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The tentative deal to settle a dispute between Charter Communications Inc. and the parent of KMOV (Channel 4) will settle a long-standing dispute that’s kept CBS’ high definition channel from this market.

Charter and Dallas-based Belo Corp. said they have nearly completed a deal that will allow Charter to continue broadcasting KMOV’s signal after Dec. 31. The deal, first reported Sunday, also covers Charter’s relationship with Belo in 10 other markets, including Houston, New Orleans, Seattle and Dallas payday cash advance.

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The global recession is re-exposing fissures in U.S.-China relations that Treasury Secretary Henry Paulson spent more than two years smoothing over.

Heightened tensions between China and the U.S. may worsen a contraction in world trade that already threatens to deepen and prolong the economic downturn. The friction comes as President- elect Barack Obama readies a two-year stimulus package worth as much as $850 billion that will require the U.S. to borrow more than ever from China, the largest buyer of Treasury securities.

“The American economic slump is running into the Chinese economic slump,” says Derek Scissors, a research fellow at the Washington-based Heritage Foundation. “It's creating the conditions for a face-off between Beijing and the U.S. Congress, possibly leading to destabilization of the world's most important bilateral economic relationship.”

Paulson, 62, who visited China 70 times during his career on Wall Street, made improving ties a priority when he arrived at the Treasury in 2006. He advocated diplomacy instead of confrontation, establishing a twice-yearly “strategic economic dialogue” with officials in Beijing, aimed at cooling tensions and deterring Congress from taking up trade sanctions.

The approach produced some results, including a pledge to share data on food safety and agreement to allow foreign mutual funds to invest in China's stock market. The value of China's currency, the yuan, rose 21 percent versus the dollar from 2005 levels to redress what U.S. officials saw as an unfair price advantage for Chinese products.

Shelved Sanctions

Paulson refrained from labeling China a currency manipulator and hailed an end to tax rebates on Chinese exports as a sign of improving trade relations. Congressional leaders, though dissatisfied with the pace of progress, shelved sanctions legislation.

Paulson “achieved some success, but it was much more difficult to get the Chinese to restructure their economy,” says Myron Brilliant, vice president for Asia at the U.S. Chamber of Commerce in Washington. Now, Brilliant says, the economic crisis has prompted China to turn back to “export-oriented policies that could lead to an increase in the trade imbalance” and new tensions with the U.S.

China's exports declined in November for the first time in seven years, and economic growth may slow by more than half to as little as 5 percent in 2009, according to Royal Bank of Scotland Plc. That has prompted China's leaders to increase tax rebates on thousands of exported products; meanwhile, the yuan's steady rise against the dollar stalled in July, and the currency has barely budged since. It was trading at 6.8462 a dollar at 1:33 p.m. in Shanghai today, from 6.8414 on Dec. 26.

A Harder Line

In the U.S., business and labor groups, along with lawmakers, are pushing the new Obama administration to take a harder line with China than President George W. Bush did.

Senate Finance Committee Chairman Max Baucus, a Democrat from Montana, plans legislation that would raise tariffs on dumped imports from China and other nations. And newly elected Democratic congressmen such as Larry Kissell of North Carolina and Dan Maffei of New York have pledged actions to stop jobs from being shipped to China.

Lawyers representing companies such as Nucor Corp., the second-largest U.S. steelmaker, NewPage Corp., a maker of coated paper, and smaller textile and steel pipe makers say they are considering new trade complaints against China. During the presidential campaign, Obama promised groups including the National Council of Textile Organizations and the Alliance for American Manufacturing that he would take a tougher stance on China's currency policies.

Pushing Back

Officials in Beijing will push back, says James McGregor, chairman of Beijing-based research firm JL McGregor & Co. and author of the book “One Billion Customers,” about doing business in China. Chinese leaders “will do whatever they need to protect their interests and to say to the U.S., 'Do not mess with us on this one,'” he says.

Paulson, before leaving for talks in Beijing this month, told business representatives his biggest concern was that China was changing course and reversing moves it had made during the past year to cut aid to exporters and stimulate domestic consumption cash advance.

