Financial life in a big town

A multiple sclerosis drug made by industry giant Novartis is under investigation after at least 11 patients taking the medicine died.

The drug, Gilenya, was licensed last year in the European Union to treat patients with a severe type of multiple sclerosis.

The deaths raise concerns Gilenya could trigger heart problems after patients take their first dose, according to a statement issued Friday by the European Medicines Agency. The agency, which is now investigating the drug, said it isn’t clear if it caused the deaths.

One of the deaths was in the U.S., where a patient died within 24 hours of taking the first dose.

The European agency said it didn’t know where the other 10 deaths occurred, but that they were reported to its drug database, which monitors side effects from medicines in the European Union.

A spokeswoman at the U.S. Food and Drug Administration said it also is conducting a data analysis but has not made any definitive conclusions and does not know when its review will be complete.

More than 30,000 patients have taken Gilenya worldwide payday loan. The European Medicines Agency advised doctors to increase their monitoring of patients after the first dose of the medicine. The agency said the risk of a slow heart rate after the first dose of Gilenya was known when it was approved.

Novartis AG said it was advising doctors of new recommendations on using Gilenya. They had previously recommended all patients be monitored for six hours after their first dose, but are now tightening that to include continuous heart monitoring using electrocardiograms and measuring blood pressure and heart rate every hour. In certain patients, that monitoring should be extended, the drug maker said in a statement.

This new guidance applies only to patients taking their first dose, Novartis said in a statement.

The EU drug regulator hopes to finish its review of the drug by March.

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PARIS

Two executives at MF Global are seeking to distance themselves from an estimated $1.2 billion in customer funds that has gone missing, according to their prepared testimony for a Senate hearing.

Bradley Abelow, the president and chief operating officer, and Henri Steenkamp, the chief financial officer, both say they don’t know where the money is or why it is missing.

Abelow says he cannot explain what happened to the money without access to MF Global documents, which a trustee now controls.

Steenkamp says he had no direct involvement with transfer of funds.

Former Sen. Jon Corzine, who led MF Global as CEO until last month, told a congressional panel last week he doesn’t know what happened to the money. All three will testify Tuesday before the Senate Agriculture Committee.

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If Toronto fireman Alexander Gunn was alive today, he might well feel like the Warren Buffett of his times.

The semi-detached home he bought in Toronto’s Riverdale neighbourhood for $1,200 in 1906, sold in November for $825,000.

Conventional wisdom has it that buying a home is one of the smartest things we can do. If you have been lucky enough to live in the Greater Toronto Area, especially in the last 10 years when house prices have doubled, that would be true.

But over the long run, is home ownership such a great deal? To find out Moneyville took a close look at Gunn’s house over the last 105 years.

Here’s what we found: Adjusted for inflation, an investment in the stock market would have yielded a better return, including all the ups and downs — starting with the 1929 stock market crash that ushered in the Great Depression.

Toronto was still rebuilding from the Great Fire of 1904 when Alexander Gunn was promoted to district captain after years of climbing the ladder at the city’s No. 3 firehall at Yonge and Carlton Sts. With his new responsibilities came a pay hike, from $850 to $1,000 a year.

It was the nod he needed to buy his first home.

The three-storey house in what is now known as Riverdale was brand new, part of a development on what had been fields where locals grew food to sell at market. It promised good luck: A shamrock had been crafted into its soaring gable, most likely by Irish immigrants who helped build these turn-of-the-century subdivisions.

Each day on his way to work, Gunn would have headed down Broadview Ave. with its sweeping view of the downtown and watched the burned-out city being rebuilt.

He would have kept warm at night in front of the house’s wood-trimmed fireplace and watched through its lead-glass windows as thousands more homeowners flocked to the area after 1912 when Danforth Ave. was paved and, later, the Bloor Viaduct erected across the Don Valley.

Gunn paid just a little more than a year’s salary for the modest house on a 20 foot by 112.5 foot lot. Today, a buyer would pay a fortune, relatively speaking — about five times their annual income given that the average price of a GTA home in October was $465,000 and the average household income $82,000, according to the Canada Mortgage and Housing Corp.

Gunn and his family lived at 56 Simpson Ave. for more than four decades, through two World Wars, the Great Depression and the remarkable transformation of Toronto.

The house changed hands just four times before its most recent sale. And the average annual gain over the 105 years, adjusted for inflation, was just 3.9 per cent.

“If I had to give new homebuyers some advice, it’s that houses aren’t always the ultimate investment. You should never bet the farm on the house, so to speak,” says Francis Fong, an economist with TD Economics.

Fong and his colleague Sonya Gulati helped Moneyville adjust prices for inflation and compare the appreciation of the home against Toronto Stock Exchange returns.

