My finance view

Pumping compressed air underground so it can be extracted later to generate electricity could prove one of the most effective ways in the short term for Ontario to add vast amounts of renewable energy to the power system, industry experts say.

So-called compressed-air energy storage, or CAES, has been around for more than 20 years and while only two facilities have ever been built – a 110-megawatt plant in Alabama and a 290-megawatt plant in Germany – officials from New York, California, Texas and a number of other U.S. states are beginning to seriously explore the potential. Iowa has already taken the leap.

The basic concept is that cheap, surplus electricity available overnight is used to compress air and inject it into underground reservoirs, like a salt cavern or depleted gas field. When power is needed during the day and can fetch a higher price on the market, the air is released, exposed to heat and put through an expansion turbine that generates electricity.

"It’s beginning to capture people’s imagination," says Mark Tinkler, an energy consultant with Emerging Energy Options and former manager of distributed energy technologies at Ontario Power Generation.

Five years ago, Tinkler did a study for OPG on the economics of using CAES and at the time he concluded it didn’t make sense. Looking back, he says, enough has changed in the world to revisit the idea.

"My personal feeling is that the time is right to do another assessment."

The reason? In a word, wind.

The wind blows intermittently, so unlike a coal-fired power plant that can dispatch electricity when we need it, a wind farm often generates electricity when we don’t need it (or it fails to when we do). Energy storage can level the playing field between renewables and fossil fuels, allowing us to capture wind energy whenever it blows and dispatch the power as demand dictates – much like a coal plant operates today.

It turns out the wind blows best at night, when there’s little or no demand for it. Wind-farm operators will often shed the energy or sell it for practically nothing to other utilities.

"It comes down to what the value of electricity is at night," says Tinkler. "Five years ago we didn’t have any wind. Now, it’s a completely different equation."

Geologically, Ontario is well equipped to embrace CAES – particularly southwestern Ontario. It’s often forgotten the region was once the hub of oil and gas exploration in North America and was home to the world’s first commercial oil well.

More than 50,000 wells have been drilled in Ontario over the past 150 years and slightly more than 2,000 still produce today. Union Gas and Enbridge Gas Distribution already use depleted gas fields in southwestern Ontario to store natural gas for the heating season. In fact, the Sarnia-Lambton region accounts for 60 per cent of Canada’s natural gas storage capacity.

Andrew Hewitt, manager of the petroleum resources centre in Ontario’s Ministry of Natural Resources, says the region is also rich in wind resources. He’s currently studying the CAES option, having decided several months ago the opportunity was ripe for consideration, particularly as the province moves to shut down its coal plants.

"The compressed-air component doesn’t have to be in the same area as a wind farm, it just has to be hooked into the same region of the province," says Hewitt, who hopes to brief the minister on his findings once his research is complete.

"The oil and gas industry has been doing this kind of storage for years. You’re using the same technology and just substituting it (natural gas) with air."

The problem is, engineers from power utilities know little about geology and underground technologies. Likewise, engineers from the oil and gas sector are not as knowledgeable about the above-ground machinery that generates electricity.

"You’ve got to bring teams of these people together to make compressed-air storage happen," says Robert Schainker, a senior technical executive and CAES expert at the Palo Alto, Calif easy payday loan.-based Electric Power Research Institute.

Schainker says it’s worth the effort if the geological conditions are right and the goal is bulk energy storage, such as a CAES facility that can store 200 megawatts for 10 hours or more – the equivalent of powering two million 100-watt light bulbs or 400,000 dishwashers for half a day.

True, a number of advanced battery-storage technologies are becoming economical for much smaller applications – for example, one megawatt for one to three hours of storage.

These technologies include zinc-bromide, sodium-sulphur, lithium-ion and vanadium flow battery chemistries. But at much larger scales batteries are simply too expensive.

CAES, on the other hand, isn’t economical on a small scale since the bulk of capital costs relates to the compressors and other turbo-machinery. The underground storage costs are the same whether you’ve got a small or large reservoir.

Adding an additional hour of storage to a CAES project will only cost $1 (U.S.) or $2 per kilowatt-hour, compared with $350 to $500 per kilowatt-hour of additional battery storage, says Schainker.

Still, there are a few wild cards that could influence the future cost of compressed-air storage. The current generation of CAES facilities still require fuel, typically natural gas, to heat the air before it enters the expansion turbine. Generally, a CAES plant consumes a third less natural gas for every kilowatt-hour it generates, compared with a simple-cycle natural gas or "peakier" plant.