China's five-year plan through 2010 seeks to rebalance growth away from exports — so far, without significant result. Household consumption slumped to slightly more than 35 percent of China's gross domestic product last year from 45 percent in 1993. By contrast, consumer spending represents more than two-thirds of the U.S. economy.

Low Consumption

“What separates China from the rest of the world is its incredibly low level of consumption relative to GDP,” says Brad Setser, a fellow at the Council on Foreign Relations in Washington. “What can China do that would most directly help the world economy during a period of very severe weakness? Get its consumption back up to 40 percent of GDP.”

Policies in both countries are shaped by the need to cope with steep declines in employment. More than 10 million migrant workers lost their jobs in China during the first 11 months of this year, Caijing Magazine reported Dec. 17, citing a Labor Ministry official.

The total will likely grow in 2009. The World Bank forecasts that global trade, which grew 6.2 percent in 2008, will shrink by 2.1 percent next year, the first such contraction since 1982.

The collapse in overseas demand is exposing China's years of overinvestment in industries such as automobiles and telecommunications.

Sitting on a Stockpile

China's steel industry, the world's largest, is sitting on a stockpile of 63 million metric tons, equivalent to about 13 percent of annual production, and Baosteel Group General Manager He Wenbo said in November that his company was facing the “most difficult” period since it was founded 30 years ago.

The government is considering measures including buying unsold inventory and raising export rebates to help steelmakers weather the slowdown, Minister of Industry and Information Li Yizhong said Dec. 12.

In the U.S., factory payrolls have shrunk by 4 million during the eight years of the Bush administration, and total job losses this year may top 2 million.

“China-bashing will only intensify in a softer economic climate,” says Stephen Roach, chairman of Morgan Stanley's Asia division in Hong Kong. “Bipartisan congressional support for anti-China trade legislation has been gathering in intensity.”

Obama's Pledges

Obama made specific pledges on the campaign trail to take a tougher approach to China than the Bush administration did. He has said the failure by Bush and Paulson to label China a currency manipulator was “unacceptable,” and he endorsed legislation to let U.S. companies seek import duties to compensate for the advantage an undervalued currency gives their Chinese competitors.

Obama also pledged to reverse course from Bush and consider petitions seeking higher tariffs on specific Chinese products.

American businesses, labor unions and lawmakers are already gearing up to force Obama's hand. Steelmakers, paper producers and textile companies are preparing trade complaints that could lead to increased tariffs. Unions and lawmakers plan to push measures to force China to raise the value of its currency.

McGregor says Obama's China policy will require a balancing act “fundamentally different” from what his predecessors faced: Obama's Treasury will need to fund a budget deficit heading for $1 trillion this year and “you don't scream at your banker.” China's holdings of U.S. Treasury securities, at $653 billion, are the world's largest.

That means an increase in trade tension “is very easy for China to handle,” says Guan Anping, a managing partner of Beijing-based law firm Anjin & Partners and a legal adviser to former Vice Premier Wu Yi until 1993. “China can react by reducing its purchases of U.S. government bonds.”

Even so, the Obama administration may not need much prodding to take a harder line on the currency issue, says William Reinsch, president of the National Foreign Trade Council and a former Clinton administration trade official.

“There will be consequences,” he says. “But they will do it anyway, if only to distinguish themselves from Bush.”

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NEW YORK — Most stocks gained Friday, extending a second straight weekly advance, as President George W. Bush’s rescue plan for carmakers eased concerns about the industry’s collapse and the loss of jobs.

General Motors Corp. rallied 23 percent as Bush announced $13.4 billion in emergency loans for the largest U.S. automaker and rival Chrysler LLC. Ford Motor Co. rose 3.9 percent, while car parts supplier ArvinMeritor Inc. climbed 5.9 percent. The Dow Jones industrial average erased a 182-point advance as Citigroup Inc. slid 5.5 percent after its debt ratings were cut, while Exxon Mobil Corp. and Chevron Corp. retreated almost 3 percent as oil tumbled below $33 a barrel.

