrow at 1 per cent from a captive bond market, and when it must foot the bill for all those fiscal packages that seemed such a good idea at the time. Every auction of Japanese Government bonds will be a news event as the public debt punches above 225 per cent of GDP. Once the dam breaks, debt service costs will tear the budget to pieces. The Bank of Japan will pull the emergency lever on QE. The country will flip from deflation to incipient hyperinflation. The yen will fall out of bed, outdoing China's yuan in the beggar-thy-neighbour race to the bottom. By then China, too, will be in a quandary. Wild credit growth can mask the weakness of its mercantilist export model for a while but only at the price of an asset bubble. Beijing must hit the brakes this year or store up serious trouble. It will make as big a hash of this as Western central banks did in 2007-08. The European Central Bank will stick to its Wagnerian course, standing aloof as ugly loan books set off wave two of Europe's banking woes. The Bundesbank will veto proper QE until it is too late, deeming it an implicit German bail-out for Club Med. More hedge funds will join the European Monetary Union divergence play, betting that the north-south split has gone beyond the point of no return for a currency union. This will enrage the Euro-group. Brussels will dust down its paper exploring the legal basis for capital controls. Italy's Economy and Finance Minister, Giulio Tremonti, will suggest using European Union anti-terrorism legislation against ''speculators''. Wage cuts will prove a self-defeating policy for Club Med, trapping it in textbook debt-deflation. The victims will start to notice this. Articles will appear in the Greek, Spanish, and Portuguese press airing doubts about EMU. Eurosceptic professors will be ungagged. Heresy will spread into mainstream parties. Greece's Prime Minister, George Papandreou, will baulk at EMU immolation. The Hellenic Socialists will call Europe's bluff, extracting loans that gain time but solve nothing. Berlin will climb down and pay, but only once. In the end the euro's fate will be decided by strikes, street protest and car bombs as the primacy of politics returns. I doubt that 2010 will see the denouement but the mood music will be bad enough to knock the euro off its stilts. The US dollar rally will gather pace. America's economy - though sick - will shine within the even sicker Organisation of Economic Co-operation and Development. The British will need a gilts crisis to shatter their complacency. In time the Dunkirk spirit will rise again. The pre-emptive QE by the Bank of England's governor, Mervyn King, and timely devaluation will bear fruit this year, sparing Britain the worst. By mid to late 2010, we will have lanced the biggest boils of the global system. Only then, amid fear and investor revulsion, will we touch bottom. That will be the buying opportunity of our lives.

http://www.financialpost.com/story.html?id=2340011

These people for sure do (Courtesy of Huffington Post)

Pourquoi je mets cette nouvelles sur le site, Six Flags est le propriétaire de La Ronde. Source: CNN.com In an effort to shed $1.8 billion in debt, popular theme-park chain Six Flags announced Saturday that it was filing for Chapter 11 bankruptcy. The filing will not affect the operation of the company's 20 parks in the United States, Mexico and Canada, said spokeswoman Sandra Daniels. "This restructuring will have no impact on families who come out to our parks. They will not see an inch of difference," Daniels said. In an online letter to employees, President and CEO Mark Shapiro said Six Flags inherited a $2.4 billion debt load that "cannot be refinanced in these financial markets." "This process is strictly a financial restructuring of our debt and that's how you should view it and speak about it," Shapiro said in the message posted on the Six Flags Web site. He said Six Flags was seeking expedited approval from the for the District of Delaware of a pre-negotiated plan of reorganization under Chapter 11 of the United States Bankruptcy Code. He said the company actually performed well in 2008, attracting 25 million visitors and making $275 million. But it could not keep up with its debt obligations. That's a balancing act you just can't risk year in and year out," he said. "Today, we are moving to rectify our balance sheet once and for all. Believe me when I say we will emerge from this process stronger and more competitive than ever." The restructuring would reduce the company's debt to $600 million. Shapiro told employees that the company was on "solid ground" and the bankruptcy decision was "difficult." He assured them their paychecks and jobs were safe.

