economics

A proposal by UK Prime Minister Gordon Brown for a global tax on financial transactions to fund bank bailouts has been rejected by Canadian Finance Minister Jim Flaherty, according to the CBC.

"That’s not something that we would want to do. We’re not in the business of raising taxes," said Flaherty.

A a global tax on financial transactions (also known as a Tobin Tax) was first proposed by economist James Tobin as a means of regulating out-of-control speculation in financial markets.

Brown's proposal was also rejected by the US.

Fours days before receiving a second bailout to the tune of $30 Billion, AIG issued a confidential internal memo regarding what could happen if the insurance company failed.

Doomsday scenarios included:

• The potential for cascading failure of US insurance companies
• The potential that US companies in foreign companies could be permanently lost to nationalization
• A run on the US dollar
• Destroy US retirement savings
• General economic meltdown similar to that of Lehman Brothers

Happy reading!

The meltdown of the economy is becoming so common and widespread it has been hard to keep track of everything that is going on. Briefly:

• In Canada, media empires including
  CTV, Torstar, Quebecor and Canwest continue to flounder along with a whole host of other media outlets across the continent.
• At the same time, Canadian pension funds, most of the big banks, Nortel, Walmart Canada, GM and a number of agricultural and mining industries are being hit with massive losses.

South of the border, thing are looking a little rough for the folks in the halls of power.

• Barack Obama is strutting out the biggest budget in US history which looks to (supposedly) raise taxes on the upper classes, cut Medicare to give more people health care and rip into Pentagon spending, military contractors and agri-business. The US economy meanwhile contracted 6.2% in the last 3 months of 2008.
• The "Sage of Omaha", Warren Buffet is sage-no-more having admitted to $11.5 billion in losses.

As previously reported, both the New York Times and CanWest Global have been facing steep economic challenges recently.

The Times has been thrown a lifeline by Carlos Slim Helu, the Mexican Communications Billionaire who's loaning them $250 million to help them cope with the $l.1 billion in debts they already have.

Things however, seem to have gotten a whole lot worse for CanWest. David Beers, editor-in-chief at the Tyee, managed to get an internal memo from CanWest about 'cost containment'.

It's seems everything is being cut at the chain including:

A freeze on all hiring,
A freeze on salaries,
A freeze on meals, catering and entertainment expenses,
Ceasing engagements with external consultants,
A freeze on conference/seminar attendance,
Equipment expense and capital purchase delays,
Limiting the use of mobile devices by 20-25%,
Reducing energy usage.

It seems the New York Times could no longer be in circulation as soon as May. According to The Atlantic:

Earnings reports released by the New York Times Company in October indicate that drastic measures will have to be taken over the next five months or the paper will default on some $400 million in debt. With more than $1billion in debt already on the books, only $46million in cash reserves as of October, and no clear way to tap into the capital markets (the company’s debt was recently reduced to junk status), the paper’s future doesn’t look good.

Things are not much better for Canwest, which Jen & Fitz report has a:

High debt load of $3.6 billion, falling ad revenues for Canadian newspapers and broadcasters, and precipitously falling value of Australian TV stations it might try to sell to raise cash.

Could be ripe timing for some other kind of alternative media giant to emerge...