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When the Chrysler plant in Newark, Del., shut its doors on Dec. 19, more than 1,000 workers there suddenly joined the ranks of the unemployed.

At least they will be able to get unemployment insurance.

Most jobless workers can’t.

Across the United States, only 37 percent of workers who lose their jobs typically collect unemployment benefits, according to U.S. Labor Department statistics.

They often miss out because they didn’t earn enough while working, or their work history was not continuous enough to make them eligible under state unemployment laws — usually written in the pre-computer era when tracking payrolls was much slower.

"I think it’s a shock to people that the safety net is in such sad shape," said Maurice Emsellem, co-policy director at the National Employment Law Project, a pro-worker organization advocating for the bill. "A lot of people fall through the cracks."

At a time when the recession is a year old and the number of unemployed has risen to 10.3 million, there is a real question about where federal unemployment dollars should go.

Should they be sent directly to states’ strained employment trust funds, enabling states to keep from raising unemployment taxes on already beleaguered employers? Or should they go to expanding eligibility, supporting states whose policies provide help to more people, who in turn will spend their benefits and boost the economy?

Last year, that approach became part of a federal bill — the Unemployment Insurance Modernization Act — passed in the House, but not the Senate, although then-Sen. Barack Obama was a sponsor.

Advocates like Emsellem always try to expand benefits in tough times, said Douglas J. Holmes, president of the National Foundation for Unemployment Compensation and Workers’ Compensation, a Washington business group. It would be better to skip the debate and ship the money to the state trust funds quickly, he said. "Federal money is not designed to dictate benefits state by state."

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Those who fall through the cracks tend to be low-wage, part-time, seasonal or new workers — not like the 1,000 autoworkers laid off in Delaware.

"Although low-wage workers were almost 2

OTTAWA–In a precedent-setting judgment, the Supreme Court of Canada has written that executives who run a company have a primary duty to do what is best for the corporation, not necessarily its shareholders or its bondholders.

Canada’s top court has ruled against the idea that the interests of shareholders supersede other stakeholders in a corporation, such as investors who have bought bonds.

The clarifications governing corporate law in Canada come from a 76-page written judgment on a decision the court made in June, when it gave the go-ahead on the planned privatization of BCE Inc., owner of Bell Canada.

Both the written reasons – and the original ruling – were unanimous, giving greater clarity to the rights of directors and stakeholders of corporations.

The court noted that, in most cases, the interests of the corporation and its investors and creditors were identical, but as was the case with BCE’s proposed acquisition by a group of investors headed by the Ontario Teachers’ Pension Plan, sometimes conflicts arise.

"Directors may find themselves in a situation where it is impossible to please all stakeholders," the court said.

"In each case, the question is whether, in all the circumstances, the directors acted in the best interests of the corporation, having regard to all relevant considerations, including, but not confined to, the need to treat affected shareholders in a fair manner."

The written ruling will bring no comfort to BCE, or shareholders who stood to benefit from the $42.75 per share sale price. It comes just over a week after the $52 billion leveraged buyout collapsed because of volatile credit markets and the impact of the North American recession.

The written reasons, nevertheless, were called important by Michael Gans, a partner with Blake, Cassels & Graydon LLP, for clarifying points of confusion that arose from an earlier decision the Quebec Court of Appeal cited to rule against the acquisition bad credit pay day loans.

In that case, the Quebec court found BCE’s directors did not give adequate consideration to how the deal would impact bondholders. Bondholders had argued that BCE would be crippled by taking on $34 billion in debt and that the value of their bonds would be diminished.

Gans said the Supreme Court found BCE had considered the effect on bondholders but decided the directors were acting in the best interest of the corporation.

"If you are a director of a Canadian corporation, you can feel good about this judgment, because it gives you significant leeway to do your job as long as you do so in a reasonable and informed manner," he said.

Gans said the top court made clear Canadian law differs from the U.S., where judgments have placed shareholders at the top of the totem pole in a contest of interests.

