For ten years (1990-2000) I had the most seductive job a visual artist could imagine as contract art educator at the National Gallery of Canada. The largest spaces in the gallery were devoted to the growing collection of contemporary art. So most educators included some contemporary art along with European, RCA, Group of Seven and modern art . . . in their survey tours of the collection. In the 1990s contemporary art was almost entirely postmodern and it was there in the early 1990s I experienced my own personal experience of the powers and limits of oppositional postmodernism (Altieri 1990). Perhaps I should have paid more attention that day to where the students were from. But they were an animated, interesting and interested group and the Hans Haake exhibition had just opened. I think it was Hans Haake’s (1983) controversial artwork Here is Alcan (Stephen Biko) (purchased by the National Gallery of Canada in 1983) that abruptly ended my tour. This image of Biko’s severely swollen battered face haunts the history of apartheid and adds weight to the Mandela’s honouring of those heroes like Biko who sought “to redeem the pledge to give a more human face to a society for centuries trampled upon by the jackboot of inhumanity (Mandela 1997). The professor who accompanied the group of CEGEP students from Jonquiere seemed to be personally insulted by Haake’s critique of Alcan and insisted his students leave the gallery immediately.

Yesterday was the thirtieth anniversay of Biko’s death in his prison cell in Pretoria, South Africa. Biko’s friend and biographer, British journalist Donald Woods’ gruesome postmortum photo of Biko was published around the globe resulting in such international indignation that the Security Council was forced to finally enforce the arms embargo they had instated in 1963. In 1994 Nelson Mandela acknowledged that the death of Biko was the first nail in the coffin of apartheid (Conchiglia 2007).

A decade ago Nelson Mandela unveiled the bronze statue of Stephen Bantu Biko by Naomi Jacobson as a contribution towards immortalising his life:

It also gives a certain kind of joy that the financial cost of creating the statue was footed by people in the creative field, including Denzel Washington, Kevin Kline and Richard Attenborough who will be remembered for the film on Biko, `Cry Freedom’. Another contributor is Peter Gabriel whose song `Biko’ helped keep the flame of anti-apartheid solidarity alive. This collaboration of British and American artists bears eloquent witness to Steve Biko’s internationalism (Mandela 1997).

Contemporary artist Jamelie Hassan (1987) reviewed Haake’s work,

Among the other works in this survey, Void Mean has the most visual and emotional impact — perhaps because it brings home Canada’s duplicity in tolerating Alcan’s involvement in the apartheid regime. It is in works like Void Mean that the full potency and immediacy of the issues reach us (and bravo to the National Gallery of Canada, who arranged for its loan during a moratorium on the loan of works from their collection so that Void Mean could be seen in the one Canadian gallery on the Haacke tour). Alcan’s corporate presence is appropriated from its promotional material and juxtaposed to two benign sepia images of a Montreal opera sponsored by Alcan. These images bracket a central, coloured, violent news photo of the dead Stephen Biko. In the accompanying text, Alcan’s involvement in South Africa is described: ‘The most important producer of aluminum sheet and the only fabricator of aluminum sheet in South Africa. From a non-white work force of 2,300 the company has trained eight skilled workers’ (translation from the French). To underline its source, the work is fabricated from aluminum storm windows: the top panels contain Alcan’s silver logo; the bottom panels, the images of the opera and Biko, to reinforce the reality of the violence perpetrated (Hassan 1987).

Bibliography

Altieri, C. 1990. “The Powers and the Limits of Oppositional Postmodernism.” American Literary History. 2: 443-481.
Bois, Yve-Alain; Crim, Douglas; Krauss, Rosalind; Haake, Hans. 1984. “A Conversation with Hans Haacke.” October. Vol. 30. Autumn: pp. 23-48.

Conchiglia, Augusta. 2007. “Steve Biko, la conscience noire.” Le monde diplomatique. September 12, 2007.

Hassan, Jamelie. 1987. “Hans Haacke at The Mendel Art Gallery, Saskatoon, May 15 – June 21.” Vanguard, Vol. 16:4, Sept/Oct 1987.

Mandela, Nelson. 1997. “Address at 20th Anniversary of Steve Biko’s Death.” East London, 12 September 1997. http://www.anc.org.za/ancdocs/history/mandela/1997/sp970912.html

Creative Commons License 2.5 Flynn-Burhoe, Maureen. 2007. “Stephen Bantu Biko (1940-1977) Thirty Years Later.” >> speechless http://docs.google.com/Doc?id=ddp3qxmz_361xsrzrh


In his May 10, 2007 Address to Shareholders, Paul Desmarais Jr. CEO of the Power Corporation of Canada compared and contrasted his corporation with private equity and hedge funds.

