Financial life in a big town

Executives at the newspaper operations of media giant Canwest Global Communications Corp. (TSX: CGS) could be included in pay cuts being suggested for unionized workers.

A spokesman for Canwest confirmed today that the proposal to slash wages by up to 5 per cent would involve everyone at the newspaper division.

The company has said a widespread pay reduction for all newspaper employees would result in $20 million in savings a year.

"In order to get to that $20 million it would require (cuts) right across the board, so that would be executives, all management and union" workers, said Canwest's John Douglas in an interview.

But he said the wage cuts, which were proposed to union members in a letter, aren't set in stone, and they haven't been officially pitched to union leaders in person.

Douglas characterizes them as nothing more than an example used to illustrate the dire situation that Canwest is experiencing as it tries to dig itself out of about $4 billion in debt.

He said Leonard Asper, who is president and chief executive of the entire Canwest operation, isn't part of the newspaper division, which suggests he wouldn't be part of these pay cuts.

"You're way ahead of yourself on this thing," he said in response to questions over who would be included in any pay cuts.

"This letter is an invitation for discussions. We have not told anybody that we are seeking a 5 per cent wage cut rollback."

Still, the suggestion was enough for union leaders to worry about the potential implications of the letter, which was signed by Dennis Skulsky, president and CEO of Canwest's newspaper operations.

So far, both sides haven't started talking with each other, though the company hopes to met with local senior labour representatives sometime this week, according to the letter.

"Our locals will be prepared to go to those first meetings to find out what they really want to talk about, and how they want to talk about it," said CWA/SCA Canada director Arnold Amber cash till payday.

"But we're definitely going to have to discuss what their (financial) stability is."

Canwest owns the National Post, based in Toronto, as well as a string of big-city dailies from Vancouver to Montreal.

Canwest said today that its Canwest Media Inc. subsiidary reached a deal with its lenders to extend a Monday deadline to reach an agreement in principle on a long-term recapitalization until the end of the month.

The company faces a July 15 deadline to reach a definitive agreement.

In Australia, Canwest's Ten Network downplayed recent speculation that the Canadian company could sell off its 56 per cent stake in the Aussie television and advertising operations.

"The new financing arrangements between Canwest and some of its lenders in fact restrict Canwest in its ability to deal with its interests in Ten, without the consent of its lenders," said Ten in a statement.

The Ten holdings are the last remaining major asset of Canwest's foray into international operations. Most recently, it sold its four Turkish radio stations, a deal made at an undisclosed price that was announced in May.

Canwest received about $175 million in fresh financing from U.S. buyout funds and other investors, but it is believed the company will have to appoint new management in any restructuring.

The company ran up a huge debt load when it bought the former Southam newspaper chain and other assets in 2000 for $3.2 billion from Conrad Black's Hollinger group, and took on additional debt from buying the specialty channels of Alliance-Atlantis Communications more than two years ago.

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The market of mobile financial services to poor people in emerging markets will surge from nothing to $5 billion in 2012, U.S.-based microfinance policy and research center CGAP said on Monday.

Mobile money is one of the hottest topics in the wireless world, but so far take-up of services has been mostly limited to a few emerging markets, as in developed countries the popularity of online banking has been a brake on mobile money.

“Theres a lot of excitement, but very little understanding what’s going on as the number of implementations is still limited,” said Mark Pickens, microfinance analyst at CGAP.

The market began in early 2007 with a launch of Safaricom’s M-PESA in Kenya, which has attracted 6.5 million customers, or one in six Kenyans.

Operators in several emerging countries have followed, and by end-2009 CGAP expects more than 120 mobile money implementations in developing markets.

The new estimates are part of GCAP’s joint study with industry group GSMA on estimating the size of mobile financial markets. The study is due to be published next week at the Mobile Money Summit in Barcelona.

Pickens said on top of the $5 billion, telecoms operators could save up to $2 billion from lower customer turnover, and the takeup of financial services would lift by $1.10 their average monthly revenue per user (ARPU).

In Africa only one in five people have bank accounts, mainly because of the prohibitive cost to the banks of operating branches in far-flung parts of a continent where many of the population of one billion live on a few dollars a day or less classic car insurance.

But mobile phones are spreading extremely fast: to 270 million in 2007 from just 50 million in 2003, according to GSMA.