Tinkler says when Ontario Power Generation studied the economics of CAES, the cost of natural gas was $3 per thousand cubic feet. At the time, "we were looking at a $5 break-even point," he says.

"As the price of natural gas goes up, compressed-air storage looks better and better."

Today, natural gas is above $5 per thousand cubic feet. The National Energy Board is projecting it could go as high as $9 over the winter and the U.S. Energy Information Administration is projecting it will hit $6.25 in 2009. As recently as this summer it was higher than $13.

Another factor that would make CAES even more attractive is carbon pricing. Both Canada and the United States plan to introduce a continental cap-and-trade system for carbon emissions. CAES, by increasing our use of wind energy and reducing our consumption of natural gas, would become more economical over time by lowering carbon dioxide emissions in the province.

"You should redo your studies," says Schainker, referring to OPG’s initial study in 2003. "CO2 costs will be a big one."

The fact that a CAES facility, like wind farms, can also be built in two or three years also makes it attractive when compared with building a nuclear facility, which, because of more rigorous regulatory requirements, can take 10 years to plan and build.

And the technology continues to mature, Schainker adds, pointing to next-generation designs that can take the waste heat that results from compressing the air and use it in place of natural gas to reheat the air during the electricity generation process. No facility has ever been built around this design, but it’s only a matter of time.

"There would be no fuel used whatsoever, no CO2 emissions," he says.

"On paper, it looks very attractive. We’re working on it."

Andrew Hewitt at the natural resources ministry says making it happen in Ontario would necessarily require the participation of OPG. He says wind developers in the region could get together and build a facility to share, or a single operator of a large wind farm may decide to pursue such a project alone.

"It doesn’t have to be the big utilities," he says. "Commercializing it would depend simply on who wants to get into that business."

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Nobody from Detroit got a particularly warm welcome in Washington last week, but the reception was coolest for General Motors, the largest and most vulnerable automaker.

As GMers admit off the record, Chairman and CEO Richard Wagoner turned in a dismal performance during two days of congressional testimony.

He served up the same kind of boilerplate that GM (GM, Fortune 500) has been offering analysts and journalists for months: We promise to make better cars, more economical cars, more alternative fuel cars.

And he presented a laundry list of steps the company has taken to regain profitability, like reducing manufacturing capacity, suspending dividend payments and eliminating health care coverage for salaried retirees.

But with a straight face, he blamed GM’s problems not on its products, its business plan or its long-term strategy but on "the global financial crisis." He didn’t bother to acknowledge that GM has lost an astonishing $72 billion in the past four years on his watch - including $51 billion before the crisis hit in 2008.

Wagoner also flunked the public relations part by arriving in Washington on board his corporate jet - couldn’t he at least have hitched a ride with Ford (F, Fortune 500) or Chrysler? - and failed to step up when asked to demonstrate a sign of financial sacrifice.

With the company in danger of running out of cash before the inauguration of President-elect Obama, what should Wagoner do now?

Start burning the deck chairs. GM needs to make some visible and effective efforts to cut costs and raise cash. Mounting a bare-bones exhibit at the Los Angeles auto show is a start. But GM has been dangerously slow about identifying surplus assets like Hummer and putting them up for sale.

Show some sacrifice. GM is currently planning to go ahead with its scheduled Christmas shutdown from Dec. 24th until January 5th. That’s great - GM employees will be on paid holiday while the rest of us are working. GM should get them back to their jobs and have them come up with more ways to raise cash.

Develop a plan and sell it hard. Wagoner tried to bluff the government into a bailout without showing any of his cards. That didn’t work, so now he needs to up the ante. When Chrysler was on the ropes in 1979, CEO Lee Iacocca put together a display of new models and took it on the road to demonstrate that Chrysler had a future business cards. Wagoner needs to do the same thing.

He’s working on it. A GM spokesman says, "We intend to deliver a plan to Congress that shows them a viable General Motors."

But what is GM’s future? Certainly not as a manufacturer selling eight - count ‘em eight - brands of cars at a time when Toyota (TM), its closest competitor, gets by with three. GM needs to address that issue immediately, even if it secretly believes that eliminating brands and their dealers is the wrong thing to do.

Some have suggested that GM become, in effect, an arm of the federal government, performing the energy independence work that Obama has promised. But having seen GM fail at profitably making and selling automobiles, something it has been doing for 100 years, I’m frightened about the possibility that it should try its hand at something new.