In recent years private equity funds have grown at a phenomenal pace. Collectively they have brought about the privatization of public companies worldwide worth $900 billion! In 2006 alone, the 10 largest private equity funds raised $120 billion in new money destined for privatizations. At first an American phenomenon, private equity funds spread to Canada, the U.K., continental Europe and even Japan. Today in the U.K., 19% of private sector employees, or 3.3 million people, work for businesses owned by private equity firms. In Germany the number is 800,000.

In their early years, private equity funds often brought an added value and better governance to the companies they privatized by replacing ineffective and complacent boards of directors. While they were then generally met by fiercely resistant business managers opposed to privatization, nowadays their job is made easier by the growing number of public company executives who, frustrated by the tedious, distracting and costly compliance to modern-day governance rules and regulations, are more receptive to the idea of private equity funds taking them private. And, let’s not forget that, in today’s world, managers are more mobile and can gravitate to the numerous opportunities offered by private equity funds, where they can receive considerable compensation over a relatively short period of time, while being sheltered from public scrutiny and sensational headlines.

Meanwhile hedge funds, which by nature have a shorter time horizon, now number 9,000 and manage in excess of $1 trillion (that’s right, one thousand billions!). In 2006 alone, $126 billion of new money flowed into U.S. hedge funds. Their presence in the financial markets is substantial: for example, they account for between 30% and 50% of transactions on the New York and London stock exchanges! These funds are lightly regulated private investment pools which initially attracted endowment funds and wealthy individuals, but which today also have pension funds and insurance companies as investors.

While many hedge funds are devoted to generating short-term returns by leveraging financial instruments, I would like to focus on those funds which take positions in widely held public companies and become “activist shareholders” with the view of pressuring those companies into actions which, in turn, will quickly result in added value for shareholders, including themselves. Once they become shareholders, they will often align with other institutional investors who are shareholders of the company, and promote whatever initiatives could quickly generate added value: sale or spinoff s of divisions, cash dividends or repurchase of shares, and cuts in operating costs, are a few examples of what can be on their agenda, in addition to their ultimate goal of an outright sale of the company, which would fetch a premium for control (Desmarais 2007a:3.)

In the same month in an article published in the Canadian Council of Chief Executives journal National and Global Perspectives Desmarais warned of the structural impact on the industrialized world caused by the meteoric rise of private equity and hedge funds in the financial markets.

Is it not ironic that the principal investors in private equity and hedge funds – large institutional investors – are happy to put massive amounts of money in the hands of people who do not register with any securities commission, or have few, if any, governance regulations to adhere to and report on? (Desmarais 2007:16).

In the same edition both Gordon Nixon and Dominic D’Alessandro echoed their concerns.

In 2006, more than 100 of Canada’s public companies were acquired by foreign interests. The list includes some of the oldest and most well-established companies across a broad spectrum of industries – everything from hotels to retailing, to metals and mining [. . .] My concern stems from the fact that the world is awash with capital and that the consolidation trend in many industries will inevitably continue. We are a small country with a relatively small population. Canadian companies typically are not of a size to be global players. All too often, decisions affecting the future of important firms and the communities that they sustain are made solely with a view to the short-term financial consequences. I find it particularly bothersome that so many of our natural resource companies – which I would argue represent unique and irreplaceable assets – are now owned elsewhere (D’Alessandro 2007).

Over the past year, 116 Canadian public companies were acquired by foreign interests, more than any other major country including much bigger economies such as the United States, the United Kingdom, France and all the Nordic countries combined. We have not only seen the disappearance of major Canadian household names, but the loss of Canadian presence in industries where we have long had traditional strengths (Nixon 2007:5).

In May and June, 2007 the 150 C-Suite executives from the top 1000 corporations interviewed by the Gandalf Group were generally optimistic about the Canadian economy (Gandalf Group 2007:4). Some expressed concerns about the increasing levels of foreign ownership in key sectors and about private equity firms hollowing out corporate Canada. 23% have concerns that private equity firms engage in too much short-term thinking (Gandalf Group 2007:32). Most executives now favour restrictions in strategic industries.

The strongest areas of consensus about the negative impacts of private equity relate to keeping the company Canadian owned and about the debt burden of the company. A substantial percentage of executives believe that private equity also has a negative impact on the economic contribution the company will make to Canada and to the community it operates in, on the labour relations of the company and on the governance of the company (Gandalf Group 2007:28).

Bibliography

2006. “Canadian Executives Indicate Human Resources and Rising Canadian Dollar are the Major Business Challenges.” CTV. June 12, 2006.

http://www.ctv.ca/servlet/ArticleNews/show/CTVShows/20060611/ctv_release_20060611/20060612

2007. “C-Suite Survey.” Globe and Mail, Report on Business. 18 June 2007: B5.

http://www.theglobeandmail.com/servlet/Page/document/video/vs?id=RTGAM.20070619.wvcsuite0619&ids=RTGAM.20070619.wvcsuite0619&hub=search

D’Alessandro, Dominic. 2007. “How Can We Conserve Canadian Ownership?” National and Global Perspectives . May 3, 2007. p. 23.

