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These are stories Report on Business followed this week.

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Home sales slump
Canada's deflating housing market closed out 2012 on a decidedly downbeat note, but observers believe it is adjusting smoothly and that the sales slump may be nearing bottom.

As The Globe and Mail's Tara Perkins and Sean Silcoff report, sales across the country plunged 17.4 per cent in December from a year earlier, bringing 2012 to a dip of 1.1 per cent.

Sales have been affected – deliberately - by Finance Minister Jim Flaherty bringing in his fourth round of mortgage restrictions in July, determined to temper the debt buildup among Canadian consumers. Many see this as a good thing.

"I don't mind prices coming down a bit, too," Mr. Flaherty said after the numbers were reported this week by the Canadian Real Estate Association.

Prices have held up on a national basis, with the average rising 1.6 per cent in December from a year earlier, and the MLS Home Price Index, which factors out changes in the types of properties sold, climbing 3.3 per cent. Still, that's the slowest pace since April of 2011.

Senior economist Robert Hogue of Royal Bank of Canada said the cooling is "generally proceeding gradually" as the rate of decline eases and the number of homes on the market adjusts to new, lower sales levels.

"While the market remains vulnerable to unexpected shocks to the economy, we believe that it is transitioning quite smoothly to lower, more sustainable levels," Mr. Hogue said.

"Moreover, we do not expect major imbalances between demand and supply to emerge in the short term that would cause the ongoing downward price adjustments to unravel into something much more dangerous."

At Toronto-Dominion Bank, senior economist Sonya Gulati said she believes the impact of Mr. Flaherty's rule changes has now been priced in.

"We expect the Canadian housing market to stabilize at current levels over the next few months," Ms. Gulati said.

"When looking at previous mortgage rule tightening episodes, the housing market impacts have been temporary in nature. There is no reason to think that this time will be any different."

Albanese exits from Rio Tinto
Well, that's what happens when you spend big just before things go sour.
Rio Tinto PLC said this week it will take a writedown of $14-billion (U.S.), the bulk of it related to its $38-billion takeover of Alcan Inc. in 2007 and almost all the rest on a more recent Mozambique coal deal.

At the same time, chief executive officer Tom Albanese stepped down from his post and will leave the company in July with no lump-sum payment, no annual bonus for 2012 and 2013, and no long-term stock compensation for this year.

It's the second writedown in as many years on the Alcan aluminum assets.

As The Globe and Mail's Pav Jordan and Jacquie McNish report, aluminum prices were at 35-year highs when Rio Tinto acquired Alcan, and Mr. Albanese believed they'd go much higher still, buoyed by demand from China.

It didn't turn out that way, however, and Alcan has seen the sale of many assets and cuts to jobs and production.

Former Nortel executives not guilty
"After waiting for almost nine years, I am grateful to have received vindication," Frank Dunn said this week as the saga of the once-mighty Nortel Networks Corp. came almost to a close.

While some issues remain in the collapse of what was once a world-famous concern, the Ontario Superior Court put to rest a criminal fraud case by acquitting Mr. Dunn, the former chief executive officer, and two other senior executives at the time.

As The Globe and Mail's Janet McFarland and Richard Blackwell report, Mr. Justice Frank Marrocco ruled accounting measures that prompted earnings restatements in 2002 and 2003 were not criminal.

Indeed, he found that Nortel had a long history of pumped-up accounting reserves that could be employed to meet profit targets.

The accounting issues at the heart of the prosecution, he said, either weren't fraudulent or weren't material for Nortel.

From Top Business Stories this week

11 things
1. Upon hearing this week that Bangladesh is threatening to execute big-time counterfeiters, Germany's Bundesbank decided to shelve a plan to help the country fight printing fake money, saying that while counterfeiting is a "serious criminal offence," the threat of imposing the death penalty is "excessive."

2. From Science Magazine: "Even Charles Darwin marveled at the length of the barnacle's penis. In some species, it's up to eight times the body length. Not all barnacles are so well-endowed, however, raising the question of how animals that can't reach their neighbours get it on. Now, new research suggests that at least one short-penised barnacle, the Pacific gooseneck barnacle, oozes sperm directly into the water for mates to capture, an approach that researchers previously considered too haphazard for the sedentary crustaceans."

3. The Warsaw Stock Exchange fired its president this week amid allegations he was trying to get listed firms to help finance a movie starring his girlfriend, The Associated Press reports. The fired 47-year-old executive, whose girlfriend is reported to be a 27-year-old ex-model, denies he did anything untoward.

4. Tweet of the week, from @TD_Canada: "Once your debt is paid off, re-allocate your payments to savings so that your money can start to grow." (I knew it wasn't a direct message when they said once your debt is paid off.)