By now, it is clear to almost everyone that the U.S. doesn’t need three independent car companies any longer. There isn’t enough business for all of them.

What Wagoner should do is design a new structure that will allow the three of them to combine forces. It is clear that Cerberus is anxious to give up its ownership of Chrysler at any price. The hard part will be convincing the Ford family to relinquish its control of Ford Motor.

Here is how Wagoner can do it: Looming in 2020 are stringent new federal fuel economy regulations that will require cars that get 35 miles per gallon. The current mandate is 27.5 mpg.

Meanwhile, California and a dozen other states are licking their lips in anticipation of a waiver from the Environmental Protection Agency that will allow them to demand cars that get 43 miles per gallon.

Having underinvested for years, it is going to be exceedingly difficult for Ford to meet that target. But by sharing technology with GM, it may have a chance.

If he can turn the Detroit Three into the Big One with a new environmental mandate, Wagoner will have developed a compelling rationale for a Congressional bailout.

It is worth a shot. Nothing else has succeeded so far. 

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Toru Yoshikawa was a young investment banker with Canadian Imperial Bank of Commerce in Tokyo in the late 1980s, when the asset bubble economy burst, leading eventually to a historic meltdown in the Japanese stock market.

"It was an incredibly crazy time," says Yoshikawa, now a professor of strategic management at the DeGroote School of Business in Hamilton. "Banks were lending money and there was almost this excessive euphoria and panic that if you didn’t buy a home you would be priced out of the market forever."

Overinflated real estate prices. Easy loans and credit leading to speculation. Financial deregulation of banks that encourages more liquidity. Market chaos as the bubble bursts.

Sound familiar?

To analysts and academics, the financial crisis in North America has a disconcerting parallelism to what happened to the Japanese market two decades ago.

Yuen Pau Woo was the economist responsible for Japan in Singapore’s central bank when the Japanese bubble – helped by a run-up in real estate prices that made Park Ave. co-ops look affordable – caused the world’s second biggest economy to burst.

"It became what was known as the zombie economy," says Woo, now CEO of the Vancouver-based Asia Pacific Foundation think-tank. "Many people look back and see that it was a mistake that they didn’t act quickly enough."

Some influential economists see a striking resemblance between what happened in Japan and what’s happening in the North American economy. The big worry is that in the Japanese example, it took more than a decade for the economy to turn around, with stock prices bottoming out in 2003.

"There are eerie similarities between the United States now and Japan then," says Morgan Stanley Asia economist Stephen Roach, in a policy paper written before the Wall Street implosion of last week.

"The Bank of Japan ran an excessively accommodative monetary policy for most of the 1980s. In the United States, the Federal Reserve did the same thing beginning in the 1990s. In both cases, loose money fuelled liquidity booms that led to major losses."

While Americans have passed a controversial $700-billion bailout package, analysts say this isn’t enough. Long-term reform in the financial system is needed, or the U.S. could indeed become another "zombie" economy – tanking global markets in its wake.

In the Japanese example, and at the height of the bubble in 1989, some would famously boast that the land beneath the Imperial Palace in Tokyo was worth more than the entire state of California.

In Tokyo’s Ginza district, properties sold for more than $100,000 per square foot. (The $30 million asking price for the Toronto Four Seasons penthouse is a mere $3,000-plus per square foot.)

The stellar run-up in prices was encouraged by low interest rates and deregulation that allowed Japanese banks to take on riskier assets and loans, says Woo. Eventually, banks got hit after loans made to the real estate sector were "impaired because of speculation in the property market and the fall in the price of real estate."

To prime the economy, Japanese lending rates went down as far as 0.1 per cent – effectively zero – but even that did little to help the moribund market.

In a similar vein, the U.S. government has tried to prime the pump by sending out rebates for families and tax breaks for businesses, while the Federal Reserve has lowered the overnight lending rate to ensure more liquidity.

"Will this medicine work? The same question was asked repeatedly in Japan during its lost decade of the 1990s. Unfortunately, as was the case in Japan, the answer may be no," says Roach (instant pay day loan). "The current recession has been set off by the simultaneous bursting of property and credit bubbles.

"The unwinding of these excesses is likely to exact a lasting toll."

To avoid the problems of the Japanese, lawmakers must ensure that in addition to the quick bailout, they also address long-term regulatory issues, says Woo.