America’s triple A rating is at risk By David Walker Published: May 12 2009 20:06 | Last updated: May 12 2009 20:06 Long before the current financial crisis, nearly two years ago, a little-noticed cloud darkened the horizon for the US government. It was ignored. But now that shadow, in the form of a warning from a top credit rating agency that the nation risked losing its triple A rating if it did not start putting its finances in order, is coming back to haunt us. That warning from Moody’s focused on the exploding healthcare and Social Security costs that threaten to engulf the federal government in debt over coming decades. The facts show we’re in even worse shape now, and there are signs that confidence in America’s ability to control its finances is eroding. Prices have risen on credit default insurance on US government bonds, meaning it costs investors more to protect their investment in Treasury bonds against default than before the crisis hit. It even, briefly, cost more to buy protection on US government debt than on debt issued by McDonald’s. Another warning sign has come from across the Pacific, where the Chinese premier and the head of the People’s Bank of China have expressed concern about America’s longer-term credit worthiness and the value of the dollar. The US, despite the downturn, has the resources, expertise and resilience to restore its economy and meet its obligations. Moreover, many of the trillions of dollars recently funnelled into the financial system will hopefully rescue it and stimulate our economy. The US government has had a triple A credit rating since 1917, but it is unclear how long this will continue to be the case. In my view, either one of two developments could be enough to cause us to lose our top rating. First, while comprehensive healthcare reform is needed, it must not further harm our nation’s financial condition. Doing so would send a signal that fiscal prudence is being ignored in the drive to meet societal wants, further mortgaging the country’s future. Second, failure by the federal government to create a process that would enable tough spending, tax and budget control choices to be made after we turn the corner on the economy would send a signal that our political system is not up to the task of addressing the large, known and growing structural imbalances confronting us. For too long, the US has delayed making the tough but necessary choices needed to reverse its deteriorating financial condition. One could even argue that our government does not deserve a triple A credit rating based on our current financial condition, structural fiscal imbalances and political stalemate. The credit rating agencies have been wildly wrong before, not least with mortgage-backed securities. How can one justify bestowing a triple A rating on an entity with an accumulated negative net worth of more than $11,000bn (€8,000bn, £7,000bn) and additional off-balance sheet obligations of $45,000bn? An entity that is set to run a $1,800bn-plus deficit for the current year and trillion dollar-plus deficits for years to come? I have fought on the front lines of the war for fiscal responsibility for almost six years. We should have been more wary of tax cuts in 2001 without matching spending cuts that would have prevented the budget going deeply into deficit. That mistake was compounded in 2003, when President George W. Bush proposed expanding Medicare to include a prescription drug benefit. We must learn from past mistakes. Fiscal irresponsibility comes in two primary forms – acts of commission and of omission. Both are in danger of undermining our future. First, Washington is about to embark on another major healthcare reform debate, this time over the need for comprehensive healthcare reform. The debate is driven, in large part, by the recognition that healthcare costs are the single largest contributor to our nation’s fiscal imbalance. It also recognises that the US is the only large industrialised nation without some level of guaranteed health coverage. There is no question that this nation needs to pursue comprehensive healthcare reform that should address the important dimensions of coverage, cost, quality and personal responsibility. But while comprehensive reform is called for and some basic level of universal coverage is appropriate, it is critically important that we not shoot ourselves again. Comprehensive healthcare reform should significantly reduce the huge unfunded healthcare promises we already have (over $36,000bn for Medicare alone as of last September), as well as the large and growing structural deficits that threaten our future. One way out of these problems is for the president and Congress to create a “fiscal future commission” where everything is on the table, including budget controls, entitlement programme reforms and tax increases. This commission should venture beyond Washington’s Beltway to engage the American people, using digital technologies in an unparalleled manner. If it can achieve a predetermined super-majority vote on a package of recommendations, they should be guaranteed a vote in Congress. Recent research conducted for the Peterson Foundation shows that 90 per cent of Americans want the federal government to put its own financial house in order. It also shows that the public supports the creation of a fiscal commission by a two-to-one margin. Yet Washington still sleeps, and it is clear that we cannot count on politicians to make tough transformational changes on multiple fronts using the regular legislative process. We have to act before we face a much larger economic crisis. Let’s not wait until a credit rating downgrade. The time for Washington to wake up is now. David Walker is chief executive of the Peter G. Peterson Foundation and former comptroller general of the US