5. "The shape in question doesn't diverge considerably from the norm or what's usual in that sector," the EU General Court said in a judgment this week. A new car design? A different look for the latest smartphone? Nope. The court was ruling on a bid by Germany's Fun Factory GmbH for intellectual property rights for a vibrator, Bloomberg News reports.

6. This is one where you've got to see the picture to get the full effect. (Scroll up and look on the left side, or click here.) A cleaning lady in Stockholm  stole a train - yes, a train - and rammed it into a house. Nobody was hurt, other than the cleaning lady, Reuters reports.

7. The Domestic Offsets Integrity Committee of Australia's Department of Climate and Energy Efficiency has turned down a proposal to give out carbon credits for slaughtering large, farting feral camels, whose nasty habits affect the environment via methane. The proposal caused something of a ... yes, stink ... as the DOIC noted  in its decision that "the methodology does not include sufficiently clear or detailed instructions to ensure the protection of animal welfare."

8. The Subway fast-food chain has a one-inch problem. Australia's Matt Corby posted online a photo of his "footlong" sandwich with a tape measure, showing it at just 11 inches long. Which led to a campaign on Subway's Facebook page.

9. Colour commentary of the week, from the foreign exchange team at Société Générale: "King Orgetorix burnt his beloved Swiss lands in a forced migration away from Germanic tribal pressure. Things are now far more civilized, the pressure comes from central banks and it is only option books that are burning as EUR/CHF explodes higher."

10. You can't make this stuff up, and I didn't. From the Chicago Tribune: "A shipment of 18 human heads stopped by customs officials at O'Hare International Airport was sent here from Rome to be cremated after being used in medical research, officials said today. Customs held up the shipment in late December because accompanying paperwork was incomplete, according to Mary Paleologos, a spokeswoman for the Cook County medical examiner's office."

11. "Data retrieved at the end of October, 2012, revealed that one-third of activewear sales are intended for casual or everyday use, while only 19 per cent is for sports or exercise," The NPD Group said this week.

Required reading
The Detroit Three auto makers, which downsized dramatically by closing dozens of factories during the 1990s and 2000s, are almost reaching the point where they need to open new vehicle assembly plants, Greg Keenan reports.

Harry Winston Diamond Corp. is selling its storied luxury retail unit to Switzerland's Swatch Group Ltd., leaving the company to focus squarely on the business of mining after eight years as a high-end jeweller. Pav Jordan and Bertrand Marotte report.

Shawn McCarthy reports on how the changing economics of energy are forcing a low-tech sector to develop high-tech answers.

Germany has shut down speculation that it could sell part of its massive gold holdings, announcing plans to repatriate 674 tonnes of bullion held in foreign vaults since the Cold War to protect it from potential invaders. Pav Jordan reports.

The grounding of Boeing Co.'s 787s around the world has prompted questions about the aircraft's lithium ion batteries, but also over how modern planes have become vast assemblies of outsourced components and operating systems, Guy Dixon writes.

What to watch for next week
The big event will be Wednesday's policy announcement by the Bank of Canada and the unveiling of its monetary policy report, which, for the first time, will be released at the same time.

The central bank won't change interest rates, of course, and isn't expected to change its signal either. That currently points to the next move in the benchmark overnight rate being up, not down, from its current 1 per cent.

Governor Mark Carney and his colleague's on the Bank of Canada's policy panel may also trim their near-term outlook for economic growth.

"The Canadian economy struggled through the second half of last year, and it looks as though real GDP growth would do well to come in north of 1 per cent in Q4, following the prior quarter's 0.6-per-cent print," said senior economist Benjamin Reitzes of BMO Nesbitt Burns.

"The softness will prompt the Bank of Canada to downgrade its growth forecast likely through to the current quarter. Expect some upgrades to late-2013 or early-2014 projections to provide some offset, but the closing of the output gap will probably be pushed into 2014."

There will also be an interesting two-day meeting of the Bank of Japan, which releases its decision Tuesday and is under intense pressure from a new government to do more to juice the economy.

"It is widely expected to result in further policy easing," said Derek Holt of Bank of Nova Scotia.

"Governor [Masaaki] Shirakawa's term is up in April and Prime Minister Shinzo Abe has been pressuring the BoJ to raise its inflation target to 2 per cent from 1 per cent. If Shirakawa doesn't deliver, his government-appointed successor likely will."

For investors, several major companies will report quarterly results, including Apple Inc., Google Inc., Microsoft Corp., Canadian National Railway Co., McDonald's Corp., Johnson & Johnson and Celestica Inc.

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