The challenge was to compare apples to apples. We had the home’s sale price going back to 1906, but the Bank of Canada’s inflation records don’t begin until 1914. Toronto Stock Exchange records start in 1919.

So we opted to track gains from 1947 onward, seven years after Gunn’s death, when the house sold for $6,300. We found that in those 64 years, the house appreciated at an average annual rate of 2.3 per cent, adjusted for inflation. (Inflation averaged 3.9 per cent during the same period, largely because of spikes in the 1970s and early ’80s.)

The TSX, on the other hand, did marginally better — producing average returns of about 3 per cent.

But when the everday costs of a house were included, things likes taxes, maintenance and upkeep, 56 Simpson fared much worse

“A house is not a good investment. It is a roof over your head,” says James McKellar, director of the real estate and infrastructure program at York University’s Schulich School of Business.

These days, homeowners in hot markets like Toronto and Vancouver may feel they have hit the jackpot: Most Toronto homes have virtually doubled in price over the last decade and in Vancouver they have almost tripled.

But once you factor in the other costs — interest on the mortgage, new kitchens, bathrooms, furnaces and electrical updates, “you’re lucky to make anything,” says McKellar. Studies have shown that it’s $800 a month cheaper to rent a 1,000-square-foot home than to own it, he notes.

“By any empirical study, houses do not inflate. They are a cost. But we all have to live somewhere.

“Calling a house a good investment is a process of rationalization. The last thing you want to admit is that, ‘I bought the house because I fell in love with it.’”

Catharine Grossi is proud to admit that. She and her husband Paul bought 56 Simpson for $462,500 back in 2001 because they were keen to move back to the city from the suburbs.

“When I saw that so much of the original house was there, and it was updated . . . That was good for me. I loved it as soon as I saw it.”

She became fascinated by the home’s history — she spent a day at the City of Toronto archives — and details such as its original fireplace, century-old exposed brick, the shamrock.

The house proved to be the perfect place for Grossi’s two sons and daughter to drop their bags after university or stints abroad.

Grossi wasn’t thinking so much about the gains she’s made, but rather the life she’s lived at 56 Simpson when the house sold Nov. 4. She and Paul are downsizing into a home two doors from their daughter and her newborn twins.

Grossi asked just one thing when her realtor called to say there had been an offer at asking price: “Do they love the house?”

James McKellar gets that.

He has lost money in the housing market: About $25,000 in the wake of the oil patch bust in Calgary in 1983 and $35,000 on a Boston home during the ’90s recession.

He now owns a home in Moore Park.

“The big drawback of renting is that it doesn’t give you the emotional satisfaction of owning,” he says with just the slightest chuckle.

“At the end of the day, when you go home and make dinner and relax, the numbers really don’t matter.”

Also read:

How we paid off our mortgage in three years

Why I sold my house and rent instead

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Umberto Bossi, the longtime ally of former Italian premier Silvio Berlusconi, says his Northern League party won’t back any government led by economist Mario Monti “for now.”

Bossi says he told Italy’s president that his party will be a “vigilant” opposition to any Monti government until the economist spells out his program to rescue Italy’s troubled economy.

Berlusconi resigned Saturday after Italy came under enormous pressure for its sovereign debt.

Bossi says “for now, we said no online pay day loans.” He adds when Monti reveals his policies, the League will decide on a measure-by-measure basis.

Italy’s president could ask Monti to try to form a government to rescue Italy from looming financial disaster after talks with all parties Sunday.

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BERLIN

Apple’s latest iPhone arrived to an enthusiastic response from buyers camped out at stores Friday, but many observers noted the crowds were smaller than those that had gathered for previous releases.

The iPhone 4S, which went on sale in seven countries, is faster and comes with better software and an improved camera.

But with the fifth unveiling of its popular iPhone, Apple is finding it difficult to maintain the excitement of past iPhone introductions. For starters, the phone is more widely available than in the past. In addition to Apple stores, people can buy the phone from one of three wireless carriers: AT&T Inc., Sprint Nextel Corp. and Verizon Wireless. Some Best Buy, Target and Walmart stores and authorized resellers also carry the phones. Buyers also were able to pre-order the phone on Apple’s website and have it shipped to their home or office.

Many diehard Apple fans and investors were disappointed that Apple didn’t launch a more radically redesigned new model _ an iPhone 5. It’s been more than a year since Apple’s previous model was released.

That also may have contributed to smaller gatherings at some Apple locations.

“People are not as excited about this version as they might have been if a (iPhone) 5 came out,” said Charles Prosser, 50, a retired teacher and a computer technician from Tuscaloosa, Ala.