"There is no principle that one set of interests – for example the interests of shareholders – should prevail over another set of interests," the court wrote.

"Everything depends on the particular situation faced by the directors and whether … they exercised business judgment in a responsible way."

The ruling will likely be used to clarify the relationships of corporate executives, shareholders and bondholders in future mergers, bankruptcies or hostile takeovers when stakeholder interests collide.

In June, the Supreme Court had approved the "plan of arrangement" – dismissing a challenge from bondholders that their interests had not been protected – but given the time constraints issued no reasons for its decision.

That ruling appeared to clear the last hurdle to the world’s largest leveraged buyout … until the size of the debt proved a bridge too far.

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TOKYO– Sony Corp. is slashing 4 per cent of its worldwide workforce, reining in spending and shutting plants as it tries to ride out a looming worldwide recession that is battering Japan’s export-reliant manufacturers.

Tokyo-based Sony, which is cutting 8,000 of its 185,000 jobs, said yesterday it will shut five or six plants – about 10 per cent of its 57 factories.

Sony also plans to reduce its electronics investments by about one-third by the end of March 2010, although it did not give specific numbers. Sony will also cut at least 8,000 temporary jobs.

The job cuts are the most drastic here since the U compare car insurance prices.S. credit crunch hit over the summer.

Sony has been recovering from internal problems in recent years under cost-cutting reforms led by chief executive Howard Stringer.

Sony said the moves will deliver $1 billion (U.S.) in savings a year by March 2010.

As well, Sony will trim spending in semiconductors and will outsource output planned for image sensors for mobile phones.

Associated Press

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TD Bank Financial Group has reported fourth-quarter net income of $1.01 billion, down from $1.09 billion a year ago, but stressed Thursday it is still providing ample credit to Canadians.

TD said revenue was $3.64 billion in the three months ended Oct. 31, up from $3.55 billion a year earlier but down from $4.04 billion in the third quarter of this year.

Adjusted earnings fell to $665 million, compared with $1.02 billion a year ago.

Earnings per share were $1.22, down by 19 per cent from $1.50 a year ago, and EPS adjusted for one-time items slumped 44 per cent to 79 cents.

The quarterly results "reflected solid earnings contributions from TDBFG’s retail businesses in both Canada and the United States, while illiquid and volatile markets affected the performance of wholesale banking," the bank stated.

TD benefited from non-recurring items during the quarter, including a positive adjustment of $323 million after tax as the bank reversed much of reserves previously set aside for Enron litigation, a gain of $118 million on changes in fair values of hedging derivatives, and a $59-million gain on credit default swaps. These were partly offset by $126 million in amortization of intangibles and $25 million in restructuring and integration items.

Provision for credit losses more than doubled to $288 million from $139 million fast cash advance.

Full-year revenue was $14.67 billion, up from $14.28 billion, with reported net income of $3.83 billion, down from just under $4 billion.

Return on equity for the year fell to 14.4 per cent from 19.3 per cent.

"On the whole, we’re proud of what we’ve accomplished in 2008," stated TD chief executive Ed Clark.

"Our retail businesses are performing very well and, even though TD Securities had a tough year and a particularly tough fourth quarter, we’re pleased that its strategic positioning has protected our investors from the worst of the current turmoil."

Clark added: "As the economy slows, understandably there’s concern from governments and the public that banks may restrict credit. What’s clear from our reporting today is that TD continues to supply credit to its customers and clients."

He said TD’s personal and commercial lending in Canada has continued to grow at an accelerating rate through 2008, despite a general slowdown in credit expansion.

"While the lack of visibility on the economic environment calls for caution, we have a strategy and competitive position that will help us weather the storm," he added.

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With the clock ticking toward a Dec. 11 closing deadline, the $52 billion buyout of BCE Inc. appeared to dodge yet another bullet this week after Washington moved to bail out Citigroup Inc., the deal’s biggest financial backer.