SCOPE OF SERVICES GROWING

The scope of mobile financial services in these markets has grown quickly from simple cash transfers by text message to payments for everything from a taxi ride to a utility bill.

There are about one billion people in emerging markets who have cellphones, but no bank accounts. CGAP expects that number to rise to 1.7 billion to 2012, with around one in five of them picking up mobile money — and creating the $5 billion market.

Most optimistic researchers expect more than a billion people in emerging markets to start using mobile money within a few years, while some are more cautious than CGAP.

Telecom operators are in a pole position to launch mobile financial services in most emerging countries as most banks know they cannot compete on their own and so are happy to provide the cash float for the systems in the belief that in the long-term they are opening up a channel to potential customers.

“Customers have already purchased point of sale — its in their pocket,” Pickens said, but warned investors should not expect to see returns in a few months. 

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In recent months, there has been growing support for a national regulatory strategy for digital media. The Canadian Radio-television and Telecommunications Commission has explicitly identified the need for this in its new-media decision, as have leaders in the technology, telecommunications, broadcast and education communities.

The need for a federal strategy stems from the realization that Canada is rapidly falling behind much of the developed world on digital issues. The gradual hollowing out of the Canadian technology sector (one-time giants such as Nortel, JDS, Corel, Newbridge Networks and Entrust are all either dead or unrecognizable today), the absence of a strategy to digitize Canadian content, the inability of the CRTC to make sense of its legislation as it applies to the Internet, and the plummeting rankings of Canadian high-speed Internet and wireless services all point to a problem that can no longer be ignored.

Industry watchers point to the late 1990s as the last time Canadian digital policy was driven by a cohesive plan. Led by then Industry Minister John Manley, Canada introduced privacy and e-commerce legislation, online consumer protections and supported high-speed networks that rivalled the best in the world. Other countries took note and today, many – Australia, New Zealand, Britain, Germany, and France among them – have developed their own digital strategies.

Most designs identify high-level principles such as fostering consumer confidence or ensuring broadband access. Given that Canada is late to the game, it should think about taking a different tack. Since broad principles rarely generate action, the government should forgo the conventional strategy and move directly to an action plan with specific deliverables.

The starting point for any action plan is leadership. Canada needs digital leaders, including a Chief Technology Officer and cabinet-level attention to the issue. On a substantive level, there is room for a greater governmental role, but it should avoid the temptation to pick winners or specific technologies. With that in mind, a Canadian digital action plan could focus on five main issues:

1. Incentives for world-class networks

Canadian telecommunications networks were once the envy of the world. No longer, as Canada now ranks 28th out of 30 OECD countries in terms of speed and pricing. Ensuring that all Canadians have access to high-speed networks that rival current leaders such as Japan and South Korea should be a top-priority. The plan could involve funding for rural broadband initiatives (the 2009 budget provided less than the Conservatives promised during the fall election campaign), and tax incentives to promote investment in fast fibre-to-the-home services.

The digital television transition (Canada will shift from analog to digital television in 2011) will free up spectrum that could be used promote new innovation by reserving space for unlicensed uses and encourage the entry of new competitors.

2. Establish openness

After years of closed, "walled garden" approaches, the world is embracing the benefits of openness. The City of Vancouver recently adopted an openness policy that establishes a preference for open standards, open-source software and open government data. The federal government should do the same, promoting the use of cost-effective open-source software and the benefits of commercial and civic activity around accessible government data cash loans for poor credit. A presumption of openness would also extend to spectrum auctions and open access to taxpayer-funded research.

3. Modernize the law

There is seemingly universal agreement that several Canadian laws are long overdue for digital reform. The government took an important step with the introduction of the Electronic Commerce Protection Act, which combines anti-spam rules and consumer protections for the digital age.

There remains much more to be done, however, including updating privacy legislation and changing Canadian tax rules to encourage venture-capital financing and corporate investment in new technologies. The Telecommunications Act and Broadcasting Act should be merged into a single law with streamlined principles that reflect the current world of technological abundance rather than scarcity. The law should preserve innovation in the network through modernized neutrality principles and mandate greater transparency in network management and pricing.

Canadian copyright law should be updated by implementing provisions that comply with international treaties and meet legitimate consumer expectations. Potential changes include a modernized backup copy provision, expanded fair dealing rules, and legal protection for digital locks only if they do not override user rights.