"They have to look at the structural problems, such as making sure financial institutions account for exotic instruments, restructuring accounting regulations, and addressing executive compensation."

Japanese regulators were roundly criticized for not doing enough during their crisis, which caused the economy to stagnate for decades.

"You can argue that the Japanese failed to act at all when it counted," says Peter Dungan, a professor at the Institute for Policy Analysis at the Joseph L. Rotman School of Management. "They did not do the financial restructuring which is now being called for in the North American market."

Dungan says the Japanese let the banks continue to operate as a kind of "gentleman’s agreement where no one confesses failure. No one was allowed to fail, which caused the problems to linger."

In the American example, it seems that at least in the initial stages, movement is happening at a much brisker pace. "In the space of a month you’ve seen virtually the entire investment banking sector disappear," says Dungan.

The next step is to do the hard work of ensuring a tighter regulatory framework to make sure it doesn’t happen again, says Yoshikawa. "Inaction will mean that you’re simply delaying the inevitable."

Still, the academic wonders what many consumers are likely asking: "It’s not as if we haven’t seen it before. Like Japan, the problem starts because of excessive expansion or euphoria, then the banks get a little careless, even reckless when lending money, and then things get out of control. I don’t know why we never seem to learn from history."

Japanese banks certainly seem to be coming around. After buying overpriced U.S. banks and real estate in the ’80s, they seem to have learned about buying on the cheap.

Mitsubishi UFJ Financial Group, Japan’s largest bank, bought 20 per cent of Morgan Stanley for $8.4 billion (U.S.) last month. Japan’s biggest broker, Nomura, snapped up the Asian, Middle Eastern and European divisions of bankrupt Lehman Brothers.

While the Japanese implosion had a major impact in the ’80s, the world economy was not as interconnected back then, so the global impact was more muted. But former Canadian prime minister Paul Martin warned in a speech in Toronto that it’s only a matter of time before economies such as China, India and Brazil see a similar fate.

"What is new is that such is the interconnectedness of the world’s financial markets today … that a mortgage problem in a major country like the U.S. can lead to the bankruptcy of small municipalities in northern Norway, to a debilitating bank credit crunch in Europe, and to panic in the Chinese treasury holding Fannie Mae paper."

Martin called for international dialogue between western and emerging economies. "We have only a short period of time to put in place the kind of forum that will allow power to be shared between the largest economies of the 21st century," he said. "In short, the time to act is when you can see the truck coming, not when it runs you over."

Sourse

SUNSET HILLS — Steve Carani popped on his headset. This would not be a pleasant phone call. He had to tell a client that the value of her $10,000 Lehman Brothers bond had deteriorated after the investment bank’s massive bankruptcy on Monday. For now, it might be worth pennies on the dollar.

"Nobody’s going to have the exact answer as to what happened for some time," Carani told the client Friday. "I’m sorry it happened."

At the end of one of the craziest and scariest weeks on Wall Street in recent memory, financial pros are taking stock and trying to regroup, facing a suddenly changed financial services industry. For Carani, a financial advisor with 16 years at Edward Jones, that means reassuring clients that this is no time to panic.

This is one of the most volatile markets some professionals have ever seen. Stocks plummeted Monday and again Wednesday as many credit markets around the world stopped functioning normally and investors ran for cover. "This financial crisis might be the worst we’ve had in 70 years," Ron Kruszewski, chairman and CEO of St. Louis-based Stifel Financial Corp., said Monday, after the Dow Jones industrials dropped more than 500 points.

On Thursday and Friday, the market picked itself up off the floor; big rallies underscored that investors had craved: the federal government’s interventions on behalf of stumbling mega-insurer AIG and firms holding degrading mortgage-backed securities.

"The way the market responded (Thursday and Friday) points out how extreme the fear was," said Al Goldman, chief market strategist at Wachovia Securities. "Investors were thinking we were facing financial Armageddon."

On Monday, Carani had to call dozens of clients to tell them that Lehman — with an investment-grade credit rating just weeks ago — was bankrupt, threatening their bond investments. It may have been the toughest day in his career and "by far" the roughest patch this week, he said.

Brokers and analysts fretted that fear, angst and uncertainty had become the primary factors in pricing securities this week, superseding fundamentals like valuation and future prospects. Safety seemed elusive. Destructive chain reactions seemed possible. "You’re looking at a range of emotion that is occurring in a short amount of time, which can be emotionally exhausting," said Richard Cripps, chief investment officer at Stifel Nicolaus.