The Standard & Poors 500 index added 2.60, or 0.3 percent, to 887.88. The Dow fell 25.88 points, or 0.3 percent, to 8,579.11. The Nasdaq composite index gained 11.95, or 0.77 percent.

The S&P 500 extended its five-day gain to 0.9 percent, capping its first back-to-back weekly advance since September. The Dow slipped 0.6 percent in the week.

GM rallied 83 cents to $4.49, trimming its 2008 decline to 82 percent. Ford Motor Co. added 11 cents to $2.95.

ArvinMeritor climbed 19 cents to $3.42. BorgWarner Inc. climbed 4.4 percent to $21.79.

Citigroup Inc. fell 41 cents to $7.02. The bank’s senior debt was cut to A2 from Aa3.

Research In Motion Ltd pay day loan lenders. gained 11 percent to $42.83. The BlackBerry smart-phone maker forecast sales of $3.3 billion to $3.5 billion for the current quarter, topping estimates of $3 billion.

Oracle Corp. added 7 percent to $17.78.

Crude oil for January delivery fell $2.35, or 6.5 percent, to $33.87 a barrel in New York. Exxon shares fell 2.6 percent to $75.02, while Chevron declined 3 percent to $70.85.

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Darden Restaurants Inc. climbed 19 percent to $28.55.

Brinker International Inc., the owner of the Chilis Grill & Bar chain, rallied 30 percent, the most since the shares began trading in 1984, to $11.18, after its sale of Romano’s Macaroni Grill chain to Golden Capital was completed.

Weyerhaeuser Co. fell 9.5 percent to $33.59 after cutting its dividend by more than half.

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Just a week before Christmas, Sun Media Corporation, Canada's largest publisher of newspapers, is laying off 600 full-time employees.

Staff at the Toronto Sun, the company's largest English-language daily, learned of the news this morning when editor-in-chief Lou Clancy emerged from a meeting with the paper's publisher and read a statement announcing the layoffs to the newsroom. He wept while reading.

The paper is said to have lost 16 full-time editorial staff as well as staff from other departments.

The other 584 jobs - which represent 10 percent of the company's workforce, excluding mailroom operators - are being shed from the company's smaller papers, which include the Ottawa Sun, London Free Press, 24 Hours and Peterborough Examiner.

In a news release, president and chief executive officer of Quebecor Pierre-Karl Peladeau cited the growing availability of free media, the economic slowdown, rising costs and falling advertising revenues as factors in the company's decision.

"The speed at which the current economic environment is deteriorating forces us to make difficult decisions at this time of the year," said Peladeau.

"This decision in no way changes our commitment to our publications, our readers and our advertisers.

"We will continue to invest in the business. We have a responsibility to offer Canadians the type of news coverage they are entitled to expect from the country's largest newspaper publisher, which is to say high-quality journalism focused on local news and exclusive features that meets changing consumer needs and habits payday loans for people with bad credit."

The majority of the layoffs will take effect before New Year's and are expected to result in restructuring costs of approximately $14 million.

Peter Murdoch, national vice-president for media at the Communication Energy Paperworkers Union called the layoffs tragic.

"It's a lot of people," he said.

"We know the media isn't insulated from the economic downturn, but my concern is that at a time when Canadians really turn to their news outlets and really want information about their communities and really want information both nationally and locally we're seeing an erosion in the newsrooms."

"To be sure there's a declining revenue with these papers….. but these things are still profitable."

A member of the Quebecor family of companies, Sun Media is Canada's largest newspaper publisher with 43 paid-circulation and free dailies across Canada.

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Honda are likely to be followed out of Formula One by another manufacturer before the start of next season, Williams chief executive Adam Parr said on Monday.

“I had expected one or two teams to pull out of Formula One imminently. And I also said that it was not necessarily going to be just independent teams that were involved,” he told Reuters in an interview.

“I believe that we probably will lose another team before the beginning of next season and there is a very high chance it will be a manufacturer.”