Desmarais, Paul Jr. 2007. “Private equity, public interest.” National and Global Perspectives . May 10, 2007. p. 16.

Desmarais, Paul Jr. 2007a. “Chairman’s Address to Shareholders.” Power Corporation of Canada. May 10, 2007.

http://www.powercorporation.com/powercorp/webcast/2007/PCC_Eng_Discours_P_Desmarais_jr_2007_May11_FINAL.pdf

Gandalf Group. 2007. “C-Suite Survey On The Role of Private Equity.” Report on Business. Globe and Mail. June 14, 2007. http://www.dwpv.com/images/C-Suite_June_2007.pdf

Nixon, Gordon M. 2007. “As the world changes, Canada must adapt.” National and Global Perspectives . March 2, 2007.

Flynn-Burhoe, Maureen. 2007. “Meteoric Rise of Private Equity and Hedge Funds.” >> speechless. September 2007. http://docs.google.com/Doc?id=ddp3qxmz_355dbbcxv


Patrick Watson (1980) vs CTV (2007): the case of Conrad Black: The Canadian Establishment and governance.

Throughout the trial of Conrad Black I wondered why Patrick Watson‘s articulate and well-researched CBC documentary entitled the Canadian Establishment (1980), was not viewed on CBC. Conrad Black was known for a strong and effective offensive tactics when dealing with his image management in the press and until the guilty verdict became publicized the media was discouraged from entirely objective coverage. This may change now that the jury has revealed to their decision. CTV coverage reveals a pro-Black bias describing him as stoic, proud, even …onian, in the face of this trial, almost agreeing with Conrad Black that he is somehow above the law. However, he did glare and skowl at the jury when they gave their decision. They describe how he helped every community he was a part of. They admire his rise from his university education to an emerging career with the press to the circle of the uber-wealthy. They expect him to stand up to this and continue to argue for his own innocence. He was found guilty of obstruction of justice where he removed evidence from his Toronto office and of email fraud which hold a combined possible sentence of 10 to 65 years. Charges of racketeering were dismissed. Nonetheless he stole millions of dollars from Hollinger, and continues to feel no remorse. There appears to be a strong empathetic response to the potential of his doing his real jailtime in an American jail where he is actually going to have to do work such as laundry. There is speculation and some relief that since he is so ‘astute’ in terms of money that he will have provided for himself and his family, Barbara Amiel, their son and daughter, Alanna in some ‘legal’ fashion. CTV journalists are comparing the American and Canadian legal systems in terms of fairness and approaches to access to jury information. They mused about whether American courts would be harsher on Black and his co-accused than their Canadian counterparts who would be more influenced by Black’s position of power, wealth and prestige. They seem to admire Black for his intelligence and his ability to write and do research and imagine him using his minimum security prison to study and write. Although others argue that an American minimium security prison is not an exclusive club prison like those in Canada and Black will not have access to a computer. CTV interviewees describe Black as someone very concerned with his place in history. CTV journalists look for ‘silver lining’ in his situation. They wonder how Black will survive from now to his sentence hearing by Judge … in November. He is no longer a Canadian citizen since he abandoned it to become a British Lord. This means he has no rights to go to Canadian jails which are considered to be friendlier to the uber-wealthy. Black is expected to begin quickly to appeal the jury’s findings. This will not be stalling the sentencing hearing.

What makes Watson’s (1980) revelations so compelling at this time is the way in which he reveals Black’s roots as outsider on Bay Street until he was able to take advantage of widows of Establishment members to get his toe in the door. While Black’s father had some wealth through his brewery, his family lacked the prestige and power of the Canadian Establishment. According to Watson, it was during the era of Conrad Black that the Establishment shifted towards an even more self-serving attitude of entitlement. His business ethics predates that of the mean-spirited arrogance of the financeers in the 1990s. He seems to embody that which is dysfunctional and unsustainable in a social world corrupted by extremes of wealth and poverty.

My own concern with Black was the role he played as media mogul in obstructing access to an objective press, a keystone of democracy. Like the the New Brunswick-Bahamas Irvings prior to their ethical turn, mass media moguls adopt Friedman’s motto that their sole responsibility is to make money. Black claimed that he hoped to provide more of a pro-business, economic efficiency viewpoint to counteract the perceived social justice bias of the media (Flynn-Burhoe).

Do we secretly admire white collar criminals and their brilliant lawyers? Conrad Black and three others are accused of stealing $60M from shareholders to fatten their 5- and 7-figure salaries. Prosecutor Jeffrey Cramer claimed in his opening statement that media mogul Black failed to provide the public with objective accounts of world affairs.

read more | digg story

CTV News. 2007. Conrad Black. July 13, 2007.