Even so, hundreds of buyers camped out in front of stores for hours to be among the first to get an iPhone 4S. About 200 people were at Apple’s Fifth Avenue store in Manhattan as the iPhone 4S went on sale.

Steve Wozniak, who created Apple with Steve Jobs in a Silicon Valley garage in 1976, was first in line at a store in Los Gatos, Calif., having arrived on his Segway the afternoon before.

Wozniak, who typically waits in line for new Apple products, said he barely slept Thursday night as he was busy chatting with Apple fans, taking photos and giving autographs. Wozniak pre-ordered two new iPhones; on Friday, he bought two more.

“I just want to be part of an important event, so I feel it more deeply,” he said.

Many said the event resembled a remembrance to Jobs, who died last week, a day after Apple Inc. announced the new phone.

Emily Smith, a 27-year-old user experience designer in New York, checked in to the line on the location-centric social network Foursquare. She got a virtual Steve Jobs badge that read: “Here’s to the crazy ones. ThankYouSteve.”

Others joked that the 4S model stood “for Steve.”

Tony Medina, a 25-year-old student from Manhattan, got in line at 11 p.m. and stayed despite getting soaked by an overnight thunderstorm. He said he planned on ordering the phone online, but decided to join the crowds to honor Jobs. “For loyalty, I felt I had to do the line,” he said. “I had to say thank you.”

In Chicago, Nicole Pacheco, 17, dragged her brother and a friend out to buy Apple’s latest gadget.

“I wanted to see how it was, to come out here for once,” she said as she looked at the line that stretched past her. “We’re kind of a memory for Steve Jobs. It’s one of his last inventions. It kind of motivated me to get the next one.”

As was the case with past Apple product launches, employees at many Apple stores greeted customers with cheers and smiles and congratulated them on their purchases. The company provided free coffee.

Dina Nguyen, who works at the Great America amusement park in Santa Clara, came to the store with her brother, Kennedy, to pick up four iPhones for their family. They are the first Apple products for the siblings. Their mom has the iPhone 4.

The siblings said it was a bit sentimental to get the phones now, right after Jobs’ death.

“He left a good legacy. He had a good life. He wanted to make people happy. It’s good to support that,” Kennedy Nguyen said.

Apple and phone companies in seven countries started taking orders for the iPhone 4S last Friday. Apple said Monday that more than 1 million orders came in, breaking the record set by last year’s model, which was available in fewer countries and on fewer carriers.

The death of Jobs could be helping sales. Marketing experts say products designed by widely admired figures such as Jobs usually see an upsurge in sales after their death.

Una Chen, a 24-year-old banker, said she was just happy to swap out her BlackBerry Bold for the new iPhone, particularly after a BlackBerry outage affected her phone this week.

“It’s not good to have a phone and not be able to use it,” Chen said.

The base model of the iPhone 4S costs $199 in the U.S. with a two-year contract. It comes with 16 gigabytes of storage. Customers can get 32 gigabytes for $299 and 64 gigabytes for $399. Customers have a choice of white or black.

The phones also debuted Friday in Australia, Canada, France, Germany, Japan and Britain. They are coming to 22 more countries by the end of the month.

The phone has a faster processor and an improved camera compared with last year’s model. It has a new operating system that allows users to sync content without needing a computer. It also includes a futuristic, voice-activated service that responds to spoken commands and questions such as “Do I need an umbrella today?”

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The European Central Bank left interest rates unchanged on Thursday, holding off on a step many think the eurozone’s chief monetary authority will eventually take by year-end to support a weakening economy.

Markets waited for bank head Jean-Claude Trichet’s last news conference to see whether the ECB would announce new measures to support shaky banks under pressure from the Greek debt crisis.

The bank’s 23-member governing council left the refinancing rate at 1.5 percent, ignoring calls to loosen its policies to fight mounting signs of a slowdown in the eurozone economy.

The bank’s caution contrasted with the Bank of England’s decision to buy another euro75 billion ($116 billion) in securities from banks, a step which expands the supply of money in the economy and can promote economic activity.

That makes the Bank of England the first major central bank to move to counterract the slide in global growth that has intensified since this summer.

Most think the ECB waited this month because the latest inflation figures were higher than expected and it typically likes to signal rate moves at least a month ahead of time. It hadn’t done so ahead of Thursday’s meeting. Rate cuts tend to boost inflation.

Trichet will turn the job over to Bank of Italy head Mario Draghi at the end of the month. But the European debt and banking crisis means his last days in office are not offering any chance for a leisurely goodbye.

Markets are now waiting to see if Trichet will announce at the news conference additional measures to steady Europe’s banks. Possible steps include opening the central bank’s credit window and offering unlimited loans to banks for six or 12 months or both. Normally the longest lending period is three months. The bank loaned euro49.75 billion ($66 billion) to 114 banks in August as an anti-crisis measure.