Shares of BCE soared nearly 10 per cent, or $3.39, to $37.94 yesterday on the Toronto Stock Exchange after the U.S. government said a day earlier that it would shield Citigroup from hundreds of billions in losses from toxic assets by injecting $20 billion (U.S.) of capital into the bank.

Investors in the Canadian phone giant had become concerned about the deal’s chances last week as the spectre of bankruptcy was raised at Citigroup.

Such an outcome could put in jeopardy the bank’s commitment to funding the $42.75 per share (Canadian) takeover of BCE by the Ontario Teachers’ Pension Plan.

Citibank is estimated to be contributing between $11 billion and $13 billion of the deal’s $32 billion in financing, while Royal Bank of Scotland Group and Deutsche Bank are believed to be on the hook for between $8 billion and $9 billion each. Canada’s Toronto Dominion Bank has pledged $3 billion in loans.

Greg MacDonald, an analyst at National Bank Financial, said in a note to clients yesterday that bank insolvencies now pose the biggest risk to the deal’s completion, but noted that governments around the world have so far shown a willingness to provide bailouts for the financial sector.

"With recent international stability efforts for the global financial system, we believe the probability of deal close is growing," MacDonald said.

Signed at the height of the market in June 2007, the deal to privatize BCE was quickly thrown into doubt after the crisis in the U business card design.S. subprime mortgage market spawned a corporate credit crunch and, ultimately, a market meltdown.

As a result, investors have been concerned for months that the transaction would be scrapped as the banks backing the deal faced steep losses on the loans they pledged to fund the transaction.

More recently, questions arose about the solvency of the institutions themselves.

The U.S. government’s bailout of Citigroup, which last week revealed a plan to cut 52,000 jobs globally, represents Washington’s biggest effort yet to prevent a major bank from failing.

The bailout would give the U.S. government a 7.8 per cent stake in Citigroup and marks the latest effort to contain a widening financial crisis that has already brought down storied Wall Street investment firms, including Bear Stearns and Lehman Brothers Holdings Inc.

The move is designed to protect Citigroup from losses on $306 billion (U.S.) of troubled U.S. home loans, commercial mortgages, subprime bonds and corporate loans when the firms tumbling share price sparked concern that depositors might pull their money and destabilize the company. Citigroup has $2 trillion of assets and operations in more than 100 countries.

The $20 billion of new cash comes on top of a $25 billion infusion the bank received last month under the Troubled Asset Relief Program, passed by U.S. Congress to shore up the financial industry.

Shares of Citigroup surged 57 per cent to close yesterday at $5.95 on the New York Stock Exchange.

With files from the Star’s wire services

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In a sign that the global credit crisis is seeping across Canada’s borders, Bank of Canada Governor Mark Carney warned yesterday that the country "has been importantly affected by global events" and hinted that another interest rate cut may be in the offing.

Pointing to "a tightening in credit conditions," Carney said in a speech to the Canada-United Kingdom Chamber of Commerce in London that "the risks to growth and inflation in Canada identified (in October) appear to have shifted to the downside."

Carney emphasized that Canada is weathering the storm better than most major economies.

But around the world, some economists and policy makers are now anxiously considering another worrisome prospect: A deflationary spiral that could make recovery even more difficult.

Those concerns were heightened yesterday by a report that showed U.S. consumer prices plummeted by 1 per cent in October (month-over-month), the biggest one-month decline since record-keeping started.

The drop was driven by a precipitous fall in oil prices, which have lost more than 60 per cent of their value since peaking in mid-July. But core consumer prices, which exclude food and energy, also fell by 0.1 per cent last month, showing broader price declines.

U.S. Federal Reserve vice-chairman Donald Kohn said yesterday that the risk of deflation "is still small in my mind … But it is also the case that whatever I thought that risk was, four or five months ago, I think it is bigger now even if it is still small."

For consumers, the prospect of deflation – an ongoing fall in the general level of prices – might seem appealing.

Under normal circumstances, lower prices are "supposed to signal to people (that) now might be a good time to buy, and that brings about an adjustment," said Gregor Smith, an economics professor at Queen’s University.