The 2009 season starts in Australia on March 29.

Honda announced on Friday that they were quitting for financial reasons, leaving their British-based team desperately seeking a buyer in the face of a global credit crunch.

Although Honda F1 bosses said they had several parties interested in taking on the under-performing team, which employees more than 800 people, others believe they will struggle to find a serious purchaser in the limited time available.

Honda had no significant sponsors, in a sport where even the smallest players have annual budgets of more than $120 million, and any buyer will also have to purchase engines from another manufacturer and re-design the 2009 car to fit.

The other carmakers involved in Formula One are BMW, Mercedes, Renault, Toyota and Fiat (Ferrari) fast payday loans. All are being battered by the economic crisis, halting production and laying off workers as sales plunge to their lowest levels in years.

ENTIRELY PREDICTABLE

Parr said Honda’s departure was “entirely predictable” and laughed off newspaper reports at the weekend suggesting that his team were among the most vulnerable of those remaining.

“Honda didn’t have to leave Formula One, it chose to,” he said, depicting the Japanese manufacturer’s departure as a “natural consequence of unlimited and unrestrained spending.”

“Williams would never choose to leave Formula One. So long as we can rub together a few pennies and put together a half-decent budget, we are going to go racing.

“If we have to tailor what we spend to a lower income, then we’ll do that. To me, it’s just completely illogical to talk about Williams leaving Formula One.”

Williams, who this year celebrated their 30th season, made a loss of 21.4 million pounds ($31.74 million) in 2007 but expect to reduce their debt in 2008.

Powered by Toyota engines, they are the only team in Formula One not owned, wholly or in part, by a manufacturer or a billionaire individual. 

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Health care stocks aren’t quite as ill as the rest of the stock market in 2008.

People want to be well and live longer no matter what the state of the economy, so the demand for the majority of health care products and services continues unabated.

In the case of established drug, biopharmaceutical and medical-equipment companies holding enormous amounts of cash, they also aren’t dependent on troubled debt markets.

Health and biotech funds are down 25 percent in value this year, according to Lipper Inc., compared with the average U.S. stock fund that is down 37 percent.
"This has been a year when doing best means losing the least," said Kris Jenner, portfolio manager of the $2.1 billion T. Rowe Price Health Sciences Fund, down 26 percent this year after a 19 percent increase in 2007. "Large-cap biotech stocks have done by far the best for us, while managed care firms have dramatically underperformed and big pharmaceutical companies have been in a downturn for years."

Jenner, who holds a medical degree, especially admires the investment prospects of Teva Pharmaceutical Industries Ltd. as the "king of the hill" in generic drugs, and Vertex Pharmaceuticals Inc. for its steps to bring to market a new class of hepatitis drugs.

Jenner’s current portfolio is 35 percent biotech, 24 percent pharmaceuticals, 20 percent services and 15 percent products and devices, with the remainder in life sciences.

Dynamic performers within his diverse portfolio this year have included biopharmaceutical stocks Celgene Corp., Genentech Inc. and Amgen Inc., while medication-delivery and bioscience giant Baxter International Inc. has held its own. Many other holdings haven’t fared so well, though the real promise of health care stocks lies in the dramatically reduced stock prices of so many important companies.

"I would look for a bottoming turn in health care because no sector stays in a bear market forever," said Kelley Wright, managing editor of Investment Quality Trends Newsletter in Carlsbad, Calif. "We’re seeing some pretty attractive dividend yields and also starting to see acquisitions."

Two positive signs that Wright sees among the big drug companies: Pfizer Inc easy fast payday loans. recently reported strong profits on flat revenue, and Bristol-Myers Squibb Co. is effectively reinventing itself by embracing biotech.

Health care stocks have inherent political, regulatory, legal, clinical and reimbursement risks, which means that any bad news can quickly send them into a swoon.

As President-elect Barack Obama prepares to take office on Jan. 20, he has made it clear the economy is his top priority. Health care initiatives seem destined for the back burner as the president and Congress deal with the financial crisis, the budget deficit and the war in Iraq. Investors, however, will monitor activity closely.

