Inflation – deflation – what is the answer ?

As recently as Oct 2008 the worry was for inflation and now the call is for deflation.

We got these stats from the Bank of Canada inflation calculator site.

$100 in 2003  = $111.38 in 2008 | 2.2% inflation
$100 in 2007  = $102.60 in 2008 | 2.6% inflation

Statistics Canada – Consumer Price Index Nov 2008

Inflation was approach 4% on an annualized monthly basis solely because of energy prices.  Deflation is defined as dropping prices, but is it just because of dropping energy prices, and is that a bad thing?  Should we bail out the oil companies now?

Thoughts from any armchair economists welcome.

We caught a brief talk from Jackie Flannery, CMO and Founder of Kiva.org last night at UofT.  She was in town to speak at the Ontario Association of Food Banks annual fund raising gala, and Rotman School were able to get an hour of her time earlier in the evening.

With small deeds comes big change | The Toronto Star

The global credit crisis may be rocking the mainstream economy, but thousands of individuals are still logging on to Kiva.org to lend as little as $25 to entrepreneurs in impoverished countries.

Founded in 2005 by American Jessica Jackie Flannery and her husband, Matt, the world’s first online micro-loan organization has built a network of more than 350,000 lenders from 78 countries who are helping to lift thousands out of poverty in the developing world. To date, Kiva has lent almost $50 million.

Kiva has lent $50 million through 70,000 loans to borrowers all around the world.  Their current pace runs at $1 million per week, and interestingly 78% of their borrowers are female.  The model works like this:

FUNDS FLOW:  Lenders ==> Kiva.org ==> MFI ==> borrowers

<MFI = Micro Finance Institution – eg Grameen Bank>

There are 360,000 lenders in the system, and they have made 70,000 loans. 

With a mission statement of “To connect people through lending for poverty alleviation” Kiva is very focussed and is clearly finding success.  She also mentioned their funding rounds, and their next one if I heard it right it is big, I will await confirmation before I mention that.

I wanted to highlight an upcoming conference in Toronto aimed at startups and entrepreneurs.  Its been organised by the irrepressible David Crow, and Jevon McDonald who have put together a great speakers list, including:

• Hugh Macleod
• Don Dodge
• Austin Hill
• and many others

Click through for details, and if the purpose, timing and location works then its one to think about.

They have just announced an innovative idea that will see the Blackberry Partners Fund provide $500K funding during the conference.

StartupEmpire | Startup Conference Toronto | Nov 13th & 14th

StartupNorth is Canada’s only grassroots conference for startups. Created for entrepreneurs and by entrepreneurs, StartupNorth aims to educate and inspire by connecting you with other entrepreneurs, mentors and the ecosystem of support needed to create and operate a successful startup in Canada and the world.

StartupNorth, the conference, is being produced by the team that has created StartupNorth.ca, DemoCamp, Founders & Funders, and and Startupindex.ca. StartupNorth.ca is Canada’s most popular community of web entrepreneurs and DemoCamp has been voted Toronto’s best “un-conference” and has been held in over 15 cities attracting over 10,000 individuals.

Register Now

MoneyAisle is a unique service, only for the US at the moment.  It allows retail savers to place their needs, and competing banks will bid for their business.  Even if you are in Canada, you can try the demo out without registering.

Anyhow I was thrilled to be asked to give my 10c worth on 10 questions from Mukesh, covering the banking industry, and some of the issues underlying the US and European banking crisis.

10 Questions with Colin Henderson from The Bankwatch Blog

Something that has been of concern since last year, is the run on effect of sub prime both internationally, and then into other credit products.

The Globe and Mail pick up on that theme with a piece on US Credit Cards.

“If history is any indicator, there should be an equivalent surge in credit-card charge-offs very soon,” he said. “We forecast first quarter credit-card charge-offs will be $18.6-billion (U.S.) and that the total 2009 charge-off bill will add up to $96-billion.”

In particular this comment has a ring to it that is reminiscent of sub prime lending:

“On the other hand, companies that have pursued aggressive portfolio growth and higher yields at the cost of prudent risk management will struggle to manage rising loan losses, which will definitely cut into earnings or even worse, as the last few weeks have shown,” Ms. Ishikawa said.

Many people in todays Canadian workforce will not remember poor economic times, because things have been generally good for some time.  All of this to suggest that people who have not reviewed their own credit card situation recently might want to think about that.

As far as Canadian Banks are concerned their exposure to the US is limited.

In response to a query during an e-mail question and answer period, Ms. Nishikawa said that the three Canadian banks most active in U.S. consumer banking, Royal Bank of Canada, Toronto-Dominion Bank and Bank of Montreal, are still “very small players” in the U.S. card business.

Apologies for not updating after the outage last week.  It was resolved later that day, when a kooky piece of hardware was identified as the culprit.

We are pleased that we have been selected as a finalist for the Top 50 Award that will be announced by Red Herring September 16th, 2008.

Red Herring Canada 2008

Red Herring Canada will host its first annual Top 50 Awards, celebrating the most innovative and promising companies in Canada. Adding to the success of our yearly North America 100, Europe 100 and Global 100 events, Red Herring Canada will provide an opportunity for the nation’s Top 50 companies to deliver their message to the top VCs and other participants throughout North America and abroad.

The nominees are rigidly evaluated on both quantitative and qualitative criteria, such as financial performance, technology innovation, quality of management, execution of strategy and integration into their ecosystem. This unique assessment of potential is measured by a review of the actual track record and standing of a company, allowing Red Herring to see past the “buzz” and make the list an invaluable instrument for discovering and advocating the greatest business opportunities in the industry.

The Top 50 Winners will be announced at the
Red Herring Canada event on September 16.

The CEOs and founders from the Red Herring Canada Top 50 will present their winning technologies to an audience of leading entrepreneurs, financiers and corporate strategists in Mont-Tremblant on September 15-17

While there are all kinds of attempts to place a brave face on the Canadian economy, it seems certain that Canada is headed for slower economic times.  Suggests it is probably a good time for consumers to review their own personal financial circumstances, and financial plan.

Toronto Star

Canada’s real gross domestic product – the broadest measure of economic health – shrank for the fourth month in half-a-year in May, falling 0.1 per cent, well below economist predictions of a 0.2 advance.

And Canadian exporters hoping for a resurgence in the United States received more bad news with the announcement the American economy grew at an annualized pace of 1.9 per cent in the April-June quarter – most due to the temporary-and-now-spent $170-billion government stimulus package that had many economists predicting a 2.4 per cent bump

But no amount of sugar coating can hide the fact that Canada’s economy remains at best stalled, and with little signs the engine will turn over soon.

 

Congratulations to our colleagues at Spreed:News on their official launch this morning. I watched a demo on Dave’s iphone this morning, and it is very impressive. Check it out here.

Spreed:News Mobile

I am very proud to announce to launch of Spreed:News today. Spreed:News is a mobile application that gives users a better reading experience on their mobile devices. The first version of our software will be available only through the iPhone.