Méga article très intéressant du magazine The Economist Lien The world economy A glimmer of hope? Apr 23rd 2009 From The Economist print edition The worst thing for the world economy would be to assume the worst is over THE rays are diffuse, but the specks of light are unmistakable. Share prices are up sharply. Even after slipping early this week, two-thirds of the 42 stockmarkets that The Economist tracks have risen in the past six weeks by more than 20%. Different economic indicators from different parts of the world have brightened. China’s economy is picking up. The slump in global manufacturing seems to be easing. Property markets in America and Britain are showing signs of life, as mortgage rates fall and homes become more affordable. Confidence is growing. A widely tracked index of investor sentiment in Germany has turned positive for the first time in almost two years. All this is welcome—not least because the slump has been made so much worse by panic and despair. When the financial system was on the brink of collapse in September, investors shunned all but the safest assets, consumers stopped spending and firms shut down. That plunge into the depths could be succeeded by a virtuous cycle, where the wheels of finance turn again, cheerier consumers open their wallets and ambitious firms turn from hoarding cash to pursuing profits. But, welcome as it is, optimism contains two traps, one obvious, the other more subtle. The obvious trap is that confidence proves misplaced—that the glimmers of hope are misinterpreted as the beginnings of a strong recovery when all they really show is that the rate of decline is slowing. The subtler trap, particularly for politicians, is that confidence and better news create ruinous complacency. Optimism is one thing, but hubris that the world economy is returning to normal could hinder recovery and block policies to protect against a further plunge into the depths. Luminous indicators Begin with those glimmers. It is easy to read too much into the gain in share prices. Stockmarkets usually rally before economies improve, because investors spy the promise of fatter profits before the statisticians document a turnaround. But plenty of rallies fizzle into nothing. Between 1929 and 1932, the Dow Jones Industrial Average soared by more than 20% four times, only to fall back below its previous lows. Today’s crisis has seen five separate rallies in which share prices rose more than 10% only to subside again. The economic statistics are hard to interpret, too. The past six months have seen several slumps, each with a different trajectory. The plunge in manufacturing is in part the result of a huge global inventory adjustment. With unsold goods piling up and finance hard to come by, firms around the world have slashed production even faster than demand has fallen. Once firms have run down their stocks they will start making things again and the manufacturing recession will be past its worst. Even if that moment is at hand, two other slumps are likely to poison the economy for much longer. The most important is the banking crisis and the purge of debt in the bubble economies, especially America and Britain. Demand has plummeted as tighter credit and sinking asset prices have exposed consumers’ excessive borrowing and scared them into saving more. History suggests that such balance-sheet recessions are long and that the recoveries which eventually follow them are feeble. The second slump is in the emerging world, where many economies have been hit by the sudden fall in private cross-border capital flows. Emerging economies, which imported capital worth 5% of their GDP in 2007, now face a world where cautious investors keep their money at home. According to the IMF, banks, firms and governments in the emerging world have some $1.8 trillion-worth of borrowing to roll over this year, much of that in central and eastern Europe. Even if emerging markets escape a full-blown debt crisis, investors’ confidence is unlikely to recover for years. These crises sent the world economy into a decline that, on several measures, has been steeper than the onset of the Depression. The IMF’s latest World Economic Outlook expects global output to shrink by 1.3% this year, its first fall in 60 years. But the collapse has been countered by the most ambitious policy response in history. Central banks have pumped out trillions of dollars of liquidity and, in rising numbers, have resorted to an increasingly exotic arsenal of “unconventional” firepower to ease credit markets and loosen monetary conditions even as policy rates approach zero. Governments have battled to prop up their banks, committing trillions of dollars in the process. The IMF has new money. Every big rich country has bolstered demand with fiscal stimulus (and so have many emerging ones). The rich world’s budget deficits will, on average, reach almost 9% of GDP, six