Eurozone leaders fear the effects on their banking system from Greece’s debt crisis. A default on Greek bonds could inflict losses on the banks that hold Greek bonds. Those default fears are keeping banks from lending to each other for fear they won’t get paid back, leaving some European banks dependent on ECB credit to keep running.

Experts and investors are increasingly resigned to the view that Greece will eventually default on its debts. The country faces bankruptcy if it does not get its next euro8 billion installment of money under a 2010 bailout; the European Commission, International Monetary Fund and ECB say a decision won’t come until the end of the month.

European Union finance ministers have asked the bloc’s banking supervisor to draw up a report on banks’ capital levels, a European official said Thursday, amid fears that the worsening debt crisis could trigger another credit crunch.

Banks’ ability to survive steeper losses on Greek debt will be one of the scenarios assessed in that report, the official said.

German Chancellor Angela Merkel said Wednesday she was in favor of a coordinated recapitalization of European banks if that was deemed necessary.

European officials have already agreed to give their euro440 billion bailout fund the power to bail out troubled banks. But the changes agreed in July are still awaiting votes in some national legislatures, and the spread of the crisis has led many economists to conclude the fund is too small to effectively reassure markets.

That delay leaves the ECB reluctantly holding the line against the crisis. It has bought Italian and Spanish government bonds, keeping those countries borrowing costs from rising because of market contagion from Greece. Greece, Ireland and Portugal all had to turn to the eurozone countries for bailouts because rising interest rates and fears of default left them unable to affordably refinance their debt burdens. Those countries are small enough to bail out, but Italy, the No. 3 eurozone economy, is too large for that.

The ECB has said it expects the eurozone bailout fund, the European Financial Stability Facility, to take over the bond purchases as soon as it can.

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Stocks in Europe recouped some recent losses on Wednesday on hopes that European policymakers were thrashing out a plan to shore up the banking sector, which has been savaged of late over fears of a Greek debt default.

In an interview with the Financial Times newspaper, European Commissioner Olli Rehn hinted at a possible bank recapitalization plan. The comments started a stock market rally when they first emerged, late Tuesday on Wall Street. With an hour to go, sentiment turned around massively _ from being nearly 2 percent lower, the Standard & Poor’s 500 index ended up over 2 percent higher.

The upbeat finish on Wall Street failed to give Asian stocks much of a fillip but European markets rose in early trading, despite a three-notch downgrade of Italy’s sovereign debt to A2 by the Moody’s credit rating agency and another day of widespread strikes in Greece, the epicenter of Europe’s debt woes.

“Traders on both sides of the Atlantic seem set to look for the positives here at least in the short term and with stocks once again trading down at discount levels, there may well be a temptation to start cherry picking some bargains,” said Cameron Peacock, market analyst at IG Markets.

Germany’s DAX was 2 percent higher at 5,320 while the CAC-40 in France rose 2.3 percent to 2,916. The FTSE 100 index of leading British shares was 1.9 percent higher at 5,039.

The euro was also shored up by reports of a recapitalization plan, trading 0.1 percent higher at $1.3325.

However, investors will be careful not to get too carried away. After all, sentiment has fluctuated wildly between despair and hope over the 21 months or so that Europe has been mired in its debt crisis.

“Whilst it is encouraging that EU leaders are addressing the perceived weakness of the financial system, it would not be unusual for the initial positive reaction to be followed by concern on delay and lack of agreement amongst member states,” said Adam Cole, an analyst at RBC Capital Markets business card.

Franco-Belgian bank Dexia will be in the spotlight once again Wednesday amid mounting expectations that it will be broken up somehow, possibly this week.

Dexia is at the forefront of investor concerns over its exposure to potentially bad debt from Europe’s most indebted countries. With the markets bracing for a Greek debt default soon, investors are concerned about what bonds Europe’s banks are holding, and banks themselves have become reluctant to lend to one another.

At one point Tuesday the bank’s share price plunged nearly 40 percent, prompting France and Belgium to launch crisis-management initiatives designed to prevent a complete rout. It finished over 20 percent lower on Tuesday.

Hopes that some sort of salvage operation will be mounted in the coming days has helped the stock rebound around 3 percent in early trading Wednesday.

In Asia, the mood was less benign, with Japan’s Nikkei index closing 0.9 percent lower at 8,382.98 and Korea’s Kospi index ending 2.3 percent down at 1,666.52.

Stock markets in Hong Kong and mainland China were closed for a holiday.

The more buoyant tone in European stock markets helped oil prices rebound too. Benchmark oil for November delivery rose $2.53 to $78.20 a barrel on the New York Mercantile Exchange.

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Tens of thousands of shoes