"It encourages people to spend, and that helps sales for those companies."

But a period of deflation carries the risk of "a deflation mentality, where people, if they can, postpone purchases because they expect that prices will fall," said Michael Gregory, a senior economist at BMO Capital Markets cash in one hour.

Businesses may follow suit by postponing building plants or buying new equipment in anticipation of lower prices, creating a pernicious cycle of decreasing demand, production cuts and layoffs that can cause demand to dip even further.

Such a spiral is "very hard to break," said Gregory, pointing to the Great Depression of the 1930s, and Japan’s 10-year spiral of falling prices and economic stagnation.

While rare, he added, "it’s a low probability of something really, really bad happening, which weighs in on your policy thinking."

Some officials have publicly mused about the possibility.

"Deflation is probably the worst case for the financial sector because it is very difficult to overcome. Therefore, all central banks are going to do everything to avoid it," European Central Bank policy maker Ewald Nowotny said earlier this month.

But Smith warned not to read too much into yesterday’s U.S. consumer price figures.

"Certainly, the credit crisis … is one of the causes of a fall in demand in the economy. And that in turn can show up in some falling prices," he said.

"Whether it will really show up in deflation is still an open question. I think it’s a bit early to say based on one month’s CPI numbers."

Canada’s consumer price index for October is scheduled to be released tomorrow .

In September, annual inflation stood at 3.4 per cent, just off August’s five-year high.

Minutes from the Federal Reserve’s October meeting, released yesterday, show that officials slashed economic growth forecasts for 2009, and some believed more interest rate cuts might become necessary.

At that session, the central bank cut its key interest rate by a half a percentage point to 1 per cent.

Its next scheduled interest-rate setting meeting is Dec. 16.

The Bank of Canada is to consider its overnight rate, which sits at 2.25 per cent, on Dec. 9.

With files from the Star’s wire services

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Canadian Satellite Radio Holdings Inc. reported its annual net loss narrowed and revenues rose as the Toronto company continued to grow its satellite radio business.

The company, known as XM Canada (TSX: XSR), said Thursday it lost $74.3 million or $1.55 a share for the year ended Aug. 31. That compared with a net loss of $84.6 million or $1.78 a share for fiscal 2007.

In fiscal 2006, XM Canada lost $102.7 million.

Annual revenues rose to $39.5 million from $21.2 million.

For the fiscal fourth quarter, total revenues rose by 72 per cent to $11.8 million.

While the company is still posting big losses, CEO Michael Moskowitz said its business strategy "is working and we are making great progress towards generating long-term sustainable growth and profitability."

“XM Canada had a very successful year capped by two consecutive quarters of positive cash and our first ever quarter of pre-marketing adjusted operating profit,” Moskowitz said in a statement cheapest cash advance.

“Revenue nearly doubled due to our strong import automotive sales, a significant improvement in automotive conversion and growth from both the retail and wireless sectors.

"Top line revenue growth, together with our sharp focus on maximizing the return on investment, has significantly strengthened our financial performance and cash position. We are confident we can operate our business without having to raise additional capital.”

In Thursday trading on the TSX, XM Canada shares fell 35 cents to $1.05, a drop of 25 per cent.

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WASHINGTON–Google Inc. and Yahoo Inc. have scrapped their Internet advertising partnership, abandoning attempts to overcome the objections of antitrust regulators and customers who believed the alliance would give Google too much power over online commerce.

The retreat announced Wednesday represented another setback for Yahoo, which had been counting on the Google deal to boost its annual revenue by $800 million and placate shareholders still incensed by management's decision to reject a $47.5 billion takeover bid from Microsoft Corp. nearly six months ago.

Without Google's help, Yahoo now may feel more pressure to renew talks with Microsoft and ultimately sell for a price well below the $33 per share that Microsoft offered in May. Yahoo shares traded Wednesday morning at just $13.67, up 2.4 percent on the day.

Surrendering the chance to sell ads on Yahoo's popular Web site won't be a significant financial blow for Google, which already runs the Internet's largest and most prosperous advertising network.

