These are stories Report on Business is following Thursday, Nov. 3. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.
Follow Michael Babad and Globe top business news on Twitter
Democracy, and democracy On Monday, a referendum for George Papandreou was "a supreme act of democracy and of patriotism for the people to make their own decision." By Thursday, not so much.
Indeed, for the Greek leader it's now a case of "if we have consensus, then we don't need a referendum," according to reports today.
Some may see Mr. Papandreou's actions this week as bold, a Solomon-like attempt to save Athens from collapsing. I don't. I understand what he did and why he did it, and why he's now saying something different, and even the genius behind it. But it's all little more than a bad joke. And in the end, it won't save him or his country. The Greek people deserve better than what they're going to get.
Here's how it all played out:
Leaders of the euro zone reached a sweeping, if questionable, grand plan in Brussels aimed at easing their considerable burden. Greek bondholders would take a sizeable haircut, the euro bailout fund would be enhanced, and banks in the 17-member monetary union would boost their capital levels. The end result is supposed to be a cut in Greece's debt-to-GDP ratio to 120 per cent by 2020.
Mr. Papandreou didn't, at that point, say anything about asking his angry people what they thought. Then, on Monday, he stunned the markets, and his colleagues in the euro zone, by saying the crisis accord would go to a national referendum.
Markets tanked, as suddenly the solidity of the pact, and Greece's membership in the union, became an open question. First, his cabinet supported his call, and then it splintered.
On the eve of the G20 summit in Cannes last night, Mr. Papandreou was called to account by Germany and France, which said Athens would get no more money until this thing was solved. Given that an €8-billion tranche in bailout funds was at stake, and Athens is running a bit short, this was a damning ultimatum.
Today, Mr. Papandreou reportedly was getting ready to quit, but his parliamentary opposition, opposed to his harsh austerity measures, rallied to the cause and said they'd back the accord to help keep Greece in the monetary union.
"Failure to back the package," Mr. Papandreou said, "would mean the beginning of our departure from the euro."
That was today. Earlier this week it was that "the referendum will be a clear mandate and strong message within and outside Greece on our European course and participation in the euro."
I get his point. If you have all the politicians together, you've essentially got the voice of the people, and that's how a democracy works. Except that, in Greece's case, it doesn't. Mr. Papandreou need only look outside his window to see what the people think.
Now, even without a referendum, the issue of Greece being able to repay its debts remains, said CMC Markets analyst Michael Hewson.
And don't rule out the embattled Greek people, who have shown their anger at Mr. Papandreou's cuts, which are tied to the bailout money. Polls show they want to stay in the euro zone, but that they're violently opposed to austery measures, which isn't a surprise.
To be told now that they won't have a referendum could bring social consequences that other world leaders may not have envisioned.
"Will the Greek people stand for having their right to be heard snatched away and subjected to another 10 years of austerity without any input?" Mr. Hewson said. "I doubt it."
And even if the referendum is off the table, that "still leaves the issue of the vote of confidence and any possible new transitional government."
- Greek PM confirms plans scrapped for bailout referendum
- Sarkozy warns of Europe's 'explosion' as G20 leaders grapple with Greece
- Barrie McKenna: Referendum or not, Greece debt crisis unsolved
- Follow The Globe and Mail's Eric Reguly and Douglas Saunders in Cannes
- Accept bailout or go bankrupt, France and Germany warn Greece
ECB cuts rates For Mario Draghi, the new chief of the European Central Bank, it was the rate cut heard 'round the world.
The ECB surprised markets today by cutting its policy rate by one-quarter of a percentage point to 1.25 per cent, expecting another recession is in the making. Indeed, markets gained immediately after the rate cut, though pulled back somewhat when Mr. Draghi forecast a mild recession.
"Note that today's decision is the first ECB policy decision under the new president Draghi, and with inflation elevated at 3 per cent as of October, it suggests that the central bank's hawkish concerns are taking a back seat to fears surrounding euro zone financial stability and elevated 'downside risks,'" said Emanuella Enenajor of CIBC World Markets. "The decision comes on the heels of unsettling developments in the last 24 hours for the euro zone."
Observers are already speculating over whether Mr. Draghi will unveil another rate cut next month.
"The ECB's surprise rate cut is certainly welcome amid a sharply weaker outlook for Europe, as the sovereign debt crisis continues to weigh on regional activity," said senior economist Benjamin Reitzes of BMO Nesbitt Burns.
"The incoming president might be making a statement with this unexpected move, perhaps signalling a change in tack by the historically hawkish central bank. Looking ahead, Draghi declined to comment on whether rates are 'appropriate,' responding that the ECB never pre-commits to any policy moves. This suggests that unless conditions improve meaningfully (doubtful), another rate cut is probable in December."
BCE profit climbs BCE Inc. posted a gain in third-quarter profit of more than 40 per cent as it boosted its share of the TV market and won more smart phone subscribers, The Globe and Mail's Iain Marlow reports.
BCE earned $642-million or 83 cents a share, up from $454-million or 60 cents a year earlier. Revenue climbed to $4.9-billion.
BCE added around 127,000 new, high-value wireless customers in the post-paid category, many of which are on smart phones, and also boosted the number of net new TV subscribers by more than 40 per cent.
Manulife posts loss Canada's Manulife Financial Corp. was hit again in the third quarter by falling stock markets and interest rates, posting a loss of $1.28-billion or 73 cents a share.
That's narrower than the loss of $2.25-billion or $1.28 a year earlier, The Globe and Mail's Tara Perkins reports.
Manulife's results are the latest indication of the severe toll that market turmoil continues to take on life insurers, which have not managed to recover from the financial crisis to the same degree as banks.
Yesterday, Sun Life Financial posted its first quarterly loss in two years.
Magna profit slips As The Globe and Mail's Greg Keenan reports today, Magna International Inc. posted a drop in third-quarter profit as it still struggles with lagging operations in Europe.
The Canadian auto parts giant earned $102-million (U.S.) or 42 cents in the quarter, down from $266-million or $1.14 a year earlier. Magna took a charge of $113-million on the disposal of an interior systems business in Europe.
"Our top priority continues to be the improvement of our underperforming operations in Europe," Magna said.
Business ticker