Flynn-Burhoe, Maureen. 2006. “Media and Objectivity: a Selected Timeline of Social Events.” >> papergirls. December 6.

Flynn-Burhoe, Maureen. 2007.

Is the Mass Media Coverage Biased in Favour of Conrad Black?”>> papergirls. May 9, 2007.

Watson, Patrick. 1980. The Canadian Establishment. CBC.

Patrick Watson.” Museum TV Archives.


In a Marketplace interview Amy Scott asked interviewees about the disturbing consequences of the interconnections between banks, hedge funds, high risk mortgages and pension funds. In June, 2007 two major hedge funds managed by the investment bank Bear Stearns, who purchased securities that were essentially a “repackaging of all kinds of risky mortgages” to tap into the subprime mortgage market are now verging on collapse as the number of borrowers defaulting on these mortgages increases. Joseph Mason explained that “this isn’t just a Wall Street problem. Your 401k or pension fund may be invested in similar mortgage-related securities.” The investor-base is broad and it is difficult to know who is at risk. “Investment managers don’t have to report their holdings. And unlike stocks, these securities aren’t quoted on an open market [. . .] Those hedge fund investment managers create investments that are bought by our pension funds and mutual funds. Charitable foundations are invested in these. It’s a broad investor base, and it’s not the rich versus the poor.” Mason has been a firm proponent of more transparency in financial dealings (Scott 2007).

Mason and Rosner (2007) warn that risk continues to increase, as ratings agencies revise their loss expectations to account for the dynamics of the mortgage meltdown. “Residential mortgage-backed securities (RMBS) market has experienced significant changes [from 1997-2007].” [T]hey caution that “structural changes in mortgage origination and servicing have interacted with complex residential mortgage-backed securities (RMBS) and highly volatile CDO funding structures to place the U.S. housing market at risk. This [. . .] could lead to prolonged domestic economic implications for U.S. standing in the world economic order [. . .] The potential for prolonged economic difficulties that also interfere with home ownership in the United States raises significant public policy concerns. Already we are witnessing restructuring and layoffs at top financial institutions. More importantly, however, is the need to provide stable funding sources for economic growth. The biggest obstacle that we have identified is lack of transparency.” (Mason and Rosner 2007).
Market analyst Winzer (2005 cited in Christie 2005) warned that the housing market was high-risk as the boom has already gone on longer than expected. Low interest rates which means cheap mortgage rates extended the cycle of the real estate boom artificially creating higher demand and higher prices as all market levels (Winzer cited in Christie 2005). “Winzer assesses local market risk by taking into account economic and population growth, construction costs, vacancy rates, and, especially, income. He also considers such factors as density and access to open land. Prices in densely settled New York have always been higher than those of cities with lots of space for new housing (Christie 2005).

 

Key words: mortgage meltdowns, Bear Stearns, Bubble economy, housing slump, mortgage helpers, democratization of debt,

Timeline

1965-2005 Between 1965 to 2005 there was no national US real-estate bust as home prices surpassed inflation by a percentage point or two on average. However local reversals have taken place and some cities have never recovered (Christie 2005).

1973-5 US investors in the S&P 500 lost 14% in 1973 and 26% in 1974 but gained 37% in 1975 (Mann 2000).

1970s “The additional grades or risk have arisen from the willingness to underwrite mortgages for more risky borrowers, encouraged by the democratization of credit since the 1970s. Lending to more risky borrowers is, by definition, more risky. More loans to risky borrowers increases the total amount of risk to be sold in the marketplace” (Mason and Rosner 2007).

1980-1990 In Los Angeles real estate was turbocharged for nearly 10 years (Christie 2005).

1985 In Peoria, Ill. a more traditional area the average home price fell from $60,800 in 1981 to $51,400 in 1985 partially because of

strikes and lay-offs at Caterpillar, the city’s biggest employer (Christie 2005).

1987 Canadian families saved 20 percent of their take-home pay (Ed 2007).

1987
Stock market crash

1988
In “oil patch” cities like Oklahoma City prices plummeted 26 percent from 1983 to 1988. They only returned to 1983 levels in 2003 fifteen years later. In Oklahoma City, the inflation-adjusted price in 1983 was $196,600. Today, it’s just $135,100 (Christie 2005).
1988 Houston home prices fell 22 percent from $111,000 in 1983 to $86,800 in 1988 rebounded only in 2003. Counting inflation, the average Houston home, which cost just $159,700 in 2004, is actually worth less [in 2005] than it was [in 1983]. When, adjusted for inflation, a home cost about $219,000 in 1983 (Christie 2005).

1988 – 1990s Real estate prices fell in Northern California first followed by the rest of the state “as employers fled, incomes dwindled, quakes rumbled, sales fell and prices slipped. [. . .] Silicon Valley’s housing market crashed into recession along with the state’s economy (Perkins 2001).