Though reform of health care has been vigorously debated since President Bill Clinton’s first administration, the system remains imperfect and has escalating costs, Jenner said. Yet investors should be forewarned that any potential worrisome news will travel fast, adding volatility.

"The only drawback with the health care stocks and funds is that people will start plowing money into them," said Tom Roseen, Lipper Inc. research manager for the U.S. and Latin America. "Then, once they start turning the other way, they are likely to pop out of them."

Be judicious in what health care stocks you choose because there are so many kinds.

"Traditionally, the market has viewed health care stocks as defensive because the drivers of demand for these companies have tended to remain robust irrespective of economic cycles," said Chris Kallos, senior health care industry analyst with Zacks Investment Research. "However, while this has proven true for the most part in the past, the health care sector is not homogeneous and includes many different sub-industries."

Investors should diversify selectively among health care companies with the greatest earnings certainty, Kallos said. Choose the strongest firms within each category, because competitive position separates winners from also-rans.

andrewinv@aol.com

2008, TRIBUNE MEDIA SERVICES INC.

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WASHINGTON—U.S. President George W. Bush said today 20 world leaders gathered here had agreed on a set of principles aimed at stabilizing the global economy and preventing future financial meltdowns.

But the outgoing president stressed in a statement that today’s historic meeting was the first in a series and he would now hand over the process to President-elect Barack Obama.

Emphasizing the need for a smooth transition, Bush wrapped up his statement at a historic downtown Washington conference centre by thanking journalists for covering his summit and ended with a simple, "Good-bye."

Today’s meeting was historic because of the attendance of 20 nations, including developing countries which had been shut out of recent economic summits.

The leaders agreed to strengthen transparency and accountability by toughening disclosure requirements on international financial transactions, requiring "complete and accurate" disclosure by firms of their financial condition and aligning incentives throughout the nations to avoid any excessive risk-taking which could cause problems to cascade worldwide.

The leaders will strengthen the oversight of credit rating agencies and financial markets, toughen their financial market regulations to prevent market manipulation and fraud, more closely co-ordinate national laws and financial regulations and modernize the International Monetary Fund and the World Bank to give more power to the developing nations at the table here.

He said the international financial institutions were still operating based on the economy of 1944, and their policies need to be updated for today’s global economy.

That was a reference to the 1944 Bretton Woods conference which established both institutions.

Bush reiterated that he was a "free market person” but not when he is told his country could have been entering a depression deeper than the Great Depression.

He also said the leaders found consensus on trade barriers, agreeing that they would resist the urge to build economic walls and retreat into protectionism.

"It makes sense to come out of here with a firm action plan, which we have, and it also makes sense to say to people that there is more work to be done, and there will be more meetings," Bush said.

One meeting, he said, cannot turn the global economy around.

"The declaration should give us all hope, and I would hope would give the markets some reassurance," Prime Minister Stephen Harper told a news conference, referring to the so-called G20 countries’ communique following the end of their emergency summit.

Canada is in relatively good shape compared to other nations as it heads off the crisis, and will issue a financial update at the end the month.

The International Monetary Fund recently forecast that the Canadian economy will grow moderately over the next year and avoid falling into a recession.

Nonetheless Harper sounded a cautious tone Saturday as he addressed the media at the Canadian Embassy.

"There are going to be very tough adjustments that will have very real effects in the Canadian economy but we will continue to be pragmatic and flexible while maintaining good, long-run economic policies," said the prime minister, flanked by Finance Minister Jim Flaherty and Ambassador Michael Wilson.

"We will respond in a way that will minimize Canadians’ exposure to these problems and maximize our ability to come out of this in a strong position creditscore.com."

The G20 leaders, who meet again April 30 left Washington armed with a series of reforms to put in motion by the end of March.

"The big question is how do we establish good regulatory structure without destroying the incentive to innovate, without destroying the marketplace," Bush said Saturday outside the stately National Building Museum where the summit was held.