4. Remove barriers to innovation

A Canadian digital action plan should help promote innovation by removing several long-standing barriers. This includes lifting foreign investment restrictions in the telecommunications sector, providing creators with greater certainty of access to underlying works and establishing limits on liability for Internet intermediaries, including Internet service providers and search engines.

Canadian patent and copyright law should be examined to guard against the gridlock that can stymie innovation, while Canadian regulators, particularly the Competition Bureau and the CRTC, must become far more aggressive in protecting consumer interests and guarding against anti-competitive behaviour.

5. Promote a Canadian Internet

Canadian cultural policy has long focused on the creation and promotion of Canadian culture. The government has already begun to shift much of its support toward new media and digital platforms. That should continue, as another portion of the spectrum auction proceeds could be directed toward digital culture funding.

Support for a Canadian Internet should extend beyond traditional funding programs, however. The Canadian Internet Registration Authority could use part of its forthcoming financial surplus (which could soon exceed $1 million annually) to assist with Internet policies or by granting every Canadian a free domain name to encourage their participation in the online world. Canada could also get on with the job of creating a national digital library by digitizing millions of Canadian books for the benefit of Canadian authors and the broader public.

A Canadian digital action plan should do more than simply present general principles or mirror strategies found in other countries. Canada has fallen behind the curve and there is no time to waste.

Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can reached at mgeist@uottawa.ca or online at www.michaelgeist.ca

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WASHINGTON–The number of newly laid-off Americans filing for jobless benefits fell for the third time in the past four weeks, fresh evidence that companies are cutting fewer jobs.

The Labor Department said Thursday that initial claims for unemployment benefits fell last week by 24,000 to a seasonally adjusted 601,000. That's below analysts' estimates of 615,000.

Still, the number of people claiming benefits for more than a week rose by 59,000 to 6.8 million, the highest on records dating to 1967. The department also revised last week's data on continuing claims, replacing what had been a drop of 15,000 with an increase of 6,000.

That means continuing claims have set records for 19 straight weeks. The data lag initial claims by a week.

Layoffs may be slowing, but companies are reluctant to hire amid the longest recession since the Second World War. That makes it harder for the unemployed to find work.

Jobless claims are a measure of the pace of layoffs and are seen as a timely, if volatile, indicator of the economy's health.

The four-week average of claims, which smooths out fluctuations, fell to 621,750, down from a high of about 658,000 in early April. Many economists see the decline as a sign that layoffs have peaked and the recession is bottoming out.

Still, the levels are far above what is customary in a healthy economy. Initial claims stood at 388,000 a year ago.

The department said last week that companies eliminated a net total of 345,000 jobs in May. While steep, that's about half the monthly average of jobs lost in the first quarter free credit report instantly.

Yet the unemployment rate jumped to 9.4 per cent in May, a 25-year high, as hundreds of thousands of people entered the labor market and began looking for work but couldn't find it, the department said.

As college graduates and other new entrants start searching for a dwindling number of jobs, economists expect the unemployment rate to rise even as layoffs subside.

Some economists project the rate could near 11 per cent by the middle of next year.

Troubles in the automotive sector could cause unexpected fluctuations in the claims. General Motors Corp. filed for bankruptcy protection June 1, joining Chrysler LLC, which filed April 30.

GM said it will close about a dozen plants as part of its restructuring. The closings, which will take place through the end of 2010, will cost up to 20,000 workers their jobs.

In addition, the company said Monday that it plans to cut a production shift at a plant in Wentzville, Mo., in August, resulting in up to 900 layoffs.

Among the states, Connecticut had the largest increase in claims of 816, followed by Louisiana, Tennessee, Arizona and Nebraska. The state data lag initial claims by a week.

Florida had the largest drop in claims of 6,655, which it attributed to fewer layoffs in the construction, service and manufacturing industries. The next largest decreases were in Illinois, Michigan, California, and Texas.

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U.S. retail sales probably rose in May for the first time in three months, helped by rising gasoline prices and an uptick in demand for cars and light trucks in response to aggressive discounting.

But core sales measures likely remained weak, in line with results already reported by many major retail chains, as Americans scrimp and save their way through a brutal recession and continued heavy job losses.

May sales are forecast to have risen by 0.5 percent after falling by 0.4 percent in April, according to a Reuters survey of 73 economists. Estimates ranged from down 0.3 percent to up 1.4 percent. Sales excluding autos are forecast up 0.2 percent after dropping by 0.5 percent in April.