1989-90 The notorious price bubble of 1989-90 was linked to central banks specifically the Bank of Japan. “The Japanese economy continued to suffer during the early 1990s, and remained in recession until the end of 1993. Nominal GDP growth rates, which had been around 7 percent during the bubble period, fell beginning in 1990 and by 1991-93 were close to zero. Profits in the manufacturing sector fell 24.5 percent in 1991 and 32.1 percent in 1992. Bankruptcies began to rise starting in the latter half of 1990; by 1992, bankruptcies with debt more than Y10 million totaled 14,569 cases. Failures of real estate firms or of firms engaged in “active fund management” constituted more than half the corporate bankruptcies in 1991 and 1992 (Miller 2001).”

1991
Inflation-adjusted take-home pay in Canada froze to this level (Ed. 2007).”

1992 A new car in Canada cost $20, 000.

1992 – 2000 “Japan remained pretty stagnant in the last eight years, with the majority of the loss coming in the first two, when it eventually fell by more than 60%. There was never a big drop, just a constant and inexorable drift downward. Real estate prices plummeted, almost no Japanese company ended 1992 higher than it started 1990. In the interim, banks have failed (and if it weren’t for the financial props of the Japanese government, many more would have), and companies have had to reassess some of their basic assumptions, such as lifetime employment and large benefit packages” (Mann 2000).

1996
There was a housing market reversal in Los Angeles with average house price dropping from $222,200 in 1990 to $176,300 in 1996, a loss of 20.7 percent. “Furthermore, those are nominal prices, not real values. To calculate the loss more realistically you would have to figure in the cost of inflation: $222,200 in 1990 would have been worth $266,700 in 1996 dollars, which means the actual loss for homeowners buying in 1990 and selling in 1996 was closer to 34 percent (Christie 2005).”

1994- 1996 “In 1994, [Japanese] banks wrote off non-performing assets of Y5.7 trillion, exceeding the previous high of Y4.3 trillion in fiscal year 1993. As yet, no major bank has failed, although a number have reportedly encountered serious difficulties. In December, 1994, the Bank of Japan supervised the takeover of two credit cooperatives, the Tokyo Kyowa Credit Cooperative and the Anzen Credit Cooperative, through the creation of a bridge bank with government support. The Bank’s decision not to let these institutions fail and pay off depositors under the deposit guarantee program was based, largely, on concern for the potential systemic effects of a deposit payoff on public confidence in the banking system in general. The “jusen,” or housing finance banks, suffered the most serious problems; these institutions, which were typically organized and sponsored by major commercial banks and staffed, in part, by former officials from the Ministry of Finance, lost tens of billions of dollars as a result of the collapse of the price bubble, and became one of the most contentious political issues of the day during 1995-86 (Miller 2001)”.

1996

“How do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade? And how do we factor that assessment into monetary policy? We as central bankers need not be concerned if a collapsing financial asset bubble does not threaten to impair the real economy, its production, jobs, and price stability. Indeed, the sharp stock market break of 1987 had few negative consequences for the economy. But we should not underestimate or become complacent about the complexity of the interactions of asset markets and the economy. Thus, evaluating shifts in balance sheets generally, and in asset prices particularly, must be an integral part of the development of monetary policy.”

– Alan Greenspan (December 5, 1996)**

1998 There was a market correction in the United States in October of 1998.

1992 – 2000 “Japan remained pretty stagnant in the last eight years, with the majority of the loss coming in the first two, when it eventually fell by more than 60%. There was never a big drop, just a constant and inexorable drift downward. Real estate prices plummeted, almost no Japanese company ended 1992 higher than it started 1990. In the interim, banks have failed (and if it weren’t for the financial props of the Japanese government, many more would have), and companies have had to reassess some of their basic assumptions, such as lifetime employment and large benefit packages” (Mann 2000).

2004 British Columbia graduates from university have an average debt of $20, 000.

2005 Real-estate investing spiked, pressuring prices upward. In Phoenix, according to Bill Jilbert, president and COO of the Coldwell Banker brokerage there, investors from Nevada and California have invaded the Arizona market, and “affordable housing has been pushed to extremes (Christie 2005).”

2000 In Tampa Bay Florida, high risk adjustable-rate mortgages (ARM) made homes “seem affordable when wages stagnated as prices soared. They were just the ticket for cash-out refinancings and home equity credit lines that bought cars and swimming pools and paid off credit card debt. “What happened in a lot of expensive real estate markets is that first-time home buyers who felt they could not afford a home otherwise, took on a loan that had lower monthly payments than a traditional mortgage would have,” said Allen Fishbein, director of housing policy for the Consumer Federation of America. “They weren’t being underwritten on the basis of the borrower’s reasonable capacity to handle these loans.” The payments started out manageable, especially since many loans offered teaser rates. But borrowers are getting a lesson in what the word “adjustable” means. More than $130-billion in mortgages payments were reset in 2006″ In 2006 nearly a third of Tampa Bay mortgages were the high-risk varieties, up from 10 percent in 2003 (Huntley 2006).