times higher than before the crisis hit. The Depression showed how damaging it can be if governments don’t step in when the rest of the economy seizes up. Yet action on the current scale has never been tried before and nobody knows when it will have an effect—let alone how much difference it will make. Whatever the impact, it would be a mistake to confuse the twitches of an economy on life-support with a lasting recovery. A real recovery depends on government demand being supplanted by sustainable sources of private spending. And here the news is almost uniformly grim. Searching for new demand Take the country many are pinning their hopes on: America. The adjustment in the housing market began earlier there than anywhere else. Prices peaked almost three years ago, and are now down by 30%. Manufacturing production has been falling at an annualised rate of more than 20% for the past three months. And the government’s offsetting policy offensive has been the rich world’s boldest. As the inventory adjustment ends and the stimuli kick in, America’s slump is sure to ease. Cushioned by the government, the economy may even begin to grow again before too long. But it is hard to see the ingredients for a recovery that is robust enough to stop unemployment rising. Weakness abroad will crimp exports. America’s banks are propped up with public capital, but their balance-sheets are clogged with toxic assets. Consumer spending and firms’ investment will be dragged lower by the need to pay back debt and restore savings. This will be a long slog. Private-sector leverage, which rose by 70% of GDP between 2000 and 2008, has barely begun to unwind. At 4%, the household savings rate has jumped sharply from its low of near zero, but it is still far below its post-war average of 7%. Higher unemployment and rising bankruptcies could easily cause a vicious new downward lurch. In Britain, given the size of its finance industry, housing boom and consumer debt, the balance-sheet adjustment will, if anything, be greater. The weaker pound will buoy exports, but fragile public finances suggest that Britain has much less scope to use government spending to cushion the private sector than America does—as this week’s flawed budget made painfully clear (see article). The outlook should in theory be brighter for Germany and Japan. Both have seen output slump faster than in other rich countries because of the collapse in trade and manufacturing, but neither has the huge private borrowing of the sort that haunts the Anglo-Saxon world. Once inventories have adjusted, recovery should come quickly. In practice, though, that seems unlikely, especially in Germany. As the output slump sends Germany’s jobless rate towards double-digits, it is hard to see consumers going on a spending spree. Nor has the government shown much appetite for boosting demand. Germany’s fiscal stimulus, although large by European standards, falls well short of what it could afford. Worse, the country’s banks are still in trouble. Germans did not behave recklessly, but their banks did—along with many others in continental Europe. New figures from the IMF suggest that European banks face some $1.1 trillion in losses, hardly any of which have yet been recognised (see article). This week’s German plan to set up several bad banks was no more than a down payment on the restructuring ahead. Japan has acted more boldly. Its latest package of tax cuts and government spending, unveiled in early April, will provide the biggest fiscal boost, relative to GDP, of any rich country this year. Its economy is likely to perk up, temporarily at least. But its public-debt stock is approaching 200% of GDP, so Japan has scant room for more fiscal stimulus. With export markets weak, demand will soon need to be privately generated at home. But the past two decades offer little evidence that Japan can make that shift. For the time being, the brightest light glows in China, where a huge inventory adjustment has exaggerated the impact of falling foreign demand, and where the government has the cash and determination to prop up domestic spending. China’s stimulus is already bearing fruit. Loans are soaring and infrastructure investment is growing smartly. The IMF’s latest forecast, that China’s economy will grow by 6.5% this year, may prove conservative. Yet even China has its difficulties. Perhaps three-quarters of the growth will come from government demand, particularly infrastructure spending. Not much to glow about Add all this up and the case for optimism fades quickly. The worst is over only in the narrowest sense that the pace of global decline has peaked. Thanks to massive—and unsustainable—fiscal and monetary transfusions, output will eventually stabilise. But in many ways, darker days lie ahead. Despite the scale of the slump, no conventional recovery is in sight. Growth, when it comes, will be too feeble to stop unemployment rising and idle capacity swelling. And for years most of the world’s economies will depend on their governments. Consider what that means. Much of the rich world will see jobless rates that reach double-digits, and then stay there. Deflation—a devastating disease in debt-laden economies—could set in as record economic slack pushes down prices and wages, particularly since headline inflation has already plunged thanks to sinking fuel costs. Public