At 7:00 Tuesday morning, a client called Carani’s office and left a message. "Tell Steve to sell everything. I want out."

In a 20-minute phone call, Carani was able to talk the client back from the brink. His mantra: prudence, diversification, patience — the old bedrocks of conservative investing.

 Radical rescue: Hundreds of billions for bailout

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 NEWSWATCH: How much is TOO MUCH?

 NEWSWATCH: Will bailout help housing market?

 Wall Street ends wild week with biggest two-day rally in 38 years

 Area financial advisers survive storm

 STROUD: Market turbulence can test your level of risk tolerance

 Missouri regulators reassure AIG policyholders

 Credit market remains tight, but avoids collapse

"Getting (investors) to hang on and stay intact — sometimes that’s the best strategy," said Carani, who oversees 70 brokerage offices.

Great opportunities open up for investors during times of crisis, said Goldman paydayloans.com. Unfortunately, he said, most people can’t bring themselves to buy stocks when the market is in a downturn and stocks can be had for a bargain.

"I’ve been doing this for 48 years, and two days ago, I thought I was going to lose my lunch," Goldman said Friday. "When my stomach acid rises to the point where I’m thinking I might lose my lunch, I know that’s when to buy stocks."

Experts stressed that the market could handle the strain, advising investors to keep an even keel and not to overreact either by dumping solid investments or piling into unsteady ones. For all of its travails, the market closed at the same level on Friday as it stood a week before. The Dow Jones industrial average is basically flat for the month. "The reality is, we’re not going to spontaneously combust," said Cripps.

Things had calmed down by Friday afternoon at Carani’s brokerage, tucked in a building near a coffee shop and sub cafe. Carani, dressed in a yellow tie festooned with small bulls — optimism? — said he would be on an anniversary trip most of next week. He might not even bring his laptop.

A 74-year-old client came in to discuss her investments in Fannie Mae, Freddie Mac and Anheuser-Busch. "I’m not really getting panicky" about the market, she said. "If you panic and start selling, that’s when you’ll really get in the hole. You know, last week when things were down, I thought, ‘I wish I had some extra money so I could buy some of this low-priced stock!’"

jmcwilliams@post-dispatch.com

314-340-8372

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Teranet Income Fund (TSX: TF.UN) is urging its unitholders not to tender to the takeover offer from Borealis Infrastructure Management, saying it is seeking better bids.

Teranet also announced Monday it has acquired the search, registration and legal corporate supplies business of Dye & Durham. It said this expands its business beyond real estate in Ontario and into legal practice areas nationally.

Teranet said its investors should take no action on the $11-per-unit cash offer from Borealis. The proposal presented Sept. 4 by the unit of the Ontario Municipal Employees Retirement System values Teranet at about $2 billion.

"We are well underway with a process to solicit potential alternative transactions that may provide greater value to unitholders," stated Aris Kaplanis, CEO of Teranet, the monopoly operator of the Ontario electronic land registry system.

"We have received considerable interest so far from potential bidders who have signed confidentiality and standstill agreements in order to obtain internal information about Teranet. This information is not available to Borealis, as it has declined to participate in the process."

Teranet also announced the purchase of Dye & Durham, established in 1875 and described as one of the best-known suppliers to the Canadian legal market.

Teranet did not disclose the terms of the purchase of the business from the Cartwright Group Ltd faxless payday advance. of Toronto.

Kaplanis said the acquisition solidifies the trust's position in the Canadian legal market "by bringing together Teranet's expertise in the delivery of electronic services with Dye & Durham's breadth of corporate supplies and services and exceptional customer care."

The takeover "extends Teranet's offering to law practices and increases our already strong presence on the legal desktop," Kaplanis added.

"It also diversifies our revenue, expands our opportunities across Canada, increases our customer base among different practice areas and strengthens our potential offering to other core markets."

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Let’s get ready to rumble.

In one corner is the mutual fund, time-honored champion of small investors. In the other corner a fast-rising challenger, the exchange-traded fund.

They are fighting for your investor dollar. Some experts predict the ETF ultimately will win the long-term confrontation.