Gasoline prices were on the rise in May, jumping 19 cents per gallon in the final two weeks of the month, but were still down nearly 40 percent from a year earlier.

That encouraged more Americans to hit the roads for the Memorial Day holiday, pushing up demand at service stations.

At the same time, carmakers had some success in pulling buyers into their showrooms, suggesting to some that the steep decline in sales might have found a bottom.

The retailing outlook became cloudier after Wal-Mart, by far the largest U.S. retailer, stopped providing monthly sales figures in May.

Of the stores that still reported, May’s results showed a continued focus on buying staples — food and everyday essentials — at the expense of almost everything else guaranteed payday advance.

Sales were weaker than expected at 63 percent of retailers tracked by Thomson Reuters in May, with many upscale chains savaged.

The retail sales report is due at 8:30 a.m. EDT (1230 GMT) on Thursday from the U.S. Department of Commerce. Following are some analysts’ comments and forecasts:

DAVID SLOAN, ECONOMIST, 4CAST LTD:

(Forecast: retail sales +0.6 pct, ex autos +0.5 pct)

“Over half the rise in sales excluding autos will be explained by a rebound in gasoline prices, with retail sales ex autos and gasoline seen rising by only 0.2 percent. This will be the first increase in all three series in three months.

“The International Council of Shopping Center’s estimate for sales of -4.6 percent excluding Wal-Mart, which has outperformed during the recession, was in line with recent trends, and while underperforming expectations, was consistent with a modest month to month rise.

“Auto sales improved in industry data and a base appears to have formed. However, much of the recent industry data volatility has been on fleet sales, and the rise in retail auto sales should be modest.”

STEVEN WOOD, ECONOMIST, INSIGHT ECONOMICS: 

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WASHINGTON – Ten of America's largest banks were given the green light Tuesday to repay $68 billion in government bailout money, freeing them from restrictions on executive compensation that they say are making it hard to keep their top-performing executives.

The Treasury Department said the banks had been approved to repay the money they received from the Troubled Asset Relief Program created by Congress in October at the height of the financial crisis.

Experts say allowing 10 banks to return $68 billion in bailout money shows some stability has returned to the system but caution that the crisis isn't over. And some fear the repayments could widen the gap between healthy and weak banks.

All eight banks that took TARP money and last month passed government "stress tests" confirmed they received permission to repay the bailout funds. They are: JPMorgan Chase & Co., American Express Co., Goldman Sachs Group Inc., U.S. Bancorp, Capital One Financial Corp., Bank of New York Mellon Corp., State Street Corp. and BB&T Corp.

Morgan Stanley did not pass the government test, but on Tuesday said it had raised enough capital quickly and was approved to repay its TARP money.

Northern Trust Corp. was not among the 19 banks subjected to stress tests, but the company said it also had received permission to repay the bailout funds.

Speaking at the White House, President Barack Obama welcomed the news but said "this is not a sign that our troubles are over – far from it.''

Stocks zigzagged after the Treasury's widely expected announcement. In afternoon trading, the Dow Jones gained about 20 points. Broader stock averages also edged up.

Some analysts questioned whether the repayment of TARP money obscures dangers in the broader banking industry. Smaller banks are still saddled with billions of dollars in risky commercial real estate loans. And large banks continue to hold the toxic mortgage-backed assets at the heart of the financial crisis.

More than 600 banks have received nearly $200 billion in TARP money, and 22 smaller banks already have repaid their funds.

The 10 banks are set to return money from a $200 billion program the government created as part of the $700 billion financial rescue package. The money initially was used to buy preferred shares in the banks – which are investments that pay regular dividends.

Officials insisted the money was an investment in the companies. The government would receive dividends and warrants, which allow it to buy shares of the banks at a set price over the next 10 years.

Critics have fretted that taxpayers may never see much of the money. But Tuesday's news makes clear that at least for this program, repayments could yield some profits for taxpayers.

Obama said he's happy that people are beginning to see "an initial return on a few of these investments.''

Money from the $700 billion fund used for other programs will be harder to recover. And some of it, such as the $70 billion used to wind down failed insurance giant American International Group Inc., ended up in the pockets of relatively healthy banks including Goldman Sachs. That means taxpayers are unlikely to recoup the entire $700 billion, even with profits from the banks.

Bank analyst Bert Ely called the repayments a positive sign for the banking sector but not a reason to celebrate. He noted that three of the nation's biggest banks – Citigroup Inc., Wells Fargo & Co. and Bank of America Corp. – are still tied to the bailout.