But the capitulation marks a rare comedown for Google, which had been insisting for more than four months that the Internet would be a better place to do business if it were allowed to work with Yahoo.

"We're of course disappointed that this deal won't be moving ahead," David Drummond, Google's chief legal officer, wrote on a company blog. "But we're not going to let the prospect of a lengthy legal battle distract us from our core mission. That would be like trying to drive down the road of innovation with the parking brake on.''

Google's management took a strategic risk by agreeing to the Yahoo partnership in June, knowing the move would increase the government's scrutiny of Google's market power. Even though it is now walking away empty-handed, Google figures to remain in regulators' sights as it tries to expand.

"For the first time, Google has run into real opposition to its marketplace goals," said Jeff Chester, executive director of the Center for Digital Democracy, a consumer advocacy group. "Google is aware that its aggressive moves in the online advertising business are potentially contributing to damaging its brand. The perception of Google has changed.''

The collapse of the Google-Yahoo alliance shapes up as a potential coup for Microsoft.

Although it has publicly said it's no longer interested in buying Yahoo, Microsoft spent a lot of time and money trying to keep Google and Yahoo from coming together.

The world's largest software maker provided evidence that helped persuade regulators the partnership would diminish competition. Microsoft also helped orchestrate the campaign that prompted major advertisers to lodge formal complaints against the proposed partnership.

The Justice Department signaled it was considering a legal challenge to the deal in September when it hired veteran antitrust lawyer Sanford Litvack to review the case.

The Wall Street Journal reported Monday that Google and Yahoo had proposed restrictions on the deal – capping the amount of search ads Yahoo could outsource to Google – in a late bid to win favor no fax pay day loan. Google's statement Wednesday indicated the idea didn't fly.

"After four months of review, including discussions of various possible changes to the agreement, it's clear that government regulators and some advertisers continue to have concerns about the agreement," Drummond wrote. "Pressing ahead risked not only a protracted legal battle but also damage to relationships with valued partners. That wouldn't have been in the long term interests of Google or our users, so we have decided to end the agreement.''

Now that Google is out of the picture, Yahoo co-founder Jerry Yang will have to come up with another way to accelerate his company's revenue growth and boost a stock price that has lost more than half its value since he became chief executive in June 2007.

If nothing else, Yang appears to have a bigger incentive to join forces with another tarnished Internet star, AOL. Yahoo has been discussing a possible acquisition with AOL's corporate parent, Time Warner Inc., for months. Google also owns a 5 per cent stake in AOL.

But many Yahoo shareholders, including new board member Carl Icahn, have indicated they think the Sunnyvale, Calif.-based company should try to lure Microsoft back to the negotiating table.

Most industry analysts still believe Microsoft will make another run at Yahoo, particularly now that the company can be bought at a fraction of the May offer. Instead of buying Yahoo in its entirety, Microsoft might just want Yahoo's search engine, which ranks a distant second in usage behind Google's. Microsoft attempted to buy Yahoo's search engine shortly before the Google partnership was reached.

Under the terms of the proposed partnership, Yahoo would have drawn on Google's superior technology for some of the ads shown alongside the search results on its Web site. Yahoo would have pocketed most of the revenue generated from Google's ads.

The concept didn't pan out because Google and Yahoo combined control more than 80 percent of the U.S. search advertising market. Microsoft and the Association of National Advertisers, among others, argued the arrangement would enable Google to gradually increase advertising prices and exert more control over the flow of e-commerce.

Google and Yahoo said the complaints were misguided because search advertising rates are set through an auction-style system. What's more, the partnership was supposed to be non-exclusive, leaving an opening for Microsoft and others to vie to sell ads on Yahoo's website.

But helping out Yahoo began to make less sense for Google as it became apparent how much the proposal was alienating the government and advertisers.

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China’s listed companies, after delivering robust earnings growth every quarter for two years, are seeing profits start to shrink as the global financial crisis hits more severely than many had expected.