"In a year such as 2008, when returns are low or negative, every 50 basis points (half of a percentage point) make a difference," said Tom Anderson, head of ETF research at State Street Global Advisors, Boston. "Because ETF fees on average are dramatically lower than those of mutual funds, the difference is huge."
ETFs, which hold baskets of stocks or bonds as mutual funds do, replicate market indexes or sectors with the goal of low-cost diversification. They’re traded on an exchange so you can buy and sell during market hours, unlike a mutual fund in which you trade shares at the end of the day. Although you must pay to trade ETFs, annual fees are generally lower than even index mutual funds.

"A number of value-oriented ETFs have done astoundingly better than active mutual fund value managers this year," said Ronald DeLegge, publisher and editor of ETFguide.com in San Diego. "While in theory the active manager can raise cash and protect capital, that hasn’t been working out because some top value managers are performing badly."

DeLegge noted that while the SPDR Dow Jones Large Cap Value ETF is down 14 percent this year, the actively managed Legg Mason Value Trust is down 28 percent.

This has been a somewhat perverse year, with the top-performing mutual fund and ETF both bear market funds that bet on the market going down. The mutual fund ProFunds UltraShort International is up 42 percent this year. In ETFs, the UltraShort MSCI EAFE ProShares is up 40 percent.

In some ways, comparing mutual funds to ETFs is apples to oranges.

There is a buyer for every ETF seller because they are traded on exchanges, so an ETF doesn’t have to scramble to sell holdings to meet a rush of shareholder redemptions, as mutual funds sometimes do. No minimum initial investment is required with an ETF, and there are no penalties for redeeming shares bad credit payday advance. Dividends are paid in cash, rather than reinvested as in a mutual fund. And annual fees are lower.

An ETF strong point has been an ability to quickly add specialties, being done from commodities to solar energy to foreign currencies.

Many investors still have no exposure to commodities, which is obtained most easily with ETFs, DeLegge said. Examples are iShares GSCI Commodity-Indexed Trust, up 15 percent this year; or PowerShares DB Commodity Index Tracking Fund, up 20 percent.

"If you’re looking for active money management, ETFs in their current form aren’t there yet," said Scott Burns, director of ETF analysis at Morningstar Inc. "But if you’re looking to index or to allocate to a sector or to access commodities or other asset classes that were once hard to reach, ETFs can be a suitable investment."

ETFs represent not only a way to invest in broad market indexes, but a chance to pick up intriguing specialties.

"This year it largely hasn’t mattered if you were in an ETF or a mutual fund, but rather what asset class you were invested in," Anderson said. "Money moved into commodities and bonds has done well this year, while you got hammered if you stuck with international or U.S. equities."

Never forget that it is the underlying investment, rather than the vehicle, that always decides results. Style, such as value or growth, makes a difference.

"One thing investors tend not to understand is the concept of style investing, because they tend to compare everything to the S&P 500," said DeLegge, who considers it important to have a reliable benchmark to which you can compare your holdings. "Investors must understand that a small-cap value fund should be compared to a small-cap value index, not just to a small-cap index."

andrewinv@aol.com

2008, TRIBUNE MEDIA SERVICES INC.

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Top executives at Anheuser-Busch Cos. are exulting over one of the brewer’s strongest summers in several years — but they’re pushing their sales and marketing staffs for more.

After performing below expectations in early 2008, the St. Louis-based company caught up to its plan. So far this year, beer distributors are selling more beer to retailers than was expected. The company says it is gaining market share against its arch-rival, the Chicago-based MillerCoors joint venture.

As the biggest U.S. brewer is in the process of being acquired by InBev of Belgium, executives want to spread the message: Us, distracted? Don’t count on it.

"People have their concerns," said Dave Peacock, vice president of marketing at A-B’s domestic beer company. "But we’ve tried to maintain a high level of morale, kind of an esprit de corps … keep your head down, keep your eyes fixed forward on the competition."
Bud Light Lime was the biggest reason for A-B’s success this summer, "but I think we’re seeing improvement in the whole portfolio," Peacock said in a telephone interview.

Sales of Bud Light beers — including Bud Light Lime, the year’s biggest beer product launch — are up 6.5 percent over the summer, according to the company cash advance in one hour. Anheuser-Busch plans to reinvest some of the proceeds from Bud Light sales into marketing during the last three months of the year. The commercials will be a little more focused on the product’s attributes, rather than on the pursuit of laughs. The company wants to maintain Bud Light’s momentum and "make sure we apply enough pressure," said Peacock.