Even the banks permitted to repay the bailout funds are still dependent on government support, including debt guarantees from the Federal Deposit Insurance Corp. and credit lines from the Federal Reserve.

American Express and U.S. Bancorp said the repayments would reduce earnings for the quarter.

Other observers worried the repayments are a better deal for the banks than they are for the taxpayer health insurance.

"We all know why the senior executives want to repay this money: It's a burden to manage the TARP politics," said Mark Williams, a finance professor at Boston University and former Fed examiner.

Williams argued that it would be best for the banks to keep as much capital as possible until the economy turns around. Unemployment continues to rise, he said, and that could mean more losses on loans and new bank failures.

"We're not at the bottom of the banking crisis, so why is it, then, that the regulators are letting these banks reduce their capital cushion?" Williams said. "Should they stumble again, taxpayers will have to come to rescue.''

Banks have been chafing under limits on executive compensation and say key employees have been leaving for small private firms and foreign banks. JPMorgan Chief Executive Jamie Dimon has railed against government restrictions on hiring foreign employees.

The administration is expected to roll out new executive compensation rules Wednesday that would apply to banks that still have TARP funds.

When Treasury first doled out the money, it received warrants from the banks allowing it to buy stock at a fixed price at some future date. The stock prices are expected to rise as the economy recovers. As a result, the warrants could provide substantial profits for taxpayers.

The firms now have the right to purchase the warrants Treasury holds in their firm "at fair market value," Treasury said Tuesday.

Testifying before a Senate panel, Geithner said the value of the warrants for banks permitted to repay TARP funds are in the “several billion dollar range.''

Besides Treasury's potential income from the sale of the warrants, the 10 banks already have paid dividends on the preferred stock totalled about $1.8 billion over the last seven months.

Dividend payments received for all TARP participants are about $4.5 billion to date, according to Treasury.

The amounts the banks could repay are:

– JPMorgan: $25 billion

– Morgan Stanley: $10 billion

– Goldman Sachs: $10 billion

– U.S. Bancorp: $6.6 billion

– Capital One: $3.6 billion

– American Express: $3.4 billion

– BB&T: $3.1 billion

– Bank of New York Mellon: $3 billion

– Northern Trust: $1.6 billion

– State Street: $2 billion

The push to repay the funds comes a month after "stress tests'' of the nation's 19 largest financial firms found that 10 needed to raise $75 billion more to protect against future losses. All of those banks, including Citigroup, Wells Fargo and Bank of America, had submitted plans by late Monday to bolster their capital cushions that were enough to help them survive a deeper recession, the Fed said.

The other nine institutions had to prove they could raise enough private capital without federal guarantees before they could return the money.

So far, 16 of the 19 banks have raised $75.2 billion, mostly by selling common stock.

Geithner cautioned senators Tuesday that Treasury still needs flexibility to inject money into the financial sector and did not guarantee that the paybacks would be used to reduce government debt.

Lawmakers, particularly Republicans, have been insisting that any repaid bailout money be used to reduce the deficit.

But Geithner did say that the repayments made it less likely that the administration would need to seek additional money from Congress. The administration had included up to $750 billion in additional bailout funds in its budget proposal.

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An Ontario private member’s bill that would bar creditors from seizing retirement savings plans and income funds has won a further lease on life.

House leaders for the province’s three political parties have agreed to refer the bill to committee, according to the bill’s author.

A committee review is a necessary step before a bill can pass third reading but does not guarantee a law will be enacted.

That’s because Finance Minister Dwight Duncan has not made the timely consumer bailout, proposed by fellow Liberal Jeff Leal of Peterborough, a government priority.

So the majority of Ontarians who are counting on their registered retirement savings plans and registered retirement income funds will have to wait in suspense through the summer recess – and who knows how much longer.

Anyone who has difficulty paying debts in the meantime would have to use federal bankruptcy provisions to shield their retirement savings accounts from seizure.

That’s a drastic step that is not required of pension plan members, or generally of the holders of life insurance products with a named beneficiary. It’s also not required of holders of ordinary RRSPs and RRIFs in six other provinces.

The lack of creditor protection in Ontario legislation is just another example of the discrimination that favours those who have pension plans.

"This is about protecting the 65 per cent of people who have no pension plan," Leal said, in support of his bill, which he modelled on legislation in Manitoba.