"Transparency is very important so that investors and regulators are able to know the truth."

Adding that the summit "is not going to solve the world’s problems," Bush said: "There is more work to be done."

Bush called for the emergency summit a few weeks ago in the face of the worldwide economic meltdown. It’s the largest meeting of its kind in more than a decade.

The meeting comes at an awkward time for Bush, a wildly unpopular lame-duck president who’s leaving office in two months when Obama is officially sworn in as America’s 44th president.

Obama has made it clear since his historic election Nov. 4 that Bush is still the president, and must remain actively involved in dealing with the crisis in the next few weeks.

Nonetheless, many of the officials who descended upon Washington for the summit had been clamouring for access not to Bush and his people but to the man who holds the real power in the U.S. capital – Obama.

The president-elect appointed two emissaries – one-time secretary of state Madeleine Albright and former Republican congressman James Leach – to attend on his behalf, reluctant to be seen as interfering during the waning days of Bush’s presidency.

Senior Canadian officials met with Albright and Leach early Friday, hours before Harper arrived in Washington to attend the extravagant White House dinner that kicked off the summit.

While the prime minister is opposed to a vast international regulatory system that would impose global rules on each country’s banking systems, he has strongly advocated the notion of "peer review" of every G20 country’s national financial regulations.

Harper said he was pleased to see that idea was embraced at the summit.

"There is an agreement to look at transparent assessments – independent transparent assessments – of financial regulatory systems, so that will happen," said Harper.

"Canada submitted to IMF assessments in the past, and as we told our American friends and others, we found those very useful in the past … so that has been recognized in the declaration."

Not far from the summit, a handful of protesters carried neon yellow signs that read: "Money for people’s needs, not bankers’ greed" and "Money for jobs, not for war and occupation."

The countries represented at the summit were the U.S., Canada, Argentina, Australia, Brazil, Britain, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea and Turkey.

Those countries and the European Union make up the so-called G20.

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North American stock markets were awash in red as commodities prices continued to decline and electronics retailer Best Buy diminished optimism for U.S. investors when it issued a profit warning.

Toronto's S&P/TSX composite index fell 170.90 points in early trading to 9,253.10, after falling 264.80 points on Tuesday.

The TSX energy sector slipped 2.9 per cent as the price of crude oil continued to fall. Light sweet crude for December delivery was down $2.01 at US$57.32 a barrel on the Nymex.

The gold sector was down 4.5 per cent as the price of bullion fell $8.50 to US$724.30 an ounce on the New York Mercantile Exchange.

On Wall Street, the Dow industrials were down 191.55 to 8,502.41 after falling 177 points Tuesday. The Nasdaq composite index lost 29.15 to 1,551.75 while the S&P 500 declined 17.69 to 881.26.

The TSX diversified metals sector slid 10.6 per cent. Teck Cominco Ltd. (TSX: TCK.B) dropped another seven per cent, or 64 cents, to $8.11. On Tuesday, Teck said that contrary to rumours, it is not planning a stock offering to raise money to pay debt.

The Canadian dollar dropped to 82.21 cents, down 1.37 cents from Monday's official close, before Tuesday's Remembrance Day bank trading holiday.

Finance Minister Jim Flaherty says the federal government will purchase another $50 billion in residential mortgages to ease the credit crunch facing Canadian banks. It follows a similar move last month to purchase up to $25 billion in mortgages.

Retailers continued to erode optimism around the start of the holiday shopping season. Consumer electronics seller Best Buy Co. says it is cutting its 2009 guidance on fears that consumer spending will erode even further.

Department store operator Macy's Inc. says it lost $44 million in the third quarter. U.S. investors are worrying that a severe pullback in consumer spending – which drives more than two-thirds of the U payday advance services.S. economy – will prolong a global economic slump.

ING Canada Inc. (TSX: IIC) reported a third-quarter profit drop to $57 million from year-earlier $92 million due to stock market volatility. Shares were down 23 cents to $31.60.

