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daybook 08.10.2009

William Berry

Daybook, a daily compendium of news, trends, data and analysis compiled by Report on Business editors and reporters, for Thursday, Oct. 8:

A new study finds that corporate leaders see global warming as a chance to profit, rather than a reason for fear. The Conference Board of Canada report, whose poll of 97 Canadian companies will be released Thursday, found that 85 per cent of those asked reported seeing "opportunities with climate change." These were in "providing alternative products and services to replace those that are affected by regulations, and in general opportunities, such as emissions trading or purchase of carbon offsets."

Other findings: Eighty-three per cent of those who do see a climate change risk say the biggest potential problem lies in climate change regulations. They also fear the physical risks that may come from more extreme weather. Still, less than half currently have created some form of "climate change governance," although 42 per cent "pay personal incentives to reward achievement" of climate goals. Nathan VanderKlippe





Chart of the day

The recession and credit crunch have helped the United States rediscover the value of saving. Canada? Not so much.

Scotia Capital economists Derek Holt and Karen Cordes note that the combined savings rate of households, businesses and governments in Canada has sunk to a 17-year low, at less than half the average rate since 1961. Meanwhile, the broadest measure of an economy's overall savings rate - the combined net savings of households, businesses and government relative to total demand for investment funds - has turned negative as a percentage of gross domestic product for the first time in a decade.

In short, Canadians have become a nation of net borrowers.

The country's trend is heading in precisely the opposite direction from the United States, where net borrowing as a percentage of GDP has shrunk rapidly in the past year, to levels that are now on par with Canada. The massive federal government budget deficits are being more than offset by rising savings in households and companies.

Mr. Holt and Ms. Cordes say this deleveraging south of the border is actually at the root of Canada's savings deterioration.

"Canada's twin surpluses of yesteryear (trade and fiscal) owed themselves less to Canadian frugality and more to the dissaving of the U.S. economy that created strength in Canadian exports and government finances. In essence, Canadian saving looked good because of vast sums of U.S. dissaving," they wrote. ("Dissaving" is the decline in savings that results when spending exceeds income.)

"Canada's inability to grow adequate domestic saving means that this net shortfall of funds to finance Canada's trade and fiscal deficits will have to be provided by foreigners." David Parkinson



The explainer

I keep being told my Nortel shares are worthless, and there seems to be no way I can sell them anyway. How can I crystallize my loss on the stock so I can deduct it from capital gains on my tax return?

The Income Tax Act spells out the circumstances under which you can report the value of certain shares as zero, and claim a capital loss for the full amount that you paid for them.

Nortel still doesn't specifically qualify under those rules, though, because it is not bankrupt (the company is in court protection from creditors), and it is still functioning as an ongoing business while its assets are being sold off.

However, the company has said many times it expects the common and preferred shares will be worthless once the process is complete.

That's good enough, said a help-desk adviser at Canada Revenue Agency, so you can report that your Nortel shares are worth nothing on your next tax return, and claim the loss. "We're pretty used to seeing a zero attached to that name," he said.

What if I want to make sure I have some sort of documentation of their worthlessness?

Tim Cestnick, managing director at WaterStreet Family Wealth Counsel, said you could sell all your shares to one of your parents, or your child, or a friend, for $1 in total. The shares have to be transferred and the $1 actually paid, he said. A one-page purchase and sale agreement would then provide the documentation you need.

Don't sell them to your spouse though. That wouldn't be allowed because of rules surrounding "affiliated" persons.



The rebound in housing

Existing home sales haven't just recovered this year - TD Bank says they are better than they were going into the economic crisis.

"No other Canadian economic indicator has rebounded as sharply as sales of existing homes over the last few months," economist Pascal Gauthier wrote in his Resale Housing Market Outlook.

After declining by nearly a third in the second half of 2008, the seasonally adjusted level of sales had climbed 61 per cent higher as of August.

"Not even the 50-per-cent S&P/TSX rally since March can match such a robust recovery," he said.

Much of the rebound can be attributed to pent-up demand, he said, although buyers' appetites will likely be sated by November. The number of listings should continue to rise, however, providing sellers modest price gains through 2010.

The market will change in 2011, he said, as "eroding affordability" begins to weaken demand.

"Meanwhile, supply will have turned the corner and should increase," he said. "Both factors combined point to an easing in price growth [in 2011]" Steve Ladurantaye

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 2:18pm EDT.

SymbolName% changeLast
TD-N
Toronto Dominion Bank
-0.59%60.28
TD-T
Toronto-Dominion Bank
-0.83%81.59

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