Speaking of pressure, Anheuser-Busch touts a new sense of urgency among its sales staff stretching back to last fall — long before InBev announced its takeover bid. Some retailers have noted that Anheuser-Busch’s sales machine is pushier than in the past. That’s music to in the ears of top A-B executives, who have more meetings with their counterparts at Wal-Mart, Kroger, Safeway, 7-11 and other retailers to strengthen the brewer’s relationship with key accounts.

"We have to keep (the momentum) going into next year," said Peacock.

jmcwilliams@post-dispatch.com | 314-340-8372

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The private sector shed jobs in August, dragged down by heavy losses in the manufacturing sector, according to a report released Thursday.

The private sector lost 33,000 jobs in August on a seasonally adjusted basis, according to payroll manager ADP. A consensus of economists surveyed by Briefing.com had expected a loss of 30,000 jobs.

"The decline in August continues the recent trend in employment that is consistent with an economy that is growing slowly but has not fallen into recession," said Joel Prakken, Chairman of Macroeconomic Advisers, in a written statement.

The August decline was lead by a drop of 78,000 jobs among goods-producing companies, the 21st monthly decline in a row, according to ADP. The service sector, however, gained 45,000 jobs in August.

Large companies, defined as those with 500 or more workers, lost 28,000 jobs in August and medium-sized companies, with between 50 and 499 employees, lost 25,000 jobs.

Small businesses, with less than 50 workers, gained 20,000 workers in August, after adding a revised 46,000 jobs in July.

The report showed a sharp drop-off from July, when the private sector gained 1,000 jobs, spurred by a boost in small business employment payday loans online. The July reading was revised down from an increase of 9,000 jobs.

The data used in the ADP National Employment Report was taken from ADP payroll data which averaged 399,000 payrolls for 24 million U.S. employees in the first six months of 2008. The data set used for this month’s report was approximately the same size.

The U.S. Department of Labor will release its August employment report Friday. A consensus of economists surveyed by Briefing.com expects the unemployment rate to hold steady at 5.7%, while nonfarm payrolls are seen declining by 75,000 after a 51,000 drop in July.

In another separate read on the labor market released Wednesday, employers said they would cut 377,325 jobs from May to August, according to employment consulting firm Challenger, Gray & Christmas, Inc. That is the highest level of summer job cut announcements since 2002 and represents nearly 30% more cuts than during the first four months of the year.  

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There are only about 1,500 hours to go before Election Day. And that’s also about how many times you’ll hear snappy sound bites about the economic proposals of John McCain and Barack Obama.

Over the next nine weeks, CNNMoney.com will help you sort through the claims. We’ll try to sort fact from fiction and truth from exaggeration - or just clue you in on what the candidates are really talking about.

The first part in the series: Just how much tax relief is McCain offering?

The claim: To hear Obama tell it, McCain isn’t proposing "one penny of tax relief to more than 100 million Americans."

The Obama campaign says it bases that number on McCain’s proposal to increase the exemption tax filers take for dependents, and adds that it is the "only middle-class tax cut" the Republican nominee has offered.

The top line: It depends on what you mean by tax relief and what you mean by "only." But Obama’s claim isn’t as far-fetched as it sounds, keeping in mind that projections about tax effects are not carved in stone.

The facts: McCain has made several tax proposals. One of them is the dependent exemption increase.

Obama gets to his "more than 100 million" charge primarily from an analysis that two Harvard researchers did for the campaign. They examined 2004 tax return data from the IRS and estimated that 101 million tax returns would not benefit from the increase to the exemption in 2009. That represents more than 140 million people. The Obama campaign claims that number is actually low because the data did not include non-filers.

The Tax Foundation, a group unaffiliated with the Obama campaign, reached a similar conclusion.

So which Americans would see no benefit from McCain’s proposal? People without dependents, of course, and those who don’t make enough money to file or to owe enough federal income tax to benefit fully from the exemption.

At the same time, the Obama camp is pushing it when it claims that the exemption increase is the "only" middle class tax break McCain offers.

Douglas Holtz-Eakin, McCain’s senior economic adviser, said some of the folks who don’t get a break from the dependent exemption could benefit from McCain’s proposal to change how money spent on health insurance is taxed.

Today, if you buy a policy on your own, you don’t get any tax break. If your employer subsidizes your premiums, that money is considered tax-free to you.