Research in Motion (TSX: RIM) debuted its latest challenge to Apple Inc.'s iPhone – the BlackBerry Curve 8900 smart phone, as its shares dropped 93 cents to $53.98.

Fears are growing for General Motors Corp. and the North American-based auto industry in general, with Michigan Gov. Jennifer Granholm calling for quick federal action to help the Detroit Three. Granholm says Washington has thrown $700 billion into the rescue of the financial sector, and the carmakers are "just asking for a fraction of that."

President-elect Barack Obama urged President George W. Bush on Monday to support aid for the struggling automakers. And House Speaker Nancy Pelosi says she's confident Congress would approve “emergency and limited financial assistance" for the industry under the $700-billion bailout measure passed in October.

Treasury Secretary Henry Paulson gives an update on the government's financial rescue package later this morning (at 10:30 a.m. ET).

Overseas, London's FTSE 100 index was down 0.48 per cent in afternoon trading in London. The German DAX fell 2.1 per cent and the Paris CAC-40 lost 1.2 per cent.

The Bank of England predicted inflation will fall below the government's target of two per cent next year as the economy contracts. This raised expectations that the British central bank will lower its benchmark rate – possibly to the lowest level ever.

Japan's Nikkei index closed down 1.3 per cent and Hong Kong's Hang Seng declined 0.7 per cent.

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Australia cut interest rates sharply on Tuesday, presaging expected reductions in Europe later this week, and EU leaders pressed for an overhaul of global market rules.

For investors, the worst financial crisis in 80 years has all but eclipsed Tuesday’s U.S. presidential election although the result may offer some relief with the promise of more fiscal stimulus.

Whether Democrat Barack Obama or Republican John McCain wins, he will face a huge challenge in reviving the world’s largest economy, which is already contracting.

Australia’s bigger-than-expected 75 basis point rate cut followed cuts in the United States, China and Japan last week. Britain and the euro zone are expected to follow suit on Thursday with half point reductions, or maybe more.

The recession that authorities have tried to temper with trillions of dollars in bank bailouts, cash thrown into money markets and economic pump-priming measures, looms ever larger.

Australia’s central bank said there was “significant weakness” in major economies in explaining why it cut rates to 5.25 percent, the lowest since March 2005.

“Each of the big developed economies now is either in a severe recession or well on the way,” said Rory Robertson, interest rate strategist at Macquarie in Sydney.

EU REFORM CALL

European Union finance ministers, meeting in Brussels, backed proposals from the bloc’s French presidency for reforming oversight of global capital markets cash till payday advance.

The proposals feed into a summit of EU leaders on Friday to prepare for a world leaders gathering in Washington on November 15, which the president-elect is expected to attend.

German Chancellor Angela Merkel demanded world leaders agree quickly on new rules for financial markets. “It mustn’t take years, it must be done in months,” she said in Berlin.

There is increasing evidence of a severe economic downturn.

Japan’s economy has joined much of the developed world in a recession, economists polled by Reuters say, with GDP seen contracting for a second consecutive quarter as the financial crisis hits exports and capital investment.

Underscoring slowing sales in the car sector, Germany’s BMW abandoned its 2008 earnings forecast and cut production after a 60-percent plunge in quarterly profit.

The woes facing the world’s biggest premium brand automaker followed the worst month in 25 years for the industry in the United States, BMW’s largest market, including big setbacks for General Motors and Ford. 

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Free trade, a strong Canadian dollar, the weak U.S. economy and a disinvestment on the part of the federal government have all been blamed for the demise of Ontario’s manufacturing sector.

But what solutions, if any, could reverse the sector’s misfortunes?

Politicians from all major parties have varying proposals to stop the sector from dying. But does its survival lie in government help? And whose plan is best suited to stop the 250,000 manufacturing job losses some economists expect in the next five years?

The answers remain unclear, but most agree the province needs a new, green and technologically advanced manufacturing sector to remain productive.

"The traditional manufacturing sector, it is a declining number," says Carol Wilding, president and CEO of the Toronto Board of Trade, adding that the province’s promotion of innovation is a step in the right direction.