debt will soar because of weak growth, prolonged stimulus spending and the growing costs of cleaning up the financial mess. The OECD’s member countries began the crisis with debt stocks, on average, at 75% of GDP; by 2010 they will reach 100%. One analysis suggests persistent weakness could push the biggest economies’ debt ratios to 140% by 2014. Continuing joblessness, years of weak investment and higher public-debt burdens, in turn, will dent economies’ underlying potential. Although there is no sign that the world economy will return to its trend rate of growth any time soon, it is already clear that this speed limit will be lower than before the crisis hit. Start preparing for the next decade Welcome to an era of diminished expectations and continuing dangers; a world where policymakers must steer between the imminent threat of deflation while countering investors’ (reasonable) fears that swelling public debts and massive monetary easing could eventually lead to high inflation; an uncharted world where government borrowing reaches a scale not seen since the second world war, when capital controls ensured that savings stayed at home. How to cope with these dangers? Certainly not by clutching at scraps of better news. That risks leading to less action right now. Warding off deflation, for instance, will demand more unconventional steps from more central banks for longer than many now seem to foresee. Laggards, such as the European Central Bank, do themselves and the world no favours by holding back. Nor should governments immediately seek to take back the fiscal stimulus. Prolonged economic weakness does far greater damage to public finances than temporary fiscal activism. Remember how Japan snuffed out its recovery in the 1990s by rushing to raise taxes. Japan also put off bank reform. Countries facing big balance-sheet adjustments should heed that lesson and nudge reform along, in particular by doing more to clean up and restructure the banks. Countries with surpluses must encourage private spending at home more vigorously. China’s leaders are still doing too little to boost private citizens’ income and their spending by fostering reforms, from widening health-care coverage to forcing state-owned firms to pay higher dividends. At the same time policymakers must give themselves room to change course in the future. Central banks need to lay out the rules that will govern their exit from exotic forms of policy easing (see article). That may require new tools: the Federal Reserve would gain from being able to issue bonds that could mop up liquidity. All governments, especially those with the ropiest public finances, should think boldly about how to lower their debt ratios in the medium term—in ways that do not choke off nascent private demand. Rather than pushing up tax rates, they should think about raising retirement ages, reining in health costs and broadening the tax base. This weekend many of the world’s finance ministers and central bankers will meet in Washington, DC, for the spring meetings of the IMF and World Bank. Amid rising confidence, they will be tempted to pat themselves on the back. There is no time for that. The worst global slump since the Depression is far from finished. There is work to do.

Sirius XM Prepares for Possible Bankruptcy Article Tools Sponsored By By ANDREW ROSS SORKIN and ZACHERY KOUWE Published: February 10, 2009 Last summer, Mel Karmazin was rattling off his trademark one-liners to talk up the future of Sirius XM Radio, the combined company he ran that had just been blessed by regulators. He was planning to cut costs and expand a business that was already a fixture in the lives of millions of Americans. “Forty-three cents a day — it’s not even vending machine coffee,” he said at the time, parrying a question about whether the softening economy might hurt subscriptions. But now Sirius XM, the satellite radio company, has problems with much bigger price tags. It has hired advisers to prepare for a possible bankruptcy filing, people involved in the process said. That would, of course, be a grim turn of events for the normally upbeat Mr. Karmazin, Sirius XM’s chief executive, who had hoped to create a mobile entertainment juggernaut with stars like Howard Stern. It is unclear how a bankruptcy would affect customers. Service is unlikely to be interrupted, but the company might have to terminate contracts with high-priced talent like Mr. Stern or Martha Stewart. A bankruptcy would make Sirius XM one of the largest casualties of the credit squeeze. With over $5 billion in assets, it would be the second-largest Chapter 11 filing so far this year, according to Capital IQ. The filing by Smurfit-Stone, with assets of $7 billion, has been the year’s biggest to date. Sirius XM, which never turned a profit when both companies were independent, is laden with $3.25 billion in debt. Its business model has been dependent, in part, on the ability to roll over its enormous debts — used to finance sending satellites into space and attract talent like Mr. Stern (who was paid $100 million a year) — at low rates for the foreseeable future until it could turn a profit. The company’s success and failure are also tied to the faltering fortunes of the automobile industry, which sells vehicles with its radio technology installed and represented the largest customer base among