Slumping demand and falling prices have hit Chinese industries from steel to automobiles to airlines, and the highly profitable financial sector, while largely insulated from the worst of the global credit crisis, will see its bottom line eroded by a slowing economy and a deflating property market.

“The impact of the global financial crisis on China’s real economy and corporate operations has just begun to make itself clear,” said Zheng Weigang, head of research at Shanghai Securities.

“Many industries, such as steel and chemicals, have seen their sales prices nearing their cost points,” he said.

“November and December will see several major sectors fall into losses, boding ill for corporate earnings growth in the fourth quarter and next year.”

In the third-quarter earnings reporting season that ended on Friday, the 1,600-plus firms listed on the Shanghai and Shenzhen stock exchanges posted a 20 percent drop in net profit from the second quarter, according to calculations by state media. Year-on-year comparisons for the quarter were not available.

For the first nine months of the year, net profit was up 7.1 percent year-on-year at 782 billion yuan ($114 billion), slowing sharply from 16 percent growth in the first half, the calculations showed.

Worse news lies ahead.

SHRINKING MARGINS

Analysts estimate that more than half of China’s listed firms have already seen their profit margins drop in the third quarter from the same period of last year creditreports.

That means the only way they could sustain earnings growth is by selling more products — a tough task as global recession crimps exports and China’s slowing economic growth dampens domestic demand.

Among 10 analysts, economists and fund managers polled by Reuters this week, all but one forecast flat to weaker earnings for listed firms in the current quarter compared with a year earlier, while for next year they projected declines ranging from 2 to 10 percent.

“Earnings growth is certain to be negative in 2009, but the extent of the decline should still be in single digits, with the first half expected to be worse than the second half,” said Wu Haijun, Shanghai principal at Power Pacific Corp of Canada, a foreign investor in Chinese stocks.

Earnings at financial firms, the primary engine of China’s profit growth accounting for some 40 percent of the total at all listed companies, slowed significantly after powering total increases of 43 percent in 2007 and 67 percent in 2006.

The country’s biggest insurer, China Life (601628.SS: Quote, Profile, Research, Stock Buzz) (2628.HK: Quote, Profile, Research, Stock Buzz), posted a drop of more than 70 percent in third-quarter net profit, as its investment income sank with the stock market. China’s benchmark Shanghai Composite Index .SSEC has dropped more than 70 percent over the past year. 

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ALBANY, N.Y. — Financially troubled American International Group, now supported by a federal bailout, has agreed to freeze millions of dollars in compensation and bonuses for former executives.

In a letter Wednesday to AIG’s new chairman, Edward Liddy, New York Attorney General Andrew Cuomo wrote that after his office’s review of company documents, the insurance and finance giant agreed to stop payments under former chief executive Martin Sullivan’s $19 million pay package.

AIG also confirmed that no payments will be made from the $600 million compensation and bonus pools of its Financial Products subsidiary, including $69 million the former head of the subsidiary, Joseph Casano, could have been paid and about $93 million that five other top executives might have been eligible to receive.

"The Financial Products subsidiary was largely responsible for AIG’s collapse, and Casano has been terminated," Cuomo wrote. Taxpayers’ financial interests should take priority over those managers, he said.

Company spokesman Joe Norton said Cuomo’s letter was consistent with AIG’s actions and discussions with the attorney general internet pay day loan. After a meeting last week, Liddy and Cuomo issued a joint statement that payments to outgoing chief financial officer Steven Bensinger were stopped and the company would help Cuomo recover any illegal expenditures.

Cuomo said Wednesday that the next step for his office will be investigating how to recoup executive bonuses paid previously, saying a fraud law could apply depending on timing, circumstances and contracts. Handling AIG’s case should be regarded as a template for other companies that require government help, he said.

"Taxpayers are, in many ways, now like shareholders of your company, and the new AIG has a responsibility to them in the first instance," Cuomo wrote Liddy, noting the $120 billion bailout will leave the U.S. Treasury with AIG stock.

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