Financial Update

Yes Virginia, there IS a Santa Claus!

U.S. Treasury said it would step in to prevent a collapse of the major American automakers, (after the U.S. Senate voted down a US$14-billion bailout package Thursday night), and use funds from the Trouble Asset Relief Program (TARP)
TORONTO - Industry Minister Tony Clement says federal and Ontario governments have agreed on a proportional auto aid plan worth close to $2.8 billion to bail out the Canadian auto industry. Clement says the money is about 20% of the US$14 that the Bush administration is considering for General Motors, Ford and Chrysler. Canada has about 20% of North American auto production.
· TSX +123.55pts (Reuters) Lost in the market's closing numbers was the scope of the rally it put together after stumbling out of the gate to its lowest level in a week. "What saved the day was the U.S. statement that basically said they will not let the auto industry down, and that kind of reignited hope of U.S. government intervention toward the car industry."
· DOW +64.59 after the Treasury Department said it "will stand ready to prevent an imminent failure until Congress reconvenes and acts to address the long-term viability of the industry
· Dollar -1.14c to $79.92US. as oil prices retreated
· Oil -$1.70 to $46.288US per barrel. on another round of poor economic news that showed consumers cutting back on spending for a record 5th straight month.
· Gold -$6.10 to $820.50US per ounce
· www.bankofcanada.ca/en/rates/bond-look.html Canadian bond prices

Here are some tips for communicating with your clients who are currently trying to sell their homes

Selling your home this holiday isn't ideal, but you can do it with these tips National Post
Life is unpredictable, which means you may find yourself trying to sell your home this month. With all the holiday hoopla -- the gifts, the eats -- it's not an ideal time, but Royal LePage says it's still doable.

Breathe. Relax. Follow these tips. –

· Lights Exterior lights give instant curb appeal, but keep it simple. Less is more and opt for white bulbs. –

· Quick trick Fake your garden by placing frost-resistant potted plants such as flowering kale or miniature trees in the walkway and give buyers a sense of the landscape potential.

· A warm home is always inviting. Be sure to have the heat set at a warm temperature for the entire day; fireplaces and candles should also be lit, even during the day.

· Size matters Choose a small Christmas tree; a huge one will make your room look smaller and more cluttered. - Stow away Cut back on clutter by hiding wrapped presents.

· Display photos of your home's gardens and patios in spring and summer to show potential buyers what the house looks like when it is not buried under snow and when leaves are on trees, not the ground. National PostClose
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December 11, 2008, 7:04 pm

Could a Bailout Actually Hurt the Detroit Three’s Business Model?

By Catherine Rampell

The prospective bailout package for the auto industry has many goals, one of which is to push the three Detroit automakers into making more fuel-efficient cars. Witness the bill:(b) PURPOSES — The purposes of this Act are — (1) to immediately provide authority and facilities to restore liquidity and stability to the domestic automobile industry in the United States; and (2) to ensure that such authority and such facilities are used in a manner that — (A) stimulates manufacturing and sales of automobiles produced by automobile manufacturers in the United States; (B) enhances the ability and the capacity of the domestic automobile industry to pursue the timely and aggressive production of energy efficient advanced technology vehicles…

Which should seem to make both environmental and business sense. As many have pointed out, part of the reason that General Motors and Chrysler are in a foxhole is that they invested in producing big, gas-guzzling vehicles like S.U.V.’s, which American consumers stopped buying when gas prices skyrocketed.

In other words, the American automakers gambled on the wrong business model. So forcing them to make smaller, more fuel-efficient cars should help save the environment and the companies themselves. Right?

One small problem. Gas prices have fallen precipitously since their peak this July. Nationwide, retail gasoline averaged $1.699 a gallon last week, which is less than it has been in nearly five years — before adjusting for inflation.

It’s entirely possible that, with gas prices so seductively low, Americans will rekindle their romance with big, fuel-inefficient vehicles. In other words, a push toward changing the business model to more fuel-efficient cars could doom the Detroit Three to failure once again.

Of course, if the broader goal is to reduce global warming and dependence on foreign oil, etc., there are ways that lawmakers could make fuel-efficient vehicles more attractive to consumers — say, through higher gas taxes or a cap-and-trade approach. But absent those other initiatives there is no guarantee that Americans will want the more fuel-efficient cars that lawmakers clearly want them to want.

The problem is that high gas prices are politically unpopular, despite what economists might argue about their Pigouvian virtues

I’m hardly the first to point out this undermining force in the auto bailout proposal. Allan Sloan mentioned it in Fortune. The Harvard economist Robert Z. Lawrence has also written about the need to “ensure higher U.S. oil prices and thereby sufficient demand for fuel-efficient cars and trucks in the future.”

As David Henderson at EconLog noted, Tom Brokaw even confronted President-elect Barack Obama about this predicament during his “Meet the Press” interview last week. In response, Mr. Obama said higher gas prices would be a hardship on Americans and then changed the subject. But of course, just a few minutes earlier Mr. Obama insisted that if the Detroit Three “want to survive, then they better start building a fuel-efficient car.”