"I don’t think there’s any one particular answer to these problems. Injecting cash and funds isn’t going to do it. Governments need to make incentives for innovative ideas to be produced here. That’s the new manufacturing sector. That’s the new economy."

John Cartwright, president of the Toronto and York Region Labour Council, says that while shifting to green manufactured goods and environmentally friendly innovation will create a strong, new green economy, the government must not forget about the existing manufacturing sector.

"We need strong policies that protect existing manufacturers, that include reversing unequal trade policies" that are allowing cheap imports to erode the Canadian manufacturers’ share of the Canadian market.

"Secondly, we’ve got to invest in the new economy, and there are all kinds of examples of how that can result in hundreds of thousands of jobs in the new economy," he says.

For example, if buildings were required to have stricter energy-efficiency standards, and alternative energy sources were developed, Ontario could build a manufacturing economy around that shift. Local companies could build solar energy and geothermal systems, and develop an array of new technology such as intelligent lighting systems, heat-recovery systems, "green" building materials and fuel cells. There’s no reason Ontario couldn’t mass-produce electric vehicles and the battery packs that power them.

To be sure, "we’re always going to need smokestacks in Ontario," Cartwright says. "It’s important to protect the existing manufacturers. People need furniture. People need mattresses. People need all kinds of materials that are still made here."

Meanwhile Chris Piper, associate professor at the University of Western Ontario’s Richard Ivey School of Business, says the onus is on the manufacturers themselves to assure their own competitiveness.

"It has become commonplace for manufacturers these past few years to throw up their hands and say that they just can’t find a way to compete," he says.

"But while we may lament those many factory shutterings, we would do well to wonder what at least some of those manufacturers could have done to forestall the inevitable, or even to reverse their fortunes."

He says Canadian manufacturers need to do a better job of finding niche markets where labour costs aren’t an issue.

While many manufacturers, especially those exporting their goods abroad, have been citing the high dollar as the nail being driven through their heads, TD economist Derek Burleton says it’s foolhardy to view the loonie’s recent plunge as the remedy to the manufacturing sector’s woes.

"It’s hard to get too excited about the declining Canadian dollar when it reflects global economic turmoil," he says. "The softness of the loonie will likely be temporary."

Jim Stanford, vice-chair of the Ontario Manufacturing Council, says the solution lies in a systematic strategy to address the manufacturing trade deficit that exists between the number of manufactured goods coming into Canada vs. the number leaving Canada.

"We’ve allowed resources to dictate our whole economic direction. That was a terrible approach. We need to diversify these manufacturing industries and nurture them for the future."

Last week, Premier Dalton McGuinty was criticized by political opponents for admitting he didn’t think Ontario’s lost manufacturing jobs would ever come back.

Opposition parties said this was the government’s acceptance of the loss of more than 200,000 manufacturing jobs in Ontario over the past five years.

But McGuinty’s finance minister, Dwight Duncan, says the government is trying to confront the "decline in our manufacturing sector" with a five-point plan that includes the government’s $500 million Advanced Manufacturing Investment Strategy, which provides repayable loans interest-free for up to five years to encourage companies to invest in leading-edge technologies and processes. The government has also enacted a $500 million Ontario Automotive Investment Strategy fund to try to curb the decline of the automotive sector by giving incentives to manufacture green automobiles in Ontario plants.

McGuinty and all the major federal parties seem to recognize the province’s shift away from traditional manufacturing jobs in furniture construction, textile production and assembly line work, and have each put forward plans to adjust the provincial infrastructure to be more innovation friendly.

In short, politicians see local innovators such as Research In Motion, the Waterloo-based manufacturer of the BlackBerry, as replacing factories like Gibbard Furniture – the soon-to-be-defunct Napanee-based manufacturer of Canada’s finest furniture – in the next generation of Ontario’s manufacturing sector.

The Ontario government has even set up the Ministry of Research and Innovation to help bring new, innovative manufacturers to the province.

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