His bill received second reading and enthusiastic support from members of all parties last October. Leal noted the bill was placed quietly last Thursday on the order paper for the standing committee on finance and economic affairs.

There had been timely nudges of support from outside of Queen’s Park, including a column I wrote shortly before the house leaders were to meet to discuss the handful of private member’s bills that would be given a chance at passage online payday advance.

Conservative house leader Elizabeth Witmer, at the time, said she had yet to hear anything about the bill from her Liberal counterpart, Monique Smith.

Meanwhile, it had just been revealed that much of Ontario’s $3.15 billion (U.S.) in loans to General Motors Corp. would end up in its Canadian pension plans, a highly controversial development.

Leal said that, after my column, various accountants flooded Premier Dalton McGuinty’s office with emails supporting the proposed legislation. This may all be coincidental. To be sure public pressure has made an impact, McGuinty or Duncan would have to step up and take a stand.

Job loss insurance: Bank of Montreal has provided additional information about optional insurance it sells with some mortgages.

As I wrote last week, the job loss benefits will be paid only while a customer is collecting federal Employment Insurance. EI is not payable if someone is collecting group indemnity wage loss insurance.

But Craig B. Mauchan, vice-president of insurance, says job loss policies BMO sells for Sun Life Assurance are not caught by that exclusion. It refers to income from an insurer or employer paid during a period of illness, injury, maternity, adoption or parental leave.

Mauchan said Sun Life’s plan also pays job loss benefits in the event of a unionized labour dispute, a legal strike or a lockout, but only in those regions and industries where EI also pays. "EI policy varies by region and by industry."

jdaw@thestar.ca

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St. Louis — Does Paul McKee have a copycat?

For five years, the O’Fallon, Mo.-based developer used a web of holding companies to quietly buy up properties in north St. Louis — about 900 in all. Now, it appears, someone else is trying to pull off something similar.

Since August, a holding company by the name of Urban Assets LLC has purchased nearly 240 properties on the city’s north side.

Some are vacant lots. Others are battered empty houses. Nearly all sit in a roughly five-square-mile corridor of north St. Louis, between Delmar Boulevard and Natural Bridge Avenue, Grand Boulevard and the city line, cutting through neighborhoods such as The Ville, Academy and Wells-Goodfellow.

It’s not clear who is behind the purchases, or what they’re up to, and that has local housing advocates stumped.

"It could be someone trying to do what McKee’s done," said Michael Allen, assistant director of the Landmarks Association of St. Louis. "Who knows."

According to the Missouri Secretary of State’s Office, Urban Assets is registered in the name of Harvey Noble, a longtime St. Louis real estate broker who helped McKee assemble the land he was buying for his just-unveiled NorthSide project.

Noble, several city housing experts said, is likely buying for a silent partner this time, too. He didn’t return calls seeking comment.

It is not unusual for developers to quietly purchase property, or to use shell companies to assemble land. They argue that showing their hand will drive up the price, and there’s no law saying they must share what they’re up to.

But coming on the heels of McKee’s purchases — and the damage many buildings sustained since he bought them — local activists and some aldermen are wary of Urban Assets buying at such a scale. They say it threatens to drag down entire blocks that are relatively stable and still have many nice homes.

"It’s very troubling," Allen said. "These are strong neighborhoods. They’ve had a lot of community development efforts to try and improve them."

The properties are a mix of empty lots and historic but damaged homes, mostly bought from sheriff’s tax auctions. Most of the houses are boarded up, and broken windows and overgrown yards were common sights on visits to about 30 in the last week. Many have outstanding code violations, according to city records, and the city Building Department has sought court judgements against Urban Assets at least 11 times since April.

Matt Moak, a city attorney who specializes in problem properties, said the company is on his radar screen, but he’s not sure who is behind the purchases, or what they’re up to.

"We’re aware of them. We’re not sure what their motivation is," he said. "But we’re also not necessarily aware that they present a formidable problem of nasty housing. This is relatively young, nine months in. The jury’s still out."

City law discourages people from buying houses at a sheriff’s sale and then flipping them. Anyone who buys a house that way must get an occupancy permit before selling it or face a $5,000 fine free business cards.

Demolishing the home is another option, and that has Alderman Antonio French worried.

