Actual finance blog

The federal government has appointed a task force to work on a national strategy for financial literacy.

You may have some questions about this announcement, which came just before the July 1 holiday.

What is financial literacy anyway?

Sadly, there’s no agreed-upon definition. The task force will have to define this elusive term to make it meaningful, and desirable, for everyone.

"I think it’s an essential skill for all Canadians, whether rich or poor or middle class," says Peter Nares, executive director of Social and Enterprise Development Innovations (SEDI).

During his non-profit career, Nares has worked on projects to help build household assets and make low-income Canadians more resilient. His lobbying helped make the task force a reality.

He sees financial literacy as not only about learning facts, but changing behaviour. "You need to know when you need help and where to go to get it," Nares says.

"You need to use it responsibly and confidently and act on it."

How financially literate are Canadians?

Again, there’s no definitive measurement. Statistics Canada has started doing a telephone survey of financial capability, involving 20,000 adults in private households in 10 provinces. The study is designed to be repeatable, so there’s a baseline against which to measure the level of literacy.

Other countries – such as Australia, Japan, South Korea, the United Kingdom and the United States – have done such surveys. All concluded that consumers lack information about financial issues and need education to make good decisions about their money.

Don’t we have enough info already?

Absolutely. You can find many useful publications put out by banks, credit unions, investment dealers and government agencies.

The challenge is to get this info to people at a time when they’re ready to hear it and act on it quick payday loans.

Financial education should take place over an entire lifetime, not just when children are in school.

Adolescents want to know about buying cars and applying for credit. Young adults will soak up details on making real estate offers and taking out a mortgage.

Only when information means something to your life do you really pay attention. Educators have to take advantage of "teachable moments," which come when people are desperate to learn about something and anxious to avoid making poor decisions.

Who’s on this task force?

The chair is Donald Stewart, chief executive of Sun Life Financial. The vice-chair is L. Jacques Ménard, chairman of BMO Nesbitt Burns. It’s not clear why large financial institutions have such a prominent role, unless the government wanted to ensure other financial institutions would pay attention.

Among the 11 other members are a journalist (Pat Foran of CTV News), an educator (Evelyn Jacks of the Knowledge Bureau), a credit counsellor (Laurie Campbell of Credit Canada) and a former provincial finance minister (Janice MacKinnon of the University of Saskatchewan). The task force is supposed to come up with a strategy by the end of next year.

Why do we lag behind other countries?

We tend to be risk-averse and slow to take on innovative projects.

Our constitution makes education a provincial responsibility. As a result, there’s little coordination and standardization of courses offered in schools. But since we’re coming in late, we can learn from work done elsewhere. New Zealand, the U.K. and the U.S. already have a national strategy on financial literacy. I’ll have more on their efforts next week.

eroseman@thestar.ca

Source

Chrysler Canada Inc. has cancelled plans to end the third shift at its minivan plant in Windsor, a decision that will save more than 1,200 jobs, CAW president Ken Lewenza said yesterday.

After months of bad news for the Canadian auto industry, Lewenza said the announcement was a good-news story for the hard-hit industrial border city in southwestern Ontario.

"Today we’re celebrating," Lewenza said.

Windsor has been battered by the auto sector’s restructuring, losing thousands of jobs from earlier streamlining at Chrysler, Ford of Canada and General Motors of Canada. Next year, GM plans to shut down a Windsor-based transmission plant, cutting another 1,400 jobs.

Lewenza said the decision has been under review for some time and he called the move a good sign for Chrysler, which hopes to grow through an alliance with Italian carmaker Fiat SpA after emerging from bankruptcy protection.

"They’re optimistic the minivan will be able to maintain its market share and be able to maintain three shifts for the next model year, which is absolutely great news for our members and their families."

Yesterday’s announcement came as Statistics Canada reported that 7,400 net jobs were lost in Canada in June as gains in part-time jobs and self employment offset losses in full-time jobs cheap business cards.

In Ontario, full-time losses in June hit 56,000, offset by 57,000 in part-time gains, while the unemployment rate edged up to 9.6 per cent, the highest rate in 15 years, Statistics Canada said.

At Chrysler, about 2,000 workers on the day and afternoon shifts at the minivan plant returned to work last week after being off the job for two months during the car maker’s bankruptcy proceedings in the U.S.

The minivan plant, one of Chrysler’s most efficient and profitable operations, is shut down for the summer vacation period for the next two weeks. The plant’s third shift is expected back at work on July 27.

Chrysler had announced in March that it would end the third shift at the plant which produces the Dodge Grand Caravan and Chrysler Town & Country minivans.

The Windsor factory is Chrysler’s only supplier of minivans, since the automaker shut down production of the vehicles at two U.S. plants.

Lewenza noted the minivan has remained a winner for Chrysler.

"Outside of all of the bad news, the minivan has been a success story by itself because of its popularity with consumers," he said.

Source

UBS cannot comply with a U.S. request to disclose the identity of 52,000 U.S. secret account holders, the bank’s chief executive Oswald Gruebel said in an internal memorandum, according to a source familiar with the situation.