Sirius XM’s 20 million subscribers. Sirius XM owes about $175 million in debt payments at the end of February that it is unlikely to be able to pay. Sirius XM’s problems could pave the way for a takeover by EchoStar, the TV satellite company, which has bought up Sirius XM’s debt. Mr. Karmazin has been locked in talks with EchoStar’s chief executive, Charles W. Ergen, over Sirius XM’s options, people involved in the talks said. The men are said not to get along, these people said, and Mr. Karmazin had rebuffed Mr. Ergen’s takeover advances before. Sirius XM hired Joseph A. Bondi of Alvarez & Marsal and Mark J. Thompson, a bankruptcy lawyer with Simpson, Thacher & Bartlett, to help prepare a Chapter 11 filing, these people said. Documents and analysis are close to completion and a filing could come in days, according to a person familiar with the matter. The threat of bankruptcy could also be part of a negotiating dance with Mr. Ergen, who could decide to convert his debt into equity instead of demanding payment. In addition to the $175 million due in February, EchoStar also owns $400 million of Sirius XM’s debt due in December. If Sirius XM files for bankruptcy, EchoStar could seek in court to take over the company. Mr. Ergen, however, may be able to negotiate to convert his shares before bankruptcy at an attractive rate and gain control of the company, these people said. For Mr. Karmazin, the sale or bankruptcy of Sirius XM would be one of his first failures. He founded Infinity Broadcasting, sold it to CBS and later merged the combined companies into Viacom, where he had a notoriously difficult relationship with Sumner M. Redstone, the chairman, before being ousted. Mr. Karmazin bought two million shares of Sirius XM at $1.37 a share in August. Before that, he had bought 20 million shares at an average price of $5 each. On Tuesday, Sirius closed at 11.4 cents a share. Since the summer, the company’s prospects have dimmed. “I’m not trying to paint the rosy picture, because we have challenges connected to our liquidity and certainly our stock price is dreadful,” Mr. Karmazin said in December. “But, you know, our revenues are growing double digits. We’re growing subscribers. We’re not losing subscribers.” A spokeswoman for Mr. Karmazin declined to comment. A spokesman for EchoStar could not be reached. Mr. Karmazin staked the success of the merger on nearly $400 million in annual cost savings and the potential to gain subscribers through deals with auto companies to put satellite radios into cars. But satellite radio failed to win over many younger listeners, and competition from other sources slowed subscriber growth.

Jan. 26 (Bloomberg) -- Smurfit-Stone Container Corp., a maker of cardboard packaging and one of the world’s largest paper recyclers, filed for bankruptcy in the face of falling demand and heavy debt payments. The petition for Chapter 11 bankruptcy, filed today in a U.S. Bankruptcy Court in Wilmington, Delaware, listed $5.6 billion in consolidated debt and $7.5 billion in consolidated assets as of Sept. 30. Twenty-four affiliates also sought protection. Smurfit-Stone, based in Chicago is North America’s second- largest maker of corrugated packaging, and has 22,000 employees in the U.S., Canada, Mexico and Asia, according to its Web site. The company joins other pulp- and paper-related bankruptcies as rising Internet use hurts magazines and newspapers. Corp. Durango SAB, Mexico’s largest papermaker, sought U.S. bankruptcy in October. Quebecor World Inc., a magazine printer and Pope & Talbot Inc., a pulp-mill operator, also sought cross-border bankruptcies for their operations in the U.S. and Canada. Smurfit-Stone’s 30 largest consolidated creditors without collateral backing their claims are owed about $4.2 billion, court papers show. The Bank of New York, as agent for bondholders, has an unsecured claim of $2.2 billion, CIT Group Inc. is owed $36.8 million and British Petroleum is owed $22.1 million, according to court papers. Debt Levels Rivals AbitibiBowater Inc., Temple-Inland Inc. and International Paper Co. also have significant debt, according to Mark Wilde, an analyst at Deutsche Bank Securities in New York. In December, Smurfit-Stone said fourth-quarter earnings would be “significantly” lower than the previous period, citing slowing demand for containers for industrial and consumer goods. It said it would reduce production of containerboard and some types of paper. Credit-rating companies Moody’s and Standard & Poor’s downgraded their ratings on Smurfit-Stone’s debt shortly thereafter. Both said the company could be required to get waivers on its debt covenants. Smurfit-Stone has an $800 million revolving credit facility due Nov. 2009. Moody’s also rates an estimated $3.5 billion in debt, and noted in December that the company could need to get waivers on some of its covenants to maintain access to the revolver. Containerboard and corrugated containers are Smurfit-Stone’s main products, and it collects recycled paper as a raw ingredient through 27 recycling plants. Its net sales were $7.4 billion in 2007, and a three-year program designed to make mills more productive is slated to finish in the first half of this year, according to the company’s Web site. The case is Smurfit-Stone Container Corp., 09-10235, U.S. Bankruptcy Court, District of Delaware (Wilmington).