Gold bullion in the vaults at the Bank of England.NewsCast
Each week, Report on Business editors choose five stories that shouldn't be missed. Here are the 'must reads' for the week of Oct. 11, 2010:
IMF takes on peacekeeping role in global 'currency war'
The 66-year-old International Monetary Fund has a new mission: economic peacekeeper.
In the latest example of how the financial crisis is reshaping how the world seeks to organize itself, finance ministers and central bank governors enlisted the IMF to help them contain what Brazil's Finance Minister late last month called a "currency war."
Tension was bordering on the extreme as officials gathered in Washington for the annual meetings of the IMF and World Bank. Responding to what Bank of Israel Governor Stanley Fischer called "impressive" volatility in foreign-exchange markets, a growing number of fast-growing emerging-market countries were seeking to control the rise of their currencies, flaming the mood for retaliatory measures in countries that continue to struggle with high unemployment, especially the United States.
Realtors keep grip on MLS in deal with feds
Canadian homeowners will be able to list their homes on the Multiple Listing Service for a flat fee, but they'll still have to compensate any real estate agent who brings a buyer to their doorstep, according to the confidential terms of a deal between the industry and Ottawa's competition watchdog.
That compromise is the cornerstone of a landmark settlement between the Canadian Real Estate Association and the Competition Bureau of Canada, say people briefed on the matter. That settlement is intended to bring peace in a months-long battle between CREA and Competition Commissioner Melanie Aitken, who had accused the real estate association of blocking its members from offering services that would lower costs and commissions for people who are buying and selling homes.
The key issue in the dispute has been MLS, the popular website and listing service through which the majority of Canadian homes are done. Conventional real estate agents, who usually charge a commission of between 4 and 5 per cent of the selling price of the home, have been the gatekeepers of that system, locking out alternative providers of less-expensive real estate services. Ms. Aitken saw that as anti-competitive and took the case to court.
Key to security: Finding the right vault
When Barry Wainstein dines at one of his favourite New York restaurants, he notices a few things most patrons miss - fortified walls and high ceilings.
"When you walk through, you know you're walking into a vault," says the global head of foreign exchange and precious metals at Scotia Capital Inc. He should know: Vaults are Mr. Wainstein's business.
Since the 1990s, scores of vaults around the banking world have been closed or converted into restaurants or offices as demand fell for bullion storage and the sites were sold. It's a shame some of them can't go back to their original purpose, because vaults are suddenly popular again.
With the global appetite for precious metals surging, along with the rise of exchange-traded funds that hold gold and silver bullion in reserve, demand for large, secure, vault space is on the rise around the world.
Hurdles mount in Potash Corp.'s search for white knight
The countdown is on for Potash Corp. of Saskatchewan to find an alternative to rival BHP Billiton Ltd.'s $38.6-billion (U.S.) hostile offer and the chances of a realistic rival emerging appear to be growing thin due to the extraordinary amounts of debt and equity any suitor would need to raise.
Potash Corp. chief executive officer Bill Doyle said in an interview with The Globe and Mail last week that another bid is coming, and the company is talking to a wide-range of potential bidders, citing sovereign funds, private equity and Canadian pension funds as possibilities.
He requested more time to let the bid process play out, signalling his backup plan won't be revealed until closer to BHP's bid expiration deadline of Nov. 18.
Potash Corp. needs the extra time to try to find a white knight. It is understood the company is having trouble finding a bidder that can not only clear the huge financial hurdles to beat BHP, the world's largest miner, but receive the crucial nod from Ottawa, which is not expected to approve easily the sale of one of the country's last remaining mining giants.
Looming Fed moves boost markets
The promise of large-scale intervention by the U.S. Federal Reserve is reverberating through global markets, driving up key commodities and currencies like the Canadian dollar, and buoying the hopes of stock investors.
Even before the U.S. central bank launches its widely expected second round of quantitative easing in an effort to breathe some life into a badly sputtering economy, the anticipation is striking.
The Canadian dollar and other currencies of major U.S. trading partners have all spiked against a depreciating greenback. Gold, copper and other resources have soared. Stocks have posted strong gains, while long-term bond yields have declined.
The result of new Fed measures, dubbed QE2 by economists, will be a weaker U.S. dollar and heightened investor demand for more attractive alternative investments, including equities, commodities and foreign currencies.