The UBS chief executive officer sent the confidential memorandum to the bank’s top executives on Thursday, the source said, confirming comments reported earlier in the day by the New York Times.

Gruebel, hired in February to turn around the troubled Swiss wealth manager, said turning over the names “would require UBS to violate Swiss criminal law, and we simply cannot comply,” the paper quoted Gruebel as saying in the memo.

A court hearing seeking to assess whether UBS is to disclose the names to U.S. tax authorities is due to start on Monday.

The judge presiding the hearing has ordered the U.S. government to say by 1600 GMT on Sunday whether it was prepared to shut UBS in the United States as part of a battle to learn the identity of the accounts suspected of being used by Americans to avoid taxes.

Switzerland, the world’s biggest offshore banking center, vowed in filings to the U.S. court to prevent UBS from handing over client data to the Internal Revenue Service (IRS) to defend bank secrecy laws, saying the tax case is souring diplomatic ties car loans.

UBS said in an emailed statement: “The IRS summons puts UBS in an untenable position, caught between the laws of two sovereign nations.”

“Honoring the IRS summons would require UBS to violate Swiss criminal law.”

A UBS spokesman in Hong Kong declined to comment on the memo.

Even though tension between the two nations has been raised, Swiss National Bank Chairman Roth said he had no doubt that the lawsuit against the country’s former flagship bank UBS in the United States would be resolved.

“We have no doubt that this bilateral fight will be resolved,” Roth told the German daily Handelsblatt according to a version of the interview on the paper’s website.

“This fight is obviously an important issue for UBS. But the bank has also taken measures to reduce risks. UBS today is a strongly capitalized bank today.”

(Additional reporting by Lisa Jucca in Zurich)

Read more

The Boeing Co. on Wednesday rolled out the first of two dozen F/A-18 Super Hornets bound for the Royal Australian Air Force over the next three years.

While a shot in the arm for Boeing’s Integrated Defense Systems in St. Louis, the first international sale of its latest multi-role fighter jet occurs at a time of uncertainty for the St. Louis F/A-18 line. The Defense Department sought just 31 in next year’s budget — or nine fewer than expected.

Boeing and its supporters are pushing for another multi-year contract for the Super Hornets. Boeing officials say multi-year contracts with the U.S. Navy help hold down production costs and have saved taxpayers $1.7 billion so far.

Boeing said the first of the Super Hornets bound for the Royal Australian Air Force will be delivered ahead of schedule to the Navy, which will test it and then deliver it to Australia next spring.

Australia will pay $3 billion in U.S. dollars for the 24 aircraft, said Marcia Hart-Wise, a Department of Navy spokeswoman. That price includes service and support through 2020.

United States and Australian military leaders said the rollout of the F/A-18F was an important cooperative milestone between the two countries. The planes are equipped with the latest radar and weapons systems.

Boeing also is vying to provide F/A-18 Super Hornets to India, Denmark, Brazil, Greece and Japan.

Congress has added language supporting the U fast payday loans.S. purchase of more Super Hornets to proposed defense authorization bills.

Sen. Christopher "Kit" Bond, R-Mo., also went to bat for the purchase of more F/A-18s "as the most cost-effective, near-term means to address the Navy’s tactical fighter shortfall," and a multi-year contract, according to a June 22 letter he co-authored to the Senate Appropriations Committee. U.S. Sen. Claire McCaskill, D-Mo., said she also favors multi-year procurements in the future.

Boeing is the region’s second-largest employer and its F/A-18 fighter jet line employs 5,000 workers.

St. Louis Mayor Francis Slay trumpeted Boeing’s regional importance — from jobs to philanthropy — in remarks he made at Wednesday’s ceremony. Other speakers included Rear Adm. David Philman, director of air warfare for the U.S. Navy, and Air Marshal Mark Binskin, chief of the Royal Australian Air Force.

Despite the uncertainties, top Boeing officials remain upbeat about the future of aircraft manufacturing here.

"In case anybody’s wondering, we’re going to be building Super Hornets here for a long time to come," said Jim Albaugh, president and chief executive officer of Boeing’s Integrated Defense Systems.

Source

The U.S. Justice Department has begun looking at big telecom companies such as AT&T Inc and Verizon Communications to try to determine if they have abused their market power, the Wall Street Journal reported in its online edition on Monday.

The journal, which cited people familiar with the matter, said the Antitrust Division’s review was in its very early stages and was not yet a formal probe of any specific company.

The report said that a probe could concern exclusive agreements between phone companies and handset makers or whether phone operators are “unduly restricting” services third parties companies can offer on their network.

The Department of Justice declined comment and the country’s biggest operators, AT&T and Verizon, said they had not been given notice of any formal probe.

Lawmakers have recently raised questions about whether large wireless carriers were hurting smaller rivals by entering into exclusive agreements with the makers of popular phones. Deals like AT&T’s pact with Apple Inc for exclusive rights to U.S. iPhone sales are at the center of some lawmaker concerns.

AT&T spokesman Mark Siegel said he was not aware of any formal probe by the Department of Justice but declined comment on any informal proceedings. Siegel defended the practice of exclusive agreements between carriers and phone makers, saying they spurred competition and development of new features.

