Today's top stories from Report on Business :
Greenspan defends Fed's record
Alan Greenspan concedes that the U.S. regulatory regime failed to head off the financial crisis, but he rejects the notion that the Federal Reserve's low interest rate environment in the early 2000s led to the meltdown. In a 48-page study of the crisis, the former chairman of the U.S. central bank traces the roots of the housing bubble to the collapse of the Soviet Union. That put millions of people into the global market, helping spur the emergence of developing countries along with a surge of savings into the financial system, pushing long-term interest rates down and house prices up. Read the story
Dodge warns on savings
The former Bank of Canada governor is warning Canadians they'll have to save more to live comfortably in retirement. David Dodge said in a report today that Canadians must save between 10 per cent and 21 per cent of pretax income, consistently for 35 years, to live well. "The required level of personal saving is unknown to most individuals, leaving them to their own devices for a large part of retirement," said the report by Mr. Dodge, co-authored by Alexandre Laurin and Colin Busby and published by the C.D. Howe Institute. Read the story
Greece says it may seek IMF help
Greece's Prime Minister George Papandreou unsettled currency markets today, warning his government may have to seek aid from the International Monetary Fund if European leaders don't spell out, at a summit next week, exactly how they will help should his country need it. Greece has said repeatedly it hasn't asked for money, but it does want a plan in place. Mr. Papandreou said a detailed plan could help push down the country's borrowing costs. "We will make it, provided that our country can borrow on reasonable terms," he told a cabinet meeting, according to Reuters. "Based on those conditions, our country is not seeking and will not seek financial aid, either from our European partners or from the IMF, which would be our last resort." Read the story
Dollar overvalued, Rosenberg says
The Canadian dollar is overvalued by at least six cents, Gluskin Sheff + Associates chief economist David Rosenberg says in posing the question of whether the loonie is "ripe for correction."
"The net speculative long position (from the Commitment of Traders report - futures and options on the Chicago Mercantile Exchange) has surged by a factor of five in just the past month, to 62,123 contracts (C$100,000 a pop) which is the second largest on record," Mr. Rosenberg said today. "The last time the net speculative longs on the loonie were this high was back in November 2007; the loonie went on to suffer a 9.5 per cent cent correction in the next month."
One of Canada's leading economists, Mr. Rosenberg said that the "fair value line" is rising by a couple of cents a year, which illustrates how Canada's fundamentals are improving relative to those of the United States. "But at 99 cents, we believe the loonie is overvalued by at least six cents and therein lies the conundrum for the bulls on a near-term basis," he wrote.
Some other economists believe the dollar will hover around par with the U.S. currency once it gets to that point.
The dollar traded around the 99-cent U.S. mark this morning, but then dipped as the price of oil dropped and the U.S. currency firmed.
Over the past three months, BMO Nesbitt Burns noted, the Canadian dollar has been "king of the currency world," outperforming all other major money. Over the past year, BMO said, the strongest performer is actually the Seychelles rupee, while the Canadian dollar ranks fifth.
Read
High dollar gives Carney wiggle room
Canadian dollar heads to parity with greenback
Manufacturing thrives despite loonie
Foreign investors pile in
Here's one telling sign: Foreign investment in Canadian securities increased again in January, by $11.8-billion, while Canadians are selling down their foreign holdings. Foreign investment in Canadian bonds, largely those of the federal government's, accounted for the bulk, at $10-billion, while corporate bonds made up the difference, the statistics gathering agency said. Foreigners dumped Canadian stocks, however. Said BMO Nesbitt Burns deputy chief economist Douglas Porter: "We've heard all the reasons why the Canadian dollar is taking dead aim at parity in recent days. Today, we saw some of the mechanics behind how it's getting there … This brings the 12-month running total net inflow to a towering $111-billion, by far and away a record. To put this in perspective, $111-billion is more than 7 per cent of Canadian GDP, it's nearly three times the size of last year's current account deficit ($41-billion), and it's larger than the budget deficits of Ottawa and all the 10 provinces combined."
Japan presses China on currency
Japan has added its voice to the growing controversy over the Chinese yuan. In Tokyo today, Japanese deputy finance minister Yoshihiko Noda told reporters that while the United States should not penalize China by slapping sanctions on the country, China should allow its currency to appreciate. Several countries, notably the United States but also China's Asian trading partners, have pushed Beijing to allow a flexible exchange rate. "I don't know if the United States will impose sanctions, but I don't think that would be the right way of dealing with it," Mr. Noda said, according to Reuters. "Basically, such an action is not desirable. But I want China to understand there are expectations for a more flexible yuan, not only from the United States."
Related: China won't bow to U.S. currency demands
Winnebago posts unexpected profit
Are Americans hitting the road again? Winnebago Industries Inc. today posted a small, surprise quarterly profit, its first in almost two years, although that was largely due to a tax gain. Still, the RV maker reported a sharp increase in sales, and its chief executive said revenue has now grown in each quarter since a low a year ago. Revenue rose more than three times to $110.5-million (U.S.), and profit came in at $706,000 or 2 cents a share, compared to a loss of $10.4-million or 36 cents a year earlier. Motor home deliveries surged. Read the story
Related: 100 years of the RV
From today's Report on Business
Kit Kat spat goes viral despite Nestlé's efforts