There’s an Urban Assets house up the street from him on Athlone Avenue, French said. The grass is knee-high, and he had to get the place boarded up. It’s on a good, stable block, he said, but threatens to drag down its neighbors, and if it got demolished, it would be "the only gap tooth on the block."

After he recently learned of Urban Assets, French petitioned to make his ward, the 21st, a Preservation Review District, which gives city officials wider latitude to deny demolition permits. Much of the city — including nearly all of south St. Louis — already has that status. Most north side areas where McKee and Urban Assets have bought property do not.

"We need to look at the impact of demolition not just on the building but on the entire block and neighborhood," he said. "We’ve got good housing stock. We need to hold on to it."

French, who has a map of Urban Assets properties in his office, said he suspects McKee himself may be behind this new round of buying, too — the properties run in a corridor pretty much due west from his project. This could be phase two, French said.

But the O’Fallon-based developer said it’s not him.

"I’m not buying any more," said McKee, who said he’s already spent $46 million on NorthSide. "I can’t afford what I’ve got now. (Urban Assets) isn’t me. It’s not for me."

And none of the properties Urban Assets owns are inside McKee’s 1,500-acre redevelopment area.

Michael Roberts, another prominent developer in north St. Louis, has said he’s not behind Urban Assets, either.

Whoever it is, buying and holding empty buildings doesn’t help the neighborhood, said Stephen Acree, executive director of the Regional Housing and Community Development Agency, which works with nonprofit groups in St. Louis to build new affordable housing.

"If they’re sitting on buildings just empty, it hurts the people who live around them," he said. "It just makes it harder for everyone."

Acree was speaking after a ribbon-cutting Friday at a block of new homes in The Ville, one of the neighborhoods where Urban Assets has been most active. They were celebrating 18 new houses, built by Northside Community Housing, the fifth such block the nonprofit has revived in the area since 2001.

The houses were shiny and new, ready for people to move in. The sidewalks were clean. The grass well-manicured. Politicians gave speeches about a neighborhood reborn. They said they’re making progress, and they’ll fight for more.

Just south of there, on Page Avenue, an Urban Assets house sat empty and dark. Its upstairs windows shattered, the downstairs ones covered in plywood. The grass was knee-high and the paint peeling.

And many more like it sit within blocks.

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Chinese state-owned metals firm Chinalco may revise its planned $19.5 billion investment in miner Rio Tinto() before a June 14 deadline to avoid further delays in Australian government approval, two sources close to the deal said on Thursday.

Any changes would address concerns raised by both Canberra and Rio Tinto shareholders over the biggest overseas investment by a Chinese company.

“I think they’ll (Chinalco) come out and make an announcement before the deadline,” an investment banker with direct knowledge of the deal told Reuters.

“There’s a lot of things on the table and there’s a lot of frustration, and I think Chinalco are getting to the point where they want to make an announcement sooner rather than later, probably next week,” the banker said.

Australia’s Foreign Investment Review Board (FIRB) is due to give its recommendation on the deal to Treasurer Wayne Swan by June 14. Swan has the final say on whether it will go ahead.

“If there was a chance the deal needs to be amended, the companies would notify FIRB of that before a FIRB decision on the current application,” said another source close to the deal.

“There would be no point getting something through FIRB only to have it rejected by shareholders,” he said.

Neither source wanted to be identified due to the sensitive nature of the negotiations.

As the deal stands, Chinalco would pay $12 cheap payday loans.3 billion for stakes in debt-saddled Rio’s key iron ore, copper and aluminum assets and $7.2 billion for convertible notes that would double its equity stake in Rio to 18 percent.

It has run into opposition from Rio shareholders, who have complained the deal favors Chinalco over other shareholders, and from some who are worried that China, Rio’s biggest customer, will gain influence over pricing of key commodities like iron ore.

“From the perspective of Rio Tinto, there’s big pressure from shareholders to change it. Unfortunately, it’s a bit embarrassing for them and not very convenient, in terms of maintaining relations with Chinalco,” said Peter Chilton, an analyst with Constellation Capital Management, which owns Rio Tinto shares.

He said it looked like a revised deal may reduce the bond issue to Chinalco, limiting its stake to 14.9 percent, and would include a rights issue to all Rio Tinto shareholders.

Rio Tinto’s shares fell 5.2 percent to A$67.91 on Thursday, while bigger rival BHP Billiton fell 4 percent.