1991- 2005 “[I]ncreased complexity from increased grading of risk can also result in increased opacity. Risk that is more difficult to see, by virtue of complexity, is risk just the same. There are plenty of reasons to believe that the amount of risk in the marketplace has increased. Figure 3 shows that defaults on ABS and residential mortgage-backed securities (RMBS) increased substantially between 1991 and 2005” (Mason and Rosner 2007).

2006 Fitch Global Structured Finance 1991-2005 Default Study revealed that, “the overwhelming majority of global structured finance defaults over the 1991-2005 period were from the U.S., accounting for more than 97 percent of the total. While the 1,000 U.S. defaults were mainly concentrated in the Asset-Backed Securities._ (ABS) sector, the 27 international defaults were primarily from the collateralized debt obligations (CDO) sector.” See Mason and Rosner (2007) warn that risk continues to increase, as ratings agencies revise their loss expectations to account for the dynamics of the mortgage meltdown. For instance, on March 27, Standard & Poor’s raised its expectation for losses on 1.

2006 In Florida millions of homeowners were warned of the mortgage meltdown in which they will “face a financial nightmare brought on by a combination of higher interest rates, risky mortgages and a housing market gone cold (Huntley 2006).

2007 Since 1991 inflation-adjusted hourly wages rose only 10 cents (Ed. 2007).”

2007 A new car in Canada cost $32,000 a 60 percent increase from 1992 (Ed. 2007).”

2007 Canadians collectively owe three quarters of a trillion dollars in personal debt. Canadian families not only have no savings, they draw on pension savings to make ends meet.

“The result of the easy credit is that an average family now owes far more than it takes in. That means we remain solvent only so long as the book value of our assets — things like our home, pension funds or investments — continue to increase (Ed. 2007).”

2007 British Columbia graduates from university have an average debt of $27, 000.

2007
It is now acceptable for Canadian families to pay 60 percent of income to pay monthly payments of their home mortgages (Ed. 2007).

2007 The British Columbia government will allow home owners who are over 55 to defer property tax payments for as long as they live. The government will claim unpaid taxes after you die or sell effectively placing the tax burden on the children (Ed. 2007).

2007 “The number of corporate failures in Japan rose for the third month in a row totaling 896 cases in December up 18.2%. November flops were up 6.5% and the number of companies going belly up in October were up 7.8%. The amount of debts the insolvent companies left behind were up 30.6% to 463.09 billion yen (Belew 2007).

2007 In March Bob Lawless reported in his blog that, “The folks at Automated Access to Court Electronic Records or AACER regularly collect data from all the bankruptcy courts for creditors and attorneys. They have a wealth of information that does not show up in the mainstream media. Most recently, they tell me that there were 58,640 total U.S. bankruptcy filings in February 2007 as compared to 55,088 total U.S. bankruptcy filings in January 2007. OK, that looks like a slight increase, but looks are deceiving. It’s actually a fairly hefty increase. The February filings were spread over only nineteen business days while the January filings were spread over twenty-one days. On a daily basis, the February filings were up 17.7% as compared to January (Lawless 2007).”


2007
Jayson Seth analysed data in National Association of Realtors (NAR) June 24, 2007 report. Seth argues that “America’s easy-credit, quick-flipping, borrow-now-and-forget-the-consequences lifestyle is coming to an increasingly painful, grinding halt” and the “confidence of homebuilders is at a 16-year low (Seth 2007).”

2007 Lawrence Yun, National Association of Realtors announced that the real estate market is softening due to psychological factors, tighter credit for subprime borrowers. NAR’s Lawrence Yun explained that since late 2006 housing sales have slowed as buyers double up with family, friends or just mortgage helper units in their homes to be able to pay for higher-priced homes.

2007 Mason and Rosner (2007) warn that risk continues to increase, as ratings agencies revise their loss expectations to account for the dynamics of the mortgage meltdown. For instance, on March 27, Standard & Poor’s raised its expectation for losses on 1. “Residential mortgage-backed securities (RMBS) market has experienced significant changes [from 1997-2007]” Furthermore they caution that “structural changes in mortgage origination and servicing have interacted with complex RMBS and highly volatile CDO funding structures to place the U.S. housing market at risk. Equally as important, however, is that housing market weaknesses feed back through financial markets to further weaken financial instruments backing today’s CDOs. Decreased housing starts that will result from lower liquidity in the MBS sector will further weaken credit spreads and depress CDO and MBS issuance. This feedback mechanism can create imbalances in the U.S. economy that, if left unchecked, could lead to prolonged domestic economic implications for U.S. standing in the world economic order [. . .] The potential for prolonged economic difficulties that also interfere with home ownership in the United States raises significant public policy concerns. Already we are witnessing restructurings and layoffs at top financial institutions. More importantly, however, is the need to provide stable funding sources for economic growth. The biggest obstacle that we have identified is lack of transparency.” (Mason and Rosner 2007).