Under McCain’s plan, that subsidy would become taxable income fast cash advance. But anyone who buys insurance would receive a refundable tax credit worth $2,500 per person ($5,000 per family). That’s a dollar-for-dollar reduction of your tax bill, or, if you don’t have a tax bill, a dollar-for-dollar increase in the amount of money Uncle Sam would send your way.

Certainly, the health care credit would provide a new tax break for anyone who buys insurance on their own. Whether the credit would be a boon for those who get insurance through their employer depends, among other things, on the cost of their plans, the amount their employer contributes and their income tax rate.

The Tax Policy Center, in a preliminary analysis of McCain’s health plan, said the credits are larger than the current premiums for the most generous group health plans. So initially it may be a break for many. But over time, experts say, the value of that credit will go down since it’s not likely to keep pace with the rising health care costs.

Holtz-Eakin also said that some of the households without dependents could get tax relief because of McCain’s proposal to permanently "patch" the Alternative Minimum Tax. The so-called wealth tax, left unaddressed, would hit an increasing number of middle- and upper-middle-income families. While Congress has been patching the AMT every year, McCain’s proposal would be more of a super-patch.

The Republican nominee has also proposed to make permanent the 2001 and 2003 tax cuts, which would otherwise expire by 2011. Even critics of those cuts, however, expect lawmakers to keep many in place.

The bottom line: It’s not fair to say that McCain’s dependent exemption proposal is his "only middle-class tax cut." But Obama’s claim that "more than 100 million Americans" will be left out of tax relief under McCain seems to be in the ballpark.

When the Tax Policy Center, which has analyzed both candidates’ tax plans, considered McCain’s proposals as a whole minus his health care plan, it estimated that 66 million tax "units" - or 78 million people - would still not see tax relief next year. Add their kids and Cousin Itt upstairs, and you get closer to that 100 million number Obama touts.

But one caveat: The numbers are expected to fall once researchers incorporate the effects of McCain’s health care credit, which they expect to do in the coming weeks. 

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Japan should change its weak-yen policy because a stronger exchange rate would help the nation import raw materials and increase investment overseas, said Eisuke Sakakibara, a former top currency-policy official.

“Japan is facing a paradigm shift and needs to change its currency and monetary policy,'' Sakakibara said in a speech at a seminar in Tokyo. “In the past, Japan's focus was on selling products overseas. Now it must focus more on securing raw materials and commodities, so a stronger yen is clearly in Japan's interest.''

Sakakibara, 67, currently a professor at Tokyo's Waseda University, was dubbed “Mr. Yen'' because of his ability to influence the foreign-exchange market during his 1997-1999 tenure at the Finance Ministry.

Rapid economic growth in China, India, Brazil and Russia is increasing prices of commodities and leading to greater competition in developing resources overseas, Sakakibara said. The price of oil, gold, corn and rice have all risen to records this year.

Japan lacks companies such as Rio Tinto Group, which is listed in Australia and the U.K., or China National Offshore Oil Corp. that can secure raw materials on a large scale, Sakakibara said. A stronger yen would help Japanese firms invest in mines and raw materials projects in Africa and Brazil, he said.

“Japan needs to change its mindset to a country focused on buying commodities and ensuring there's a stable supply of raw materials,'' Sakakibara said. “Right now, such a structure is not in place.''

Currency Intervention

The yen is “extremely'' weak because the Japanese government has regularly intervened by selling the currency to bolster exports and because the Bank of Japan has kept interest rates very low, he said quick payday. Japanese authorities sold the currency on all four occasions since 1995 when the yen approached 100 per dollar. Since the BOJ ended its policy of flooding the money market with cash in 2006, it has raised rates twice to 0.5 percent.

The yen rose to 107.66 against the dollar as of 11:03 a.m. in London, from 108.80 late in New York on Aug. 29. It traded at 157.84 yen versus the euro from 159.65. The yen fell to a four- year low versus the dollar and a record low against the euro in June 2007.

Japan's currency is likely to trade in a range of 105 to 110 against the dollar for the time being, Sakakibara said, adding that it may fall as low as 115 if the nation's economy weakens.

Japan should consider selling the euro to try to strengthen the yen, Sakakibara said. That would be easier than selling the dollar as U.S. officials don't want their currency to weaken while the economy struggles with fallout from the collapse of the subprime-mortgage market, he said.

The BOJ should also raise borrowing costs to boost the currency and keep capital from flowing overseas, he said.

Sakakibara is a member of the Asia-Pacific advisory board of Bloomberg LP, the parent of Bloomberg News.

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