Noise around the deal comes as China’s steelmakers hold out for steeper price cuts on iron ore contracts from major miners than the one-third price cut Rio has already agreed with Japanese, South Korean and Taiwanese mills.

CLOCK TICKING 

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 "The skeleton frames of burned-out Chevrolets"

– Bruce Springsteen, "Thunder Road"

Few products have done more to help shape American culture than those of General Motors Corp., which filed for Chapter 11 bankruptcy protection yesterday in the largest industrial bankruptcy in U.S. history.

"The General," as it was known at the height of the Auto Century it long dominated, inspired the tunesmiths of Tin Pan Alley and later, the Beach Boys and the Boss.

But by late last year, GM, the world’s biggest automaker for 77 years until it was overtaken by Toyota Motor Corp. in 2008, could no longer pay its bills. It was just another deadbeat, stringing along many of its more-than-3,000 suppliers for as long as it could.

When Dinah Shore sang "See the U.S.A. in your Chevrolet" in the 1950s, GM held the whip in an oligopoly shared with Ford Motor Co. and Chrysler Corp.

The early GM decided its cars would have covered bodies, and later automatic transmissions, and still later outrageous tail fins.

Soon almost all American cars had these things. The GM mystique then expanded to its leading role in the "arsenal of democracy" as a prodigious arms supplier in two world wars.

But an arrogant Detroit went into denial at the dawn of the import era, and remained fixated on big, heavy gas-guzzlers well into the 21st century. Americans long ago abandoned Detroit brands for more fuel-efficient foreign makes.

Today, GM is mocked as "Government Motors." Washington, Ottawa and Queen’s Park have taken a 72 per cent ownership stake in the reorganized GM, set to emerge from bankruptcy in about six months, in return for about $72 billion (U.S.) in state loan assistance, $9.5 billion of it from Canada.

In a recent public-opinion survey released last week, two-thirds of Americans opposed the use of taxpayer funds to bail out GM, regarded as a textbook case of chronic failure of free-market managers. The dwindling popularity of GM products relegated its market share to "flyover country," the less-populated interior American states.

The allegiance of motorists on the coasts is to Toyota, Honda, BMW and other foreign makers. GM’s overall market share has plummeted to 19.1 per cent. In the most heavily populated states such as New York and California, GM’s market share is even lower than that. In detailing Washington’s turnaround scheme for the company, built by the legendary Alfred Sloan, who was an implacable foe of FDR’s interventionist policies, U payday loan.S. President Barack Obama described yesterday what he called "a credible plan that is full of promise."

That it may be, since it expects a "new GM" to be capable of making a profit even during the current 27-year low in auto sales.

Yet ,this phoenix-like rebirth will require another round of drastic downsizing at a GM that already has been shrinking at a desperate pace. Fourteen more plants are to be boarded up, another 21,000 jobs eliminated and a remarkable 40 per cent of GM dealerships closed.

Washington is widely accused of throwing good money after bad in its long-shot rescue bid of a company that managed to lose $88 billion over the past four years. "I think this is going to be Obama’s Vietnam," U.S. auto historian Bob Elton told Reuters on Sunday. "Every time he turns around, there goes another $20 billion."

Indeed, it will take some doing to renew America’s affection for Chevys, Buicks, Cadillacs and GMCs, after a restructured GM has shed its Pontiac, Saturn, Saab, Hummer, Opel and Vauxhall brands. (Control of the last two, GM’s European brands, was tentatively won by Magna International Inc. last weekend.)

GM had begun its death spiral about a decade before Michael Moore’s 1989 breakout classic, Roger & Me. The film misses the point in savaging then-GM chief executive Roger Smith for his alleged insensitivity to laid-off GM workers in Moore’s native Flint, Mich. Smith’s real crime was failing to cut deeper and reduce GM’s overcapacity. Instead, Smith and his successors continued to flood the market with vehicles North Americans didn’t want.

And so came yesterday’s great reckoning. For all that Americans have spurned GM in the showroom, the parlous state into which GM has steadily slipped over the past three decades is, for many, as unthinkable as the earlier demise of Penn Central, Pan Am and the Great Atlantic & Pacific Tea Co.

"The phrase `bankrupt General Motors,’ which we expect to hear uttered on Monday, leaves Americans my age in economic shock," P.J. O’Rourke wrote in a Wall Street Journal essay over the weekend. "The words are as melodramatic as `Mom’s nude photos.’"

dolive@thestar.ca

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