2007 In a Marketplace interview Amy Scott asked interviewees about the disturbing consequences of the interconnections between banks, hedge funds, high risk mortgages and pension funds. In June two major hedge funds managed by the investment bank Bear Stearns, who purchased securities that were essentially a “repackaging of all kinds of risky mortgages” to tap into the subprime mortgage market are now verging on collapse as the number of borrowers defaulting on these mortgages increases. Joseph Mason explained that “this isn’t just a Wall Street problem. Your 401k or pension fund may be invested in similar mortgage-related securities.” The investor-base is broad and it is difficult to know who is at risk. “Investment managers don’t have to report their holdings. And unlike stocks, these securities aren’t quoted on an open market.” Mason has been a firm proponent of more transparency in financial dealings (Scott 2007).

Webliography

Belew, Bill. 2007. “Corporate Bankruptcies climb for third month in a row.” Uploaded January 21, 2007. Accessed June 24, 2007.
Christie, Lee. 2005. “Real estate: When booms go bust: Home prices can and do go down. Here’s what declines have looked like in the past.” CNN/Money. September 19, 2005.

Editorial. 2007. “Family finances under pressure.” Victoria, British Columbia. Times Colonist. June 24. D2.

Fitch IBCA, 2006. Fitch Global Structured Finance 1991-2005 Default Study, Nov. 26, 2006.
Huntley, Helen. 2006. “Mortgage Meltdown.” Tampa, Florida: St. Petersburg Times. Uploaded October 2, 2006.
Jayson, Seth. 2007. “Housing Slumps. Who’s Surprised?“; The Motley Fool. Uploaded June 25, 2007. Accessed June 25, 2007.

Lawless, Bob. 2007. “Bankruptcy Filings Up 18% in February 2007.” Credit Slips: A Discussion on Credit and Bankruptcy. Uploaded March 6, 2007. Accessed June 24, 2007.

Mann, Bill. 2000. “An Investment Opinion: What a Real Bear Market Feels Like.” >> Fool on the Hill. Uploaded April 26, 2000.

Mason, Joseph R.; Rosner, Joshua. 2007. “Where Did the Risk Go? How Misapplied Bond Ratings Cause Mortgage Backed Securities and Collateralized Debt Obligation Market Disruptions.” Uploaded May 2007. Accessed June 24, 2007.

Miller, Geoffrey P. 2001. “The Role of a Central Bank in a Bubble Economy.” July 16, 2001.

Molony, Walter. 2007. “May Existing: Home Sales Show Market is Under Performing.” Washington. Uploaded June 25, 2007.

Perkins, Broderick. 2001. “California Real Estate Won’t Mirror Silicon Valley Volatility.” >> Realty Times. Uploaded May 18, 2001. Accessed June 24, 2007.

Scott, Amy. 2007. “Mortgage meltdown hits Bear Stearns.” >> New York: Marketplace. Uploaded June 20, 2007. Accessed June 24, 2007.

Winzer, Ingo. 2005. president of Local Market Monitor, which sells real-estate market analysis to corporate and consumer clients.

Flynn-Burhoe, Maureen. 2007. “Democratization of Debt: Wall Street’s Bear Stearn’s and Tampa’s Mortgage Meltdown.” >> Speechless. June 24, 2007.

Flynn-Burhoe, Maureen. 2007. “Democratization of Debt: Bear Stearn & Mortgage Meltdown.” >> Google docs

http://docs.google.com/Doc?id=ddp3qxmz_320dqk9nt


The Canadian business community has taken the most active interest in politics at the CEO level than any other business community in in the world (d’Acquino cited in Brownlee 2005: 9 Newman 1998:159-160). And this interest and influence has been on the rise in the last decades. Canada’s business community has had more influence on Canadian public policy in the years 1995-2005 then in any other period since 1900.

Look at what we stand for and look at what all the governments, all the major parties . . . have done, and what they want to do. They have adopted the agendas we’ve been fighting for the in the past few decades (cited in Brownlee 2005: 12 Newman 1998:151).

Tom D’Acquino should know as he is the CEO of the Canadian Council of Chief Executives.

While the average North American is becoming increasingly concerned by climate change, a recent report by Pricewaterhouse Coopers has found that fewer than a fifth – 18 per cent – of North American chief executives are concerned about climate change putting them increasingly out of step with their colleagues in Europe and Asia Pacific.