Verizon Wireless spokesman Jeffrey Nelson said that his company, which is the biggest U.S. mobile service, had no notice from the Justice Department about any probe into handset exclusivity. Verizon Wireless is a venture of Verizon Communications and Vodafone Group Plc.

The Justice Department’s top antitrust official Christine Varney had said in May that the DoJ would be “aggressively pursuing” companies that abuse their power to crush competition cash advance loans.

Consumer groups said on Monday that they were hopeful that Varney’s comment and the latest report were positive signs the government was looking at their concerns.

“There are definitely some things in the marketplace that we believe as consumer advocates should trigger scrutiny from the anti-trust authorities,” said Ben Scott, policy director for consumer advocacy group Free Press referring to handset deals and the blocking of certain applications from phones.

It has been a long standing practice for carriers to forge exclusive deals with phone makers giving them a head start in luring customers with a particularly attractive handset.

The iPhone has made this trend a bone of contention among consumers because of the devices’ widespread popularity and the fact that AT&T has been the sole U.S. provider selling it since 2007. Exclusivity deals often end after about a year.

However, network operators argue that consumers could end up losing out if they were unable to forge exclusive agreements with phone makers. Such deals give carriers incentives to shoulder a hefty part of the price of a cellphone in exchange for getting consumers to sign on to a longer term contract.

John Taylor, a spokesman for Sprint Nextel, the No. 3 U.S. mobile service which has an exclusive agreement to sell Palm Inc’s high-profile Pre phone, declined comment on the reported probe.

But he also defended exclusive handset agreements as pro-competitive. “We think that without these exclusivity arrangements carriers are less likely to risk the investment necessary to develop and promote devices like these,” he said.

The new chairman of the Federal Communications Commission, Julius Genachowski, plans to review the deals. 

Read more

Tough times in commercial aviation have forced St. Louis airport officials to reach into a new bag of tricks in their search for money.

Among the revenue sources being considered are:

— Selling the naming rights to concourses, parking garages or passenger lounges at Lambert-St. Louis International Airport.

— Piping in music over the airport sound system with advertisements sprinkled into the mix.

— Letting companies pass out samples of their products.

The St. Louis Airport Authority today will consider hiring Airport Marketing Income LLC to identify some of these nontraditional sources of money. The company, based in Beaverton, Ore., does similar work at Boston’s Logan International Airport, Cleveland Hopkins International Airport and several others in the U.S.

"I think airports and any businesses have to be looking at everything," Lambert Director Richard Hrabko said. "Creating revenue and saving revenue. That’s not new."

Like their counterparts at other airports, Lambert officials say they are taking steps to replace revenue lost to sagging passenger counts and cuts to airline

schedules. American Airlines, for instance, has slashed its schedule twice in the past year. The latest cuts will eliminate 18 departing flights.

Passenger boardings were down to 2.53 million — or 15 percent — in St. Louis through May of this year, compared to 2.97 million during the same period in 2008, said Lambert spokesman Jeff Lea.

Under the proposed three-year deal with the city of St. Louis — which operates Lambert — AMI would pay a fee to the city that would be based on a percentage of gross revenue. The agreement also must be approved by the city Estimate Board.

Faced with a stubborn recession that has stunted the demand for air travel, airports are placing greater emphasis on nonaviation revenue sources, said Spencer Dickerson, senior executive vice president of the American Association of Airport Executives.

Dickerson said some airports "are going through tremendous financial pain," and are delaying public works projects and shedding payroll in response to the downturn online payday loans. While hardships have forced airports to seek new revenue, he said, major cities may not be ready to sell the naming rights to entire airports.

"I think we are some ways away from that," Dickerson said. "Once you get into the naming rights of the whole airport, it gets complicated. You get politics involved."

Hrabko said the city would get the final say on any revenue-generating proposals brought in by AMI, including any long-term naming rights agreements.

Cleveland and Boston have sought bids to name airport parking facilities, but nothing has materialized.

Operators of the Detroit Metropolitan Airport hired General Sports and Entertainment LLC to handle the naming rights for the new north terminal, which opened in September.

"They are still actively pursuing sponsorships," said Michael Conway, an airport spokesman. "We are in a tough economic climate. Nobody is sponsoring anything now. It’s pretty bad."

In Boston, Logan International Airport earned about $800,000 last year through an agreement with AMI, said Jack Hemphill, business general manager at the Massachusetts Port Authority.

"In the past couple of years, it has caught on," Hemphill said.

Dunkin’ Donuts, for instance, has large outdoor signs on a pedestrian walkway and 8-foot-tall Dunkin’ coffee cups in airport terminals, he said. The airport now has its own "radio" network, featuring easy listening music punctuated by commercials and public service announcements produced by AMI.

In Cleveland, AMI helped the airport reach a five-year deal making PepsiAmericas the official beverage provider at Cleveland Hopkins International Airport.

More airports have turned to companies such as AMI during the latest downturn, said Julie Olson, the company’s director of marketing. Despite the sluggish economy, companies still want to place their brands in front of the traveling public.

"You have this captive audience," Olson said. "It’s a very high-end demographic."

Source