This a current list of the Chief Executive Officers of the Officers of the Board of Directors of the Canadian Council of Chief Executives:

  • Dominic D’Alessandro, Vice Chair Canadian Council of Chief Executives (CCCE) and President and CEO Manulife Financial
  • Thomas d’Aquino, Chief Executive Officer and President of Canadian Council of Chief Executives
  • Paul Desmarais. Jr. Vice Chair President of Canadian Council of Chief Executives and Chairman and C0-Chief Executive Officer of Power Corporation of Canada
  • Richard L. George, Honorary Chair Canadian Council of Chief Executives and President and CEO of Suncor Energy Inc.
  • Jacques Lamarre, Vice Chair of Canadian Council of Chief Executives (CCCE) and President and CEO SNC-Lavalin Group, Inc.
  • Gordon M. Nixon, Chair of Canadian Council of Chief Executives (CCCE) and President and CEO of Royal Bank of Canada
  • Hartley T. Richardson Vice Chair of Canadian Council of Chief Executives (CCCE) and President and CEO of James Richardson and Sons, Ltd.
  • Annette Verschuren Vice Chair of Canadian Council of Chief Executives (CCCE) and President of The Home Depot Canada

Selected bibliography

  • Brownlee, Jamie. 2005. Ruling Canada: Corporate Cohesion and Democracy. Halifax: Fernwood Publishing.
  • Brownlee’s (2005) publication stems from his MA thesis supervised by University of Manitoba Sociology Professor Greg Olsen. It builds on the work of William Carroll, Wallace Clement and Murray Dobbin. I highly recommend this book for teaching, learning and research on how Ottawa really works. Some of the well-constructed arguments are located in sections entitled: economic cohesion and the structure of corporate capital, mergers and acquisitions, interlocking directorates, a class conscious business elite, public policy formation network, Canadian Council of Chief Executives, Global policy organizations, advocacy think tanks and economic elite, corporate social responsibility and the role of states in the era of globalization. The bibliography is a book in itself. The appendices, Media-Corporate Director Board Interlocks and Think Tanks – Corporate Director Board Interlocks for 2003 provide missing pieces to a puzzle.

  • Flynn-Burhoe, Maureen. 2006.Media and Objectivity: a Selected Timeline of Events
  • Flynn-Burhoe, Maureen. 2005. Interview with Jamie Brownlee in response to Globe and Mail article “Canada’s top 10% pay 52% of total tax bill.”
  • Flynn-Burhoe, Maureen. 2007. “King of Canada: Tom d’Acquino CEO of CEO’s” Google Docs and Spreadsheet. mirror
  • “The Globe and Mail Weekly Appointment Review.” Globe and Mail. January 22, 2007. p. B6
  • Hackett, Robert A. and Gruneau, Richard. 2000. The Missing News: Filters and Blind Spots in Canada. Ottawa: Centre for Policy Alternatives/Garamond Press Inc.
  • Hackett, Robert A. and Zhao, Yuezhi. 1998. Sustaining Democracy? Journalism and the Politics of Objectivity. Toronto: Garamond Press Inc.
  • I first read this book while preparing to teach a Northern-centred introductory human rights course in Iqaluit, Nunavut. My students were often employees of the Nunavut Government involved in making history as they introduced their own human rights bill. I wanted the inconvenient truth claims in Hackett and Zhao to be illegitimate but their research was unfortunately very robust. I thought I lived in a country whose forms of democratic governance were maturing until I read how we were actually going backwards not forwards in terms of objectivity and mass media.

    These recent shifts in media ownership and policy might be seen as the equivalent of a non-violent coup d’etat, a metaphor evoking the inherent link between media power and state power — between the colonization of the popular imagination and the allocation of social resources through public policy and market relations. Communications scholar Herbert Schiller suggests that what is at stake is “packaged consciousness”: the intensified appropriation of the national symbolic environment by a “few corporate juggernauts in the consciousness business (Hackett and Zhao 1998:5)

  • N/A. 2007. “U.S bosses out of step on climate change.” Management-Issues
  • Newman, Peter. 1975. The Canadian Establishment. Toronto: Mclelland and Stewart.
  • Newman, Peter. 1975. The Canadian Establishment. Toronto: Mclelland and Stewart.
  • Newman, Peter. 1981. The Acquisitors.. Toronto: Mclelland and Stewart.
  • Newman, Peter. 1998. Titans: How the New Establishment Seized Power. Toronto: Penguin Books.
  • Olsen, Gregg. 1991. “Labour Mobilization and the Strength of Capital: The Rise and Stall of Economic Democracy in Sweden.” Studies in Political Economy. 34.
  • Olsen, Gregg. 2002. The Politics of the Welfare State: Canada, Sweden and the United States.. Toronto: Oxford University Press.
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